[Federal Register Volume 64, Number 66 (Wednesday, April 7, 1999)]
[Notices]
[Pages 16907-16910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8624]
[[Page 16907]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-001]
Final Results of Expedited Sunset Review: Potassium Permanganate
from the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Expedited Sunset Review: Potassium
Permanganate from the People's Republic of China.
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SUMMARY: On November 2, 1998, the Department of Commerce (``the
Department'') initiated a sunset review of the antidumping order on
potassium permanganate from the People's Republic of China (63 FR
58709) pursuant to section 751(c) of the Tariff Act of 1930, as amended
(``the Act''). On the basis of a notice of intent to participate and
substantive comments filed on behalf of the domestic industry and
inadequate response (in this case, no response) from respondent
interested parties, the Department determined to conduct an expedited
review. As a result of this review, the Department finds that
revocation of the antidumping 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: Scott E. Smith 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-
6397 or (202) 482-1560, respectively.
Effective Date: April 7, 1999.
Statute and Regulations
This review was conducted pursuant to sections 751(c) and 752 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''). 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
The merchandise subject to this antidumping order is potassium
permanganate from the People's Republic of China (``PRC''), an
inorganic chemical produced in free-flowing, technical, and
pharmaceutical grades.1 Potassium permanganate is
classifiable under item 2841.61.0000 of the Harmonized Tariff Schedule
of the United States (HTSUS). The HTSUS item number is provided for
convenience and U.S. Customs purposes. The written description remains
dispositive.
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\1\ On May 19, 1995, the Department determined that plastic
ignitor spheres containing potassium permanganate are not within the
scope of the order (60 FR 26871).
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This review covers imports from all manufacturers and exporters of
potassium permanganate from the PRC.
Background
On November 2, 1998, the Department initiated a sunset review of
the antidumping order on potassium permanganate from the People's
Republic of China (63 FR 58709), pursuant to section 751(c) of the Act.
The Department received a Notice of Intent to Participate on behalf of
Carus Chemical Company (``Carus'') on November 16, 1998, within the
deadline specified in section 351.218(d)(1)(i) of the Sunset
Regulations. Carus claimed interested party status under 19 U.S.C.
1677(9)(C) as a U.S. producer of potassium permanganate. In addition,
Carus indicated that it was the original petitioner in this proceeding
and that it has regularly participated in all administrative reviews.
We received a complete substantive response from Carus on December 3,
1998, within the 30-day deadline specified in the Sunset Regulations
under section 351.218(d)(3)(i). We did not receive a substantive
response from any respondent interested party to this proceeding. As a
result, pursuant to section 751(c)(3)(B) of the Act and 19 CFR
351.218(e)(1)(ii)(C), the Department determined to conduct an
expedited, 120-day review of this order.
The Department determined that the sunset review of the antidumping
duty order on potassium permanganate from the People's Republic of
China is extraordinarily complicated. In accordance with section
751(c)(5)(C)(v) of the Act, the Department may treat a review as
extraordinarily complicated if it is a review of a transition order
(i.e., an order in effect on January 1, 1995). (See section
751(c)(6)(C) of the Act.) Therefore, on March 2, 1999, the Department
extended the time limit for completion of the final results of this
review until not later than June 1, 1999, in accordance with section
751(c)(5)(B) of the Act.2
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\2\ See Potassium Permanganate from Spain and the People's
Republic of China: Extension of Time Limit for Final Results of
Five-Year Review, 64 FR 10991 (March 8, 1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department
conducted this review to determine whether revocation of the
antidumping order would be likely to lead to continuation or recurrence
of dumping. Section 752(c) of the Act provides that, in making this
determination, the Department shall consider the weighted-average
dumping margins determined in the investigation and subsequent reviews
and the volume of imports of the subject merchandise for the period
before and the period after the issuance of the antidumping order, and
shall provide to the International Trade Commission (``the
Commission'') the magnitude of the margin of dumping likely to prevail
if the order is revoked.
The Department's determinations concerning continuation or
recurrence of dumping and the magnitude of the margin are discussed
below. In addition, Carus' comments with respect to continuation or
recurrence of dumping and the magnitude of the margin are addressed
within the respective sections below.
Continuation or Recurrence of Dumping
Drawing on the guidance provided in the legislative history
accompanying the Uruguay Round Agreements Act (``URAA''), specifically
the Statement of Administrative Action (``the SAA''), H.R. Doc. No.
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the
Department issued its Sunset Policy Bulletin providing guidance on
methodological and analytical issues, including the bases for
likelihood determinations. In its Sunset Policy Bulletin, the
Department indicated that determinations of likelihood will be made on
an order-wide basis (see section II.A.3). In addition, the Department
indicated that normally it will determine that revocation of an
antidumping order is likely to lead to continuation or recurrence of
dumping 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
[[Page 16908]]
order and import volumes for the subject merchandise declined
significantly (see section II.A.3).
In addition to guidance on likelihood provided in the Sunset Policy
Bulletin and legislative history, section 751(c)(4)(B) of the Act
provides that the Department shall determine that revocation of an
order is likely to lead to continuation or recurrence of dumping where
a respondent interested party waives its participation in the sunset
review. In the instant review, the Department did not receive a
substantive response from any respondent interested party. Pursuant to
section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes
a waiver of participation.
The antidumping duty order on potassium permanganate from the PRC
was published in the Federal Register on January 31, 1984 (49 FR 3897).
Since that time, the Department has conducted two administrative
reviews.3 The order remains in effect for all manufacturers
and exporters of the subject merchandise.
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\3\ See Final Results of Antidumping Duty Administrative Review:
Potassium Permanganate from The People's Republic of China, 56 FR
19640, April 29, 1991 (1989 POR) and Potassium Permanganate from The
People's Republic of China; Final Results of Antidumping Duty
Administrative Review, 59 FR 26625, May 23, 1994 (1990 POR). Prior
to the imposition of the order, the Department published Final
Determination of Sales at Less Than Fair Value; Potassium
Permanganate from The People's Republic of China, 48 FR 57347,
December 29, 1983.
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In its substantive response, Carus argues that it is highly likely
that dumping would continue if the antidumping order in this case were
to be revoked. (See December 3, 1998, Substantive Response of Carus at
2.) With respect to whether dumping continued at any level above de
minimis after the issuance of the order, Carus argued that high dumping
margins have been continuously in place for the almost 15 years since
the date of the order. Carus further argues that the uninterrupted
existence of high margins over the life of the order, and the continued
failure of any PRC producer or exporter to successfully complete an
annual review, provides compelling evidence that PRC exporters would
engage in dumping at very high rates in the absence of the order.
According to Carus, even with the severe discipline of the order in
place, PRC exporters have continued to dump. (See December 3, 1998,
Substantive Response of Carus at 7.)
With respect to whether imports of the subject merchandise ceased
after the issuance of the order, Carus, citing its own shipment data
and official U.S. Census Bureau import statistics, argued that reported
imports of potassium permanganate from the PRC effectively ceased after
May 1994, when the Department issued the final results of the 1990
administrative review. (See December 3, 1998, Substantive Response of
Carus at 7.) Carus argues that PRC producers/exporters were attempting
to circumvent the order by shipping subject merchandise through a
number of Hong Kong resellers who had not been subject to increased
margin rates assigned to PRC producers and certain Hong Kong resellers
in the final results of the 1989 administrative review (56 FR
19640).4 Carus further argues that while imports of Chinese
potassium permanganate were subject to the 39.64 percent deposit rate
(1984-1990), annual imports surged by almost 580%--from 432,000 lbs. in
1984 to over 2.1 million lbs. in 1989 to over 2.5 million lbs. in 1990.
(See December 3, 1998, Substantive Response of Carus at 22.) According
to Carus, imports of the subject merchandise ceased after the deposit
rate increased to reflect the actual level of dumping and purported
absorption and, thus, the ``loophole'' associated with sales through
Hong Kong resellers was eliminated.
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\4\ On April 29, 1991, the Department published Final Results of
Antidumping Duty Administrative Review: Potassium Permanganate from
The People's Republic of China (56 FR 19640) in which all subject
merchandise produced and exported directly to the U.S. by Chinese
manufacturers became subject to a deposit rate of 128.94 percent. In
addition to all PRC producers, a rate of 128.94 percent was
established for four of the seven known Hong Kong resellers of the
subject merchandise in the 1991 Final Results. In those Final
Results, other resellers retained the original 39.63 percent rate
established for ``all other'' producers/exporters in the antidumping
duty order (see Antidumping Duty Order; Potassium Permanganate from
The People's Republic of China, 49 FR 3897, January 31, 1984).
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In addition, Carus states that there are other factors which
support the likelihood of dumping if the order were revoked. Carus
argues that the attractiveness of the U.S. market would promote
increased imports of Chinese potassium permanganate because U.S. prices
of this product are at a premium while prices elsewhere in the world
are well below U.S. levels. Carus also argues that Chinese producers
have an oversupply of subject merchandise. In this respect, Carus makes
four arguments. First, Carus states that the high antidumping duties
established by the European Union and India on potassium permanganate
from China have effectively shut Chinese exporters of this product out
of those markets, increasing their inventories and forcing them to look
elsewhere for export markets. Second, Carus argues that advances in
Chinese potassium permanganate production technology have resulted in
increased efficiency and enable producers to offer lower prices. These
technological advances have resulted in increased production capacities
and inventories and, coupled with a lower price, will spur increased
exportation. Third, because potassium permanganate has applications in
the production of cocaine and China has recently demonstrated greater
vigilance in controlling exports of potassium permanganate in
situations where it may be used in the production of narcotics, Carus
argues that this increased control may result in an additional surplus
of Chinese potassium permanganate. According to Carus, this will
promote the search for additional export markets which, in turn, may
prompt future dumping. Fourth, Carus asserts that the Asian financial
crisis has reduced the need for Chinese potassium permanganate in Asia.
Carus argues that cash-strapped Asian governments are not likely to
begin using large volumes of potassium permanganate in the type of
applications for which it is used in the United States--for the
treatment of municipal waste and drinking water. According to Carus,
these factors may force Chinese producers to look elsewhere to sell
their product.
In conclusion, Carus argued that the Department should determine
that there is a likelihood that dumping would continue were the order
revoked because (1) dumping margins have existed throughout the life of
the order, (2) shipments of subject merchandise continued throughout
the life of the order and have ceased only recently as the effective
margin rate has increased to reflect the actual level of dumping, (3)
premium prices for potassium permanganate in the U.S. will promote
continued, if not increased, dumping by Chinese producers, (4) Chinese
producers have an oversupply of the subject merchandise, for a variety
of reasons, and need markets in which to sell and (5) the Asian
economic crisis is limiting the number of markets in which Chinese
producers of potassium permanganate can sell.
As discussed in Section II.A.3 of the Sunset Policy Bulletin, the
SAA at 890, and the House Report at 63-64, if companies continue
dumping with the discipline of an order in place, the Department may
reasonably infer that dumping would continue if the discipline were
removed. A dumping margin above de minimis continues to exist for
shipments of the subject
[[Page 16909]]
merchandise from all Chinese producers/exporters.5
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\5\ See Potassium Permanganate from The People's Republic of
China; Final Results of Antidumping Duty Administrative Review, 59
FR 26625 (May 23, 1994).
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Consistent with section 752(c) of the Act, the Department also
considered the volume of imports before and after issuance of the
order. The import statistics provided by Carus on imports of the
subject merchandise between 1980 and 1998, and those examined by the
Department (U.S. Census Bureau IM146 reports), demonstrate that imports
of the subject merchandise have continued throughout the life of the
order.
Based on this analysis, the Department finds that the existence of
dumping margins after the issuance of the order is highly probative of
the likelihood of continuation or recurrence of dumping. Deposit rates
above a de minimis level continue in effect for exports of the subject
merchandise by all known Chinese manufacturers/exporters. Therefore,
given that dumping has continued over the life of the order and
respondent interested parties have waived their right to participate in
this review before the Department, and absent argument and evidence to
the contrary, the Department determines that dumping is likely to
continue if the order were revoked.
Because the Department based this determination on the continued
existence of margins above de minimis and respondent interested
parties' waiver of participation, it is not necessary to address Carus'
arguments concerning the attractiveness of the U.S. market, U.S. price
premiums for potassium permanganate, Chinese overcapacity and export
orientation, or the effects of the Asian economic crisis.
Magnitude of the Margin
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. 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.)
The Department, in its final determination of sales at less than
fair value, published a weighted-average dumping margin for the China
National Chemicals Import and Export Corporation (SINOCHEM), the sole
Chinese producer/exporter in the original investigation, of 39.63
percent (48 FR 57347, December 29, 1983). The Department also published
an ``all others'' rate of 39.63 percent in this same Federal Register
notice. With respect to duty absorption findings, Carus argues that
duty absorption is likely in this case but, because there have been no
completed administrative reviews of the order since the 1990
administrative review, the Department has not had the opportunity to
address the issue of duty absorption.
In its substantive response, Carus argues that the Department
should provide the Commission a more recently calculated margin. Citing
the Sunset Policy Bulletin, Carus states that ``[a] company may choose
to increase dumping in order to maintain or increase market share. As a
result, increasing margins may be more representative of a company's
behavior in the absence of an order.'' In the original investigation,
the Department established a deposit rate of 39.63 percent for SINOCHEM
as well as for ``all other'' producers/exporters of Chinese potassium
permanganate (48 FR 57347, December 29, 1983). Carus asserts that the
39.63 percent margin established in the investigation was far too low
to prevent rapid import growth and continued dumping of PRC-origin
product, as well as dramatic increases in the Chinese share of the U.S.
market. According to Carus, Chinese imports of the subject merchandise
surged by almost 580%--from 432,000 lbs. in 1984 to over 2.1 million
lbs. in 1989 to over 2.5 million lbs. in 1990.
In January of 1990, Carus requested an administrative review of
Chinese exports of potassium permanganate to the United States. In
response to this request, the Department conducted a review and
established, on April 29, 1991, a new deposit rate for all PRC
producers of 128.94 percent. In addition, the Department established a
new deposit rate for four of the seven known Hong Kong resellers of
this product. According to Carus' information, imports of the subject
merchandise then decreased by almost 70 percent, from 2,560,700 lbs. in
1990 to 861,051 lbs. in 1991.
Nevertheless, by 1993, imports of Chinese potassium permanganate
had increased to 2,441,453 lbs. and had recaptured over 9 percent of
the U.S. market, almost as much of the U.S. market as Chinese
producers/exporters had held just prior to the imposition of the order.
Carus claims this resurgence in Chinese imports was attributed to a
``loophole'' evident in the 1991 Final Results. Specifically, the ``all
others'' rate of 39.63 percent was still being applied as a deposit
rate to previously unnamed Hong Kong resellers, not all of whom could
be identified for review. Carus argues that the retention of the 39.63
percent rate for Hong Kong resellers subject to the ``all others''
rate, coupled with the willingness and ability of Chinese producers/
exporters to dump, allowed substantial amounts of PRC-origin potassium
permanganate to be transshipped through Hong Kong resellers and sold in
the U.S. at below fair market value. In the 1991 Final Results, the
Department clarified that, in cases involving non-market economies, an
``all others'' cash deposit rate is not appropriate because any non-
market economy country firm must show that it is entitled to a separate
rate before a rate other than the non-market economy country-wide rate
can be assigned to it, and any intermediate country reseller is
properly assigned the rate for its producer unless the reseller
affirmatively shows that the merchandise has not simply been
transshipped. 59 FR 26630. 6 Because no third country
reseller established, during the 1990 administrative review or since,
that its merchandise was not being transshiped, such that the first
exporter ``to the United States'' was properly deemed to be the PRC
exporter, the ``all others'' loophole was eliminated in the May 23,
1994 final results of the 1990 administrative review, which established
a 128.94 percent deposit rate for all shipments of Chinese potassium
permanganate. 59 FR 26625.
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\6\ See also Yue Pak v. United States, Slip Op. 96-65 (CIT April
18, 1996), aff'd 111 F. 3rd 142 (Fed. Cir. 1997).
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Carus submits that the history of this case shows that the margin
established in the original investigation was insufficient to prevent
an influx of Chinese potassium permanganate and insufficient to prevent
Chinese producers/exporters' attempts at increasing market share in the
United States through dumping. Carus argues that, between 1984 and
1990, Chinese producers/exporters of potassium permanganate increased
their share of the U.S. market by 340 percent, from 2.5 percent to 8.5
percent. December 3, 1998 Substantive Response of Carus. Furthermore,
Carus argues that the ``loophole'' created by the exclusion of certain
Hong Kong resellers from the
[[Page 16910]]
128.94 percent margin assigned to Chinese exporters in the 1989
administrative review again permitted dramatic increases in Chinese
imports of the subject merchandise and the virtual recapture of the
Chinese percentage of the U.S. potassium permanganate market.
Therefore, Carus argues, the margin determined in the original
investigation does not reflect current Chinese pricing behavior or
present levels of globally-traded input prices. In addition, Carus
argues the changes in the methodology used by the Department in the
calculation of margins renders the margin from the original
investigation suspect.
The Department agrees with Carus' argument concerning the choice of
the margin rate to report to the Commission. An examination of the
margin history of the order as well as an examination of import
statistics of the subject merchandise, as provided in U.S. Census
Bureau IM146 reports, confirms the scenario outlined by Carus. From
1984, the date the first margins were established for this proceeding
(49 FR 3897, January 31, 1984), to 1990, import volumes of the subject
merchandise swelled, increasing by almost 600 percent. During this
period, a cash deposit rate of 39.64 percent was in effect. In 1991, in
an administrative review requested by Carus, the Department established
a new deposit rate of 128.94 percent for producers of the subject
merchandise from the PRC and for certain named third country resellers
(56 FR 19640, April 29, 1991). Import volumes fell substantially in
1991, by almost 70 percent, but then rebounded by 1993, the year
immediately preceding the final results of the 1990 administrative
review (59 FR 26625, May 23, 1994). In May of 1994, in the Final
Results of the 1990 administrative review, the Department established a
rate of 128.94 percent for all potassium permanganate of Chinese
origin, whether shipped directly from the PRC or transshipped through a
third country reseller. Following the establishment of this more
inclusive margin rate, shipments of potassium permanganate fell
dramatically, and have not exceeded 50,000 lbs. in any year since 1996.
The Department believes that the increase in import volumes and
market share between the imposition of the order and the Final Results
in the 1989 administrative review (56 FR 19640, April 29, 1991) reflect
the willingness and ability of Chinese producers/exporters to dump this
product despite the margin rate established by the Department in the
original investigation. Furthermore, the continuation of dumping and
the virtual recapture of market share between the final results in the
1989 review and those in the 1990 review reflects attempts by Chinese
producers/exporters to circumvent the order by transshipping the
subject merchandise through third country resellers with lower deposit
rates. This is evidenced by the dramatic reduction in import volumes
following the 1990 administrative review (59 FR 26625, May 23, 1994) in
which a single rate was established for all potassium permanganate of
Chinese origin, regardless of the interim shipping location, absent a
showing that either the Chinese exporter was entitled to a separate
rate or the third country reseller was not merely engaged in
transshipment. This more inclusive margin determination has apparently
reduced the ability of Chinese producers/exporters to circumvent the
order.
According to the Sunset Policy Bulletin, ``a company may choose to
increase dumping in order to maintain or increase market share. As a
result, increasing margins may be more representative of a company's
behavior in the absence of an order.'' Therefore, the Department finds
that this most recent rate is the most probative of the behavior of
Chinese producers/exporters of potassium permanganate if the order were
revoked. As a result, the Department is not addressing current Chinese
pricing behavior or changes in methodologies used by the Department in
its margin calculations. The Department will report to the Commission
the country-wide rate from the administrative review for the period
January 1, 1990 through December 31, 1990 (59 FR 26625, May 23, 1994)
as contained in the Final Results of Review section of this notice.
Final Results of Review
As a result of this review, the Department finds that revocation of
the antidumping order would likely lead to continuation or recurrence
of dumping at the margins listed below:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
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Country-wide rate for the People's Republic of China.... 128.94
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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: April 1, 1999.
Robert S. LaRussa
Assistant Secretary for Import Administration.
[FR Doc. 99-8624 Filed 4-6-99; 8:45 am]
BILLING CODE 3510-DS-P
