65 FR 41441, July 5, 2000 A-844-802 Sunset Review Public Document MEMORANDUM TO: Troy H. Cribb Acting Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memorandum for the Sunset Review of Uranium from Uzbekistan; Final Results Summary: We have analyzed the comments and rebuttals of interested parties in the full sunset review of the suspended antidumping duty investigation covering uranium from Uzbekistan. We recommend that 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 final results of full sunset review for which we received case briefs and rebuttal comments by parties: 1. Scope 2. Domestic industry response 3. Likelihood of continuation or recurrence of dumping A. Weighted-average dumping margin B. Volume of imports C. Other Factors 4. Magnitude of the margin likely to prevail A. Margins from the investigation B. Use of a more recent margin Background: On February 28, 2000, the Department of Commerce (“the Department”) published in the Federal Register a notice of preliminary results of the full sunset review of the antidumping duty investigation on uranium from Uzbekistan (65 FR 10471) pursuant to section 751(c) of the Tariff Act of 1930, as amended (“the Act”). In our preliminary results, we found that termination of the agreement suspending the antidumping duty investigation would likely result in continuation or recurrence of dumping at a weighted- average margin of 115.82 percent for all producers/exporters from Uzbekistan. On March 24, 2000, we received a request from Navoi Mining and Metallurgical Combinat ("Navoi") and the Government of Uzbekistan ("GOU") (together, "respondent interested parties") for an extension of time for filing rebuttal comments to case briefs until April 18, 2000. The Department agreed to extend the deadline to April 18, 2000. (1) On March 29, 2000, the Ad Hoc Committee of Domestic Uranium Producers (the "Ad Hoc Committee"), requested a hearing in this review. On April 14, 2000, the Ad Hoc Committee formally withdrew its March 29, 2000, request for a hearing in this review; therefore, the Department canceled the public hearing. On April 10, 2000, we received case briefs on behalf of the Ad Hoc Committee, the Ad Hoc Utilities Group ("AHUG"), (2) and respondent interested parties. On April 18, 2000, within the deadline specified in 19 CFR 351.309(d), the Department received rebuttal comments from the Ad Hoc Committee and respondent interested parties. We have addressed the comments received below. Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted this sunset review to determine whether termination of the antidumping duty investigation would likely 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 the suspension agreement. 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 or suspension agreement is revoked. 1. Scope Interested Party Comments In its case brief, the Ad Hoc Committee states that the Department properly confirmed that the scope of the Uzbek suspension agreement includes all forms of uranium, including highly enriched uranium ("HEU") and low enriched uranium ("LEU") derived from HEU, and Uzbek uranium enriched in a third country prior to importation into the United States (see April 10, 2000, case brief of the Ad Hoc Committee at 2). The Ad Hoc Committee urges the Department to reconfirm that the above forms of uranium are within the scope of the agreement and the underlying investigation. Id. In its case brief, AHUG opposes the Department's preliminary determination, reiterates and incorporates by reference its comments filed with the Department on September 1, 1999, and September 13, 1999 (see April 10, 2000, case brief of AHUG at 2). Respondent interested parties contend in their case brief that the Department failed to acknowledge in its preliminary results review the important distinction between the negotiated terms of a "suspension agreement" and the scope of the "suspended investigation," and urge the Department to properly focus on whether dumping is likely to continue or recur if the suspended investigation is terminated, and conduct a prospective analysis of what is likely to occur in the future if the suspended investigation and the suspended agreement no longer existed (see April 10, 2000, case brief of respondent interested parties at 37). Accordingly, respondent interested parties argue, the rule that "enrichment confers origin" would replace the third-country "bypass" amendment of the suspension agreement to which the Department refers in the February 18, 2000, Issues and Decision Memorandum for the Sunset Review of Uranium from Uzbekistan; Preliminary Results. In doing so, it would contradict the requirement that likelihood of dumping be assessed on an "order-wide" basis and the sunset standards set forth in the statute, the Statement of Administrative Action ("SAA"), and the Sunset Policy Bulletin. Id. at 38. Moreover, respondent interested parties argue that the principle that "enrichment confers origin" is a basic tenet of the Department's prior uranium determinations and rules of origin ruling of the U.S. Custom's service, and overturning this fundamental principle would potentially cause chaos in uranium trade. Id. at 38-39. In addition, respondent interested parties assert that HEU is not covered by the underlying investigation or the Uzbek suspension agreement because Uzbekistan produces only natural uranium, is incapable of exporting HEU to the United States, has no nuclear weapons grade material or stockpile HEU material, and does not produce any LEU blended down from HEU and its return feed. Id. at 39. Thus, respondent interested parties state, the importation of HEU to the United States is governed by an entirely different regulatory scheme under the USEC Privatization Act, and the Department should re-evaluate the Diversified criteria, including physical characteristics, channels of trade, purchaser expectations, and cost, which would no longer support inclusion of HEU in the same class or kind as the natural uranium produced in Uzbekistan. Id. at 39-40. In its rebuttal brief, the Ad Hoc Committee states that all forms of uranium are within the scope of this proceeding because both the suspension agreement and the suspended investigation make clear that HEU and uranium enriched in third countries are within the scope of the underlying investigations, the suspension agreements, and this sunset review (see April 18, 2000, rebuttal of the Ad Hoc Committee at 14). The Ad Hoc Committee also asserts that the GOU's request that the Department reconsider its Diversified analysis and 1992 scope ruling is inappropriate for this proceeding; sunset reviews are not scope proceedings, and neither the statute, the SAA, nor the Department's regulations provide for a reconsideration of the scope of the proceeding during a sunset review. Id. at 15. Further, the Ad Hoc Committee states, it is irrelevant that the GOU does not currently produce HEU and unnecessary that respondent interested parties produce any or all "subclasses" within the class or kind. Accordingly, the Department correctly determined that all forms of uranium constitute one class or kind of merchandise. Id. at 16. Respondent interested parties rebut that there is no basis for including HEU in the scope of this sunset review. They reassert that the proper scope of a sunset review must be consistent with a prospective analysis of whether dumping would be likely to continue or recur if the suspension agreement no longer existed and, thus, the third-country bypass amendment was no longer in place (see April 18, 2000, rebuttal comments of respondent interested parties at 6). Further, respondent interested parties contend that the Department's preliminary determination undermines the fundamental principle that "enrichment confers origin," which has been established through numerous uranium decisions by the Department and U.S. customs. Id. Finally, respondent interested parties reassert that an analysis of the traditional Diversified criteria establishes that HEU and LEU blended down from HEU are readily distinguishable from the natural uranium concentrates produced in Uzbekistan. Id. Department's Position In response to the arguments of interested parties, we find it useful to summarize the history of the scope of the Uzbek suspension agreement. According to the June 3, 1992, preliminary determination the suspended investigation included natural uranium in the form of uranium ores and concentrates; natural uranium metal and natural uranium compounds; alloys, dispersions (including cermets), ceramic products, and mixtures containing natural uranium or natural uranium compound; uranium enriched in U235 and its compounds; alloys dispersions (including cermets), ceramic products and mixtures containing uranium enriched in U235 or compounds or uranium enriched in U235; and any other forms of uranium within the same class or kind. The uranium subject to these investigations was provided for under subheadings 2612.10.00.00, 2844.10.10.00, 2844.10.20.10, 2844.10.20.25, 2844.10.20.50, 2844.10.20.55, 2844.10.50, 2844.20.00.10, 2844.20.00.20, 2844.20.00.30, and 2844.20.00.50 of the Harmonized Tariff Schedule of the United States ("HTSUS"). (3) In addition, the Department preliminarily determined that highly-enriched uranium ("HEU") was not covered within the scope of the investigation, and that the subject merchandise constituted a single class or kind of merchandise. On October 30, 1992, the Department issued a suspension of the antidumping duty investigation of uranium from Uzbekistan and an amendment of the preliminary determination. (4) The notice amended the scope of the investigation to include HEU. (5) The suspension agreement provided that uranium ore from Uzbekistan that is milled into U3O8 and/or converted into UF6 in another country prior to direct and/or indirect importation into the United States is considered uranium from Uzbekistan and is subject to the terms of the Agreement. (6) Further, uranium enriched in U235 in another country prior to direct and/or indirect importation into the United States was not considered uranium from Uzbekistan and was not subject to the terms of the suspension agreement. (7) In this suspension agreement, imports of uranium ores and concentrates, natural uranium compounds, and all forms of enriched uranium are classifiable under HTSUS subheadings 2612.10.00, 2844.10.20, 2844.20.00, respectively. Imports of natural uranium metal and forms of natural uranium other than compounds were classifiable under HTSUS subheadings 2844.10.10 and 2844.44.10.50. On October 13, 1995, the Department issued an amendment to the suspension agreement on uranium from Uzbekistan. Among other things, this amendment modifies the agreement to include Uzbek uranium enriched in a third country prior to importation into the United States. The scope of this sunset review is set forth above. We agree with the Ad Hoc Committee that the sunset review is an improper forum for the analysis or determination of the scope of the underlying suspended investigation. We do not find that the Department should reconsider its Diversified analysis and 1992 scope of the proceeding during a sunset review. Such request may be appropriately contemplated/considered in the context of a scope inquiry. Accordingly, we leave the scope as described both in the preliminary determination and the suspension agreement unchanged for purposes of this sunset review. 2. Domestic Industry Support Interested Party Comments The Ad Hoc Committee asserts in its case brief that the Department correctly held that a complete substantive response from a single domestic interested party constitutes adequate domestic industry participation in this sunset review, under 19 CFR 351.218(e)(1)(i), to warrant continuation of the review (see April 10, 2000, case brief of the Ad Hoc Committee at 2). The Ad Hoc Committee states that its present members include Rio Algom, URI, Cotter Corporation ("Cotter"), Everest Exploration, Inc. ("Everest"), and ConverDyn, all of which are domestic interested parties under section 771(9)(c) of the Act and 19 CFR 351.102(b). Id. at 2-3. Respondent interested parties assert in their case brief that the Department's reliance on its regulations in its preliminary results can only be consistent with the SAA and Articles 6 and 11 of the GATT Agreement on the Implementation of Article VI ("Antidumping Agreement") if the one responding domestic party controls a significant proportion of production or market share (see April 10, 2000, case brief of respondent interested parties at 41). Respondent interested parties state that there are only two domestic producers, Rio Algom and URI, that have participated in the sunset proceeding, and that these companies represented a mere 2.02 percent of total domestic production of uranium products in 1998. Further, according to their annual reports, these companies phased down or eliminated mining production in 1998-99 in favor of importing uranium, so the likely future production of these two producers is minuscule or nonexistent. Id. at 42. Therefore, given the inadequate response of any domestic interested party, respondent interested parties assert that the Department should issue a final determination terminating the suspended investigation. Id. In its rebuttal comments, the Ad Hoc Committee contends that the Department, in response to a U.S. manufacturer's claim that no review should be conducted because most domestic parties favored revocation, explained why the domestic interested parties' response is adequate. In doing so, the Ad Committee asserts that the SAA language cited by the GOU does not alter the Department's analysis (see April 18, 2000, rebuttal comments of the Ad Hoc Committee at 17). As a result, the Ad Hoc Committee continues to argue that the Department should reject in its final determination the GOU's challenge to the adequacy of domestic interested party responses. Id. In their rebuttal comments, respondent interested parties reassert that the only members relevant to the Department's adequacy determination are Rio Algom and URI, and the Department must take into account, under SAA adequacy standards, the proportion of parties and market share accounted for by these two companies (see April 18, 2000, rebuttal comments of respondent interested parties at 7). Thus, given the minuscule U.S. production and market share accounted for by these two companies, the Department should find the Ad Hoc Committee's response to be inadequate and terminate the suspended investigation in the final results. Id. Department's Position We agree with the domestic interested parties that the industry support requirements are inapplicable to sunset reviews beyond the adequacy determination. As we stated in our preliminary results, the Department normally will not analyze and evaluate standing and industry support in the course of a sunset review. The Department's mandate in a sunset review is to determine whether termination of the suspended investigation is likely to result in the continuation or recurrence of dumping, and it made clear in its regulations that a complete substantive response from one domestic interested party is considered adequate for purposes of continuing the review. Therefore, given that we received a response from at least one member of the domestic industry, in accordance with section 351.218(e)(1)(i) of the regulations, we determine that we have adequate domestic industry participation. 3. Likelihood of Continuation or Recurrence of Dumping: Interested Party Comments: In its case brief, the Ad Hoc Committee contends that the Department properly found that the continuation or recurrence of dumping is a likely result of revoking the Uzbek suspension agreement and underlying investigation. Specifically, the Ad Hoc Committee states that the Department correctly held that market conditions are such that removal of restrictions imposed by the suspension agreement will likely result in the continuation or recurrence of dumping in light of the fungible, commodity nature of uranium, the restricted access of Uzbek uranium to European and Asian markets, and the fact that some Uzbek deliveries are now made under long-term contracts (see April 10, 2000, case brief of the Ad Hoc Committee at 3). As a result, the removal of the Uzbek agreement's restrictions would result in an increase in Uzbek imports and a decrease in subject import prices. Id. In their case brief, respondent interested parties argue that there is no record evidence to support the Department's preliminary determination of likelihood that dumping will continue or recur if the suspended investigation is terminated. Further, the Department fails to address the substantial record evidence demonstrating that Uzbekistan has never engaged in less-than-fair-value ("LTFV") sales, and that prices of sales to the United States would likely increase if the suspended investigation is terminated. Respondent interested parties assert that the Act, SAA, and Policy Bulletin plainly establish the Department's criteria for analysis and the Department expressly acknowledges, in its Decision Memorandum, that none of these three scenarios is supported by the price or import volume data on the record of this sunset review (see April 10, 2000, case brief of respondent interested parties at 4). With respect to whether dumping has occurred at any level above de minimis since the acceptance of the suspension agreement, respondent interested parties reassert that the Department has never calculated any margin that would establish that Uzbekistan has sold uranium to the United States at LTFV, and has never permitted Uzbekistan to submit complete country-specific data establishing the absence of dumping. Id. First, the Department cannot rely on the original preliminary margin as evidence of any likelihood of dumping by Uzbekistan because the original preliminary margin was improperly based on highly adverse best information available ("BIA") data from the USSR, rather than on any country-specific data or allegations relating to Uzbekistan. Id. at 5. Second, respondent interested parties argue that the operation of the Uzbek suspension agreement ensures that sales of uranium from Uzbekistan have not been at dumped prices. Specifically, the Uzbek suspension agreement can be distinguished from other non-market economy suspension agreements because it contains a unique price-tied quota mechanism that eliminates the possibility of dumping. Id. at 6. Respondent interested parties assert that all of Uzbekistan's imports from 1992 through 1995 were made pursuant to contracts entered into before March 1992, and record evidence demonstrates that all of the prices were at or above U.S. market prices. Id. Further, they assert that the Department has ensured that deliveries of Uzbek uranium to the United States under the suspension agreement have been made pursuant to long-term contracts in which the selling prices are above the comparable U.S. market prices. Id. at 7. Third, respondent interested parties contend that record evidence of actual selling prices under long-term contracts confirms Uzbekistan's above-market prices and contradicts the Department's statement in its Decision Memorandum that the existence of these contracts says nothing with respect to whether such prices are at, or above, normal market value ("NV"). Id. at 8. Rather, the evidence demonstrates that all of GOU/Navoi's sales are most likely at prices above- market prices. Finally, respondent interested parties assert that Navoi's contract commitments and capacity constraints ensure that it cannot sell at dumped prices in the future, and that the relevant window of foreseeability for the Department's likelihood of dumping determination should not be extended beyond 2004, the year in which the suspension agreement is scheduled to expire. Further, respondent interested parties contend that Navoi has no economic incentive to sell at lower prices with respect to future contracts; rather, Navoi will benefit from selling its production into the United States at the higher prices it receives under long-term contracts. Id. at 9-10. Moreover, Uzbekistan accounts for only a small fraction of U.S. uranium supply, and Navoi, because of its capacity constraints, has a very strong economic incentive to maximize its profitability and foreign exchange revenues by selling its limited production quantities of uranium at the highest possible prices under all current and future contracts, regardless of whether the suspended investigation is terminated. Id. at 10. With respect to whether imports of the subject merchandise did not cease after issuance of the suspension agreement, respondent interested parties assert that the import volume data submitted by GOU/Navoi plainly shows that imports did not cease; rather, imports were significant immediately following issuance of the suspension agreement. Id. at 12. With respect to whether dumping was eliminated after issuance of the suspension agreement, and import volumes have remained steady or increased, respondent interested parties contend that record evidence establishes that dumping did not occur after issuance of the suspension agreement. Id. Contrary to the Department's characterization of Uzbek import volumes, the record data indicates that uranium from Uzbekistan has consistently been imported at significant levels since the issuance of the suspension agreement, and that imports have increased during the last four semi-annual periods. Id. at 13. Moreover, imports increased relative to pre-suspension agreement levels, and Uzbekistan's share of the domestic uranium purchases by U.S. utilities has remained steady in 1997 and 1998. Id. With respect to other factors, respondent interested parties assert that volume and market share evidence reflects that Uzbekistan is able to export significant quantities of uranium to the United States without dumping, however, import volumes have not been identical in every year because of unrelated factors, such as Navoi's changes in technology and mining methods. Id. at 13-14. Further, the fact that Uzbek imports are constrained by a quota does not mean that the volume and market share data is inconclusive; rather, this record data reflects that Navoi has been able to maintain market share by exporting significant levels of uranium to the United States without dumping. Id. at 14. Respondent interested parties assert that none of the additional information cited in the Department's Decision Memorandum provides any basis for finding that dumping is likely to continue or recur. Specifically, they contend that record evidence reflects that Uzbekistan has not engaged in dumping since the issuance of the suspension agreement as all of Uzbekistan's sales have been at under long-term contracts at above-market prices, and prices of Uzbek uranium would in the future rise toward the restricted market prices because of uranium purchasing decisions. Id. at 15-16. Moreover, respondent interested parties add, if current Uzbek prices do not reflect dumping, then the resulting higher prices as a result of removing restrictions cannot be dumped prices. Id. at 16. Respondent interested parties continue, the Department's citation to the basic laws of supply and demand provide no basis for concluding that sales are likely to be at dumped prices. First, they state that imports of Uzbek uranium cannot increase by an amount sufficient to have any impact on overall market prices because it would take many years and enormous capital expenditure to expand Navoi's mining capacity; such an expansion would not be feasible under current of foreseeable market conditions. Id. at 17. Second, given the record evidence that Uzbekistan's exports are already at capacity and committed under long-term contracts, generalized price declines in the market due to an overall increase in supply cannot be treated as per se evidence of dumping. Id. at 18. Further, establishing the likelihood of sales at LTFV for a non-market economy respondent requires the construction of a NV based on valuation of inputs and factors of production, and the Department has never made a determination of NV for Uzbek uranium. Id. at 19. Finally, respondent interested parties contend that specific record evidence confirms that a large proportion of Uzbek production is in fact committed to customers in the EU and Asian markets, and could not be diverted to the United States if the suspension investigation is terminated. Id. at 19-20. Further, these markets are completely open to Uzbek imports and will have increasing demand, while the remaining uncommitted proportion of Uzbek production is simply too small to be affected by Eurotom's flexible limits. The Ad Hoc Committee, in its rebuttal comments, restates that the Department correctly determined that removal of the restrictions imposed by the suspension agreement is likely to result in the continuation or recurrence of dumping and incorporates by reference its entire September 13, 1999, rebuttal submission. First, the Ad Hoc Committee reasserts that this sunset review is not the appropriate forum for the GOU's complaints about alleged procedural defects in the underlying investigation; in fact, the Court of International Trade ("CIT") upheld the Department's decision to continue the uranium investigations upon the dissolution of the USSR and the Department afforded the GOU adequate opportunity to respond to the Department's questionnaires (see April 18, 2000, rebuttal comments of the Ad Hoc Committee at 4). The GOU then had the opportunity to request continuation of the investigation, obtain a final determination, and appeal any issues to the CIT. Second, the Ad Hoc Committee reasserts that the GOU's argument that the Department cannot find likelihood because there has been no dumping of Uzbek uranium during the entire term of the suspension agreement rest on two faulty premises: (1) that the Uzbek suspension agreement, by its operation, prevents dumping, and (2) that it is appropriate to assume that pricing behavior under an agreement would characterize behavior in the absence of an argument. Id. at 4-5. All sales of Uzbek uranium being "at market" or above U.S. market prices is not the same as being "fairly traded" - the agreement includes no provision that ensures Uzbek prices will be at or above normal value. Id at 5. In addition, the Ad Hoc Committee argues that none of the pricing or volume behavior experience with respect to Uzbek uranium since 1992 can be reasonably assumed to have been driven solely by Uzbek commercial practices rather than the requirements of the agreement. Id. at 6. In its rebuttal comments, respondent interested parties argue that the Ad Hoc Committee failed to provide any evidence that dumping is likely to continue, that the Department's final determination must ultimately be based on actual facts supported by substantial evidence placed on the record by the parties (see April 18, 2000, rebuttal comments of respondent interested parties at 1). Respondent interested parties assert that the Department cannot impose such an adverse presumption of dumping against Uzbekistan based on an oversimplified supply-and-demand theory because (1) purchasing decisions are based on price is contradicted by record evidence; and (2) termination would result in increased imports from Uzbekistan is disproved by substantial record evidence regarding Navoi's severe capacity constraints and the fact that Uzbek production is already committed under long-term contracts beyond the time at which the suspension agreement is scheduled to expire in 2004; and (3) the Ad Hoc Committee has failed to provide any evidence supporting assertions that Uzbek access to markets in Asia and Europe is restricted. Id. at 2-3. Finally, according to respondent interested parties, the supply-and- demand theory ignores the fact that any potential imports by Uzbekistan would be dwarfed by the other dominant sources of supply in the U.S. market, including the Department of Energy inventories inherited by USEC and the increasing levels of imports from non-subject counties. Therefore, the Department should use in its final results its substantial evidence of Navoi's past behavior to speculate Navoi's future behavior. Id. at 4. Department's Position As an initial matter, we agree with the Ad Hoc Committee that the sunset review is not the appropriate forum for respondent interested parties' complaints about alleged procedural defects in the underlying investigation. We disagree with respondent interested parties' argument that, because the Department allegedly did not conduct an independent investigation, there is no record evidence to support a finding of likelihood. Respondent interested parties could have requested termination of the suspension agreement and a continuation of the investigation of Uzbek uranium; however, they have not made such request. Moreover, the U.S. CIT held that the Department adequately notified Uzbekistan and the other former Soviet republics of the investigation. In addition, although the Department may in the course of sunset review request or collect new information to support a likelihood determination, we disagree with respondent interested parties' suggestion that the Department should calculate a new margin based on "other factors" in the uranium industry with respect to Navoi. As stated in our preliminary results, an interested party that wishes the Department to consider new information or evidence may submit such information in its substantive response to the notice of initiation. As stated in our preliminary results, although the Department has not conducted an administrative review of the suspension agreement, it has monitored imports of Uzbek uranium over the life of the suspension agreement to ensure compliance with its terms. For the purposes of this sunset review, we considered the volume of imports for the period before and after the suspended investigation. The respondent interested parties provided statistics on uranium exports from Uzbekistan for the period 1990- 1991 and 1994-1998 demonstrating that import volumes have fluctuated over the life of the agreement. Thus, we agree with the interested parties that the observed patterns regarding U.S. sales prices and import volumes pursuant to the suspension agreement are not necessarily indicative of the likelihood of future dumping. Therefore, we determined to consider the additional information submitted with respect to the likelihood of future dumping and considered the arguments presented by the interested parties with respect to a variety of market and economic factors. All of the interested parties acknowledge the post-suspension agreement distinction between the unrestricted/restricted uranium markets. AHUG and respondent interested parties argued that removal of the restrictions imposed by the suspension agreement would cause the price of Uzbek uranium to rise whereas the Ad Hoc Committee argued that removal of the restrictions would increase supply thereby causing prices to fall. While we agree that the restrictions imposed by the suspension agreement may have resulted in the price distinction, we do not agree that removal of the restrictions will necessarily cause the price of Uzbek uranium to rise. Even if the price of uranium from Uzbekistan were to rise closer to restricted market prices, there is no information or evidence on the record that would permit a determination that such a price would reflect the absence of a likelihood of continuation or recurrence of dumping. Therefore, we continue to rely on the basic laws of supply and demand which suggest that an increase in supply as a result of removal of the restrictions would increase the availability and supply of Uzbek uranium in the U.S. market and decrease prices. As for the restrictions on access to the EU and Asian markets, we agree that the information presented by the parties indicates that the EU and Asian markets are not closed to Uzbek uranium, but we also find that these markets are not completely open to Uzbek uranium. The GOU attempts to argue that dumping is not likely to continue or recur on the basis that a major portion of Uzbekistan's uranium production is already committed under Appendix A long-term contracts at prices above-market through 2004. However, the negotiated duration of the suspension agreement reflects the nature of uranium marketing, specifically, the role of long-term contracts. The fact that currently existing long-term contracts provide for delivery at prices above-market does not indicate that dumping is not likely to continue or recur with respect to whether such prices are at, or above, normal value and the prices for contracts that will be negotiated between now and 2004. We agree with the domestic interested parties that, as noted in the SAA at 883, the determination called for in these types of reviews is inherently predictive and speculative and that there may be more than one likely outcome following termination. Although we acknowledge the changes that have taken place in Uzbekistan and in the worldwide uranium market during the 1990s, we do not agree with the arguments submitted by GOU, Navoi, and AHUG that conditions have changed to such an extent that termination of the suspension agreement and underlying investigation is not likely to result in the continuation or recurrence of dumping. The arguments outlined above indicate that the market conditions are such that the removal of the restrictions imposed by the suspension agreement will likely result in the continuation or recurrence of dumping. We agree with the Ad Hoc Committee that the statute indicates that the Department must in a sunset review only find likelihood of recurrence or continued dumping. We preliminarily determined in this case, that without the discipline of the suspension agreement in place, there is likelihood of recurrence or continued dumping. Our determination was not made solely on the basis of observed patterns regarding U.S. sales prices and import volumes pursuant to the suspension agreement. Instead, the Department structured its decision based upon the SAA provisions which clearly contemplate the existence of good cause to consider "other factors" insofar as they affect the likelihood of future dumping. Although significant changes have taken place in Uzbekistan and in the worldwide uranium market during the 1990s, we do not agree with the arguments submitted by the GOU, Navoi, and AHUG that conditions have changed to such an extent that termination of the suspension agreement and underlying investigation is not likely to result in the continuation or recurrence of dumping. We reassert that the procedural history of the original investigation, including the fact that the calculation of a margin for Uzbekistan was based on BIA, does not undermine the validity of the investigation. As stated in our preliminary results, the sunset review is inherently predictive and speculative and there may be more than one likely outcome following termination; the removal of restrictions from the suspension agreement do not rule out the possibility that dumping is likely to occur. However, because the observed patterns regarding U.S. sales prices and import volumes pursuant to the suspension agreement are not necessarily indicative of the likelihood of future dumping, we considered additional information about a variety of market and economic factors submitted by the parties, including supply diversification and reliability, flexibility in quantities of supply, and payment and delivery terms. We continue to find that purchasing decisions are based almost exclusively on price. Accordingly, the removal of the restriction of the agreement will not, as the AHUG and respondent interested parties have argued, necessarily increase Uzbek uranium prices. Instead, we continue to find that an increase in supply will result in a decrease in prices. Moreover, as stated in our preliminary results, there is no information or evidence on the record that would permit a determination that such a price would reflect the absence of a likelihood of continuation or recurrence of dumping. With respect to Uzbekistan's access to the EU and Asian markets, we determine that the information presented by the parties indicates that the EU and Asian markets are neither closed to Uzbek uranium, nor completely open to Uzbek uranium. Further, the fact that currently existing long-term contracts provide for delivery at prices above-market does not indicate that dumping is not likely to continue or recur; the contracts do not reflect whether such prices are at, or above, normal value nor do they indicate the possible contract negotiations between now and 2004. Likewise, capacity constraints and market incentives do not necessarily indicate that dumping will not occur in the future. Therefore, we determine that the removal of the restrictions imposed by the suspension agreement will likely result in the continuation or recurrence of dumping. 4. Magnitude of the Margin Likely to Prevail Interested Party Comments In its case brief, the Ad Hoc Committee asserts that the Department's decision to select the original margin is in accordance with the Sunset Policy Bulletin, which provides that, in a suspended investigation, the Department may provide to the Commission the margin that was determined in the preliminary determination of the original investigation (see April 10, 2000, case brief of the Ad Hoc Committee at 4). Moreover, the Ad Hoc Committee asserts that the original margin is the only margin available to the Department, and calculating a new margin would be inaccurate and involve undue speculation because the margin would inevitably reflect the effect of the restrictions under the Uzbek suspension agreement. Id. Thus, the Department should confirm its determination to report to the Commission the 115.82 percent margin determined in the preliminary determination. Id. In their case brief, respondent interested parties argue that the Department erred in selecting the preliminary margin from the original investigation as the rate likely to prevail if the suspended investigation is terminated. They contend that this BIA margin cannot be used as the margin likely to prevail because (1) Uzbekistan is entitled to a country- specific calculation whereas the preliminary margin is based on BIA for an entirely different country that no longer exists; (2) this margin is inapplicable to Uzbekistan due to procedural defects; and (3) the Department is unlawfully imposing adverse facts available against a respondent that has fully cooperated to the best of its ability (see April 10, 2000, case brief of respondent interested parties at 21-22). Respondent interested parties assert that the Department should permit Uzbekistan for the final results to submit the complete data and information necessary for valuation of the relevant factors of production and construction of a country-specific normal value for Uzbek uranium. Id. at 22. Further, if the Department refuses to permit the submission of complete country-specific information, the calculation used in the original preliminary determination from June 1992 should be adjusted to reflect less adverse BIA using publicly available information bearing a closer relationship to Uzbek data. Id. First, respondent interested parties contend that the SAA permits margins to be calculated in sunset reviews as long as extraordinary circumstances are present, and they state that there is nothing in the statute or legislative history proscribing the calculation of a sunset review margin that is not based on projections of future data, but rather utilizes actual such data and information from a past time period. Under such extraordinary circumstances, Navoi is prepared to provide detailed data and information relating to any past period for purposes of calculating a reliable country-specific margin that does not require any speculation about future prices, costs, or sales. Id. at 23. Second, respondent interested parties state that the original preliminary margin relied upon by the Department cannot be applied to Uzbekistan because it its not country or exporter-specific. Further, the selected margin in this sunset review was based on BIA that was not even based on data relating to the same country of production or the same company. Id. at 24. Moreover, the Antidumping Agreement expressly requires that sunset margin determinations must be made on a country/exporter-specific basis. Thus, at a minimum, the Department must rely on a margin calculated for a known exporter or producer from Uzbekistan and, by violating these provisions of the Antidumping Agreement, the Department also contravenes the obligations of the United States to accord unconditional Most Favored Nation ("MFN") treatment to Uzbekistan under the 1993 Bilateral Trade Agreement Between the United States and Uzbekistan. Third, respondent interested parties assert that the margin relied on by the Department is invalid due to the procedural deficiencies in the underlying proceedings and lacks any probative value because Uzbekistan's industry, economy, and trading patterns have changed dramatically since 1991. Id. at 27-28. In addition, they describe the extraordinary circumstances in the underlying investigation, including the lack of proper communication, that have prevented a country-specific margin from being available for use by the Department and that that warrants the unusual step of calculating a margin in the sunset review context. Furthermore, respondent interested parties state that the Department and judicial precedent reflect that Uzbekistan is entitled to an opportunity to submit country-specific data in this sunset review and that the CIT has specifically cautioned that the Department must afford each NIS the opportunity to provide country-specific data. Id. at 29. Respondent interested parties also assert that the Department has arbitrarily imposed on Uzbekistan a margin that was based on BIA data for another country and issued without any notice or opportunity to comment, and has simply ignored the extraordinary geopolitical changes that have occurred. Moreover, the Department's preliminary results are incompatible with the Department's previous recognition of identical procedural and due process concerns. For instance, the Department determined that it was appropriate to give Kazakhstan a renewed opportunity to provide country-specific data. Id. at 30. Respondent interested parties criticize the Department's rationale for denying Uzbekistan a similar opportunity. They assert that the only way Uzbekistan will receive fair and equitable treatment is if it chooses to terminate its suspension agreement and submit country-specific data in a resumed investigation, thus, undermining the intent of the statutory provisions relating to suspension agreements, the U.S. - Uzbekistan Bilateral Trade Agreement, and the terms of the Uzbek suspension agreement despite Uzbekistan's continued efforts to cooperate with its terms. In addition, respondent interested parties contend that the June 1992 preliminary margin is not probative evidence of the magnitude of the margin likely to prevail if the suspended investigation is terminated and, particularly, in light of the extraordinary geopolitical and uranium market changes that have taken place in Uzbekistan since the issuance of the preliminary determination as discussed in detail in the GOU/Navoi's substantive response of September 1, 1999. Id. at 33. Finally, respondent interested parties contend that the Department's reliance on the preliminary margin constitutes the unlawful imposition of adverse facts available, despite respondent interested parties' full cooperation to the best of its ability. They state that Uzbekistan has cooperated fully in this proceeding as the GOU and Navoi have submitted information, requested the Department to issue a complete questionnaire or permit the submission of the 1991-92 questionnaire response, and have been cooperative in providing information to the Department. Id. at 35-36. Respondent interested parties add that the Department should, at a minimum adjust the margin adopted in the preliminary results to reflect a more probative and non-adverse form of BIA for Uzbekistan rather than the punitive BIA by utilizing publically available information as surrogate values for these factors of production. Id. at 36. In its rebuttal, the Ad Hoc Committee contends that the Department should reject the GOU/Navoi's arguments and reasserts that the Department's methodology for selecting a margin is very clear, and entirely consistent with the statute and the SAA (see April 18, 2000, rebuttal of the Ad Hoc Committee at 7). The Ad Hoc Committee continues that the SAA makes it clear that sunset reviews are not intended to be vehicles for the recalculations or new calculation of margins, and the SAA cautions the Department against calculating future margins because it would involve "undue speculation" by the Department. Id. at 9. Further, it would be impossible to conduct a recalculation in the context of a sunset review that can satisfy the SAA's direction that a sunset review assume a margin that reveals the GOU's behavior without the discipline of the suspension agreement and does not violate the SAA's prohibition on speculation by the Department. Id. With respect to respondent interested parties' argument that the Department adjust the preliminary margin to reflect a more probative and non-adverse form of BIA for Uzbekistan rather than the punitive BIA selected, the Ad Hoc Committee argues that the GOU's provision of new information in its case brief is untimely, and requests that this information be removed from the record and returned to the GOU. Id. at 10. Rather, any new information that a party wishes the Department to consider in a sunset review may be submitted in that party's substantive response. Moreover, the Ad Hoc Committee asserts that if the GOU had wished to challenge the Department's choice of BIA, it should have done so in the underlying investigation; the Department cannot permit parties in sunset reviews to re-assert previously rejected challenges or to raise new objections to margin calculations that have been completed and subject to judicial review at the time of completion. Id. at 11. Such use of a sunset review would be contrary to the Department's rule permitting the post- final correction of margins only for ministerial errors. Id. The Ad Hoc Committee argues that the Department's use of BIA in calculating its preliminary margin was appropriate and consistent with Department practice and law. With respect to the GOU's argument the Department's use of BIA in calculating the Uzbek-specific margin in the original investigation violates the Antidumping Agreement, the Ad Hoc Committee notes that, because Uzbekistan is not a member of the WTO, Uzbekistan has no standing to complain that its rights under the Antidumping Agreement are somehow diminished. Id. at 11-12. In addition, the claims that selection of a BIA margin is inappropriate in a sunset review directly conflicts with the intent of the sunset statute and the Department's regulations and practice. Since a BIA investigation margin in this case is based on the best information then available and is the only margin that provides an accurate picture of the GOU's behavior absent the discipline of the suspension agreement, the preliminary BIA margin calculated for Uzbekistan is the correct margin to utilize in this case. Moreover, the Ad Hoc Committee asserts that the GOU's additional claim that the Department allowed Kazakhstan to submit additional data upon resumption of its investigation is inapplicable in this review. Id. at 13- 14. According to the Ad Hoc Committee, the Department noted that it allowed Kazahkstan to submit such data in the context of a resumed investigation and not a sunset review. Id. at 14. Therefore, the Department should not consider the Kazakh investigation as relevant precedent to this proceeding. In its rebuttal response, respondent interested parties argue that the Ad Hoc Committee provides no support for the Department's continued reliance on the preliminary margin from June 1992. They reassert that Uzbekistan has cooperated fully in these sunset review proceedings, throughout the underlying investigation and the suspension agreement, such that there is no lawful basis for imposing against GOU/Navoi a margin that was calculated using highly adverse BIA (see April 18, 2000, rebuttal response of respondent interested parties at 4). Respondent interested parties restate that the SAA specifically contemplates that it may be necessary for the Department to calculate a sunset review margin under "extraordinary circumstances"and, further, all parties have acknowledge that there is simply no country-specific margin available to the Department in this case. Id. at 5. Continued reliance on this margin in the final results would be unduly punitive, because it results in the rejection of low-margin information in favor of high margin information that is demonstrably less probative. Rather, the Department should request that Uzbekistan submit a country-specific questionnaire response or, at a minimum, the Department must adjust the selected highly adverse margin from the June 1992 preliminary results to derive a margin that is based on non-adverse BIA by using publically available factors of production information that is contemporaneous with and more probative of the country-specific behavior of Uzbekistan. Id. at 5-6. Department's Position We agree with domestic interested parities. As stated in our preliminary results, the SAA cautions the Department against calculating future margins in sunset reviews because it would involve undue speculation by the Department; the sunset review is not intended to be a vehicle for recalculations or new calculations of margins. Contrary to the GOU's arguments, the Department in choosing a margin calculated using BIA instead of an Uzbek-specific margin is not in violation of the Antidumping Agreement or the obligations of the United States to accord unconditional MFN treatment under the 1993 Bilateral Trade Agreement between the United States and Uzbekistan. Rather the Department's selection of a BIA margin is consistent with the sunset provision of the Act and the Department's regulations and practice. Although the GOU and Navoi request in their case briefs that the Department accept the original questionnaire response from the investigation and examine new data and information during the course of this sunset review, we choose not to request or accept such submission and we will not conduct the requested recalculation. Further, the Department's use of BIA in calculating the margin for our preliminary results was appropriate and consistent with Department practice and law. As noted above, the procedural history of the original investigation, including the fact that the calculation of a margin for Uzbekistan was based on BIA, does not undermine the validity of the investigation. The preliminary margin was based on the best information available during the period of investigation and remains the only margin available to the Department without the discipline of the suspension agreement. We cannot, in the course of this sunset review, calculate a margin of dumping by relying on a previously rejected, untimely questionnaire response, or more recent information. As stated in our preliminary results, continuation of the investigation, not a sunset review, would be the appropriate forum for consideration of information related to the period of investigation. While we agree that significant changes have taken place in Uzbekistan and in the worldwide uranium market during the 1990s, we do not agree that conditions have changed to such and extent that the termination of the suspension agreement and underlying investigation is not likely to result in the continuation or recurrence of dumping. We have no information on the record to conclude with certainty that this would be the case, and would, hence, need to resort to speculation. Nor do we agree with the GOU's arguments that changes in Uzbekistan and its industry since 1992 constitute "extraordinary circumstances" that require the Department to consider new information. The Department's use of a margin based on BIA Soviet-era data does not constitute extraordinary circumstances, as the margin from the investigation is the only calculated rate that reflects the behavior of exporters and foreign governments without the discipline of the suspension agreement in place. The submission of new information in this case might be appropriate in the context of a resumed investigation, or a changed circumstances review. Because other administrative proceedings are available to respondent interested parties that are more appropriate for the consideration of their request, we do not view these circumstances as sufficiently extraordinary so as to essentially conduct a renewed investigation in the context of a sunset review. The SAA makes clear that the calculation of future dumping margins would involve undue speculation regarding future selling prices, costs of production, selling expenses, exchange rates, and sales and production volumes. Given the restrictions imposed by the suspension agreement with respect to imports of uranium, any such calculation would reflect the behavior of producers and exporters with the restrictions of the suspension agreement in place. Therefore, we determine that the margins calculated in the original investigation are probative of the behavior of Uzbek manufacturers/exporters of uranium were the suspended investigation terminated. As such, the Department will report to the Commission the rate from the original investigation as the magnitude of the margin likely to prevail if the suspended investigation were terminated, as contained in the Final Results of Review section of the accompanying Federal Register notice. Recommendation: Based on our analysis of the comments received, 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____ ______________________________________________________________________ footnotes: 1. See April 4, 2000, Letter from Jeffrey A. May, Director, Office of Policy, to Carolyn B. Lamm, granting an extension for time for filing rebuttal comments to the case briefs. 2. AHUG consists of U.S. industrial users Ameren UE, Baltimore Gas and Electric Co., Carolina Power and Light Co., Commonwealth Edison Co., Consumers Energy, Duke Power Co., Entergy Services, Ins., FirstEnergy Nuclear Operating Co., Florida Power and Light Co., Northern States Power Co., PECO Energy Co., Southern Nuclear Operating Co., Texas Utilities Electric Co., and Virginia Power. 3. See Preliminary Determination of Sales at Less Than Fair Value: Uranium from Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Ukraine and Uzbekistan; and Preliminary Determination of Sales at Not Less Than Fair Value: Uranium from Armenia, Azerbaijan, Byelarus, Georgia, Moldova and Turkmenistan, 57 FR 23381, 23382 (June 3, 1992). 4. See Antidumping; Uranium from Kazakhstan, Kyrgyszstan, Russia, Tajikistan, Ukraine, and Uzbekistan; Suspension of Investigations and Amendment of Preliminary Determinations, 57 FR 49220 (October 30, 1992). 5. Id. at 49221. 6. Id. at 49255. 7. Id.