03-5187. Final Results of Inquiry Into Lithuania's Status as a Non-Market Economy Country for Purposes of the Antidumping and Countervailing Duty Laws Under a Changed Circumstances Review of the Solid Urea Order Against Lithuania

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Final results.

EFFECTIVE DATE:

January 1, 2003.

FOR FURTHER INFORMATION CONTACT:

George Smolik, Office of Policy, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone].

Background: The Department has treated Lithuania as a non-market economy (“NME”) country in past antidumping duty investigations and administrative reviews. See, e.g., Urea From the Union of Soviet Socialist Republics; Final Determination of Sales at Less Than Fair Value, 52 FR 19557 (May 26, 1987); and, Solid Urea from the Union of Soviet Socialist Republics; Transfer of the Antidumping Duty Order on Solid Urea From the Union of Soviet Socialist Republics to the Commonwealth of Independent States and the Baltic States and Opportunity to Comment, 57 FR 28828 (June 29, 1992). A designation as a NME remains in effect until it is revoked by the Department. See section 771(18)(C)(i) of the Act.

On May 15, 2002, the Department received a letter from the Embassy of Lithuania requesting a review of Lithuania's status as NME country. On June 5, 2002, the GOL submitted a document supporting its request for market economy status. On August 20, 2002, the Department received a letter from the Embassy of Lithuania requesting that the Department review Lithuania's NME status under a changed circumstances review of the solid urea order against Lithuania. In response to this latter request, the Department initiated an inquiry into Lithuania's status as an NME in the context of a changed circumstances review of the solid urea order against Lithuania pursuant to sections 751(b) and 771(18)(C)(ii) of the Act.

On September 10, 2002, the Department published a Notice in the Federal Register requesting comments from the public concerning this matter. See Notice of Initiation of Inquiry Into the Status of Lithuania as a Non-Market Economy Country for Purposes of the Antidumping and Countervailing Duty Laws Under a Changed Circumstances Review of the Solid Urea Order Against Lithuania, 67 FR 57393, September 10, 2002. The comments due date was extended to November 8, 2002. Rebuttal comments were due no later than December 9, 2002.

SUMMARY:

The Government of Lithuania (“GOL”) has implemented comprehensive economic and institutional reforms aimed at establishing a market economy since 1991. See memorandum to Faryar Shirzad from Barbara Mayer et al, Decision Memorandum Regarding Lithuania's Status as a Non-Market Economy Country for Purposes of the Antidumping and Countervailing Duty Law under a Changed Circumstances Review of the Solid Urea Order Against Lithuania (February 28, 2003). Lithuania's currency, the litas, is fully convertible for trade purposes and effectively convertible for investment purposes. Wages are freely negotiated between employees and management. Workers have the right to unionize and engage in collective bargaining, and employers are free to transfer or fire workers. Foreign direct investment has been encouraged by the GOL in almost all sectors of the economy. Foreign investors compete on a level playing field with domestic investors. Lithuania's efforts toward privatizing the economy have been wide-spread and effective. Seventy-five percent of Lithuania's gross domestic product is in the hands of the private sector with only a few large state-owned enterprises remaining. Land, including land for agricultural use, is under private ownership, and foreigners are permitted to purchase land for non-agricultural use. The GOL has eliminated its previous role as an allocator of resources by completely privatizing the commercial banking sector and eliminating price controls. Additionally, Lithuania has been a member of the World Trade Organization since May 2001 and is slated to join the European Union at the beginning of 2004.

Notwithstanding, several areas of Lithuania's economy require additional reform. Foreign direct investment remains relatively low and the commercial banking sector does not play a significant role in lending to the private sector. In particular, small- and medium sized enterprise growth is currently hampered by the reluctance of banks to provide credit.

Overall, however, Lithuania has made far-reaching changes in the structure of the economy. Therefore, based on the evidence on reforms in Lithuania to date, analyzed as required under section 771(18)(B) of the Act, the Department determines that (1) revocation of Lithuania's NME country status under section 771(18)(A) is warranted, and (2) Lithuania has operated as a market-economy country since January 1, 2003. Lithuania producers and exporters will be subject, therefore, to the antidumping rules applicable to market economies with respect to the analysis of transactions occurring after January 1, 2003. In addition, the U.S. countervailing duty law will apply now to Lithuania where the proceeding at issue involves an adequate period of investigation after this effective date.

Dated: February 27, 2003.

Faryar Shirzad,

Assistant Secretary for Import Administration.