[Federal Register Volume 65, Number 4 (Thursday, January 6, 2000)]
[Notices]
[Pages 735-742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-285]
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Notices
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains documents other than rules
or proposed rules that are applicable to the public. Notices of hearings
and investigations, committee meetings, agency decisions and rulings,
delegations of authority, filing of petitions and applications and agency
statements of organization and functions are examples of documents
appearing in this section.
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Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 /
Notices
[[Page 735]]
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DEPARTMENT OF COMMERCE
International Trade Administration
Final Results of Full Sunset Review: Brass Sheet and Strip From
the Netherlands
[A-421-701]
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of full sunset review: Brass sheet and
strip from the Netherlands.
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SUMMARY: On August 26, 1999, the Department of Commerce (``the
Department'') published a notice of preliminary results of the full
sunset review of the antidumping duty order on brass sheet and strip
from the Netherlands (64 FR 46637) pursuant to section 751(c) of the
Tariff Act of 1930, as amended (``the Act''). We provided interested
parties an opportunity to comment on our preliminary results. We
received comments from both domestic and respondent interested parties.
As a result of this review, the Department finds that revocation of
this order would be likely to lead to continuation or recurrence of
dumping at the levels indicated in the Final Results of Review section
of this notice.
FOR FURTHER INFORMATION CONTACT: Eun W. Cho or Melissa G. Skinner,
Office of Policy for Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-
1698 or (202) 482-1560, respectively.
EFFECTIVE DATE: January 6, 2000.
Statute and Regulations
This review was conducted pursuant to sections 751(c) and 752(c) of
the Act. The Department's procedures for the conduct of sunset reviews
are set forth in Procedures for Conducting Five-Year (``Sunset'')
Reviews of Antidumping and Countervailing duty Orders, 63 FR 13516
(March 20, 1998) (``Sunset Regulations'') and 19 CFR Part 351 (1999) in
general. Guidance on methodological or analytical issues relevant to
the Department's conduct of sunset reviews is set forth in the
Department's Policy Bulletin 98:3--Policies Regarding the Conduct of
Five-Year (``Sunset'') Reviews of Antidumping and Countervailing Duty
Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset Policy
Bulletin'').
Scope
Imports covered by this order are brass sheet and strip, other than
leaded and tin brass sheet and strip, from the Netherlands. The
chemical composition of the products under order is currently defined
in the Copper Development Association (``CDA'') 200 Series or the
Unified Numbering System (``UNS'') C20000 series. This order does not
cover products the chemical composition of which are defined by other
CDA or UNS series. The physical dimensions of the products covered by
this order are brass sheet and strip of solid rectangular cross section
over 0.006 inch (0.15 millimeter) through 0.188 inch (4.8 millimeters)
in gauge, regardless of width. Coiled, wound-on-reels (traverse-wound),
and cut-to-length products are included. The merchandise subject to
this order is currently classifiable under items numbers 7409.21.00 and
7409.29.20 of the Harmonized Tariff Schedule of the United States
(``HTSUS''). Although the HTSUS subheadings are provided for
convenience and customs purposes, the written description of the
merchandise subject to this order is dispositive.
History of the Order
The antidumping duty order on brass sheet and strip (``BSS'') from
the Netherlands was published in the Federal Register on August 12,
1988 (53 FR 30455).1 In that order, the Department
determined that weighted-average dumping margins for the Metallverken
Nederland B.V. and all others were 16.99 percent.2
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\1\ See Antidumping Duty Order of Sales at Less Than Fair Value;
Brass Sheet and Strip From the Netherlands, 53 FR 30455 (August 12,
1988).
\2\ In the original investigation, Outokumpu Copper Strip, B.V.
(``OBV'') was doing business under the name, Metallverken Nederland
B.V. (See March 4, 1999, Substantive Response of OBV at 5 (footnote
4); see also March 3, 1999, Substantive Response of the domestic
interested parties at 24.)
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The Department has conducted several administrative reviews since
that time.3 The order remains in effect for all producers
and exporters of BSS from the Netherlands. We note that the Department
has not conducted any investigation with respect to duty absorption
regarding the exports of the subject merchandise.
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\3\ See Brass Sheet and Strip From the Netherlands; Final
Results of Antidumping Duty Administrative Reviews (Corrections), 57
FR 11352 (April 2, 1992); Brass Sheet and Strip From the
Netherlands; Final Results of Antidumping Administrative Reviews, 57
FR 9534 (March 19, 1992) (this review consolidated first and second
reviews); Brass Sheet and Strip From the Netherlands; Final Results
of Antidumping Duty Administrative Review, 61 FR 1324 (January 19,
1996); Brass Sheet and Strip From the Netherlands; Amendment to
Final Results of Antidumping Duty Administrative Review, 62 FR 33395
(June 19, 1997); Brass Sheet and Strip From the Netherlands; Final
Results of Antidumping Duty Administrative Review, 61 FR 1324
(January 19, 1996); Brass Sheet and Strip From the Netherlands;
Final Results of Antidumping Duty Administrative Review, 62 FR 51449
(October 1, 1997); and Brass Sheet and Strip From the Netherlands;
Final Results of Antidumping Duty Administrative Review, 63 FR 49544
(September 16, 1998). See also the final results of the latest
administrative review, covering the period 1997-1998, which should
be published concurrently with this publication.
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Background
On August 26, 1999, the Department published the preliminary
results of the sunset review on BSS from the Netherlands.4
Notwithstanding a finding of a significant decline in the import
volumes of the subject merchandise after the issuance of the order, the
Department preliminarily determined that revocation of the order would
not be likely to lead to continuation or recurrence of dumping. The
Department stated that although import volumes of the subject
merchandise declined significantly after the issuance of the order,
since the two most recent administrative reviews indicate that dumping
of the subject merchandise has been eliminated, and since Outokumpu
Copper Strip, B.V. (``OBV'') presents effective other relevant
information and arguments explaining why it is unlikely that OBV would
resume dumping in the United States, the Department preliminarily
determines that
[[Page 736]]
recurrence of dumping is not likely if the order were revoked.
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\4\ See Preliminary Results of Full Sunset Review: Brass Sheet
and Strip From the Netherlands, 64 FR 46637 (August 26, 1999).
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On October 13, 1999, both the domestic and respondent interested
parties submitted additional information.5 Also, on October
25, 1999, we received case briefs from the domestic interested parties
and OBV.6 On November 1, 1999, within the deadline specified
in the Department's memorandum,7 both domestic and
respondent parties submitted reply briefs. The Department held a public
hearing on November 3, 1999. As a result of the aforementioned
additional documents and comments, we have changed our determination.
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\5\ Following the Department's publication of its preliminary
results of the instant sunset review, on October 5, 1999, counsel to
the domestic interested parties, submitted a letter requesting the
Department to allow the domestic interested parties to augment the
existing record with additional information. The Department allowed
both domestic and respondent interested parties to submit relevant
information until October 13, 1999. (See the Department's memorandum
to Mr. Jeffrey S. Beckington.) The domestic interested parties
submitted Mr. Baker's affidavit and three different portions of the
Department's Sales Verification Report (``Verification Report'')
which was completed in the concurrent administrative review of the
order. Also, OVB submitted two portions of the Verification Report.
Consequently, Mr. Baker's affidavit and the portions of the
Verification Report submitted by interested parties are now on the
record in this review.
\6\ On September 27, 1999, while requesting a public hearing,
the domestic interested parties requested extensions of the
deadlines for the case and rebuttal briefs and a postponement of the
hearing. The Department extended the deadlines for case brief and
rebuttal brief until and not later than October 25, 1999, and
November 1, 1999, respectively. Also, at the same time, the
Department postponed the hearing to November 3, 1999.
\7\ See footnote 6, supra.
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Department's Determination
Based upon arguments raised by interested parties in case and
rebuttal briefs, we have re-examined the facts and statements on the
record in this case and determined that revocation of the antidumping
duty order on brass sheet and strip from the Netherlands pursuant to
section 751(c) of the Act would be likely to lead to recurrence of
sales of subject merchandise at less than fair value.
In its Sunset Policy Bulletin, the Department established that it
will normally determine that revocation of an antidumping duty order
would be likely to lead to continuation or recurrence of sales of the
subject merchandise at less than fair value where: (a) Dumping
continued at any level above de minimis after the issuance of the
order; (b) imports of the subject merchandise ceased after the issuance
of the order; or (c) dumping was eliminated after the issuance of the
order and import volumes for the subject merchandise declined
significantly (see section II.A.3).
In this case, consistent with section 752(c) of the Act, the
Department considered whether dumping continued at any level above de
minimis after the issuance of the antidumping duty order; whether the
imports ceased after the issuance of the order; and whether dumping was
eliminated and import volumes declined significantly after the issuance
of the order. We found that dumping of the subject merchandise
continued after the issuance of the order, through the first, second
and third administrative reviews.8 We also found that OBV's
imports of subject merchandise ceased after the issuance of the order
for four administrative review periods,9 but resumed in
1995. Further, we found that OBV did not dump subject merchandise, at a
level above de minimis, during the periods 1995-1996 and 1996-1997
(last two administrative review periods).
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\8\ See footnote 3.
\9\ Id.
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With respect to import volumes of the subject merchandise, the data
reported by both OBV and the domestic interested parties in this case
indicate that, since the imposition of the order, import volumes of
subject merchandise have declined significantly. In addition, data in
the United States Customs Census Bureau IM-146s and import data from
the U.S. International Trade Commission indicate that imports of
subject merchandise have declined over the life of the order. No party
in this case disputes that import volumes of subject merchandise
declined significantly since the issuance of the order. Rather, the
parties have argued over the significance of the acquisition of the
U.S. producer, American Brass, by OBV's parent company, and the
corporate decision to have American Brass play the primary role in
supplying subject merchandise to the U.S. market.
In the preliminary results, we agreed with OBV that the acquisition
of American Brass makes OBV's position in the U.S. market rather unique
because it appeared that OBV no longer had to dump subject merchandise
in order to supply the U.S. market, and because American Brass had more
than adequate capacity to meet the demand in the U.S. market for BSS.
Given these apparent facts, we preliminarily found persuasive OBV's
argument that it would not make sense for OBV to jeopardize the
economic well being of American Brass by undercutting the prices of its
U.S.-produced BSS by resumption of dumping. Because we preliminarily
found that American Brass was to bear the primary responsibility of
satisfying U.S. customers' needs for BSS, we preliminarily determined
that, despite the significant decline in import volumes of subject
merchandise after the issuance of the order, the two most recent
reviews were probative of the behavior of the company absent the
discipline of the order.
As noted in the SAA, at 883, the determination called for in this
type of review is inherently predictive and speculative. Therefore, we
have established a policy of relying on past behavior as a predictor of
future behavior. In light of OBV's announced resumption of import
volumes at pre-order levels, we now find that the company's behavior
during the most recent administrative reviews can no longer be
considered probative of OBV's behavior absent the discipline of the
order.10 In the two most recent administrative reviews,
OBV's import volumes were abnormally small by any measure.11
If the transfer of production and sales of subject radiator strip to
American Brass were permanent, then these small import volumes could be
considered normal for the company and the margins for the two recent
reviews could be reflective of the company's future behavior. By
contrast, where, as here, a company will resume imports of the subject
merchandise at levels expected to exceed nearly 65 times the import
volumes in the two most recent reviews, the Department is compelled to
conclude that the company's pricing behavior during these previous
periods in which import volumes were small has little or no probative
value. Due to the transfer of production and sales of subject radiator
strip back to OBV, the company will import subject merchandise in
volumes that equal or exceed the volume of imports during the pre-order
period. Accordingly, we determine that, consistent with established
policy, the margin likely to prevail must be measured based on the
company's behavior at the time of the original investigation.
Therefore, we determine that revocation of the antidumping duty order
on brass sheet and strip from the Netherlands under section 751(c)
would be likely to lead to recurrence of sales of subject merchandise
at less than fair value. We have addressed the comments received below.
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\10\ See Sales Verification Report at 39.
\11\ See Comment 1 below.
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[[Page 737]]
Likelihood of Continuation or Recurrence of Dumping
Comment 1: The domestic interested parties contend that the factual
premises underlying the Department's preliminary results are in error;
namely, OBV was dumping during the most recent administrative review.
The domestic interested parties claim that had the Department not
allowed OBV the start-up adjustment and quarterly (instead of yearly)
calculation of its cost, OBV would have been found to be dumping during
1997-1998 review period. Assuming, arguendo, OBV was not dumping, the
domestic interested parties further argue that because such a finding
was based on a small, unrepresentative volume of sales when compared
to: (1) OBV's pre-order exports of the subject merchandise; (2) the
current size of the U.S. market for the subject merchandise; (3) OBV's
shipments of non-subject merchandise; (4) OBV's shipments in its home
market; (5) OBV's shipments to other countries; or (6) OBV's projected
volume of shipments to the United States, those few sales should not
serve as the basis for a finding that dumping is not likely to occur in
the future. (See the domestic interested parties' brief at 2 and 8-27,
and the hearing transcript at 10-49 and 97-108.)
OBV argues that the start-up cost adjustment is a relatively new
concept and, as a result, there have not been many applications of the
adjustment. However, OBV contends that the rarity alone should not be
considered as a determining factor in finding whether the adjustment is
warranted. OBV further argues that a potential distortive effect of
metal prices on margin calculation was recognized by the Department
from the beginning (in the original investigation) and, therefore,
allowing a cost calculation based on quarterly data is not unusual at
all. (See OBV's reply brief at 24-26, and brief transcript at 56-97.)
OBV contends that its export volumes of the subject merchandise
were low during the last three administrative review periods due to the
acquisition of American Brass. OBV asserts that it never stated that
the order was even a reason for stopping shipments. In other words, OBV
claims that it could have sold a substantial amount of subject
merchandise with the discipline of the order in place had OYJ not
purchased American Brass. OBV further argues that, at any rate, the
Department determined, in its most recent preliminary results of
administrative review, that the import volumes in the recent
administrative reviews constitute commercial quantities. In addition,
OBV asserts that the comparison between pre-order and post-order
volumes is meaningless because OBV will never return to pre-order
levels on account of American Brass's presence in the U.S. market. OBV
basically dismisses the domestic interested parties' various
comparisons of OBV's post-order export volumes of the subject
merchandise as meaningless by resorting to the fact that the much
larger American Brass's production replaced OBV's exports of the
subject merchandise to the United States. Furthermore, OBV argues that
its recent shipment levels are not aberrational or abnormally small in
the first place, and to the extent they are deemed small, they are due
to OYJ's purchase of American Brass. (See OBV's reply brief at 2 and
24-40.)
Department's Position: With respect to arguments raised regarding
the results of the administrative review, we refer interested parties
to the final results of the administrative review.12
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\12\ See footnote 3, supra.
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Further, in light of the arguments raised in this sunset review, we
do not agree with OBV that the comparison between OBV's pre-and post-
order import volumes of the subject merchandise to the United States is
meaningless. The Act, the SAA, the House Report, the Senate Report, the
Department's Regulations, and the Sunset Policy Bulletin provide that,
in making its determinations of likelihood of continuation or
recurrence of dumping, the Department compare the import volumes of the
subject merchandise for the period before and the period after the
issuance of the order. In our preliminary results we compared the
import volumes for the period before and the period after the issuance
of the order and found, on the basis of uncontroverted evidence, that
there was a significant decline in the volume of imports of the subject
merchandise after the issuance of the order. However, as noted above,
on the basis of additional information and argument provided by OBV, we
preliminarily determined that the elimination of dumping in recent
administrative reviews was, nonetheless, probative of the behavior of
OBV without the discipline of the order. For the purposes of these
final results we have reconsidered the weight to be accorded the more
recently calculated margins and have determined, in light of OBV's
stated intent to begin importing subject merchandise into the United
States at pre-order levels once the order is revoked, that the more
recently calculated margins are not probative of the behavior of OBV
were the order revoked.
Comment 2: The domestic interested parties insist that OYJ's
ownership of American Brass is by no means unique; rather, such
acquisition is a standard practice for foreign respondents to avoid the
dumping laws. Essentially, the domestic interested parties claim that
OYJ's acquisition of American Brass does not mean that OBV is not
likely to dump. The domestic interested parties further note that the
purchase of American Brass never demonstrated that OBV stopped dumping.
(See the domestic interested parties brief at 3 and 29-30, and the
hearing transcript at 10-49 and 97-108.)
OBV contends that the domestic interested parties misunderstood the
rationale with respect to OBV's uniqueness argument. Specifically, OBV
contends that its unique position is derived from the fact that: (1)
OBV is the sole producer of the subject merchandise in the Netherlands;
(2) the ownership of American Brass by OBV's parent company; (3) the
size of American Brass vis-a-vis OBV; and (4) the relative roles of OBV
and American Brass in the OYJ Group. In any case, OBV argues that the
cases cited by the domestic interested parties were based on sparse,
limited facts available and that the Department never addressed a
uniqueness issue in these cases. (See OBV's reply brief at 3 and 40-50,
and the hearing transcript at 56-97.)
Department's Position: The Department's preliminary results that
the recently calculated margins were, despite the significant decrease
between pre- and post-order import volumes, nonetheless probative of
OBV's behavior without the discipline of the order was based on OBV's
representation that the acquisition of American Brass enabled American
Brass to meet the U.S. demand for BSS, thereby replacing OBV's exports
of the subject merchandise to the United States. In part on this basis,
we stated in our preliminary results that the cessation of imports from
OBV after the purchase ``buttresses the notion that American Brass
basically took over OBV's exports of the subject merchandise.''
13
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\13\ See footnote 4, 64 FR at 46641, supra.
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Once it became evident that OBV will take over the entire
production of radiator strip from American Brass and export that
subject merchandise to the United States from the Netherlands, OBV
undermined its uniqueness contention. With the proposed production
shift from American Brass to OBV, OBV's contention that the purchase of
American Brass and
[[Page 738]]
subsequent presence of American Brass in the U.S. market eliminated any
likelihood of future dumping is diminished (i.e., the existence of
American Brass no longer has any bearing on whether the more recently
calculated margins are probative of the behavior of OBV without the
disciple of the order OBV and whether OBV would be likely to resume
dumping subject merchandise, in general,14 and radiator
strip, in particular).
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\14\ As it proposed to do with radiator strip, OYJ can shift
production of any other type of BSS from American Brass to OBV and
start dumping that subject merchandise without necessarily competing
with American Brass.
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Therefore, for purposes of these final results, we agree
15 with the domestic interested parties that OYJ's purchase
of American Brass after the imposition of the order, no longer provides
sufficient reason and/or evidence to negate the presumption expressed
in the Sunset Policy Bulletin and the SAA that the elimination of
dumping coupled with a significant decrease in the volume of imports
may be probative of the fact that producers/exporters may need to dump
in order to maintain market share in the United States. Therefore, for
the final results of this sunset review we have considered OBV's past
histories pertaining to import volumes and weighted-average dumping
margins.
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\15\ As noted in the previous paragraphs, however, we agree with
the domestic interested parties for different reasons. The domestic
interested parties cite five cases in their case brief (at 21-29).
In Brass Sheet and Strip From Germany; Final Results of Antidumping
Duty Administrative Review and Determination Not To Revoke in Part,
61 FR 49727 (September 23, 1996), the Department rejected Wieland's
attempt to make a relevant issue out of its purchase of a U.S.
production facility because the U.S. facility used imports of the
subject merchandise as a feed product. The Department determined
that had the order not been in place, Wieland would have used its
dumped subject merchandise rather than U.S. produced domestic like
product as its raw material; hence, Wieland's purchase of a U.S.
production facility can be distinguished from the instant case. In
the other four cited cases, also, the ownership of U.S. production
facilities by foreign respondent interested parties was never an
issue. In other words, the domestic interested parties reliance on
the above-referenced cases to discredit OBV's uniqueness argument is
misplaced.
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With respect to import volumes of the subject merchandise, the data
supplied by both OBV and the domestic interested parties indicate that,
since the imposition of the order, import volumes of the subject
merchandise have declined significantly. Moreover, data in United
States Census Bureau IM146s and import data from the United States
Commission clearly indicate that imports of the subject merchandise
have declined over the life of the order. In 1986 (a year prior to the
initiation of the original investigation), import volumes of brass
sheet and strip exceeded 15 million pounds; whereas, in 1998 import
volumes have been well under 1 million pounds. In addition, OBV does
not negate the statistics which show that OBV's import volumes of the
subject merchandise decreased significantly after the issuance of the
order. Consequently, we determine that the import volumes of the
subject merchandise declined substantially after the issuance of the
order.
In conclusion, although the three most recent reviews indicate that
dumping of the subject merchandise has been eliminated,16
since import volumes of the subject merchandise declined significantly,
we determine that recurrence of dumping of subject merchandise from the
Netherlands is likely if the order were revoked.
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\16\ See footnote 3, supra.
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Comment 3: The domestic interested parties assert that the
Department's preliminary results reflect a marked departure from the
standards established in the statute, the SAA, and the Sunset Policy
Bulletin, based on which the Department determines whether continuation
or recurrence of dumping is likely should the order be revoked.
Specifically, the domestic interested parties contend that, in its
preliminary results, the Department ignored the facts that dumping
continued at levels above de minimis after the issuance of the order
and that the import volumes of the subject merchandise ceased and
declined substantially when dumping was eliminated. The domestic
interested parties further argue that the Department should rely upon
what OBV did in conjunction with the order and not upon what OBV says
it will do in the future if the order were revoked. (See October 26,
1999, the domestic interested parties' case brief at 1 and 4-7, and the
hearing transcript at 10-49 and 97-108.)
OBV claims that the Department's preliminary decision is fully
consistent with and supported by a plain reading of the statute, the
Department's Regulations, and the Sunset Policy Bulletin. OBV contends
that the Department's ultimate mandate in a sunset review is to
determine whether revocation of an order is likely to lead to a
continuation or recurrence of dumping, and as such, the Department is
free to consider all record evidence in carrying out its ultimate
mandate in a sunset review. OBV claims that the Department stated that
it makes no sense to conclude that Outokumpu is going to permit OBV to
dump the subject merchandise in the United States. (See November 1,
1999, OBV's reply brief at 1 and 4-17, and the hearing transcript at
56-97.)
Department's Position: We do not agree with the domestic interested
parties' characterization that the Department ignored the facts that
dumping continued at levels above de minimis and that the import
volumes of the subject merchandise declined substantially after the
issuance of the order. In the preliminary results, the Department noted
that dumping continued for a period after the issuance of the order and
further, that the import volumes of the subject merchandise decreased
significantly after the issuance of the order.
As noted by OBV, in a sunset review, consistent with our
regulations, interested parties are invited to submit any other
relevant information or arguments that the party would like the
Department to consider. (See section 351.218(d)(3)(iv)(B) of the Sunset
Regulation.) In this review, OBV submitted additional information and
argument to support its assertion that the significant decrease in the
post-order volume of imports was not dispositive of the likelihood
issue. We agree with OBV that the Department has the discretion to
consider these arguments in the course of determining whether to
deviate from the general policy. Specifically, our Sunset Policy
Bulletin enunciates that, with a given set of facts, the Department
normally will determine whether revocation of the order is likely to
lead to continuation. (See section II.A.3 of the Sunset Policy
Bulletin.) Nowhere do we state that the Department will always find
that dumping is likely to continue or recur when dumping has been
eliminated and there has been a significant decline in the volume of
imports.
Comment 4: The domestic interested parties state that the
Department erred in basing its preliminary results, without invoking
good cause, on OBV's unsolicited, unilateral, uninvestigated, and self-
serving representations regarding matters which would more properly
fall within the purview of the sunset analysis of the International
Trade Commission (``Commission''). The domestic interested parties
argue that OBV's claims pertaining to the role it will play in the U.S.
market (in terms of volumes and nature of the products it will supply,
and the price it will charge) and pertaining to the competitive
conditions of the U.S. market of the subject merchandise, were
unsolicited, not subject to follow-up questioning, and not subject to
verification by the Department. Since the Department did not have an
[[Page 739]]
affirmative showing of good cause, as required by the statute, the
domestic interested parties conclude that the Department should exclude
the aforementioned other factors and make its final determination based
solely on the three-pronged test set forth in its Sunset Policy
Bulletin. (See the domestic interested parties brief at 1 and 8-12, and
the hearing transcript at 10-49 and 97-108.)
OBV notes that since OBV filed its substantive response on March 3,
1999, the domestic interested parties have had an ample opportunity to
request follow-up questions, but did not do so. OBV claims that its
substantive response is basically a questionnaire response; that there
is nothing improper about the Department revoking an order prior to the
Commission's decision; and that the factors considered are identical to
the factors typically considered by the Commission in making its injury
determination. (See OBV's reply brief at 13-17 and the hearing
transcript at 56-97.)
Department's Position: We disagree with the domestic interested
parties' argument that the Department erred in basing our preliminary
results on unsolicited, unilateral, un-investigated, and self-serving
representations made by OBV pertaining to the competitive conditions of
the U.S. market. Consistent with the Sunset Regulations (section
351.218(d)(3)(iv)(B)), a party may submit in its substantive response
other information or argument the party would like the Secretary to
consider. Other parties (that filed substantive responses) may then
rebut those arguments and information. Nothing precludes the Department
from considering the type of information OBV submitted in its
substantive response and the Department properly considered this
information and the domestic interested parties' rebuttals thereto in
its preliminary results.
Comment 5: The domestic interested parties note that the
Department's finding that American Brass would bear the primary
responsibility of satisfying the U.S. customers of radiator strip is
contrary to OBV's acknowledgment that OBV will eventually assume the
primary responsibility of satisfying its U.S.-based customers by
exporting more than 15.8 million pounds of subject radiator strip in
the future. Specifically, the domestic interested parties point out
inconsistent claims by OBV: on one hand, OBV states that it never will
rreturn to pre-order export level while, on the other hand, OBV
stipulates that it will eventually take over American Brass' entire
production of radiator strip, which will result in OBV exporting the
subject merchandise to the United States at levels greater than pre-
order export volumes of the subject merchandise to the United States.
The domestic interested parties assert that since OBV readily
changed its position (production shift from OBV to American Brass and
then back to OBV), nothing precludes the parent company of OBV, OYJ,
from changing its mind again in the near future. Namely, the domestic
interested parties claim that it is possible for OBV to start shipping
other subject merchandise to the United States--and this production
shift can rather easily be accomplished with only minor adjustment in
OBV's current production process. According to the domestic interested
parties, this possibility is looming especially large in light of
shrinking radiator strip market. Domestic interested parties point out
that OBV may start shipping electrostrip products, and that OBV can do
this without competing with American Brass by utilizing a creative
product mix. Inasmuch as the instant review covers all subject
merchandise (not just radiator strip), the domestic interested parties
further contend that should the order be revoked, OYJ can easily have
OBV export other subject merchandise, besides radiator strip, to the
United States. (See the domestic interested parties brief at 2 and 27-
30, and the hearing transcript at 10-49 and 97-108.)
OBV argues that it informed the Department of OBV's plans to
gradually increase shipments of subject radiator strip in its March 3,
1999, response to the notice of initiation in the instant review. OBV
claims that the Department clearly contemplated that OBV will continue
to ship the subject radiator strip and that the fact that the tonnage
is not mentioned is by no means evidence that the Department was
unaware of, or did not consider, this fact in reaching its preliminary
results. OBV notes that the proposed shift of production of the
radiator strip is only a minor portion of American Brass' 1998
production capacity and of American Brass' 1998 shipments within the
United States. (See OBV's reply brief at 3, 45-50, and 52, and the
hearing transcript at 96-97.)
Department's Position: We agree with the domestic interested
parties that there is conflicting information on the record regarding
OBV's intent to export subject merchandise to the United States.
Although OBV states that American Brass permanently replaced OBV's
exports of BSS to the United States, OBV also expresses its intention
of resuming significant exports to the United States when and if the
order were revoked (see OBV's substantive response, Exhibit 1 (LECG
Report at 41-42). Therefore, for the purposes of the final results of
this review, as noted above, we consider the planned resumption of
imports at pre-order volumes to be probative of the behavior of OBV
without the discipline of the order.
Comment 6: The domestic interested parties further note that when
OBV was selling substantial volumes of the subject merchandise to the
United States, the Department found margins at levels above de minimis.
In other words, the domestic interested parties claim, according to
facts of record, that OBV always dumped when shipping commercial
quantities of the subject merchandise to the United States. Knowing
that OBV has been an aggressive and a significant supplier of connector
products in the European market and that the U.S. radiator-strip market
is highly competitive, the domestic interested parties assert that
OBV's self-imposed moratorium of not exporting other subject
merchandise to the United States will not continue in the future. While
arguing that OBV is likely to dump in the United States where it
imports a large volume and a wide range of products to the United
States if the order were revoked, the domestic interested parties try
to illustrate its contention with the fact that OBV did not provide to
the Department American Brass's price data regarding the domestic like
product. The domestic interested parties also claim that in certain
instances, the prices of some non-subject merchandise, which are more
costly to produce than subject merchandise, were lower than the prices
of the subject merchandise. The domestic interested parties also
suggest that the Department postpone revocation until a later
administrative review because revocation would result in serious
prejudice to the domestic industry; whereas, the postponement would not
prejudice OBV because its current cash deposit rate is zero, and if
such is the finding in the instant review, OBV will not only be
absolved from any duty liability, but will remain eligible for
revocation; i.e., OBV's ability to obtain revocation would in no way be
prejudiced by delaying revocation. (See the domestic interested parties
case brief at 3 and 30-36 and, the hearing transcript at 10-49 and 97-
108.)
OBV indicates that in the last three administrative reviews, the
Department found that OBV has shipped in commercial quantities without
dumping. OBV claims that its sponsored LECG Report indicated that OBV
would not resume dumping if the order were revoked. OBV contends that
its future
[[Page 740]]
exports of the subject merchandise will be limited to brass radiator
strip. OBV claims that, as a matter of law, the Department cannot delay
revocation in this sunset review just to determine whether OBV would
dump in the next five years. OBV states that the Department did not
request OBV to provide American Brass pricing data in this review, and
thus it cannot be accused of not supplying something when not asked to
do so. Further, OBV argues that unlike a small, ``stand alone''
company, OBV is not forced into dumping the subject merchandise for its
own survival. OBV indicates that, even with antidumping duty orders in
effect on the subject merchandise from numerous countries, the domestic
interested parties, so far, do not find it profitable to manufacture
radiator strip. Stated differently, based on the fact that OBV will not
have any domestic competition in the radiator strip market, OBV
forecasts that there will be no downward pricing pressure exerted on
OBV by the domestic industries. Thus, OBV concludes that it is unlikely
to resume dumping in the near future. (See OBV's reply brief at 4, 50-
61, and 64-83, and the hearing transcript at 56-97.)
Department's Comment: We agree with the domestic interested parties
that OBV has never attained a zero or de minimis margin when ever it
exported more than a small amount of subject merchandise to the United
States.17 However, we disagree with the domestic interested
parties' contention that a postponement of revocation, where revocation
is appropriate, would not prejudice OBV. We agree with OBV that the
Department is required to revoke the order if, based on the record of
the proceeding, the Department determines that dumping is not likely to
recur.
---------------------------------------------------------------------------
\17\ The lowest weighted-average dumping margin associated with
a significant import volume (2,284 metric tons) was 2.03 percent for
August 1990-July 1991. When OBV was assessed with zero (0) percent
or de minimis dumping margin for the last three administrative
reviews, its imports of subject merchandise were significantly
lower. Thus, we agree with the domestic interested parties that when
OBV was exporting substantial volumes of the subject merchandise to
the United States, it was dumping. This is especially true in light
of the final results of the most recent administrative review, in
which the Department found that the import volumes of the subject
merchandise associated with OBV's zero or de minimis weighted-
average dumping margins did not constitute commercial quantities.
(See footnote 4, supra.)
---------------------------------------------------------------------------
As to the pricing data from American Brass, because we have
determined that revocation of the order would be likely to result in
the continuation or recurrence of dumping, this issue is moot. Further,
because the scope of the order includes merchandise other than radiator
strip and our determination is based on OBV's historical behavior at a
time when it exported significant volumes of subject merchandise to the
United States, OBV's assertions with respect to the lack of domestic
competition and downward pricing pressure are also moot.
Finally, with respect to OBV's contention that in three
administrative reviews, the Department has found that OBV has shipped
in commercial quantities without dumping, we refer interested parties
to the notice of final results of the most recent administrative
review, issued concurrently with this notice, in which the Department
determined that OBV did not sell in commercial quantities for any of
the three consecutive reviews that formed the basis of OBV's revocation
request in that proceeding.
Comment 7: The domestic interested parties urge the Department not
to revoke the order without first performing a verification because the
Department made its preliminary findings based on other relevant
information and arguments OBV has submitted. They further argue that a
verification is mandated by statute and the Department's Regulation;
thus, the phrase, ``only where needed,'' in the Sunset Policy Bulletin
is questionable since it is contrary to statue and regulations (782(i)
of the Act and section 351.307(b) of the Department's Regulations). The
domestic interested parties insist that the Department cannot rely on
the verification report that was issued in the concurrent
administrative review of the order because the verification report did
not involve the relevant facts upon which the agency is relying in this
case. The domestic interested parties list factors, based on which the
Department purportedly made its preliminary determination yet to which
the verification did not address: the historical nature of OBV's and
American Brass's sales of the subject merchandise in the United States
and the reasons therefor; the prices at which OBV is likely to sell
radiator strip as compared to the prices charged by American Brass; the
capacity of American Brass; the size of and competition in the U.S.
radiator strip market; and the corporate relationship between OBV and
American Brass and the effects thereof upon their future business and
sales operations. The domestic interested parties further claim that
OBV itself discredited the findings of the verification report in the
concurrent administrative review. In conclusion, the domestic
interested parties argue that the Department should not rely on the
voluntary and self-serving representations made by the OBV. Instead,
domestic interested parties insist, the Department should issue a
questionnaire and a supplemental questionnaire to elicit relevant
information, and verify the information thereof so long as the
Department continues to rely upon any of the factual representations
proffered by OBV. (See the domestic interested parties brief at 3 and
12-18, and the hearing transcript at 10-49 and 97-108.)
OBV asserts that a verification is unnecessary in the instant
review. OBV claims that, first, the Department based its preliminary
results upon, inter alia, the dumping margins in the most recently
completed administrative reviews. OBV argues that, second, where the
Department recently verified OBV's data, which included information
supporting revocation of the dumping order and which was placed on the
record of this review, the current situation would fall under the
``other situations'' in which the Department need not conduct a
verification (see Sunset Regulations, 63 FR at 13519) because standards
for two reviews are basically the same. OBV claims that many items
which the domestic interested parties request the Department verify
were either verified by the Department during the 1997-1998
administrative review or were not relied upon by the Department in
making its preliminary results in this sunset review. OBV denies that
it alleged the verification report issued in the administrative review
is meaningless or challenged the accuracy of the numbers. OBV
indicates, nonetheless, that it opposes unjustified extrapolation of
numbers or leaps of logic based upon those numbers. Given the vast
amounts of verified information already on the record in this review,
an additional verification would be unnecessary and of little value to
the Department in this review. (See OBV's reply brief at 17-24, the
hearing transcript at 69-97.)
Department's Position: Because we have determined that dumping is
likely to continue or recur were the order revoked, the issue of
verification is moot.
Magnitude of the Margin
Because the magnitude of likely-to-prevail margin was not discussed
in the preliminary results of this review, we incorporate interested
parties' arguments in our determination as follows.
Comment 1: The domestic interested parties, in their substantive
response and in the hearing transcript, simply state that the
Department should select
[[Page 741]]
a margin from the investigation according to the principle set forth in
the SAA at 890 and the Sunset Policy Bulletin, 63 FR at 18873. (See the
domestic interested parties' March 3, 1999 substantive response of at
45-46, March 12, 1999, rebuttal response at 25-26, and the hearing
transcript at 10.) The domestic interested parties note that the margin
from the original investigation is the only calculated rate that
reflects the behavior of OBV without the discipline of the order.
Therefore, the domestic interested parties argue that the Department
should abide by its stated policy and provide to the Commission the
rate set forth in the original investigation, which is 16.99 percent.
Id.
Citing the same policy, but with a different emphasis, OBV argues
that the Department can, and should, exercise its discretion, as
allowed by the SAA.18 (See OBV's substantive response at
39.) OBV urges that the Department determine the margin likely to
prevail if the order were revoked to be zero percent, which is the
margin determined for sales by OBV in the last two administrative
reviews, or, in the alternative, 2.03 percent, which is the margin from
the third administrative review that is associated with a sales volume
that is larger than the sales volume examined by the Department during
the original investigation.
---------------------------------------------------------------------------
\18\ OBV infers this discretion from the word ``normally.'' (See
Substantive Response of OBV at 39.)
---------------------------------------------------------------------------
OBV further states that it came forth with data which support the
selection of a margin other than the margin in the original
investigation. OBV argues that the weighted-average dumping margin
assigned to OBV in the original investigation is the least probative of
the magnitude of the dumping margin likely to prevail were the order
revoked. OBV bases its argument on the assertions that the margin from
the original investigation is inherently unreliable and does not
reflect the current circumstances surrounding the order. Specifically,
the margin from the original investigation as well as those from the
first two administrative reviews are skewed in OBV's view because the
Department employed an old, and since-discarded, method in deriving
such margins.19 OBV argues that the Exporter's Sales Price
(now called Constructed Export Price, CEP) used in the original
investigation was deflated because some sales of the subject
merchandise were made to an OBV affiliated U.S. company at a lower
price. Id. at 41-45.20 Therefore, OBV contends, the
Department should reject the margins from original investigation and
from the final results of the first two reviews because weighted-
average margins therefrom are unreliable indicators of the magnitude of
the margin that would be likely to prevail if the order were revoked.
Instead, OBV argues that the Department should report to the Commission
a zero or, at the most, a 2.03 percent as the likely-to-prevail margin
were the order revoked.
---------------------------------------------------------------------------
\19\ The original investigation was based on the U.S. sale price
compared to a weighted-average foreign market value. In
investigations, the Department now employs an average-to-average
method--a comparison of the weighted-average of the normal values
with the weighted-average of the export prices (and constructed
export prices) for comparable merchandise. (See 19 CFR 351.414(b)
and (c).)
\20\ During the original investigation, OBV had an affiliated
U.S. company, Outokumpu Metallverken (``MINC''), which bought the
subject merchandise at a bargain price and further processed it
according to U.S. customers' specification. OBV implies that, in the
process of calculating dumping margins, the cost associated with the
process done by MINC was inflated, consequently further lowing OBV's
export price to MINC.
---------------------------------------------------------------------------
In its rebuttal, OBV reiterates its arguments that there is no
justification for the Department to use the margin from the original
investigation because that margin is the least probative and inherently
unreliable. Also, OBV states that it no longer has the capacity to and,
in any case, will not further process the subject merchandise in the
United States, thereby eliminating the adjustment for further-
manufacturing, which OBV perceives resulted in an upward distortion of
dumping margin.21
---------------------------------------------------------------------------
\21\ OBV is indicating that it no longer has an affiliated U.S.
company which further processes the subject merchandise on behalf of
OBV, see footnote 30, supra. Also, due to the OYJ's purchase of
American Brass, OBV feels that further processing of the subject
merchandise in the United States is no long necessary. (See OBV's
reply brief at 55-59.)
---------------------------------------------------------------------------
Department's Position: In the Sunset Policy Bulletin, the
Department stated that it will normally provide to the Commission the
margin that was determined in the final determination in the original
investigation because that is the only margin that reflects the
behavior of producers/exporters without the discipline of the order in
place. Further, for companies not specifically investigated or for
companies that did not begin shipping until after the order was issued,
the Department normally will provide a margin based on the all-others
rate from the investigation. (See section II.B.1 of the Sunset Policy
Bulletin.) Exceptions to this policy include the use of a more recently
calculated margin, where appropriate, and consideration of duty
absorption determinations. (See sections II.B.2 and 3 of the Sunset
Policy Bulletin.)
We note that, to date, the Department has not issued any duty
absorption findings in this case.
The SAA at 890-891 and House Report at 63, provide that declining
(or no) dumping margins accompanied by steady or increasing import
volumes of the subject merchandise may be indicative of a situation in
which respondent interested parties do not have to dump in order to
maintain market share in the United States and that dumping is less
likely to recur. To appropriately reflect such situation, the
Department may, in response to argument from an interested party,
provide to the Commission a more recently calculated margin in cases
where: (1) The dumping margin was reduced or eliminated after the
issuance of the order and (2) import volumes remained steady or
increased. (See section II.B.2 of Sunset Policy Bulletin.)
However, in the instant review, as discussed above, immediately
after the imposition of the order, import volumes of the subject
merchandise fell substantially and ceased altogether for a period.
Furthermore, for the last five years (1994-1998), the import volumes of
the subject merchandise have remained at levels that can be
characterized as negligible vis a vis pre-order volumes. These facts
coupled with OBV's statement that it plans to resume exports from the
Netherlands at pre-order volumes 22 leads us to determine
that the use of a more recently calculated margin is inappropriate.
Therefore, we disagree with OBV's argument that we should report to the
Commission a more recently calculated margin. Instead, because it is
the only rate which reflects the behavior of producers/exporters
without the discipline of the order, the Department determines that the
margin from the original investigation is probative of the behavior of
OBV without the discipline of the order and will provide to the
Commission the weighted-average margin from the original investigation.
---------------------------------------------------------------------------
\22\ See OBV Substantive Response at Exhibits 1 (at 41-42), 8,
and 15.
---------------------------------------------------------------------------
Final Results of Review
As a result of this review, the Department finds that revocation of
the antidumping duty order would be likely to lead to continuation or
recurrence of dumping at the margins listed below:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
OBV......................................................... 16.99
All Others.................................................. 16.99
------------------------------------------------------------------------
[[Page 742]]
This notice serves as the only reminder to parties subject to
administrative protective order (``APO'') of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 351.305 of the Department's regulations.
Timely notification of return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of an APO is a sanctionable
violation.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: December 28, 1999.
Holy Kuga,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-285 Filed 1-5-00; 8:45 am]
BILLING CODE 3510-DS-P