64 FR 51511 September 23, 1999 ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE International Trade Administration [A-423-602] Preliminary Results of Full Sunset Review: Industrial Phosphoric Acid From Belgium AGENCY: Import Administration, International Trade Administration, Department of Commerce. ACTION: Notice of preliminary results of full sunset review: Industrial phosphoric acid from Belgium. ----------------------------------------------------------------------- SUMMARY: On March 1, 1999, the Department of Commerce (``the Department'') initiated a sunset review of the antidumping duty order on industrial phosphoric acid from Belgium (64 FR 9970) pursuant to section 751(c) of the Tariff Act of 1930, as amended (``the Act''). On the basis of a notice of intent to participate filed on behalf of domestic interested parties and adequate substantive comments filed on behalf of domestic and respondent [[Page 51512]] interested parties, the Department determined to conduct a full review. As a result of this review, the Department preliminarily finds that revocation of the antidumping duty order would likely lead to continuation or recurrence of dumping at the levels indicated in the Preliminary Results of Review section of this notice. 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 & Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-3207 or (202) 482-1560, respectively. EFFECTIVE DATE: September 23, 1999. Statute and Regulations This review is being conducted pursuant to sections 751(c) and 752 of the Act. The Department's procedures for the conduct of sunset reviews are set forth in Procedures for Conducting Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 (March 20, 1998) (``Sunset Regulations'') and 19 CFR Part 351 (1998) in general. Guidance on methodological or analytical issues relevant to the Department's conduct of sunset reviews is set forth in the Department's Policy Bulletin 98:3--Policies Regarding the Conduct of Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset Policy Bulletin''). Scope The merchandise subject to this antidumping duty order is industrial phosphoric acid (``IPA'') from Belgium. IPA is currently classifiable under item number 2809.20.00 of the Harmonized Tariff Schedule of the United States (``HTSUS''). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description remains dispositive. History of the Order The Department published its final determination of sales at less than fair value (``LTFV'') with respect to IPA from Belgium on July 7, 1987 (52 FR 25436). In this determination, the Department published a weighted-average dumping margin for one company as well as an ``all others'' rate. On August 20, 1987, the Department issued the antidumping duty order on IPA from Belgium (52 FR 31439). Since the order, four administrative reviews have been conducted.1 In each of these reviews, the Department published one company-specific weighted-average dumping margin, as well as an ``all others'' rate. The order remains in effect for the sole known exporter of IPA from Belgium. We note that, to date, the Department has not issued any duty absorption findings in this case. --------------------------------------------------------------------------- \1\ See Final Results of Antidumping Administrative Review; Industrial Phosphoric Acid from Belgium, 61 FR 20227 (May 6, 1996); Final Results of Antidumping Administrative Review; Industrial Phosphoric Acid from Belgium, 61 FR 51424 (October 2, 1996); Final Results of Antidumping Administrative Review; Industrial Phosphoric Acid from Belgium, 62 FR 41359 (August 1, 1997); and Final Results of Antidumping Administrative Review; Industrial Phosphoric Acid from Belgium, 63 FR 55087 (October 14, 1998). --------------------------------------------------------------------------- Background On March 1, 1999, the Department initiated a sunset review of the antidumping order on IPA from Belgium (64 FR 9970), pursuant to section 751(c) of the Act. The Department received a Notice of Intent to Participate from Albright and Wilson Americas Inc., Solutia Inc. (formerly part of the Monsanto Company), and FMC Corporation (collectively, the ``domestic interested parties'') on March 15, 1999, within the deadline specified in section 351.218(d)(1)(i) of the Sunset Regulations. Pursuant to 19 U.S.C. 1677(9)(C), the domestic interested parties claimed interested party status as domestic producers of IPA. Moreover, the domestic interested parties stated that FMC and Monsanto were petitioners in the original antidumping investigation. The Department received a complete substantive response from the domestic interested parties on March 31, 1999, within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). The Department also received a complete substantive response on behalf of Societe Chimique Prayon-Rupel, S.A. (``Prayon'') on March 31, 1999, within the deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). Prayon claimed interested party status under 19 U.S.C. 1677(9)(A) as a manufacturer and exporter of IPA to the United States. In its substantive response, Prayon stated that it participated in the original investigation and all of the subsequent administrative reviews. The Department determined that Prayon's response constituted an adequate response to the notice of initiation. As a result, the Department determined, in accordance with section 351.218(e)(2) of the Sunset Regulations, to conduct a full (240 day) review. On April 8, 1999, the Department received rebuttal comments from the domestic interested parties.2 --------------------------------------------------------------------------- \2\ On April 1, 1999, the Department received and granted a request from the domestic interested parties for a three working-day extension of the deadline for filing rebuttal comments in this sunset review. This extension was granted for all participants eligible to file rebuttal comments in this review. The deadline for filing rebuttals to the substantive comments therefore became April 8, 1999. --------------------------------------------------------------------------- In accordance with section 751(c)(5)(C)(v) of the Act, the Department may treat a sunset review as extraordinarily complicated if it is a review of a transition order (i.e., an order in effect on January 1, 1995). On June 25, 1999, the Department determined that the sunset review of the antidumping duty order on IPA from Belgium is extraordinarily complicated pursuant to section 751(c)(5)(C)(v) of the Act, and extended the time limit for completion of the preliminary results of this review until not later than September 17, 1999, in accordance with section 751(c)(5)(B) of the Act.3 --------------------------------------------------------------------------- \3\ See Industrial Phosphoric Acid from Israel (C-508-605) and Industrial Phosphoric Acid from Belgium (A-423-602): Extension of Time Limit for Final [sic] Results of Five-Year Reviews, 64 FR 34189 (June 25, 1999). --------------------------------------------------------------------------- Determination In accordance with section 751(c)(1) of the Act, the Department is conducting this review to determine whether revocation of the antidumping duty order would be likely to lead to continuation or recurrence of dumping. Section 752(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 order, and shall provide to the International Trade Commission (``the Commission'') the magnitude of the margin of dumping likely to prevail if the order was revoked. The Department's determinations concerning continuation or recurrence of dumping and the magnitude of the margin are discussed below. In addition, parties' comments with respect to continuation or recurrence of dumping and the magnitude of the margin are addressed within the respective sections below. Continuation or Recurrence of Dumping Interested Parties' Comments In their substantive response, the domestic interested parties argue that [[Page 51513]] revocation of the antidumping duty order would likely result in the continuation or recurrence of dumping of IPA (see March 31, 1999, Substantive Response of the domestic interested parties at 6). They maintain that historical experience clearly supports a decision to continue the current order. More specifically, the domestic interested parties assert that the behavior of Prayon before and after the issuance of the order indicates that were the order revoked, dumping would likely continue. For example, they argue that imports fell sharply in 1987, the year the order was issued. In 1988, imports again declined, followed by a complete cessation in 1989 (see id. at 9 and Attachment C). Moreover, the domestic interested parties state that Prayon essentially remained outside of the U.S. market until 1994; even upon returning to the market, Prayon's imports have remained significantly below pre-order shipment levels (see id. at 11). As a result, the domestic interested parties conclude that, consistent with the Sunset Policy Bulletin, it is reasonable to assume that Prayon could not sell in the U.S. market without dumping. Further, citing a letter written by Prayon to its U.S. customers, the domestic interested parties argue that the cessation in imports was the result of a decision made by Prayon because it could not continue shipments in the face of the burden of the antidumping duty order (see id. at 9 and Attachment A). In its substantive response, Prayon argues that revocation of the antidumping duty order would not be likely to lead to continuation or recurrence of dumping of IPA (see March 31, 1999, Substantive Response of Prayon at 3). Prayon bases this argument, in part, on the fact that dumping margins have declined steadily throughout the life of the order. Prayon explains its declining margins as follows. First, Prayon states that it suspended sales to the United States shortly after the imposition of the order because of declining IPA prices. Five years later, after price trends reversed, Prayon states that it reentered the U.S. market with sales of IPA. At that time, margins were zero (1993-94 administrative review). Subsequently, relative prices temporarily changed again as the value of the Belgian franc rose sharply vis-a-vis the dollar, and a company-specific margin of 11.36% therefore reappeared in the 1994-1995 administrative review. Since that review, margins have declined for the subsequent two administrative reviews. Moreover, Prayon states that it anticipates that margins will decline still further when the Department completes its review for the 1997- 1998 administrative review (see id. at 4). Moreover, Prayon argues that it has never held more than a very small share of the U.S. market for IPA. Therefore, Prayon argues, whether its sales have been at LTFV has been determined by prevailing prices in the U.S. and Belgian markets for IPA, and relative currency values (see id. at 3). Prayon also maintains that there have been significant changes in the United States IPA market. As a result of these changes, pricing in the market has firmed, argues Prayon. Therefore, Prayon maintains that since the 14.67 percent margin found the in the original investigation predates these changes in the market and the industry, it does not provide a reasonable basis on which to predict the future (see id. at 5). Prayon further argues that although the Policy Bulletin states that declining margins alone normally do not qualify as grounds for a determination of no likelihood, the recent declining value of the Belgian franc vis-a-vis the U.S. dollar provides additional evidence for such a determination as well as reason for considering that, in the circumstances of this case, the declining margins indicate that revocation is not likely to lead to continuation or recurrence of dumping (see id. at 4). In other words, Prayon appears to be arguing that differences in the dumping margins found in administrative reviews were primarily the result of fluctuations in currency exchange rates. Therefore, since the Belgian franc has weakened against the dollar in recent years, Prayon expects margins to decline. Quoting the Statement of Administrative Action (``the SAA''), H.R. Doc. No. 103-316, vol. 1 (1994), at 889-90, Prayon also argues that its declining dumping margins accompanied by steady or increasing imports may indicate that foreign companies do not have to dump to maintain market share in the United States and that dumping is less likely to continue or recur if the order is revoked (see id. at 5-6). In sum, Prayon asserts that both of these conditions (i.e., declining margins and steady or increasing imports) are satisfied in this case. In their rebuttal comments, the domestic interested parties argue that the volume of imports of IPA subject to the order has not remained steady or increased over the life of the order. On the contrary, argue the domestic interested parties, Prayon's volume of sales decreased after the issuance of the order and have not regained pre-order levels (see April 8, 1999, rebuttal comments of the domestic interested parties at 4-5). Moreover, the domestic interested parties address Prayon's comments regarding the changes in the United States IPA market. They argue that it is precisely because those changes have occurred that the Department should recommend the original dumping margin as the margin likely to prevail if the order is revoked. They assert that many of the changes in the United States IPA market since the time of the original investigation are the direct result of the order and would not have occurred without the protection from unfair imports that the order has provided (see id. at 6). Therefore, the conclusion drawn by the domestic interested parties is that Prayon cannot sell IPA in the U.S. market without dumping, and, were the antidumping order on IPA from Belgium revoked, Prayon would be likely to continue and expand sales to the United States at less than fair value. Moreover, they conclude that the dumping margin of 14.67 percent found in original investigation is the only margin available that reflects Prayon's behavior without the discipline of the order in place (see id. at 5, 7). Department's Determination Drawing on the guidance provided in the legislative history accompanying the Uruguay Round Agreements Act (``URAA''), specifically the SAA, the House Report, H.R. Rep. No. 103-826, pt. 1 (1994), and the Senate Report, S. Rep. No. 103-412 (1994), the Department issued its Sunset Policy Bulletin providing guidance on methodological and analytical issues, including the basis for likelihood determinations. The Department clarified that determinations of likelihood will be made on an order-wide basis (see section II.A.2 of the Sunset Policy Bulletin). In addition, the Department indicated that it will normally 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). Consistent with section 752(c) of the Act, the Department considered whether dumping continued at any level above de minimis after the issuance of the order. In the 1993-94 review (the first administrative review) the Department [[Page 51514]] determined that the dumping margin for Prayon was zero (61 FR 20227). In the subsequent three administrative reviews conducted, however, the Department calculated dumping margins above de minimis for Prayon. As for Prayon's assertion that it expects dumping margins to decline in the future based on the weakened Belgian franc vis-a-vis the dollar, the Department cannot anticipate future exchange rates, and therefore, cannot rely on Prayon's statement in making a determination. In addition, consistent with section 752(c) of the Act, the Department also considered whether imports of the subject merchandise ceased after the issuance of the order. Utilizing U.S. Census data, the Department agrees with the domestic interested parties that imports of IPA decreased sharply following the issuance of the order and have only occurred in intermittent years, and even then, at levels significantly below pre-order levels. However, imports of the subject merchandise from Belgium have continued throughout the life of the order.4 --------------------------------------------------------------------------- \4\ The Department bases this determination on information submitted by the domestic interested parties in their March 31, 1999, submission, as well as U.S. IM146 Reports, U.S. Department of Commerce statistics, U.S. Department of Treasury statistics, and information obtained from the U.S. International Trade Commission. --------------------------------------------------------------------------- Therefore, given that dumping has continued over the life of the order and import volumes declined significantly following the imposition of the order, the Department preliminarily determines that dumping is likely to continue were the order revoked. Magnitude of the Margin Interested Parties' Comments The domestic interested parties argue that the Department should adhere to its normal procedure and report to the Commission the dumping margin of 14.67 percent calculated in the original investigation since that is the only calculated rate that reflects the behavior of exporters without the discipline of the order in place. They argue that the most recent margin calculated for Prayon, 4.35 percent, is not a true indication of Prayon's actions as it reflects Prayon's pricing practices with the antidumping order in place (see March 31, 1999, Substantive Response of the domestic interested parties at 13). Moreover, they argue, that the 4.35 percent margin is for a period in which imports from Prayon were less than half of what they had been prior to the issuance of the order. Therefore, they argue, the 4.35 percent margin clearly should not be used (see id.). Prayon argues that should the Department determine that, were the order revoked, dumping is likely to continue or recur, the Department should find that a dumping margin no higher than the margin found in the current review is likely to prevail (see March 31, 1999, Substantive Response of Prayon at 6). Here, Prayon is apparently referring to the dumping margin of 4.35 percent calculated in the 1996- 97 administrative review.5 --------------------------------------------------------------------------- \5\ See Industrial Phosphoric Acid from Belgium; Final Results of Antidumping Duty Administrative Review, 63 FR 55087 (October 14, 1998). --------------------------------------------------------------------------- Department's Determination 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.) The Department agrees with the domestic interested parties. Section II.B.2 of the Sunset Policy Bulletin states that if dumping margins have declined over the life of an order and imports have remained steady or increased, the Department may conclude that exporters are likely to continue dumping at the lower rates found in a more recent review. However, in this case, imports of the subject merchandise from Belgium have fluctuated over the life of the order but have never regained their pre-order levels. Therefore, we preliminarily determine that the margin from the Department's original investigation is probative of the behavior of Belgian producers and exporters of industrial phosphoric acid if the order were revoked because that is the only calculated rate which reflects the behavior of exporters without the discipline of the order in place. We will report to the Commission the company-specific and ``all others'' rates from the original investigation contained in the Preliminary Results of Review section of this notice. Preliminary Results of Review As a result of this review, the Department preliminarily finds that revocation of the antidumping duty order would likely lead to continuation or recurrence of dumping at the margins listed below: ------------------------------------------------------------------------ Margin Manufacturer/exporter (percent) ------------------------------------------------------------------------ Prayon...................................................... 14.67 All Others.................................................. 14.67 ------------------------------------------------------------------------ Any interested party may request a hearing within 30 days of publication of this notice in accordance with 19 CFR 351.310(c). Any hearing, if requested, will be held on November 17, 1999. Interested parties may submit case briefs no later than November 8, 1999, in accordance with 19 CFR 351.309(c)(1)(i). Rebuttal briefs, which must be limited to issues raised in the case briefs, may be filed not later than November 15, 1999. The Department will issue a notice of final results of this sunset review, which will include the results of its analysis of issues raised in any such comments, no later than January 25, 2000. This five-year (``sunset'') review and notice are in accordance with sections 751(c), 752, and 777(i)(1) of the Act. Dated: September 17, 1999. Bernard T. Carreau, Acting Assistant Secretary for Import Administration. [FR Doc. 99-24828 Filed 9-22-99; 8:45 am] BILLING CODE 3510-DS-P