[Federal Register Volume 64, Number 176 (Monday, September 13, 1999)]
[Notices]
[Pages 49464-49467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23040]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
Final Results of Full Sunset Review: Sugar From the European
Community
[C-408-046]
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Full Sunset Review: Sugar From the
European Community.
-----------------------------------------------------------------------
SUMMARY: On April 26, 1999, the Department of Commerce (``the
Department'') issued the preliminary results of full sunset review of
the countervailing duty order on sugar from the European Community
(``the EC'') (64 FR 20257) pursuant to section 751(c) of the Tariff Act
of 1930, as amended (``the Act''). We provided interested parties an
opportunity to comment on our preliminary results. We received comments
filed on behalf of domestic interested parties. As a result of this
review, the Department finds that revocation of the countervailing duty
order would be likely to lead to continuation or recurrence of a
countervailable subsidy. The net countervailable subsidy and the nature
of the subsidy are identified 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 & Constitution, N.W.,
Washington, D.C. 20230; telephone: (202) 482-6397 or (202) 482-1560,
respectively.
EFFECTIVE DATE: September 13, 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'') and in 19 CFR 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'').
[[Page 49465]]
Scope
The merchandise subject to this countervailing duty order is sugar,
with the exception of specialty sugars (e.g., cones, hats, pearls,
loaves), from the European Community. Blends of sugar and dextrose, a
corn-derived sweetener, containing at least 65 percent sugar are within
the scope of this order. According to the final results of the
Department's most recent administrative review, the merchandise subject
to this order is currently classifiable under item numbers 1701.11.00,
1701.12.00, 1701.91.20, and 1701.99.00 of the Harmonized Tariff
Schedule of the United States (``HTSUS'') (see Sugar From the European
Community; Final Results of Countervailing Duty Administrative Review,
55 FR 35703 (August 31, 1990). In their substantive response, the
domestic interested parties asserted that the merchandise subject to
the order is currently classifiable under item numbers 1701.11.0025,
1701.11.0045, and 1702.90.300 of the HTSUS. Although the HTSUS
subheadings are provided for convenience and Customs purposes, the
written description remains dispositive.
Background
On April 26, 1999, the Department issued the Preliminary Results of
Full Sunset Review: Sugar From the European Community (64 FR 20257). In
our preliminary results, we found that revocation of the order would be
likely to lead to continuation or recurrence of a countervailable
subsidy. Further, we found the net countervailable subsidy likely to
prevail if the order were revoked is 10.80 cents per pound, the subsidy
from the original investigation. Finally, we found that, although
qualifying as a countervailable export subsidy, Article 3 of the
Subsidies Agreement did not apply to the export restitution payments
program.
On June 8, 1999, we received comments on behalf of the United
States Beet Sugar Association and its individual members and the United
States Cane Sugar Refiners' Association and its individual members
(collectively ``the Associations''), within the deadline specified in
19 CFR 351.309(c)(1)(i). We did not receive comments from respondent
interested parties.
Comments
Comment 1: The Associations assert that the Department's
preliminary determination that revocation of the order would likely
lead to continuation or recurrence of a countervailable subsidy was
appropriate and should be maintained for the final results. The
Associations further assert that the Department properly applied the
relevant standards, and the record in the underlying sunset review
cannot support any alternative conclusion.
Department Position: We agree with the Associations. For the
reasons enunciated in our notice of preliminary results (see
Preliminary Results of Full Sunset Review: Sugar From the European
Community, 64 FR 20257 (April 26, 1999)), we continue to find that
revocation of the countervailing duty order would likely lead to
continuation or recurrence of a countervailable subsidy.
Comment 2: The Associations assert that the Department correctly
concluded that the export restitution payments on European sugar
constitute a countervailable subsidy. However, they argue that the
Department incorrectly concluded that the subsidies are exempt from
Articles 3 and 6 of the Subsidies Agreement.
The Associations argue that the respondent foreign government and/
or industry bears the burden of demonstrating that the export subsidy
program at issue is in conformance with the provisions of Part V of the
Agreement on Agriculture before the Department may properly determine
that the program is exempt from Articles 3, 5, or 6 of the Subsidies
Agreement. Further, the Associations assert that the European
Commission failed to place evidence on the record or set forth
arguments supporting the proposition that the restitution payment
system under the CAP conforms to Part V of the Agreement on
Agriculture. The Associations assert that in their substantive response
they had presented significant evidence that the sugar restitution
payments under the CAP have repeatedly been found to violate GATT/WTO
principles. Additionally, they assert that they had presented further
evidence showing that it is likely that the European Union (``EU'')
will be unable to meet its GATT/WTO commitments to reduce the levels of
these export subsidies, in light of the increasing gap between the EU
and world price of sugar and the likely accession of ten new member
states to the EU in the near term.
In conclusion the Associations argue that the EU's sugar export
restitution payments most certainly constitute a prohibited
countervailable subsidy, whether under Article 3 of the Subsidies
Agreement or under Article 13(c) of the Agreement on Agriculture.
Department's Position: We disagree with the Associations' assertion
that the burden is on the respondent government and/or exporters to
provide evidence demonstrating that the export subsidy program at issue
is in conformance with the provisions of Part V of the Agreement on
Agriculture before the Department may properly determine that the
program is exempt from Articles 3, 5, or 6 of the Subsidies Agreement.
While the provision of such evidence would certainly aid the Department
in its determination, failure of the respondent government to provide
such evidence does not preclude the Department from finding that the
program is in conformance with the provisions of Part V of the
Agreement on Agriculture.
Further, we do not agree with the Associations that the evidence
they presented regarding prior determinations is sufficient to find
this program is a prohibited subsidy under the WTO Agreements. The
Associations referred to prior determinations by Treasury, Commerce,
the Commission, and the Canadian International Trade Tribunal, that
export restitution payments under the CAP are countervailable
subsidies. We agree that each of these determinations supports a
finding that the program is a countervailable export subsidy; however,
they do not address the question of whether the program is a prohibited
export subsidy under the Subsidies Agreement. In addition, the
Associations refer to the GATT Dispute Panel Report on Complaint by
Brazil Concerning EC Refunds on Exports of Sugar (adopted November 10,
1980) and the GATT Dispute Panel Report on Complaint by Australia
Concerning EC Refunds on Exports of Sugar (adopted November 6, 1979).
While both of these adopted Panel Reports held that the CAP sugar
regime constitutes a form of subsidy subject to the provisions of
Article XVI of the GATT, neither of these reports addresses the
question of whether the program is in conformance with the provisions
of Part V of the WTO Agreement on Agriculture.
As to the Associations' assertions that falling world sugar prices
and the pending application of ten new former Eastern bloc countries
currently seeking admission to the EU make it, at best, uncertain
whether the EU will be able to meet its commitments to reduce export
subsidies, we find these allegations insufficient to support a finding
that the program is not in conformance with Part V of the WTO Agreement
on Agriculture.
Article 13(c) of the Agreement on Agriculture states that export
subsidies conforming to the provisions of Part V of the Agreement on
Agriculture shall be exempt from actions based on Article
[[Page 49466]]
XVI of GATT 1994 or Articles 3, 5, and 6 of the Subsidies Agreement.
Part V of the Agreement on Agriculture, specifically Articles 8 and 9,
refers to the export subsidy commitments as specified in the Schedule
of each Member. Nothing on the record suggests that the restitution
payments on sugar do not conform to the commitments as reflected in the
EU's Schedule. Therefore, we continue to find that, although qualifying
as a countervailable export subsidy, Articles 3 and 6 of the Subsidies
Agreement do not apply to the export restitutions payment program on
sugar under the CAP.
Comment 3: The Associations argue that the Department should make
an upward adjustment to the net countervailable subsidy rate to arrive
at a rate that represents the countervailing duty rate likely to
prevail if the order is revoked. The Associations assert that the
evidence set forth in their substantive response supports a net
countervailable subsidy rate of 27.97 cents/pound of sugar and that
even the data presented in the EC's response supports a net subsidy
rate of 18.61 cents/pound of sugar. The Associations argue that, in the
present case, because the investigation rate is based on data that is
more than 20 years old and both domestic and foreign interested parties
have provided the Department with more recent data establishing a
current net subsidy rate of at least 18.61 cents/pound, there is
sufficient cause for the Department to make an exception to the general
rule of selecting the subsidy rate from the original investigation.
In conclusion, the Associations request that the Department make an
upward adjustment to the countervailing duty rate likely to exist in
the event of revocation to reflect the current prevailing rate of 27.97
cents/pound, or 18.61 cents/pound at a minimum.
Department's Position: In sunset reviews, the Department is
assigned the responsibility of providing to the International Trade
Commission (``the Commission'') the magnitude of the net
countervailable subsidy that is likely to prevail if the order is
revoked. For purposes of determining whether revocation of a
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy, section 752(b)(1) of the Act
directs the Department to consider the net countervailable subsidy
determined in the investigation and subsequent reviews and whether any
change in the program which gave rise to the net countervailable
subsidy has occurred that is likely to affect that net countervailable
subsidy. The Department noted in its Sunset Policy Bulletin that,
consistent with the Statement of Administrative Action (``the SAA'')
1 at 890, and the House Report 2 at 64, the
Department normally will select a rate from the investigation, because
that is the only rate that reflects the behavior of exporters and
foreign governments without the discipline of an order in place (see
section III.B.1 of the Sunset Policy Bulletin). Additionally, the
Department noted that the rate from the investigation may not be the
most appropriate if it was derived from a subsidy program which was
found in a subsequent review to have undergone a program-wide change
(see id. at section III.B.3).
---------------------------------------------------------------------------
\1\ H.R. Doc. No. 103-316, vol. 1 (1994).
\2\ H.R. Rep. No. 103-826, pt. 1 (1994).
---------------------------------------------------------------------------
The Department defines ``program-wide change'' as a change that (1)
is not limited to an individual firm or firms and (2) is effectuated by
an official act, such as the enactment of a statute, regulation, or
decree, or contained in the schedule of an existing statute,
regulation, or decree.3
---------------------------------------------------------------------------
\3\ See 19 CFR 351.526 (1999), which although not applicable to
this sunset review, nonetheless provides guidance on the
Department's policy.
---------------------------------------------------------------------------
As described in numerous Federal Register notices regarding the
underlying investigation and administrative reviews, export restitution
payments made under the CAP are a means of guaranteeing sugar producers
a stated export price for sugar (see e.g., Sugar From the European
Community; Preliminary Results of Countervailing Duty Administrative
Review, 55 FR 28799 (July 13, 1990)). Further, export restitution
payments are only granted when the world price of sugar as established
in international markets is lower than the ``threshold price''
established by the EC. Changes in the world market price are not
effectuated by the EC. However, the ``threshold price,'' the amount of
restitution payments to be provided, are determined by the EC,
effectuated by regulation, and published in the Official Journal. As
such, these changes constitute program-wide changes that the Department
may consider in determining the net countervailable subsidy likely to
prevail if the order were revoked.
Therefore, in a change from our preliminary results, we agree with
the Associations that the Department should determine the net
countervailable subsidy likely to prevail were the order revoked based
on more recent information. In its substantive response, the EC
identified the average export refund for marketing years 1995/1996,
1996/1997, and 1997/1998. In its substantive response, the Committee
calculated a subsidy rate based on the export refund rate from October
1998. Because, as the Committee argues, the world price of sugar has
been declining since 1995, we determine that recent data would more
closely approximate the level of subsidy if the order were revoked than
would the subsidy levels from the original investigation or
administrative reviews conducted in the early 1980's.
We do not, however, agree with the Associations' suggestion that a
rate based on an October 1998 announcement is the most appropriate.
Over the 1995-1998 time period, the average export refund has varied
from year to year and we do not have a basis to select one year over
the other as the most probative rate. Because we must provide the
Commission with the rate likely to prevail in the future based upon
past experience, we have determined that an average of the marketing
year refunds since the implementation of the WTO Agreement on
Agriculture, as reported in the EC's response, is an appropriate
representation of the net countervailable subsidy likely to prevail if
the order were revoked. On this basis, we find that the net
countervailable subsidy likely to prevail were the order revoked is
23.69 cents per pound of sugar, the rate established by the record as
reflecting recent trends in the level of export refunds.
Comment 4: The Associations argue that the Department's
determination to conduct a full sunset review is plainly inconsistent
with its own regulations, and will have the effect of rendering the
provision of 19 CFR 351.218(e)(3)(ii) meaningless in all countervailing
duty sunset determinations going forward. Specifically, the
Associations assert that none of the foreign respondent producers filed
any substantive responses to the notice of initiation and, therefore,
the Department should have determined that it did not receive adequate
response since it did not have complete substantive responses from
respondent interested parties accounting on average for more than 50
percent of the total exports of the subject merchandise. Given that the
legislative history contemplates that a response from the foreign
government in addition to responses from the foreign industry
respondents is essential to the sunset determination, foreign
governments are not entitled to a full review where all of the industry
participants that the government
[[Page 49467]]
presumably represents have failed to respond.
In conclusion, the Associations argue that the Department should
determine that a full review in this case was unnecessary and
unwarranted.
Department's Position: We disagree. The Department's regulations do
not require that the Department conduct an expedited review. Rather,
the regulations provide that the Department normally will conduct an
expedited review where it does not receive adequate response, where
adequate response is described as responses from parties accounting for
more than 50 percent of the volume of exports over the five years
preceding initiation of the sunset review. The Department must conduct
an expedited sunset review of a countervailing duty order only when the
foreign government does not participate.
Unlike other countervailing duty investigations or reviews, where
company-specific information is required in order to measure the amount
of countervailable subsidy, the subsidy rate from the only program
investigated over the life of this order has consistently been
determined without the need for, or use of, company-specific
information. Because adequacy determinations are made for the purpose
of determining whether there is sufficient participation to warrant a
full review, in a case such as this, where company-specific information
provides no additional input into our determinations, we believe that
requiring producer/exporter participation is not warranted. Therefore,
in this sunset review, we continue to believe that the response of the
EC forms an adequate basis for conducting a full review to determine
whether revocation of the countervailing duty order on sugar from the
EC will likely lead to continuation or recurrence of a countervailable
subsidy and, if so, what the level of the net countervailable subsidy
would be.
Final Results of Review
As a result of this review, the Department finds that revocation of
the countervailing duty order would be likely to lead to continuation
or recurrence of a countervailable subsidy for the reasons set forth in
the preliminary results of review. For the reasons set forth in the
preliminary results of review, we continue to determine the country-
wide net countervailable subsidy in terms of cents per pound. However,
for this final, we find the net countervailable subsidy likely to
prevail if the order were revoked is 23.69 cents per pound. Although
qualifying as a countervailable export subsidy, Articles 3 and 6 of the
Subsidies Agreement do not apply to the export restitution payments
program under the EC's CAP.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: August 27, 1999.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-23040 Filed 9-10-99; 8:45 am]
BILLING CODE 3510-DS-P
