[Federal Register Volume 65, Number 26 (Tuesday, February 8, 2000)]
[Notices]
[Pages 6171-6174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2840]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-807]


Final Results of Expedited Sunset Review: Sulfanilic Acid From 
India

AGENCY:  Import Administration, International Trade Administration, 
Department of Commerce.

ACTION:  Notice of Final Results of Expedited Sunset Review: Sulfanilic 
Acid from India.

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SUMMARY:  On October 1, 1999, the Department of Commerce (``the 
Department'') initiated a sunset review of the countervailing duty 
order on sulfanilic acid from India (64 FR 53320) pursuant to section 
751(c) of the Tariff Act of 1930, as amended (``the Act''). On the 
basis of a notice of intent to participate and an adequate response 
filed on behalf of a domestic interested party and an inadequate 
response (in this case no response) from respondent interested parties, 
the Department decided to conduct an expedited (120-day) review. As a 
result of this review, the Department finds that revocation of the 
countervailing duty order would be

[[Page 6172]]

likely to lead to continuation or recurrence of a countervailable 
subsidy. The net countervailable subsidy and the nature of the subsidy 
are identified in the Final Results of Review section of this notice.

EFFECTIVE DATE:  February 8, 2000.

FOR FURTHER INFORMATION CONTACT:  Mark D. Young or Melissa G. Skinner, 
Office of Policy for Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-
3207 or (202) 482-1560, respectively.

Statute and Regulations

    This review was conducted pursuant to sections 751(c) and 752 of 
the Act. The Department's procedures for conducting sunset reviews are 
set forth in Procedures for Conducting Five-year (``Sunset'') Reviews 
of Antidumping and Countervailing Duty Orders, 63 FR 13516 (March 20, 
1998) (``Sunset Regulations''), and 19 CFR Part 351 (1999) in general. 
Guidance on methodological or analytical issues relevant to the 
Department's conduct of sunset reviews is set forth in the Department's 
Policy Bulletin 98:3--Policies Regarding the Conduct of Five-year 
(``Sunset'') Reviews of Antidumping and Countervailing Duty Orders; 
Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset Policy 
Bulletin'').

Scope

    The products covered by this order are all grades of sulfanilic 
acid, which include technical (or crude) sulfanilic acid, refined (or 
purified) sulfanilic acid and sodium salt of sulfanilic acid (sodium 
sulfanilate). The principal differences between the grades are the 
undesirable quantities of residual aniline and alkali insoluble 
materials present in the sulfanilic acid. All grades are available as 
dry free flowing powders. Technical sulfanilic acid contains 96 percent 
minimum sulfanilic acid, 1.0 percent maximum aniline, and 1.0 percent 
maximum alkali insoluble materials. Refined sulfanilic acid contains 98 
percent minimum sulfanilic acid, 0.5 percent maximum aniline, and 0.25 
percent maximum alkali insoluble materials. Sodium salt of sulfanilic 
acid (sodium sulfanilate) is a granular or crystalline material 
containing 75 percent minimum sulfanilic acid, 0.5 percent maximum 
aniline, and 0.25 percent maximum alkali insoluble materials based on 
the equivalent sulfanilic acid content. The merchandise is classifiable 
under Harmonized Tariff Schedule of the United States (``HTSUS'') 
subheadings 2921.42.22 and 2921.42.24.20. \1\ Although the HTSUS 
subheadings are provided for convenience and customs purposes, our 
written description of the scope of the order is dispositive.
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    \1\ HTSUS subheadings for sulfanilic acid and sodium salts of 
sulfanilic acid have changed since the issuance of this order. The 
petitioner asserts that the HTSUS subheading for sulfanilic acid was 
2921.42.24.20 in 1993 and has remained at 2921.42.22 since 1994.
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    This review covers imports from all manufacturers and exporters of 
sulfanilic acid from India.

History of the Order

    The Department published its final affirmative countervailing duty 
determination on sulfanilic acid from India in the Federal Register on 
January 8, 1993 (58 FR 3259). In the final determination the Department 
found an estimated net subsidy, for all manufacturers/producers/
exporters of sulfanilic acid from India, of 43.71 percent ad valorem 
based on four programs: (1) 2.17 percent under the Preferential Export 
Financing Through Packing Credits; (2) 1.69 percent under the 
Preferential Post-Shipment Financing; (3) 6.13 percent under the Import 
Tax Deduction for Exporters (Section 80HHC); and (4) 33.72 percent 
under the Import Duty Exemptions Available Through Advance Licenses. 
Receipt of benefits under each of these programs was contingent upon 
exports.
    On March 2, 1993, the Department issued the countervailing duty 
order, utilizing the subsidy rates found in the original investigation. 
\2\ Since the issuance of the order, the Department has not conducted 
an administrative review.
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    \2\ See Countervailing Duty Order: Sulfanilic Acid From India, 
58 FR 12026 (March 2, 1993).
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Background

    On October 1, 1999, the Department initiated a sunset review of the 
countervailing duty order on sulfanilic acid from India (64 FR 53320), 
pursuant to section 751(c) of the Act. The Department received a Notice 
of Intent to Participate on behalf of National Ford Chemical Company 
(``NFC'') on October 18, 1999, within the deadline specified in section 
351.218(d)(1)(i) of the Sunset Regulations. Pursuant to section 
771(9)(C) of the Act, NFC claimed interested party status as a U.S. 
manufacturer whose workers are engaged in the production of domestic 
like products. Moreover, NFC claims that it was a petitioner in the 
original investigation. The Department received a complete substantive 
response from NFC by November 1, 1999, within the 30-day deadline 
specified in the Sunset Regulations under section 351.218(d)(3)(i). We 
did not receive a substantive response from any respondent interested 
party to this proceeding. As a result, pursuant to 19 CFR 
351.218(e)(1)(ii)(C), the Department determined to a conduct an 
expedited, 120-day, review of this order.

Determination

    In accordance with section 751(c)(1) of the Act, the Department 
conducted this review to determine whether revocation of the 
countervailing duty order would be likely to lead to continuation or 
recurrence of a countervailable subsidy. Section 752(b) of the Act 
provides that, in making this determination, the Department shall 
consider the net countervailable subsidy determined in the 
investigation and subsequent reviews, and whether any change in the 
program which gave rise to the net countervailable subsidy has occurred 
and is likely to affect that net countervailable subsidy. Pursuant to 
section 752(b)(3) of the Act, the Department shall provide to the 
International Trade Commission (``the Commission'') the net 
countervailable subsidy likely to prevail if the order is revoked. In 
addition, consistent with section 752(a)(6), the Department shall 
provide to the Commission information concerning the nature of the 
subsidy and whether it is a subsidy described in Article 3 or Article 
6.1 of the 1994 WTO Agreement on Subsidies and Countervailing Measures 
(``Subsidies Agreement'').
    The Department's determinations concerning continuation or 
recurrence of a countervailable subsidy, the net countervailable 
subsidy likely to prevail if the order is revoked, and nature of the 
subsidy are discussed below. In addition, NFC's comments with respect 
to each of these issues are addressed within the respective sections.

Continuation or Recurrence of a Countervailable Subsidy

    Drawing on the guidance provided in the legislative history 
accompanying the Uruguay Round Agreements Act (``URAA''), specifically 
the Statement of Administrative Action (the ``SAA''), H.R. Doc. No. 
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1 
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the 
Department issued its Sunset Policy Bulletin providing guidance on 
methodological and analytical issues, including the basis for 
likelihood determinations. The Department clarified that determinations 
of

[[Page 6173]]

likelihood will be made on an order-wide basis (see section III.A.2 of 
the Sunset Policy Bulletin). Additionally, the Department normally will 
determine that revocation of a countervailing duty order is likely to 
lead to continuation or recurrence of a countervailable subsidy where 
(a) a subsidy program continues, (b) a subsidy program has been only 
temporarily suspended, or (c) a subsidy program has been only partially 
terminated (see section III.A.3.a of the Sunset Policy Bulletin). 
Exceptions to this policy are provided where a company has a long 
record of not using a program (see section III.A.3.b of the Sunset 
Policy Bulletin).
    In addition to considering the guidance on likelihood cited above, 
section 751(c)(4)(B) of the Act provides that the Department shall 
determine that revocation of an order is likely to lead to continuation 
or recurrence of a countervailable subsidy where a respondent 
interested party waives its participation in the sunset review. 
Pursuant to the SAA, at 881, in a review of a countervailing duty 
order, when the foreign government has waived participation, the 
Department shall conclude that revocation of the order would be likely 
to lead to a continuation or recurrence of a countervailable subsidy 
for all respondent interested parties.\3\ In the instant review, the 
Department did not receive a response from the foreign government or 
from any other respondent interested party. Pursuant to section 
351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver 
of participation.
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    \3\ See 19 CFR 351.218(d)(2)(iv).
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    In its substantive response, NFC argues that revocation of the 
countervailing duty order on sulfanilic acid from India will result in 
the continuation or recurrence of a countervailable subsidy. Citing the 
SAA, at 888, NFC asserts that continuation, or temporary or partial 
termination, of a subsidy program will be highly probative of the 
likelihood of continuation or recurrence of countervailable subsidies, 
absent significant evidence to the contrary (see November 1, 1999, 
Substantive Response of NFC regarding sulfanilic acid from India at 6). 
NFC asserts that there is no indication that the Indian government's 
subsidy programs have been modified or eliminated (see November 1, 
1999, Substantive Response of NFC regarding sulfanilic acid from India 
at 8). NFC argues as support the fact that the order has never been 
subject to an administrative review, nor has any evidence been 
submitted to the Department demonstrating the termination of these 
programs that conferred countervailable subsidies. Therefore, NFC adds, 
it is reasonable to assume that these programs continue to exist and 
are utilized. Moreover, NFC notes that section 751(c)(4)(B) of the Act 
provides that the Department shall determine that revocation of an 
order is likely to lead to continuation or recurrence of a 
countervailable subsidy where a respondent interested party waives its 
participation in the sunset review.
    As stated above, the continued use of a program is highly probative 
of the likelihood of continuation or recurrence of countervailable 
subsidies if the order were revoked. Additionally, the presence of 
programs that have not been used, but have also not been terminated, is 
also probative of the likelihood of continuation or recurrence of a 
countervailable subsidy. Absent argument or evidence to the contrary, 
we find that countervailable programs continue to exist and be used. 
Therefore, because countervailable programs continue to exist and be 
used, the foreign government and other respondent interested parties 
waived their right to participate in this review before the Department, 
and absent argument to the contrary, the Department concludes that 
revocation of the order would be likely to lead to a continuation or 
recurrence of a countervailable subsidy for all respondent interested 
parties.\4\
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    \4\ See 19 CFR 351.218(d)(2)(iv).
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Net Countervailable Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with the SAA and House Report, the Department normally will 
select a rate from the investigation as the net countervailable subsidy 
likely to prevail if the order is revoked, because that is the only 
calculated rate that reflects the behavior of exporters and foreign 
governments without the discipline of an order or suspension agreement 
in place. The Department noted that this rate may not be the most 
appropriate rate if, for example, the rate was derived from subsidy 
programs which were found in subsequent reviews to be terminated, there 
has been a program-wide change, or the rate ignores a program found to 
be countervailable in a subsequent administrative review.\5\
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    \5\ See section III.B.3 of the Sunset Policy Bulletin.
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    NFC, citing the SAA, notes that the Administration intends that 
Commerce normally will select the rate from the investigation as the 
net countervailable subsidy likely to prevail if the order is revoked, 
because that is the only calculated rate that reflects the behavior of 
exporters and foreign governments without the discipline of an order in 
place (see November 1, 1999, Substantive Response of NFC regarding 
sulfanilic acid from India at 8). Therefore, NFC argues that the 
Department should determine that the net countervailable subsidy likely 
to prevail is 43.71 percent, the rate set forth in the original 
investigation.
    As noted above, the Department has not conducted an administrative 
review of this order. Thus, we have never found that substantive 
changes have been made to any of the Indian subsidy programs. 
Therefore, absent any argument or evidence to the contrary, the 
Department determines that the net countervailable subsidy that would 
be likely to prevail in the event of revocation of the order would be 
43.71 percent. This rate is for all producers and exporters of the 
subject merchandise from India.

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department states that, 
consistent with section 752(a)(6) of the Act, the Department will 
provide to the Commission information concerning the nature of the 
subsidy, and whether the subsidy is a subsidy as described in Article 3 
or Article 6.1 of the Subsidies Agreement. NFC did not address this 
issue in its substantive response of November 1, 1999.
    Because the receipt of benefits provided by the Government of India 
under all four of the programs are contingent on exports, these 
programs fall within the definition of an export subsidy under Article 
3.1(a) of the Subsidies Agreement. Therefore, the Department is 
providing the Commission with the following program descriptions.

1. Preferential Export Financing Through Packing Credits

    The Reserve Bank of India, through commercial banks, provides 
``packing'' credits or pre-shipment loans to exporters. With these pre-
shipment loans, exporters may purchase raw materials to produce goods 
for export based on the presentation of a confirmed purchase order. In 
general, the pre-shipment loans are granted for a period of up to 180 
days. Because only exporters are eligible for these pre-shipment loans, 
they are countervailable to the extent that they are provided at 
preferential rates.

2. Preferential Post-Shipment Financing

    The Reserve Bank of India, through commercial banks, provides post-

[[Page 6174]]

shipment financing loans to exporters. The purpose of post-shipment 
financing is to enable exporters to extend favorable payment terms such 
as deferred payment, to the foreign purchaser. Post-shipment financing 
loans may not exceed a period of 180 days. Because only exporters are 
eligible for the post-shipment loans, they are countervailable to the 
extent that they are provided at preferential interest rates.

3. Import Tax Deduction for Exporters (Section 80HHC)

    For tax returns filed during the period of investigation, the 
Indian government allowed exporters to claim a tax deduction related to 
their export sales. This tax deduction was calculated by dividing 
export sales by total sales and then multiplying the resulting figure 
by the exporter's profit as shown in the tax return. This amount is 
then deducted from taxable profits. Because this program is only 
available to exporters, we determine it to be countervailable.

4. Import Duty Exemptions Available Through Advance Licenses

    Advance licenses are available to exporters, to enable them to 
import raw material inputs used in the production of exports duty-free. 
Recipients of advance licenses are obligated under the terms of the 
license to export the products produced with the duty-free imports. The 
amount of imports allowed under an advance license is closely linked to 
the amount of exports to be produced. We consider the use of the 
advance licenses to be equivalent to a duty drawback program insofar as 
customs duties are not paid on physically incorporated, imported 
products used in the production of exports. However, where imported 
inputs are not physically incorporated into the exported product, we 
consider the duty savings afforded by the advance license to be a 
countervailable export subsidy.

Final Results of Review

    As a result of this review, the Department finds that revocation of 
the countervailing duty order would be likely to lead to continuation 
or recurrence of a countervailable subsidy at the rates listed below:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
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All manufacturers/producers/exporters......................        47.31
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    This notice serves as the only reminder to parties subject to 
administrative protective order (``APO'') of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305 of the Department's regulations. 
Timely notification of return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and the terms of an APO is a sanctionable 
violation.
    This five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: January 31, 2000.
Holly A. Kuga,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-2840 Filed 2-7-00; 8:45 am]
BILLING CODE 3510-DS-P