[Federal Register Volume 59, Number 164 (Thursday, August 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20931]


[[Page Unknown]]

[Federal Register: August 25, 1994]


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INTERNATIONAL TRADE COMMISSION
 

Iron Construction Castings From Canada; Dismissal of Request for 
Institution of A Section 751(b) Review Investigation

AGENCY: International Trade Commission.

ACTION: Dismissal of a request to institute a section 751(b) review 
investigation concerning the Commission's affirmative determination in 
investigation No. 731-TA-263 (Final), Iron Construction Castings from 
Canada.

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SUMMARY: On August 8, 1994, the Commission determined, pursuant to 
section 751(b) of the Tariff Act of 1930 (the ``Act'')(19 U.S.C. 
1675(b)) and Commission rule 207.45 (19 CFR 207.45), that the subject 
request does not show changed circumstances sufficient to warrant 
institution of an investigation to review the Commission's affirmative 
determination in investigation No. 731-TA-263 (Final), regarding iron 
construction castings from Canada. Iron construction castings are 
provided for in subheading 7325.10.00 of the Harmonized Tariff Schedule 
of the United States.

FOR FURTHER INFORMATION CONTACT: Vera Libeau (202-205-3176), Office of 
Investigations, U.S. International Trade Commission, 500 E Street SW, 
Washington, DC 20436. Hearing-impaired persons can obtain information 
on this matter by contacting the Commission's TDD terminal on 202-205-
1810. Persons with mobility impairments who will need special 
assistance in gaining access to the Commission should contact the 
Office of the Secretary at 202-205-2000. Information can also be 
obtained by calling the Office of Investigations' remote bulletin board 
system for personal computers at 202-205-1895 (N,8,1).

BACKGROUND INFORMATION: On March 5, 1986, the Commission issued an 
affirmative injury determination with respect to investigation No. 731-
TA-263 (Final), Iron Construction Castings from Canada, 51 F.R. 7646 
(March 5, 1986), following the U.S. Department of Commerce's final 
determination that imports of the subject merchandise were being sold 
at less than fair value (LTFV). 51 FR 2412 (Jan. 16, 1986). The 
Commission's determination was based on a cumulative assessment of 
subject imports from Canada with subject imports from Brazil, the 
People's Republic of China (China), and India, which Commerce also 
determined were being sold at LTFV. 51 FR 9477 (March 19, 1986). 
Commerce issued antidumping orders covering subject imports from all 
four countries.
    On May 20, 1994, the Commission received a petition, filed pursuant 
to section 751(b) of the Act, to review its final injury determination 
with respect to Canada in light of changed circumstances. The petition 
was filed by counsel on behalf of Associated Foundry, Ltd.; Laperle 
Foundry Division of Fonderies Bibby-Ste-Croix; Fonderies Bibby-Ste-
Croix, Inc.; and Titan Foundry, Ltd.--producers of the subject products 
in Canada. The alleged changed circumstances include: (1) an exclusion 
of foreign producers from an estimated 60-75 percent of the U.S. market 
due to a 1991 extension of Buy America provisions to iron products used 
in highway construction; (2) an exclusion of foreign producers from an 
additional 2 percent of the market due to a 1992 extension of Buy 
America provisions to iron products used in airport and airway 
construction; and (3) an effective exclusion of foreign producers from 
an estimated 12 percent of the market for heavy iron castings due to 
Customs' 1986 enforcement of a 1984 statutory requirement governing the 
marking of manhole covers with regard to country of origin.
    Pursuant to section 207.45(b)(2) of the Commission's Rules of 
Practice and Procedure (19 CFR 207.45(b)(2)), the Commission published 
a notice in the Federal Register requesting comments as to whether the 
alleged changed circumstances warranted the institution of a review 
investigation. 59 FR 29619 (June 8, 1994). Because the alleged changed 
circumstances related to the U.S. market and were not unique to 
Canadian imports, the Commission also sought comment on whether it 
should self-initiate a review regarding imports of iron construction 
castings from Brazil, India, and China. Comments were received both in 
opposition to and in favor of the petition. Summarizing the impact of 
the alleged changed circumstances in a supplemental comment to their 
petition, the petitioners estimated that only 18-38 percent of the 
total U.S. castings market is open to Canadian (and presumably other) 
import competition. Petitioners' Comments at 8. The petitioners 
maintain that with such a substantial portion of the United States 
market ``closed'' to Canadian producers, domestic producers are 
effectively protected from injury and would continue to be protected if 
the order for Canada were to be revoked. Id. at 9-10. Counsel on behalf 
of the Castings Panel of the Engineering Export Promotion Council of 
India and the exporters of castings from India urge the Commission to 
review not only its determination with respect to Canada but also its 
determination with respect to India; however, they offer no arguments 
for changed circumstances other than those of the petitioners. Indian 
Parties' Comments at 2-3.
    In opposition to the petition, comments were filed by counsel on 
behalf of the U.S. producers of the subject merchandise. The U.S. 
producers take issue with the petitioners regarding (1) the size of the 
market affected by these two Buy America provisions, claiming that 
there is no evidence of widespread implementation of these provisions 
at either the State or local level and that the share of the market so 
affected is on the order of 17 percent, rather than 62-82 percent; and 
(2) the enforcement of country-of-origin marking requirements, claiming 
that these were being fully enforced at least one year prior to 1986, 
the year Commerce's antidumping-duty order went into effect. U.S. 
Parties' Comments at 9-18. The domestic producers argue that section 
751(b) and applicable Commission precedent preclude a review because 
the changed circumstances alleged by the Canadian producers are 
premised on inaccurate or incomplete factual assertions, exaggerated 
estimates of the effect of Buy America restrictions, and speculation 
regarding future action by states and municipalities. Id. at 18-21.
    After consideration of the request and the comments submitted in 
response to the Commission's Federal Register notice, the Commission 
determines that the information of record does not show changed 
circumstances sufficient to warrant institution of an investigation to 
review the Commission's affirmative determination in Iron Construction 
Castings from Canada, Inv. No. 731-TA-263 (Final), USITC Pub. 1811 
(Feb. 1986) or its determination in Iron Construction Castings from 
Brazil, India, and the People's Republic of China, Inv. Nos. 701-TA-
249; 731-TA-262, 264-265 (Final), USITC Pub. 1838 (April 1986).

DECISION OF THE COMMISSION: Section 751(b)(1) of the Act grants to the 
Commission the authority to conduct an investigation to determine 
whether to revoke or modify an outstanding antidumping order. The 
Commission is required to conduct a review of a prior affirmative 
injury determination whenever it receives a request for such a review 
that shows ``changed circumstances sufficient to warrant a review.'' 
Congress, however, set forth ``very strict controls'' on the exercise 
of that authority, demonstrating that it did not want prior Commission 
injury determinations ``to remain in a state of flux.'' Royal Business 
Machines, Inc. v. United States, 507 F. Supp. 1007, 1014 n. 18 (Ct. 
Int'l Trade 1980), aff'd, 669 F.2d 692 (CCPA 1982). The statutory 
requirements for instituting Section 751 reviews clearly demonstrate 
the intent of Congress that the ``underlying finding of injury . . . is 
entitled to deference and should not be disturbed lightly.'' Avesta AB 
v. United States, 689 F. Supp. 1173, 1180 (Ct. Int'l Trade 1988) 
(Avesta I); see also Matsushita Elec. Indus. Co., Ltd. v. United 
States, 750 F.2d 927, 932 (Fed. Cir. 1984). In order for a review 
investigation to be instituted, the information available to the 
Commission, after notice and comment from all interested parties, must 
be sufficient to persuade the Commission: (1) That there have been 
significant changed circumstances from those in existence at the time 
of the original investigation, (2) that those changed circumstances are 
not the natural and direct result of the imposition of the antidumping 
or countervailing duty order, and (3) that the changed circumstances 
indicate that the domestic industry would not be materially injured 
should the order be revoked thereby warranting a full investigation. 
See A. Hirsh, Inc. v. United States, 737 F. Supp. 1186 (CIT 1990)(Hirsh 
II); Avesta AB v. United States, 724 F. Supp. 974 (CIT 1989), aff'd 914 
F.2d 232 (Fed. Cir. 1990), cert. denied, 111 S. Ct. 1308 (1991)(Avesta 
II). Once instituted, the petitioner must persuade the Commission, 
after a full investigation and hearing, that the domestic industry 
would not be injured or threatened with injury if the order were 
revoked. See Citizen Watch Co. v. United States, 733 F. Supp. 383 (CIT 
1990).
    The CIT has observed that ``Congress carefully limited the 
availability of Sec. 1675(b) investigations'' and that ``the party 
seeking review bears the initial burden of showing the existence of 
changed circumstances sufficient to warrant a review.'' Avesta I, 689 
F. Supp. at 1180, 1181; Avesta II, 724 F. Supp. at 978; A. Hirsh, Inc. 
v. United States, 729 F. Supp. 1360 (Ct. Int'l Trade 1990) (Hirsh I), 
aff'd following remand, 737 F. Supp. 1186 (Ct. Int'l Trade 1990) (Hirsh 
II). This burden is placed upon the party seeking review because the 
review investigation does not begin with a clean slate as though it 
were an original investigation. Matsushita, 750 F.2d at 932. Although a 
petition for institution of a review need not ``prove'' that changed 
circumstances exist such that injury would not recur upon revocation, 
it must nevertheless contain credible evidence which, if uncontroverted 
by other evidence, would persuade the Commission that a full review is 
warranted. Avesta I, 689 F. Supp. at 1181.
    In determining whether a full review is warranted, the Commission 
is permitted to weigh the evidence presented to it. The Commission 
analyzes the specific facts alleged in the petition and fully evaluates 
all the evidence submitted in support of, and in opposition to, the 
petition. Full reviews will not be instituted based upon mere 
allegations in a petition, allegations that are clearly contradicted by 
evidence submitted by others in response to the Commission's notice, or 
allegations that are contradicted or undermined by a petitioner's own 
data. Thus, the Commission decides whether to initiate a review, not 
based solely on the allegations contained in a petition, but also upon 
a critical evaluation of the entire record. Avesta I, 689 F. Supp. at 
1181.
    In this case, the request alleged three changed circumstances 
warranting review: (1) Changes in enforcement of country of origin 
marking requirements for manhole covers; (2) the extension of Buy 
America restrictions to procurement of iron construction castings in 
airport construction; and (3) the extension of Buy America restrictions 
to procurement of iron construction castings in all highway 
construction that receives federal financing. The information available 
on the record does not persuade us that a full investigation is 
warranted for any of the three allegations.
    The changes in country of origin marking requirements for manhole 
covers significantly predate the Commission's original determination. 
The statutory change occurred in 1984, and there is documented evidence 
of its enforcement by Customs prior to 1986. Because those requirements 
were in effect prior to the Commission's injury determination, they are 
not ``changed'' circumstances. The two separate extensions of Buy 
America restrictions, however, occurred after the Commission's 
determination and do constitute ``changed circumstances'' that are not 
the natural and direct consequence of the imposition of the order. With 
respect to the extension of Buy America restrictions to airport 
construction, the Canadian industry admits that the change only affects 
2 percent of total U.S. consumption. In the context of this market and 
the relative shares of the market reflected in the original record, 
such a marginal impact alone is not a changed circumstance sufficient 
to warrant review.
    The third ``changed circumstance'' concerns a 1991 amendment to the 
Buy America provisions (Section 165(a)) of the Surface Transportation 
Assistance Act of 1982. Section 1048 of the Intermodal Surface 
Transportation Efficiency Act of 1991 extended those Buy America 
restrictions to iron. Amended section 165(a) reads as follows:

    Notwithstanding any other provision of law, the Secretary of 
Transportation shall not obligate any funds authorized to be 
appropriated by the Act * * * unless steel, iron, cement, and 
manufactured products used in such project are produced in the 
United States.

23 U.S.C. 101 note (emphasis added). The Canadian producers insist that 
this amendment has effectively precluded them from competing with the 
domestic industry in 60-75 percent of the U.S. market.
    In this case, because ``the vast bulk of construction castings are 
ultimately purchased and used by utilities, municipalities, and other 
such entities for civil construction purposes,'' government contracts 
comprise a substantial portion of total sales. Iron Construction 
Castings from Canada, USITC Pub. 1811 at A-9. It is not at all clear, 
however, what percentage of the total market is covered by Buy America 
restrictions and how the extension of Buy America restrictions has 
affected the U.S. market generally, or any segment of the market in 
particular.
    The only available objective evidence of the impact of the Buy 
America restrictions on U.S. sales of Canadian castings--import 
trends--suggests that the restrictions have not had a significant 
impact on such sales. If the extension of Buy America restrictions had 
a significant impact on the ability of Canadian producers to compete in 
the U.S. market, then one would expect to see a decline in imports from 
Canada, and from all other sources as well, shortly after the 
extensions took effect. Data supplied by the Canadian producers 
regarding import trends, however, indicate that, after the extension of 
the Buy America restrictions, imports did not decline significantly. In 
1986, when the order was first imposed, imports of iron construction 
castings from Canada reached 21,377 short tons. While imports declined 
subsequently, the significant decline in imports predates the extension 
of Buy America restrictions in 1991. Imports declined from 18,312 short 
tons in 1989 to 11,996 short tons in 1990. In 1991, such imports 
declined slightly to 10,233 short tons. Although imports dropped 
further to 8,312 short tons in 1992, data available for the first three 
quarters of 1993 indicate that imports from Canada already exceeded 
1992 full-year levels and were likely to exceed 12,000 short tons by 
the end of the year. See Petition at Appendix 22. Declines in imports 
followed by larger increases in recent periods do not support the claim 
that the 1991 amendments have significantly affected the ability of 
Canadian producers to compete in the U.S. market.
    To support their assertion of the size of the Buy America market, 
the Canadian producers submitted only a conclusory and unsubstantiated 
declaration by a member of the Canadian Foundry Association. No 
methodology was identified and no source was cited for the estimates. 
Further, the Canadian producers acknowledge that their estimates are 
based on favorable assumptions regarding future actions by state and 
local authorities in extending their own Buy America restrictions to 
cover iron construction castings. They argue that such actions, while 
not mandatory, ``are reasonable to expect.'' We find persuasive the 
domestic producers' objection that such expectations of future state 
and local administrative actions do not constitute changed 
circumstances. See Avesta I, 689 F. Supp. at 1185 (``A future intention 
does not show changed circumstances in the present.'').
    Moreover, the Canadian producers did not provide any evidence 
regarding their shipments to particular U.S. market segments and the 
effect of the extension of Buy America restrictions, if any, on 
shipments to each of those market segments. In sum, we believe that the 
Canadian estimates of the Buy America market are overstated.
    Although Buy America restrictions have been expanded as the result 
of federal legislation, it is not clear how broad they are and how much 
of the iron construction casting market is now affected by them. 
Although the Canadian producers have arguably raised an issue of fact 
that may have merit, if true, they have not provided sufficient 
evidence to persuade us that the petition shows changed circumstances 
warranting review. While the petitioner need not prove its case at the 
institution stage, the petition, as filed, must contain more than the 
conclusory allegations submitted in this case. Because neither 
probative supporting evidence, an explanation of methodology, nor any 
concrete indication of the significance of the extension of Buy America 
restrictions has been provided, there is insufficient evidence to 
warrant a full investigation. Absent such evidence, we determine that 
it is inappropriate to institute a review. Accordingly, the request for 
a review is denied. Finally, in the absence of a review of the Canadian 
order, a self-initiated review of the order covering iron construction 
castings from Brazil, India, and China is inappropriate.

    By order of the Commission.

    Issued: August 17, 1994.
Donna R. Koehnke,
Secretary.
[FR Doc. 94-20931 Filed 8-24-94; 8:45 am]
BILLING CODE 7020-02-P