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Import Administration, International Trade Administration, Department of Commerce.
Initiation of antidumping duty investigations.
June 13, 2001.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Ron Trentham or Jeffrey Pedersen at (202) 482-6320 and (202) 482-4195, respectively; AD/CVD Enforcement, Office 4, Group II, Import Administration, International Trade Start Printed Page 31889Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC 20230.
Initiation of Investigations
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department of Commerce's (the Department's) regulations are references to the provisions codified at 19 CFR Part 351 (2000).
On May 17, 2001, the Department of Commerce (the Department) received petitions filed in proper form by the following parties: DuPont Teijin Films, Mitsubishi Polyester Film, and Toray Plastics (America) Inc., (collectively, the petitioners). The Department received from the petitioners information supplementing the petitions throughout the 20-day initiation period.
In accordance with section 732(b) of the Act, the petitioners allege that imports of polyethylene terephthalate film, sheet and strip (PET film) from India and Taiwan are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act, and that such imports are materially injuring an industry in the United States.
The Department finds that the petitioners filed these petitions on behalf of the domestic industry because they are interested parties as defined in section 771(9) (C) of the Act and have demonstrated sufficient industry support with respect to each of the antidumping investigations that they are requesting the Department to initiate (see the Determination of Industry Support for the Petitions section below).
Scope of Investigations
For purposes of these investigations, the products covered are all gauges of raw, pretreated, or primed PET film, whether extruded or coextruded. Excluded are metallized films and other finished films that have had at least one of their surfaces modified by the application of a performance-enhancing resinous or inorganic layer of more than 0.00001 inches thick. Imports of PET film are classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) under item number 3920.62.00. HTSUS subheadings are provided for convenience and Customs purposes. The written description of the scope of this proceeding is dispositive.
During our review of the petitions, we discussed the scope with the petitioner to ensure that it accurately reflects the product for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations, we are setting aside a period for parties to raise issues regarding product coverage. See, Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295, 27323 (May 19, 1997). The Department encourages all parties to submit such comments within 20 days from the publication of this notice. Comments should be addressed to Import Administration's Central Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230. The scope comment period is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determinations.
Determination of Industry Support for the Petitions
Section 771(4)(A) of the Act defines the “industry” as the producers of a domestic like product. Thus, to determine whether the petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (ITC), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authorities. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to the law.
Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition.
The domestic like product referred to in the petitions is all PET film, including equivalent PET film. In a prior antidumping investigation, the ITC adopted this definition of the domestic like product. See, Polyethylene Terephthalate Film, Sheet, and Strip from Japan and the Republic of Korea, (ITC Pub. No. 2383) (May, 1991) (Final Determination). Because no party has commented on the petitions' definition of the domestic like product, and there is nothing on the record to indicate that this definition is inaccurate, the Department has adopted the domestic like product definition set forth in the petitions.
Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (1) At least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Finally, section 732(c)(4)(D) of the Act provides that if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the administering agency shall (i) poll the industry or rely on other information in order to determine if there is support for the petition as required by subparagraph (A), or (ii) determine industry support using a statistically valid sampling method.
In order to estimate production for the domestic industry as defined for purposes of this case, the Department has relied upon not only the petition and amendments thereto, but also “other information” it obtained through research and which is attached to the Initiation Checklist (See Import Administration Antidumping Investigation Initiation Checklist (Initiation Checklist), Attachment I, Re: Industry Support, June 6, 2001, on file in the Central Records Unit (CRU) of the main Department of Commerce building). Based on information from these sources the Department determined that producers supporting the petition with respect to each of the two countries represent over 50 percent Start Printed Page 31890of total production of the domestic like product. Additionally, no person who would qualify as an interested party pursuant to section 771(9) of the Act has expressed opposition to the petition.
Accordingly, the Department determines that these petitions are filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.
Constructed Export Price, Export Price and Normal Value
The petitioners determined export prices (“EP”) and constructed export prices (“CEP”) based on their own market research reports tracking the selling activities of two Indian producers active in the United States market, Garware Polyester Ltd. (“Garware”) and Polyplex Corporation (“Polyplex”). According to the petitioners, neither company sells directly to U.S. end users, but rather sell through the companies' respective U.S. sales agent/distributor. The petitioners state that Garware sells its products through its affiliated sales agent/distributor, Global PET Films (“Global”), while Polyplex sells through an unaffiliated sales agent/distributor. The petitioners based their U.S. price calculations on the prices of the U.S. distributors to U.S. end users. We do not believe it is appropriate, in this instance, to use the submitted U.S. prices for Polyplex because these prices are based on the prices of an unaffiliated U.S. distributor to a U.S. end user, and not on Polyplex's prices to that unaffiliated U.S. distributor. The petition also contains two other U.S. prices from India (i.e., Garware's prices through its affiliated U.S. distributor, Global, one for 48 gauge and one for thick industrial film) on which we can calculate an estimated dumping margin. Therefore, we are basing the U.S. price on Garware's CEP prices through its affiliated distributor, Global.
To derive CEP for Garware, the petitioner deducted from the price quote an affiliated party selling markup, ocean freight, U.S. brokerage and handling, U.S. inland freight from port to warehouse, marine insurance, U.S. customs duties, U.S. warehousing, U.S. inland freight from warehouse to customer, slitting costs and material losses associated with slitting. We recalculated the affiliated party selling markup to more accurately reflect Global's indirect selling expenses incurred in the United States. The petitioners made no adjustment for CEP profit as Garware's fiscal year 1999 financial statement showed no profit.
With respect to normal value (NV), the petitioners provided home market prices that were based on their own market reports tracking the selling activities of Garware and Polyplex in the Indian market for 48 gauge film and thick industrial film. Since we are not using the submitted U.S. prices for Polyplex, we are not using any of the submitted home market prices for Polyplex. Furthermore, we did not use the submitted home market price for Garware for thick industrial film because the petitioners could not substantiate this price with documentation or other market reports that would support the veracity of this price. Thus, the Department determined that Garware's home market price for the 48 gauge film is the only price in the petition that is directly comparable to the products exported to the U.S. which serve as the basis for CEP.
The petitioners calculated an NV by making deductions from the quoted home market price for 48 gauge film for Garware's credit expenses, packing costs, slitting costs, material loss, and advertising expenses. We adjusted the petitioners' NV calculations by adding the petitioners' reported U.S. packing costs to NV. For NV compared to CEP, the petitioners deducted a CEP offset.
Although the petitioners provided a margin based on a price-to-price comparison, they also made a country-wide cost allegation and provided information demonstrating reasonable grounds to believe or suspect that sales of PET film in the home market were made at prices below the fully absorbed cost of production (COP), within the meaning of section 773(b)(3) of the Act. As a result, they requested that the Department initiate sales-below-cost investigations on a country-wide basis.
Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacture (COM), selling, general, and administrative (SG&A) expenses, and packing costs. The petitioners calculated COM based on the average consumption rates of a U.S. PET film producer. The petitioner adjusted COM for known differences in costs between the United States and India. To calculate SG&A and interest expense, the petitioner relied upon Garware's 1999 financial statements. Based upon the comparison of the adjusted prices of the foreign like product in the home market to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP, within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation. See the Initiation of Cost Investigations section below.
Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the petitioners also based NV for sales in India on constructed value (CV). The petitioners calculated CV using the same COM, depreciation, SG&A and interest expense figures used to compute Indian home market costs. The petitioners did not include profit in calculating CV. As this approach is conservative, the Department accepted such methodology.
Based on a comparison of CEP to NV, we calculated a margin of 77.52 percent. Based on comparisons of CEP to CV, we calculated margins of 128.33 percent and 142.21 percent.
The petitioners determined EP based on their own market research tracking the activity of the largest Taiwanese exporter of PET film to the United States, Nan Ya Plastics Industry Co., Ltd. (Nan Ya).
The petitioners submitted Nan Ya's prices for 48 gauge film and DFR base (industrial) film. For DFR base film, the petitioners submitted a price from a direct sale from Nan Ya to an unrelated U.S. purchaser. For this sale, the petitioners calculated a net U.S. price by deducting ocean freight, U.S. brokerage and handling, U.S. inland freight from port to warehouse, marine insurance, U.S. customs duties, U.S. warehousing, U.S. inland freight from warehouse to customer, slitting costs and material losses associated with slitting.
For 48 gauge film, the petitioners' cited price was a price from an unaffiliated U.S. distributor to a U.S. end user. We do not believe it is appropriate, in this instance, to use the submitted 48 gauge film U.S. price for Nan Ya because this is the price from an unaffiliated U.S. distributor to a U.S. end user, and not Nan Ya's price to that unaffiliated U.S. distributor. However, the petition also contains one other U.S. price from Taiwan on which we can calculate an estimated dumping margin, i.e., the EP price on a direct sale from Nan Ya to an unrelated U.S. customer the DFR base film price discussed above. Therefore, we based U.S. price on this EP sale information. Start Printed Page 31891
With respect to NV, the petitioners provided home market prices that were obtained from an independent marketing consultant for 48 gauge and DFR base film. The petitioner also made a country-wide cost allegation and provided information to support its claim that sales of PET film in the home market were made at prices below the fully absorbed COP, within the meaning of section 773(b)(3) of the Act. As a result, they requested that the Department initiate a sales-below-cost investigation on a country-wide basis. However, since the submitted home market prices were from outside of the anticipated POI and we are able to calculate a margin based on constructed value, we did not use these prices in our analysis and therefore have not conducted an analysis for sales below cost.
Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the petitioners also based NV on constructed value (CV), consisting of COM, depreciation, SG&A expenses, interest expense, profit and packing. The petitioner calculated COM based on the average consumption rates of a U.S. PET film producer. The petitioner adjusted COM for known differences in costs between the United States and Taiwan. To calculate SG&A, interest expense, and profit, the petitioner relied upon the 1999 financial statements of Nan Ya. We recalculated profit to more accurately reflect the profits attributable to plastic products (which predominantly consist of PET film products).
Based on a comparison of EP to CV, calculated in accordance with section 773(c) of the Act, the estimated dumping margin for PET film from Taiwan is 15.65 percent.
Initiation of Cost Investigations
As noted above, pursuant to section 773(b) of the Act, the petitioners provided information demonstrating reasonable grounds to believe or suspect that sales in India were made at prices below the fully absorbed COP and, accordingly, requested that the Department conduct country-wide sales-below-COP investigations in connection with the requested antidumping investigation for India. The Statement of Administrative Action (SAA), submitted to the U.S. Congress in connection with the interpretation and application of the URAA, states that an allegation of sales below COP need not be specific to individual exporters or producers. See SAA, H. Doc. 103-316, Vol. 1, at 833 (1994). The SAA, at 833, states that “Commerce will consider allegations of below-cost sales in the aggregate for a foreign country, just as Commerce currently considers allegations of sales at less than fair value on a country-wide basis for purposes of initiating an antidumping investigation. “Reasonable grounds' * * * exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices.” Id. Based upon the comparison of the adjusted prices from the petition for the representative foreign like products to their COPs, we find the existence of “reasonable grounds to believe or suspect” that sales of these foreign like products in India were made at prices below their respective COPs within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating the requested country-wide cost investigation with respect to India.
As also noted above, the petitioners alleged that sales in Taiwan were made at prices below the fully absorbed COP and, accordingly, requested that the Department conduct country-wide sales-below-COP investigations in connection with the requested antidumping investigation for Taiwan. However, since we could not determine whether sales in Taiwan were made at prices below COP, we are not initiating a sales-below-COP investigation at this time in the Taiwan investigation.
Section 733(e)(1) of the Act states that the Department will find that critical circumstances exist, at any time after the date of initiation, when there is a reasonable basis to believe or suspect that under paragraph (A) “there is a history of dumping and material injury by reason of dumped imports in the United States or elsewhere of the subject merchandise, or . . . the person by whom, or for whose account, the merchandise was imported know or should have known that the exporter was selling the subject merchandise at less than fair value and that there was likely to be material injury by reason of such sales, and (B) there have been massive imports of the subject merchandise over a relatively short period of time.” Section 351.206(h) of our regulations defines “massive imports” as imports that have increased by at least by 15 percent over the imports during an immediately preceding period of comparable duration. Section 351.206(i) of the regulations states that “relatively short period” will normally be defined as the period beginning on the date the proceeding begins and ending at least three months later.
At this time, the petitioners have not supported their allegation under section 733(e)(1) of the Act and section 351.206 of the Department's regulations. Although the petitioners provided data indicating significant increases in imports over a three-year period, we do not consider this to be sufficient evidence of massive imports over a relatively short period of time within the meaning of section 733(e)(1)(B) of the Act and section 351.206 of the Department's regulations. If, at a later date, the petitioners adequately allege the elements of critical circumstances, based on reasonably available information, the Department will investigate this matter further.
Fair Value Comparisons
Based on the data provided by the petitioners, there is reason to believe that imports of PET film from India and Taiwan are being, or are likely to be, sold at less than fair value.
Allegations and Evidence of Material Injury and Causation
The petitions allege that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise sold at less than NV. The petitioners contend that the industry's injured condition is evident in declining trends in U.S. selling prices, sales, revenue and market share.
The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. The Department assessed the allegations and determined that these allegations are supported by accurate and adequate evidence and meet the statutory requirements for initiation. See Attachment II to the Initiation Checklist-Analysis of Allegations and Evidence of Material Injury and Causation.
Initiation of Antidumping Investigations
Based upon our examination of the petitions on PET film, and the petitioners' responses to our supplemental questionnaire clarifying the petitions, we have found that they meet the requirements of section 732 of the Act. Therefore, we are initiating antidumping duty investigations to determine whether imports of PET film from India and Taiwan are being, or are likely to be, sold in the United States at less than fair value. Unless this deadline Start Printed Page 31892is extended, we will make our preliminary determinations no later than 140 days after the date of this initiation.
Distribution of Copies of the Petitions
In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of each petition has been provided to the representatives of the governments of India and Taiwan. We will attempt to provide a copy of the public version of each petition to each exporter named in the petition, as appropriate.
International Trade Commission Notification
We have notified the ITC of our initiations, as required by section 732(d) of the Act.
Preliminary Determinations by the ITC
The ITC will determine, no later than July 2, 2001, whether there is a reasonable indication that imports of PET film from India and Taiwan are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination for any country will result in the investigation being terminated with respect to that country; otherwise, these investigations will proceed according to statutory and regulatory time limits.
This notice is issued and published pursuant to section 777(i) of the Act.Start Signature
Dated: June 6, 2001.
Assistant Secretary for Import Administration.
1. See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content Panel Displays and Display Glass from Japan: Final Determination; Recission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).Back to Citation
2. The petitioners also calculated a producer-specific COP for Polyplex in the same manner, but since we did not use the submitted prices for Polyplex, we also did not use the submitted costs for Polyplex in our calculations.Back to Citation
2. TheBack to Citation
3. The petitioners also calculated a producer-specific CV for Polyplex in the same manner, but since we did not see the submitted prices for Polyplex, we also did not use the submitted costs for Polyplex in our calculations.Back to Citation
4. Since we did not use the submitted home market thick industrial film price for Garware, we compared Garware's CEP for this product exclusively to CV.Back to Citation
[FR Doc. 01-14915 Filed 6-12-01; 8:45 am]
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