68 FR 23954, May 6, 2003

DEPARTMENT OF COMMERCE

International Trade Administration
 
Antidumping and Countervailing Duty Proceedings: Assessment of 
Antidumping Duties

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of policy concerning assessment of antidumping duties

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SUMMARY: The Department of Commerce hereby issues clarification on the 
automatic-liquidation regulation where a reseller has been involved in 
the chain of commerce.

FOR FURTHER INFORMATION CONTACT: Laurie Parkhill, Office 3, Import 
Administration, at 202-482-4733, or Patrick Gallagher, Office of Chief 
Counsel for Import Administration, at 202-482-5053.

EFFECTIVE DATE: May 1, 2003 (see discussion below).

SUPPLEMENTARY INFORMATION: This notice clarifies the Department of 
Commerce's (the Department's) regulation, 19 CFR 351.212(c), regarding 
automatic liquidation where an intermediary (e.g., a reseller, a 
trading company, an exporter) exports the merchandise. This notice uses 
the term ``reseller'' to apply to any intermediary that could be an 
interested party as defined in section 771(9)(A) of the Tariff Act of 
1930, as amended (the Act).

Background

    On October 15, 1998, the Department published a proposed 
clarification of the Department's position on the automatic-liquidation 
procedures for a reseller and invited public comment on that 
clarification. See Notice and Request for Comment on Policy Concerning 
Assessment of Antidumping Duties, 63 FR 55361. On November 12, 1998, we 
published a notice of Rebuttal Period for Comments on Policy Concerning 
Assessment of Antidumping Duties (63 FR 63288) which extended the 
period for initial comments to November 13, 1998, established a 
rebuttal period until December 4, 1998, and provided for the submission 
of comments and rebuttal in an electronic format for posting to the 
Import Administration internet home page. The Department received 
several written comments and rebuttals regarding the proposed 
assessment clarification. Given the time which had elapsed since the 
original publication of the proposal, on March 25, 2002, the Department 
published a notice of an additional one-week comment period (67 FR 
13599). The Department received additional comments by April 1, 2002.
    In preparing this final clarification, the Department reviewed and 
considered each of the comments it received carefully. Although we 
received several comments after the originally established deadlines, 
we have decided to consider and respond to all comments in order to 
allow for a thorough analysis of this issue.
    As described in the October 15, 1998, Federal Register notice, 
automatic liquidation at the cash-deposit rate required at the time of 
entry can only apply to a reseller which does not have its own rate if 
no administrative review has been requested, either of the reseller or 
of any producer of merchandise the reseller exported to the United 
States. If the Department conducts a review of a producer of the 
reseller's merchandise where entries of the merchandise were suspended 
at the producer's rate, automatic liquidation will not apply to the 
reseller's sales. If, in the course of an administrative review, the 
Department determines that the producer knew, or should have known, 
that the merchandise it sold to the reseller was destined for the 
United States, the reseller's merchandise will be liquidated at the 
producer's assessment rate which the Department calculates for the 
producer in the review. If, on the other hand, the Department 
determines in the administrative review that the producer did not know 
that the merchandise it sold to the reseller was destined for the 
United States, the reseller's merchandise will not be liquidated at the 
assessment rate the Department determines for the producer or 
automatically at the rate required as a deposit at the time of entry. 
In that situation, the entries of merchandise from the reseller during 
the period of review will be liquidated at the all-others rate if there 
was no company-specific review of the reseller for that review period.

Analysis of Comments Received

    Comment 1: The Canadian Government contends that Canadian 
enterprises, due to the integrated nature of the North American market 
and the consequent special nature of Canadian/U.S. trade, will bear the 
preponderance of the impact of any such change in policy.
    Response: We have found no evidence to indicate that this 
clarification will have a greater impact on any segment of the market 
or any of our trading partners.
    Comment 2: The Canadian Government comments that the Department's 
proposal would essentially remove the provisions of 19 CFR 
351.212(c)(1) with respect to resellers without providing an 
explanation of the circumstances that gave rise to the proposed 
clarification of the policy. It argues further that the Department must 
provide evidence as to why such a change is necessary in order to 
justify a policy change which would be detrimental for many resellers 
and it questions whether the integrity of an antidumping duty order has 
been harmed through the imports from a reseller.
    Response: In various proceedings parties have claimed that entries 
should be liquidated at many different rates in cases where entries 
involving resellers have not been reviewed. Parties have claimed, 
depending on the situation, that the results of the Department's review 
of the producer should apply,

[[Page 23955]]

that the rate in effect at the time of entry should apply, or, even, 
that the all-others rate should apply. Given the variation in the 
claims parties have made with respect to the rate applicable at 
liquidation, we initiated this clarification in order to clarify how we 
would instruct the Bureau of Customs and Border Protection (Customs) to 
liquidate entries in certain circumstances and to put importers on 
notice of the applicable rate even if they do not request or 
participate in a review. As we explain in response to Comment 7, below, 
knowing the method we will use when instructing Customs to liquidate an 
entry when it is not reviewed enables the importer to determine whether 
to request a review.
    Comment 3: According to the Canadian Government, the use of the 
all-others rate will result in the Department's application of a wholly 
unrealistic final antidumping duty rate for resellers because the all-
others rate is an unchanging weighted-average rate determined during 
the original less-than-fair-value investigation (LTFV).
    Response: The Department's current practice often results in the 
use of an inaccurate rate for duty assessment in reseller situations 
where the Department conducts a review. Under the current practice, the 
duty rate for non-reviewed resellers (which do not have their own rate 
and where the deposit rate at the time of entry becomes the final rate 
of duty) is based on a previous review of the producer's selling 
experience, not the reseller's selling experience. Furthermore, the 
current system perpetuates the possible application of an inaccurate 
rate because there may be little incentive for resellers to request a 
review to obtain their own specific rates. Moreover, through litigation 
of customs protests we have seen that resellers ``shop'' for margins by 
waiting until the completion of the review to determine whether the 
producer's rate determined in the review or the all-others rate is more 
favorable. For example, in situations where the Department calculates a 
dumping margin for a producer which is higher than the all-others rate, 
importers have claimed at liquidation that the producer was not 
involved in the transaction (see ABC International Traders, Inc. v. 
United States, 19 CIT 787 (1995)). Regardless of the allegedly 
``unrealistic'' nature of the all-others rate, where the review has 
identified the customers of the reviewed party, application of either 
the as-entered deposit rate of the producer or the results of the 
review to the unreviewed reseller's entries is not appropriate.
    This clarification establishes an assessment policy for any 
unreviewed reseller. If the all-others rate is not an accurate 
reflection of the market, then an interested party can request a review 
of that reseller. Within the context of the review the Department will 
then consider that reseller's specific selling experience in 
determining the appropriate rate.
    Comment 4: The Canadian Government maintains that the Department's 
proposal could create a burden on producers with respect to whether 
they knew if an unaffiliated reseller would resell certain merchandise 
to domestic customers or for export to the United States.
    Response: Currently, any responding producer must report all sales 
made to the United States. As stated in the preamble to the current 
regulations (62 FR at 27303), ``* * * in an AD proceeding, the 
Department usually investigates or reviews sales by a non-producing 
exporter only if that exporter's supplier sold the subject merchandise 
to the exporter without knowledge that the merchandise would be 
exported to the United States.'' Therefore, the producer already bears 
the responsibility of reporting sales made through a reseller where the 
producer has knowledge that the reseller will sell the merchandise in 
the United States. Under the clarified automatic-liquidation 
regulation, this responsibility will not be altered.
    Comment 5: The Canadian Government argues that the Department 
should recognize that resellers, distributors, exporters, and other 
intermediaries are unable to participate in administrative reviews to 
the same degree as producers. Often, it asserts, such entities do not 
operate sophisticated accounting systems which would enable them to 
participate in the kind of investigative process that the Department 
would normally impose on producers. Furthermore, it contends, resellers 
are invariably unable to provide certain other information that is 
necessary to an administrative review, such as costs of production, and 
other complications arise when the Department discovers through 
verification that the universe of sales covered by a review must be 
altered. In this context, the Canadian Government concludes, resellers 
could not participate in an administrative review without incurring a 
high risk of inviting the use of ``facts otherwise available'' to 
calculate a final antidumping duty rate.
    Response: Section 782(c)(2) of the Act provides that the Department 
will take into account difficulties experienced by interested parties, 
particularly small companies, in supplying information and will provide 
any assistance that is practicable. Further, section 776(b) of the Act 
provides for the use of an adverse inference where the Department finds 
that an interested party ``has failed to cooperate by not acting to the 
best of its ability to comply with a request for information.'' 
Pursuant to these provisions, the Department may consider the specifics 
of any given respondent in determining whether it acted to the best of 
its ability. Such decisions can be made by the Department on a case-by-
case basis. Further, it is the Department's practice to take a 
respondent's records and accounting system into consideration when 
determining whether that respondent has cooperated to the best of its 
ability.
    Comment 6: The Canadian Government argues that resellers are, by 
definition, sellers rather than producers and, as such, sell products 
at many levels of trade, in large and small quantities, both 
domestically and in the export market, to a wide range of customers and 
in numerous shipments. Accordingly, it contends, the normal price-
comparison process may lead to invalid results.
    Response: Through the process of conducting an administrative 
review, the Department examines all the factors which comprise an 
individual respondent's selling experience. Under the guidelines 
established by the statute and the regulations, we make appropriate 
adjustments to export price, constructed export price, and normal value 
to reflect the unique characteristics of the respondent's experience 
such as differences in levels of trade and quantity. Moreover, 
producer-sellers also can have a variation in all the factors 
indicated. Therefore, our analysis of a reseller will be the same as 
our analysis of a producer. Furthermore, the analysis of the reseller 
will be based on that reseller's actual selling experience, making it 
more accurate than the use of the producer's experience to determine 
the reseller's rate of dumping.
    Comment 7: Several commenters assert that, if the Department 
determines to modify its policy in this regard, it should be 
prospective only and made effective for review periods which have not 
yet started. One party, the Steel Service Center Institute (SSCI), 
argues that the modification should be applied only to antidumping 
investigations initiated after the publication of the clarification or 
at the very least to annual reviews of antidumping duty orders which do 
not encompass merchandise entered prior to the

[[Page 23956]]

publication of the clarification. SSCI contends that such action by the 
Department imposes a hardship because the service centers could not 
anticipate it and avoid the consequences. In its rebuttal comments, 
SSCI comments on the retroactive effect further, arguing that the sales 
the Department analyzes in a future review will capture sales and 
entries that have already taken place. SSCI cites Bowen v. Georgetown 
University Hosp., 488 U.S. 204 (1988), to support its conclusion that a 
retroactive examination of sales is not supported by law.
    Response: This clarification will be applicable only to entries for 
which the anniversary month for requesting an administrative review is 
May 2003 or later. For example, if the anniversary month of an order is 
June, the clarification will apply for the first time to entries made 
during the period of review for which parties may request a review in 
June 2003 which, in most cases, will be the period June 1, 2002, 
through May 31, 2003. This does not impose a hardship for parties to 
the proceeding because they have the opportunity during the anniversary 
month to decide whether to request a review of those earlier sales.
    The purpose of this clarification is to provide all parties with 
the methodology the Department will use to determine the proper 
assessment rate for subject merchandise when resellers are in the chain 
of commerce between the producer and the sale to a customer for 
importation into the United States in order to provide parties with the 
opportunity to make an informed determination about whether to request 
a review of a reseller. The holding in Bowen is not on point because 
this methodology does not ``retroactively'' apply duties to the subject 
entries. Rather, duties are owed on imports of the subject merchandise 
and the question is one of the proper rate to be applied. This notice 
provides parties the opportunity to understand how the Department will 
determine the proper assessment rate early enough so that a party may 
request an administrative review of the reseller if it chooses to do 
so. The fact that the subject merchandise may have entered before the 
publication of this clarification is immaterial because interested 
parties will be informed of the methodology the Department will use to 
determine the proper assessment rate, regardless of the cash-deposit 
rate in effect at the time of entry, and because an interested party 
will have the opportunity to request an administrative review of the 
reseller if it believes that the deposit and possible final assessment 
rates do not reflect the reseller's pricing practices.
    Comment 8: Several parties offer alternative approaches for the 
Department to consider. One suggestion is that under 19 CFR 351.107(c) 
the Secretary should establish a combination rate for non-producing 
exporters with multiple supplying producers. Such cash-deposit rates, 
they contend, which would then be finalized in accordance with the 
appropriate producer's rate, would be based on each combination of 
reseller and producer. Another proposal observes that, although not 
specifically provided in the regulations, the Department could also 
apply cash-deposit requirements and final duties based on the trade-
weighted average rate assessed on each producer that supplied to the 
reseller, i.e., if a reseller is exporting merchandise that is produced 
by three different producers, then the cash deposit and final rate 
should be the weighted average of the specific rates found for all 
three producers. SSCI contends that the Department could calculate the 
reseller's export price or constructed export price by taking the 
reseller's resale price, adjusted for selling, general, and 
administrative expenses, movement costs, and further-manufacturing 
costs, compared to the reseller's purchase price from the producer. In 
SSCI's scenario, the reseller's rate would be determined based on the 
producer's rate plus any difference found. The final alternate 
proposal, also from SSCI, is to calculate a reseller-specific rate 
using a constructed-value method starting with the reseller's purchase 
price plus the reseller's general expenses and profit.
    Response: We considered a number of possible alternatives for this 
clarification but found none that better represent the reality of the 
reseller's selling practices. Further, each proposal assumes that the 
Department has information about the reseller. In fact, this 
clarification addresses liquidation of entries involving a reseller 
about which there is no information on the record of a review. 
Nevertheless, we have examined the merits of each of the proposals.
    While 19 CFR 351.107(c) addresses the possibility of combination 
rates for deposit purposes, the underlying assumption is that the 
Department has information about the non-producing reseller and its 
supplier(s). Therefore, the type of situation we are addressing in this 
clarification would not fit into that regulation. The second proposal 
creates a specific reseller rate which is based on the producer's 
selling practices, not those of the reseller. Therefore, this would not 
be a realistic reflection of the resellers' pricing practices and would 
continue to be distortive. Further, there is no description of how we 
would create that rate, given that we would have none of the required 
information, and in what context, given that the situation we are 
addressing exists outside the realm of an administrative review. The 
third and fourth proposals would require the calculation of a rate for 
a specific reseller based somewhat on the reseller's information. If 
the Department is requested to review a reseller and establish a rate 
for that reseller, the Department will conduct an administrative review 
in accordance with the established administrative-review procedures 
under 19 CFR 351. Moreover, the basic premises of the third and fourth 
proposals are flawed. Both assume we know the identity of the reseller 
prior to liquidation and that we can conduct an administrative review 
of its exports. On the contrary, we do not know whether a reseller has 
sales unless such sales are reported by the producer or by the reseller 
itself in a review. The existence of U.S. sales by a reseller for which 
the reviewed producer did not have knowledge only comes to light after 
all entries covered by the review have been liquidated, which occurs 
after the final and conclusive results of review. For these reasons, 
these proposals are not administrable.
    Comment 9: Micron Technology comments that application of the all-
others rate to resellers which have not been individually reviewed is, 
in many cases, appropriate. It contends, however, that the uniform 
application of the all-others rate to an independent reseller, as 
proposed by the Department, creates an asymmetry between the position 
of the foreign producers and exporters and the domestic industry. 
Micron contends that, when the all-others rate is higher than the 
producer's rate, the reseller may request a review to receive a 
separate rate but, in those cases where a reviewed producer/exporter is 
also the producer of the goods which are exported by an independent 
reseller and the exporter/producer's rate is higher than the all-others 
rate, the reseller will not request a review. Furthermore, Micron 
asserts, this policy would provide an incentive to resellers not to 
make themselves known to petitioners so that they will not be able to 
request a review of the resellers. Therefore, this party argues, the 
assessment rate for resellers which are exporting goods that are 
manufactured by a producer which has

[[Page 23957]]

an antidumping rate should be the higher of either the all-others rate 
or the producer's rate. If resellers believe that they could get a 
lower rate than that which would result from this rule, Micron 
concludes, they could come forward and request a review, an option 
which is not available to petitioners which may not know the identity 
of the reseller.
    The Canadian Government argues, however, that this scenario is not 
relevant to Canadian resellers. It maintains that typically the 
Canadian resellers have openly identified the producers to which a 
specific antidumping duty rate has been assigned because their deposit 
rates are based on those same producer rates. Furthermore, the 
government argues that any suggestion that antidumping duty orders are 
being circumvented by resellers is entirely without foundation and 
should not form the basis of any change in the Department's assessment 
policy.
    SSCI claims that the fact that the Department has received no 
comments from the domestic steel industry with regard to the cross-
border trade by steel service centers indicates that this proposed 
change is unnecessary. Furthermore, SSCI maintains that Micron's 
comments contemplate a hypothetical situation that bears no 
relationship to the conditions of competition in the North American 
steel industry. SSCI disputes Micron's assertion that resellers could 
``hide in the bushes'' since the identity of the steel service centers 
that sell into the U.S. market are known or can be determined easily. 
In fact, SSCI concludes, steel service centers not only identify 
themselves as the exporters of the merchandise, but they also provide 
Customs with the names of the mills from which they purchase the 
merchandise.
    Response: We find no convincing evidence that any asymmetry will 
exist with the implementation of this proposed clarification. It is 
true that a reseller may request a review when the all-others rate is 
higher than the producer's rate. This provides the opportunity for a 
reseller to establish a rate which best reflects that reseller's 
selling experience. Likewise, a producer may request a review of its 
own rate. Use of a ``higher of'' assessment methodology, as suggested 
by Micron, to compel a party to request a review, however, would not be 
reasonable.
    Moreover, the assessment methodology we are implementing now for 
unreviewed entries involving intermediate parties not only addresses 
any potential circumvention of duty orders as suggested by the Canadian 
Government, but it also ensures that the proper assessment rate is 
assigned to subject merchandise purchased from resellers. The 
Department must apply a methodology, in accordance with its 
regulations, that results in a proper assessment rate and which 
provides for the appropriate enforcement of U.S. law.
    More to the point, however, the cash deposit may not reflect the 
actual dumping margins associated with the subject merchandise because 
the price discriminator for those sales may have been the reseller 
rather than the producer. If the producer has knowledge of the 
reseller's U.S. sales and reports sales to the reseller as U.S. sales 
in the course of the Department's administrative review, then it is 
appropriate that those sales receive the producer's rate for final 
duty-assessment purposes. Indeed, that rate is determined by our 
analysis of the producer's selling experience, which includes those 
sales. If, however, the producer has no knowledge of sales to the 
United States made by a reseller (where a producer believes the 
ultimate consumer for its sales is the customer in the home market or 
third country), then those sales are not included in the Department's 
margin analysis for the producer because the proper respondent for 
these sales to the United States is the reseller. The most accurate 
determination of the appropriate assessment rate would be an analysis 
of the reseller's pricing practices.
    Furthermore, the current practice places a greater burden on the 
petitioners to identify specific resellers. Given a reseller's ability 
to margin-shop by not requesting an administrative review, there is 
less incentive under the current practice for the resellers to request 
an administrative review. With this clarification, however, a reseller 
will be more likely to request an administrative review if a reseller 
believes the all-others rate does not reflect its pricing practices 
during the period of review.
    Comment 10: SSCI comments that the Department's current practice is 
equitable, easy to administer, and supported by statutory authority and 
judicial precedent. It also contends that the current practice 
constitutes a reasonable construction of applicable law, i.e., whenever 
a party requests an administrative review of an antidumping duty order, 
all parties recognize that the final results of review will apply to 
all merchandise made by that producer and shipped to the United States, 
either directly or through a reseller. Moreover, it asserts, the 
current practice is also easy to administer in that all parties are 
aware of the ``rules of the game,'' making costly administrative 
reviews unnecessary when parties are satisfied with the rate applicable 
to producers. Finally, SSCI states, the current policy conforms to the 
law in that section 777A(c)(2) of the Act gives the Department the 
discretion to assess duties on a reseller's sales at the rate 
applicable to a producer whose shipments are examined during an 
administrative review. Furthermore, SSCI contends, this practice has 
been implicitly approved by the Court of International Trade in ABC 
International Traders, Inc. v. United States, 19 CIT 787 (1995). 
Specifically, SSCI notes, the Court held that the proper rate to be 
applied to the reseller in question is ``the manufacturer's rates as 
determined on review, because no reseller rates exist,'' citing ABC 
Int'l Traders, 19 CIT at 790.
    The Canadian Government characterizes the Department's current 
practice as automatic liquidation of entries from resellers at the 
producers' cash-deposit rate in effect at the time of entry.
    Micron rebuts by first observing that the positions of both the 
Canadian Government and SSCI differ from its position, but they also 
are mutually inconsistent. Micron contends that the Canadian Government 
states that the Department should not depart from its current practice 
of assessing resellers under the automatic-assessment provisions of 19 
CFR 351.212(c). Micron contends, citing several 1997 and 1998 
liquidation instructions, that SSCI's characterization is the most 
accurate reflection of the Department's current practice. Nevertheless, 
Micron emphasizes, the Department must take this opportunity to clarify 
its policy. Moreover, Micron argues that SSCI's contention that the 
petitioner can request a review for any particular reseller is 
specious. Micron states that the reseller may not always be visible to 
the petitioner and therefore the petitioner may not have the 
opportunity to request a review of specific resellers. Micron contends 
that, if the petitioner does not request a review for a given reseller, 
it cannot be said that the petitioner has waived its rights to 
challenge the application of a different assessment rate.
    Consolidated Bearings Company (Consolidated) comments that the 
Department's proposal contradicts its current practice of instructing 
Customs to liquidate entries at the weighted-average rates determined 
in a review and published in the Federal Register. Specifically, 
Consolidated refers to certain liquidation instructions the

[[Page 23958]]

Department has issued with respect to certain malleable cast iron pipe 
fittings from Brazil (Pipe Fittings), DRAMs from the Republic of Korea 
(DRAMs), and tapered roller bearings and parts thereof from Japan 
(TRBs). In all three instances, Consolidated observes, the Department 
did not specify the importers to which the results of the review 
applied but, instead, instructed Customs to apply the results of those 
reviews to all importers of merchandise produced by the reviewed 
producer. Consolidated goes on to assert that the only appropriate 
assessment rate for a reseller which does not have its own rate is the 
rate the Department determines for the producer and publishes in the 
Federal Register. According to Consolidated, the use of any other rate 
results in an inaccurate assessment of the actual duties due and is not 
legally justified. Because resellers are rarely subject to a 
constructed-export-price analysis, Consolidated explains, the lack of 
record evidence makes any modification of the published rate 
unjustified for resellers which do not have their own rates.
    Certain Canadian resellers of corrosion-resistant carbon steel 
products comment that the Department's current practice of applying the 
reviewed producer's results of review to the entries from resellers is 
consistent with statutory and regulatory practice. They contend that 
the proposed clarification is unlawful and unfair, and they do not 
agree that they should be liable for duties at the all-others rate if 
their supplier/producer disavows knowledge of ultimate exportation to 
the United States. In their view, the proposed clarification results in 
an unwarranted de facto repeal of the automatic-assessment regulation. 
Many of their comments echo the comments by SSCI and the Canadian 
Government.
    Response: The comments we have received make it clear, from the 
various descriptions of our current practice, that this practice has 
generated confusion. Through this clarification, it is our purpose to 
provide notice to importers as to the methodology we will use to 
determine the liquidation rate applicable to entries of the subject 
merchandise if no one requests an administrative review of the seller 
of the imported merchandise to the United States. Based on an 
understanding of our future practice, all parties can make an 
appropriate decision regarding requests for review by evaluating 
whether they believe the applicable rate is satisfactory. Furthermore, 
the procedure would be readily administrable by the Department.
    The argument that failure on the part of the petitioner to request 
a review binds the Department to an assessment rate selected by the 
importer at the time of entry is incorrect. The Department is well 
within its authority to assign the all-others rate for assessment 
purposes under the provisions of 19 CFR 351.212(c) whether that seller 
is the manufacturer or a reseller. Reliance by the Canadian Government 
and SSCI on ABC Int'l Traders to support their conclusion that the 
Department has no authority to assign the all-others rate is misplaced. 
In ABC Int'l Traders, there was no all-others rate or any other rate to 
be assigned to the resellers for subject merchandise sold by the 
resellers to customers in the United States. Nor did the Court find 
that it had been established that the producer had no knowledge that 
the merchandise in question was destined for the United States. Hence, 
the Court held that the importers were bound to the results of the 
Department's administrative review of the producer because there were 
no other assessment rates applicable to the subject merchandise. Had 
the Department's methodology, as announced by this notice, been in 
effect at the time the entries subject to the ABC Int'l Traders 
decision were made and the Department had determined that the producer 
did not have knowledge of the U.S. destination of the merchandise, the 
entries would have been liquidated at the all-others rate. The 
uncertainty on the part of all parties evident in the ABC Int'l Traders 
case is precisely what the Department's methodology is intended to 
alleviate by providing all parties the information necessary for them 
to determine the proper assessment rate early enough to request an 
administrative review if they wish.
    The idea that the producer's rate determined in the review is the 
only appropriate rate for resellers which do not have their own rate 
misses the point of any review the Department may conduct of a 
producer. When the Department conducts a review of a producer, it is 
conducting a review of that producer's U.S. sales, not the producer's 
merchandise. Consolidated confuses the issue with its assertion that 
the rate the Department determines for the producer is the rate which 
reflects most accurately the actual duties due on entries from a 
reseller of a reviewed producer's merchandise. The producer's selling 
practices form the basis of the importer-specific assessment rates and 
weighted-average margin the Department calculates in a review, and 
these only pertain to imports of merchandise where the producer was the 
seller to the United States. A producer's selling practices bear no 
relationship to the reseller's selling practices. This is the central 
point to this clarification: The results of the review of the 
producer's U.S. sales do not apply to entries where the producer did 
not make the sale to the United States and hence were not covered by 
the review. Therefore, while entry was made at the producer's cash-
deposit rate under a reasonable assumption at the time of entry that 
the producer was involved in the U.S. transaction, through the 
administrative review the producer identified its actual customers and 
importers for its U.S. sales and only entries involving those customers 
and importers are appropriately assessed duties based on the results of 
the review. To apply the results of the review to imports from 
resellers for which the reviewed producers had no knowledge of the 
sales to the United States (and hence were not covered by the review) 
would allow the resellers to benefit from the selling practices of the 
producer without any analysis of the resellers' actual selling 
practices (indeed without any review of the relevant U.S. sales 
whatsoever).
    Further, the assumption at the time of entry that the producer made 
the U.S. sales, and on whose rate the collection of a cash deposit at 
the time of entry was based, has been disproved through the review; in 
fact, it has been determined that a deposit based on the producer's 
rate at the time of entry was not appropriate. Rather, the review has 
demonstrated that the producer had nothing to do with the sale to the 
United States and imports from the reseller should have been suspended 
at the all-others rate. As a result, we proposed that, under these 
circumstances, the appropriate assessment rate is the all-others rate 
since no review was requested of the reseller's selling practices.
    With respect to the specific instructions to which Consolidated 
refers in its comments, it is accurate that the Department has applied 
the results of the review of the producer as published in the Federal 
Register instead of importer-specific assessment rates in certain 
situations. For example, if a reviewed producer does not provide 
information we can use in our analysis, such that we apply adverse 
facts available to entries of its merchandise during the period of 
review, we have no information on which to base liquidation 
instructions which will distinguish between sales to the United States 
by the reviewed producer and sales by unreviewed intermediate

[[Page 23959]]

parties. For example, in Certain Malleable Cast Iron Pipe Fittings from 
Brazil; Final Results of Antidumping Duty Administrative Review, 60 FR 
41876, August 14, 1997, we applied total best information available to 
the respondent because it did not respond to our questionnaire. As a 
result, we issued the December 1998 non-importer-specific Pipe Fittings 
liquidation instructions because we had no information on which to base 
importer-specific assessment rates.
    Further, where we have not gathered the information during a review 
to establish importer-specific liquidation rates and liquidation has 
remained suspended during the pendency of litigation, sometimes lasting 
several years as parties contest our decisions at the Court of 
International Trade and the Court of Appeals for the Federal Circuit, 
we have on occasion decided to apply the weighted-average margins as 
the assessment rate for all importers because to calculate the 
importer-specific assessment rates would lead to additional delay and 
possibly errors. See, for example, Memorandum to Laurie Parkhill from 
George Callen, Assessment Methodology for Liquidation of Entries 
Subject to the 1994-1995 Review of Tapered Roller Bearings, January 18, 
2002. Given that until fairly recently the Department did not always 
calculate importer-specific assessment rates when conducting its 
reviews, the instructions pertaining to DRAMs and TRBs in all 
likelihood reflected a decision to issue instructions using the 
information on the record (i.e., the weighted-average margins) rather 
than calculate importer-specific assessment rates for the first time, 
after all decisions were final and conclusive, in accordance with 19 
CFR 351.212(b).
    Finally, the Canadian resellers' comment that the results of review 
of the producer are applied to all imports is not entirely accurate. In 
January 2000 the Department sent instructions to Customs with respect 
to two companies covered by the 1996-1997 review of the order on 
corrosion-resistant carbon steel flat products from Canada which were 
specific with respect to the importers of the products. Those 
instructions do not suggest that all imports of this merchandise 
produced by the specific producer should be liquidated pursuant to the 
results of the review. In fact, as in most cases, there is no reference 
in one of the instructions at all to imports of the reviewed producer's 
merchandise which were imported by a party other than the party the 
producer identified in its response. In the other set of instructions 
for a different company covered by the same review, the Department 
instructed Customs to liquidate all other entries during the 1996-1997 
period of review, except those of one specific company, at the rate in 
effect at the time of entry. Again, there was no suggestion that the 
Department intended to apply the results of the review of a producer to 
unreviewed resellers' exports to the United States. Further, such 
importer-specific liquidation instructions are consistent with the 
regulations at 19 CFR 351.212(b). The unreviewed resellers' exports are 
at issue in this clarification because the regulations do not address 
them in any meaningful manner.
    Comment 11: SSCI argues that the Department's proposal is contrary 
to law and the regulations because it is based on the assumption that 
the reseller's sales are not encompassed within the administrative 
review of the producer and results in an assessment rate which differs 
from both the cash-deposit rate paid on imports from the reseller and 
the producer's rate calculated by the Department during the course of 
the review. SSCI characterizes the Department's current practice as one 
in which the Department applies the final results of the review of a 
producer to all imports of that producer's merchandise during the 
review. Alternatively, SSCI and the Canadian Government contend that, 
in accordance with section 777A(c)(2) of the Act, the Department is 
required, by law, to assess duty on the reseller's shipments at the 
cash-deposit rate in accordance with 19 CFR 351.212(c). Furthermore, 
SSCI argues that findings in Federal Mogul Corporation v. United 
States, 822 F. Supp. 782, 787-88 (CIT 1993), and Jeumont Schneider 
Transformateurs v. United States, 18 CIT 647 (CIT 1994), support their 
position that, when no interested party requests an administrative 
review, the Department will instruct Customs to liquidate the entries 
for the review period at the rate deposited at time of entry. Finally, 
SSCI states that the Department's interpretation of ABC Int'l Traders 
is incorrect. SSCI argues that the facts of ABC Int'l Traders were 
limited to very specific circumstances where there was neither a 
specific reseller rate nor an all-others rate and that the Court held 
that the reseller should have known that it would have been assigned 
the only existing rates. SSCI comments that, under the current 
proposal, resellers would have no reason to believe that their entries 
would be subject to the all-others rate, which differs from the cash-
deposit rate applied to their exports at the time of entry and their 
producer's rate as determined during the review.
    Micron disagrees with SSCI's contention that the Department's 
regulations preclude the application of the all-others rate. Micron 
holds that SSCI is mistaken in arguing that the only alternative to 
automatic assessment at the cash-deposit rate is assessment based on 
the overall, weighted-average dumping margin the Department calculates 
for the producer of the imported goods. To the contrary, Micron 
asserts, the courts have held that the Department has discretion in the 
selection of its methodology of assigning antidumping duty rates to 
particular imports; it may choose to calculate margins on an entry-by-
entry basis or assess duties by allocating the total dumping margins 
calculated on all sales to an importer across all entries made by the 
importer during the period of review. Similarly, where it has 
determined that the sales to the United States were made through an 
independent reseller, Micron contends, the Department may reasonably 
determine that those shipments should be assessed antidumping duties 
based on either the overall margin calculated for the producer during 
that review or on the all-others rate, if higher. According to Micron, 
the application of the higher of the two rates is a reasonable proxy 
for the actual margins of dumping associated with the reseller's sales, 
where the reseller always has the option of requesting a review to 
establish its own company-specific rate if it believes that such a rate 
would be more favorable than either the producer's overall rate or the 
all-others rate.
    Response: The Department's methodology in reviews does not include 
an analysis of a reseller's sales if the producer has no knowledge of 
those sales. Therefore, if that reseller is not participating in the 
review, that reseller's sales are not encompassed within the 
administrative review. Thus, the Department has determined that the 
rate it calculates for a producer in a review is not the most 
appropriate rate upon which to base liquidation of entries for which 
the reviewed producer did not have knowledge of exports to the United 
States. Based on the Department's prior practice, when an entity has 
not been assigned a rate from a previously completed segment of a 
proceeding and that entity does not participate in a current review, 
that entity is subject to the all-others rate and its imports of 
subject merchandise are assessed at that rate. This clarification is 
consistent with that principle.

[[Page 23960]]

    SSCI's citations to Federal Mogul and Jeumont miss the point. The 
issue in both Federal Mogul and Jeumont is whether the Department could 
change a company's cash-deposit rate once a particular rate had been 
assigned and the company shipped the subject merchandise to the United 
States. See Federal Mogul, 822 F.Supp. at 788, and Jeumont, 18 CIT at 
651. The issue addressed here by the Department's proposed 
clarification is the proper rate at the time of assessment, which 
should be the proper rate assigned to the subject merchandise as 
determined by the identity of the price discriminator for the U.S. 
sales attributable to the entries. The Department's methodology does 
not change a company's cash-deposit rate after that rate has been 
assigned; rather it determines the proper rate for final assessment 
purposes regardless of whether that rate is the rate applicable to a 
producer or a reseller.
    Similarly, the Canadian Government's references to U.S. law and the 
Department's regulations at 19 CFR 351.212 also miss the point of the 
Department's clarification. Section 351.212 of the regulations provides 
that, absent a request for an administrative review, the Secretary will 
instruct Customs to ``assess antidumping duties * * * at rates equal to 
the cash deposit of, * * * estimated dumping duties * * * required on 
that merchandise at the time of entry.'' 19 CFR 351.212(c)(1)(I) 
(emphasis added). As it stands now, it is left to the importer to 
choose the cash-deposit rate applied to ``that merchandise at the time 
of entry'' because, at the time of entry, only the importer knows the 
identity of the price discriminator for those particular imports. 
Presently, the importer may choose to claim the producer's or the all-
others rate at the time of importation, whichever is most beneficial to 
the importer, and then claim that this rate must be the assessment rate 
also. This rate may or may not be the proper cash-deposit rate required 
for those imports because the proper rate depends on the identity of 
the seller. Where the cash deposit is not the cash-deposit rate of the 
seller (the price discriminator), it is not the proper cash deposit 
``required at the time of entry'' under U.S. law or the Department's 
regulations. Consequently, the Department's methodology is intended to 
clarify the means to determine the proper cash-deposit rate and to 
provide importers with the information necessary to determine the 
proper assessment rate in a timely fashion. Thus, the importers may 
make an informed decision as to whether they wish to request a review 
of the price discriminator, the producer or reseller as the case may 
be, for their imports of the subject merchandise or accept the 
automatic-assessment rate, which may reflect the results of the review 
if the producer had knowledge or may be the all-others rate if there 
was no knowledge.
    Comment 12: SSCI maintains that, should the Department decide to 
modify its current practice, it will need to expressly advise any 
affected reseller that it will not be subject to the producer's rate. 
Furthermore, it contends, the Department must make special provisions 
for conducting a ``reseller review.''
    Response: This notice serves as public notification to the 
importing public of our clarification of the liquidation policy with 
regard to resellers. Based on this information, resellers will now need 
to determine whether they need to request a review to establish a more 
accurate rate for their exports to the United States. Furthermore, the 
administrative review of a reseller will be conducted as specified 19 
CFR part 351. There need not be nor will there be any special 
provisions for administrative reviews of resellers.
    Comment 13: SSCI comments that the Department needs to make 
available to the general public the appraisement instructions it sends 
to Customs. SSCI refers to the confusion it claims occurred upon 
issuance of the Department's instructions for the second administrative 
review of the antidumping duty order involving corrosion-resistant 
carbon steel products from Canada. In that situation, SSCI contends, 
resellers were unaware of the fact that the Department had instructed 
Customs to liquidate their shipments at the all-others rate until after 
they received liquidation letters from Customs. Had those instructions 
been included in the Federal Register notice containing the final 
results of review, SSCI asserts, resellers might have avoided the 
burden of filing hundreds of protests with Customs in order to protect 
their interests while awaiting the Department's issuance of revised 
instructions replacing its original liquidation instructions.
    Response: While most liquidation instructions contain business 
proprietary information, the Department places public versions of its 
liquidation instructions in the public file. Access to the public files 
is available through the IA Central Records Unit, room B-099 of the 
main Department of Commerce building.
    Comment 14: Volvo comments that as a reseller it frequently accepts 
the producer's rate rather than request a review of its entries because 
it is more cost-effective to do so. (In its comments, Volvo did not 
specify whether the company-specific rate to which it refers is the 
cash-deposit rate in effect at the time of entry or the results of 
review for the producer which did not cover the sales of the reseller.) 
Moreover, it observes that, by the Department's own admission, if such 
a reseller request were made it would more than likely not be reviewed. 
In addition, Volvo asserts, the Department has stated that it 
recognizes that this policy will likely increase the number of reviews 
requested. Further, Volvo contends, if the Department elects not to 
review a reseller, the burden should lie with the Department to 
demonstrate that the company-specific rate should not apply.
    Response: We recognize that many economic factors are considered by 
an importer or a possible respondent in determining whether to request 
a review and participate with our inquiries in an antidumping 
proceeding. It is our goal, through this policy, to clarify the 
possible liquidation rates should a party determine not to request a 
review. Furthermore, Volvo's reference to the Department's admission 
that it is unlikely to conduct a reseller review, if requested, is 
taken from Departmental policy regarding its investigation procedures. 
Unless there are extenuating circumstances, it is exceedingly rare for 
the Department to refuse a request for an administrative review of an 
antidumping duty order or finding.
    Comment 15: Volvo contends that the Department's purpose in 
assigning the all-others rate is clearly punitive in that there is no 
logic in assigning a higher rate when the producer's rate is determined 
to be at a lower level.
    Response: Our goal is to determine the proper rate for a reseller 
and to provide a methodology which gives parties the ability to 
understand how we will determine the proper liquidation rate so that 
these parties can make informed decisions about whether to request 
administrative reviews. Within this context, the rate we determine for 
a producer is based on that particular producer's pricing practices. 
These are not necessarily the same pricing practices as those of the 
reseller. Resellers virtually always determine their own pricing and 
marketing policies with no input from the producer. Indeed, the 
producer may have no knowledge of the product after it leaves the 
producer's possession. Therefore, to use that producer's pricing 
practices to determine the reseller's final duty rate is inappropriate 
and does not address the pricing practices of the

[[Page 23961]]

price discriminator for the sales to the United States. To permit the 
reseller to claim the producer's rate when the reseller is the price 
discriminator for the U.S. sale allows a reseller to sell subject 
merchandise in the United States without the appropriate discipline of 
an antidumping duty order. Furthermore, the current methodology permits 
a reseller to undercut, with impunity, the price of an original 
producer which has worked to establish a lower rate through its pricing 
practices.
    Comment 16: The American Bearings Manufacturers Association (ABMA) 
and The Timken Company support the October 15, 1998, proposed 
clarification of the automatic-liquidation procedures. The ABMA asserts 
that the Department's assignment of the producer's company-specific 
cash-deposit rate is an inappropriate basis upon which to assess final 
antidumping duties on entries on an intermediary's exports and urges 
the Department to adopt and finalize the proposed clarification 
promptly.
    Response: As we stated in response to Comment 15, above, if the 
producer has no knowledge of a reseller's U.S. transactions, use of the 
producer's rate for final duty assessment, where a review of the 
producer has been requested, is not appropriate because it does not 
reflect the reseller's pricing practices.

Implementation

    This clarification will apply to all entries for which the 
anniversary month for requesting an administrative review of an 
antidumping duty order or finding is May 2003 or later.
    Further, this clarification addresses the assessment of duties on 
imports of merchandise from a market-economy country and subject to an 
antidumping duty order. This clarification does not apply to imports of 
merchandise from non-market-economy (NME) countries which may be 
subject to an antidumping duty order. In addition, this clarification 
does not apply to imports of merchandise subject to a countervailing 
duty order because this issue does not arise in the subsidy enforcement 
context.

    Dated: April 30, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-11226 Filed 5-5-03; 8:45 am]