(65 FR 10471, February 28, 2000) A-844-802 Sunset Review Public Document MEMORANDUM TO: Robert S. LaRussa Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memo for the Sunset Review of Uranium from Uzbekistan; Preliminary Results Summary: We have analyzed the substantive responses and rebuttals of interested parties in the sunset review of the suspended antidumping 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 preliminary results of full sunset review for which we received comments and rebuttals by parties: 1. Scope 2. History of Proceedings and Domestic Industry Support 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 History of the Suspension Agreement: On December 5, 1991, the Department of Commerce ("the Department") published in the Federal Register a notice of initiation of the antidumping duty investigation on uranium from the Union of Soviet Socialist Republics ("USSR") (56 FR 63711). On December 10, 1992, the Department received a letter of appearance on behalf of Technabexport Ltd., NUEXCO Trading Corporation ("NUEXCO") and Global Nuclear Services and Supply Ltd. ("GNSS"). On December 23, 1991, the U.S. International Trade Commission ("Commission") issued an affirmative preliminary injury determination. On December 25, 1991, the USSR dissolved and the United States subsequently recognized the twelve newly independent states ("NIS") that emerged: Armenia, Azerbaijan, Byelarus, Georgia, Kazakhstan, Kyrgystan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. The Department continued the investigation against each of these twelve countries. On June 3, 1992, the Department issued an affirmative preliminary determination that uranium from Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Ukraine, and Uzbekistan was being sold at less-than-fair-value ("LTFV") by a weighted-average dumping margin of 115.82 percent, and a negative determination regarding the sale of uranium from Armenia, Azerbaijan, Byelarus, Georgia, Moldova, and Turkmenistan (57 FR 23380). On September 22, 1992, the Department rejected the September 16, 1992, response of the Government of Uzbekistan ("GOU") and Navoi Mining and Metallurgical Combinat ("Navoi") to the Department's original questionnaire as untimely (57 FR 49220; October 20, 1992). On October 30, 1992, the Department suspended the antidumping duty investigations involving uranium from Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Ukraine, and Uzbekistan on the bases of agreements by the countries' respective governments to restrict the volume of direct or indirect exports to the United States in order to prevent the suppression or undercutting of price levels of United States domestic uranium.(1) The Department also amended its preliminary determination to include highly enriched uranium ("HEU") and any other forms of uranium within the same class or kind in the scope of the investigations.(2) On October 13, 1995, the Department issued an amendment to the suspension agreement on uranium from Uzbekistan that authorized direct or indirect deliveries of up to 940,000 pounds U3O8 equivalent per year of Uzbek-origin natural uranium from Uzbekistan to the United States during the first and second years of the amendment (October 13, 1995 - October 12, 1997), provided that the price for these shipments was at or above $12.00 per pound.(3) In addition, beginning in the third year, the amendment authorized Uzbekistan to make annual deliveries of uranium up to, but not exceeding, levels established by U.S. uranium production-tied quotas. Id. The amendment also extended the duration of the suspension agreement to October 12, 2004. Id. On August 5, 1999, the Department requested comments on a proposed amendment in the Uzbek suspension agreement that would double the amount of Uzbek-origin uranium that may be imported into the United States for further processing before re-exportation, and lengthen the time that the uranium may remain in the United States for such processing to up to three years (see September 3, 1999, Substantive Response of the Ad Hoc Committee of Domestic Uranium Producers at 7). There have been no completed administrative reviews of the suspension agreement. Background: On August 2, 1999, the Department initiated a sunset review of the antidumping suspension agreement on uranium from Uzbekistan (64 FR 41915), pursuant to section 751(c) of the Act. The merchandise covered by this order is 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. We invited parties to comment. We received Notices of Intent to Participate on behalf of domestic interested parties, the Ad Hoc Committee of Domestic Uranium Producers (the "Ad Hoc Committee"), including Rio Algom Mining Corporation ("Rio Algom") and Uranium Resources Inc. ("URI");(4) USEC, Inc. and its subsidiary, the United States Enrichment Corporation (collectively, "USEC"), and the Paper, Allied- Industrial, Chemical and Energy Workers International Union, AFL-CIO ("PACE"), within the applicable deadline (August 17, 1999) specified in section 351.218(d)(1)(i) of the Sunset Regulations. On August 27, 1999, we received a notice of intent to participate on behalf of the Ad Hoc Utilities Group ("AHUG").(5) The Ad Hoc Committee and USEC claimed interested-party status under section 771(9)(C) of the Act, as the only U.S. producers of a domestic like product; AHUG claimed interested-party status as industrial users of uranium;(6) PACE claimed interested-party status as a union representing workers of the two domestic gaseous diffusion plants that produce uranium products. On September 1, 1999, GOU and Navoi notified the Department of their intent to participate in the review. GOU is an interested party pursuant to section 771(9)(B) of the Act, as the government of a country in which subject merchandise is produced and exported; Navoi is an interested party pursuant to section 771(9)(A) of the Act as a foreign producer and exporter of subject merchandise. The Ad Hoc Committee claims that, along with the Oil, Chemical and Atomic Workers International Union, it was the original petitioner in the suspended antidumping investigation and resulting suspension agreement under review (see September 1, 1999, Substantive Response of the Ad Hoc Committee at 4). AHUG did not submit a summary of their past participation in the proceedings. GOU and Navoi contend that they actively participated in the proceedings after July 1992, when they received a copy of the Department's questionnaire and became aware of the action brought by the United States against uranium from Uzbekistan (see September 1, 1999, Substantive Response of GOU and Navoi at 11). On September 1, 1999, the Department received complete substantive responses from the above domestic and respondent interested parties and industrial users, with the exception of USEC and PACE,(7) within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). On September 2, 1999, we received a request for an extension to file rebuttal comments from AHUG.(8) Pursuant to 19 CFR 351.302(b)(1999), the Department extended the deadline for all participants eligible to file rebuttal comments until September 13, 1999.(9) On September 14, 1999, pursuant to 19 CFR 351.218 (e)(1)(ii)(A), the Department determined to conduct a full (240-day) sunset review of this suspended investigation.(10) 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). Accordingly, on November 22, 1999, the Department determined that the sunset review of this suspended investigation is extraordinarily complicated, and extended the time limit for completion of the preliminary results of this review until not later than February 18, 2000, in accordance with section 751(c)(5)(B) of the Act.(11) Discussion of the Issues: In accordance with section 751(c)(1) of the Act, the Department is conducting this sunset review to determine whether termination of the suspended antidumping 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 of the antidumping duty suspension agreement. In addition, section 751(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 comments and rebuttals of interested parties. 1. Scope Interested Party Comments: The Ad Hoc Committee notes in its substantive response that the scope of the suspension agreement covers all forms of uranium produced in Uzbekistan and enriched in a third country (see September 1, 1999, Substantive Response of the Ad Hoc Committee at 3). In its substantive response, AHUG asserts that, although the Department obtained concurrence from subject countries to implement the amendment to the suspension agreements so that uranium produced in those countries and enriched in a third country would be covered by the agreements (i.e., the "bypass amendments"), the bypass amendments were inconsistent with the Department's past practice and normal procedures for amending the scope of a suspension agreement (see September 1, 1999, Substantive Response of AHUG at 9). Therefore, AHUG argues that the Department should find that uranium enriched in a third country is outside the scope of the suspension agreements. Id. at 10. In their substantive response, GOU and Navoi argue that, pursuant to the HEU Agreement between Russia and the United States and the USEC Privatization Act, HEU, low-enriched uranium ("LEU") blended down from HEU, and its return feed are not "subject merchandise" for purposes of the review (see September 1, 1999, Substantive Response of GOU and Navoi at 4). GOU and Navoi acknowledge that the Department issued a notice that it had entered into and approved the various suspension agreements on October 30, 1992 (57 FR 49220), stating that HEU was not only within the scope, but also in the same class or kind of merchandise as natural uranium. However, GOU and Navoi assert that this does not change the scope of the underlying investigation, and a distinction lies between what constitutes "subject merchandise" within the scope of the suspended uranium investigations and the broader range of merchandise that was negotiated as being subject to quotas established under the terms of the various suspension agreements. Id. at 5. They argue that the USEC Privatization Act reflects that HEU, LEU blended down from HEU, and its return feed have never been treated as within the terms of any underlying investigations or suspension agreements involved in the uranium grouped reviews because the USEC Privatization Act specifies a quota system for sales of HEU (single work units ("SWU") and return feed) into the U.S. market that is completely outside of the suspension agreements. Id. at 6. Further, GOU and Navoi assert that the Russian suspension agreement was amended, accordingly, to be consistent with the USEC Privatization Act and provide for the sale of feed associated with imports of LEU derived from HEU to the United States. Id. at 6-7. The Department's draft procedures for the delivery of the Russian feed component of the LEU derived from the HEU taken from dismantled nuclear warheads specifically note the HEU procedures are not subject to the Russian suspension agreement. Id. at 7. Moreover, GOU and Navoi assert that the Department must take into account the fact that Uzbekistan produces only U3O8 and is incapable of producing HEU, or any form of enriched uranium. Id. Accordingly, the Department must make a determination for Uzbekistan based on country-specific analysis. Id. The Ad Hoc Committee reasserts in their rebuttal that any other forms of uranium within the same class or kind-including HEU and LEU derived from HEU, and uranium mined in Uzbekistan, but enriched in a third country-are within the scope of the suspension agreement (see September 13, 1999, Rebuttal of the Ad Hoc Committee at 2-3). The Ad Hoc Committee dismisses GOU's suggestion that the Department's determination is related to the suspension agreement, but not to the suspended investigation. Id. at 3. The Ad Hoc Committee notes that if HEU had not been within the scope of the investigations, the International Trade Commission would not have considered injury with respect to HEU, as it did in the case of Uranium from Ukraine. Moreover, the Ad Hoc Committee rejects GOU's argument that HEU is not within the scope of the Russian uranium investigation, and states that the scope of the Russian investigation is not pertinent to this case. Instead, they assert, the objective of the Department's analysis in this sunset review is to determine whether dumping is likely to continue or recur in the event of termination of the suspended investigation. Id. 5. Therefore, the Department should use the scope of the suspension agreement, as amended, for the scope of this sunset review. Id. at 6. In its rebuttal, AHUG states that because the Act requires the Department to review the "investigation suspended," and not the suspension agreement, the scope of the sunset review must be limited to the scope of the original investigation suspended (see September 13, 1999, Rebuttal of AHUG at 2). Thus, the Department should not include uranium enriched in a third country within the scope of the sunset review. In their rebuttal, GOU and Navoi reassert that the definition of "subject merchandise" corresponds to the scope of merchandise covered in the suspended investigation rather than to the merchandise subject to the suspension agreement (see September 13, 1999, Rebuttal of GOU and Navoi at 31). They argue that, with respect to the underlying uranium investigations, the Department has expressly concluded that the enrichment constitutes a substantial transformation and thus confers origin, and that the Uzbek and Russian suspension agreements were amended not as the result of any formal scope review by the Department, but to cover uranium enriched in a third country in return for other concessions, such as increased quotas. Id. Department's Position: The Department agrees with the Ad Hoc Committee that the scope of the suspended investigation covers one class or kind of merchandise that includes all forms of uranium, including HEU. We disagree with the assertions of respondent interested parties and industrial users that HEU and LEU derived from HEU are not subject to the terms of the Russian suspension agreement. Rather, HEU is specifically included within the product coverage of the Russian suspension agreement (see section III of the suspension agreement). Further, we do not agree with the GOU that during the course of this sunset review we should analyze the scope of the underlying investigation and determine that, because Uzbekistan produces only natural uranium and has no enrichment capabilities, we must now find that only natural uranium is subject to the scope of this review. As a result of an analysis of the Diversified criteria, during the original investigation, the Department determined that all forms of uranium constitute one class or kind of merchandise. The fact that Uzbekistan does not have enrichment capabilities does not undermine our original analysis. Therefore, we leave the scope as described both in the preliminary determination and the suspension agreement unchanged for the purposes of this sunset review. As to AHUG's argument that the Department should find that uranium enriched in a third country is outside the scope of the suspension agreement, we disagree that such a finding should be made in the course of this sunset review or, that such a finding is appropriate. Rather, as noted by all parties, the suspension agreement was amended to include within the quota limits, Uzbek uranium enriched in a third country prior to importation into the United States. 2. History of Proceedings and Domestic Industry Support Interested Party Comments: In its substantive response, GOU and Navoi note that there are a number of procedural defects in the history of the underlying proceedings that prevented their full participation and argue that the Department should consider this information in making its determination (see September 1, 1999, Substantive Response of GOU and Navoi at 11). They assert that, prior to the November 8, 1991, antidumping duty petition of the Ad Hoc Committee and the Oil, Chemical and Atomic International Union against uranium imports from the Soviet Union, Uzbekistan had already declared its independence from the Soviet Union, on August 31, 1991. Id. Moreover, GOU and Navoi claim that Uzbekistan was not mentioned in the November 8, 1999, petition, and the petitioners made no allegations of LTFV sales with respect to Uzbekistan. The Department's notice of initiation of the antidumping duty investigation of uranium from the USSR also made no mention of Uzbekistan. Id. GOU and Navoi note that the first notice published by the Department making any reference to Uzbekistan was in the April 1, 1992, postponement of a preliminary determination, and GOU and Navoi underscore that they were not even aware of any action brought by the United States against uranium from Uzbekistan until July 1992, after the issuance of the preliminary determination. Id. at 13. GOU and Navoi contend that, because the Department never made a final determination in the underlying investigation, GOU has been denied any country-specific determination that subject imports from Uzbekistan were ever dumped in the United States. Id at 15. Therefore, the Department should in this review give the newly independent republics and opportunity to submit country-specific information. In its rebuttal, the Ad Hoc Committee argues that GOU's alleged procedural defects in the Department's underlying investigation are irrelevant for the purposes of this sunset review (see September 13, 1999, Rebuttal of the Ad Hoc Committee at 7-8). The Ad Hoc Committee contends that the Department initiated and conducted an independent investigation of uranium from Uzbekistan and GOU had sufficient opportunity to participate in the investigation and submit information, appeal to the Court of International Trade, or request the Department to continue the investigation and issue a final determination. Id. at 9-10. The Ad Hoc Committee asserts that the Department far exceeded the minimum requirements for providing GOU with an opportunity to participate, and notes that the Technsabexport court noted the Department's efforts and rejected arguments that the Department violated the former Soviet Republics' and respondent trading companies' limited procedural due process rights and opportunity to participate. Id. at 10-13. AHUG asserts that the Department should consider other information in its analysis, such as the extent to which the domestic industry supports the trade restrictions (see September 1, 1999, Substantive Response of AHUG at 14). AHUG notes that, whereas of the only domestic producers of the thirteen original petitioners that support the continued imposition of the antidumping restrictions are Uranium Resources and Rio Algom, AHUG represents 14 utility companies which own and operate 60 percent of the nuclear units in the United States, and have approximately 34,000 nuclear-related employees in the United States. Id. at 15. In addition, U.S. fuel fabricators, whom employ approximately 3,300 nuclear-related employees in the United States also oppose the imposition of the suspension agreements. Id. GOU and Navoi urge the Department to consider the lack of continued support for the underlying investigation, and that the majority of the original petitioners have either expressed active opposition to continuing the antidumping measures against the independent republics or have failed to participate (see September 1, 1999, Substantive Response of GOU and Navoi at 43). Moreover, GOU and Navoi noted that the Department's sunset regulations accord disparate treatment to domestic and respondent producers with respect to determining whether sunset response are adequate. Id. at 44. The Ad Hoc Committee contends in its rebuttal that, contrary to the arguments of GOU regarding the participation of domestic interested parties, the Department's regulations state that the Department will normally will conclude that domestic interested parties have provided adequate response to a notice of initiation where it receives a complete substantive response from at least one domestic interested party. Id. at 35. Therefore, in light of a timely response from domestic interested parties, the Department should not reassess the adequacy of domestic industry support. Id. at 38. In its rebuttal, AHUG challenges the legitimacy of the support of the Ad Hoc Committee to continue the antidumping restrictions on subject merchandise. Specifically, AHUG questions the status of these companies' ownership, with Rio Algom wholly-owned by a Canadian company, and URI having entered into discussions with various domestic and international uranium companies regarding the possible divestment or joint venturing of all or a portion of its assets (see September 13, 1999, Rebuttal of AHUG at 3). Further, AHUG asserts that the antidumping restrictions have benefitted foreign interests at the expense of the domestic industry who, as industrial users of uranium, have their purchasing and supply options limited. Id. In their rebuttal, GOU and Navoi reassert that the suspended investigation should be terminated due to an inadequate response and insufficient domestic industry support (see September 13, 1999, Rebuttal of GOU and Navoi at 2). Whereas the AHUG consists of fourteen domestic end users of uranium, the Ad Hoc Committee consists of only two of its original participants, who account for only a small percentage of total domestic uranium production and reserves. Id. at 7-8. Further, the GOU and Navoi reassert that the Department should determine the substantive response of the Ad Hoc Committee to be inadequate, pursuant to the SAA, the URAA amendments, and the Sunset Regulations, because there is insufficient evidence to justify the initiation of an antidumping investigation and terminate the suspended investigation. Moreover, the insufficient evidence does not support a determination that Uzbekistan has ever engaged in dumping, let alone that dumping would continue or recur if the suspended investigation were terminated. Id. at 11. Department's Position: We disagree with AHUG that the Department should consider, in the course of this sunset review, the extent to which the domestic industry supports the continuation of the import restrictions of the suspension agreement. 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. Further, the Department made clear in its regulations that a complete substantive response from one domestic interested party would be considered adequate for purposes of continuing the review. 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 preliminarily determine that we have adequate domestic industry participation. The Department normally will not analyze and evaluate standing and industry support in the course of a sunset review beyond this threshold requirement. 3. Likelihood of Continuation or Recurrence of Dumping Interested Party Comments: In its substantive response, the Ad Hoc Committee argues that revocation of the suspension investigation and the resulting suspension agreement would likely lead to continuation or recurrence of dumping. The Ad Hoc Committee asserts that there is "good cause" for the Department to consider other factors in its likelihood analysis. The Ad Hoc Committee contends that the terms of suspension agreement-including its expiration date of 2004-limits the quantity of Uzbek uranium imports into the United States, and, therefore, any import volume data is inconclusive (see September 1, 1999, Substantive Response of the Ad Hoc Committee at 11). Further, the suspension agreement is quantity-based rather than price-based, it provides no information about whether and to what extent dumping of Uzbek uranium has continued since the suspension agreement. Id. The Ad Hoc Committee argues that market factors have affected purchasing and pricing decisions and indicate the likelihood of dumping. In 1992, after the uranium suspension agreements were implemented and restrictions were imposed on imports of uranium from Uzbekistan, the global market immediately recognized that the price for "unrestricted" Commonwealth of Independent States ("CIS") uranium was and continues to be significantly less than the price for "restricted" uranium from western producers. Id. at 12. Further, because purchasing decisions in the industry are based almost exclusively on price, the fact that Uzbekistan has not raised its prices to market levels to maximize income despite quantity restrictions demonstrates that Uzbekistan has continued and will continue to use below-market pricing to gain market share. Id. at 13. The Ad Hoc Committee asserts that, since the imposition of the suspension agreement, Uzbek capacity utilization has been significantly depressed, there has been a low domestic demand in Uzbekistan, and other markets are not fully accessible to Uzbek origin imports. Therefore, without the discipline of the suspension agreement, Uzbekistan can use its presently underutilized production capacity to increase uranium production for shipment to the United States, the only major western market open to foreign imports. Id. at 14. Moreover, the Ad Hoc Committee states that, without the discipline of the suspension agreement, the devaluation of the Uzbek currency creates a strong inducement for Uzbekistan to increase uranium exports and earn hard currency. Id. at 15. In its substantive response, AHUG argues that revocation of the suspension agreement would not lead to the recurrence of dumping, and, in fact, the NIS would command a higher price in the United States for its uranium imports (see September 1, 1999, Substantive Response of AHUG at 6). Removal of the antidumping restrictions would result in the removal of current restricted/unrestricted market distinction and the former perception of supply risks would be eliminated. Id. In addition, the diversity of suppliers, the post Cold-War political climate and the increasingly globalized uranium market would result in increased prices for uranium. Id. AHUG contends that purchasers of foreign enrichment services are motivated by the more attractive prices and terms offered by certain foreign enrichers. In fact, foreign purchases grew significantly in the mid-1990s, not because utilities' attempted to evade the suspension agreements, but because long-term purchase obligations to the Department of Energy ("DOE") could be terminated without cost, and the utilities were free to purchase lower cost foreign enrichment services. Id. at 10-12. AHUG argues that there is "good cause" for the Department to consider these market and economic factors that have occurred which suggest that the NIS countries are behaving as market economies in the sales of uranium. For instance, the Department should consider the transition of the NIS into market economies by (1) setting price-based production costs; (2) partnerships with western companies; (3) adjusting uranium production in reaction to market conditions; and (4) the inclusion of a floor price for sales of the natural uranium component of HEU. Id. In their substantive response, GOU and Navoi argue that there is no likelihood that dumping would occur if the suspension investigation were terminated. They assert that the "order-wide" requirement of a sunset determination reflects an intent that the Department make its sunset determination based on country- specific data and information (see September 1, 1999, Substantive Response of GOU and Navoi at 17). Further, GOU and Navoi assert that the standards articulated under Article 11 of the GATT Antidumping Agreement reflect that antidumping measures should be terminated in a sunset review unless the authorities make a positive likelihood determination. Id. at 18. Therefore, in the absence of such positive evidence, the Department must terminate the suspended investigation. Id. at 19. Further, GOU and Navoi argue that the application of the Sunset Policy Bulletin demonstrates that there is no evidence to support finding a likelihood of dumping by Uzbekistan. With respect to dumping at any level above de minimis, GOU and Navoi contend that the suspension agreement put into place a system of price and volume-based quotas, under which the prices of all sales of uranium from Uzbekistan are carefully monitored. To meet the requirements of the suspension agreement, Uzbekistan has committed under long-term contracts to deliver its uranium at prices above comparable market prices through 2004. Thus, the operation of these long-term contracts means there can be no likelihood of dumping by Uzbekistan in the foreseeable future. Id. at 21. Moreover, there is no economic incentive for Uzbekistan-which accounts for only a small proportion of the uranium supply that reaches the U.S. market relative to other countries-to sell at below market prices, and benefits from selling its production into the United States at the higher prices it receives under the long-term contracts. Id. With respect to the cessation of imports after the suspension agreement was issued, GOU and Navoi assert that the data submitted shows that imports of subject merchandise did not cease after issuance of the suspension. Id. at 22. In fact, imports have been steady and increasing over the last four years. Id. With respect to declining import volumes, GOU and Navoi assert that import volumes did not decline significantly, and, with the exception of 1994, the annual volumes of uranium exported from Uzbekistan have been steady and/or increased during the last four semi-annual periods. Id. Therefore, in light of the above, the Department must make a finding of good cause and allow the submission of complete, country-specific information by Uzbekistan. GOU and Navoi assert that, in this case, the Department has never made any final determinations, issued any dumping order, or completed any administrative reviews, and that there exists no pattern of historical dumping determinations. GOU and Navoi note that the paragraph II.C of the Sunset Policy Bulletin provides that the Department may be more likely to entertain good cause arguments in a sunset review of a suspended investigation. Section 752(C)(2) provides that the Department will consider other information regarding price, cost, market or economic factors it deems relevant. GOU and Navoi assert that unprecedented historical circumstances underlying this review impacted uranium markets worldwide: the dissolution of the USSR; the emergence of Uzbekistan as an independent state; the end of the Cold War, and the nearly-complete transition of the uranium industry in Uzbekistan from a "command and control" to a market-driven management structure. Id. at 34. These changes enabled Navoi to establish new trading relationships and shift its production purposes from centralized Soviet production directives and military requirements to market force and price maximization. Id. at 34-35. GOU and Navoi note the expansive changes in the uranium market that have affected the U.S. market. Increased national security interests in keeping weapons-grade uranium off of the world market have caused the United States to become directly involved in ensuring proper management of the surplus defense inventories of uranium from the Soviet Union. In addition, USEC's long-term commitment to purchase enormous quantities of non-subject LEU from HEU over a 20-year period under the Russian HEU Agreement and the USEC Privatization Act have had a greater impact on U.S. market prices than imports of subject uranium under the Uzbek suspension agreement. Id. at 35-36. Finally, deregulation of electrical utilities in the United States has also significantly impacted the domestic uranium market, since utilities must operate more cost effectively to remain competitive. Id. GOU and Navoi contend that the unique procedural defects in the underlying proceeding with respect to Uzbekistan require a finding of good cause. They note that Uzbekistan never had sufficient notice or opportunity to submit country-specific factual information in the underlying proceeding prior to the suspension of the investigation. Id. at 37. They also note that interested parties from Kyrgystan, Russia, Tajikistan, Ukraine, and Uzbekistan filed complaints with the Court of International Trade (the "Court") at the time of the underlying investigation in 1992, and that the Court recognized the geopolitical changes in the regions covered by the uranium investigations and cautioned that the Department must afford the new republics the opportunity to provide country-specific data. Id. at 37. In addition, GOU and Navoi note that, in its final determination of June 10, 1999, in the investigation covering uranium from Kazakhstan, the Department determined that the unique circumstances of these investigations made it appropriate to give Kazak respondents a new opportunity to provide the data requested in the original questionnaires. Id. at 39. GOU and Navoi note that all of the unique factors acknowledged by the Department in its final determination in the Kazak case are also present in this sunset review. Id. at 40. Given the unique circumstances of this sunset review, the Department should allow Uzbekistan to submit the detailed, country-specific price, cost, and economic data- including the country-specific questionnaire response, economic data related to trends in the uranium industry in the domestic and home markets, currency movements-that will provide evidence of the ability of Uzbekistan to compete in the U.S. marketplace without below-market sales. Id. at 42. In its rebuttal, the Ad Hoc Committee disagrees that GOU's assertion that the Department must terminate the suspended investigation and suspension agreement unless evidence "affirmatively" demonstrates that termination of the suspended investigation and suspended agreement will result in the continuation or resumption of dumping (see September 13, 1999, Rebuttal of the Ad Hoc Committee at 15). The Ad Hoc Committee asserts that, on the contrary, the Department must only find a likelihood of resumed or continued dumping, and the fact that there may be more than one likely outcome following the termination does not require the Department to terminate the suspended investigation and the suspension agreement. Id. at 15-16. The Ad Hoc Committee claims that GOU's arguments regarding the occurrence of past and future dumping are unsubstantiated, and offer no basis for the Department to conclude that dumping is not a likelihood if suspension agreement were terminated. Id. at 17. With respect to GOU's assertion that it has no economic incentive to dump, the Ad Hoc Committee asserts that the objective of maximizing its hard currency revenue could encourage dumping as a means to increase U.S. market share. Further, the Ad Hoc Committee disagrees with AHUG's theory that the under-pricing of CIS-origin uranium is a result of the uranium suspension agreements and the subsequent restrictions placed on the resale and transfer of CIS uranium. Id. at 20. The Ad Hoc Committee notes the fact that under-pricing by CIS uranium was observed in the fourth quarter of 1992, immediately after the institution of the suspension agreements, and before the uranium market learned how the Department would administer the agreements. Id. Therefore, the immediate ability of U.S. prices to rise above the lower CIS prices-an increase that created the price differential-was a result of the quantity limits of the agreements. Id. The Ad Hoc Committee also disagrees with GOU's argument that the import volumes of Uzbek uranium after implementation of the suspension agreement demonstrate that dumping is not likely in the absence of the suspension agreement. The Ad Hoc Committee contends that because the Uzbek suspension agreement limits the quantity of Uzbek uranium imports into the United States, any import volume data is thereby irrelevant to the Department's analysis. Id. at 21. The Ad Hoc Committee asserts that, although the Department may consider other factors in this sunset review, it should not do so for the reasons asserted by GOU. The Ad Hoc Committee disagrees with the relevance of GOU's assertion that changes in the U.S. uranium market and within the Uzbek uranium industry constitute good cause for the Department to consider other factors. Id. at 27. Moreover, the Ad Hoc Committee contends that the question of whether the Uzbek economy is no longer a non-market is economy an inappropriate issue for the Department to consider in this sunset review, and that GOU could have sought a review of its status and a revised agreement. Id. The Ad Hoc Committee asserts, that the Department must reject GOU's and AHUG's request to allow GOU to submit data and information because, according to the Department's regulations, the information would not be considered timely submitted. Id. at 32. Moreover, the GOU's argument that the Department in past administrative reviews has considered market information when determining whether to revoke an order does not automatically cause such information to be relevant or probative for this sunset review. Id. The Ad Hoc Committee argues that, given that the suspension agreement in this proceeding was concluded under section 734(1), and that dumping has continued, any market information is irrelevant. Id. AHUG argues in its rebuttal, that, contrary to the claims of the Ad Hoc Committee, the European and Asian markets are not closed to Uzbek uranium, and that sales of uranium from the NIS to Europe represented the single largest source of uranium to the European Union ("EU") in 1998. Id. at 5. AHUG refers to the flexible policy guidelines set by the Eurotom Supply Agency and the Ad Hoc Committee's own data indicating that deliveries from the NIS to the EU utilities did not fall below 32 percent after 1993 and that such deliveries were 43 percent of total deliveries in 1996. Id. Another argument in AHUG's rebuttal concerns the domestic the Ad Hoc Committee's assertion that the restricted/unrestricted pricing differentials demonstrate underselling in the uranium market. AHUG reasserts their initial comments that the price differential does not represent underselling, but a discount due to the restrictions, and that absent the suspension agreement restrictions, the price for unrestricted uranium would increase to the level of restricted uranium, thus eliminating the discount. Id. at 6. AHUG also adds that the termination date of 2004 of the suspension agreement is arbitrary and has no bearing on whether dumping would continue until that year. Id. at 8. Finally, AHUG asserts that the production of uranium in Uzbekistan currently takes place in a market environment, and would not, as domestic miners claim, use its underutilized production capacity to increase uranium production for sales to the United States below market prices. Id. at 9. On the contrary, AHUG reasserts the correlation between market demand and production by the companies in the NIS countries. Id. GOU and Navoi argue in their rebuttal that the response of the Ad Hoc Committee does not support a determination that dumping is likely to continue or recur. GOU and Navoi assert that an inconsistency lies in the Ad Hoc Committee's focus on the distinction between the restricted and unrestricted markets to support its argument that Uzbekistan is underselling domestic uranium (see September 13, 1999, Rebuttal of GOU and Navoi at 13). In fact, the spread between "restricted" and "unrestricted" market prices stems not from any alleged prior or ongoing dumping by Uzbekistan, but from the operation of the suspension agreement, which created an artificial dichotomy between the two sets of market prices. Id. at 14. For example, GOU and Navoi cite the recent final determination Uranium from Kazakhstan in which the Commission noted that the termination of the Kazakh suspension agreement will eliminate a major distinction between Kazakh uranium and restricted market uranium, which should cause the Kazakh prices to rise closer to restricted market price. Id. Thus, the restricted/unrestricted market distinction actually supports a negative determination. Additionally, GOU and Navoi note a recent International Atomic Energy Agency publication concludes that the world uranium market is moving toward a more balanced relationship between supply and demand and excess inventories are getting much closer to desired levels. Id. at 15-16. GOU and Navoi also assert that the Ad Hoc Committee's allegations of underselling by Uzbekistan is that they are based on generalized data about CIS uranium pricing and are not probative of any actual underselling by Uzbekistan. Specifically, GOU and Navoi note that, given the system of long-term contracts under which uranium is exported from Uzbekistan to the United States, the data in the Ad Hoc Committee's substantive response is highly generalized and irrelevant to the Department's determination. Id. at 18. Further, they note that, the Department acknowledged, when signing the suspension agreements, that prices set under long-term contracts must be viewed as isolated from spot market prices because such prices follow the market prices and deliveries under any existing long-term contracts to not have any direct effect on current market prices. Id. GOU and Navoi assert that there are three fundamental flaws in the Ad Hoc Committee's assertion that Uzbekistan may increase capacity utilization and ship low-priced uranium to the United States. First, they argue that the Ad Hoc Committee's capacity data is flawed because the reported nominal capacity figure includes uranium that can only be mined cost-effectively if prices reach high enough levels to justify utilization of such capacity. Id. at 21-22. Second, the GOU and Navoi assert that the scenario posed by the Ad Hoc Committee is pure speculation that is inconsistent with Navoi's past actions and with its economic incentives. Id. at 22-23. Third, contrary to the Ad Hoc Committee's assertion that there are no markets available to Uzbekistan's uranium shipments other than the United States, several sources of information indicate that there will be a strong demand from Uzbekistan's non-U.S. markets through the world in the foreseeable future. Id. at 25-26. They note that, in particular, NIS countries remain the largest source of supply of natural uranium to the EU. Id. at 26. GOU and Navoi conclude in their rebuttal that, on the basis of the arguments above, the Department should find inadequate the substantive response of the domestic interested parties seeking to maintain antidumping measures against uranium from Uzbekistan. Id. at 27. Accordingly, the Department should either terminate the suspended investigation and the full sunset review or conclude that "good cause" exists to allow the submission of additional data and information not normally considered in a sunset review. Id. at 28. 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 basis for likelihood determinations. In its Sunset Policy Bulletin, the Department indicates 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 termination of a suspended antidumping duty investigation is likely to lead to continuation or recurrence of dumping where (a) dumping continued at any level above de minimis after the suspension agreement, (b) imports of the subject merchandise ceased after the suspension agreement, or (c) dumping was eliminated after the suspension agreement and import volumes for the subject merchandise declined significantly (see section II.A.3.) The Department also explained that, in the case of a suspension agreement, the data pertaining to weighted-average dumping margins and import volumes may not be conclusive in determining the likelihood of future dumping. Thus, in the context of the sunset review of a suspended investigation, the Department may be more likely to take other factors into consideration, provided good cause is shown. Id. To date, the Department has not conducted an administrative review of the suspension agreement. Rather, the Department 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. This information demonstrates that import volumes have fluctuated over the life of the agreement. We agree with the interested parties that, in the instant sunset review, 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 have determined to consider the additional information submitted with respect to the likelihood of future dumping. As a threshold matter, we note that we do not agree that a sunset review is the proper forum for reconsideration of the market-economy status of a country. Parties are free to request such reconsideration in the course of an administrative review. Nor do we agree that the procedural history of the original investigation in any way undermines the validity of the original investigation. Additionally, although the Department has the authority to request information from interested parties during the course of a sunset review, we agree with the Ad Hoc Committee that, pursuant to 19 CFR 351.218(d)(3)(iv)(B), an interested party may also submit in its substantive response any other relevant information that the party would like the Department to consider. We have considered the arguments presented by the interested parties with respect to a variety of market and economic factors. We agree with the Ad Hoc Committee (citing the Commission's final determination with respect to uranium from Tajikistan and Ukraine) that uranium is a highly fungible commodity. Although, as noted by AHUG , purchasing considerations include such matters as supply diversification and reliability, flexibility in quantities of supply, and payment and delivery terms, we agree with the Ad Hoc Committee that, given the fungibility of uranium, purchasing decisions are based almost exclusively on price. All of the interested parties acknowledge the post-suspension agreement distinction between the unrestricted/restricted uranium markets. AHUG and respondent interested parties would have us believe that removal of the restrictions imposed by the suspension agreement would cause the price of Uzbek uranium to rise whereas the Ad Hoc Committee argues that removal of the restrictions would unleash significant 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 cause the price of Uzbek uranium to rise. Further, 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 preliminarily determine that the more likely outcome of removal of the restrictions would be the increase in availability and supply of Uzbek uranium in the U.S. market. The basic laws of supply and demand suggest that an increase in supply, all else being equal, will result in a fall of price. As to the restrictions on access to the EU and Asian markets, while we agree that the information presented by the parties indicates that the EU and Asian markets are not closed to Uzbek uranium, we also agree that these markets are not completely open to Uzbek uranium. We do not agree with the Ad Hoc Committee that the planned duration of the suspension agreement, per se, reflects the likelihood of continuation or recurrence of dumping. However, the negotiated duration of the suspension agreement reflects the nature of uranium marketing, specifically, the role of long-term contracts. 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 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. First, it says nothing with respect to whether such prices are at, or above, normal market value. Second, it says nothing with respect to 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. Magnitude of the Margin Likely to Prevail Interested Party Comments: The Ad Hoc Committee asserts in their substantive response that the Department should select the margin of 115.82 percent from the preliminary determination to provide to the Commission because, without any administrative reviews of the suspension agreement, that is the only rate that reflects the behavior of exporters without the discipline of the order in place (see September 1, 1999, substantive response of the Ad Hoc Committee at 16). In its substantive response, AHUG contends that, should the Department determine that the dumping would likely continue if the suspended investigation was terminated, the prevailing dumping margin would drastically lower that the margins calculated in the preliminary determination for Uzbekistan because of its transition from non-market economies to market economy (see September 1, 1999, Substantive Response of AHUG at 7). Moreover, the margins originally calculated for the NIS were based on the BIA provided to the Department in the original petition was not based on data specific to each country and thus is not representative of any margins that would apply to the NIS today. Id. Therefore, AHUG asserts that the Department should collect new market-based information from those countries directly, rather than from surrogate countries, to determine whether dumping would occur, and to calculate accurately the dumping margins. Id. at 14. GOU and Navoi argue in their substantive response that, should the question of the magnitude of the margin become relevant in this sunset review, the Department should disregard the margin calculated in the preliminary determination (see September 1, 1999, Substantive Response of GOU and Navoi at 24). The Department should make a finding of "good cause" and allow GOU and Navoi to submit additional information regarding price, cost, market and other economic factors. Id. at 24. In addition, because this is a sunset review of a suspended investigation, GOU and Navoi would also be entitled to submit additional information and data relating to trends in the uranium industry in the domestic and home markets, currency movements, and the ability of Uzbekistan to compete in the U.S. marketplace without LTFV sales. Id. Finally, GOU and Navoi contend that the Department must disregard the margin calculated in the preliminary determination because the determination was issued before GOU or Navoi received any notice of the investigation of uranium from Uzbekistan. Id. Moreover, this margin was calculated using BIA data for a different country that no longer exists, and thus, bore no relationship to conditions in Uzbekistan as a separate country. Id. at 25. Therefore, in order to calculate a country-specific margin, the Department must permit GOU and Navoi to provide the complete response to the original questionnaire. Id. In its rebuttal, the Ad Hoc Committee reasserts that the Department should select the margin of 115.82 percent from the investigation, according to the SAA and the Department Policy Bulletin, and that this sunset review neither presents the "extraordinary circumstances" alleged by GOU, nor allows the Department to calculate a new margin. Moreover, the Ad Hoc Committee argues that, although good cause exists for the Department to consider other factors in this review, the Department should not do so for the reasons asserted by GOU and AHUG. Specifically, the Ad Hoc Committee asserts that GOU's arguments- including the issues of whether the Uzbek economy is a market economy and a new margin should be calculated and the Department's decision in the resumed investigation of uranium from Kazakhstan-are irrelevant to the present analysis (see September 13, 1999, Rebuttal of the Ad Hoc Committee at 27-30). The Ad Hoc Committee also asserts that GOU's arguments regarding the occurrence of past and future dumping are unsubstantiated and contends that the preliminary margin is probative of the likelihood of dumping because this rate is the only indication of the behavior of importers and exporters of Uzbek uranium without the discipline of the suspension agreement. Id. at 17. Furthermore, the fact that the margin from the investigation's preliminary determination is based on BIA and on information regarding the USSR does not prevent the Department from taking this rate into consideration. Id. In addition, the Ad Hoc Committee contends that the Department should not allow the GOU to submit significant volumes of data and information. They assert that the only conceivable use for information similar to that obtained in an administrative review would be the calculation of a new margin. Id. at 33. However, such a margin could not demonstrate that there is no likelihood of dumping in the future, as any margin would invariably reflect the impact of the suspension agreement on the exporters and importers of Uzbek uranium. Id. With respect to the magnitude of the margin, GOU and Navoi reassert in their rebuttal that the Department must find good cause and allow Uzbekistan to submit country-specific data in order to conform to due process obligations (see September 13, 1999, Rebuttal of GOU and Navoi at 30). 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. In addition, we stated that, where the Department did not issue a final determination because the investigation was suspended and continuation was not requested, we may use the margin that was determined in the preliminary determination in the original investigation. Further, for companies not specifically investigated or for companies that did not begin shipping until after the order was issued, the Department normally will provide a margin based on the "all-others" rate from the investigation (see section II.B.1 of the Sunset Policy Bulletin). Exceptions to this policy include the use of a more recently calculated margin, where appropriate, and consideration of duty absorption determinations (see sections II.B.2 and 3 of the Sunset Policy Bulletin). We do not agree with respondent interested parties and AHUG that the procedural circumstances of the antidumping investigation of uranium from Uzbekistan make the reliance on the margin from the original investigation unacceptable. As noted by the Ad Hoc Committee, the Department has declined respondent interested parties requests in other sunset reviews to reject margins determined on the basis of BIA in the original investigation (see e.g. Carbon Steel Wire Rod from Argentina, 64 FR 53321 (October 1, 1999)). Further, we note that the weighted-average dumping margin in the preliminary determination of the investigation is the only margin available to the Department. We do not agree that we should, in the course of this sunset review, either calculate a margin of dumping by relying on a previously rejected, untimely questionnaire response or that we should calculate a margin of dumping likely to prevail if the suspended investigation were terminated based on more recent information. Continuation of the investigation, not a sunset review, would be the appropriate forum for consideration of information related to the period of investigation. Additionally, 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 preliminarily find that the margins calculated in the original investigation are probative of the behavior of Uzbek manufacturers/exporters of the subject merchandise 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 Preliminary 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 preliminary results of review in the Federal Register. AGREE______ DISAGREE_______ ______________________________ Robert S. LaRussa Assistant Secretary for Import Administration _______________________________ (Date) 1. See Antidumping; Uranium from Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Ukraine, and Uzbekistan; Suspension of Investigations and Amendment of Preliminary Determinations, 57 FR 49220 (October 30, 1992). 2. Id. 3. See Amendment to Agreement Suspending the Antidumping Investigation on Uranium from Uzbekistan, 60 FR 55004 (October 27, 1995). 4. The Ad Hoc Committee included Cotter Corporation in its Notice of Intent to Participate; however, Cotter Corporation was not included in the Ad Hoc Committee's substantive response of September 1, 1999. 5. AHUG consists of Ameren UE, Baltimore Gas and Electric Co., Carolina Power and Light Co., Commonwealth Edison Co., Consumers Energy, Duke Power Co., Entergy Services, Inc., 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. 6. The Department notes that, although industrial users are allowed to participate in sunset reviews, they are not considered "interested parties" as defined in the statute and regulations. See section 771(9) and 777(h) of the Act, and 19 CFR 351.312. 7. See September 9, 1999, Letter to the Secretary from Philip H. Potter withdrawing PACE from participation in the sunset reviews of uranium from Russia, Uzbekistan, and Ukraine. 8. See September 2, 1999, Request for an Extension to File Rebuttal Comments in the Sunset Reviews of Uranium from Russia, Uzbekistan, and Ukraine from Nancy A. Fischer, Shaw Pittman, to Jeffrey A. May, Office of Policy. 9. See September 3, 1999, Letter from Jeffrey A. May, Director of the Office of Policy to Nancy A. Fischer, Shaw Pittman. 10. See May 24, 1999, Memoranda for Jeffrey A. May, Re: Sunset Reviews of Uranium from Russia and Uzbekistan: Adequacy of Respondent Interested Party Response to the Notice of Initiation. 11. See Extension of Time Limit for Preliminary Results of Full Five-Year Reviews, 64 FR 66879 (November 30, 1999).