Certain Pasta From Turkey: Preliminary Results of Countervailing Duty Changed Circumstances Review, 47225-47229 [E9-22192]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 74, Number 177 (Tuesday, September 15, 2009)]
[Notices]
[Pages 47225-47229]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-22192]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-489-806]


Certain Pasta From Turkey: Preliminary Results of Countervailing 
Duty Changed Circumstances Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: On January 28, 2009, the Department of Commerce (``the 
Department'') published a notice of initiation of a changed 
circumstances review (``CCR'') of the countervailing duty (``CVD'') 
order on certain pasta from Turkey as requested by Marsan Gida Sanayi 
ve Ticret A.S. (``Marsan'') See Notice of Initiation of Countervailing 
Duty Changed Circumstances Review: Certain Pasta from Turkey, 74 FR 
4938 (January 28, 2009) (``Initiation Notice''). As stated in the 
Initiation Notice, we are not applying the antidumping (``AD'') 
successor-in-interest methodology to determine whether Marsan is the 
successor to Gidasa Sabanci Gida Sanayi ve Ticaret A.S. (``Gidasa'') 
for CVD purposes. Id. at 4939. After receiving additional information 
regarding the circumstances which warranted the CCR of Gidasa, pursuant 
to the new criteria outlined in the ``Preliminary Results of Changed 
Circumstances Review'' section below, we preliminarily find that Marsan 
is not the successor to Gidasa, for purposes of the CVD cash deposit 
rates, and therefore its merchandise should continue to enter under the 
``all others'' cash deposit rate. Interested parties are invited to 
comment on these preliminary results.

DATES:  Effective Date: September 15, 2009.

[[Page 47226]]


FOR FURTHER INFORMATION CONTACT: Shelly Atkinson or Brandon Farlander, 
AD/CVD Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street & Constitution 
Avenue, NW., Washington, DC 20230; telephone: (202) 482-0116 or (202) 
482-0182, respectively.

SUPPLEMENTARY INFORMATION: 

Background

    On July 24, 1996, the Department published in the Federal Register 
the order on certain pasta from Turkey. See Notice of Countervailing 
Duty Order: Certain Pasta (``Pasta'') From Turkey, 61 FR 38546 (July 
24, 1996). On December 3, 2008, Marsan requested that the Department 
initiate and conduct expedited CCRs to determine that, for purposes of 
the AD and CVD cash deposits, Marsan is the successor to Gidasa. See 
Marsan's December 3, 2008, submission entitled, ``Pasta from Turkey: 
Request for Expedited Changed Circumstances Review of AD/CVD Orders'' 
(``CCR Request''). On January 28, 2009, the Department published a 
notice of initiation of a CCR of the CVD order for Marsan. See 
Initiation Notice. On April 16, 2009, the Department requested 
additional information and issued a questionnaire to Marsan, to which 
it responded on May 1, 2009. See Marsan's May 1, 2009, response 
entitled, ``Pasta from Turkey: Marsan response to the supplemental 
questionnaire.''
    On April 14, 2009, and June 2, 2009, the Department published its 
preliminary and final results, respectively for the CCR of the AD order 
on certain pasta from Turkey and found that Marsan was the successor-
in-interest to Gidasa. See Certain Pasta from Turkey: Notice of 
Preliminary Results of Antidumping Duty Changed Circumstances Review, 
74 FR 17153 (April 14, 2009); Certain Pasta from Turkey: Notice of 
Final Results of Antidumping Duty Changed Circumstances Review, 74 FR 
26373 (June 2, 2009).

Scope of the Order

    Imports covered by the order are shipments of certain non-egg dry 
pasta in packages of five pounds (or 2.27 kilograms) or less, whether 
or not enriched or fortified or containing milk or other optional 
ingredients such as chopped vegetables, vegetable purees, milk, gluten, 
diastases, vitamins, coloring and flavorings, and up to two percent egg 
white. The pasta covered by this scope is typically sold in the retail 
market, in fiberboard or cardboard cartons, or polyethylene or 
polypropylene bags, of varying dimensions.
    Excluded from the order are refrigerated, frozen, or canned pastas, 
as well as all forms of egg pasta, with the exception of non-egg dry 
pasta containing up to two percent egg white.
    The merchandise subject to review is currently classifiable under 
item 1902.19.20 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the HTSUS subheading is provided for convenience 
and customs purposes, the written description of the merchandise 
subject to the order is dispositive.

Preliminary Results of Changed Circumstances Review

    Pursuant to section 751(b)(1) of the Tariff Act of 1930, as amended 
(``the Act''), and 19 CFR 351.216, the Department will conduct a CCR 
upon receipt of information concerning, or a request from an interested 
party for review of, a CVD order which shows changed circumstances 
sufficient to warrant a review of the order. In this case, the 
Department finds that the information submitted by the respondent 
provided sufficient evidence of changed circumstances to warrant a 
review to determine whether Marsan is the successor to Gidasa for 
purposes of CVD cash deposit rates. Thus, in accordance with section 
751(b) of the Act, the Department initiated a CCR to determine whether 
Marsan is the successor to Gidasa for purposes of CVD cash deposit 
rates with respect to imports of certain pasta from Turkey.
    In Stainless Steel Sheet and Strip in Coils from the Republic of 
Korea: Preliminary Results of Countervailing Duty Changed Circumstances 
Review, 71 FR 75937 (December 19, 2006), the Department indicated that 
it intended to further consider the issue of whether alternative or 
additional successorship criteria, other than those the Department 
relies upon in an AD CCR, would be more appropriate in a successorship-
type \1\ CVD CCR context. Moreover, the Department stated that it 
anticipated issuing a Federal Register notice inviting the public to 
submit comments on the issue. Subsequently, the Department published 
Countervailing Duty Changed Circumstances Reviews; Request for Comment 
on Agency Practice, 72 FR 3107 (January 24, 2007) (``Request for 
Comment''), in which the Department highlighted various considerations 
relevant to the issue of CVD CCRs, and provided the public an 
opportunity to comment on whether any changes to the Department's 
practice regarding such reviews was warranted and, if so, what those 
changes should entail.
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    \1\ Recognizing the Department may conduct other types of CCRs, 
the discussion in this section focuses on ``successorship'' CCRs for 
determining the appropriate cash deposit rate for the respondent 
company in question.
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    We received comments from two parties in response to the Request 
for Comment.\2\ The first commenter urged that any decision to revise 
or clarify the Department's CVD CCR practice should reflect the 
historically limited purpose of CCRs, which is to modify a successor's 
cash deposit rate for future entries until it obtains a new rate as a 
result of an administrative review. Citing to the statute, various past 
Department decisions and findings of the Court of International Trade, 
as well as noting various practical constraints, the commenter argued 
that CCRs are not administrative reviews and do not necessarily involve 
the calculation of rates related to specific entries. Administrative 
reviews, this party contended, are the appropriate forum in which to 
collect the evidence and calculate the precise level of subsidization 
for a successor company. In contrast, the function of CCRs is to 
address the effect of ``changed circumstances'' on a final affirmative 
determination that resulted in a CVD order. Put otherwise, the function 
of a CCR is to determine whether the company is essentially the same as 
the predecessor company for cash deposit purposes. If the company is 
not essentially the same, the commenter argued that the Department 
should normally assign the successor company the ``all others'' rate 
until an administrative review is requested as the all others rate is 
the default rate for exports that have not been investigated or subject 
to an administrative review. With regard to which criteria the 
Department should use in assessing whether the successor company is 
essentially the same as the predecessor company, this commenter argued 
for the following factors: (1) Organization structure; (2) management; 
and (3) production facilities relevant to the

[[Page 47227]]

production and exportation of subject merchandise.
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    \2\ See Letter to Gregory W. Campbell, Office of Policy from 
Corus Group plc, entitled ``Countervailing Duty Changed 
Circumstances Review; Request for Comments on Agency Practice,'' 
dated February 23, 2007, and Letter to Gregory W. Campbell, Office 
of Policy, from Law Offices of Stewart and Stewart, entitled 
``Countervailing Duty Changed Circumstances Reviews: Request for 
Comment on Agency Practice; Comments of Stewart and Stewart,'' dated 
February 23, 2007. Copies of these public comments are available on 
file in the Department's Central Records Unit in Room HCHB 1117 of 
the Department's main building.
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    The second commenter agreed with the Department's observation in 
the Request for Comment that AD and CVD proceedings, while having some 
points of common analysis, are ultimately focused on analytically 
distinct questions; where AD proceedings are focused on the extent to 
which a foreign producer or exporter has made sales below fair value, 
CVD proceedings are focused on the extent to which a foreign producer 
or exporter has benefitted from subsidies. Therefore, the application 
of the AD ``same business entity'' criteria in a CVD CCR is, in this 
commenter's view, clearly inappropriate. This is because, in the case 
of a change in ownership for payment of market value, some or all of a 
respondent's previously received subsidies will no longer be 
countervailable, even where the company remains, after the change in 
ownership, the ``same business entity'' as it was before the 
transaction. According to this party, in these circumstances, the 
Department focus must be on the nature of the transaction and not the 
four factor ``same business entity'' test. This commenter believes that 
where, in a CVD CCR, the Department determines that a change in the 
company's ownership or structure has effected a significant change in 
the level of countervailable subsidization, it is incumbent on the 
Department to recalculate the cash deposit rate to reflect the change 
effected by the change in structure or ownership. However, a full 
recalculation of all aspects of the respondent's subsidies, to the 
extent that they are not directly related to the change in ownership or 
structure, is neither necessary nor appropriate. Finally, this 
commenter supported an expedited CVD CCR process where there is no 
indication that the level of subsidization has changed significantly as 
a result of the changed circumstances.
    After considering parties' comments, and drawing on the 
Department's past experience with CVD CCRs, we are now prepared to 
promulgate a new approach that the Department intends to apply in the 
current as well as in future CVD CCR proceedings. As background, we 
start by laying out certain broad principles relevant to this issue. 
First, we note that section 751(b)(1) of the Act directs the Department 
to conduct a review of a final affirmative CVD determination when it 
receives a request from an interest party ``which shows changed 
circumstances sufficient to warrant a review of such determination.'' 
The statute does not define the term ``changed circumstances.''
    Nor does the statute require that the standards and analysis the 
Department uses in finding changed circumstances in the CVD context be 
identical to those used in the AD context. What may constitute 
sufficient grounds for initiating an AD CCR may not be sufficient 
grounds for initiating a CVD CCR and vice versa. As we noted in the 
Request for Comment and as reflected in the second commenter's 
arguments, above, to the extent that dumping is a matter of price 
discrimination and the AD CCR analysis is concerned with the pricing 
behavior of a successor company, such an analysis would not necessarily 
be relevant in the CVD context where subsidization, not price 
discrimination, is the analytical focus. In the context of a CVD CCR, 
the Department interprets the term ``changed circumstances'' in a 
manner consistent with the purpose of the CVD statute. Thus, the 
findings in an AD CCR may be different from, and irrelevant to, the 
findings in a CVD CCR.
    Moreover, the limited purpose of a CVD CCR generally is to 
determine whether a company is essentially the same subsidized entity 
as the alleged predecessor company for cash deposit purposes. 
Accordingly, the Department decides whether the alleged predecessor 
company's rate applies to the party being examined. In the context of a 
CVD CCR, the Department does not normally calculate a new subsidy rate, 
or revised rate where applicable, for the party being examined. Among 
other reasons, a complete analysis of a respondent's subsidy rate 
(whether the respondent is a successor or not) would require, at a 
minimum, the submission and analysis of a full questionnaire response 
(and any supplemental responses), ample time for comment from 
interested parties, and possible verification. All this would not be 
feasible within the condensed time frame of a CCR. See 19 CFR 
351.216(e). Rather, the Department conducts such an analysis in an 
administrative review, which is the administrative procedure provided 
in the statute precisely for this purpose.
    With this in mind, our approach to CVD CCRs going forward will be 
as follows. As a general rule, in a CVD CCR, the Department will make 
an affirmative CVD successorship finding (i.e., that the respondent 
company is the same subsidized entity for CVD cash deposit purposes as 
the predecessor company) where there is no evidence of significant 
changes in the respondent's operations, ownership, corporate or legal 
structure during the relevant period (i.e., the ``look-back window'') 
\3\ that could have affected the nature and extent of the respondent's 
subsidy levels. Where the Department makes an affirmative CVD 
successorship finding, the successor's merchandise will be entitled to 
enter under the predecessor's cash deposit rate.
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    \3\ For purposes of CVD CCRs, the ``look-back window'' is 
defined as the period spanning from the present (i.e., the time the 
CCR request was submitted to the Department), back to the end of the 
period of investigation or, if there have been intervening 
opportunities to request an administrative review, the end of the 
period of review associated with the most recent opportunity to 
request an administrative review. The look-back window has been 
circumscribed in this manner based, in part, on the principle that 
if changed circumstances occurred prior to this period that were of 
concern to any party in the proceeding, that party could have 
requested an administrative review to consider those changes.
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    Structured in this manner, this CVD CCR analysis is intended to 
serve as a type of screening mechanism. Significant changes in the 
respondent's operations, ownership, corporate or legal structure that 
potentially could affect the nature and extent of the company's 
subsidization are a sufficient basis for reconsidering what constitutes 
the best estimate of the respondent's existing subsidy levels. In the 
face of such changes, it normally would be inappropriate for the 
Department to affirm a cash deposit rate that had been calculated 
during a previous time period based on a significantly different 
factual pattern. The most appropriate CVD cash deposit rate in this 
instance is the rate under which the merchandise of a newly-renamed 
entity would normally be entered, i.e., the ``all others'' cash deposit 
rate. Conversely, where there have not been any such significant 
changes during the look-back window, it normally is appropriate and 
reasonable for the Department to re-affirm the existing ``predecessor'' 
duty deposit rate as the best estimate of the respondent's existing 
rate of subsidization.
    For the sake of clarity, consistency, and predictability, we are 
identifying the following non-exhaustive list of the types of changes 
that we normally consider to be significant and would affect the nature 
and extent of the requesting party's subsidization: \4\ (1)

[[Page 47228]]

Changes in ownership, other than regular buying and selling of publicly 
owned shares held by a broad array of investors, (2) corporate mergers 
and acquisitions involving the respondent's consolidated or cross-owned 
corporate family and outside companies, and (3) purchases or sales of 
significant productive facilities.
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    \4\ This list is based on the Department's extensive experience 
in applying its regulations and existing practice to various factual 
patterns. Taking just one example, 19 CFR 351.525(b) provides 
general ``attribution'' rules that would apply when determining the 
subsidy rate when two previously unrelated subject merchandise 
producers merge. What is clear ex ante in applying these general 
rules is that the resulting rate for the merged entity would most 
likely be different from the previously calculated subsidy rates for 
either of the two pre-merger companies. Given the fact-intensive 
analysis involved, the extent to which the rate for the merged 
entity differs from either of the previous company's rates could 
only be determined in a full administrative review.
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    Where a change has occurred in the respondent's operations, 
ownership, corporate or legal structure that is not explicitly 
reflected in this non-exhaustive list, the Department will assess 
whether that change could affect the nature and extent of the 
respondent's subsidization and, therefore, whether the respondent is 
the same subsidized entity as the predecessor for CVD purposes, with 
reference to one or more of the following objective criteria: \5\ (1) 
Continuity in the cross-owned or consolidated respondent company's 
financial assets and liabilities; (2) continuity in its production and 
commercial activities; and (3) continuity in the level of the 
government's involvement in the respondent's operations or financial 
structure (e.g., government ownership or control, the provision of 
inputs, loans, equity).\6\
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    \5\ This is not necessarily an exclusive list.
    \6\ Routine or ``technical'' fluctuations in subsidy rates 
stemming from, e.g., declining allocable subsidy benefits under the 
Department's declining balance methodology, ordinary fluctuations in 
sales denominators, or changing interest rates would not normally in 
themselves be a basis for a negative successorship finding.
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    We have adopted the particular criteria noted above because, in 
contrast to the factors examined in an AD CCR, these better reflect 
those aspects of a company that generally are most impacted by, the 
target of, or the vehicle for subsidy benefits. For example, 
stabilizing a company's financial position, or facilitating investment 
in new productive capacity is often a goal of subsidization, and 
governments often achieve this subsidization through direct involvement 
in, or financial or ``in kind'' provisions to, the company.
    Any party requesting a CVD CCR should provide, as part of its 
request, information sufficient to clearly identify and explain any 
significant changes in the respondent's operations, ownership, or 
corporate or legal structure during the look-back window. At a minimum, 
the request should include a full narrative with supporting 
documentation regarding any changes similar to those items in the non-
exhaustive list above as well as complete information addressing the 
three objective criteria enumerated above. The supporting information 
should also include, where available, the translated financial 
statements on a consolidated basis for the respondent for the years of 
and immediately prior to any changes related to the non-exhaustive list 
and the objective criteria. (For example, if the change in question 
occurred in May 2008, annual consolidated financial statements should 
be provided for years 2007 and 2008). The requesting party should also 
identify in its request, to the extent of its knowledge, under what 
exporter/producer name and CVD cash deposit rate the subject 
merchandise is currently entering into the United States.
    Upon receipt of a duly supported CVD CCR request containing the 
necessary information outlined above, the Department will initiate and 
conduct a CVD CCR, consistent with its regulations. In making a final 
CVD CCR finding, the Department will normally come to one of two 
conclusions: (1) The respondent company is the successor to the pre-
change predecessor company and, therefore, the respondent's merchandise 
may enter under the predecessor's established duty deposit rate, or (2) 
the respondent company is not the successor, which means its 
merchandise is not entitled to enter under the claimed 
``predecessor's'' previously established cash deposit rate.\7\
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    \7\ Generally, this means the ``all others'' cash deposit rate 
will apply.
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    Finally, we make the following general points about the application 
and likely implications of this new methodology. First, we reiterate 
that, for the reasons discussed above, our analysis will focus on 
whether a significant change occurred in the company's operations, 
ownership, corporate or legal structure and not whether those changes, 
in fact, ultimately did affect the respondent's subsidization or by how 
much. This latter question can only be decided based on a full analysis 
of a complete record compiled in the course of an administrative review 
and not on the limited facts or within the abbreviated time frame of a 
CVD CCR.
    Second, we recognize that CVD CCRs involving companies that have 
been excluded from the order is a unique situation that may require 
additional consideration and, potentially, a different analysis. As we 
are not presented with that fact pattern in this case, we will address 
the issue of excluded companies in CVD CCRs, and articulate appropriate 
standards and analyses for such instances, where and when those 
circumstances arise.
    Third, we will not initiate a CVD CCR if the question of the 
appropriate cash deposit rate can otherwise be addressed in an ongoing 
or, where appropriate, an impending administrative review. Initiating 
an additional CVD CCR in these circumstances poses an unnecessary 
burden on parties and on the Department's resources, and an ongoing 
administrative review generally provides an opportunity for a fuller 
record to be developed and for greater participation by interested 
parties.
    Finally, for reasons discussed above, findings regarding 
successorship under an AD CCR are not necessarily relevant to a CVD 
CCR, and vice versa.

Analysis of Responses

    On August 14, 2007, MGS Marmara Gida (``MGS''), a Turkish holding 
company, was formed by five individuals for the purpose of acquiring 
the respondent, Gidasa. The agreement to transfer Gidasa from its 
former owner to MGS was signed on the same day MGS incorporated, and 
the transfer was completed on March 3, 2008. On June 5, 2008, MGS 
changed Gidasa's legal corporate name to Marsan. Subsequently, in its 
submissions dated December 3, 2008, and May 1, 2009, Marsan informed 
the Department that a change in ownership occurred, and that MGS 
acquired all of Gidasa's assets, including its facilities and brand 
names.
    Accordingly, we find that significant changes have occurred during 
the relevant ``look-back'' window, beginning January 1, 2008, in 
Gidasa's/Marasan's ownership and corporate structure.\8\ New investors 
and a new corporate entity now own and control the production of 
subject merchandise and such significant changes could impact the 
nature and extent of the respondent's subsidization. As stated above in 
our new policy, we are not going to analyze whether Marsan's rate of 
subsidization matches that of Gidasa (i.e., whether the level of 
subsidization has actually changed at some point on or after March 3, 
2008, when significant changes occurred) or recalculate a new CVD cash 
deposit rate for Marsan. This type of analysis is more appropriately 
done in the context of an administrative review.
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    \8\ We note that the last date to request an administrative 
review was July 31, 2009, which would cover the period of review for 
January 1, 2008, to December 31, 2008. Therefore, based on our new 
policy, in this case the Department will examine changes that have 
occurred from January 1, 2008, through the time that Gidasa/Marsan 
submitted its CCR Request.

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[[Page 47229]]

    Since significant changes in Marsan's ownership and corporate 
structure have occurred that could potentially affect the nature and 
extent of the company's subsidization, pursuant to our new policy 
outlined above, we are finding that Marsan's merchandise is not 
entitled to enter under the CVD cash deposit rate previously 
established in the last CVD administrative review of Gidasa. 
Accordingly, we preliminarily determine that Marsan's merchandise 
should continue to enter under the ``all others'' CVD rate.

Public Comment

    Any interested party may request a hearing within 10 days of 
publication of this notice. Any hearing, if requested, will be held no 
later than 19 days after the date of publication of this notice, or the 
first workday thereafter. See 19 CFR 351.310. Case briefs from 
interested parties may be submitted not later than 10 days after the 
date of publication of this notice. Rebuttal briefs, limited to the 
issues raised in those comments, may be filed not later than 17 days 
after the date of publication of this notice. See 19 CFR 351.309. All 
written comments shall be submitted in accordance with 19 CFR 351.303. 
Persons interested in attending the hearing, if one is requested, 
should contact the Department for the date and time of the hearing. The 
Department will publish the final results of this CCR in accordance 
with 19 CFR 351.216(e), including the results of its analysis of issues 
raised in any written comments. The current requirement for a cash 
deposit of estimated CVD duties on all subject merchandise at issue 
will continue unless and until it is modified pursuant to the final 
results of this CCR.
    We are issuing and publishing these results and notice in 
accordance with sections 751(b)(1) and 777(i)(1) and (2) of the Act and 
19 CFR 351.216.

    Dated: September 9, 2009.
Ronald K. Lorentzen,
Acting Assistant Secretary for Import Administration.
[FR Doc. E9-22192 Filed 9-14-09; 8:45 am]
BILLING CODE 3510-DS-P