[Federal Register Volume 74, Number 177 (Tuesday, September 15, 2009)]
[Notices]
[Pages 47225-47229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-22192]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-489-806]
Certain Pasta From Turkey: Preliminary Results of Countervailing
Duty Changed Circumstances Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: On January 28, 2009, the Department of Commerce (``the
Department'') published a notice of initiation of a changed
circumstances review (``CCR'') of the countervailing duty (``CVD'')
order on certain pasta from Turkey as requested by Marsan Gida Sanayi
ve Ticret A.S. (``Marsan'') See Notice of Initiation of Countervailing
Duty Changed Circumstances Review: Certain Pasta from Turkey, 74 FR
4938 (January 28, 2009) (``Initiation Notice''). As stated in the
Initiation Notice, we are not applying the antidumping (``AD'')
successor-in-interest methodology to determine whether Marsan is the
successor to Gidasa Sabanci Gida Sanayi ve Ticaret A.S. (``Gidasa'')
for CVD purposes. Id. at 4939. After receiving additional information
regarding the circumstances which warranted the CCR of Gidasa, pursuant
to the new criteria outlined in the ``Preliminary Results of Changed
Circumstances Review'' section below, we preliminarily find that Marsan
is not the successor to Gidasa, for purposes of the CVD cash deposit
rates, and therefore its merchandise should continue to enter under the
``all others'' cash deposit rate. Interested parties are invited to
comment on these preliminary results.
DATES: Effective Date: September 15, 2009.
[[Page 47226]]
FOR FURTHER INFORMATION CONTACT: Shelly Atkinson or Brandon Farlander,
AD/CVD Operations, Office 1, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street & Constitution
Avenue, NW., Washington, DC 20230; telephone: (202) 482-0116 or (202)
482-0182, respectively.
SUPPLEMENTARY INFORMATION:
Background
On July 24, 1996, the Department published in the Federal Register
the order on certain pasta from Turkey. See Notice of Countervailing
Duty Order: Certain Pasta (``Pasta'') From Turkey, 61 FR 38546 (July
24, 1996). On December 3, 2008, Marsan requested that the Department
initiate and conduct expedited CCRs to determine that, for purposes of
the AD and CVD cash deposits, Marsan is the successor to Gidasa. See
Marsan's December 3, 2008, submission entitled, ``Pasta from Turkey:
Request for Expedited Changed Circumstances Review of AD/CVD Orders''
(``CCR Request''). On January 28, 2009, the Department published a
notice of initiation of a CCR of the CVD order for Marsan. See
Initiation Notice. On April 16, 2009, the Department requested
additional information and issued a questionnaire to Marsan, to which
it responded on May 1, 2009. See Marsan's May 1, 2009, response
entitled, ``Pasta from Turkey: Marsan response to the supplemental
questionnaire.''
On April 14, 2009, and June 2, 2009, the Department published its
preliminary and final results, respectively for the CCR of the AD order
on certain pasta from Turkey and found that Marsan was the successor-
in-interest to Gidasa. See Certain Pasta from Turkey: Notice of
Preliminary Results of Antidumping Duty Changed Circumstances Review,
74 FR 17153 (April 14, 2009); Certain Pasta from Turkey: Notice of
Final Results of Antidumping Duty Changed Circumstances Review, 74 FR
26373 (June 2, 2009).
Scope of the Order
Imports covered by the order are shipments of certain non-egg dry
pasta in packages of five pounds (or 2.27 kilograms) or less, whether
or not enriched or fortified or containing milk or other optional
ingredients such as chopped vegetables, vegetable purees, milk, gluten,
diastases, vitamins, coloring and flavorings, and up to two percent egg
white. The pasta covered by this scope is typically sold in the retail
market, in fiberboard or cardboard cartons, or polyethylene or
polypropylene bags, of varying dimensions.
Excluded from the order are refrigerated, frozen, or canned pastas,
as well as all forms of egg pasta, with the exception of non-egg dry
pasta containing up to two percent egg white.
The merchandise subject to review is currently classifiable under
item 1902.19.20 of the Harmonized Tariff Schedule of the United States
(``HTSUS''). Although the HTSUS subheading is provided for convenience
and customs purposes, the written description of the merchandise
subject to the order is dispositive.
Preliminary Results of Changed Circumstances Review
Pursuant to section 751(b)(1) of the Tariff Act of 1930, as amended
(``the Act''), and 19 CFR 351.216, the Department will conduct a CCR
upon receipt of information concerning, or a request from an interested
party for review of, a CVD order which shows changed circumstances
sufficient to warrant a review of the order. In this case, the
Department finds that the information submitted by the respondent
provided sufficient evidence of changed circumstances to warrant a
review to determine whether Marsan is the successor to Gidasa for
purposes of CVD cash deposit rates. Thus, in accordance with section
751(b) of the Act, the Department initiated a CCR to determine whether
Marsan is the successor to Gidasa for purposes of CVD cash deposit
rates with respect to imports of certain pasta from Turkey.
In Stainless Steel Sheet and Strip in Coils from the Republic of
Korea: Preliminary Results of Countervailing Duty Changed Circumstances
Review, 71 FR 75937 (December 19, 2006), the Department indicated that
it intended to further consider the issue of whether alternative or
additional successorship criteria, other than those the Department
relies upon in an AD CCR, would be more appropriate in a successorship-
type \1\ CVD CCR context. Moreover, the Department stated that it
anticipated issuing a Federal Register notice inviting the public to
submit comments on the issue. Subsequently, the Department published
Countervailing Duty Changed Circumstances Reviews; Request for Comment
on Agency Practice, 72 FR 3107 (January 24, 2007) (``Request for
Comment''), in which the Department highlighted various considerations
relevant to the issue of CVD CCRs, and provided the public an
opportunity to comment on whether any changes to the Department's
practice regarding such reviews was warranted and, if so, what those
changes should entail.
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\1\ Recognizing the Department may conduct other types of CCRs,
the discussion in this section focuses on ``successorship'' CCRs for
determining the appropriate cash deposit rate for the respondent
company in question.
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We received comments from two parties in response to the Request
for Comment.\2\ The first commenter urged that any decision to revise
or clarify the Department's CVD CCR practice should reflect the
historically limited purpose of CCRs, which is to modify a successor's
cash deposit rate for future entries until it obtains a new rate as a
result of an administrative review. Citing to the statute, various past
Department decisions and findings of the Court of International Trade,
as well as noting various practical constraints, the commenter argued
that CCRs are not administrative reviews and do not necessarily involve
the calculation of rates related to specific entries. Administrative
reviews, this party contended, are the appropriate forum in which to
collect the evidence and calculate the precise level of subsidization
for a successor company. In contrast, the function of CCRs is to
address the effect of ``changed circumstances'' on a final affirmative
determination that resulted in a CVD order. Put otherwise, the function
of a CCR is to determine whether the company is essentially the same as
the predecessor company for cash deposit purposes. If the company is
not essentially the same, the commenter argued that the Department
should normally assign the successor company the ``all others'' rate
until an administrative review is requested as the all others rate is
the default rate for exports that have not been investigated or subject
to an administrative review. With regard to which criteria the
Department should use in assessing whether the successor company is
essentially the same as the predecessor company, this commenter argued
for the following factors: (1) Organization structure; (2) management;
and (3) production facilities relevant to the
[[Page 47227]]
production and exportation of subject merchandise.
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\2\ See Letter to Gregory W. Campbell, Office of Policy from
Corus Group plc, entitled ``Countervailing Duty Changed
Circumstances Review; Request for Comments on Agency Practice,''
dated February 23, 2007, and Letter to Gregory W. Campbell, Office
of Policy, from Law Offices of Stewart and Stewart, entitled
``Countervailing Duty Changed Circumstances Reviews: Request for
Comment on Agency Practice; Comments of Stewart and Stewart,'' dated
February 23, 2007. Copies of these public comments are available on
file in the Department's Central Records Unit in Room HCHB 1117 of
the Department's main building.
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The second commenter agreed with the Department's observation in
the Request for Comment that AD and CVD proceedings, while having some
points of common analysis, are ultimately focused on analytically
distinct questions; where AD proceedings are focused on the extent to
which a foreign producer or exporter has made sales below fair value,
CVD proceedings are focused on the extent to which a foreign producer
or exporter has benefitted from subsidies. Therefore, the application
of the AD ``same business entity'' criteria in a CVD CCR is, in this
commenter's view, clearly inappropriate. This is because, in the case
of a change in ownership for payment of market value, some or all of a
respondent's previously received subsidies will no longer be
countervailable, even where the company remains, after the change in
ownership, the ``same business entity'' as it was before the
transaction. According to this party, in these circumstances, the
Department focus must be on the nature of the transaction and not the
four factor ``same business entity'' test. This commenter believes that
where, in a CVD CCR, the Department determines that a change in the
company's ownership or structure has effected a significant change in
the level of countervailable subsidization, it is incumbent on the
Department to recalculate the cash deposit rate to reflect the change
effected by the change in structure or ownership. However, a full
recalculation of all aspects of the respondent's subsidies, to the
extent that they are not directly related to the change in ownership or
structure, is neither necessary nor appropriate. Finally, this
commenter supported an expedited CVD CCR process where there is no
indication that the level of subsidization has changed significantly as
a result of the changed circumstances.
After considering parties' comments, and drawing on the
Department's past experience with CVD CCRs, we are now prepared to
promulgate a new approach that the Department intends to apply in the
current as well as in future CVD CCR proceedings. As background, we
start by laying out certain broad principles relevant to this issue.
First, we note that section 751(b)(1) of the Act directs the Department
to conduct a review of a final affirmative CVD determination when it
receives a request from an interest party ``which shows changed
circumstances sufficient to warrant a review of such determination.''
The statute does not define the term ``changed circumstances.''
Nor does the statute require that the standards and analysis the
Department uses in finding changed circumstances in the CVD context be
identical to those used in the AD context. What may constitute
sufficient grounds for initiating an AD CCR may not be sufficient
grounds for initiating a CVD CCR and vice versa. As we noted in the
Request for Comment and as reflected in the second commenter's
arguments, above, to the extent that dumping is a matter of price
discrimination and the AD CCR analysis is concerned with the pricing
behavior of a successor company, such an analysis would not necessarily
be relevant in the CVD context where subsidization, not price
discrimination, is the analytical focus. In the context of a CVD CCR,
the Department interprets the term ``changed circumstances'' in a
manner consistent with the purpose of the CVD statute. Thus, the
findings in an AD CCR may be different from, and irrelevant to, the
findings in a CVD CCR.
Moreover, the limited purpose of a CVD CCR generally is to
determine whether a company is essentially the same subsidized entity
as the alleged predecessor company for cash deposit purposes.
Accordingly, the Department decides whether the alleged predecessor
company's rate applies to the party being examined. In the context of a
CVD CCR, the Department does not normally calculate a new subsidy rate,
or revised rate where applicable, for the party being examined. Among
other reasons, a complete analysis of a respondent's subsidy rate
(whether the respondent is a successor or not) would require, at a
minimum, the submission and analysis of a full questionnaire response
(and any supplemental responses), ample time for comment from
interested parties, and possible verification. All this would not be
feasible within the condensed time frame of a CCR. See 19 CFR
351.216(e). Rather, the Department conducts such an analysis in an
administrative review, which is the administrative procedure provided
in the statute precisely for this purpose.
With this in mind, our approach to CVD CCRs going forward will be
as follows. As a general rule, in a CVD CCR, the Department will make
an affirmative CVD successorship finding (i.e., that the respondent
company is the same subsidized entity for CVD cash deposit purposes as
the predecessor company) where there is no evidence of significant
changes in the respondent's operations, ownership, corporate or legal
structure during the relevant period (i.e., the ``look-back window'')
\3\ that could have affected the nature and extent of the respondent's
subsidy levels. Where the Department makes an affirmative CVD
successorship finding, the successor's merchandise will be entitled to
enter under the predecessor's cash deposit rate.
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\3\ For purposes of CVD CCRs, the ``look-back window'' is
defined as the period spanning from the present (i.e., the time the
CCR request was submitted to the Department), back to the end of the
period of investigation or, if there have been intervening
opportunities to request an administrative review, the end of the
period of review associated with the most recent opportunity to
request an administrative review. The look-back window has been
circumscribed in this manner based, in part, on the principle that
if changed circumstances occurred prior to this period that were of
concern to any party in the proceeding, that party could have
requested an administrative review to consider those changes.
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Structured in this manner, this CVD CCR analysis is intended to
serve as a type of screening mechanism. Significant changes in the
respondent's operations, ownership, corporate or legal structure that
potentially could affect the nature and extent of the company's
subsidization are a sufficient basis for reconsidering what constitutes
the best estimate of the respondent's existing subsidy levels. In the
face of such changes, it normally would be inappropriate for the
Department to affirm a cash deposit rate that had been calculated
during a previous time period based on a significantly different
factual pattern. The most appropriate CVD cash deposit rate in this
instance is the rate under which the merchandise of a newly-renamed
entity would normally be entered, i.e., the ``all others'' cash deposit
rate. Conversely, where there have not been any such significant
changes during the look-back window, it normally is appropriate and
reasonable for the Department to re-affirm the existing ``predecessor''
duty deposit rate as the best estimate of the respondent's existing
rate of subsidization.
For the sake of clarity, consistency, and predictability, we are
identifying the following non-exhaustive list of the types of changes
that we normally consider to be significant and would affect the nature
and extent of the requesting party's subsidization: \4\ (1)
[[Page 47228]]
Changes in ownership, other than regular buying and selling of publicly
owned shares held by a broad array of investors, (2) corporate mergers
and acquisitions involving the respondent's consolidated or cross-owned
corporate family and outside companies, and (3) purchases or sales of
significant productive facilities.
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\4\ This list is based on the Department's extensive experience
in applying its regulations and existing practice to various factual
patterns. Taking just one example, 19 CFR 351.525(b) provides
general ``attribution'' rules that would apply when determining the
subsidy rate when two previously unrelated subject merchandise
producers merge. What is clear ex ante in applying these general
rules is that the resulting rate for the merged entity would most
likely be different from the previously calculated subsidy rates for
either of the two pre-merger companies. Given the fact-intensive
analysis involved, the extent to which the rate for the merged
entity differs from either of the previous company's rates could
only be determined in a full administrative review.
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Where a change has occurred in the respondent's operations,
ownership, corporate or legal structure that is not explicitly
reflected in this non-exhaustive list, the Department will assess
whether that change could affect the nature and extent of the
respondent's subsidization and, therefore, whether the respondent is
the same subsidized entity as the predecessor for CVD purposes, with
reference to one or more of the following objective criteria: \5\ (1)
Continuity in the cross-owned or consolidated respondent company's
financial assets and liabilities; (2) continuity in its production and
commercial activities; and (3) continuity in the level of the
government's involvement in the respondent's operations or financial
structure (e.g., government ownership or control, the provision of
inputs, loans, equity).\6\
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\5\ This is not necessarily an exclusive list.
\6\ Routine or ``technical'' fluctuations in subsidy rates
stemming from, e.g., declining allocable subsidy benefits under the
Department's declining balance methodology, ordinary fluctuations in
sales denominators, or changing interest rates would not normally in
themselves be a basis for a negative successorship finding.
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We have adopted the particular criteria noted above because, in
contrast to the factors examined in an AD CCR, these better reflect
those aspects of a company that generally are most impacted by, the
target of, or the vehicle for subsidy benefits. For example,
stabilizing a company's financial position, or facilitating investment
in new productive capacity is often a goal of subsidization, and
governments often achieve this subsidization through direct involvement
in, or financial or ``in kind'' provisions to, the company.
Any party requesting a CVD CCR should provide, as part of its
request, information sufficient to clearly identify and explain any
significant changes in the respondent's operations, ownership, or
corporate or legal structure during the look-back window. At a minimum,
the request should include a full narrative with supporting
documentation regarding any changes similar to those items in the non-
exhaustive list above as well as complete information addressing the
three objective criteria enumerated above. The supporting information
should also include, where available, the translated financial
statements on a consolidated basis for the respondent for the years of
and immediately prior to any changes related to the non-exhaustive list
and the objective criteria. (For example, if the change in question
occurred in May 2008, annual consolidated financial statements should
be provided for years 2007 and 2008). The requesting party should also
identify in its request, to the extent of its knowledge, under what
exporter/producer name and CVD cash deposit rate the subject
merchandise is currently entering into the United States.
Upon receipt of a duly supported CVD CCR request containing the
necessary information outlined above, the Department will initiate and
conduct a CVD CCR, consistent with its regulations. In making a final
CVD CCR finding, the Department will normally come to one of two
conclusions: (1) The respondent company is the successor to the pre-
change predecessor company and, therefore, the respondent's merchandise
may enter under the predecessor's established duty deposit rate, or (2)
the respondent company is not the successor, which means its
merchandise is not entitled to enter under the claimed
``predecessor's'' previously established cash deposit rate.\7\
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\7\ Generally, this means the ``all others'' cash deposit rate
will apply.
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Finally, we make the following general points about the application
and likely implications of this new methodology. First, we reiterate
that, for the reasons discussed above, our analysis will focus on
whether a significant change occurred in the company's operations,
ownership, corporate or legal structure and not whether those changes,
in fact, ultimately did affect the respondent's subsidization or by how
much. This latter question can only be decided based on a full analysis
of a complete record compiled in the course of an administrative review
and not on the limited facts or within the abbreviated time frame of a
CVD CCR.
Second, we recognize that CVD CCRs involving companies that have
been excluded from the order is a unique situation that may require
additional consideration and, potentially, a different analysis. As we
are not presented with that fact pattern in this case, we will address
the issue of excluded companies in CVD CCRs, and articulate appropriate
standards and analyses for such instances, where and when those
circumstances arise.
Third, we will not initiate a CVD CCR if the question of the
appropriate cash deposit rate can otherwise be addressed in an ongoing
or, where appropriate, an impending administrative review. Initiating
an additional CVD CCR in these circumstances poses an unnecessary
burden on parties and on the Department's resources, and an ongoing
administrative review generally provides an opportunity for a fuller
record to be developed and for greater participation by interested
parties.
Finally, for reasons discussed above, findings regarding
successorship under an AD CCR are not necessarily relevant to a CVD
CCR, and vice versa.
Analysis of Responses
On August 14, 2007, MGS Marmara Gida (``MGS''), a Turkish holding
company, was formed by five individuals for the purpose of acquiring
the respondent, Gidasa. The agreement to transfer Gidasa from its
former owner to MGS was signed on the same day MGS incorporated, and
the transfer was completed on March 3, 2008. On June 5, 2008, MGS
changed Gidasa's legal corporate name to Marsan. Subsequently, in its
submissions dated December 3, 2008, and May 1, 2009, Marsan informed
the Department that a change in ownership occurred, and that MGS
acquired all of Gidasa's assets, including its facilities and brand
names.
Accordingly, we find that significant changes have occurred during
the relevant ``look-back'' window, beginning January 1, 2008, in
Gidasa's/Marasan's ownership and corporate structure.\8\ New investors
and a new corporate entity now own and control the production of
subject merchandise and such significant changes could impact the
nature and extent of the respondent's subsidization. As stated above in
our new policy, we are not going to analyze whether Marsan's rate of
subsidization matches that of Gidasa (i.e., whether the level of
subsidization has actually changed at some point on or after March 3,
2008, when significant changes occurred) or recalculate a new CVD cash
deposit rate for Marsan. This type of analysis is more appropriately
done in the context of an administrative review.
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\8\ We note that the last date to request an administrative
review was July 31, 2009, which would cover the period of review for
January 1, 2008, to December 31, 2008. Therefore, based on our new
policy, in this case the Department will examine changes that have
occurred from January 1, 2008, through the time that Gidasa/Marsan
submitted its CCR Request.
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[[Page 47229]]
Since significant changes in Marsan's ownership and corporate
structure have occurred that could potentially affect the nature and
extent of the company's subsidization, pursuant to our new policy
outlined above, we are finding that Marsan's merchandise is not
entitled to enter under the CVD cash deposit rate previously
established in the last CVD administrative review of Gidasa.
Accordingly, we preliminarily determine that Marsan's merchandise
should continue to enter under the ``all others'' CVD rate.
Public Comment
Any interested party may request a hearing within 10 days of
publication of this notice. Any hearing, if requested, will be held no
later than 19 days after the date of publication of this notice, or the
first workday thereafter. See 19 CFR 351.310. Case briefs from
interested parties may be submitted not later than 10 days after the
date of publication of this notice. Rebuttal briefs, limited to the
issues raised in those comments, may be filed not later than 17 days
after the date of publication of this notice. See 19 CFR 351.309. All
written comments shall be submitted in accordance with 19 CFR 351.303.
Persons interested in attending the hearing, if one is requested,
should contact the Department for the date and time of the hearing. The
Department will publish the final results of this CCR in accordance
with 19 CFR 351.216(e), including the results of its analysis of issues
raised in any written comments. The current requirement for a cash
deposit of estimated CVD duties on all subject merchandise at issue
will continue unless and until it is modified pursuant to the final
results of this CCR.
We are issuing and publishing these results and notice in
accordance with sections 751(b)(1) and 777(i)(1) and (2) of the Act and
19 CFR 351.216.
Dated: September 9, 2009.
Ronald K. Lorentzen,
Acting Assistant Secretary for Import Administration.
[FR Doc. E9-22192 Filed 9-14-09; 8:45 am]
BILLING CODE 3510-DS-P