congressional_record: CREC-1994-12-20-pt1-PgE23
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| CREC-1994-12-20-pt1-PgE23 | 1994-12-20 | 103 | 2 | URUGUAY ROUND AGREEMENTS ACT | HOUSE | EXTENSIONS | FRONTMATTER | E | E | [{"name": "Philip M. Crane", "role": "speaking"}] | [{"congress": "103", "type": "HR", "number": "5110"}] | 140 Cong. Rec. E | Congressional Record, Volume 140 Issue 150 (Tuesday, December 20, 1994) [Congressional Record Volume 140, Number 150 (Tuesday, December 20, 1994)] [Extensions of Remarks] [Page E] From the Congressional Record Online through the Government Printing Office [www.gpo.gov] [Congressional Record: December 20, 1994] From the Congressional Record Online via GPO Access [wais.access.gpo.gov] URUGUAY ROUND AGREEMENTS ACT ______ speech of HON. PHILIP M. CRANE of illinois in the house of representatives Tuesday, November 29, 1994 The House in Committee of the Whole House on the State of the Union had under consideration the bill (H.R. 5110) to approve and implement the trade agreements concluded in the Uruguay round of multilateral trade negotiations: Mr. CRANE. Mr. Chairman, I believe it is necessary to provide further clarification regarding the antidumping provisions contained in title II of H.R. 5110, the Uruguay Round Agreements Act. I fully expect that the Commerce Department will implement the antidumping provisions of H.R. 5110 in a manner which is consistent with both the letter and spirit of our obligations under the WTO Agreement. I expect that Commerce will implement the following provisions in full compliance with our antidumping agreement obligations, and in a fair manner that the United States would have no objection to if used by foreign governments against U.S. exporters: evaluation of industry support Section 212 of H.R. 5110 establishes procedures for determining industry support, and provides conditions under which the petition may establish adequate support. Section 212 provides that the Commerce Department may, in appropriate circumstances, exclude a domestic producer of a like product from the industry where the producer is itself related to exporters or importers. As a general rule, Commerce should not include members of the domestic industry those domestic producers who oppose the petition, but are related to exporters, unless such producers demonstrate that their interests as domestic producers would be adversely affected by the imposition of an order. It is expected that related domestic producers must demonstrate to the Commerce Department how an order resulting from an investigation would adversely affect their interests, for example, by showing that their domestic production operations would be damaged. In addition, section 231 provides for termination of a case if Commerce determines that producers accounting for substantially all of the production of a product lack interest in the case. It is expected that Commerce will interpret this standard to be the same as that set forth in court decisions such as Gilmore Steel Corp. versus U.S., in which the standard is described as an overwhelming majority. captive production Section 222 of H.R. 5110 provides for the treatment of captive production in an injury inquiry. It is expected that the Commission, in implementing the captive production provision, will fully comply with article 3.5 and 4.1 of the antidumping agreement and articles 15.5 and 16.1 of the subsidies agreement, which require a finding that the dumped or subsidized imports are causing material injury to the domestic industry as a whole. It is my understanding that when examining a captive production situation, the ITC will focus primarily, but not exclusively, on the factors provided in the bill. However, the captive production provision does not limit the Commission to analyzing the merchant market, and an affirmative injury finding not based on an analysis of the industry as a whole, including captive production, would be inconsistent with the agreement. In addition, to the extent the Commission focuses its inquiry on noncaptive production in the domestic industry, it must also focus on noncaptive imports. It is expected that the Commission will apply the same criteria in its determination of whether to focus primarily on noncaptive imports as it applies in its determination of whether to focus primarily on noncaptive domestic production. It is also recognized that, by the nature of the fact that captive imports are internally consumed, such imports generally do not compete with the domestic like product. I expect that it will be very difficult to establish that captive imports compete with domestic production in a particular investigation. Accordingly, only rarely, if ever, should the ITC find that captive imports compete with the domestic like product. Negligible Imports In preliminary determinations, section 212 of the new legislation requires the Commission to base its finding on a determination as to whether there is a reasonable indication that imports are not negligible. It is expected that the Commission will, when necessary, use reasonable estimates when calculating import volumes. It is further expected that the Commission will normally terminate an investigation when import levels are below the statutory threshold, except when import volumes are extremely close to the statutory threshold and reliable data obtained in a final investigation establishes that imports exceed the statutory threshold. Sunset Reviews Section 220 of the legislation establishes that Commerce and the Commission will make their determinations concerning termination of an order based on the facts available if responses by the parties are inadequate. In judging the adequacy of responses, it is expected that Commerce and the Commission shall apply the same standard as that applied in other contexts of the antidumping and countervailing duty laws, such as Commerce's use of best information available. Article 11.3 of the antidumping agreement permits antidumping duties to remain in force pending the outcome of a sunset review, even if the review is not completed until after the 5-year deadline. The agreement thus authorizes the continued collection of duty deposits, but only up to the point that a sunset determination is made to revoke the order. In order to comply with our agreement obligations in cases where the determination is made to revoke the order, it is expected that, pursuant to section 751(d(3), Commerce will determine that the revocation will apply to entries on or after the date of the 5-year anniversary, and that Commerce will direct Customs to refund antidumping duty deposits on merchandise entered after the 5-year anniversary of the order. Section 221 of H.R. 5110 states that the Commission, in making its sunset determination, ``shall consider that the effects of revocation may not be imminent, but may manifest themselves only over a longer period of time.'' Although a sunset review is necessarily prospective in nature, it is not intended that Commerce or the Commission use this fact to extend orders indefinitely. It is not expected that the Commission will find that injury is likely to continue or recur based on uncertainty over the possible conditions at a point in time well beyond the time of the determination. It is expected that the order will be extended only in those cases where there is substantial evidence on the record that material injury is likely to continue or recur within a reasonable period of time. Duty Absorption/Duty as a Cost Sections 221 and 222 of H.R. 5110 provide for Commerce and the Commission to consider the issue of duty absorption. It is expected that before initiating a duty absorption inquiry, Commerce shall ensure that there is a reasonable basis to believe that duty absorption has occurred. The statement of administrative action makes clear that ``during an administrative review initiated 2 or 4 years after the issuance of an order, Commerce will examine, if requested, whether absorption has taken place by reviewing the data on the volume of dumped imports and dumping margins.'' Therefore, Commerce's inquiry will result in either an affirmative or negative finding of duty absorption. Nothing in the statement of administrative action or legislative language provides that Commerce would determine or compute the extent of duty absorption, or the magnitude of duty absorption. Therefore, it is expected that Commerce will not quantify the level of duty absorption, and that an affirmative finding will have no effect on the dumping margins calculated. In making its determination, Commerce should give less probative weight to dumping marging and data based on best information available, as these may be a poor indicator of whether a company is actually absorbing duties. Commerce will notify the International Trade Commission of its findings made during the 4-year review. The Commission should take these findings into account in determining the likelihood of continuation or recurrence of material injury in the sunset review. It is expected that the Commission will not consider duty absorption to the exclusion of other statutory factors. Further, it is expected that the weight accorded by the Commission to Commerce's duty absorption finding will depend on the extent to which it bears on the issue of the likelihood of continuation or recurrence of material injury in light of the facts of each case. Finally, the duty absorption provision in no way permits the treatment of antidumping duties as a cost to be deducted from the U.S. price. The treatment of antidumping duties as a cost has been repeatedly rejected by Commerce and U.S. reviewing courts. Moreover, in the U.S. retrospective duty assessment system, treatment of duties as a cost would violate the WTO Antidumping Agreement, result in the over- assessment of antidumping duties, and serve as a disincentive to investment in the United States. basis for determination of threat of injury Article 3.7 of the antidumping agreement, regarding the determination of threat of material injury, is unchanged from the 1979 antidumping code. It is expected that, as provided in the statement of administrative action at page 184, the Commission's practice in threat determinations will remain unchanged from current practice. As noted in the statement of administrative action, revision of the threat language of the statute in section 771(7)(F)(ii) in no way change Commission practice or judicial interpretations of the statute. export price and constructed export price definitions The statement of administrative action at page 152 states that the change in terminology from ``purchase price'' and ``exporter's sales price'' to ``export price'' and ``constructed export price'' will in no way change the criteria now used to categorize U.S. sales as one or the other. Commerce's decisions will be monitored closely to ensure that no change is, in fact, made in the Department's methodology for categorizing U.S. sales. reimbursement of antidumping duties The statement of administrative action expresses the administration's intent to continue to apply, when appropriate, the current regulation [19 C.F.R. Sec. 353.26] providing for antidumping duties to be increased when Commerce finds that an exporter has directly paid the antidumping duties due, or has reimbursed the importer for the importer's payment of the antidumping duties. The legislation makes no change in this regulation. It is not intended that this provision be extended to apply to countervailing duties. Countervailing duties differ from antidumping duties, and it is not intended that Commerce will deduct countervailing duties from export price or constructed export price when calculating the margin of dumping. fair comparison/normal value adjustments Section 224 of H.R. 5110 implements the requirement in antidumping agreement article 2.4 that ``a fair comparison shall be made between export price and normal value.'' It is expected that Commerce will ensure that a fair, apples-to-apples comparison is made in all cases. In particular, a fair comparison requires that, as a general rule, normal value shall be adjusted for the same costs and expenses for which adjustments are made to the export price or constructed export price. When U.S. price is based on constructed export price, it is expected that Commerce will make either a level of trade adjustment or a CEP offset adjustment to normal value. It is my understanding that an adjustment will be made to normal value in order to ensure a fair comparison to the export price or constructed export price, as the case may be. In measuring the effect on price comparability and interpreting the statutory requirement that a pattern of consistent price differences be shown, it is expected that Commerce will follow the statement of administrative action, which states that ``while the pattern of pricing at the two levels of trade under section 773(a)(7)(A) must be different, the prices at the levels need not be mutually exclusive; there may be some overlap between prices at the different levels of trade.'' Initiation of Cost Investigations in Reviews As noted in the statement of administrative action [page 163], section 224 amends section 773(b) to provide that Commerce must have reasonable grounds to initiate a cost of production investigation in an administrative review, if Commerce excluded below-cost sales of a particular exporter or producer from the determination of normal value ``in the most recently completed segment of the antidumping proceeding.'' Thus, in an administrative review, Commerce may initiate a cost investigation if it has excluded below cost sales in the most recently completed administrative review, or, if no review has been completed, in the original investigation. Anticircumvention Section 230 of H.R. 5110 amends the anticircumvention provision of the law, which currently provides for a test of whether the difference between the value of parts imported from the subject country and the value of the finished product is small. The legislation replaces this test with two inquiries: whether minor or insignificant assembly or completion is occurring in the United States or the third country, and whether the value of parts imported to the United States or third country from the country subject to the order is a significant proportion of the total value of the finished product. The structure of the statute is based on the anticircumvention provisions of the ``Dunkel Text.'' It is expected that Commerce will adhere to the statutory requirement that the value of the parts is a significant proportion of the value of the finished product. For example, the value of a flat panel display in relation to the value of a finished laptop computer would not be significant, and thus would not be found to circumvent an antidumping order on laptops. Further, it is expected that only in very rare instances would Commerce find circumvention to be occurring between unrelated parties. It is expected that Commerce will not interpret these criteria such that the value added in the United States becomes the essential determinant of whether circumvention is occurring. The anticircumvention rules must not operate as a domestic content rule, or as a critical component rule. Moreover, in order to comply with the antidumping agreement and article VI of the GATT 1994, Commerce must only apply antidumping duties to merchandise for which a final determination of dumping and injury has been made. Start-Up Costs Section 224 of H.R. 5110 implements the adjustment for startup operations provided for in article 2.2.1.1 of the antidumping agreement. This provision was one of the agreement's most important accomplishments on behalf of U.S. exports, in particular, high- technology exports. Commerce must not undercut this accomplishment by prematurely ending the start-up period or by limiting the start-up adjustment. It is expected that Commerce will determine the start-up period to end at the point at which commercial production levels characteristic of the product, producer or industry under investigation are achieved, based on production of merchandise of quality levels sufficient for sale. Further, when making the start-up adjustment, Commerce is expected to amortize all start-up costs only after the end of the start-up period and over the life of the product or equipment. Short Supply While I continue to support separate short supply legislation, the administration has stated that there are mechanisms under current law to address short supply situations. Specifically, the fact that a product is not being produced in the United States should be reflected in the ITC's determination of whether the imports are a cause of injury to the domestic industry. That is, if petitioning companies are not producing a competing product, there will be no adverse effect with respect to the imported merchandise, and the ITC must take this into account in its injury determination. After an order is in effect, Commerce can declare a product outside the scope of an order if it has substantially different characteristics or uses than the subject merchandise, or if it is unclear whether the order included the specific product. It is my expectation that Commerce and the ITC will actively use their existing authority to address short supply situations. ____________________ |