[Federal Register Volume 64, Number 120 (Wednesday, June 23, 1999)]
[Notices]
[Pages 33461-33463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15997]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-840]


Initiation of Antidumping Duty Investigation: Acrylonitrile 
Butadiene Rubber From the Republic of Korea

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

EFFECTIVE DATE: June 23, 1999.

FOR FURTHER INFORMATION CONTACT: Marian Wells, Annika O'Hara, or Ryan 
Langan, Office One, AD/CVD Enforcement, Import Administration, 
International Trade Administration, U.S. Department of Commerce, Room 
3099, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230; telephone: (202) 482-6309, 482-3798, and 482-1279, respectively.

Initiation of Investigation

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 as amended (``the 
Act'') by the Uruguay Round Agreements Act (``URAA''). In addition, 
unless otherwise indicated, all citations to the Department's 
regulations are to the provisions codified at 19 CFR Part 351 (1998).

The Petition

    On May 27, 1999, the Department of Commerce (``the Department'') 
received a petition filed in proper form by Zeon Chemicals L.P. and 
Uniroyal Chemical Company, Inc., hereinafter collectively referred to 
as ``the petitioners.''
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of acrylonitrile butadiene rubber from the Republic 
of Korea (``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 
Act and that such imports are both materially injuring and threatening 
material injury to an industry in the United States.
    The Department finds that the petitioners filed this petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) of the Act and because the petitioners 
have demonstrated that they represent, at a minimum, the required 
proportion of the United States industry (see ``Determination of 
Industry Support for the Petition'' section, below).

Scope of the Investigation

    The product covered by this investigation is commonly referred to 
as acrylonitrile butadiene rubber or nitrile rubber (``NBR''). NBR is a 
synthetic rubber produced by the copolymerization of butadiene and 
acrylonitrile. NBR is sold in bale, slab, crumb, powder and latex form. 
NBR in the latex form is excluded from the scope of this investigation. 
Also excluded from the scope of this investigation is NBR containing 
additives, NBR containing rubber processing chemicals, and NBR 
containing other materials used for further processing beyond the 
copolymerization process. The merchandise subject to this investigation 
is classified in the Harmonized Tariff Schedule of the United States 
(``HTSUS'') at subheading 4002.59.00. Although the HTSUS subheading is 
provided for convenience and customs purposes, the written description 
of the merchandise under investigation is dispositive.
    During our review of the petition, we discussed the scope of the 
investigation with the petitioners to ensure that the scope language 
accurately reflects the product for which the domestic industry is 
seeking relief. Moreover, as discussed in the preamble to our 
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 within 20 days of publication of this 
notice. Comments should be addressed to Import Administration's Central 
Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230. The period of scope 
consultations is intended to provide the Department with ample 
opportunity to consider all comments and consult with parties prior to 
the issuance of its preliminary determination.

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 as a whole 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 
definition regarding the domestic like product, 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 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 analysis 
of the domestic like product 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 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 identified 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 this 
definition of the domestic like product to be inaccurate. Therefore, 
the Department has adopted this definition of the domestic like 
product.
    In this case, the Department has determined that the petition 
contains evidence of sufficient industry support. Therefore, polling 
was not necessary. See Initiation Checklist dated June 16, 1999 (the 
public version is on file in the Central Records Unit of the Department 
of Commerce, Room B-099). Based on the record evidence, the producers 
who

[[Page 33462]]

support the petition account for more than 50 percent of the production 
of the domestic like product. Additionally, no person who would qualify 
as an interested party pursuant to section 771(9)(C), (D), (E) or (F) 
of the Act has expressed opposition on the record to the petition. 
Accordingly, the Department determines that this petition is filed on 
behalf of the domestic industry within the meaning of section 732(b)(1) 
of the Act.
    On June 15, 1999, the Department received a letter from counsel for 
the potential respondents who argued that the Department should not 
initiate this investigation unless it determines, through polling, that 
the petition is supported by the U.S. industry. The basis for this 
request was the potential respondents' claim that one of the 
petitioners, Uniroyal, will cease its production of the subject 
merchandise in the United States in mid-1999 and move all of its 
production to Mexico. Thereby, Uniroyal would not be a U.S. producer, 
according to respondents. This fact was argued as outcome determinative 
that there was no industry support.
    The Department has decided to continue to treat Uniroyal as a 
petitioner and interested party in this investigation. First, Uniroyal 
was producing the subject merchandise in the United States at the time 
the petition was filed and, to the best of our knowledge, the planned 
move to Mexico had not yet taken place at the time of this initiation 
of the investigation. Second, if we were to exclude Uniroyal, the 
companies supporting the petition would still exceed the required 25 
percent of total production and more than 50 percent of the production 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. If we were to accept the argument that 
Uniroyal no longer is a U.S. producer, we would exclude its production 
from both the numerator and the denominator in our calculation of 
industry support. Thus, it would not change industry support 
substantially and the Department's determination regarding industry 
support, mentioned above, would stand.

Export Price and Normal Value

    The following is a description of the allegation of sales at less 
than fair value upon which our decision to initiate this investigation 
is 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.
    The petitioners identified Korea Kumho Petrochemical (``Kumho'') 
and Hyundai Petrochemical Co., Ltd. (``Hyundai'') as producers and 
exporters of NBR to the United States. According to the petitioners, 
Korean producers sold NBR to unaffiliated imports/distributors in the 
United States and, therefore, U.S. price is calculated using the export 
price (``EP'') methodology.
    For their EP calculation, the petitioners have used multiple offers 
for sale of the subject merchandise by unaffiliated U.S. importer/
distributors to unaffiliated purchasers in the United States between 
March 1998 and February 1999. In order to approximate the price paid by 
the U.S. importers/distributors to Korean exporters, the petitioners 
subtracted the importers/distributors' estimated profit, selling, 
general, and administrative expenses, and imputed credit expenses. The 
petitioners also deducted movement charges incurred in bringing the 
merchandise to the United States.
    The Department has made several adjustments to the petitioners' 
calculation of net U.S. price. First, only two of the several U.S. 
prices presented by the petitioners are supported by source 
documentation in the petition. Of these two prices, one is from the 
anticipated period of investigation (``POI'') whereas the other price 
dates to a period prior to the POI. Therefore Department has 
recalculated the U.S. price based on the price which pertained to the 
POI and for which the petitioners have submitted supporting 
documentation. Second, based on our understanding of the distribution 
process of the Korean product in the United States, the price paid by 
the unaffiliated importer/distributor in the United States can be 
computed by simply deducting the importers/distributors' markup (as 
reported in the petition) from the price charged by the importers/
distributors to their unaffiliated customers. Therefore, we deducted 
this markup rather than the alleged expenses and profit of the 
importers/distributors. In addition, we subtracted Korean inland 
freight, ocean freight, U.S. inland freight, U.S. warehousing expenses, 
U.S. merchandise processing fees, and U.S. harbor maintenance fees. The 
resulting amount is the net U.S. export price which we have compared to 
normal value. See Initiation Checklist.
    On June 16, the petitioners submitted to the Department unit import 
values based on U.S. import statistics for January through March 1999. 
As an alternative calculation of U.S. price, we have used the import 
values adjusted for the movement expenses above.
    The petitioners have used quoted sales prices in the home market to 
calculate normal value. They obtained gross unit prices and multiple 
offers for sale in May and October of 1998 for products which were 
either identical or similar to those sold to the United States. The 
petitioners subtracted from the gross unit home market prices the 
estimated transportation costs to home market customers. They made 
adjustments for differences in circumstances of sale in the U.S. and 
home markets (for credit and technical services), and they applied a 
commission offset (corresponding to their deduction of importers/
distributors' expenses and profits in calculating EP). Finally, they 
deducted estimated home market packing costs and added estimated U.S. 
(international) packing costs.
    The Department has also made several adjustments to the 
petitioners' calculation of normal value. First, we converted the home 
market prices to U.S. dollars using exchange rates contemporaneous with 
the U.S. sales. We then computed an average home market price. Second, 
we did not include the commission offset computed by the petitioners 
because, as discussed above, no commission was reflected in the U.S. 
price. Following the petitioners' methodology, we made the 
circumstance-of-sale adjustment and adjusted for packing and freight. 
See Initiation Checklist.

Fair Value Comparison

    Based on the data provided by the petitioners, there is reason to 
believe that imports of NBR from Korea are being, or are likely to be, 
sold at less than fair value. Based on the Department's recalculations 
of export price and normal value, the comparisons yield dumping margins 
ranging from 83.81 percent to 102.20 percent.

Allegation 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 the imports of the subject merchandise 
sold at less than normal value. The petitioners explained that the 
industry's injured condition is evident in the declining trends in net 
operating income, net sales volumes, net selling prices, and U.S., 
production. The allegation of injury and causation are supported by 
relevant evidence including U.S. Customs import data, lost sales, and 
pricing information. The Department assessed the allegations and

[[Page 33463]]

supporting evidence regarding material injury and causation and 
determined that these allegations are supported by accurate and 
adequate evidence and meet the statutory requirements for initiation. 
See Initiation Checklist.

Initiation of Antidumping Investigation

    Based upon our examination of the petition, we have found that the 
petition meets the requirements of section 732 of the Act. Therefore, 
we are initiating an antidumping duty investigation to determine 
whether imports of NBR from Korea are being, or are likely to be, sold 
in the United States at less than fair value. Unless this deadline is 
extended, we will make our preliminary determination by November 3, 
1999.

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 representatives of 
the Government of Korea. We will attempt to provide a copy of the 
public version of the petition to the Korean exporters named in the 
petition.

International Trade Commission Notification

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

Preliminary Determination by the ITC

    The ITC will determine by July 12, 1999, whether there is a 
reasonable indication that an industry in the United States is 
materially injured, or is threatened with material injury, by reason of 
imports of NBR from Korea. A negative ITC determination will result in 
the investigation being terminated; otherwise, this investigation will 
proceed according to statutory and regulatory time limits.
    This notice is published in accordance with section 777(i) of the 
Act.

    Dated: June 16, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-15997 Filed 6-22-99; 8:45 am]
BILLING CODE 3510-DS-P