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Notice

Notice of Initiation of Antidumping Duty Investigation: Thermal Transfer Ribbons From France, Japan and the Republic of Korea

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Start Preamble

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Initiation of Antidumping Duty Investigation.

EFFECTIVE DATE:

June 27, 2003.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Julio Fernandez (France) at 202-482-0961, Alex Villanueva (Japan) at 202-482-3208, Fred Baker (South Korea) at 202-482-2924 or Robert James at 202-482-0649, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.

End Further Info

Initiation of Investigation

The Petition

On May 30, 2003, the Department of Commerce (the Department) received a petition filed in proper form by International Imaging Materials, Inc. (IIMAK, or petitioner). On June 2, 13, and 18, 2003, petitioner submitted clarifications of the petition. IIMAK is a domestic producer of thermal transfer ribbons. In accordance with section 732(b) of the Tariff Act of 1930, as amended (the Tariff Act), the petitioner alleges imports of thermal transfer ribbon from France, Japan and the Republic of Korea (South Korea) 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 Tariff Act, and that such imports are materially injuring, or threatening material injury to, the U.S. industry.

The Department finds the petitioner filed its petition on behalf of the domestic industry because it is an interested party as defined in section 771(9)(C) of the Tariff Act, and it has demonstrated sufficient industry support with respect to the investigations it is presently seeking. See, “Determination of Industry Support for the Petitions,” below.

Scope of the Investigations

These investigations cover wax and wax/resin thermal transfer ribbons (TTR), in slit or unslit (“jumbo”) form originating from France, Japan or South Korea, with a total wax (natural or synthetic) content of all the image side layers, that transfer in whole or in part, of equal to or greater than 20 percent by weight and a wax content of the colorant layer of equal to or greater than 10 percent by weight, and a black color as defined by industry standards by the CIELAB (International Commission on Illumination) color specification such that L*<35, -20>a*<35 and -40<b*<31, and black and near-black TTR. TTR is typically used in printers generating alphanumeric and machine-readable characters, such as bar codes and facsimile machines.

The petition does not cover pure resin TTR, and finished thermal transfer ribbons with a width greater than 212 millimeters (mm), but not greater than 220 mm (or 8.35 to 8.66 inches) and a length of 230 meters (m) or less (i.e., slit fax TTR, including cassetted TTR), and ribbons with a magnetic content of greater than or equal to 45 percent, by weight, in the colorant layer.

The merchandise subject to this investigation may be classified in the Harmonized Tariff Schedule of the United States (HTSUS) at heading 3702 and subheadings 3921.90.40.25, 9612.10.90.30, 3204.90, 3506.99, 3919.90, 3920.62, 3920.99 and 3926.90. The tariff classifications are provided for convenience and Customs purposes; however, the written description of the scope of the investigation is dispositive.

As discussed in the preamble to the Departments regulations, we are setting aside a period for parties to raise issues regarding product coverage. See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997). The Department encourages all interested parties to submit such comments within 20 days of publication of this notice. Comments should be addressed to Import Administration's Central Records Unit, Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230. This period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with parties Start Printed Page 38306prior to the issuance of the preliminary determinations.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Tariff Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Tariff Act provides that the Department's industry support determination, which is to be made before the initiation of the investigation, be based on whether a minimum percentage of the relevant industry supports the petition. A petition meets this requirement if the domestic producers or workers who support the petition account for: (i) at least 25 percent of the total production of the domestic like product; and (ii) 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. Moreover, section 732(c)(4)(D) of the Tariff 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 Department 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.

Section 771(4)(A) of the Tariff Act defines the “industry” as the producers of a domestic like product. Thus, to determine whether a 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 (the Commission), 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 Commission must apply the same statutory definition regarding the domestic like product (section 771(10) of the Tariff Act), they do so for different purposes and pursuant to a 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 like product, such differences do not render the decision of either agency contrary to law. See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (Ct. Int'l Trade 2001), citing Algoma Steel Corp. Ltd. v. United States, 688 F. Supp. 639, 642-44 (Ct. Int'l Trade 1988) (“the ITC does not look behind ITA's determination, but accepts ITA's determination as to which merchandise is in the class of merchandise sold at LTFV”).

Section 771(10) of the Tariff 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.

In determining whether the domestic petitioner has standing, we considered the industry support data contained in the petition with reference to the domestic like product as defined above in the “Scope of the Investigations” section. To establish standing, petitioner provided its actual production data for the domestic like product for the year 2002. To estimate 2002 production for all other domestic thermal transfer ribbon producers named in the petition, petitioner estimated production data by several means. These estimated production data were added to the actual production data detailed above to arrive at total estimated U.S. production of thermal transfer ribbon for the year 2002 in thousands of square inches (msi). See Petition at Exhibit A-1 and Exhibit A-2 containing an affidavit by an IIMAK thermal transfer ribbon division official describing how the production data were estimated.

Using the data described above, the share of total estimated U.S. production of thermal transfer ribbon in 2002 represented by petitioner (there were no other supporting parties) equals over 50 percent of total domestic production. Therefore, the Department finds the domestic producers who support the Petition account for at least 25 percent of the total production of the domestic like product. In addition, as no domestic producers have expressed opposition to the Petition, the Department also finds the domestic producers who support the Petition account for 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.

With regard to the domestic like product, petitioner's definition of the like product is identical to the scope of these investigations. See Petition at 69. Based on our analysis of the information submitted in the Petition we have determined there is a single domestic like product, thermal transfer ribbons in slit or jumbo form, which is defined further in the “Scope of the Investigations” section above, and we have analyzed industry support in terms of that domestic like product. For more information on our analysis and the data upon which we relied, see the Antidumping Investigation Initiation Checklist (Initiation Checklist), dated June 19, 2003, at “Industry Support,” and Appendix 1.

Therefore, we find that petitioners have met the requirements of section 732(c)(4)(A) of the Tariff Act.

Constructed Export Price and Normal Value

The following are descriptions of the allegations of sales at less than fair value upon which the Department based its decision to initiate these investigations. The source or sources of data for the deductions and adjustments relating to U.S. and foreign market prices and cost of production and constructed value have been accorded treatment as business proprietary information. Petitioner's sources and methodology are discussed in greater detail in the business proprietary version of the Petition and in our Initiation Checklist. We corrected certain information contained in the petition's margin calculations; these corrections are set forth in detail in the Initiation Checklist. Should the need arise to use any of this information as facts available under section 776 of the Tariff Act in our preliminary or final determinations, we may re-examine this information and revise the margin calculations, if appropriate.

Period of Investigation

The period of investigation for these cases will be April 1, 2002 through March 31, 2003, or the four most-recently completed fiscal quarters as of the month preceding the month in which the petition was filed. See 19 CFR 351.204(b).

France

Constructed Export Price

To calculate constructed export price (CEP) petitioner obtained pricing information for certain wax and wax/resin products sold to unaffiliated parties in the United States, and comparable to the products sold in the home market. Petitioner made certain adjustments to this selling price for specific expenses that would be incurred by foreign producers of the subject merchandise for sales made in the United States. Because petitioner was unable to obtain actual data for selling expenses incurred by respondents in the United States, petitioner obtained price quotes as a Start Printed Page 38307basis for its estimation of certain expenses, and, where appropriate, also based its estimates for such expenses on actual figures incurred in the course of its own selling activities. Petitioner indicates this approach is a reasonable and appropriate way to calculate CEP because the selling process for thermal transfer ribbon is uniform within the United States, and the selling activities performed by respondents' U.S. affiliates for their U.S. customers are largely the same as those performed by petitioner for its customers in the United States. See Petition at 49. Where known differences between petitioner's and respondents' operations exist, petitioner adjusted selling expenses accordingly to account for such differences.

Petitioner adjusted the U.S. prices for ocean freight, marine insurance, U.S. duties, packaging expenses, indirect selling expenses incurred by the respondent's U.S. affiliate, inventory carrying costs in transit, and a figure for CEP profit. Where possible, these expenses were based upon petitioner's actual experience; where petitioner lacked such data, petitioner made reasonable estimates as described above. Petitioner based CEP profit for the respondent, Armor SA, upon the experience of Dai Nippon Printing, a Japanese TTR producer. Petitioner explained this was a reasonable surrogate figure because no sector-specific profit data are available for the French TTR industry. With respect to selling expenses incurred in France, petitioner indicates there is no basis to believe that such expenses would differ for thermal transfer ribbon destined for the United States versus merchandise sold in the home market. Therefore, petitioner claims it is reasonable to consider such expenses to be equal for sales to the United States and in the home market. We have accepted this methodology for purposes of this initiation.

Normal Value

With respect to normal value (NV), petitioner relied on foreign market research to obtain information on the prices of two grades of thermal transfer ribbon sold in the French market. This sales information is contemporaneous with the pricing information used as the basis for CEP, and represents products which are either identical or similar to those sold in the United States. See Petition Exhibits A-7 and A-8.

The petitioner also provided information demonstrating reasonable grounds to believe or suspect that sales of TTR in the home market were made at prices below the fully absorbed cost of production (COP), within the meaning of section 773(b) of the Tariff Act, and requested that the Department initiate a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Tariff Act, COP consists of cost of manufacture (COM), selling, general and administrative (SG&A) expenses, and packing. The petitioner calculated COM based on the experience of a U.S. TTR producer, adjusted for known differences based on petitioner's knowledge of French TTR producers' operations and other publically available data. See Petition at 64 and Exhibit B-14, and Petitioner's June 13, 2003 submission at 20 through 22 and Exhibit B-27. According to the petitioner, these are the most specific cost data reasonably available. The U.S. producer's figures are reasonable to use to estimate French producers' costs because, according to the petitioner, U.S. and French producers have similar production processes. Petitioner states it was unable to obtain French producers' cost of production data. Petitioner determined French producers' raw materials cost, variable and fixed overhead, SG&A and packing cost based on the costs incurred by the U.S. producer and adjusted for the known differences. See id. Petitioner valued labor costs based on the U.S. producer's production experience adjusted for known differences and French hourly wages in U.S. dollars as posted on the Department's web site.

Based upon a comparison of the price 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 Tariff Act. Accordingly, the Department is initiating a country-wide cost investigation.

Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Tariff Act, the petitioners also based NV for sales in France on constructed value (CV). See Petitioner's June 18 submission. The petitioner calculated CV using the same COM, SG&A and interest expense figures used to compute the COP. Consistent with 773(e)(2) of the Tariff Act, the petitioners included in CV an amount for profit. For profit, the petitioners relied upon amounts reported for the Japanese company Dai Nippon Printing's printing business segment for the year ending March 2002. Petitioner states it was unable to obtain specific and detailed financial data for Armor, the French TTR company and believes it reasonable to use the rate for Dai Nippon Printing as a surrogate for a French TTR company. However, we do not believe the Dai Nippon Printing profit rate is a reasonable surrogate for profit on the sales in the ordinary course of trade in France for purposes of this initiation. For initiation purposes, we have recalculated CV without regard to profit, as we have no acceptable surrogate profit rate on the record. Should the need arise to use the profit rate suggested by the petitioners as facts available under section 776 of the Tariff Act in our preliminary or final determination, we may reexamine the information developed on the French TTR industry and, if appropriate, revise the margin calculations.

The estimated dumping margin for subject merchandise from France, based on comparisons of CEP and NV, range between 16.5 and 60.6 percent. The estimated margin for France based on a comparison of CEP to CV is 57.7 percent.

Japan

Constructed Export Price

To calculate CEP petitioner obtained pricing information for certain wax and wax/resin products sold to unaffiliated parties in the United States, and comparable to the products sold in the home market. Petitioner made certain adjustments to this selling price for specific expenses that would be incurred by foreign producers of the subject merchandise for sales made in the United States. Because petitioner was unable to obtain actual data for selling expenses incurred by respondents in the United States, petitioner obtained price quotes as a basis for its estimation of certain expenses, and, where appropriate, also based its estimates for such expenses on actual figures incurred in the course of its own selling activities. Petitioner indicates this approach is a reasonable and appropriate way to calculate CEP because the selling process for thermal transfer ribbon is uniform within the United States, and the selling activities performed by respondents' U.S. affiliates for their U.S. customers are largely the same as those performed by petitioner for its customers in the United States. See Petition at 49. Where known differences between petitioner's and respondents' operations exist, petitioner adjusted selling expenses accordingly to account for such differences.

Petitioner adjusted the U.S. prices for ocean freight, marine insurance, U.S. duties, packaging expenses, indirect selling expenses incurred by a Start Printed Page 38308respondent's U.S. affiliate, inventory carrying costs in transit, and a figure for CEP profit. See Petition at 50 through 55, and Exhibit B-14. Where possible, these expenses were based upon petitioner's actual experience; where petitioner lacked such data, petitioner made reasonable estimates as described above. Petitioner based CEP profit upon the experience of Dai Nippon Printing, a Japanese TTR producer.

With respect to selling expenses incurred in Japan, petitioner indicates there is no basis to believe that such expenses would differ for thermal transfer ribbon destined for the United States versus merchandise sold in the home market. Therefore, petitioner claims it is reasonable to consider such expenses to be equal for sales to the United States and in the home market. We have accepted this methodology for purposes of this initiation.

Normal Value

In calculating NV, the petitioner relied upon data provided by foreign market researchers on home market prices of wax and wax resin TTR products. See Petition at Exhibit B-10. This sales information is contemporaneous with the pricing information used as the basis for CEP and represents products which are either identical or similar to those sold in the United States. No other adjustments were made to NV, because additional information on home market adjustments was not reasonably available to petitioner.

The estimated dumping margin for subject merchandise from Japan, based on comparisons of CEP and NV, range between 65.9 and 147.3 percent.

South Korea

Constructed Export Price

To calculate CEP petitioner obtained pricing information relating to sales of certain wax products sold to unaffiliated parties in the United States, and comparable to the product sold in the home market. Petitioner made certain adjustments to these selling prices for specific expenses that would be incurred by foreign producers of the subject merchandise for sales made in the United States. Because petitioner was unable to obtain actual data for selling expenses incurred by respondents in the United States, petitioner obtained price quotes as a basis for its estimation of certain expenses, and, where appropriate, also based its estimates for such expenses on actual figures incurred in the course of its own selling activities. Petitioner indicates this approach is a reasonable and appropriate way to calculate CEP because the selling process for thermal transfer ribbon is uniform within the United States, and the selling activities performed by respondents' U.S. affiliates for their U.S. customers are largely the same as those performed by petitioner for its customers in the United States. See Petition at 49. Where known differences between petitioner's and respondents' operations exist, petitioner adjusted selling expenses accordingly to account for such differences.

Petitioner adjusted the U.S. prices for ocean freight, marine insurance, U.S. duties, packaging expenses, indirect selling expenses incurred by the respondents' U.S. affiliates, inventory carrying costs in transit, and a figure for CEP profit. Where possible, these expenses were based upon petitioner's actual experience; where petitioner lacked such data, petitioner made reasonable estimates as described above. CEP profit for the respondent was based upon the experience of Dai Nippon Printing, a Japanese TTR producer. Petitioner explained this was a reasonable surrogate figure because no sector-specific profit data are available for the South Korean TTR industry. With respect to selling expenses incurred in South Korea, petitioner indicates there is no basis to believe that such expenses would differ for thermal transfer ribbon destined for the United States versus merchandise sold in the home market. Therefore, petitioner claims it is reasonable to consider such expenses to be equal for sales to the United States and in the home market. We have accepted this methodology for purposes of this initiation.

Normal Value

With respect to NV, the petitioner relied upon foreign market research to obtain information relating to home market prices for a grade of TTR that is almost identical to the grade for which petitioners obtained U.S. pricing data. Petitioners made no deductions from the home market selling price because estimates of home market expenses were not reasonably available to petitioner. See Petition at 50. Thus, petitioners made no deductions for expenses incurred in Korea in its calculations of either net U.S. price or net home market price.

The estimated dumping margin for subject merchandise from South Korea, based on comparisons of CEP and NV, range between 56.6 and 59.9 percent.

Fair Value Comparisons

Based on the data provided by petitioner, there is reason to believe imports of TTR from France, Japan and South Korea are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

With respect to France, Japan and South Korea, petitioner alleges the U.S. industry producing the domestic like product is being materially injured, or threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise sold at less than NV.

Petitioner contends the industry's injured condition is evident in examining net operating income, profit, net sales volumes, production employment, as well as inventory levels, and reduced capacity utilization. See Petition at 84 et seq. Petitioner asserts its share of the market has declined from 2000 to 2002. Finally, petitioner notes one TTR manufacturer went out of business altogether in 2001, while another closed one of its coating facilities. For a full discussion of the allegations and evidence of material injury, see the Initiation Checklist at Appendix II.

Initiation of Antidumping Investigations

Based on our examination of the Petition covering TTR, we find it meets the requirements of section 732 of the Tariff Act. Therefore, we are initiating antidumping duty investigations to determine whether imports of TTR from France, Japan and South Korea are being, or are likely to be, sold in the United States at less than fair value. Unless this deadline is extended pursuant to section 733(b)(1)(A) of the Tariff Act, we will make our preliminary determinations 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 Tariff Act, a copy of the public version of the Petition has been provided to representatives of the governments of France, Japan and South Korea. We will attempt to provide a copy of the public version of the Petition to each exporter named in the Petition, as provided in section 19 CFR 351.203(c)(2).

Commission Notification

The International Trade Commission will preliminarily determine no later than July 14, 2003, whether there is reasonable indication that imports of TTR from France, Japan and South Korea are causing, or threatening, material injury to a U.S. industry. A Start Printed Page 38309negative Commission 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 Tariff Act.

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Dated: June 19, 2003.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

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[FR Doc. 03-16341 Filed 6-26-03; 8:45 am]

BILLING CODE 3510-DS-S