(65 FR 11549, March 3, 2000) A-588-815 Sunset Review Public Document MEMORANDUM TO: Joseph A. Spetrini Acting Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memorandum for the Sunset Review of Gray Portland Cement and Cement Clinker from Japan; Final Results Summary We have analyzed the substantive responses of interested parties in the expedited sunset review of the antidumping duty order covering gray portland cement and cement clinker from Japan. We recommend that for our expedited final results you approve the positions we have developed in the Discussion of the Issues section of this memorandum. Below is the complete list of the issues in this expedited sunset review for which we received substantive responses by parties: 1. Likelihood of continuation or recurrence of dumping: Weighted-average dumping margin Volume of imports Other factors 2. Magnitude of the margin likely to prevail Margins from investigation Use of a more recent margin History of Order: The antidumping duty order on gray portland cement and clinker from Japan was published in the Federal Register on May 10, 1991 (56 FR 21658), as amended.(1) In the order, the Department announced the weighted-average dumping margins for the following companies: Onoda Cement Co. Ltd ("Onoda"): 70.52; Nihon Cement Co., Ltd ("Nihon")(2): 69.89; and all others: 70.23 percent. The Department has conducted several administrative reviews since that time.(3) The order remains in effect for all manufacturers and exporters of the subject merchandise. We note that the Department has not conducted a duty- absorption investigation pertaining to the imported subject merchandise. Background: On August 2, 1999, the Department initiated a sunset review of the antidumping duty order on gray portland cement and cement clinker from Japan (64 FR 41915) pursuant to section 751(c)(6)(A)(i) of the Tariff Act of 1930, as amended ("the Act"). On August 16, 1999, the Department received a Notice of Intent to Participate on behalf of the Committee for Fairly Traded Japanese Cement ("the Committee"), an ad hoc association of manufacturers of the domestic like product, within the deadline specified in section 351.218(d)(1)(i) of the Sunset Regulations. In its notice of intent to participate, the Committee indicated that none of its members is related to a Japanese producer/exporter of the subject merchandise or to a U.S. importer of the subject merchandise. We received a complete substantive response on behalf of the Committee on September 1, 1999. The Committee claimed interested party status, under section 771(9)(E) of the Act, as an ad hoc trade or business association, a majority of whose members manufacture, produce, or wholesale the domestic like products.(4) The Department received the Committee's substantive response within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). In its September 1, 1999, substantive response at 4, the Committee notes that each of its members intends to participate in the instant review and that its predecessor, the Ad Hoc Committee of Southern California Producers of Gray Portland Cement ("Ad Hoc Committee"),(5) filed the petition in the original antidumping investigation. The Committee also states that the Ad Hoc Committee actively participated in every facet of the subsequent administrative reviews of the order including appeals before the United States Court of International Trade. Id. We did not receive a substantive response from any respondent interested party to this proceeding. Consequently, pursuant to section 351.218(e)(1)(ii)(C) of the Sunset Regulations, the Department determined to conduct an expedited, 120- day, review of this order. 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). This review concerns a transition order within the meaning of section 751(c)(6)(C)(ii) of the Act. Therefore, on December 3, 1999, the Department determined that the sunset review of the antidumping duty order on gray portland cement and cement clinker from Japan is extraordinarily complicated and extended the time limit for completion of the final results of this review until not later than February 28, 2000, in accordance with section 751(c)(5)(B) of the Act.(6) Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted this expedited sunset review 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 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 duty order. In addition, section 752(c)(3) of the Act provides that the Department shall provide to the International Trade Commission ("the Commission") the magnitude of the margin of dumping likely to prevail if the order is revoked. Below we address the issues raised in substantive responses of interested parties. 1. Likelihood of Continuation or Recurrence of Dumping Interested Parties' Substantive Responses: The Committee argues that dumping of the subject merchandise will resume if the antidumping duty order were revoked. The Committee illustrates that dumping continued at levels above de minimis since the issuance of the order. At the same time, the Committee notes that imports of the subject merchandise declined substantially immediately after the issuance of the order, and in some instances, imports virtually ceased. (See September 1, 1999 Substantive Response of the Committee at 1 - 2 and 5 - 16.) With respect to continued dumping of the subject merchandise, the Committee points to the weighted-average dumping margins found in the Department's three administrative reviews of the order.(7) Although the margins determined in three administrative reviews were lower than those in the investigation, the Committee argues that the Japanese manufacturers/exporters achieved the lower margins in administrative reviews by selectively exporting only to the U.S. markets where the price of the domestic like product is relatively high.(8) In short, the Committee contends that Japanese manufacturers/exporters are simply unable to ship the subject merchandise to the United States without dumping. Id. As for import volumes, the Committee states that imports of the subject merchandise have declined dramatically since the issuance of the order and that imports were almost non-existent during 1995 - 1997. Moreover, according to the Committee, since 1997, the Japanese manufacturers/exporters have shipped the subject merchandise only three times, the sum of which represents about one percent of pre-order volumes. In addition, the Committee asserts that exports of Japanese cement clinker completely ceased after the imposition of the order.(9) In light of the fact that Japan is the world's leading exporter of cement and that U.S. imports of cement products from all countries have risen to record levels in recent years,(10) the Committee asserts that the reduced import volumes of the subject merchandise since the issuance of the order demonstrates that Japanese manufacturers/exporters are unable to export meaningful quantities of the subject merchandise to the United States without dumping. Id. The committee also states that, since the third review, Nihon, Onoda, and Chichibu Cement Co. Ltd. ("Chichibu") merged to form Taiheyo Cement Corporation ("Taiheiyo") - currently the largest Japanese producer of cement. Id. The Committee further claims that Onoda's success in lowering its dumping margins is not indicative of, nor is it relevant to, Taiheiyo's likely course of action should the Department revoke the order because Taiheiyo is a new entity.(11) In addition, the Committee argues that Japanese manufacturers/exporters' ownership of import terminals in California(12) contribute to the likelihood that the Japanese manufacturers/exporters of portland cement would return to pre-order practice of dumping in the absence of the order. Department's Position: 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 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 order and import volumes for the subject merchandise declined significantly. (See section II.A.3.) In addition to considering the guidance on likelihood cited above, 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 response from any respondent interested party. Pursuant to section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver of participation. As indicated in section II.A.3 of the Sunset Policy Bulletin, the SAA at 890, and House Report at 63-64, the Department considers whether dumping continued at any level above de minimis after the issuance of the order. If companies continue dumping with the discipline of an order in place, the Department may reasonably infer that dumping would continue were the discipline removed. After examining the published findings pertaining to the weighted-average dumping margins from previous administrative reviews, the Department agrees with the Committee that dumping above de minimis levels has persisted over the life of the order.(13) Consistent with section 752(c) of the Act, in addition, the Department also considered import volumes of the subject merchandise before and after the issuance of the order. The data supplied by the Committee and those of the United States Census Bureau IM146 and the Commission indicate that, since the imposition of the order, import volumes of the subject merchandise have declined substantially. In the year preceding the initiation of the original antidumping investigation, 1989, the import volume of the subject merchandise was 2,291 metric tons. In 1992, the year following the order, the import volume was 278 metric tons, about 12 percent of the pre-order volume. Moreover, during 1994 - 1998, the average import volume of the subject merchandise was 7 metric tons.(14) Therefore, we agree with the Committee that the import volumes of the subject merchandise decreased significantly after the issuance of the order. Given that dumping continued over the life of the order, that import volumes of the subject merchandise decreased significantly after the issuance of the order, and that Japanese manufacturers/exporters waived their right to participate in the instant review, we agree with the Committee's contention that dumping is likely to continue if the order is revoked. 2. Magnitude of the Margin Likely to Prevail Interested Parties' Substantive Responses: In its substantive response, at 17 - 25, the Committee argues that the likely- to-prevail dumping margins should be ones from the original investigation because there is no increasing trend in the post-order import volumes nor a decreasing trend in the weighted-average dumping margins to support the use of a more recently calculated margin. The Committee further notes that the newly formed company, Taiheiyo, was never subject to an administrative review and, consequently, the Department has never determined a company-specific rate for Taiheiyo. As such, the Committee claims that the Department should treat Taiheiyo as a new shipper and apply the all- others rate from the original investigation. Id. In addition, the Committee argues that Taiheiyo is not the successor-in- interest to either Nihon or Chichibu-Onoda.(15) After the merger, according to the Committee, both Nihon and Chichibu-Onoda underwent significant changes; neither company assumed a dominant role in Taiheiyo; Taiheiyo's production facilities will undergo significant changes; and Taiheiyo must alter its distribution system as per its agreement with the Japanese Fair Trade Commission. The Committee states that, therefore, Taiheiyo is a new, hybrid entity and, consequently, that Taiheiyo should be assigned the all-others rate from the original investigation rather than one of the lower rates determined for Onoda in subsequent administrative reviews. Id. Department's Position: 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 in the original investigation established both company-specific and all-others weighted-average dumping margins.(16) We note that the Department has not conducted a duty-absorption investigation with respect to the subject merchandise imported. The Department agrees with the Committee's contention that the likely-to- prevail margins are those from the original investigation. Absent argument or evidence to the contrary, we determine that the margins from the original investigation are probative of the behavior of Japanese manufacturers/exporters without the discipline of the order. We note that we have not previously determined whether Taiheiyo is the successor-in-interest to either Nihon or Onoda. Thus, we agree with the Committee that, for purposes of this sunset review, Taiheiyo is a new shipper to which we normally apply the all-others rate from the original investigation. Therefore, we will report to the Commission the rates as contained in the Final Results of Review section of this notice. Final Results of Review Based on the above analysis, the Department finds that revocation of the antidumping order would likely lead to continuation or recurrence of dumping at the margins listed below: ------------------------------------------------------------ Manufacturer/Exporter----------------------- Margin (percent) Nihon--------------------------------------- 69.89 Onoda--------------------------------------- 70.52 All others---------------------------------- 70.23 ------------------------------------------------------------ Recommendation Based on our analysis of the substantive responses, we recommend adopting all of the above positions. If these recommendations are accepted, we will publish the final results of review in the Federal Register. AGREE____ DISAGREE____ ______________________________________ Joseph A. Spetrini Acting Assistant Secretary for Import Administration ____________________________ (Date) 1. See Antidumping Duty Order and Amendment to Final Determination of Sales at Less Than Fair Value: Gray Portland Cement and Clinker From Japan, 56 FR 21658 (May 10, 1991), as amended, Amended Final Determination of Sales at Less Than Fair Value and Antidumping Order: Gray Portland Cement and Clinker From Japan, 60 FR 39150 (August 1, 1995). 2. Myojo Cement Co., Ltd. and Daiichi Cement Co., Ltd., which are affiliates of Nihon, are assigned the same margin as that of Nihon. 3. See Gray Portland Cement and Clinker From Japan; Final Results of Antidumping Duty Administrative Review, 58 FR 48826 (September 20, 1993), as amended, Gray Portland Cement and Clinker From Japan; Amendment of Final Results of Antidumping Duty Administrative Review, 58 FR 53705 (October 18, 1993); Gray Portland Cement and Clinker From Japan; Final Results of Antidumping Duty Administrative Review, 60 FR 43761(August 23, 1995); and Gray Portland Cement and Clinker From Japan; Final Results of Antidumping Duty Administrative Review, 61 FR 67308 (December 20, 1996). All these reviews covered only one Japanese manufacturer/exporter of the subject merchandise, Onoda. 4. The Committee's membership consists of Calaveras Cement, Hanson Permanente Cement, National Cement Co. of California, Inc., RMC Lonestar, Southdown, Inc., and TXI-Riverside Cement Co. 5. The Ad Hoc Committee consisted of National Cement Company and Southwestern Portland Cement, to which Southdown, Inc. is a successor. 6. See Extension of Time Limit for Final Results of Five-Year Reviews, 64 FR 67847 (December 3, 1999). 7. See footnote 3, supra. The weighted-average dumping margins determined by the Department in its three administrative reviews are as follows: first review - 33.95 (as amended); second review - 24.27 percent; and third review - 30.12 percent. 8. According to the Committee, the Japanese manufacturers/exporters basically discarded the highly competitive California market, which was their primary destination during the pre-order period. Instead, after the issuance of the order, the Japanese manufacturers/exporters have been exporting to the Alaska, Oregon, and Washington markets, which bear higher prices for the cement product than does the California market (e.g., during 1991-1994, the average price per metric ton of portland cement in the Alaska, Oregon, and Washington was 30 to 57 percent higher than the price in California). (See the Committee's substantive response at 10 - 12 and Attachment F.) 9. In other words, Japanese manufacturers/exporters have been exporting only gray portland cement since the imposition of the order. 10. The Committee states that from 1992 to 1998, U.S. imports of cement products from all nations increased by nearly 300 percent (from 6.4 million short tons to 25.6 million short tons). (See the Committee's substantive response at 15 and Attachment J.) To illustrate its point further, the Committee notes that Japanese manufacturers/exporters' market share of the subject merchandise in the United States declined from 9.7, 13.5, and 11.5 percent in 1988, 1989, and 1990, respectively, to 0.00 percent in 1991 through 1997 and to 0.1 percent in 1998. Id. 11. As noted above, Onoda was the only company subject to the Department's administrative review. According to the Committee, since the last administrative review, in 1994, Onoda merged with Chichibu to form Chichibu- Onoda. Then in 1998, Chichibu-Onoda and Nihon merged to form Taiheiyo. 12. Taiheiyo owns California Portland Cement Company ("CPC"), which operates an import terminal in California and a floating cement storage silo at the port of Stockton. Also, Mitsubishi Materials Corp. owns MCC-Lucky import terminal at Long Beach, California. 13. See footnote 7, supra. 14. Data from the Commission indicate that the import volumes of the subject merchandise during the period 1989 through 1998 are as follows: 1989 - 2,291; 1990 - 1,906; 1991 - 300; 1992 - 278; 1993 - 43; 1994 - 14; 1995 - 0; 1996 - 0; 1997 - 0; and 1998 - 21 (the investigation was initiated in 1990, and the order was imposed in 1991). 15. See footnote 11, supra. 16. See footnote 1, supra.