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Notice

Initiation of Antidumping Duty Investigation: Saccharin from the People's Republic of China

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

August 8, 2002.

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FOR FURTHER INFORMATION CONTACT:

Javier Barrientos or Sally Gannon, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-2243, (202) 482-0162, respectively.

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SUPPLEMENTARY INFORMATION:

Initiation Of Investigation

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the Tariff Act of 1930 (“Act”), as amended. In addition, unless otherwise indicated, all citations to the Department of Commerce's (“Department”) regulations are to 19 CFR Part 351 (2002).

The Petition

On July 11, 2002, the Department received a petition on imports of saccharin from the People's Republic of China (“PRC”) filed in proper form by PMC Specialities Group, Inc., hereinafter referred to as “the Petitioner.” On July 23, 2002, the Department requested clarification of certain areas of the petition and received a response on July 26, 2002.

In accordance with section 732(b) of the Act, the Petitioner alleges that imports of saccharin from the PRC 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, and threatening material injury to, an industry in the United States.

The Petitioner is a saccharin producer and accounts for over fifty percent of domestic production of saccharin, as defined in the petition. Therefore, the Department finds that the Petitioner has standing to file the petition because it is an interested party as defined under section 771(9)(C) of the Act, with respect to the merchandise subject to this investigation. The Petitioner has demonstrated sufficient industry support with respect to the antidumping duty investigation, which it is requesting the Department to initiate (see “Determination of Industry Support for the Petition” below).

Scope of Investigation

The product covered by this investigation is saccharin. Saccharin is a non-nutritive sweetener used in beverages and foods, personal care products such as toothpaste, table top sweeteners, and animal feeds. It is also used in metalworking fluids. There are four primary chemical compositions of saccharin: (1) sodium saccharin (American Chemical Society Chemical Abstract Service (“CAS”) Registry #128-44-9); (2) calcium saccharin (CAS Registry #6485-34-3); (3) acid (or insoluble) saccharin (CAS Registry #81-Start Printed Page 5153707-2); and (4) research grade saccharin. Most of the U.S.-produced and imported grades of saccharin from the PRC are sodium and calcium saccharin, which are available in granular, powder, spray-dried powder, and liquid forms.

The merchandise subject to this investigation is classifiable under subheading 2925.11.00 of the Harmonized Tariff Schedule of the United States (HTSUS) and includes all types of saccharin imported under this HTSUS subheading, including research and specialized grades.[1] Although the HTSUS subheading is provided for convenience and Customs purposes, the Department's written description of the scope of this investigation remains 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 (62 FR 27323), we are setting aside a period for parties to raise issues regarding product coverage. The Department encourages all parties to submit such comments within 20 calendar days of 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, NW., Washington, DC 20230. The period of scope consultations 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 Petition

Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) 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.

Section 771(4)(A) of the Act defines the “industry” as the producers as a whole 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 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 the Department and the ITC must apply the same statutory definition regarding the domestic like product (see section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the domestic like product, such differences do not render the decision of either agency contrary to law.[2]

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 subtitle.” 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.

In this case, the domestic like product referred to in the petition is the single domestic like product defined in the “Scope of Investigation” section, above. At this time, the Department has no basis on the record to find the petition's definition of the domestic like product to be inaccurate. The Department, therefore, has adopted the domestic like product definition set forth in the petition.

Moreover, the Department has determined that the petition contains adequate evidence of industry support; therefore, polling was unnecessary. See Import Administration AD Investigation of Saccharin from the PRC: Initiation Checklist, (July 31, 2002) (“Initiation Checklist”), at Attachment II (public version on file in the Central Records Unit of the Department of Commerce, Room B-099). To the best of the Department's knowledge, the Petitioner supporting the petition represents over 50 percent of total production of the domestic like product. Additionally, no person who would qualify as an interested party pursuant to section 771(9) (C), (D), (E), (F), or (G) of the Act has expressed opposition to the petition.

Accordingly, the Department determines that this petition is filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

The following is a description of the allegation of sales at less than fair value (“LTFV”) upon which the Department based its decision to initiate this investigation. The sources of data for the deductions and adjustments relating to U.S. price and factors of production are also discussed in the Initiation Checklist. Should the need arise to use any of this information as facts available under section 776 of the Act in our preliminary or final determination, we may reexamine the information and revise the margin calculations, if appropriate. The anticipated period of investigation (“POI”) is January 1, 2002 through June 30, 2002.

The Petitioner identified five PRC companies as producers and exporters of saccharin in the PRC. See Initiation Checklist at Attachment I.

The Petitioner submitted an LTFV analysis for the PRC as a non-market economy (“NME”). The Petitioner provided a dumping margin calculation using the Department's NME methodology as required by 19 C.F.R. § 351.202(b)(7)(i)(C).

Export Price

Petitioner calculated a range of export prices using average unit values (AUVs) of saccharin imports reported by the U.S. Census Bureau and the price quotes it obtained, subtracting ocean freight, insurance, brokerage and handling charges and foreign inland freight, where appropriate. See Petition at Exhibit 6; and Letter from Petitioner to the Department: Response to Petition Clarifications Questions (July 26, 2002) (“Petition Clarifications”) at Exhibits 1 and 2, for a detailed calculation of these export prices. Petitioner did not calculate imputed credit expenses for PRC sales because the petition bases normal value (“NV”) on a factors of production analysis pursuant to section 773(c) of the Act. See Initiation Checklist for further information.

Petitioner argues that, because at least one PRC producer of saccharin sells to an affiliated reseller in the United States, some sales during the period of investigation (“POI”) should be considered constructed export price (“CEP”) sales.[3] See Initiation Checklist.

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Normal Value

For the normal value (“NV”) calculation, Petitioner based the factors of production, as defined by section 773(c)(3) of the Act (raw materials, labor and energy), for saccharin on information from PRC producers. See Initiation Checklist.

The Petitioner selected India as the surrogate country for purposes of valuing the factors of production. The Petitioner argued that, pursuant to section 773(c)(4) of the Act, India is an appropriate surrogate because it is a market-economy country that is at a comparable level of economic development to the PRC and is a significant producer of comparable merchandise. Based on the information provided by the Petitioner, we believe that the Petitioner's use of India as a surrogate country is appropriate for purposes of initiation of this investigation. See Initiation Checklist.

In accordance with section 773(c)(4) of the Act, the Petitioner valued factors of production, where possible, on reasonably available, public, surrogate country data. To value certain raw materials, the Petitioner used various sources including import statistics from India, the periodical Chemical Weekly, and U.S. Census data. See Initiation Checklist. Where Indian import statistics were used, the Department recalculated the data to exclude NME countries and countries determined to provide non-industry specific export subsidies. See Final Determination of Sales at Less Than Fair Value: Certain Automotive Replacement Glass Windshields from the People's Republic of China, 67 FR 6482 (February 12, 2002) and accompanying Issues and Decision Memorandum. For inputs valued in Indian Rupees and not contemporaneous with the POI, the Petitioner used information from the wholesale price indices (“WPI”) in India, as published by the International Monetary Fund, to determine the inflation adjustment.

The Petitioner explained that, as a result of the saccharin production process, certain byproducts are created that can in turn be sold by the producer to offset the cost of production. Petitioner calculated the quantity of byproducts released per pound of saccharin production, and identified Indian prices to value sales of these byproducts. The quantity of byproduct was then multiplied by the Indian price to determine the total amount of byproduct offset, and subtracted this amount from the total variable cost of producing saccharin. See Initiation Checklist.

To value electricity, Petitioner obtained industrial electricity costs in India from the 2000-2001 annual report of National Peroxide Limited (“National Peroxide”), a publicly traded Indian chemical producer. Petitioner maintains that this information is appropriate for use as a surrogate value because it accurately reflects the cost associated with an Indian chemical company's purchases of electricity and is the most contemporaneous pricing data available to Petitioner. See Initiation Checklist.

To value coal, Petitioner obtained coal costs in India based on the 1999-2000 financial statement of Hindustan Lever Limited (“Hindustan”), a publicly traded Indian chemical producer. This represents the most contemporaneous information available to Petitioner because National Peroxide's more recent annual report does not contain data regarding purchases of coal. See Initiation Checklist.

Pursuant to 19 C.F.R. §351.408(c)(3), the Department calculates and publishes the surrogate values for labor to be used in non-market economy cases. The Petitioner applied the regression formula published on the Department's website to derive the PRC labor rate that would be calculated using the Department's methodology. See Initiation Checklist.

For factory overhead (“overhead”), selling, general, and administrative expenses (“SG&A”), and profit, Petitioner states that its research indicated that several companies currently produce saccharin in India. However, to the best of Petitioner's knowledge, all of these companies are privately owned. Consequently, financial statements for an Indian producer of saccharin were not reasonably available to Petitioner. Overhead was, therefore, calculated based on the most recent financial statements of two Indian chemical producers: Calibre Chemicals Pvt. Limited (“Calibre”) and National Peroxide. Petitioner states that data from the 2000 annual report of Calibre was used by the Department in its recent preliminary and final results of the annual administrative review of Persulfates from the PRC, and that the 2000-2001 annual report for National Peroxide has been placed on the record of the current annual review of the dumping order in the same case. The overhead, SG&A, and profit ratios for each company were averaged to obtain the respective surrogate values used. See Initiation Checklist.

We made adjustments to NV for packing materials. For further information, see the Initiation Checklist.

Based on comparisons of EP and CEP to NV, calculated in accordance with section 773(c) of the Act, the estimated dumping margins for saccharin from the PRC range from 116.64 percent to 355.55 percent.

Fair Value Comparisons

Based on the data provided by the Petitioner, there is reason to believe that imports of saccharin from the PRC are being, or are likely to be, sold in the United States at less than fair value.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic like product is being materially injured, and is threatened with material injury, by reason of the imports of the subject merchandise sold at LTFV. The Petitioner contends that the industry's injured condition is demonstrated by: (1) reduced shipments; (2) reduced market share; (3) reduced prices; (4) declining production and capacity utilization; (5) growing inventories; (6) significant operating losses; and, (7) lost sales.

The Department assessed the allegations and supporting evidence regarding material injury and causation and determined that these allegations are supported by accurate and adequate evidence and meet the statutory requirements for initiation. See Initiation Checklist at Attachment IV.

Initiation of Antidumping Investigation

Based upon our examination of the petition on saccharin from the PRC, we find that the petition meets the requirements of section 732 of the Act. Therefore, we are initiating an antidumping duty investigation to determine whether imports of saccharin from the PRC are being, or are likely to be, sold in the United States at LTFV. Unless postponed, we will make our preliminary determination no later than 140 days after the date of this initiation.

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of the petition has been provided to the government representatives of the PRC. We will attempt to provide a copy of the public version of the petition to each exporter named in the petition, as appropriate, pursuant to 19 CFR 351.203(c)(2).

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International Trade Commission Notification

We have notified the ITC of our initiation, as required by section 732(d) of the Act.

Preliminary Determination by the ITC

The ITC will preliminarily determine, no later than August 25, 2002, whether there is a reasonable indication that imports of saccharin from the PRC are materially injuring, or threatening material injury to, a U.S. industry. A negative ITC determination will result in this investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits.

This notice is published pursuant to section 777(i) of the Act.

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Dated: July 31, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

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Footnotes

1.  See Harmonized Tariff Schedule of the United States (2002) (Rev. 3), Chapter 29, Section VI at 29-60.

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2.  See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content Flat Panel Displays and Display Glass from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).

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3.  Petitioner alleges that Suzhou maintains an affiliated reseller, Suzhou-Chem USA, Inc., which is located at 17 Appleby Rd., Suite B1 Wellesley, MA 02482.

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[FR Doc. 02-20076 Filed 8-7-02; 8:45 am]

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