[Federal Register Volume 63, Number 80 (Monday, April 27, 1998)]
[Notices]
[Pages 20575-20578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11148]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-351-827, A-580-833, A-201-821]


Initiation of Antidumping Investigations: Emulsion Styrene-
Butadiene Rubber from Brazil, the Republic of Korea, and Mexico

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

EFFECTIVE DATE: April 27, 1998.

FOR FURTHER INFORMATION CONTACT: David Genovese, at (202) 482-0498, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230.

[[Page 20576]]

Initiation of Investigations

The Applicable Statute and Regulations

    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). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations published in the Federal Register on May 19, 1997 (62 FR 
27296).

The Petition

    On April 1, 1998, the Department of Commerce (the Department) 
received a petition filed in proper form by Ameripol Synpol Corporation 
and DSM Copolymer. On April 3, 1998, the Department received an 
amendment to the petition. On April 13, 1998, the Department received 
supplemental information to the petition that it had requested from the 
petitioners.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of emulsion styrene-butadiene rubber (ESBR) from 
Brazil, the Republic of Korea (Korea), and Mexico 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 an industry in the United States.
    The Department finds that the petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) and (D) of the Act and they have 
demonstrated sufficient industry support (see discussion below).

Scope of Investigations

    For purposes of these investigations, the product covered is ESBR. 
ESBR is a synthetic polymer made via free radical cold emulsion 
copolymerization of styrene and butadiene monomers in reactors. The 
reaction process involves combining styrene and butadiene monomers in 
water, with an initiator system, an emulsifier system, and molecular 
weight modifiers. ESBR consists of cold non-pigmented rubbers and cold 
oil extended non-pigmented rubbers that contain at least one percent of 
organic acids from the emulsion polymerization process.
    ESBR is produced and sold, both inside the United States and 
internationally, in accordance with a generally accepted set of product 
specifications issued by the International Institute of Synthetic 
Rubber Producers (IISRP). The universe of products subject to these 
investigations are grades of ESBR included in the IISRP 1500 series and 
IISRP 1700 series of synthetic rubbers. The 1500 grades are light in 
color and are often described as ``Clear'' or ``White Rubber.'' The 
1700 grades are oil-extended and thus darker in color, and are often 
called ``Brown Rubber.'' ESBR is used primarily in the production of 
tires. It is also used in a variety of other products, including 
conveyor belts, shoe soles, some kinds of hoses, roller coverings, and 
flooring.
    Products manufactured by blending ESBR with other polymers, high 
styrene resin master batch, carbon black master batch (i.e., IISRP 1600 
series and 1800 series) and latex (an intermediate product) are not 
included within the scope of these investigations.
    The products under investigation are currently classifiable under 
subheading 4002.19.0010 of the Harmonized Tariff Schedule of the United 
States (HTSUS). Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the scope 
of these investigations is dispositive.
    During our review of the petition, we discussed the scope with the 
petitioners to ensure that the scope in the petition accurately 
reflects the product for which they are seeking relief. As we discussed 
in the preamble to the new 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 by May 
18, 1998. Comments should be addressed to Import Administration's 
Central Records Unit at Room 1874, U.S. Department of Commerce, 
Pennsylvania Avenue and 14th Street, NW, Washington, D.C., 20230. This 
period of scope consultation 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 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 and workers who account for production 
of 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 both the Department and 
the ITC must apply the same statutory provision regarding the domestic 
like product (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 the law.1 Section 771(10) of the 
Act defines 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.
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    \1\ 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 Therefor from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    The domestic like product referred to in the petition is the single 
domestic like product defined in the ``Scope of Investigation'' 
section, above. The Department has no basis on the record to find the 
petition's definition of the domestic like product to be inaccurate. 
The Department has, therefore, adopted the domestic like product 
definition set forth in the petition. In addition, the petitioners 
established that they represent more than 50 percent of domestic 
production of the like product. This level of industry support is above 
the statutory requirement. Accordingly, the Department determines that 
the 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 are descriptions of the allegations of sales at less 
than fair value

[[Page 20577]]

upon which our decisions to initiate these investigations are based. 
Should the need arise to use any of this information in our preliminary 
or final determinations for purposes of facts available under section 
776 of the Act, we may re-examine the information and revise the margin 
calculations, if appropriate.

Brazil

    The petitioners identified Petroflex Industria e Comercio S.A. 
(Petroflex) as the sole exporter and producer of ESBR from Brazil. The 
petitioners based export price on U.S. prices in call reports generated 
by the petitioners' sales personnel in the normal course of business 
and obtained from various customers over the last 12 months for ESBR 
grades 1502 and 1712, the grades the petitioners claim are those used 
most extensively by the tire industry. The petitioners converted U.S. 
prices quoted in dollars per pound to dollars per metric ton by 
multiplying the per pound amounts by 2204.60 pounds per metric ton. The 
petitioners calculated net U.S. prices by subtracting an estimate of 
the international freight and insurance expenses incurred to transport 
the subject merchandise from the factory to a port in the United States 
or to the U.S. customer, depending on the terms of sale specified in 
the call reports. Where the terms of sale were not specified in the 
call report, the petitioners assumed that the terms of sale were FOB 
Brazil and no freight expense was deducted from the U.S. price. The 
petitioners estimated the cost of international freight and insurance 
based upon the difference in the CIF values and the U.S. Customs values 
reported in the official U.S. import statistics for 1997.
    With respect to normal value (NV), the petitioners obtained from a 
local business contact in Brazil prices for contemporaneous sales of 
ESBR grades 1502 and 1712 from Petroflex to a Brazilian consumer. 
Because home market prices were quoted in U.S. dollars, prices were 
converted from U.S. dollars to reals for purposes of making adjustments 
based on the daily exchange rate corresponding to the date of the price 
quotes. Daily exchange rates for 1997 were obtained from the database 
of exchange rates maintained by Import Administration on the internet. 
Daily exchange rates for 1998 were obtained from The Money Exchange 
(internet address www.oanda.com). When comparing normal value to U.S. 
price, the petitioners used the daily exchange rate corresponding to 
the effective date of each U.S. sale to convert the normal values to 
U.S. dollars. The petitioners calculated net home market prices by 
subtracting an amount for the estimated expense incurred by Petroflex 
to deliver the merchandise to the Brazilian consumer. This estimate was 
provided by the local business contact noted above.
    The petitioners made a circumstance of sale adjustment for imputed 
credit expenses by subtracting home market credit expenses and by 
adding U.S. credit expenses to the net home market prices calculated in 
the petition. The petitioners calculated home market imputed credit 
expenses based on payment terms of net 35 days, as reported by the 
local business contact, and the annual average Brazilian bank rate 
published by the International Financial Statistics of 26.4 percent. 
The petitioners calculated U.S. credit expenses based on payment terms 
of net 30 days and the annual average lending rate in the United States 
published in the International Financial Statistics of 8.44 percent. 
The petitioners did not adjust the reported prices for differences in 
packing costs because the petitioners assumed that packing costs were 
the same for home market and for U.S. sales.
    Comparison of NV and net U.S. prices for sales of ESBR from Brazil 
results in estimated dumping margins that range from 17.77 percent to 
71.08 percent.

Korea

    The petitioners identified two exporters and producers of ESBR: 
Korea Kumho Petrochemical Company (Kumho) and Hyundai Petrochemical 
Co., Ltd. (Hyundai). The petitioners based export price on U.S. prices 
in call reports generated by the petitioners' sales personnel in the 
normal course of business and obtained from various customers over the 
last 12 months for ESBR grades 1502 and 1712. The petitioners converted 
U.S. prices quoted in dollars per pound to dollars per metric ton by 
mulitplying the per pound amounts by 2204.60 pounds per metric ton. The 
petitioners calculated net U.S. prices by subtracting an estimate of 
the international freight and insurance expenses incurred to transport 
the subject merchandise from the factory to a port in the United States 
or to the U.S. customer, depending on the terms of sales specified in 
the call reports. Where the terms of sale were not specified in the 
call reports, the petitioners assumed that the terms of sale were FOB 
Korea and no freight expense was deducted from the U.S. price. The 
petitioners estimated the cost of international freight and insurance 
based upon the difference in the CIF values and the U.S. Customs values 
reported in the official U.S. import statistics for 1997.
    With respect to NV, the petitioners obtained from local business 
contacts in Korea prices for contemporaneous sales of ESBR grades 1502 
and 1712 from Kumho to Korean consumers. For Hyundai, the petitioners 
obtained from local business contacts in Korea prices for 
contemporaneous sales of ESBR grades 1500/1500H (rather than 1502) and 
1712 from Hyundai to Korean consumers. However, the petitioners 
provided documentation to show that ESBR grades 1500/1500H and 1502 are 
priced the same by Hyundai in Korea. Due to the volatility in the 
exchange rate, the petitioners received a set of price quotes from one 
producer for a period before exchange rate volatility set in, as well 
as for a period after the Korean won plummeted in value. Where home 
market prices were quoted in U.S. dollars, prices were converted from 
U.S. dollars to won for purposes of making adjustments based on the 
daily exchange rate corresponding to the effective date of the price 
quote. Daily exchange rates for 1997 were obtained from the database of 
exchange rates maintained by Import Administration on the internet. 
Daily exchange rates for 1998 were obtained from The Money Exchange 
(internet address www.oanda.com). When comparing normal value to U.S. 
price, the petitioners used the daily exchange rate corresponding to 
the effective date of each U.S. sale to convert the normal values to 
U.S. dollars. The petitioners calculated net home market prices by 
subtracting an amount for the estimated expense incurred by Hyundai and 
Kumho to deliver the merchandise to the consumer in Korea. This 
estimate was provided by the local business contact noted above.
    The petitioners made a circumstance of sale adjustment for imputed 
credit expenses by subtracting home market credit expenses and by 
adding U.S. credit expenses to the net home market prices calculated in 
the petition. The petitioners calculated home market imputed credit 
expenses based on the typical credit terms for ESBR in Korea as 
obtained by local business contacts of 90 days, and the average 
corporate bond rate in Korea published by the International Financial 
Statistics for August 1997, of 12.1 percent (to reflect the corporate 
bond rate before the won depreciated), and October 1997, of 12.5 
percent (to reflect the corporate bond rate after the won depreciated). 
See Exhibit 8 of the petition. The petitioners calculated U.S. credit 
expenses based on payment terms of net 30 days, and the annual average 
lending rate in the

[[Page 20578]]

United States published in the International Financial Statistics of 
8.44 percent. The petitioners did not adjust the reported prices for 
differences in packing costs because the petitioners assumed that 
packing costs were the same for home market and for U.S. sales.
    Comparison of NV and net U.S. prices for sales of ESBR from Korea 
results in estimated dumping margins that range from 14.92 percent to 
118.88 percent.

Mexico

    The petitioners identified Industrias Negromex, S.A. de C.V. 
(Negromex) as the sole exporter and producer of ESBR from Mexico. The 
petitioners based export price on contemporaneous price quotes to an 
unaffiliated U.S. consumer and U.S. prices in call reports generated by 
the petitioners' sales personnel in the normal course of business over 
the last 12 months for grades 1502 and 1712. The petitioners converted 
U.S. prices quoted in dollars per pound to dollars per metric ton by 
multiplying the per pound amounts by 2204.60 pounds per metric ton. The 
petitioners calculated net U.S. prices by subtracting an estimate of 
the international freight and insurance expenses incurred to transport 
the subject merchandise from the factory to a port in the United States 
or to the U.S. customer, depending on the terms of sales specified in 
the call reports. Where the terms of sale were not specified in the 
call report, the petitioners assumed that the terms of sale were FOB 
Mexico and no freight expense was deducted from the U.S. price. The 
petitioners estimated the cost of international freight and insurance 
based upon the difference in the CIF values and the U.S. Customs values 
reported in the official U.S. import statistics for 1997.
    With respect to NV, the petitioners obtained from a local business 
contact in Mexico contemporaneous price quotes for ESBR grades 1502 and 
1712 from Negromex to Mexican consumers of ESBR. The petitioners 
converted home market prices quoted in pesos per kilogram to U.S. 
dollars per metric ton by using a conversion ratio of one kilogram 
equals 1/1000 metric tons and the Mexican pesos/U.S. dollar exchange 
rate in effect on the date of the U.S. sale. Daily exchange rates for 
1997 were obtained from the database of exchange rates maintained by 
Import Administration on the internet. Daily exchange rates for 1998 
were obtained from The Money Exchange (internet address www.oanda.com).
    The petitioners made a circumstance of sale adjustment for imputed 
credit expenses by subtracting home market credit expenses and by 
adding U.S. credit expenses to the net home market prices calculated in 
the petition. The petitioners calculated home market imputed credit 
expenses based on payment terms of net 60 days, as reported by the 
local business contacts, and the annual average Mexican Treasury bill 
rate published by the International Financial Statistics of 19.80 
percent. The petitioners calculated U.S. credit expenses based on 
payment terms of net 30 days and the annual average lending rate in the 
United States published in the International Financial Statistics of 
8.44 percent. The petitioners did not adjust the reported prices for 
differences in packing costs because the petitioners assumed that 
packing costs were the same for home market and for U.S. sales.
    Comparison of NV and net U.S. prices for sales of ESBR from Mexico 
results in estimated dumping margins that range from 6.06 percent to 
25.16 percent.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of ESBR from Brazil, Korea, and Mexico are being, 
or are likely to be, sold 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 imports of the subject merchandise sold 
at less than NV. The allegations of injury and causation are supported 
by relevant evidence including business proprietary data from the 
petitioning firms and U.S. Customs import data. The Department assessed 
the allegations and supporting evidence regarding material injury and 
causation and determined that these allegations are sufficiently 
supported by accurate and adequate evidence and meet the statutory 
requirements for initiation.

Initiation of Antidumping Investigations

    We have examined the petition on ESBR and have found that it meets 
the requirements of section 732 of the Act. Therefore, we are 
initiating antidumping duty investigations to determine whether imports 
of ESBR from Brazil, Korea, and Mexico 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 for the antidumping duty 
investigations by September 8, 1998.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of the governments of Brazil, Korea, and Mexico. We 
will attempt to provide a copy of the public version of the petition to 
each exporter named in the petition (as appropriate).

International Trade Commission 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 May 18, 1998, whether there is a 
reasonable indication that imports of ESBR from Brazil, Korea, and 
Mexico are causing material injury, or threatening to cause material 
injury, to a U.S. industry. Negative ITC determinations will result in 
the particular investigations being terminated; otherwise, the 
investigations will proceed according to statutory and regulatory time 
limits.

    Dated: April 21, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-11148 Filed 4-24-98; 8:45 am]
BILLING CODE 3510-DS-P