E7-1015. Countervailing Duty Changed Circumstances Reviews; Request for Comment on Agency Practice

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Request for comment on agency practice

EFFECTIVE DATE:

January 24, 2007.

SUMMARY:

When conducting a countervailing duty changed circumstances review for purposes of determining the appropriate cash deposit rate in light of a change in a company's name, structure, or ownership, the Department's general approach has been to apply the “successor in interest” analysis that it uses for considering similar types of changes in antidumping duty changed circumstances reviews. The Department has conducted relatively few changed circumstances reviews involving the successorship of companies in the context of countervailing duty measures. However, based on recent experience, the Department is now considering whether its practice regarding such reviews should be revised or clarified.

This notice highlights various considerations relevant to this issue, and provides an opportunity for public comment on whether any changes to the Department's current practice regarding countervailing duty changed circumstances reviews would be warranted and, specifically, what those changes should entail.

DATES:

Comments should be submitted within 30 days of the publication date of this request for comment.

ADDRESSES:

An original and six copies of all written comments should be sent to Gregory W. Campbell, Office of Policy, Import Administration, U.S. Department of Commerce, Central Records Unit, Room 1870, Pennsylvania Avenue and 14th Street NW, Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT:

Gregory W. Campbell, Office of Policy, Import Administration, U.S. Department of Commerce, Room 3712, Pennsylvania Avenue and 14th Street, NW, Washington, DC 20230, [phone].

SUPPLEMENTARY INFORMATION:

Background

In accordance with section 751(b) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.216 and 19 CFR 351.221, the Department of Commerce (Department) may conduct a review of an antidumping (AD) or countervailing duty (CVD) measure where, inter alia, an interested party requests such a review and there are changed circumstances sufficient to warrant a review. In the context of an AD “changed circumstances review” involving a change in a company's name, structure or ownership, the Department relies on its successor-in-interest criteria to determine whether the newly named or structured company (“successor company”) remains essentially the same as the predecessor company. See, e.g., Industrial Phosphoric Acid from Israel; Final Results of Antidumping Duty Changed Circumstances Review, 59 FR 6944, 6945 (February 14, 1994) (“Industrial Phosphoric Acid”); Notice of Final Results of Antidumping and Countervailing Duty Changed Circumstances Reviews; Certain Pasta from Italy, 68 FR 41553, 41553 (July 14, 2003).

Under this analysis, where the evidence demonstrates that the successor company operates as the “same business entity” as its predecessor with respect to the production and sale of the subject merchandise, the Department will assign to the successor company the existing cash deposit rate of its predecessor. Brass Sheet and Strip from Canada; Preliminary Results of Antidumping Duty Administrative Review, 57 FR 5128, 5129 (February 12, 1992).

The Department generally bases its successorship/business entity determination in AD changed circumstances reviews on an analysis of the following factors: (1) management, (2) production facilities, (3) supplier relationships, and (4) customer base. Brass Sheet and Strip from Canada; Final Results of Antidumping Duty Administrative Review, 57 FR 20460 (May 13, 1992). While none of these factors is dispositive of the issue, the Department generally considers the new company to be the successor company to the predecessor company if its resulting operation is not materially dissimilar to that of the predecessor. Industrial Phosphoric Acid, 59 FR 6944, 6945.

However, to the extent that this AD analysis is concerned with the pricing behavior of the successor company it might not be entirely relevant in the CVD context where price discrimination is not the analytical focus. Other factors or considerations (e.g., factors that focus on whether subsidies to the predecessor are attributable to the successor, or on increased participation in or eligibility for new subsidy programs as a result of the changed circumstance) might be more relevant.

In addition, there is also a broader question of whether a successorship/business entity analysis generally is too narrowly focused when reviewing the changed circumstances of a subsidized company. An examination that focuses largely or solely on changes in the legal or managerial structure or the productive capacity of a company may overlook other important considerations that also may be relevant in the context of subsidies and countervailing duties. For instance, whether the change (e.g., name change or merger) was accompanied or preceded by new subsidies, or had an impact on any existing subsidies to the companies involved, also might be a relevant consideration.

One hypothetical example in which a strict successorship/business entity analysis might fall short of accurately determining the appropriate deposit rate (or level of subsidization) is where a producer of subject merchandise, who has been excluded from the order, purchases or merges with an unrelated, subsidized producer who has a company-specific rate under the order. Even if the combined entity (i.e., the successor company) in this hypothetical example operated as the same business entity as its predecessor, the changed circumstance itself might have resulted in a fundamental change in the nature and extent of the subsidization of the successor company. Under this scenario, one option might be to assign the rate of the one subsidized producer to the successor company. Another option would be to continue to exclude the entries of the successor company. This second approach, however, might foreclose any possibility of a future administrative review of the successor company whose (expanded) operations have already been determined to be subsidized, at least in part. In circumstances such as these, it might be appropriate for the Department to take into account other factors that go beyond a strict business entity analysis to determine the appropriate cash deposit rate for the successor company in a CVD proceeding.

A related question is whether, if the subsidy levels have been affected by the changed circumstances, the Department should calculate a new cash deposit rate in the changed circumstances review that reflects the new level of subsidization or, alternatively, whether the Department should self-initiate an administrative review. Another approach would be for the Department to simply select a rate from among existing cash deposit rates (e.g., the predecessor's rate, the all others rate, some combination of the existing rates).

In commenting on these issues, we invite commenters to identify and discuss the criteria that they consider most appropriate for a successorship/business entity analysis in the CVD context, whether they may be the same as the AD criteria, some mix of those criteria and others, or an entirely different set of criteria. We further invite commenters to address whether and how the Department's analysis might extend beyond the successorship/business entity analysis to consider more directly any changes in the company's level of subsidization occasioned by the changed circumstance. Such comments should also address the feasibility of identifying or even quantifying changes in subsidy levels given the shorter deadlines of changed circumstances reviews and the potentially significant increase in required information (e.g., detailed sales and subsidy data), participatory burden (e.g., of the respondent company and government), and administrative burden such an analysis might entail.

Suggested practical solutions for addressing possible feasibility concerns are encouraged. For example, one possible approach to mitigating the burden might be to conduct a staged analysis where, if the initial data indicate that the only change has been to the name of a company (i.e., the change was not accompanied or prompted by a substantial change to the company's ownership or operations), no further analysis of changes in the subsidy levels would be necessary and the successor company would receive the predecessor's cash deposit rate. However, if the changed circumstances entail more than a simple name change, and the evidence indicates that the changes could have a significant impact on the level of subsidy benefits to the successor company, then the successor company could be assigned the all others rate until the subsidy levels could be fully analyzed in the course of an administrative review.

Comments

Persons wishing to comment should file a signed original and six copies of each set of comments by 5:00 p.m. on the above-referenced deadline date. The Department will consider all comments received before the close of the comment period. Comments received after the end of the comment period will be considered, if possible, but their consideration cannot be assured. The Department requires that comments be submitted in written form. All comments responding to this notice will be a matter of public record and will be available for public inspection and copying at Import Administration's Central Records Unit, Room B-099, between the hours of 8:30 a.m. and 5 p.m. on business days. The Department will not accept comments accompanied by a request that a part or all of the material be treated confidentially because of its business proprietary nature or for any other reason. The Department will return such comments and materials to the persons submitting the comments and will not consider them in development of any changes to its practice.

The Department also recommends submission of comments in electronic form to accompany the required paper copies. Comments filed in electronic form should be submitted either by e-mail to the webmaster below, or on CD-ROM, as comments submitted on diskettes are likely to be damaged by postal radiation treatment. Comments received in electronic form will be made available to the public in Portable Document Format (PDF) on the Internet at the Import Administration Web site at the following address: http://ia.ita.doc.gov/​. Any questions concerning file formatting, document conversion, access on the Internet, or other electronic filing issues should be addressed to Andrew Lee Beller, Import Administration Webmaster, at [phone], e-mail address: [e-mail].

All written comments should be sent to Gregory W. Campbell, Office of Policy, Import Administration, U.S. Department of Commerce, Central Records Unit, Room 1870, Pennsylvania Avenue and 14th Street NW., Washington, DC 20230, Subject: Countervailing Duty Changed Circumstances Reviews; Request for Comment on Agency Practice.

Dated: January 17, 2007.

David M. Spooner,

Assistant Secretary for Import Administration.