[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Notices]
[Pages 41085-41089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19446]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-505]
Preliminary Results of Full Sunset Review: Malleable Cast Iron Pipe
Fittings From Brazil
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of full sunset review: malleable
cast iron pipe fittings from Brazil.
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SUMMARY: On January 4, 1999, the Department of Commerce (``the
Department'') initiated a sunset review of the antidumping duty order
on malleable cast iron pipe fittings from Brazil (64 FR 364) 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 filed on behalf of
domestic interested parties and subsequent adequate responses from both
domestic and respondent interested parties, the Department is
conducting a full review. As a result of this review, the Department
preliminarily finds that revocation of the antidumping duty order would
be likely to lead to continuation or recurrence of a dumping at the
levels indicated in the Preliminary 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 & Constitution,
Washington, D.C. 20230; telephone: (202) 482-6397 or (202) 482-1560,
respectively.
EFFECTIVE DATE: July 29, 1999.
Statute and Regulations
This review is being 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''), and 19 C.F.R. Part
351 (1998) in general. 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
Imports covered by this review are shipments of certain malleable
cast iron pipe fittings, other than grooved, from Brazil. In the
original order, these products were classified in the Tariff Schedules
of the United States, Annotated (TSUSA), under item numbers 610.7000
and 610.7400. These products are currently classifiable under item
numbers 7307.19.90.30, 7307.19.90.60, and 7307.19.90.80 of the
Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS item
numbers are provided for convenience and customs purposes. The written
description remains dispositive.
This order applies to all imports of certain malleable cast iron
pipe fittings from Brazil.
History of the Order
The Department issued a final determination of sales at less than
fair value on March 31, 1986, finding a weighted-average margin of 5.64
percent for Industria de Fundicao Tupy, S.A. (``Tupy''), and for all
others (51 FR 10897). The antidumping duty order on malleable cast iron
pipe fittings from Brazil was published in the Federal Register on May
21, 1986 (51 FR 18640). Since that time the Department has conducted
one administrative review of this order, which covered the period from
May 1, 1993, to April 30, 1994.1
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\1\ See Malleable Cast Iron Pipe Fittings, Other Than Grooved,
From Brazil; Final Determination of Sales at Less Than Fair Value,
51 FR 10897 (May 31, 1986); Antidumping Duty Order: Malleable Cast
Iron Pipe Fittings From Brazil, 51 FR 18640 (May 21, 1986); and
Malleable Cast Iron Pipe Fittings From Brazil; Final Results of
Antidumping Duty Administrative Review, 60 FR 41876 (August 14,
1995).
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Background
On January 4, 1999, the Department initiated a sunset review of the
antidumping duty order on malleable cast iron pipe fittings from Brazil
(64 FR 364) pursuant to section 751(c) of the Act. On January 19, 1999,
the Department received a Notice of Intent to Participate on behalf of
the Cast Iron Pipe Fittings Committee and its members, Grinnell
Corporation and Ward Manufacturing (collectively ``CIPFC''), within the
applicable deadline specified in section 351.218(d)(1)(i) of the Sunset
[[Page 41086]]
Regulations. The CIPFC claimed interested party status under section
771(9)(F) of the Act as an ad hoc trade association consisting entirely
of U.S. manufacturers of malleable cast iron pipe fittings.
We received a complete substantive response to the notice of
initiation on February 3, 1999, on behalf of CIPFC. In its substantive
response, CIPFC stated that both it and its two current members have
been participants in both the Department's original investigation and
in the sole administrative review conducted by the Department.
2 We received a complete substantive response on behalf of
Tupy on February 4, 1999. In its substantive response, Tupy claimed
interested party status under section 771(9) of the Act, as a foreign
producer of malleable cast iron pipe fittings. Tupy also asserted that,
to the best of its knowledge, it has always accounted for 100 percent
of the exports to the United States of pipe fittings from Brazil, both
before and after the issuance of the order.
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\2\ CIPFC's current members are Grinnell Corporation and Ward
Manufacturing. The Committee previously consisted of five members,
including Grinnell and Ward. The other three members have since gone
out of business. CIPFC's members represent ``virtually'' all
domestic production of malleable cast iron pipe fittings, other than
grooved.
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On February 8, 1999, we granted an extension to all parties to the
deadline for filing rebuttal comments. We received rebuttal comments
from Tupy and from CIPFC on February 11 and 12, 1999, respectively.
Both Tupy and CIPFC claim that Tupy was, and remains, the only
producer of malleable cast iron pipe fittings from Brazil. Therefore,
Tupy accounted for significantly more than 50 percent of the value of
total exports of the subject merchandise over the five calendar years
preceding the initiation of the sunset review and the response of Tupy
constituted an adequate response to the notice of initiation. Thus,
because the Department received adequate responses from both domestic
and foreign interested parties, we are conducting a full (240 day)
review in accordance with section 351.218(e)(2)(i) of the Sunset
Regulations.
The Department determined that the sunset review of the antidumping
duty order on malleable cast iron pipe fittings from Brazil is
extraordinarily complicated. In accordance with section 751(c)(6)(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 May 3, 1999, the Department extended the time limit for
completion of the preliminary results of this review until not later
than July 23, 1999, in accordance with section 751(c)(5)(B) of the
Act.3
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\3\ See Malleable Cast Iron Pipe Fittings From Brazil and
Thailand: Extension of Time Limit for Preliminary Results of Five-
Year Reviews, 64 FR 23598 (May 3, 1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department is
conducting this review to determine whether revocation of the
antidumping duty order would be likely to lead to continuation or
recurrence of dumping. Section 752(b) of the Act provides that, in
making this determination, the Department shall consider the weighted-
averaged dumping margins determined in the original 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 duty 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 preliminary determinations concerning continuation
or recurrence of dumping and magnitude of the margin likely to prevail
are discussed below. In addition, parties' comments with respect to
continuation or recurrence of dumping and the magnitude of the margin
likely to prevail are addressed within the respective sections below.
Continuation or Recurrence of Dumping
Party Comments
In its substantive response, CIPFC argued that revocation of the
antidumping duty order would likely result in the continuation or
resumption of dumping of malleable cast iron pipe fittings from
Brazil.4 CIPFC asserted that, since the imposition of the
antidumping duty order in 1986, Tupy has continued dumping at margins
well over a de minimis level. As support for this assertion, CIPFC
argued that the Department's revision of Tupy's margin in the sole
administrative review of this order, from 5.64 percent to 34.64 percent
is evidence that there is likelihood of continuation or recurrence of
dumping as Tupy has continued dumping with the discipline of an order
in place.5
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\4\ See CIPFC substantive response of February 3, 1999, page 6.
\5\ See CIPFC substantive response of February 3, 1999, page 8.
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With respect to whether imports of the subject merchandise have
either fallen dramatically or ceased following the imposition of the
antidumping duty order, CIPFC argued that import volumes dropped
significantly after the order was put into place. CIPFC contended that,
in 1984, prior to the imposition of the order, imports of the subject
merchandise totaled 3,274,000 pounds. In 1985, imports decreased
significantly, to 476,000 pounds, and then rose slightly in 1986 and
1987 to 816,000 pounds and 762,000 pounds, respectively.6
According to CIPFC, these data represent total imports of malleable
cast iron pipe fittings from Brazil, but, since Tupy is the only known
Brazilian exporter of the subject merchandise, it is reasonable to
assume that these numbers represent Tupy's exports to the United States
during those calendar years.
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\6\ See Table 1 in CIPFC's substantive response of February 3,
1999, page 9.
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CIPFC also argued that import volumes in subsequent years gradually
began to rise, although never managing to come close to the peak volume
of 1984. In 1991, the total volume of imports of the subject
merchandise was 721,385 pounds. This volume subsequently increased in
1992, 1993, and 1994 to a range between 1.3 million pounds in 1992 and
1.7 million pounds in 1994.7 CIPFC asserted that, following
the 1995 administrative review in which the Department found that Tupy
was dumping at a rate of 34.64 percent, imports of the subject
merchandise from Brazil (and, accordingly, Tupy's exports of the
subject merchandise) fell dramatically to 818 pounds and have only now
begun to start again.
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\7\ See Table 2 of CIPFC substantive response, page 10.
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CIPFC concluded by arguing that the data, showing a decline in
import volumes of malleable cast iron pipe fittings from Brazil
accompanied by the continued existence of dumping margins after the
order, provide a strong indication that Tupy will continue or resume
dumping if the order is revoked.8 Therefore, CIPFC asserted
that the Department should determine that there is a likelihood of
continuation or recurrence of dumping if the order is revoked.
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\8\ See CIPFC substantive response, page 10.
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Tupy, in its substantive response of February 4, 1999, argued that
the likely effects of revocation of the order on pipe fittings from
Brazil would not be a continuation or recurrence of dumping by Tupy.
Accordingly, because there is no other Brazilian producer and exporter
of pipe fittings, Tupy asserted
[[Page 41087]]
that there is no other reason to expect that pipe fittings from Brazil
will be dumped in the United States in the event the order is
revoked.9
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\9\ See Tupy substantive response of February 4, 1999, page 4.
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Tupy explained in its substantive response that following the
imposition of the incorrect and prohibitive best information available
(BIA) rate of 34.64 percent in the administrative review, Tupy ceased
exports of the subject merchandise to the United States in favor of
other markets and other product lines. Tupy also asserted that it has
recently begun to resume exports of pipe fittings to the United States.
Tupy claims that it has no intention of dumping because it can now
compete in the United States without dumping.
In its rebuttal response of February 11, 1999, CIPFC argued that
Tupy is still interested in the U.S. market and that Tupy's statement
that it has no intention of dumping is nothing more than an
unsubstantiated, self-serving statement and should be disregarded as
such.10 According to CIPFC, Tupy has presented no credible
basis for the Department to find that revocation of the antidumping
duty order is not likely to lead to continuation or recurrence of
dumping.11
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\10\ See CIPFC rebuttal response of February 11, 1999, page 3,
to Tupy's substantive response of February 4, 1999.
\11\ See CIPFC rebuttal response of February 11, 1999, page 4.
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Tupy did not address the issue of whether dumping was likely to
continue were the order to be revoked in its rebuttal comments.
Department's Determination
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 basis for
likelihood determinations. The Department clarified that determinations
of likelihood will be made on an order-wide basis (see section II.A.3
of the Sunset Policy Bulletin). Additionally, the Department normally
will determine that revocation of an antidumping duty 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
order and import volumes for the subject merchandise declined
significantly (see section II.A.3.a of the Sunset Policy Bulletin).
As discussed in section II.A.3 of the Sunset Policy Bulletin, the
SAA at 890, and the House Report at 63-64, the existence of dumping
margins after the order, or the cessation of imports after the order,
is highly probative of the likelihood of continuation or recurrence of
dumping. If companies continue to dump with the discipline of an order
in place, it is reasonable to assume that dumping would continue if the
order were revoked. If imports cease after the order is issued, it is
reasonable to assume that the exporters could not sell in the United
States without dumping and that, to reenter the U.S. market, they would
have to resume dumping. Since deposit rates above de minimis remain in
effect for exports of malleable cast iron pipe fittings from Brazil,
evidence suggests that exporters cannot sell in the U.S. market without
dumping.
With respect to whether imports of the subject merchandise ceased
following the imposition of the original antidumping duty order, the
Department preliminarily finds that imports of the subject merchandise
to the United States declined dramatically from a high point of
3,274,437 pounds (1485.28 metric tons) in 1984 to 761,050 pounds
(345.21 metric tons), in 1987. Imports increased dramatically in 1988,
exceeding 3 million pounds (1400 metric tons) and then fell again.
However, following the 1995 issuance of the final results of the sole
administrative review conducted by the Department, imports subsequently
ceased and only in 1998 began to resume. Since Tupy is the only
Brazilian producer of malleable cast iron pipe fittings, as stated in
the substantive responses of both parties, it is reasonable to assume
that these numbers accurately reflect Tupy's exports to the United
States. Therefore, since dumping margins have continued over the life
of the order, the Department preliminarily determines that dumping is
likely to continue if the order were revoked.
Magnitude of the Margin
Party Comments
In its February 3, 1999, substantive response, CIPFC argued that
the Department should determine that the margin likely to prevail if
the antidumping duty order were to be revoked is the more recent rate
of 34.64 percent. According to CIPFC, the more recently calculated
margin of 34.64 percent is more representative of Tupy's likely
behavior if the Department revokes the order than the original rate of
5.64 percent.12
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\12\ See CIPFC substantive response of February 3, 1999, page
11.
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CIPFC argued that, since the imposition of the antidumping duty
order in 1986, Tupy has been attempting to increase its share of the
U.S. market for malleable pipe fittings. According to CIPFC, in 1986
Tupy accounted for approximately 0.67 percent of the U.S. market or 0.8
million pounds. CIPFC also argues that, by 1994, when the Department
found a margin of 34.64 percent, Tupy had exported 1.75 million pounds
or approximately twice the volume of its exports in 1986. Thus,
according to the CIPFC, Tupy had been trying to gain a greater
percentage of market share in what CIPFC termed a mature low-growth or
no-growth market.13
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\13\ See CIPFC substantive response of February 3, 1999, page
12.
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Additionally, CIPFC argued that Tupy attempted to secure the 5.64
percent rate of the original investigation by not participating in the
administrative review and forcing the Department to use BIA in
determining the margin. Since the Department's normal procedure is to
limit the BIA rate to the highest rate determined in the original
investigation and since Tupy was the only company investigated, CIPFC
asserted that Tupy believed that it could secure the 5.64 percent rate
when it did not participate in the administrative review. Therefore,
CIPFC contended that the use of the 5.64 percent rate in the context of
this sunset review would permit Tupy to benefit from the very behavior
that the Department sought to sanction in 1995. Therefore, the CIPFC
concluded, the Department should find that a dumping margin of 34.64
percent is a more accurate rate than the original rate, that it better
reflects Tupy's likely dumping in the event of revocation, and that,
therefore, it is the legally correct rate to provide to the
Commission.14
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\14\ See CIPFC substantive response of February 3, 1999, page
13-14.
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In its substantive response of February 4, 1999, Tupy argued that,
pursuant to the Sunset Policy Bulletin, the correct margin to be
applied to Tupy in the event of revocation of the antidumping duty
order is the rate that was determined in the original investigation.
Tupy asserted that the Department may not choose the higher margin from
the final results of review issued in 1995 simply because that rate was
determined more recently. Tupy
[[Page 41088]]
also argued that the record of this case does not justify the higher
rate because Tupy asserts that it has not attempted to increase market
share since the imposition of the order. Tupy argued, therefore, that
the Department should follow its standard practice of determining that
the margin likely to prevail if the order were revoked would be the
margin from the original investigation, 5.64 percent.
In its rebuttal, CIPFC argued that, since U.S. imports from Brazil
increased while at the same time Tupy's margin also increased, it is
reasonable to infer that Tupy was attempting to increase its market
share between 1986 and 1995. 15 Thus, CIPFC asserted that
Tupy increased exports by dumping in the mid-1980s and then, following
the imposition of the order, decreased its imports to the United States
substantially. CIPFC argued that, in the early 1990s, Tupy again
attempted to gain market share and began increasing its exports to the
United States by dumping at higher margins only to cease exporting when
the Department determined that there was a new, higher dumping margin.
Therefore, CIPFC asserted that the margin of dumping that will prevail
if the order is revoked will be the higher margin of 34.64 percent.
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\15\ See CIPFC rebuttal response of February 11, 1999, page 6.
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In its rebuttal comments Tupy continued to argue that the
Department should use the 5.64 percent margin from the original
investigation. Tupy asserted that this is consistent with the
Department's policy and practice. Citing to the final results of the
expedited sunset review on the antidumping duty order on roller chain
from Japan, Tupy asserted that, in order for the Department to consider
a margin other than one determined in an original investigation, the
domestic parties have the burden of affirmatively demonstrating that
higher, more recent margins reflect a consistent pattern of behavior by
respondents to obtain or increase market share. Tupy asserted the CIPFC
has not met this burden. Further, Tupy asserted that it has never held
a commercially significant share of the U.S. market. Tupy disputed the
statistics concerning market share provided by CIPFC but argued
nonetheless that, even if CIPFC's statistics were used, Tupy's share of
the U.S. market was its highest in 1984 at 2.3 percent and that its
market share was 1.18 percent and 1.28 percent in 1993 and 1994,
respectively. Tupy asserted that the slight increase of 0.67 percent in
its 1993 and 1994 market share over its 1986 market share hardly
warrants selecting the 34.64 percent BIA rate.
Department's Determination
In the Sunset Policy Bulletin, the Department stated that,
consistent with the SAA and House Report, the Department normally will
provide to the Commission a margin from the investigation because that
is the only calculated rate that reflects the behavior of exporters
without the discipline of an order or suspension agreement in place.
16 Exceptions to this policy include the use of a more
recently calculated margin, where appropriate, and consideration of
duty absorption determinations.
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\16\ See section II.B.1 of the Sunset Policy Bulletin.
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In its substantive response, CIPFC urged the Department to
determine that the magnitude of the margin likely to prevail if the
order were revoked is 34.64 percent, which is the rate that was
determined in the sole administrative review and the one that is
currently in effect. CIPFC argued, in both its substantive response and
in its rebuttal, that the Department may choose a higher, more recent
margin. Specifically, the Sunset Policy Bulletin, at section II.B.2
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. Therefore, the Department may, in response to an argument from
an interested party, provide to the Commission a more recently
calculated margin for a particular company where, for that particular
company, dumping margins increased after the issuance of the order,
even if the increase was a result of the use of BIA.
As discussed in Final Results of Expedited Sunset Review: Stainless
Steel Plate From Sweden, 63 FR 67658 (December 8, 1998), the Department
intended to establish a policy of using the margin from the original
investigation as a starting point, thus providing interested parties
the opportunity and incentive to present data which would support a
different estimate. Additionally, in Barium Chloride From the People's
Republic of China, 64 FR 5633, 5635 (February 4, 1999), the Department
determined that where there is an increase in imports corresponding to
the increase in the dumping margin, the Department may determine that
the higher rate is more representative of the behavior of the company
without the discipline of an order in place.
In the instant case, however, the Department finds that annual
import volumes for the subject merchandise have fluctuated during the
life of the order and no consistent pattern of behavior by Tupy can be
discerned. From 1986, the year of the imposition of the order, through
the period prior to the conclusion of the 1993-94 administrative
review, the Department finds no pattern of consistently increasing
imports of subject merchandise associated with increasing dumping
margins. Imports fluctuated during this period, increasing and
decreasing during a period when the deposit rate was constant. Imports
of subject merchandise during this period were both above and below
pre-order levels. In addition, estimates provided by Tupy concerning
its U.S. market share during this period also indicate that there were
fluctuations in its share of the U.S. market.
Given the fluctuations over the life of the order, the Department
finds no reason to believe that Tupy attempted to increase its U.S.
market share through the increased dumping of subject merchandise.
Because of this, the Department preliminarily finds that the use of a
more recently calculated margin in its report to the Commission would
be inappropriate. Therefore, we determine that the margins calculated
in the original investigation best reflect the behavior of producers/
exporters without the discipline of the order and we find that the
margins calculated in the original investigation are probative of the
behavior of Brazilian producers/exporters of the malleable cast iron
pipe fittings if the order were revoked. As such, if these results are
adopted for the Department's final determination, we will report to the
Commission the rate established for Tupy (as well as for all other
producers/exporters of the subject merchandise) in the original
investigation as contained in the Preliminary Results of Review section
of this notice.
Preliminary Results of Review
As a result of this review, the Department preliminarily finds that
revocation of the antidumping duty order would be likely to lead to
continuation or recurrence of dumping. The magnitude of the margin that
is likely to prevail is 5.64 percent.
Any interested party may request a hearing within 30 days of
publication of this notice in accordance with 19 CFR 351.310(c). Any
hearing, if requested, will be held on September 22, 1999. Interested
parties may submit case briefs no later than September 13, 1999, in
accordance with 19 CFR
[[Page 41089]]
351.309(c)(1)(i). Rebuttal briefs, which must be limited to issues
raised in the case briefs, may be filed not later than September 20,
1999. The Department will issue a notice of final results of this
sunset review, which will include the results of its analysis of issues
raised in any such comments, no later than November 30, 1999.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: July 23, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-19446 Filed 7-28-99; 8:45 am]
BILLING CODE 3510-DS-P
