[Federal Register Volume 60, Number 144 (Thursday, July 27, 1995)]
[Notices]
[Pages 38546-38549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18399]



-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE
[A-428-821, A-588-837]


Initiation of Antidumping Duty Investigations: Large Newspaper 
Printing Presses and Components Thereof, Whether Assembled or 
Unassembled, From Germany and Japan

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: July 27, 1995.

FOR FURTHER INFORMATION CONTACT: Bill Crow or James Maeder, Office of 
Antidumping Investigations, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-0116 
and 482-3330, respectively.

Initiation of Investigations

The Applicable Statute

    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).

The Petitions

    On June 30, 1995, we received petitions filed in proper form by 
Rockwell Graphic Systems, Inc. and its parent company, Rockwell 
International Corporation (the petitioner). Supplements to the 
petitions were received on July 17 and 19, 1995. In accordance with 
section 732(b) of the Act, the petitioner alleges that large newspaper 
printing presses from Germany and Japan are being, or are likely to be, 
sold in the United States at less than fair value (LTFV) within the 
meaning of section 731 of the Act, and that these imports are 
materially injuring, or threaten material injury to, a U.S. industry.
    The petitioner has stated that it has standing to file these 
petitions because it is an interested party, as defined under section 
771(9)(C) of the Act. The petitioner also states that it has filed the 
petitions on behalf of the U.S. industry producing the product that is 
subject to this investigation. 

[[Page 38547]]


Determination of Industry Support for the Petitioner

    Section 732(c)(4)(A) of the Act requires the Department to 
determine, prior to the initiation of an investigation, that a minimum 
percentage of the domestic industry supports an antidumping petition. A 
petition meets these minimum requirements if (1) the domestic producers 
or workers who support the petition account for at least 25 percent of 
the total production of the domestic like product; and (2) the domestic 
producers or workers 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. For purposes of our analyses, we accept the definition of the 
domestic like product as defined in the petitions.
    A review of the production data provided in the petitions indicates 
that the petitioner accounts for more than 25 percent of the total 
production of the domestic like product and for more than 50 percent of 
that produced by companies expressing support for, or opposition to, 
the petitions. The Department received no expressions of opposition to 
the petitions by domestic producers of the domestic like product. 
However, on July 17, 1995, Mitsubishi Heavy Industries, Ltd. (MHI) 
submitted on the Japanese record a challenge to the petitioner's claim 
that the petition was filed on behalf of the domestic industry with 
respect to newspaper press components, alleging that petitioner lacks 
standing because it does not produce all components (e.g., folders), 
subcomponents and parts (e.g., reel stands, paper guides, screws, etc.) 
of the subject merchandise. Also, on July 18, 1995, MAN Roland, Inc. 
(MAN Roland) submitted in connection with the German petition a 
challenge to the petitioner's claim that the petition was filed on 
behalf of the domestic industry with respect to newspaper press 
components.
    The petitioner filed a response to both challenges on July 19, 
1995. In addition, in an ex-parte meeting with Department officials, 
the petitioner clarified certain elements of the scope language 
submitted in the original petitions. With respect to the arguments 
concerning parts manufacturing, we have found MHI's and MAN Roland's 
challenges to be unsubstantiated. Rockwell is a producer of all five of 
the named newspaper press components designated as within the scope of 
these investigations as it attested to in its July 19 affidavit.
    With respect to the argument that the petitioner does not produce 
subcomponents and parts, we note that the subject merchandise defined 
in the scope section of this notice clarifies that the domestic like 
product identified in the petition is limited to large newspaper 
printing press systems, press additions, and the five named major press 
system components. The subcomponents and parts identified by MHI are 
not included in the definition of the domestic like product accepted by 
the Department. As such, there is no issue with respect to domestic 
producers of printing press subcomponents or parts.
    MAN Roland also argued that the petitioner does not manufacture 
presses using flexographic printing technology and, therefore, has not 
presented evidence of sufficient industry support. Based on the 
petitioner's attestation, MAN Roland is incorrect. The petitioner has 
produced and sold, and remains capable of producing and selling, large 
newspaper printing presses using flexographic printing technology, as 
discussed in its July 19 and 20, 1995, submissions.
    Therefore, the Department determines that both the German and the 
Japanese petitions are filed on behalf of the domestic producers of 
large newspaper printing presses, and the five named components 
designated in the petitions.

Scope of Investigations

    The products covered by these investigations are large newspaper 
printing presses, including press systems, press additions and press 
components, whether assembled or unassembled, that are capable of 
printing or otherwise manipulating a roll of paper more than two pages 
across. A page is defined as a newspaper broadsheet page in which the 
lines of type are printed perpendicular to the running of the direction 
of the paper or a newspaper tabloid page with lines of type parallel to 
the running of the direction of the paper.
    In addition to complete systems, the scope of these investigations 
includes the five press system components. They are:
    (1) A printing unit, which is any component that prints in 
monocolor, spot color and/or process (full) color, or a printing-unit 
cylinder;
    (2) A reel tension paster (RTP), which is any component that feeds 
a roll of paper more than two newspaper broadsheet pages in width into 
a subject printing unit;
    (3) A folder, which is a module or combination of modules capable 
of cutting, folding, and/or delivering the paper from a roll or rolls 
of newspaper broadsheet paper more than two pages in width into a 
newspaper format;
    (4) Conveyance and access apparatus capable of manipulating a roll 
of paper more than two newspaper broadsheet pages across through the 
production process and which provides structural support and access; 
and
    (5) A computerized control system, which is any computer equipment 
and/or software designed specifically to control, monitor, adjust, and 
coordinate the functions and operations of large newspaper printing 
presses or press components.
    A press addition is comprised of a union of one or more of the 
press components defined above and the equipment necessary to integrate 
such components into an existing press system.
    Because of their size, large newspaper printing press systems, 
press additions, and press components are typically shipped either 
partially assembled or unassembled. Any of the five components, or 
collection of components, the use of which is to fulfill a contract for 
large newspaper printing press systems, press additions, or press 
components, regardless of degree of disassembly and/or degree of 
combination with non-subject elements before or after importation, is 
included in the scope of this investigation. This scope does not cover 
spare or replacement parts. Further, these investigations cover all 
current and future printing technologies capable of printing 
newspapers, including, but not limited to lithographic (offset or 
direct), flexographic, and letterpress systems.
    The products covered by these investigations are imported into the 
United States under subheadings 8443.11.10, 8443.11.50, 8443.30.00, 
8443.60.00, and 8443.90.50 of the HTSUS. Large newspaper printing 
presses may also enter under HTSUS subheadings 8443.21.00 and 
8443.40.00. Large newspaper printing press computerized control systems 
may enter under HTSUS subheadings 8471.91.00, 8524.21.00, 8524.90.00, 
and 8537.10.00. Although the HTSUS subheadings are provided for 
convenience and customs purposes, our written description of the scope 
of these investigations is dispositive.

Export Price and Normal Value

Germany
    The petitioner based gross export price on detailed pricing 
information on a sale to a customer in the United States obtained by 
the bidding process for newspaper press sales. The petitioner 

[[Page 38548]]
deducted from a delivered price a certain proprietary allowance, 
installation costs, training expenses, and movement charges, including 
foreign inland freight, foreign port and loading charges, ocean 
freight, marine insurance, U.S. wharfage expenses, U.S. port and 
loading costs, U.S. duty, and U.S. inland freight expenses.
    According to the petitioner, the German home market is viable. 
However, contending that large newspaper printing presses sold in 
Germany differ substantially from those sold in the United States, the 
petitioner was unable to provide information for sales of identical or 
similar large newspaper printing presses sold in both markets. 
Accordingly, the petitioner based normal value on constructed value 
(CV).
    CV includes the cost of manufacturing (COM), selling, general and 
administrative expenses (SGA), interest expense, U.S. packing and 
profit. For COM, the petitioner estimated overhead production factors 
and material requirements based on its own bid proposal cost of 
production model for the U.S. sale used in its allegation. The 
petitioner valued labor and overhead (excluding depreciation) using 
publicly available data for Germany. Where German market specific costs 
were unavailable, the petitioner relied on its own experience. Major 
component parts were valued using price quotes received from a German 
supplier where available. Because petitioner was unable to obtain 
German prices for the remaining material parts, it relied on its own 
experience as a reasonable surrogate. Therefore, the petitioner used 
Rockwell Graphic Systems' actual price paid to a U.S. supplier to value 
all the remaining material parts.
    As part of COM, the petitioner included an amount for depreciation 
expense computed from MAN Roland's 1994 financial statements. As noted 
above, however, the petitioner based the materials costs on supplier 
price quotes which would reasonably recover the suppliers' costs, 
including costs relating to manufacturing depreciation. Since MAN 
Roland produces its own component parts, a significant amount of the 
depreciation expense reflected in its financial statements relates to 
machinery and equipment used to manufacture these component parts. 
Therefore, we believe the COM in the petition double counts 
depreciation expense for component parts. We could not identify the 
amount of depreciation expense directly related to manufacturing the 
component parts. In order to avoid overstating costs, we excluded all 
reported depreciation expense from the CV calculation.
    Although petitioner had obtained a copy of MAN Roland's 1994 
financial statements, it was unable to use the information presented to 
compute SGA expense for CV due to the format of the company's income 
statement. Moreover, the petitioner was unable to obtain from other 
sources the German market SGA data for the printing machinery and 
equipment industry, and documented its unsuccessful attempts to collect 
this information. As an alternative source for SGA expense, the 
petitioner calculated an SGA rate specific to large newspaper printing 
presses based on its own experience. The Department normally relies on 
home market specific information where reasonably available. In this 
instance, however, having made a reasonable effort to collect this 
data, the petitioner was unable to do so. We therefore have relied on 
the petitioner's own SGA information for CV.
    The petitioner calculated interest expense based on MAN Roland's 
1994 unconsolidated financial statements rather than using the 1994 MAN 
consolidated financial statements. The Department normally computes 
interest expense on a consolidated basis. MAN's 1994 consolidated 
financial statements indicate that short-term interest income exceeded 
interest expense. Therefore, we included no interest expense in CV. For 
U.S. packing, the petitioner calculated MAN Roland's cost based on its 
own experience.
    The petitioner contends that MAN Roland's lack of profit, as 
reported in its audited financial statements, does not constitute a 
reasonable profit under the statute. Thus, the petitioner calculated 
profit based on the financial results for six other MAN companies which 
manufactured marine engines, automotive parts, space systems, and heavy 
industrial equipment. Section 773(e)(2) of the Act provides that CV 
include a reasonable amount for profit earned by the exporter or 
producer of the merchandise under investigation. The Department 
therefore recalculated CV using a profit figure of zero based on the 
results shown in MAN Roland's 1994 financial statements.
    Based on the Department's modifications to the petitioner's 
methodology, the estimated dumping margin is 46.40 percent.
Japan
    The petitioner based gross export price on detailed pricing 
information on two sales to customers in the United States obtained by 
the bidding process for newspaper press sales. The petitioner deducted 
from delivered prices installations costs, training expenses and 
movement charges including foreign inland freight, foreign port and 
loading charges, ocean freight, marine insurance, U.S. duty, U.S. 
wharfage charges, U.S. port and unloading fees and U.S. inland freight. 
For one sale, the petitioner deducted the cost of a certain proprietary 
allowance; from the second sale, the petitioner deducted the expenses 
incurred for advance press and support services.
    According to the petitioner, the Japanese home market is viable. 
However, contending that large newspaper printing presses sold in Japan 
differ substantially from those sold in the United States, the 
petitioner was unable to provide information for sales of identical or 
similar large newspaper printing presses sold in both markets. 
Accordingly, the petitioner based normal value on CV.
    CV includes the COM, SGA, interest expense, U.S. packing, and 
profit. For COM, the petitioner estimated material requirements and 
overhead costs for the two reported Japanese sales based on its own bid 
proposal cost of production model and adjusted for known differences 
between costs incurred in producing the large newspaper printing 
presses in the United States and the production costs incurred for the 
merchandise in Japan.
    For one sale, the petitioner used SGA expenses from its own U.S. 
Graphic Systems division expense because the CV was based primarily on 
U.S. production costs. For the other sale, the petitioner used the SGA 
expenses incurred by its Japanese subsidiary because the CV was based 
primarily on the subsidiary's costs. The Department prefers to 
calculate SGA using home market and industry specific information where 
reasonably available. Therefore, we used the SGA expenses from 
petitioner's Japanese subsidiary for both Japanese sales because this 
represented costs specific to the newspaper press industry in Japan.
    The petitioner calculated interest expense and profit for both 
Japanese sales based on Mitsubishi Heavy Industries' 1993 and 1994 
consolidated financial statements, respectively. Packing costs were 
based on its own U.S. Graphic Systems division's experience.
    Based on the Department's modifications to the petitioner's 
methodology, the estimated dumping margins range from 78.22 to 179.55 
percent.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that 

[[Page 38549]]
imports of large newspaper printing presses are being, or are likely to 
be, sold at less than fair value. If it becomes necessary at a later 
date to consider these petitions as a source of facts available under 
section 776 of the Act, we may review further the calculations.

Initiation of Investigations

    We have examined the petitions on large newspaper printing presses 
from Germany and Japan and have found that they meet the requirements 
of section 732 of the Act, including the requirements concerning 
allegations of the material injury or threat of material injury to the 
domestic producers of a domestic like product by reason of the 
complained-of imports, allegedly sold at less than fair value. 
Therefore, pursuant to section 732(c)(2) of the Act, we are initiating 
antidumping duty investigations to determine whether imports of large 
newspaper printing presses from Germany and Japan are being, or are 
likely to be, sold in the United States at less than fair value. Unless 
extended, we will make our preliminary determinations by December 7, 
1995.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, copies of the 
public versions of the petitions have been provided to the 
representatives of the governments of Germany and Japan. We will 
attempt to provide copies of the public versions of the petitions to 
all the exporters named in the petitions.

International Trade Commission (ITC) 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 by August 14, 1995, whether there is a 
reasonable indication that imports of large newspaper printing presses 
from Germany and Japan are materially injuring, or threaten material 
injury to, a U.S. industry. A negative ITC determination in either 
investigation will result in that investigation being terminated; 
otherwise, the investigations will proceed according to statutory and 
regulatory time limits.

    Dated: July 20, 1995.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 95-18399 Filed 7-26-95; 8:45 am]
BILLING CODE 3510-DS-P