Volume 5, Number 21, Page 1

U.S. Sunset Reviews

by Francis J. Sailer, Patricia M. Steele and Julia Padierna Peralta

A new era in U.S. antidumping (AD) history is set to begin when U.S. trade authorities commence their initial review of over 300 antidumping orders under a new type of proceeding known as five-year (“sunset’) reviews. This type of proceeding is dictated by the GATT/WTO Antidumping Agreement and could potentially impact all present and future U.S. antidumping duty orders on Mexican products. How meaningful these proceedings will be, however, remains to be seen.

Introduction

In accordance with the World Trade Organization (WTO) Agreement, any antidumping duty order is to be terminated on a date no later than five years from its imposition, unless the administering authority determines that revocation of the duty would likely lead to continuation or recurrence of dumping and, thus, injury to the domestic industry. Every country establishes its own regulations and administrative procedures to comply with this WTO commitment. The U.S. implemented these rules in the Uruguay Round Agreements Act, which became effective on January 1, 1995.

United States trade legislation contemplates that, after five years, AD orders will be terminated unless during the course of a review the Department of Commerce (DOC) determines that lifting the order would result in the continuation or recurrence of dumping, and the International Trade Commission (ITC) determines that lifting the order is likely to lead to continuation or recurrence of injury to the competing U.S. industry within the reasonably foreseeable future. Initiation of sunset reviews occurs automatically. Sunset reviews of AD orders in effect as of January 1, 1995, will commence starting July 1998. Over the next two to three years, approximately 300 sunset reviews will be conducted. Orders issued after January 1, 1995 will be reviewed automatically on their fifth anniversary.

Mexican Product	Sunset Review Initiation Date	Grouping of Countries with Similar or Identical Products
Steel Wire Rope	January 1999	Japan and South Korea
Porcelain on Steel	February 1999	China, Taiwan and South Korea
Fresh Cut Flowers	February 1999	Netherlands, Colombia, Ecuador, Chile, Kenya and Peru
Circular-Welded	May 1999	Taiwan, Turkey, Thailand, India, Canada, Singapore, Israel, Argentina, Brazil, South Korea, Venezuela, Japan and Italy
Gray Portland Cement and Cement Clinker	August 1999	Japan and Venezuela
Cut-to-Length Carbon Steel Plate	September 1999	Taiwan, Sweden, Belgium, Brazil, France, Germany, South Korea, Spain, U.K., Australia, Canada, Finland, Japan, Netherlands, Poland and Romania

Key Aspects of the Sunset Review Process

As in antidumping investigations, the DOC and the ITC are the authorities responsible for conducting the sunset review in the Federal Register no later than 30 days before the fifth anniversary of the order. Pursuant to regulations recently published by the DOC, within 15 days of initiation any interested U.S. domestic party that intends to participate must file a Notice of Intent to participate. If no U.S. producer responds, the DOC will revoke the order. If at least one U.S. producer expresses interest, within 30 days of initiation all interested parties must submit substantial information to the DOC, including a statement expressing their willingness to participate in the review by providing information, a statement regarding the likely effects of revocation and a summary concerning any duty absorption findings made by the DOC during administrative reviews.

Foreign producers and exporters must also provide historical margin information and export volume and value data. If inadequate responses are received from either foreign or domestic interested parties, the DOC will conduct and expedite a review, which must be completed in 120 days. If adequate responses are received, the DOC will conduct a full review. If a full review is conducted, the DOC generally must conclude the review within 240 days (or 330 days if extended) of the initiation date. The statute provides that interested parties may choose not to participate in the DOC’s process.

The DOC is to base its determination of the likelihood that dumping will continue or recur if the order is revoked on factors such as:

• The weighted average dumping margins determined in the original investigation and subsequent reviews;
• Import volumes for a period before and after the issuance of the AD order; and
• Other economic factors if good cause is shown, such as prices, costs, market share, exchange rates and productive capacity.

The ITC’s proposed regulations indicate that it will also issue a notice of initiation requesting detailed information. Interested parties must submit their responses no later than 50 days after the publication of the notice in the Federal Register. Responses to the ITC’s notice need not be filed until 30 days after the date on which DOC informs the ITC that DOC has received notice of intent to participate from an interested domestic party. The ITC will evaluate the adequacy of interested party responses on a case-by-case basis. If responses to the ITC’s notice are inadequate, it can make an expedited determination within 150 days based on the available facts, making adverse inferences against the parties found to have responded inadequately. If responses are adequate, the ITC will conduct a full review that would be completed within 360 days of issuance of the initiation notice. In either an expedited or full review, the ITC is expected to make its determination of whether injury to the U.S. industry will continue or recur if the order is revoked by assessing a number of factors, including:

The likely volumes of future import if the order is revoked; The resulting price effects if the order is revoked; and the impact of the imports on the U.S. domestic industry.

As a practical matter, except in very narrow circumstances involving several years of zero or declining margins and steadily increasing import values, we anticipate that the DOC will find a likelihood of recurrence of dumping in most cases in which U.S. producers file a notice of intent to participate. Thus, the real issue in these cases will be whether revocation of the order is likely to lead to continued or subsequent injury within a reasonably foreseeable time. As a consequence, the real battle will be before the ITC.

Proposed Schedule and Groupings

One of the main features of the Sunset review process is that both the DOC and the ITC will group sunset reviews involving similar or identical products or issues to ease the administrative burden. Under this scheme, the Sunset review of a product from one country would be conducted together with reviews of identical or similar products from other countries.

Mexican exporters of products subject to U.S. antidumping orders in effect on January 1, 1995 must be aware of the following schedule and grouping of sunset reviews since, upon initiation, those wishing to participate must submit all their information within a short period of time:

Participation in the Sunset review Process

Although the first Sunset reviews of AD orders covering Mexican merchandise are still a few months away, Mexican producers and exporters of products subject to AD duties should begin preparing for this new proceeding immediately. Those industries contemplating participation in the U.S. Sunset review process should also carefully monitor the conduct and progress of the first Sunset reviews since these early cases will signal how the ITC will analyze the substantive issues.

The advantages and disadvantages associated with participating in these Sunset reviews may vary significantly depending on the industry, U.S. market conditions and many other related factors. In general, if conditions in the market have changed and a particular U.S. industry is healthy, it is possible that the ITC could find no injury and an order would be revoked. Orders that are contested by the U.S. domestic industry are likely to meet with stiff opposition to revocation. Mexican companies interested in continued access to the U.S. market should develop a careful plan, gather solid factual evidence to demonstrate that injury to the U.S. domestic industry is unlikely to continue or recur if the order is revoked, and pursue a well-conceived strategy.

Francis J. Sailer is a partner, Patricia M. Steele and associate and Julia Padierna Peralta a Latin American trade specialist in the international trade/customs group of Dickstein Shapiro Morin & Oshinsky LLP, a Washington D.C.-based law firm.

This article was reproduced with the authorization of the authors and from El Financiero.