[Federal Register: December 3, 2002 (Volume 67, Number 232)]
[Notices]
[Page 71936-71939]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03de02-59]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-846]
Notice of Determination Under Section 129 of the Uruguay Round
Agreements Act: Antidumping Measures on Certain Hot-Rolled Flat-Rolled
Carbon-Quality Steel Products from Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: Consistent with section 129 of the Uruguay Round Agreements
Act (URAA), which governs the
[[Page 71937]]
Department's actions following WTO reports, the Department has
calculated new rates with respect to the antidumping duty investigation
on hot-rolled flat-rolled carbon-quality steel products (hot-rolled
steel) from Japan, in order to implement findings of the World Trade
Organization (WTO) Appellate Body. These new rates will apply to
unliquidated entries of the subject merchandise that are entered, or
withdrawn from warehouse, for consumption on or after November 22,
2002.
EFFECTIVE DATE: November 22, 2002.
FOR FURTHER INFORMATION CONTACT: Mark Hoadley, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-3148.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the Tariff Act of 1930, as amended (the Act). In
addition, unless otherwise indicated, all citations to the Department's
regulations are references to the provisions codified at 19 CFR Part
351 (2001). Finally, citation to ``section 129'' refers to section 129
of the URAA, codified at 19 U.S.C. Sec. 3538.
Background
On April 28, 1999, the Department of Commerce issued a final
determination of sales at less than fair value in the antidumping
investigation on hot-rolled steel from Japan. Notice of Final
Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled
Carbon-Quality Steel Products From Japan, 64 FR 24329 (May 6, 1999)
(Final Determination). Following an affirmative injury determination
issued by the United States International Trade Commission, the
Department issued an antidumping duty order on this product on June 23,
1999. Antidumping Duty Order; Certain Hot-Rolled Flat-Rolled Carbon-
Quality Steel Products From Japan, 64 FR 34778 (June 29, 1999).
Subsequently, the Government of Japan requested the establishment
of a WTO dispute resolution panel (the Panel) to consider, among other
issues, various aspects of the Department's final determination in this
case. The Panel circulated its report on February 28, 2001. United
States Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184/R (February 28, 2001).
The United States and Japan appealed certain findings and
conclusions in the Panel report. The WTO Appellate Body (the Appellate
Body) issued its report on July 24, 2001. United States Anti-Dumping
Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R
(July 24, 2001). The Appellate Body report and the Panel report, as
modified by the Appellate Body report, were adopted by the WTO Dispute
Settlement Body (DSB) on August 23, 2001. United States - Anti-Dumping
Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/8
(August 23, 2001).
On September 10, 2001, the United States informed the DSB that it
would implement the recommendations and rulings of the DSB in a manner
consistent with its WTO obligations. On November 5, 2002, pursuant to
section 129(b)(2) of the URAA, the United States Trade Representative
requested that the Department issue a determination that would render
the Department's actions in the investigation not inconsistent with the
findings of the DSB.
Section 129 of the URAA is the applicable provision governing the
nature and effect of determinations issued by the Department to
implement findings by WTO panels and the Appellate Body. Specifically,
section 129(b)(2) provides that ``{n{time} otwithstanding any provision
of the Tariff Act of 1930 . . .,'' within 180 days of a written request
from the U.S. Trade Representative, the Department shall issue a
determination that would render its actions not inconsistent with an
adverse finding of a WTO panel or the Appellate Body. 19 U.S.C. Sec.
3538(b)(2). The Statement of Administrative Action for the URAA (SAA)
variously refers to such a determination by the Department as a
``new,'' ``second,'' and ``different'' determination. SAA at 1025,
1027. This determination is subject to judicial review separate and
apart from judicial review of the Department's original determination.
19 U.S.C. Sec. 1516a(a)(2)(B)(vii).
In addition, section 129(c)(1)(B) of the URAA expressly provides
that a determination under section 129 applies only with respect to
unliquidated entries of merchandise entered, or withdrawn from
warehouse, for consumption on or after the date on which the U.S. Trade
Representative directs the Department to implement that determination.
In other words, as the SAA clearly provides, ``such determinations have
prospective effect only.'' SAA at 1026. Thus, ``relief available under
subsection 129(c)(1) is distinguishable from relief in an action
brought before a court or a NAFTA binational panel, where . . .
retroactive relief may be available.'' Id.
Accordingly, this new determination, pursuant to section 129 of the
URAA (Section 129 Determination), does not render moot the federal
court appeal currently pending with respect to the antidumping duty
order on hot-rolled steel. As detailed below, the Section 129
Determination rates will apply only to cash deposits for entries made
after the effective date, and subsequent assessments on such entries,
should no administrative review be requested under section 351.213 of
the Department's regulations.
On November 8, 2002, the Department issued a draft Section 129
Determination to the Government of Japan and to the parties to the less
than fair value investigation segment of the proceeding, soliciting
comments by November 15, 2002 and rebuttal comments by November 19,
2002. On November 15, two petitioning parties provided joint comments
on the draft determination. No other affirmative or rebuttal comments
were received.
Appellate Body Findings and Conclusions
In its report, the Appellate Body found, inter alia, that certain
aspects of the Department's final determination in the hot-rolled steel
investigation were inconsistent with the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994 (the
Antidumping Agreement).
1. The Appellate Body's report, at paragraph 240(a), upholds the
finding, in paragraph 8.1(a) of the Panel Report, that the United
States acted inconsistently with Article 6.8 and Annex II of the
Antidumping Agreement in applying ``facts available'' to Nippon Steel
Corporation (Nippon) and NKK Corporation (NKK) with respect to sales
affected by their failure to timely provide weight conversion factors.
The information, which was needed to allow the Department to compare
steel sold on an actual weight basis with steel sold on a theoretical
weight basis, was provided by the two companies after the stipulated
deadline.
2. The Appellate Body's report, at paragraph 240(b), upholds the
finding, in paragraph 8.1(a) of the Panel Report, that the United
States acted inconsistently with Article 6.8 and Annex II of the
Antidumping Agreement in applying adverse facts available to Kawasaki
Steel Corporation (Kawasaki).
3. The Appellate Body's report, at paragraph 240(c), upholds the
Panel's findings that the United States' application of section
735(c)(5)(A) of the United States Tariff Act of 1930, as
[[Page 71938]]
amended, to determine the ``all others'' rate in this case, was
inconsistent with the United States' obligations under Article 9.4 of
the Antidumping Agreement.
4. The Appellate Body's report, at paragraph 240(d), upholds the
finding, in paragraph 8.1(c) of the Panel Report, that the United
States acted inconsistently with Article 2.1 of the Antidumping
Agreement by excluding from the calculation of normal value, as outside
``the ordinary course of trade,'' certain home market sales to parties
affiliated with an investigated exporter, on the basis of the ``99.5
percent'' or ``arm's length'' test.
Implementation
The Department is implementing the recommendations and rulings of
the DSB as follows:
1. All three investigated companies (Kawasaki, NKK, and Nippon) made
home market sales through affiliates. In order to determine which of
these related party sales may have been made at arm's length and thus
may be considered for use in calculating normal value, the Department
applied a new arm's length methodology. See Antidumping Proceedings:
Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186
(November 15, 2002). Specifically, under the new methodology, for sales
by the exporter or producer to an affiliate to be included in the
normal value calculation, those sales prices must fall, on average,
within a defined range, or band, around sales prices of the same or
comparable merchandise sold by that exporter or producer to all
unaffiliated customers. The band established for this test provides
that the overall ratio calculated for an affiliate be between 98
percent and 102 percent, inclusive, of prices to unaffiliated customers
in order for sales to that affiliate to be considered ``in the ordinary
course of trade'' and used in the normal value calculation. This new
test is consistent with the view, expressed by the Appellate Body at
paragraph 148 of its report, that rules aimed at preventing the
distortion of normal value through sales between affiliates should
reflect, ``even-handedly,'' that ``both high and low-priced sales
between affiliates might not be 'in the ordinary course of trade.'''
Additionally, under the new methodology, the Department will compare
sales to affiliates with sales to unaffiliated parties of the most
similar merchandise, when sales of identical merchandise to
unaffiliated parties are unavailable.
In comparing merchandise sold in the United States with merchandise
sold in the home market, the Department makes an adjustment, where
appropriate, to normal value for differences in physical
characteristics. This adjustment normally is based on differences in
the variable costs of manufacturing attributable to the physical
differences between the products. While product characteristics differ
from case to case, the Department generally does not compare a
comparison market product to a given product sold in the United States
if the difference in variable manufacturing costs of the two products
is greater than 20 percent. Under the new arm's length methodology, the
Department has applied a comparable adjustment to prices of similar
merchandise sold to unaffiliated customers.
As a result of the application of this new methodology, the home
market sales used to calculate normal value changed somewhat, in this
Section 129 Determination, for each of the three companies examined
during the investigation.
2. In the Final Determination, the Department applied adverse facts
available to sales of Nippon and NKK that were affected by the absence
of weight conversion factors on the record. Commerce has placed the
weight conversion factor data submitted by Nippon and NKK on the record
of this Section 129 Determination, and has used these factors in
calculating the margins for affected sales, rather than using facts
available margins for those sales. Refer to the proprietary Memorandum
to the File from Mark Hoadley through Sally Gannon, Analysis of Nippon
Steel Corp., dated November 12, 2002, and the proprietary Memorandum to
the File from Mark Hoadley through Sally Gannon, Analysis of NKK Corp.,
dated November 12, 2002, for the conversion factors used.
3. In the Final Determination, the Department used adverse facts
available to determine the margin for U.S. sales made by Kawasaki
through its affiliate California Steel Industries (CSI), because
Kawasaki did not provide requested information with respect to these
sales. The Department stated in the Final Determination that, in not
providing these data, Kawasaki had failed to cooperate by not acting to
the best of its ability to obtain the CSI data, and, thus, that the use
of an adverse inference was warranted in selecting facts available for
the CSI sales. However, the Appellate Body report stated that the
Department's determination that Kawasaki had not cooperated was
inconsistent with Article 6.8 and Annex II of the Antidumping
Agreement. Therefore, under the circumstances in this case, in
selecting the facts available for the missing sales made through CSI,
the Department has, in this Section 129 Determination, applied neutral
facts available to these sales. Specifically, the Department has
applied the weighted-average margin calculated for sales to all
customers other than CSI.
4. Using the new rates for examined respondents, the Department also
recalculated the ``all others'' rate. The Appellate Body's report, at
paragraph 129, stated:
[S]ection 735(c)(5)(A) of the United States Tariff Act of 1930, as
amended, requires the inclusion of margins established, in part, on the
basis of facts available, in the calculation of the 'all others' rate,
and to the extent that this results in an 'all others' rate in excess
of the maximum allowable rate under Article 9.4, we uphold the Panel's
finding that section 735(c)(5)(A) of the United States Tariff Act of
1930, as amended, is inconsistent with Article 9.4 of the Anti-Dumping
Agreement.
As required by section 735(c)(5) of the Act, the Department has
calculated the ``all others'' rate for this Section 129 Determination
as the amount equal to the weighted average of the estimated margins
established for the exporters and producers individually investigated,
excluding any zero and de minimis margins, and any margins determined
entirely on the basis of the facts available. In this Section 129
Determination, none of the exporters and producers individually
examined had a rate which was zero, de minimis, or determined entirely
on the basis of the facts available. Therefore, the ``all others'' rate
for this Section 129 Determination is the weighted average of the
recalculated company-specific rates for Nippon, NKK, and Kawasaki, the
three individually examined producers and exporters. This rate is 22.92
percent.
Article 9.4 of the Antidumping Agreement requires that, when the
authorities have limited their examination of the known exporters or
producers in accordance with Article 6.10, any antidumping duty applied
to imports from exporters or producers not included in the examination
shall not exceed the weighted average margin of dumping established
with respect to the selected exporters or producers. Article 9.4
further provides that, for purposes of that calculation, the
authorities shall disregard any zero and de minimis margins and
``margins established under the circumstances referred to in paragraph
8 of Article 6.''
[[Page 71939]]
The ``all others'' rate in this Section 129 Determination conforms
to the requirements of Article 9.4 because the new ``all others'' rate
of 22.92 percent does not exceed the rate of 25.95 percent, which is
the weighted average of the company-specific rates for NKK and
Kawasaki, the rates which are based solely on the data provided by
those respondents for the purposes requested. Therefore, this weighted
average is made up of margins that are not ``established under the
circumstances referred to in paragraph 8 of Article 6.'' The new rate
for Nippon, in contrast, is based in part on the application of a
facts-available ``plug'' to U.S. sales matched to home market products
(``CONNUMs'') for which Nippon failed to report product-specific costs.
For those sales, the Department used the highest margin calculated for
other sales, and averaged those margins into the overall margin for
Nippon, thereby changing that margin. 64 FR 24329, 24348 (May 6, 1999).
This methodology was not contested before either the WTO Panel or the
Appellate Body. In contrast, Kawasaki's margin was calculated solely on
the basis of the information Kawasaki provided with respect to the non-
CSI sales, and was not altered by any use of facts available. Thus,
Kawasaki's overall margin was not ``established under the circumstances
referred to in paragraph 8 of Article 6.''
Comment 1
Two petitioning steel companies stated that the Department's draft
Section 129 Determination adequately implemented the findings of the
Appellate Body, but that it was ambiguous as to the nature and effect
of that determination. They urged the Department to make clear that it
is a new and different determination, rather than an amendment to the
original determination in the investigation, and that it has
prospective effect only. They also asked that the Department address
the proper assessment rates for entries made prior to the date of
implementation of the Section 129 Determination.
Department Position
We agree with petitioners' first argument, and have clarified, in
this notice, the nature and effect of this Section 129 Determination.
We do not agree, however, that a section 129 Determination should
necessarily include a discussion of the proper assessment rates for
entries made prior to the effective date of that determination, i.e.,
entries to which that determination expressly does not apply. Under
U.S. law, such prior entries, if reviewed, are governed by the results
of the relevant review. Section 751(a)(1) and (a)(2)(C) of the Act. If
such prior entries are not reviewed, they are liquidated as entered. 19
CFR Sec. 351.212(c).
Section 129 Determination Margins
As a result of the changes to the calculations, we determine that
the following Section 129 Determination margins exist:
Kawasaki............................................ 40.26%
NKK................................................. 17.70%
Nippon.............................................. 18.37%
All Others.......................................... 22.92%
------------------------------------------------------------------------
Continuation of Suspension of Liquidation
In accordance with section 129(c)(1)(B) of the URAA, we will
instruct the U.S. Customs Service (Customs) to continue to suspend
liquidation of all imports of hot-rolled steel from Japan that are
entered, or withdrawn from warehouse, for consumption on or after
November 22, 2002, the date on which the Trade Representative directed
the Department under subsection (b)(4) of that section to implement
this Section 129 Determination. Customs shall continue to require a
cash deposit equal to the estimated amount by which the normal value
exceeds the U.S. price. The suspension of liquidation instructions will
remain in effect until further notice.
Because we completed an administrative review of Kawasaki
subsequent to the issuance of the order in this proceeding, we will not
issue a new cash deposit rate for Kawasaki pursuant to this Section 129
Determination. We have not conducted reviews of Nippon and NKK,
however. Thus, we will instruct Customs to revise the cash deposit
rates for these two firms with respect to subject merchandise entered,
or withdrawn from warehouse, for consumption on or after November 22,
2002. The Section 129 Determination ``all others'' rate will be the new
cash deposit rate for all exporters of subject merchandise other than
Nippon, NKK and Kawasaki, with respect to entries of subject
merchandise entered, or withdrawn from warehouse, for consumption on or
after November 22, 2002.
This Section 129 Determination is issued and published in
accordance with section 129(c)(2)(A) of the URAA.
Dated: November 22, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-30621 Filed 12-2-02; 8:45 am]