RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/Q1/USA/19
G/SCM/Q1/USA/19
13 January 2000
(00-0139)
Committee on Anti-Dumping Practices
Committee on Subsidies and Countervailing MeasuresOriginal:  English
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS
Replies to Questions from ARGENTINA1, BRAZIL2, the EUROPEAN COMMUNITIES3,
HONG KONG, CHINA4, JAPAN5, MEXICO6, AND TURKEY7
Regarding the Notification of the UNITED STATES8
The following communications, dated 1 November 1999 and 11 January 2000, have been
received from the Permanent Mission of the United States.
_______________
TABLE OF CONTENTS
Page
QUESTIONS FROM ARGENTINA....................................................................................................1
QUESTIONS FR OM BR AZIL.......................................................................................................... ...9
QUESTIONS FROM THE EU ROPEAN COMM UNITIES..............................................................15
QUESTIONS FROM HONG KONG, CHINA ..................................................................................19
QUESTIONS FR OM JAPAN........................................................................................................... ..19
QUESTIONS FROM  MEXICO .........................................................................................................2 2
QUESTIONS FROM  TURKEY.........................................................................................................2 5
QUESTIONS FROM ARGENTINA
Q1. The supplementary information provided by the United States states that the Uruguay
Round Agreements Act (URAA) requires that the Department of Commerce initiate a sunset
review of each order or suspended investi gation not later than 30 days before the fifth
anniversary of publication of the order or suspension agreement in the Federal Register.Bearing in mind that the full sunset review ta kes 240 days, in addition to the number of days
required by the International Trade Commission, can the measure still be applied during the
review period?  If so, under what circumstances?
                                                     
1 G/ADP/Q1/USA/14-G/SCM/Q1/USA/14
2 G/ADP/Q1/USA/18-G/SCM/Q1/USA/18
3 G/ADP/Q1/USA/20-G/SCM/Q1/USA/20
4 G/ADP/Q1/USA/17-G/SCM/Q1/USA/17
5 G/ADP/Q1/USA/16-G/SCM/Q1/USA/16
6 G/ADP/Q1/USA/13-G/SCM/Q1/USA/13
7 G/ADP/Q1/USA/12-G/SCM/Q1/USA/12
8 G/ADP/N/1/USA/1/Suppl.4 and 5-G/SCM/N/1/USA/1/Suppl.4 and 5G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 2
Reply
Yes, it is appropriate to continue to impose duty deposit  requirements on entries between the
fifth anniversary and the final sunset determinati on.  Article 11.3 of the Anti-Dumping Agreement
and Article 21.3 of the SCM Agreement provide that “the duty may remain in force pending the
outcome of such a review”.
Q2.  In Section 351.218 - “Sunset reviews under Section 751(c) of the Act”, referring to
substantive responses to a notice of intent to initiate a sunset review, a time-limit of 30 days
from publication of the notice of initiation in the Federal Register is set for interested parties to
submit substantive responses.  Can interested parties request an extension of the deadline for
submitting substantive responses?
If no, how is that consistent with Articl e 6.1.1 of the Agreement on Anti-Dumping and
Article 12.1.1 of the SCM Agreement which states that “due consideration should be given to
any request for an extension of the 30-day period and, upon cause shown, such an extensionshould be granted whenever practicable”?  We should like to point out that the Section in
question is applicable to reviews as provid ed for in Article 11.4 of the Agreement on
Anti-Dumping and Article 21.4 of the Agreement on Subsidies and Countervailing Measures.
Reply
Yes, interested parties may request an extension to the 30-day deadline for submitting a
substantive response.
We have received only one such request for an extension, and we granted the request.  In the
sunset reviews of the suspended anti-dumping and countervailing duty investigations on cement from
Venezuela, we received a request for an extension from one of the Venezuelan cement producers and
the Government of Venezuela on the day the substantive response was due.  We granted the requested
extension despite the fact that all other interested parties had filed their response within the 30-day
deadline.
We note that the schedule for the initiation of sunset reviews was published in the Federal
Register on 14 May 1998 (and republished 29 May 1998) and is available on the Department’s sunset
web site.  Further, the Department’s regulations identify the information required in substantive
responses.  Therefore, although a sunset review is not initiated until notice of initiation is published in
the Federal Register, interested parties have significant advance notice of when these reviews will be
initiated and the information to be submitted in response.
Q3. Section 351.218 also states that the Department will make its determination of adequacy
of responses of interested parties on a case-by- case basis.  What criteria does the Department
use to formulate those determinations?  Since determination of inadequate responses rules out
participation in the review, does the Department of Commerce request the party to improve itspresentation?  If no, is there an administrative mechanism which allows for appeals against
determination of inadequate substantive responses?
Reply
First, we consider the completeness of each response.  Where information is not provided, the
explanatory material accompanying our sunset regulations provide that we may nonetheless consider
the response so long as the submitter provides a reasonable explanation as to why it is unable to
provide the missing information.G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 3
After determining the completeness of the individual responses, the Department considers the
percent of exports of subject merchandise accounted for by the respondent interested parties
participating in the review.  Where exporters accounting for significantly less than 50 per cent of themost recent five years’ exports participate, we conduct an expedited review.
Parties have the opportunity to comment on the Department’s determination to conduct an
expedited review.  Specifically, section 351.309(e) provides that parties may file comments on the
appropriateness of an expedited sunset review within  70 days of initiation of the review.  Because the
Department notifies the International Trade Commission of any determination to conduct an
expedited sunset review within 50 days of initiat ion of the review, this 70-day deadline provides
parties sufficient opportunity to comment.
Finally, we note that any determination to conduct an expedited review does not mean that
parties cannot participate.  In fact, our expedited reviews are based on all of the information on the
record of the review, including the parties’ responses we determined to be inadequate for purposes ofconducting a full review.
Q4. Under the heading “Full sunset review upo n adequate response from domestic and
respondent interested parties”, it is stated th at even where the Department carries out a full
sunset review, “only under the most extraordinary circumstances will the Department rely on acountervailing duty rate or dumping margin other than those it calculated and published in its
prior determinations” and under no circumstances will it “calculate a net countervailable
subsidy or dumping margin for a new shipper”.
What “most extraordinary circumstances” could necessitate the application of a
countervailing duty rate or dumping margin other than those calculated and published
previously?  If, during the full sunset review, a dumping margin or subsidy total is obtained
other than those calculated and published previously, will the anti-dumping or countervailing
duty rates be adjusted?  Or, would it be necessary to conduct simultaneously a full sunset
review and a changed circumstances review?  If bo th types of reviews have to be carried out,
would they both have to be requested by the inte rested parties or could the designated authority
conduct the changed circumstances review?
Reply
The Department did not define “most extraordinary circumstances” in its regulations because
we envision that this determination will be made on a case-by-case basis.  However, because theDepartment conducts administrative reviews upon request on an annual basis, it is difficult to identify,
in advance, what exactly would constitute “most extraordinary circumstances.”  We can, however,
state that a sunset review of a suspended investigation, particularly where the suspension agreement is
based on a commitment to do something other than completely eliminate dumping, may present such
extraordinary circumstances.
Any adjustment to an anti-dumping or countervailing duty deposit or assessment rate is done
through an administrative or changed circumstances review which the Department conducts in
response to a request from interested parties.
Q5.  The Act states that “the Department will verify factual information relied upon in
making its final determination normally only in  a full sunset review ... and only where needed.
The Department will conduct verification normally only if, in its preliminary results, the
Department determines that revocation of the order or termination of the suspendedG/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 4
investigation, as applicable, is not likely to  lead to continuation or recurrence of a
countervailable subsidy or dumping ... and the De partment’s preliminary results are not based
on countervailing duty rates or dumping margins as applicable, determined in the investigation
or subsequent reviews.
Does the Department not verify the inform ation presented in substantive responses
which give rise to summary sunset reviews?  How does this provision line up with Article 6.6 of
the Agreement on Anti-Dumping and Article 12.5 of the Agreement on Subsidies and
Countervailing Measures which provide that excep t in cases where interested parties refuse
access to information the authorities will sati sfy themselves as to the accuracy of the
information supplied by interested parties upon which their findings are based?
Reply
In expedited sunset reviews, the Department relies on previously calculated margins or
subsidy rates.  Because information used in calculating the rates in prior administrative reviews willalready have been verified (or deemed accurate), there is no need to re-verify such information.  In
sunset reviews where new information is submitted, and such information would result in the
revocation of the order, the Department made clear its intent to verify such information.  This is
consistent with both Article 6.6 and Article 12.5.
Q6.  Bearing in mind that reviews must begin at least 30 days before the fifth anniversary of
the assessment of the anti-dumping or countervailing measure, and considering that the review
period exceeds 30 days, could the measure continue to be applied to the end of the investigation
period (page 7, paragraph 6 -  “ Substantive response to a Notice of Initiation ”)?
Reply
Yes, as we explained in response to Argentina’s Question 1, any duty deposit requirements
will remain in force until the end of the sunset review.  This is fully consistent with Article 11.3 of the
Anti-Dumping Agreement which provides that “the duty may remain in force pending the outcome of
such a review.”
Q7. Does the fact that sunset reviews are initiated automatically mean that the review is
initiated without sufficient reasons to justify it?  Does it always take place as a matter of course?
Reply
The United States does not view the automatic initiation of sunset reviews as meaning that
such reviews are initiated without sufficient reason.  Consistent with Article 11.3 of the Anti-
Dumping Agreement and Article 21.3 of the SCM Agreement, section 751(c) of the URAA provides
that the Department and the ITC will automatically initiate five-year sunset reviews not later than
30 days prior to the fifth anniversary of an order for the purpose of determining whether revocation ofan order will lead to continuation or recurrence of dumping or a countervailable subsidy and material
injury.  Further, consistent with Article 18.2 of the Anti-Dumping Agreement and Article 32.4 of the
SCM Agreement, five-year sunset reviews of the orders and suspended investigations in effect on
1 January 1995, (the date the WTO Agreement entered into force with respect to the United States),
are being automatically initiated pursuant to a schedule published in the Federal Register in
May 1998.G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 5
Q8.  In a sunset review of countervailing duty rates, why is an expedited review conducted
when the government of the exporting country does not respond or fails to file a complete
substantive response although shipp ers may have responded. (page 18(b))
Reply
We consider the participation of the foreign government to be indispensable, because only the
government is in a position to explain its actions and intentions with respect to present and future
subsidization.
Q9. What happens if the Government of the exporting country responds but shippers do
not?  Is the same procedure followed as for the reverse situation?
Reply
Where a government responds, but exporters do not, the Department will conduct an
expedited review in cases where the rate of subs idy is determined using company-specific production,
sales, or export information.  It is essential for the Department to have company-specific information
in a sunset review where it may consider calculation of a new subsidy rate.  Where such information
is not used in the calculation of the subsidy rate, company participation is not needed in order toconduct a full review.
For example, in the sunset review of the countervailing duty order on sugar from the
European Community, the Department conducted a full review with only the participation of the
European Commission.  In its final results of  review the Department stated that “where
company-specific information provides no additional input into our determination, we believe that
requiring producer/exporter participation is not warranted.” 64 FR 49464 (13 September 1999).
Q10.  Why, in the case of expedited sunset revi ews, is the matter generally concluded with the
possible continuation or recurrence of the dumping measure?  (page 18(c))
Reply
Expedited reviews are conducted where there is participation by exporters accounting for less
than a significant percent of merchandise subject to an order.  Because the Department makes its
sunset determinations on an order-wide basis, it is expected that non-participating producers would
not have eliminated dumping over the life of th e order.  As such, the Department would find that
dumping would likely continue were the order revoked.
Q11.  What is meant by the Secretary possibly  relying on subsidy or dumping margins other
than those it calculated and published in its pr ior determinations?  Are these determinations the
results of administrative reviews?  (Page 18(2)(i))
Reply
This language refers to the potential for the Department to calculate dumping margins or
subsidy rates during the course of a sunset review.
For example, in the sunset review of the countervailing duty order on sugar from the
European Community, rather than relying on the prev iously calculated subsidy rates, the DepartmentG/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 6
relied on the evidence contained in the record of that review to calculate a subsidy rate likely to
prevail were the order revoked.
Q12.  What happens when imports of the origin involved in the invest igation are not recorded
but the domestic producer shows int erest in the follow-up to a review?
Reply
We note that we do not consider this question to address the Department’s sunset regulations.
Rather, it goes to what the outcome/decision will be in a particular situation.  As such, we are unable
to give a specific answer because each sunset dete rmination is based on the evidence on the record for
that review.
We did, however, indicate in our Policy Bulletin that for the purpose of determining whether
revocation of the order is likely to result in continuation or recurrence of dumping, the Department
normally will find that dumping is likely to continue or recur in cases where there has been acessation of exports.
Q13.  Please specify the indicators used to evaluate the possibility of a dumping measure
recurring.
Reply
Again, we note that we do not consider that th is question addresses the Department’s sunset
regulations.
The URAA, SAA, and our policy bulletin specify that for the purpose of determining whether
revocation of an order would result in continuation or recurrence of dumping, the Department will
consider the weighted-average dumping margins determined in the investigation and subsequent
reviews and the volume of imports for the period before and after the issuance of the order.
Additionally, we may also consider such other price, cost, market, or economic factors as we deem
relevant.
Q14.  In the subsection “Adequacy of response to a Notice of Initiation”  (page 8, paragraph 6) it
is stated that “the determination of adequacy is committed to the Department’s (and,
separately, the International Trade Commission’s) discretion”.  However, paragraph (e)(4)
provides guidelines by which the Department de termines whether the responses of interested
parties to the Notice of Initiation are adequate.  Is this not contradictory?
Reply
While determinations of adequacy are within the discretion of the Department (and,
separately, the ITC) we believe it appropriate to develop guidelines for making adequacydeterminations.  Paragraph (e)(4) merely provides guidelines that the Department uses in making
these determinations.  As such, we do not consider these statements contradictory.
Q15.  Why is it that when a respondent interest ed party does not provide complete responses
to the initial Notice of Initiation, the Department considers that as a waiver of participationwithout giving the party the opport unity to correct the shortcoming?G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 7
Reply
As we indicated in response to Argentina Question #, we do not reject responses, or view
responses as incomplete, where the submitter provides a reason for not submitting information.
Questions regarding G/ADP/N/1/USA/1/Suppl.4-G/SCM/N/1/USA/Suppl.4
Q1 In Section 351.510, why are indirect taxes and import charges included in the
calculation of subsidies?
Reply
As explained in the preamble to the regulations, section 351.510 does not apply to exemptions
from and deferrals of indirect taxes and import charges for goods destined for export.  Such
programmes are examined under Sections 351.517 – 351.519, which incorporate the criteria from theIllustrative List and reflect the general principle that the non-excessive exemption, remission or
deferral of indirect taxes and import charges on goods destined for export would not be considered a
subsidy.  In contrast, Section 351.510 applies when companies are provided exemptions from indirect
taxes and import charges as part of a domestic subsidy or import substitution programme (i.e. on
goods not destined for export).  In such circumstance s, the benefit to the recipient is the amount of the
tax savings.
Q2. Section 351.511 – "Provision of goods or services."  Why is so much leeway for
discretion given to the Secretary to establish co mparison prices in order to determine whether
there is "less than adequate remunerati on"?  (Paragraphs (a)(1) and (a)(2))
Reply
The circumstances surrounding the government provision of a good or service can be quite
varied.  For example, the government may be providing a good or service which is widely traded
within the country in question or the government may be the sole provider of a good or service.
Depending on the circumstances, the preferred be nchmark of market-determined prices stemming
from actual transactions might not always be availa ble.  For this reason, the Department of Commerce
adopted an approach which would provide the Department with options for finding an appropriate
benchmark while adhering to the general principle that the ideal benchmark would be a market-
determined price.  While the Department does have a certain degree of discretion in selecting the
appropriate benchmark, that discretion is constrained by the hierarchy established in the regulations.
Q3. Section 351.516 – Price preferences for inputs used in the production of goods for
export.  Why is so much leeway for discretion given to the Secretary to establish comparison
prices in order to determine whether there is "less than adequate remuneration"?
Reply
The United States is of the opinion that this regulation, in contrast with Section 351.511,
leaves very little room for discretion in choosing a benchmark.  According to item (d) of the
Illustrative List of Export Subsidies, the provision of goods or services for use in the production ofexported goods constitutes a prohibited export subsidy if such goods or services are provided on terms
or conditions more favourable than for products or services for use in the production of goods for
domestic consumption, if (in the case of products) such terms or conditions are more favourable than
those commercially available on world markets.  This is a different inquiry than whether the goods orG/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 8
services are provided for less than adequate remuneration and contemplates a comparison with a
commercially available world market price.  Acco rdingly, Section 351.516 provides that the benefit
will be determined by comparing the price of products used in the production of exported goods to the
commercially available world market price of such products, inclusive of delivery charges.
Q4. Section 351.525 – "Calculation of ad valorem  subsidy rate and attribution of subsidy to a
product".  It is stated that in cases where sh ipping expenses are taken into consideration,
appropriate adjustments may be introduced, what are these adjustments and why are they not
explained, if only by way of example?
Reply
In cases where a subsidy is provided with respect to the movement of a product from the port
or factory to the place of destination, the use of an f.o.b. sales denominator may overstate the subsidy
amount.  Accordingly, Section 351.525 allows for an adjustment to be made to account for this
scenario.  The adjustment contemplated could take the form of calculating a subsidy rate using someother sales value (e.g. c.i.f.) and adjusting the resul ting rate to an f.o.b. equivalent using the ratio of
f.o.b. to c.i.f. sales.
Q5. Section 351.301(d), point 7.  Please explain what is meant by the fact that if the
Government authority "establishes to the Secretary's satisfaction that the alleged subsidy orsubsidy program has been notified, the Secretary will terminate the investigation of the notified
subsidy"?
Reply
As is explained in the preamble to the regulations, there may be times when it is unclear
whether a subsidy alleged in a petition is, in fact, a subsidy provided under a programme that has been
notified under Article 8.3 of the Subsidies Agreement.  The regulation provides that, in such
situations, the United States may include the subsid y in its investigation, but will cease to investigate
the programme if the responding government demonstrates that the alleged subsidy has, in fact, been
notified to the WTO.
Q6. Section 351.512.  What is hidden behind the word "reserved" in square brackets?
Q7. Section 351.521.  What is hidden behind the wo rd "reserved"?  Why are they notified in
this manner?
Reply
The term "reserved" is merely a drafting convention used in rule promulgation in the
United States to signify that the regulatory authorit y wishes to "reserve" its right to develop rules on
this subject at a later point, without disrupting the sequence of subjects to be addressed by the rules.
In other words, Sections 351.512 (Purchase of goods) and 351.521 (Import substitution subsidies)have been designated "reserved" in order to preserve a place where regulations regarding these topics
can be included in the future.  There is nothing hidden behind the word "reserved".  The United States
chose not to issue regulations on these two topics at this time because of its lack of experience in
dealing with such types of subsidies.  However,  in order to preserve the option of including
regulations on these topics in the future without disturbing the current sequencing of the paragraphs,these two sections were designated "reserved".G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 9
QUESTIONS FROM BRAZIL
Questions regarding G/ADP/N/1/USA/1/Suppl.4
Q1. Paragraph 351.505(a)(4)(i) states that:
"The Secretary will consider a firm to be uncreditworthy if the Secretary
determines that, based on information available at the time of the government-
provided loan, the firm could not have ob tained long-term loans from conventional
commercial sources.  The Secretary will determine uncreditworthiness on a case-
by-case basis, and may, in appropriate circumstances, focus its creditworthinessanalysis on the project being financed rather than the company as a whole."
Please clarify:
(a) Whether the evaluation of the firm would be made in all cases?
Reply
A creditworthiness analysis will be conducted in those cases where the petitioner supplied
information establishing a reasonable basis to believe or suspect that a firm is uncreditworthy.
Generally, the financial situation of the firm in question will be the basis for the creditworthiness
determination.  In those circumstances where the creditworthiness analysis focuses on the projectbeing financed, the financial situation of the firm will not be disregarded.  The creditworthiness of the
project will be evaluated in the context of the financial situation of the firm.
(b) Will the project be evaluated only if it is determined that the firm is creditworthy?  If
not, in which circumstances will the Secretar y focus its creditworthiness analysis on the
project being financed?
Reply
The project-specific analysis is not intended to be  used solely where the firm is creditworthy.
As was stated in the preamble to the regulations, the project-specific analysis will be used in situations
where the success or failure of a project would be the most important indicator of the borrowing firm'sability to repay the loan.  This could happen where a loan is provided to fund a plant expansion or
new model or product line and repayment of the loan is contingent upon the success of the particular
project being funded.
Q2. Paragraph 351.507(a)(2)(i) states that:
"In general.   Except as provided in paragraph (a)(2)(iii) of this section, the
Secretary will consider an equity infusion as being inconsistent with usual
investment practice (see paragraph (a)(1) of this section) if the price paid by the
government for newly issued shares is gr eater than the price paid by private
investors for the same (or similar form of) newly issued shares."
Please:
(a) Clarify the concept of "similar" form of newly issued shares.  What criteria will be used
for the selection of the "similar" form of newly issued shares?G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 10
Reply
Ideally, the benchmark to be used to compare a government's purchase of newly issued equity
would be the price paid by a private investor for shares with characteristics identical to thosepurchased by the government.  The concept of a "similar" form of newly issued shares is relevant
where the only newly issued shares purchased by private investors at the time of the government
infusion are for shares which are not identical, yet still similar, to those purchased by the government.
For example, where the government shares are at a different level of subordination than the private
shares, the price paid by the private investor, adjusted to account for any differences in value, may be
used as a benchmark.
(b) In which circumstances will the price paid by private investors for similar form of newly
issued shares be considered instead of th e market price of the newly issued shares?
Reply
The methodology measures the market price of the newly issued shares by comparing the
government purchase to private purchases of newly issued shares.  The price paid for a similar form
of newly issued shares will only be used where there is no private purchase of identical newly issued
shares.  In no circumstances, for the reasons explained in the preamble, will secondary market prices
be considered.
Q3. Paragraph 351.507(a)(2)(iii) states that:
"The Secretary will not use private investor prices under paragraph (a)(2)(i) of this
section if the Secretary concludes that private investor purchases of newly issued
shares are not significant."
Please explain the criteria used to consid er that private investor purchases of newly
issued shares are not significant.  Are there any criteria established in the relevant legislation or
in any other implementing regulation?
Reply
This provision is intended to apply where the number of newly issued shares purchased by
private investors is very small in relation to the number of shares purchased by the government.  In
such circumstances, the use of the price paid by the private investors would be inappropriate.  The
legislation and regulations do not establish fixed criteria for determining whether the private investor
purchases are not significant, and we have not yet had sufficient experience in applying this regulationto provide quantitative indicators of such criteria in practice.
Q4. Paragraph 351.507(a)(5) establishes that:
"(…) If the Secretary determines that the investment was inconsistent with usual
private investment practice, the Secretary will determine the amount of the benefit
conferred on a case-by-case basis."
Please explain:
(a) What are the benchmarks, or any general crit eria used to determine if the investment is
consistent with the usual practice of private investors?  Are these criteria established in
any relevant regulation?G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 11
Reply
This regulation applies only in those circumstances where private investor prices are
unavailable and it is necessary to conduct an equ ity-worthiness inquiry.  The preamble to the
regulations explains that where a company is found to be equity-worthy, we will conduct a further
inquiry to determine whether the shares purchased by the government have special conditions or
restrictions attached and, if so, whether those conditions render the investment inconsistent with usual
private investment practices.
(b) In case it is determined that the investment is inconsistent with the usual investment
practice of private investors, is there any methodology established in the legislation or
any other regulation to determine the amount of the benefit?
Reply
Due to the variety of unique conditions or attachments which might give rise to such a
situation, neither the law nor our regulations stipulate a particular means for establishing the benefit.
Rather, the methodology would be determined on a case-by-case basis, in light of the facts and
circumstances presented.
Q5. Paragraph 351.524(b)(2) states that:
"The Secretary will normally allocate (expense) non-recurring benefits provided
under a particular subsidy programme to the year in which the benefits are
received if the total amount approved under the subsidy programme is less than 0.5per cent of relevant sales (e.g., total sales, export sales, the sales of a particular
product, or the sales to a particular market ) of the firm in question during the year
in which the subsidy was approved."
Please explain:
(a) Is the choice of the "relevant sales (e.g. total sales, export sales, the sales of a particular
product, or the sales to a particular market)" , with the objective of evaluating the share
of the subsidy, related to the nature of the subsidy programme in question (e.g. subsidies
to the firm, export subsidies, subsidies to a particular product, subsidies related to sales
in a particular market)?
Reply
Yes.
(b) Considering that the benefit conferred by a non-recurring subsidy will be distributed
during the average useful life ("AUL") of renewable physical assets,  what is the reasonthat justifies not to allocate the benefit during the AUL, in cases where the total amount
approved under the subsidy programme is less than 0.5 per cent of relevant sales of the
firm in question during the year in which the subsidy was approved?G/ADP/Q1/USA/19
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Page 12
Reply
Where a non-recurring subsidy is so small in relation to the operations which benefit from the
subsidy, it is less burdensome on respondents and the investigating authority to expense the benefit inthe year of receipt rather than to allocate and track the benefit over time.
Questions regarding G/SCM/N/1/USA/1/Suppl.5
Q1. Section 351.218 refers to the procedures for sunset reviews.  Apparently, it does not
establish any obligation for the investigating auth ority to notify interested parties about the
initiation of a sunset review.  The time-limit established for a substantive response to theinformation specified in paragraph 351.218(d)(3)(i) is 30 days after the date of publication in the
Federal Register of the Notice of Initiation.
- Could the US indicate whether, at the time  of initiation of the sunset review, the
investigating authority will notify interested parties as established by Articles 12.1 and12.3 of the Anti-Dumping Agreement and Articles 22.1 and 22.7 of the SCM
Agreement?
- Could the US indicate whether interested parties will be notified of the required
information established in paragraph 351.218(d)(3)?  Will they receive a questionnaire?
- In case a questionnaire is sent to interested parties, what will be the time-limit for
response:  30 days counted from the receipt of the questionnaire, as established by
Article 6.1.1 of the Anti-Dumping Agreement and Article 12.1.1 of the SCM Agreement,
or 30 days after the date of publication of the Notice of Initiation, as established bySection 351.218(d)(3)(i)?
- In case the time-limit for response is 30 days  after the date of publication of the Notice,
could the US explain how this time-limit complies with the obligation established by
Article 6.1 of the Anti-Dumping Agreement and Article 12.1 of the SCM Agreement,
that is:  all interested parties shall be given ample opportunity to present in writing all
evidence which they consider rele vant in respect of the review?
- Could the US clarify if the investigatin g authority would consider a request for an
extension of the 30 days time-limit for response?  Does the relevant legislation or any
other implementing regulation have any provision related to this matter?
Reply
The United States automatically self-initiates sunset reviews of all orders prior to the fifth
anniversary of such orders.  A sunset review is initiated on the date the Notice of Initiation is
published in the Federal Register.  The Department’s final month-by-month schedule for initiation of
all sunset reviews of transition orders (i.e., orders in place as of 1 January 1995) was published in the
Federal Register on 14 May 1998 (63 Fed. Reg. 26779) (republished on 29 May 1998, due to
typesetting errors (63 Fed. Reg. 29372)) (“Sunset Review Schedule”).  The Department publishes the
Notices of Initiation in the Federal Register in accordance with the monthly schedule set forth the
Sunset Review Schedule.  In addition, as a courtesy, during the month preceding the sunset review’s
scheduled automatic initiation date, the Department notifies, by registered mail, all parties that have
participated previously before the Department in a particular anti-dumping or countervailing duty
proceeding, as well as the embassy of the order country, of the imminent automatic initiation of a
sunset review on that order.G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 13
The Department does not send or transmit questionnaires in sunset reviews.  Rather, as stated
in each Notice of Initiation of Sunset Review published in the Federal Register, and as stated in the
letters sent to potential interested parties and embassies, the Department’s sunset review information
requirements are contained in its sunset regulations.  The sunset regulations were published in the
Federal Register on 20 March 1998 (63 Fed. Reg. 13516), and were codified at 19 CFR Part 351 in
April 1998.  The information requirements do not vary from case to case.  As the regulations makeclear, normally this is the only information required from interested parties.   See 19 CFR
351.218(d)(3).
A complete substantive response is due not later than 30 days after the date of publication in
the Federal Register of the Notice of Initiation of a sunset review.  19 CFR 351.218(d)(3)(i).
Article 6.1.1 of the WTO A-D Agreement provides that exporters be given at least 30 days to reply toa questionnaire.  Footnote 15 of Article 6.1.1 provides, “as a general rule,” for an additional seven
days to account for mail or transmittal time.  As stated above, the Department does not send or
transmit questionnaires in sunset reviews; rather, the Department’s sunset review informationrequirements are contained in its sunset regulations. Given the significant advance public notice and
availability of the sunset information requirements (published in March 1998) and the sunset review
initiation schedule (published in May 1998), the United States believes that the 30 day deadline for
submission of substantive responses is appropriate.
The Department would consider a request to extend the 30-day deadline for filing substantive
responses.  Section 351.302 of the Department’s regulations (19 CFR 351.302) sets forth procedures
for requesting an extension of a time limit.  Section 351.302(b) provides that the Department may
extend a time limit for good cause.  The request must be in writing and state the reasons for the
request.
Q2. Paragraph 351.218(d)(2)(iii) establishes that:
The Secretary will consider the failure by a respondent interested party to file a
complete substantive response to a Notice of Information under paragraph (d)(3) of
this section as a waiver of participation in a sunset review before the Department.
- In case a questionnaire is not sent to the foreign interested parties and considering that
information required by paragraph 351.218(d)(3)(ii), (iii) and (iv) are not sufficiently
detailed, could the US inform:
(a) what are the criteria to evaluate if a response to a Notice of Initiation is
substantive?
(b) If, for example, an interested party presents a complete response, but not with
the detail "expected" by the investi gating authority, what is the procedure
adopted?
Reply
The Department evaluates a substantive response to determine if it is “adequate.”  Responses
are evaluated for adequacy on an individual basis, i.e ., whether a party has timely submitted a
complete substantive response to a Notice of Initiation.  The Department does not believe that thesunset review information requirements are particularly burdensome.  A complete substantive
response is one which contains all of the information required under 19 CFR 351.218(d)(3).  It has,G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 14
however, provided explicitly for situations where a party is unable to report the required information.
As stated in the explanatory material accompanying the sunset regulations,
"The Department may consider a substantive response that does not contain all of the
information required under paragraph (d)(3) to be complete where a party is unable to
report certain required information and provides a reasonable explanation as to why it is
unable to provide such information."
63 Fed. Reg. 13516, 13518 (20 March 1998).  The Department makes its determination of adequacy
on a case-by-case basis.
Q3. Paragraph 351.218(d)(2)(iv)(A) establishes that:
"Where a foreign government waives participation in a CVD sunset review under
paragraph (d)(2)(i) or (d)(2)(ii) of this section), the Secretary will:
(A) Conclude that respondent interest ed parties have provided inadequate
response to the Notice of Initiation under section 751(c)(3)(B) of the Act;"
- In case a foreign government waives participation, could the US delegate clarify if this
provision implies that, if an exporter presents a complete substantive response, it would
not be considered and facts available would be used for the final determination?
Reply
If the foreign government does not file a complete substantive response to a Notice of
Initiation in a CVD  sunset review, the Department will find inadequate response from all interested
parties and will conduct an expedited sunset review.  As provided for in section 751(c)(3)(B) of the
Act, the Department will make its final determination in an expedited review on the basis of the facts
available.  This does not mean, however, that an exporter’s complete substantive response would be
ignored.  The Department considers the evidence and arguments submitted by all participating parties
(i.e., the facts available) regardless of whether it is conducting an expedited or full sunset review.
Q4. Paragraph 351.218(e)(1)(ii)(A) establishes that:
"(…) the Secretary normally will conclude that respondent interested parties have
provided adequate response to a Notice of Initiation where it receives complete
substantive responses under paragraph (d)(3) of this section from respondent
interested parties accounting on average for more than 50 per cent, on a volume
basis (or value basis, if appropriate), of the total exports of subject merchandise tothe United States over the five calendar years preceding the year of publication of
the Notice of Initiation."
Could the US clarify:
- Whether the above-mentioned percentage of 50 per cent of "total exports of subject
merchandise" refers to each investigated origin  of exports or to the total exports to the
US?
- If only one individual exporter presents a complete substantive response and its exports
account for less than 50 per cent of "total exports of subject merchandise" to theUnited States, and it has demonstrated that:G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 15
- its exports have not been dumped over the five calendar years preceding the
year of publication of the Notice of Initiation;  and
- the revocation of the order to this expo rter would not lead to a recurrence of
dumping
will a full sunset review be conducted for this exporter?  If not, what procedure would be
adopted?  Could this exporter be excluded from the order?
Reply
The Department conducts sunset reviews on a product and country-specific basis.  Therefore,
determinations concerning which exports are considered for purposes of evaluating adequacy of
respondent participation ( i.e., the 50 percent threshold) are made on an order-specific basis (i.e ., a
product and country-specific basis).
There is no requirement  that respondent interested parties account for 50 per cent of exports.
Rather, as a general rule the Department established a threshold  of 50 per cent for use in determining
whether there was sufficient respondent participation to warrant a full sunset review by the
Department.  Determinations concerning adequacy are made on a case-by-case basis.  Normally,however, if the Department receives substantive responses from exporters representing less that
50 per cent of exports of the subject merchandise to the United States, it will conduct an expedited
review.
In its sunset reviews (of orders on dumping), th e Department essentially determines two things:
(1) whether revocation of the order is likely to lead to continuation or recurrence of dumping; and
(2) if so, at what rate.  The Department’s determination concerning likelihood of continuation or
recurrence of dumping is made on an order-wide   basis.  In your hypothetical, therefore, if other
exporters subject the order, for example, conti nue to dump, the Department probably would find
likelihood of continuation or recurrence of dumping.  It is possible, however, that the Department
would report to the International Trade Commission a margin of zero for your hypothetical exporter.
The International Trade Commission may consider this information in its determination of whetherrevocation of the order would likely lead to cont inuation or recurrence of material injury to the
domestic industry.  We also would point out that your hypothetical exporter could have sought (and
could still seek) revocation of the order in part (i.e., for itself) under section 351.222 of the
Department’s regulations, which allows exporters to seek revocation if they have sold the subject
merchandise at not less than normal value for a period of three consecutive years.  See 19 CFR
351.222.
QUESTIONS FROM THE EUROPEAN COMMUNITIES
Q1. A DEQUACY OF RESPONSE
§ 351.218 (e)(1)(ii)(A) stipulates that the ' Secretary normally will conclude that
respondent interested parties have provided adequ ate response to a Notice of Initiation where it
receives complete substantive responses (…) from respondent interested parties accounting (…) formore than 50 per cent (…) of the total exports of subject merchandise to the US (…). ' The
corresponding level for domestic interested parties appears to be different. According to
§ 351.218 (e)(1)(i)(A), the ' Secretary normally will conclude that domestic interested parties haveG/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 16
provided adequate response to a Notice of Initiation where it receives a complete substantive
response (…) from at least one domestic interested party  (emphasis added).'
§ 351.218 (e)(2)(i) provides that a full sunset review is only carried out if there is an
adequate response as defined above from both domestic interested parties and respondent
interested parties. We note that there is an im balance in the extent of co-operation necessary
from domestic interested parties and respondent interested parties in ord er to carry out such a
full review.
Could the United States explain why appa rently different standards have been chosen
for domestic interested parties and respondent interested parties in order to carry out a fullreview?
Reply
United States law requires that anti-dumping and countervailing duty orders be revoked after
five years unless revocation of the order would be likely to lead to a continuation or recurrence of (1)
dumping or a countervailable subsidy, and (2) material injury to a domestic industry.  Sections 752(b)
and (c) of the Tariff Act of 1930, as amended (“the Act”) (19 USC 1675a(b) and (c)), assign to the
Department of Commerce (“the Department”) the responsibility of determining whether revocation of
an order would be likely to lead to continuation or recurrence of dumping  or a countervailable
subsidy .  In accordance with sections 752(b)(1) and (c)(1) of the Act, and as described in Policy
Bulletin 98:3 (63 Fed. Reg. 18871 (April 16, 1998)), the Department’s likelihood determination
normally is based on respondent interested parties’  behaviour over the life of the order, i.e ., do
respondent interested parties’ continue to sell in the United States at dumped prices?  The number (or
percentage) of  domestic interested parties that participate in a sunset review before the Department9
has no impact on the fact that the Department considers data related to respondent interested parties’
behaviour in determining likelihood of continuation or recurrence of dumping or a countervailable
subsidy.10
Our determinations with respect to adequacy of respondent interested party responses,
therefore, are made only for the purposes of determining whether to conduct an expedited or full
sunset review.  We note that the Department considers the evidence and arguments submitted by allparticipating parties in the course of both an ex pedited review and a full review.  However, because
we make our determinations of likelihood of conti nuation or recurrence of dumping on an order-wide
basis, response from less than a significant percentage of respondent interested parties could result in
the conduct of needless full sunset reviews.
Q2. I
NFORMATION REQUIREMENTS
§ 351.218 (d)(3)(iii) requires a respondent interested party which wishes to submit a
substantive response to file, inter alia , the following information:
                                                     
9 At least one domestic interested party must participate in a sunset review or the Department will
automatically revoke the order.  See section 751(c)(3)(a) of the Act.
10 In contrast, the International Trade Commission (“Commission”) is responsible for determining
whether revocation of an order would be likely to lead to continuation or recurrence of material injury to a
domestic industry .  The Commission has its own separate standard for determining adequacy of domestic and
respondent interested party responses.G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 17
'(A) That party's individual weighted average dumping margin (…) from the investigation and
each subsequent completed administrative review (…);
(B) For each of the five calendar years (…) preceding the year of publication of the Notice of
Initiation, that party's volume and value (…) of exports of subject merchandise to the United
States;
(C) As applicable, for the calendar year (…) prece ding the year of initia tion of the dumping
investigation, that party's volume and value (… ) of exports of subject merchandise to the
United States;
(D) For each of the five calendar years (…) preceding the year of publication of the Notice of
Initiation, on a volume basis (…) that party's  percentage of the total exports of subject
merchandise (…) to the United States; (…)
In addition, § 351.218 (d)(3)(ii) requires, inter alia , the following information:
(H) A summary of the Department's findings  regarding duty absorption, if any (…;)
(I) A description of any relevant scope clarification or ruling, including a circumvention
determination, or changed circumstances determination issued by the Department (...). '
We note that on the basis of the aforemen tioned provisions, a respondent interested
party has to provide information which can relate to a period dating back up to 20 years.
Could the United States explain the relevance of such 'historical' information for a finding as to
whether or not there is a likelihood of a cont inuation or recurrence of dumping and injury?
Could the United States explain how they apply in  this context the provisions of Article 6.13 of
the WTO A-D Agreement?
Reply
As mentioned in response to Question 1 above, the Department is responsible for determining
whether revocation of an order would be likely to lead to continuation or recurrence of dumping  or a
countervailable subsidy .  (The Commission is responsible for determining likelihood of continuation
or recurrence of injury .113   For purposes of the Department’s role in the sunset review process,
therefore, such “historical” information is ge rmane to the Department’s analysis of respondent
interested parties’ selling and pricing behaviour in the United States over the course of the order and
whether such  behaviour indicates that revocation of the order would be likely to lead to continuation
or recurrence of dumping or a countervailable subsidy.
Article 6.13 of the WTO A-D Agreement provides that the authorities must take into account
any difficulties experienced by interested partie s, in particular small companies, in supplying
information requested and provide any assistance practicable.  Section 782(c)(1) of the Act provides
that the Department may modify its requests for information if promptly asked to do so by an
interested party, to avoid imposing an unreasonable burden on the party.  In addition,
section 782(c)(2) of the Act provides that  the Department will take account of difficultiesexperienced by parties, particularly small companies, in supplying information, and will provide such
                                                     
11 3  The information requirements quoted above are those of the Department; the Commission
has its own information requirements which may differ.G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 18
assistance as it considers practicable.  The Department does not believe that the sunset review
information requirements are particularly burdensome.  Nevertheless, in the explanatory material
accompanying its sunset regulations, the Department specifically provided for circumstances where
an interested party is experiencing difficulty in providing the requested information, stating that,
"The Department may consider a substantive response that does not contain all of the
information required under paragraph (d)(3) to be complete where a party is unable to
report certain required information and provides a reasonable explanation as to why it
is unable to provide such information.
63 Fed. Reg. 13516, 13518 (20 March 1998).
Q3. T IME LIMIT FOR A SUBSTANTIVE RESPONSE TO A NOTICE OF INITIATION
§ 351.218 (d)(3)(i) stipulates that a complete substantive response to a Notice of
Initiation has to be submitted to the Department not later than 30 days after the date ofpublication. It appears that this time limit al so applies to respondent interested parties.
We also note the information requirements set out in § 351.218 (d)(3)(ii) and (iii), which
are substantial – so substantial, in fact, that they are tantamount to a questionnaire.
Articles 11.4 and 6.1.1 of the WTO A-D Agreement stipulate that an exporter shall have
37 days to reply to a questionnaire. In these circumstances, could the United States explain why
exporters are only given 30 days in order to file a substantive response?
Reply
The United States respectfully disagrees with the EC’s statement that Articles 11.4 and 6.1.1
of the WTO A-D Agreement “stipulate” that an exporter shall have “37 days” to reply to a
questionnaire.  Article 6.1.1 of the WTO A-D Agreement provides that exporters be given at least
30 days to reply to a questionnaire.  Footnote 15 of Article 6.1.1 provides, “as a general rule,” for an
additional seven days to account for mail or transmittal time.  The Department does not send or
transmit questionnaires in sunset reviews.  Rather, as stated in each Notice of Initiation of SunsetReview published in the Federal Register, the Depa rtment’s sunset review information requirements
are contained in its sunset regulations.  The information requirements do not vary from case to case.
As the regulations make clear, normally this is the only information required from interested parties.
See 19 CFR 351.218(d)(3).
The sunset regulations were published in the Federal Register on 20 March 1998 (63 Fed.
Reg. 13516), and were codified at 19 CFR Part  351 in April 1998.  The Department’s final
month-by-month schedule for initiation of all sunset reviews of transition orders (i.e., orders in place
as of 1 January 1995) was published in the Federal Register on 14 May 1998 (63 Fed. Reg. 26779)
(republished on 29 May 1998 due to typesetting errors (63 Fed. Reg. 29372)) (“Sunset Review
Schedule”).  Finally, the Department publishes the Notices of Initiation in the Federal Register  in
accordance with the monthly schedule set forth the Sunset Review Schedule and, as a courtesy, during
the month preceding the sunset review’s scheduled automatic initiation date, notifies, by registeredmail, all parties that have participated previously before the Department in a particular anti-dumping
or countervailing duty proceeding of the imminent automatic initiation of a sunset review on thatorder.  Given the significant advance public notice and availability of the sunset information
requirements and the sunset review initiation schedule, the United States believes that the 30 day
deadline for submission of substantive responses is in compliance with the obligations of
Article 6.1.1.G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 19
As noted in response to Argentina, Question 3, as provided in 19 CFR 351.312(b) (1998), the
Department will consider individual requests for extension based upon a showing of good cause.
QUESTIONS FROM HONG KONG, CHINA
General
Q1. The Department of Commerce has invited the submission of initial and rebuttal
comments on the interim regula tions concerning the conduct of sunset reviews by April and
May 1998 respectively.  Have the said interim re gulations been amended since then and, if yes,
what are the major amendments?
Reply
No, the Department has not amended its interim final regulations.
Substantive Response to a Notice of Initiation
Q2. The additional information required to be filed by respondent interested parties in a
sunset review includes, inter alia, their percentage  of the total exports of subject merchandise to
the US.  This information is considered central  to the determination as to whether respondent
interested parties provided adequate response to the notice of initiation.  Would the US share
with us the underlying reasons of the subject requirement?
Reply
The Department makes its determinations of likelihood of continuation or recurrence of
dumping on an order-wide basis.  Therefore, response from less than a significant percent of exporters
could result in the conduct of needless full reviews.  Further, although our determinations of adequacy
are made for the purpose of determining whether to conduct an expedited or full sunset review, the
Department considers the evidence and arguments submitted by participating parties in the course ofboth an expedited review and a full review.
QUESTIONS FROM JAPAN
Q1.  “Policy Bulletin”
The Commerce Department published “Policy Bulletin 98-3" which states policies
regarding sunset reviews in the Federal Register on April 16, 1998.
We recognize that the “Policy Bulletin 98-3" is a complement to the Commerce
Department sunset review regulations and should be discussed at review of notifications of
legislation or regulations under Articles 18.5 of the Agreement.
Could the United States explain why the “Policy Bulletin 98-3" has not been notified for
the reviews among Members?G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 20
Reply
We respectfully disagree that policy bulletins should be notified for review among members.
As a matter of US law, the Department must explain its reasoning in each case.  Policy bulletins aremerely a statement of policy intended to provide guidance on issues that are likely to arise in
numerous cases.  They do not carry the same force or weight as either statutes or regulations.
We would be happy to provide a response to any questions submitted addressing the Policy
Bulletin.
The requirement to conduct sunset reviews was only recently added to our statute.  In
preparing regulations prior to the conduct of sunset reviews, we determined that, based on our lack of
experience conducting sunset reviews, it would not be appropriate to include regulations on the
substantive aspects of such reviews.  Rather, we determined it would be more appropriate to identify
proposed policies and to provide an opportunity to all parties to comment on such policies prior to the
conduct of such reviews.  As we stated in the Federal Register requesting comments on the Policy
Bulletin, the proposed policies are intended to complement the applicable statutory and regulatory
provisions by providing guidance on methodological  or analytical  issues not explicitly addressed by
the statute or regulations.
Q2.  Section 351.218
Section 351.218 states that all interested pa rties including exporters may submit their
substantive response if the Notice of Intent to Participate is submitted by US industry not later
than 15 days after the date of publication of the Federal Register.  The regulation forces
exporters to submit their substantive response  before the DOC’s determination of completeness
and adequacy of US industry ’s substantive response.
In this regard, Article 11.3 of the Anti-Dumpi ng Agreement stipulates that “... unless the
authorities determine, in a review initiated before that date on their initiative or upon duly
substantiated request made by or on behalf of the domestic industry within a reasonable period
of time prior to that date, that the expiry of the duty would be likely to lead to continuation or
recurrence of dumping and injury.”
Japan would like to clarify the US implementation of sunset review based on this
provision.
Commerce Department explains that the initiation of sunset reviews is automatic.  At
the time of publication of the Federal Register, does the Commerce Department possess
evidence which demonstrates that dumping would continue or recur if the order is revoked?
Does the Commerce Department consider the publication of the Federal Register as the
initiation of a review “on their own initiative ” in the meaning of Article 11.3 of the Anti-
Dumping Agreement?
If no, i.e. in case the Commerce Department do esn’t initiate the review on its initiative,
(i) when is each review “initiated” in the meaning of Article 11.3?(ii) according to the Commerce Department regulations, how does the Commerce
Department obtain “duly substantiated request” which is required by theG/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 21
Agreement when the domestic industry make a request of sunset reviews by the
time of the initiation?
If the Commerce Department considers the Notice of Intent to Participate as “duly
substantiated request”, it seems to be inconsistent with Article 11.3, because there is no
provision in the Commerce Department regula tion which requires the Notice of Intent to
Participate to be “duly substantiated”.
Reply
The United States interprets Article 11.3 to provide for either (1) self-initiation of a sunset
review by the authorities or (2) initiation of a sunset review in response to a duly substantiated request
made by or on behalf of the domestic industry.  As such, we are implementing our WTO obligations
by automatically self-initiating sunset reviews of all orders prior to the fifth anniversary of such
orders.  As such, we consider that a review is self-initiated at the time of publication of the Federal
Register notice of initiation.
Q3. Section 351.222(i)(1)(ii)
DOC’s sunset regulations provide, at sect ion 351.222(i)(1)(ii), that an order shall be
revoked if DOC determines that “revocation ...  is not likely to lead to continuation or
recurrence of ... dumping...”
In contrast, Article 11.3 stipulates “any definitive anti-dumping duty shall be terminated
on a date not later than five years from its im position..., unless the authorities determine ... that
the expiry of the duty would be likely to lead to continuation or recurrence of dumping andinjury.” That means an order shall be continue d only if the authorities determine “that the
expiry of the duty would be likely to lead to continuation or recurrence of dumping...”
Thus, if domestic industry fails to demonstrate the necessity of continuation of an order,
the order should be revoked pursuant to Articl e 11.3.  However, the DOC’s sunset regulations
has reversed this standard by allowing revocation only if an enough evidence demonstrates that
dumping would not occur in case of the revocation of  the order.  In other words, if exporters fail
to demonstrate that an order is unnecessary, the order would be continued under DOC’s
regulation.
In the light of these concerns, please explain the consistency of Section 351.222(i)(1)(ii)
with Article 11.3.  In addition, please address the issue in view of WTO Panel Report, United
States - Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of
One Megabit or Above From Korea, WT/DS99/R, at 6.43-6.68 (December 4, 1998).  The Panel
found, in constructing directly analogous provisions of Article 11.2, that “a failure to find that
an event is “not likely” is not equivalent to fi nding that the event is “likely”...”  Id. at 6.53.  It
concluded that the DOC regulation at issue was not consistent with the Anti-DumpingAgreement, and made similar observations concer ning Article 11.3 and sunset reviews.  Id. at
6.48 n. 494.
Reply
We respectfully disagree with the assertion that the Department’s regulations have reversed
the standard for revocation and permit revocation only in cases where there is enough evidence to
demonstrate that dumping would not occur if an order were revoked.  Rather, it should be clear from
the statute and regulations that, in the course of sunset reviews, the Department determines, based onG/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 22
the evidence on the record of the review, whether dumping or countervailable subsidies would be
likely to continue or recur if an order were revoked.
Specifically, section 751(c)(1) of the Tariff Act of 1930, as amended, which provides for
five-year reviews, states that the
“administering authority and the Commission shall conduct a review to determine ...
whether revocation of the countervailing or  anti-dumping duty order or termination of
the investigation suspended under section 704 or 734 would be likely to lead to
continuation or recurrence of dumping or a countervailable subsidy (as the case may
be) and of material injury.”
Additionally, section 351.218(a) of the regulations, which addresses sunset reviews under
section 751(c) of the Act, specifies that:
“... the Secretary must determine whether dumping or countervailable subsidies
would be likely to continue or resume if an order were revoked...”
These sections of the statute and regulations speak to the determination to be made by
Commerce.  Section 351.222(i)(1)(ii), addresses the timing of revocation and provides for revocation
within 240 days (or 330 days were a full review is fu lly extended) after initiation of the sunset review
where the Department determines that revocation or termination is not likely to lead to continuation or
recurrence of a countervailable subsidy or dumping.  See explanatory material accompanying the
Department’s sunset regulations at 63 FR 13520 and 13521.  Additionally, section 351.222(i)(1)(ii)
refers to revocation under section 751(d)(2) of the Act which is clear:
"... the administering authority shall revoke a countervailing duty order or an anti-
dumping duty order ... unless
(A) the administering authority makes a determination that
dumping or a countervailable subsidy, as the case may be,
would be likely to continue or recur, and
(B) the Commission makes a determination that material injury
would be likely to continue or recur as described in
section 752(a)."
QUESTIONS FROM MEXICO
Questions regarding G/ADP/N/1/USA/1/Suppl.4
Q1. How would the investigating authority proc eed should there be a contradiction between
the Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the rules and
procedures notified?  Which instrument takes precedence?
Reply
The US Department of Commerce countervailing duty regulations were issued as part of the
US efforts to adapt its laws and regulations to the provisions of the Uruguay Round Agreements,
including the SCM Agreement.  The United States, therefore, believes there are no "contradictions"G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 23
between the obligations of the SCM Agreement and the means by which the United States implements
those obligations through its domestic law and practice.
Q2. Section 351.503.  According to the Department of Commerce, the concept of benefit
implies an improvement in a firm's situation compared to its situation prior to the granting of
the subsidy.  In its analysis of Section 351.503, th e Department separates the concepts of benefit
and the effect of a subsidy.  Mexico would like to know whether this distinction is compatible
with Article 14 (d) of the SCM Agreement which, referring to "adequate remuneration",
indicates that even where there is an increase in income or a reduction in costs, financial
contributions in themselves do not confer a benefit.
Reply
It is not technically correct to say that the regulations imply that a benefit results whenever
there is an improvement in a firm's situation comp ared to its situation prior to the granting of the
subsidy.  Rather, the regulations say that a benefit exists where the firm's situation is improvedcompared to what its situation would be absent the government's financial contribution.  Inherent in
this regulation and in the more detailed regulations outlining the benefits resulting from certain types
of financial contributions is the principle that, in the absence of the government contribution, the
firm's situation would be determined by market fo rces.  This principle is in complete accord with
Article 14(d) of the SCM Agreement, under which a benefit exists if a firm pays less than adequateremuneration (i.e. pays an amount which is less than would be obtained under market-determined
conditions) for a government-provided good or service.  In such a situation, it is clear that the firm's
costs have been reduced in comparison to what they would be in the absence of the government
provision of the good or service.  When we say that we will not consider the effects of subsidies, we
mean that, once we have determined that a particular financial contribution is inconsistent withcommercial considerations and, therefore, constitutes a benefit, we will not consider whether that
benefit is put to use in such a way that it improves the subsequent performance of the recipient (for
example, by making it more productive or more profitable).
Q3. Section 351.511.  The Department of Commerce uses the concept of world market price
as a benchmark to verify whether a price is distorted or not.  In that context, how does the
United States consider programmes whose objective is only to bring the price of a final goodinto line with the world market price?
Reply
In the context of the provision of a good or service, a world market price is intended to be
used as a benchmark for determining the adequacy of remuneration only in situations where there is
no market-determined domestic price and only in situations where the world market price is actually
available in the domestic market.  Where private domestic prices are higher than world market prices
for the good in question (perhaps as a result of high import tariffs) and the government provides the
good at prices below the private domestic prices with the objective of bringing the price of the finalgood into line with the world market price, there is  a benefit in the amount of the difference between
the private domestic price and the government-provided price, unless the limited exception contained
in item (d) of the Illustrative List is met.
Q4. Section 351.515 states that " a benefit exists to the extent that a firm pays less for the
transport of goods destined for export than it wo uld for the transport of goods destined for domestic
consumption".   How is Section 351.515 compatible with  paragraph (c) of Annex I of the SCM
Agreement (Illustrative List of Export Subsidies ) if internal transport and freight charges on
export shipments must be provided or set by the authorities?G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 24
Reply
The phrase "provided or mandated by governments", from paragraph (c) of the Illustrative
List, was not repeated in our regulations, because it was not deemed necessary.  Of course there
would need to be a financial contribution in order for a subsidy to exist.  In this case, for there to be a
financial contribution, the government would have had to have provided, either directly or indirectly
(e.g. by setting tariffs), the internal transport and freight services.  The purpose of the regulation is to
determine the existence and amount of the benefit resulting from the given financial contribution.
In relation to the " Procedures for Conducting Five-Year ("Sunset") Reviews of Anti-
Dumping and Countervailing Duty Orders"  (G/ADP/N/1/USA/1/Suppl.5 and
G/SCM/N/1/USA/1/Suppl.5).
Q5. Is there any opportunity for respondent in terested parties to correct deficiencies or
errors which may have occurred  in their responses?  If so, when and how are these
opportunities given?
Reply
The sunset regulations do not specifically provide for supplemental responses.  However, the
Department has the authority, pursuant to 19 CFR 351.310(c)(2) to request any person to submit
factual information at any time during a proceeding.  The Department reviews each substantive
response for completeness, and, as needed, the Department may request additional information from
any respondent interested party.  Further, should an interested party identify errors in its submission, it
should notify the Department and, where appropriate, provide corrected information.
Q6. What other elements besides dumping and export volumes are taken into consideration
by the Department of Commerce in its analysis when there are no firm or country exports
which have been subject to anti-dumping meas ures?  What experience can the United States
mention in this regard?
Reply
The Department basis its determinations on the evidence on the record of each sunset review.
To date, we have conducted several sunset reviews in which we found that exports from the country
subject to the order had ceased at some point in time after the imposition of the order.  However,
absent argument or evidence to the contrary, we determined that the cessation of exports wasprobative of the fact that the exporters could not  export to the United States without dumping.
(Synthetic methionine from Japan - for which the ITC found no injury, polychloroprene
rubber from Japan, melamine from Japan, pressure sensitive plastic tape from Italy, steel wire strand
from Japan, anhydrous sodium metasilicate from France, barium chloride from the People’s Republicof China, sugar from France, Belgium, and Germany, barbed wire and barbless fencing wire from
Argentina, and solid urea from Romania.)
With respect to company-specific cessation of dumping, we note that we make sunset
determinations on an order-wide basis.  However,  in the sunset review of fresh cut flowers from
Mexico, an order that was revoked based on withdrawal of domestic interest, we had received a
response from a company that had received a zero  margin in previously conducted administrative
reviews and then ceased exporting to the United  States.  The company argued that it had ceased
exporting because of ban on importations, not because it could not sell in the United States withoutG/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 25
dumping.  As noted above, however, we did not complete this review because the domestic interested
party withdrew its participation.
QUESTIONS FROM TURKEY
Q1. Could you make an explanation as to the application of the following provision quoted
regarding a new exporter’s situation in connection with a sunset review?
"§ 351.218 Sunset reviews under section 751(c) of the Act
(ii) Full sunset review upon adequate res ponse from domestic and respondent
interested parties.
(A)  In general . .... and in no case will the Secretary calculate a net countervailable
subsidy or a dumping margin for a new shipper in the context of a sunset review.
(a) If a new shipper made an application requesting a new shipper review at the time when
a sunset review is being carried out, what action would the US authorities take?
(b) In the case where a new shipper review is  carried out and an individual margin is
determined, would that new exporter be in cluded in the sunset review of the order?
Reply
The Department conducts administrative and new shipper reviews for the purpose of
determining company-specific levels of dumping, if any.  Where a company has requested a new
shipper review, providing it has satisfied the regulatory standards, the Department will conduct a new
shipper review.  Such a review is, however, separate from a sunset review.  The Department conducts
sunset reviews for the purpose of determining whether revocation of an order is likely to result in
continuation or recurrence of dumping (or a countervailable subsidy).  If the Department is
conducting a sunset review at the same time that  a company requests a new shipper review, the
Department will, nonetheless, proceed with the sunset review.
A new shipper may choose to participate in a sunset review.  However, whether the
Department would, in the sunset review, assign th e individual margin determined in the new shipper
review would be dependent upon the evidence and argument submitted in the course of the sunset
review.
Although we have not yet faced the situation where a recent new shipper chose to participate
in a sunset review, we have had reviews where companies that did not export at the time of the
original investigation chose to participate in the sunset review.  For example, in the sunset review of
steel wire rope from Korea, although Kumho was not a participant in the original investigation andwas, therefore, considered a new shipper, Kumho had received its own dumping margins during
subsequent administrative reviews.  Based on arguments submitted by Kumho, the Department
determined that the margin calculated for Kum ho in subsequent administrative reviews (zero or de
minimis ) was probative of the magnitude of dumping by Kumho likely to prevail were the order
revoked.  See Final Results of Expedited Sunset Review: Steel Wire Rope from the Republic of
Korea, 64 FR 43166 (9 August 1999).
Q2. Could you make an explanation as to the application of the following provision quoted
regarding a new exporter's situation in connection with a sunset review?G/ADP/Q1/USA/19
G/SCM/Q1/USA/19
Page 26
"Section 351.218   Sunset reviews under section 751(c) of the Act
(2) Full sunset reviews upon adequate response from domestic and respondent
interested parties
(i) In general, … and in no case will the Secretary calculate a net
countervailable subsidy or a dumping margin for a new shipper in the
context of a sunset review."
(a) If a new shipper made an application requesting a new shipper review at a time when a
sunset review is being carried out, what action would the US authorities take?
(b) In the case where a new shipper review is  carried out and an individual margin is
determined, would that new exporter be in cluded in the sunset review of the order?
Reply
The Department conducts administrative and new shipper reviews for the purpose of
determining company-specific levels of dumping, if any.  Where a company has requested a new
shipper review, providing it has satisfied the regulatory standards, the Department will conduct a newshipper review.  Such a review is, however, separate from a sunset review.  The Department conducts
sunset reviews for the purpose of determining whether revocation of an order is likely to result in
continuation or recurrence of dumping (or a countervailable subsidy).  If the Department is
conducting a sunset review at the same time that  a company requests a new shipper review, the
Department will, nonetheless, proceed with the sunset review.
A new shipper may choose to participate in a sunset review.  However, whether the
Department would, in the sunset review, assign the individual margin determined in the new shipper
review would be dependent upon the evidence and argument submitted in the course of the sunset
review.
Although we have not yet faced the situation where a recent new shipper chose to participate
in a sunset review, we have had reviews where companies that did not export at the time of the
original investigation chose to participate in the sunset review.  For example, in the sunset review of
steel wire rope from Korea, although Kumho was not a participant in the original investigation and
was, therefore, considered a new shipper, Kumho had received its own dumping margins during
subsequent administrative reviews. Based on arguments submitted by Kumho, the Departmentdetermined that the margin calculated for Kum ho in subsequent administrative reviews (zero or de
minimis ) was probative of the magnitude of dumping by Kumho likely to prevail were the order
revoked.  See Final Results of Expedited Sunset Review:  Steel Wire Rope from the Republic of
Korea, 64 FR 43166 (9 August 1999).
__________