00-2581. Final Results of Expedited Sunset Reviews: Axes and Adzes and Picks and Mattocks From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final results of expedited sunset reviews: Axes and adzes and picks and mattocks from the People's Republic of China.

SUMMARY:

On July 1, 1999, the Department of Commerce (“the Department”) initiated sunset reviews of the antidumping duty orders on axes and adzes and on picks and mattocks from the People's Republic of China (“PRC”) (64 FR 35588) pursuant to section 751(c) of the Tariff Act of 1930, as amended (“the Act”). On the basis of notices of intent to participate and adequate substantive comments filed on behalf of domestic interested parties and inadequate responses from respondent interested parties, the Department determined to conduct expedited reviews. As a result of these reviews, the Department finds that revocation of the antidumping orders would likely lead to continuation or recurrence of dumping at the levels indicated in the Final Results of Reviews section of this notice.

EFFECTIVE DATE:

February 4, 2000.

FOR FURTHER INFORMATION CONTACT:

Darla D. Brown 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, DC 20230; telephone: [phone] or [phone], respectively.

Statute and Regulations

These reviews were 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 CFR Part 351 (1999) 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

Although we provide the full scope language for the order on heavy forged hand tools (“HFHTs”) below, this determination applies only to the types of HFHTs which fall under the orders (A-570-803) on axes and adzes and picks and mattocks from the PRC. HFHTs include heads for drilling, hammers, sledges, axes, mauls, picks, and mattocks, which may or may not be painted, which may or may not be finished, or which may or may not be imported with handles; assorted bar products and track tools including wrecking bars, digging bars and tampers; and steel wool splitting wedges. HFHTs are manufactured through a hot forge operation in which steel is sheared to the required length, heated to forging temperature, and formed to final shape on forging equipment using dies specific to the desired product shape and size. Depending on the product, finishing operations may include shot-blasting, grinding, polishing, and painting, and the insertion of handles for handled products. HFHTs are currently classifiable under the following Harmonized Tariff Schedule (“HTS”) item numbers 8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically excluded are hammers and sledges with heads 1.5 kilograms (3.33 pounds) in weight and under, and hoes and rakes, and bars 18 inches in length and under. The HTS item numbers are provided for convenience and customs purposes only. The written description of the scope remains dispositive.

There has been one scope ruling with respect to the order on HFHTs from the PRC in which the Forrest Tool Company's Max Multipurpose Tool was determined to be within the scope of the order (58 FR 59991; November 12, 1993).

These reviews cover imports from all manufacturers and exporters of axes and adzes and picks and mattocks from the PRC.

History of the Orders

The Department published its final affirmative determination of sales at less than fair value (“LTFV”) with respect to imports of HFHTs from the PRC on January 3, 1991 (56 FR 241). In this determination, the Department published four country-wide weighted-average dumping margins, one each for hammers/sledges, bars/wedges, picks/mattocks and axes/adzes. The Department subsequently issued the antidumping duty orders on HFHTs from the PRC on February 19, 1991 (56 FR 6622). Since the imposition of the orders, the Department has conducted several administrative reviews.^[1] The orders remain in effect for all manufacturers and exporters of the subject merchandise from the PRC.

To date, the Department has not issued any duty absorption findings in these cases.

Background

On July 1, 1999, the Department initiated sunset reviews of the antidumping duty orders on axes and adzes and picks and mattocks from the PRC (64 FR 35588), pursuant to section 751(c) of the Act. For both of the reviews, the Department received notices of intent to participate on behalf of O. Ames Co. and its division, Woodings-Verona (collectively, “domestic interested parties”) on July 16, 1999, within the deadline specified in section 351.218(d)(1)(i) of the Sunset Regulations. Pursuant to section 771(9)(C) of the Act, the domestic interested parties claimed interested party status as domestic manufacturers of the subject merchandise. The Department received complete substantive responses from the domestic interested parties on August 2, 1999, within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). In addition, we received substantive responses on behalf of Fujian Machinery and Equipment Import and Export Corp., Shandong Huarong General Group Corp., Shandong Machinery Import and Export Corp., and Tianjin Machinery Import and Export Corp. (collectively, “respondents”). The respondents claimed interested party status under section 771(9)(A) as exporters of the subject merchandise.

Using information on the value of exports submitted by the respondents and the value of imports as reported in U.S. Census Bureau IM146 Reports, the Department determined that respondents' exports to the United States accounted for significantly less than fifty percent of the total volume of subject merchandise to the U.S. over the five calendar years preceeding the initiation of these sunset reviews. Therefore, respondents provided inadequate response to the notice of initiation and, pursuant to 19 CFR 351.218(e)(1)(ii)(C), the Department determined to conduct expedited, 120-day reviews of the orders.^[2]

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). On November 16, 1999, the Department determined that the sunset reviews of the antidumping duty orders on axes/adzes and picks/mattocks from the PRC are extraordinarily complicated and extended the time limit for completion of the final results of these reviews until not later than January 27, 2000, in accordance with section 751(c)(5)(B) of the Act.^[3]

Although the deadline for this determination was originally January 27, 2000, due to the Federal Government shutdown on January 25 and 26, 2000, resulting from inclement weather, the time-frame for issuing this determination has been extended by one day.

Determination

In accordance with section 751(c)(1) of the Act, the Department conducted these reviews to determine whether revocation of the antidumping duty order would be likely to lead to continuation or recurrence of dumping. Section 752(c) of the Act provides that, in making these determinations, 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 margins of dumping likely to prevail if the order were revoked.

The Department's determinations concerning continuation or recurrence of dumping and the magnitude of the margins are discussed below. In addition, domestic interested parties' and respondents' comments with respect to continuation or recurrence of dumping and the magnitude of the margins 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.2). In addition, the Department indicated that it 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).

In their substantive responses, the domestic interested parties argue that revocation of the orders would likely lead to continuation or recurrence of dumping. They base their conclusion on the combined facts that dumping has continued over the life of the orders at levels well above de minimis and that import volumes, in the case of axes/adzes, declined significantly after the issuance of the orders. The domestic interested parties maintain that imports of axes/adzes from the PRC declined significantly from approximately $1.9 million worth of subject merchandise in 1989 to approximately $1.5 million worth of merchandise in 1997 and to roughly $1.2 million in 1998. They argue that although import quantities are not publicly available, the decline in total value of imports indicates that volume also declined substantially. The domestic interested parties, however, do not discuss import volumes for picks/mattocks in their substantive response. They conclude that it is reasonable to assume that the PRC exporters could not sell in the United States without dumping and that, to reenter to U.S. market, they would have to increase or continue dumping (see August 2, 1999, substantive response of the domestic interested parties at 3-4).

The respondents argue that if the orders were revoked, shipments would likely continue at average levels as seen in 1996 through 1998. They maintain that there is greater competition from other supplying countries and that demand in the U.S. is fairly inelastic, indicating that even with lower prices (without dumping duties), demand for imports of the subject merchandise from the PRC is not likely to change much (see July 30, 1999, substantive response of the respondents at 2).

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 to dump with the discipline of an order in place, the Department may reasonably infer that dumping would continue if the discipline were removed. As pointed out above, dumping margins above de minimis continue to exist for shipments of the subject merchandise from China.

Consistent with section 752(c) of the Act, the Department also considers the volume of imports before and after issuance of the order. As mentioned before, the domestic interested parties maintain that imports of axes/adzes from the PRC declined significantly from approximately $1.9 million worth of subject merchandise in 1989 to approximately $1.5 million worth of merchandise in 1997 and roughly $1.2 million in 1998.

Using the Department's statistics, including IM146 reports, on imports of the subject merchandise from the PRC, the Department concludes that imports of axes/adzes and picks/mattocks from the PRC have fluctuated over the life of the orders, showing no overall trend.

As noted above, in conducting its sunset reviews, the Department considers the weighted-average dumping margins and volume of imports when determining whether revocation of an antidumping duty order would lead to the continuation or recurrence of dumping. Based on this analysis, the Department finds that the existence of dumping margins above de minimis levels is highly probative of the likelihood of continuation or recurrence of dumping. A deposit rate above a de minimis level continues in effect for exports of the subject merchandise by at least one Chinese manufacturer/exporter. Therefore, given that dumping has continued over the life of the orders, the Department determines that dumping is likely to continue if the orders were revoked. Because we are basing our determination on the fact that dumping has continued throughout the life of the orders, it is not necessary to address respondent's arguments concerning demand.

Magnitude of the Margin

In the Sunset Policy Bulletin, the Department stated that it normally will 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.) We note that, to date, the Department has not issued any duty absorption findings in either of these cases.

In their substantive responses, the domestic interested parties recommend that the Department deviate from its normal practice of using margins from the original investigation and instead use margins from a more recent administrative review. In the case of axes/adzes, the domestic interested parties recommend using the PRC-wide margin of 21.92 calculated in the fourth administrative review. For picks/mattocks, the domestic interested parties argue that the dumping margins likely to prevail if the orders were revoked would be 98.77 percent for Fujian Machinery & Equipment Import & Export Corp., as calculated in the fifth administrative review; 70.31 percent for Shandong Machinery Import & Export Corp., as calculated in the fourth administrative review; and 50.81 percent for Tianjin Machinery Import & Export Corp., Liaoning Machinery Import & Export Corp. and Shandong Huarong General Group Corp., as calculated in the original investigation. The domestic interested parties argue further that, in the case of picks/mattocks, while the dumping margins calculated by the Department have fluctuated, the margins have increased for most of the PRC producers.

The respondents argue that the dumping margin likely to prevail if the orders were revoked would be zero, but no higher than the average margin for the latest reviews.

The Department disagrees with both domestic and respondent interested parties. As noted in the Sunset Regulations and Sunset Policy Bulletin, the Department may provide to the Commission a more recently calculated margin for a particular company where dumping margins increased after the issuance of the order where that particular company increased dumping to maintain or increase market share. In these cases, the domestic interested parties do not provide any company-specific argument or evidence that any Chinese companies have increased dumping in order to maintain or gain market share or increase import volumes. Moreover, while it is true that dumping margins have increased for some Chinese companies, we have no company-specific information demonstrating that imports of the subject merchandise have increased over the life of the orders. Since we have no company-specific information correlating an increase in exports for one company with an increase in the dumping margin for that particular company, we cannot conclude that the use of more recently calculated margins is warranted in this case. Further, we do not agree with the respondents that a more recently calculated margin is appropriate, because we have no company-specific information demonstrating that the lower, more recent rates are associated with steady or increasing imports.

Therefore, consistent with the Sunset Policy Bulletin, the Department finds that the margins calculated in the original investigation are probative of the behavior of Chinese producers/exporters if the orders were revoked as they are the only margins which reflect their behavior absent the discipline of the orders. As such, the Department will report to the Commission the PRC-wide rates from the original investigations as contained in the Final Results of Reviews section of this notice.

Final Results of Reviews

As a result of these reviews, the Department finds that revocation of the antidumping orders would likely lead to continuation or recurrence of dumping at the margins listed below:

PRC-wide	Margin (percent)
Axes/adzes	15.02
Picks/mattocks	50.81

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.

These five-year (“sunset”) reviews and notices are in accordance with sections 751(c), 752, and 777(i)(1) of the Act.

Dated: January 28, 2000.

Holly A. Kuga,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  See Heavy Forged Hand Tools, Finished and Unfinished, With or Without Handles, from the People's Republic of China; Final Results of Antidumping Duty Administrative Reviews, 60 FR 49251 (September 22, 1995); Heavy Forged Hand Tools, Finished and Unfinished, With or Without Handles, from the People's Republic of China; Final Results of Antidumping Duty Administrative Review, 61FR 15028 (April 4, 1996); as amended, Heavy Forged Hand Tools, Finished and Unfinished, With or Without Handles, from the People's Republic of China; Amendment of Final Results of Antidumping Duty Administrative Review, 61 FR 24285 (May 14, 1996); Heavy Forged Hand Tools, Finished and Unfinished, With or Without Handles, from the People's Republic of China; Final Results of Antidumping Duty Administrative Review, 61 FR 51269 (October 1, 1996); as amended, Heavy Forged Hand Tools from the People's Republic of China; Notice of Amendment of Final Results of Antidumping Duty Administrative Review, 62 FR 24416 (May 5, 1997); Heavy Forged Hand Tools from the People's Republic of China; Final Results of Antidumping Duty Administrative Reviews, 62 FR 11813 (March 13, 1997); Heavy Forged Hand Tools, Finished and Unfinished, With or Without Handles, from the People's Republic of China; Final Results of Antidumping Duty Administrative Reviews, 63 FR 16758 (April 6, 1998); as amended, Amended Final Results of Antidumping Duty Administrative Reviews Pursuant to Remand from the Court of International Trade: Heavy Forged Hand Tools, Finished and Unfinished, With or Without Handles, from the People's Republic of China, 63 FR 55577 (October 16, 1998) and Amended Final Results of Antidumping Duty Administrative Reviews Pursuant to Remand from the Court of International Trade: Heavy Forged Hand Tools, Finished and Unfinished, With or Without Handles, from the People's Republic of China: Correction, 64 FR 851 (January 6, 1999); Heavy Forged Hand Tools, Finished and Unfinished, With or Without Handles, from the People's Republic of China; Final Results and Partial Recission of Antidumping Duty Administrative Reviews, 64 FR 43659 (August 11, 1999).

2.  See memoranda concerning adequacy of respondent response dated October 19, 1999.

3.  See Extension of Time Limit for Final Results of Five-Year Reviews, 64 FR 62167 (November 16, 1999).