[Federal Register Volume 61, Number 108 (Tuesday, June 4, 1996)]
[Notices]
[Pages 28163-28166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13966]



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

[[Page 28164]]


DEPARTMENT OF COMMERCE
[A-588-840]


Initiation of Antidumping Duty Investigation: Engineered Process 
Gas Turbo-Compressor Systems, Whether Assembled or Unassembled, and 
Whether Complete or Incomplete, From Japan

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

EFFECTIVE DATE: June 4, 1996.

FOR FURTHER INFORMATION CONTACT: Irene Darzenta at (202) 482-6320 or 
Katherine Johnson at (202) 482-4929, Office of Antidumping 
Investigations, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

Initiation of Investigation

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 Petition

    On May 8, 1996, the Department of Commerce (``the Department'') 
received a petition filed in proper form by Dresser-Rand Company. On 
May 21, 1996, Dresser Rand Company provided supplemental data regarding 
specific issues relating to scope, industry support, and pricing 
information. On May 23, 1996, the United Steelworkers of America 
(``USW'') entered an appearance as co-petitioners in this 
investigation. The USW represents turbo-compressor systems production 
workers for three domestic producers of the subject merchandise. In 
accordance with section 732(b) of the Act, the petitioners allege that 
imports of engineered process gas turbo-compressor systems, whether 
assembled or unassembled, and whether complete or incomplete (``turbo-
compressor systems'') from Japan 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, 
or threatening material injury to, a U.S. industry.
    Since the petitioners are interested parties as defined under 
section 771(9)(C) of the Act, they have standing to file a petition for 
the imposition of antidumping duties.

Determination of Industry Support for the Petition

    Section 732(c)(4)(A) of the Act requires the Department to 
determine, that a minimum percentage of the domestic industry supports 
an antidumping petition. A petition meets the minimum requirements if 
(1) 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) those domestic producers or workers expressing support 
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.
    On May 24, 1996, Mitsubishi Heavy Industries (``MHI'') submitted a 
letter challenging the industry support for the petition. MHI argued 
that the turbo-compressor systems covered in the petition are comprised 
of numerous products, including steam turbines, lubrication systems, 
and seal systems, as such the petitioners are required to show industry 
support for domestic producers of these products. MHI further argued 
that because the petition contains no data showing industry support for 
these products, e.g., steam turbines, the Department must resort to 
polling of these producers. We have determined that MHI's challenge is 
without merit. The like product covered by this investigation is a 
complete system. The ``products'' identified by MHI are subcomponents 
which are included within the like product of systems only to the 
extent that they are designed and dedicated to a specific system, which 
is typically designed to contract specifications. Thus, for example, 
steam turbines by themselves are not covered by the scope of this 
investigation and as a result a showing of support by the steam turbine 
industry is not required. Rather, only steam turbines included in the 
contract for the initial system designed and dedicated for use in a 
complete system (the like product) are covered. Accordingly, it would 
be inappropriate to consider whether steam turbine producers support a 
petition on turbine-compressor systems.
    A review of the production data provided in the petition and other 
information readily available to the Department indicates that the 
petitioners account for more than 50 percent of the total production of 
the like product. (See Office of Antidumping Investigation's Initiation 
checklist dated May 28, 1996). The Department received no expressions 
of opposition to the petition from any U.S. producers or workers. 
Accordingly, the Department determines that the petition is filed on 
behalf of the domestic industry.

Scope of the Investigation

    The products covered by this investigation are turbo-compressor 
systems (i.e., one or more ``assemblies'' or ``trains'') which are 
comprised of various configurations of process gas compressors, drivers 
(i.e., steam turbines or motor-gear systems designed to drive such 
compressors), and auxiliary control systems and lubrication systems for 
use with such compressors and compressor drivers, whether assembled or 
unassembled. One or more of these turbo-compressor assemblies or 
trains, may be combined. The systems covered are only those used in the 
petrochemical and fertilizer industries, in the production of ethylene, 
propylene, ammonia, urea, or methanol. This petition does not encompass 
turbo-compressor systems incorporating gas turbine drivers, which are 
typically used in pipeline transmission, injection, gas processing, and 
liquid natural gas service.
    Compressors are machines used to increase the pressure of a gas or 
vapor, or mixture of gases and vapors. Compressors are commonly 
classified as reciprocating, rotary, jet, centrifugal, or axial 
(classified by the mechanical means of compressing the fluid), or as 
positive-displacement or dynamic-type (classified by the manner in 
which the mechanical elements act on the fluid to be compressed). 
Subject compressors include only centrifugal compressors engineered for 
process gas compression, e.g., ammonia, urea, methanol, propylene, or 
ethylene service. Unassembled compressors for purposes of this 
investigation consist of (1) either half of the casing (in the case of 
a horizontally split casing) or the casing and end-caps, whether or not 
assembled, and whether or not mounted on a platform; or (2) the rotor, 
whether or not mounted in the casing. Compressors are often 
disassembled into such component parts for shipping.
    Turbines are classified (1) as steam or gas; (2) by mechanical 
arrangement as single-casing, multiple shaft, or tandem-compound (more 
than one casing with a single shaft); (3) by flow direction (axial or 
radial); (4) by steam cycle, whether condensing, non-condensing, 
automatic extraction, or reheat; and (5) by number of exhaust flows of 
a condensing unit. Steam and gas turbines are used in various 
applications. Only steam turbines as dedicated for a turbo-

[[Page 28165]]

compressor system are subject to this investigation.
    An ``unassembled'' steam turbine, for purposes of this 
investigation, includes (1) either half of the turbine casing, whether 
or not mounted on a platform; or (2) the turbine rotor, whether or not 
mounted in the casing. Steam turbines are commonly disassembled into 
major segments for shipping.
    A motor and gear box is used as a compressor driver in lieu of a 
steam turbine. A control system is used to monitor and control the 
operation of a turbo-compressor system. A lubrication system is 
engineered to support a subject compressor and steam turbine (or motor/
gear box).
    A typical turbo-compressor system consists of one or more 
compressors driven by a turbine (or in some cases a motor drive). A 
compressor is usually installed on a base plate and the drive is 
installed on a separate base plate. The turbine (or motor drive) base 
plate will typically also include any governing or safety systems, 
couplings, and a gearbox, if any. The lube and oil seal systems for the 
turbine and compressor(s) are usually mounted on a separate skid.
    This scope covers only constituent parts of turbo-compressor 
systems that are integral to the original start-up and operation of the 
turbo-compressor system, whether shipped individually or in combination 
with other subject merchandise. This scope excludes spare parts that 
are sold separately from a contract for a turbo-compressor system.
    Turbo-compressor systems imported from Japan as an assembly or 
train (i.e., including turbines, compressors, motor and gear boxes, 
control systems and lubrication systems, and auxiliary equipment) may 
be classified under Harmonized Tariff Schedule of the United States 
(``HTSUS'') subheading 8414.80.2015, which provides for centrifugal and 
axial compressors. The U.S. Customs Service may view the combination of 
turbine driver and compressor as ``more than'' a compressor and, as a 
result, classify the combination under HTSUS subheading 8419.60.5000.
    Compressors for use in turbo-compressor systems, if imported 
separately, may also be classified under HTSUS subheading 8414.80.2015. 
Parts for such compressors, including rotors or impellers and housing, 
are classified under HTSUS subheading 8414.90.4045 and 8414.90.4055.
    Steam turbines for use in turbo-compressor systems, if imported 
separately, may be classified under the following HTSUS subheadings: 
8406.81.1020: steam turbines, other than marine turbines, stationary, 
condensing type, of an output exceeding 40MW; 8406.82.1010: Steam 
turbines, other than marine turbines, stationary, condensing type, 
exceeding 7,460 Kw; 8406.82.1020: Steam turbines, other than marine 
turbines, stationary, condensing type, exceeding 7,460 Kw, but not 
exceeding 40 MW; 8406.82.1050: Steam turbines, other than marine 
turbines, stationary, other than condensing type, not exceeding 7,460 
Kw; 8406.82.1070: steam turbines, other than marine turbines, 
stationary, other than condensing type, exceeding 7,460 Kw, but not 
exceeding 40 MW. Parts for such turbines are classified under HTSUS 
subheading 8406.90.2000 through 8406.90.4580.
    Control and other auxiliary systems may be classified under HTSUS 
9032.89.6030, ``automatic regulating or controlling instruments and 
apparatus: complete process control systems.''
    Motor and gear box entries may be classified under HTSUS subheading 
8501.53.4080, 8501.53.6000, 8501.53.8040, or 8501.53.8060. Gear speed 
changers used to match the speed of an electric motor to the shaft 
speed of a driven compressor, would be classified under HTSUS 
subheading 8483.40.5010.
    Lubrication systems may be classified under HTSUS subheading 
8414.90.4075.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
investigation is dispositive.

Scope Comments

    The scope of this investigation includes incomplete and unassembled 
systems. Given that systems may be shipped in different containers, it 
is important to ensure that the subject merchandise, in particular 
components and subassemblies, be readily identifiable to the U.S. 
Customs Service. To ensure that any antidumping order which may result 
is clear and enforceable, we are asking interested parties to submit 
comments to the Department by July 8, 1996. Reply comments will be due 
by July 22, 1996.

Export Price and Normal Value

    The petitioners based export price on a foreign producer's 1995 
contract price for the sale of: (1) A charge gas compressor train, (2) 
a propylene compressor train, and (3) an ethylene compressor sold as an 
entire package. The terms of the contract were based on a delivered 
price with duties paid to the nearest U.S. port. Deductions were made 
to export price for packing, inland freight, ocean freight, and customs 
duties.
    The petitioners submitted three alternatives for determining normal 
value. Of the three alternatives, the Department, for initiation 
purposes, relied on the normal value calculated based on constructed 
value (``CV'') using the U.S. producer's production costs, because the 
other calculations were based on non-contemporaneous prices. Since the 
CV calculation provided an adequate basis for initiation, we did not 
further analyze the remaining two normal value calculations submitted 
by the petitioners.
    CV includes the cost of manufacturing (``COM''), selling, general 
and administrative expenses (``SG&A''), U.S. packing, and profit.
    The petitioners calculated COM based on the U.S. producer's own 
cost data as reflected in a recent bid proposal to produce a turbo-
compressor system for a U.S. sale, adjusted for known differences 
between costs incurred in producing turbo-compressor systems in the 
United States and in Japan. The labor and engineering cost estimates 
were adjusted from one of the U.S. producer's cost models to reflect 
the higher compensation levels existing in Japan compared to those in 
the United States. The Japan/U.S. labor cost inflator used to adjust 
the labor and engineering cost estimates was based on data petitioners 
obtained from reports issued by the U.S. Bureau of Labor Statistics.
    For SG&A and profit, the petitioners relied on the 1995 financial 
statements of a Japanese producer of turbo-compressor systems. We 
recalculated the SG&A and profit rates, revising the figures upward to 
account for an error in the petitioners' calculations. The petitioners 
did not separately report an amount for U.S. packing.
    Based on comparison of export price to the Department's 
recalculation of CV, the estimated dumping margin is 90.05 percent.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of turbo-compressor systems from Japan are being, 
or are likely to be, sold at less than fair value. If it becomes 
necessary at a later date to consider the petition as a source of facts 
available under section 776 of the Act, we may further review the 
calculations.

Initiation of Investigation

    We have examined the petition on turbo-compressor systems and have 
found that it meets the requirements of section 732 of the Act, 
including the requirements concerning allegations of the material 
injury or threat of material

[[Page 28166]]

injury to the domestic producers of a like product by reason of the 
subject imports, allegedly sold at less than fair value. Therefore, we 
are initiating an antidumping duty investigation to determine whether 
imports of turbo-compressor systems from Japan are being, or are likely 
to be, sold at less than fair value in the United States. Unless 
extended, we will make our preliminary determination by October 15, 
1996.

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 representatives 
of the Government of Japan. We will attempt to provide a copy of the 
public version of the petition to each exporter of turbo-compressor 
systems named in the petition.

International Trade Commission (``ITC'') Notification

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

Preliminary Determinations by the ITC

    The ITC will determine by June 24, 1996, whether there is a 
reasonable indication that imports of turbo-compressor systems from 
Japan are causing material injury, or threatening to cause material 
injury, to a U.S. industry. A negative ITC determination will result in 
the investigation being terminated; otherwise, the investigation will 
proceed according to statutory and regulatory time limits.

    Dated: May 28, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-13966 Filed 6-3-96; 8:45 am]
BILLING CODE 3510-DS-P