[Federal Register Volume 64, Number 166 (Friday, August 27, 1999)]
[Notices]
[Pages 46881-46884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22354]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-857, A-560-809]
Initiation of Antidumping Investigations: Paintbrushes and
Paintbrush Heads, Other Than Natural Bristle Paintbrushes and
Paintbrush Heads, From the People's Republic of China and Paintbrushes
and Paintbrush Heads From Indonesia
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 27, 1999.
FOR FURTHER INFORMATION CONTACT: Sunkyu Kim, AD/CVD Enforcement Group
I, Office 2, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-2613.
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 of Commerce's (the
Department's) regulations are to the current regulations at 19 CFR part
351 (April 1998).
The Petitions
On August 2, 1999, the Department received petitions filed in
proper form by The Paintbrush Trade Action Coalition (PATAC) which is
comprised of the following companies: EZ Paintr Corporation; The
Wooster Brush Company; Purdy Corporation; Bestt Liebco; and Tru*Serv
Manufacturing, collectively referred to hereinafter as the petitioner.
On August 11 and August 16, 1999, the Department received supplemental
information to these petitions that it had requested from the
petitioner.
In accordance with section 732(b) of the Act, the petitioner
alleges that imports of paintbrushes, other than natural bristle
paintbrushes, from the People's Republic of China (PRC), and
paintbrushes from Indonesia 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 petitioner filed the petitions on
behalf of the domestic industry because it is an interested party as
defined in sections 771(9) (C) and (D) of the Act and it has
demonstrated sufficient industry support. See ``Determination of
Industry Support for the Petitions'' section, below.
Scope of Investigations
There is an existing antidumping duty order on natural bristle
paintbrushes from the PRC. See Antidumping Duty Order; Natural Bristle
Paintbrushes and Brush Heads from the People's Republic of China, 51 FR
5580 (February 14, 1986). The scope of the petition on
[[Page 46882]]
paintbrushes from the PRC covers all paintbrushes and paintbrush heads
imported from the PRC, except those that are already covered by the
existing order. For Indonesia, the scope of the petition includes all
paintbrushes and paintbrush heads (i.e., natural bristle, synthetic
filament, and natural-synthetic filament blended paintbrushes).
People's Republic of China
The scope of the PRC investigation includes all paintbrushes and
paintbrush heads that are used to apply paint, stain, varnish, shellac,
or any other type of protective coating, other than natural bristle
paintbrushes and paintbrush heads that are classifiable under
9603.40.4040 of the Harmonized Tariff Schedule of the United States
(HTSUS). The scope of the investigation includes paintbrushes and
paintbrush heads with a blend of natural bristle and synthetic
filaments, provided that the synthetic filaments comprise over 50
percent of the total filler material in the finished paintbrush or
paintbrush head.
The merchandise subject to this investigation is classifiable under
9603.40.4060 of the HTSUS. Although the HTSUS subheading is provided
for convenience and customs purposes, the written description of the
merchandise under investigation is dispositive.
Excluded from the scope of this investigation are artists' brushes
classifiable under 9603.30.2000, 9603.30.4000, or 9603.30.6000 of the
HTSUS or other non-paintbrush products classifiable under 9603.40.4060
of the HTSUS, such as foam applicators, sponge applicators, or any
other type of non-brush paint applicator.
Indonesia
The scope of the Indonesian investigation includes all paintbrushes
and paintbrush heads that are used to apply paint, stain, varnish,
shellac, or any other type of protective coating, including natural
bristle paintbrushes and paintbrush heads, synthetic filament
paintbrushes and paintbrush heads, and paintbrushes and paintbrush
heads made with a blend of natural bristle and synthetic filament.
The merchandise subject to this investigation is classifiable under
9603.40.4040 and 9603.40.4060 of the Harmonized Tariff Schedule of the
United States (HTSUS). Although the HTSUS subheadings are provided for
convenience and customs purposes, the written description of the
merchandise under investigation is dispositive.
Excluded from the scope of this investigation are artists' brushes
classifiable under 9603.30.2000, 9603.30.4000, or 9603.30.6000 of the
HTSUS or other non-paintbrush products classifiable under 9603.40.4060
of the HTSUS, such as foam applicators, sponge applicators, or any
other type of non-brush paint applicator.
During our review of the petitions, we discussed the definitions of
the scope of the investigations with the petitioner to ensure that the
definitions accurately reflect the products for which it is seeking
relief. As we discussed in the preamble to the Department's
regulations, we are setting aside a period for parties to raise issues
regarding product coverage. See Antidumping Duties; Countervailing
Duties: Final Rule, 62 FR 27296, 27323 (May 19, 1997). The Department
encourages all parties to submit such comments by September 13, 1999.
Comments should be addressed to Import Administration's Central Records
Unit at Room 1870, U.S. Department of Commerce, Pennsylvania Avenue and
14th Street, NW., Washington, DC, 20230. This scope consultation period
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 Petitions
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, 644 (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
Fed. Reg. 32376, 32380-81 (July 16, 1991).
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In this case, the petitioner claims that all paintbrushes including
natural bristle, synthetic filament, and natural-synthetic filament
blended paintbrushes, constitute one class or kind of merchandise. In
addition, the petitioner notes that the ITC, in its determination in
the original investigation on natural bristle paintbrushes from the
PRC, defined the domestic like product as all paintbrushes, both
natural bristle and synthetic filament paintbrushes. See Natural
Bristle Paint Brushes from the People's Republic of China, Inv. No.
731-TA-244 (Final), USITC Pub.1805 at 7 (January 1986).
Based on our analysis of the information and arguments presented to
the Department, we have determined that for purposes of initiation of
these investigations there is a single domestic like product which is
defined in the ``Scope of Investigations'' section, above, with respect
to Indonesia.
Moreover, the Department has determined that the petitions and
supplemental information contained adequate evidence of sufficient
industry support. See August 23, 1999, Initiation Checklist (public
version on file in the Central Records Unit of the Department of
Commerce, Room B-099). To the best of the Department's knowledge, the
producers who support the petitions 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
[[Page 46883]]
Act expressed opposition to the petitions on the record. Accordingly,
the Department determines that these petitions are 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 describes the allegations of sales at less than fair
value upon which our decision to initiate these investigations 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.
People's Republic of China
The petitioner identified 42 potential PRC exporters and/or
producers of paintbrushes. The petitioner based export price (EP) on
offers for sale of the subject merchandise by three PRC exporters. The
petitioner made no adjustments to the starting prices.
Because the PRC is considered a nonmarket economy (NME) country
under section 771(18) of the Act, the petitioner based normal value
(NV) on the factors of production valued in a surrogate country, in
accordance with section 773(c)(3) of the Act. For purposes of the
petition, the petitioner selected Indonesia as the most appropriate
surrogate market economy. For the factors of production, the petitioner
analyzed sample paintbrushes provided by the PRC exporters that
correspond to the price quotations. The petitioner disassembled and
weighed each of the inputs in order to derive the consumption amount of
each raw material used. For labor and electricity, the petitioner
estimated the consumption amounts based on its own experience.
Materials were valued based on Indonesian prices obtained from the
petitioner's market research. For wood handles, the petitioner stated
that it was unable to obtain any publicly available information
specific to wood handles for paintbrushes. Therefore, wood handles were
valued using prices obtained from an Indonesian supplier. The remaining
materials, including packing materials, were valued based on publicly
available information which consisted principally of prices published
in official Indonesian government import statistics (i.e., Foreign
Trade Statistical Bulletin: Imports) for the period January 1997
through October 1997. Labor, including direct and packing labor, was
valued using the regression-based wage rate for the PRC provided by the
Department, in accordance with 19 CFR 351.408(c)(3). To value
electricity, the petitioner used the value used by the Department in
the 1996-1997 administrative review of the antidumping duty order on
natural bristle paintbrushes and brush heads from the PRC. This value
is based on rates published in A Brief Guide for Investors 1995, issued
by the Indonesian government's Investment Coordinating Board. The
petitioner adjusted the rate for inflation using the wholesale price
indices (WPI) published by the International Monetary Fund (IMF). For
factory overhead, selling, general, and administrative expenses (SG&A)
and profit, the petitioner used information from financial statements
pertaining to the Indonesian industrial grouping which includes
manufacturers of paintbrushes, as reported in the Indonesian
government's Large and Medium Manufacturing Statistics: Volume I
(1997).
Based on comparisons of EP to NV, the petitioner estimates dumping
margins from 10.82 percent to 148.91 percent.
Indonesia
The petitioner identified the following four exporters and
producers of paintbrushes from Indonesia: PT Ace Oldfields; PT Eterna
Jayatama Industries; PT Kata Perkasa J/V; and PT Sentosa Hastareksa.
For EP, the petitioner used price quotes offered by one of the
producers, PT Ace Oldfields, as obtained from its foreign market
research.
The petitioner adjusted these prices by subtracting amounts for
foreign inland freight and brokerage and handling expenses. The
movement expenses were based on information obtained from the
petitioner's market research report.
With respect to NV, the petitioner used price quotations obtained
from the foreign market researcher for paintbrushes manufactured by Ace
Oldfields and sold to customers in Indonesia. The petitioner adjusted
these prices by subtracting foreign inland freight amounts which were
calculated by using information obtained by the market researcher. In
addition, the petitioner made a circumstance of sale adjustment for
imputed credit expenses by subtracting home market credit expenses from
the starting prices. The petitioner calculated home market imputed
credit expenses based on an estimated credit period and the average
short-term lending rate in Indonesia during the first quarter of 1999,
as published in the International Financial Statistics.
Based on comparisons of EP to home market prices, the petitioner
estimates margins of 0.00 to 53.12 percent.
Allegation of Sales Below Cost
Pursuant to section 773(b) of the Act, the petitioner alleged that
home market sales of the foreign like product in Indonesia were made at
prices below the cost of production (COP) and requested that the
Department initiate a country-wide sales-below-cost investigation.
Pursuant to section 773(b)(3) of the Act, COP consists of cost of
manufacturing (COM), SG&A and packing costs. The petitioner calculated
the COP for a sample paintbrush manufactured in Indonesia by PT Ace
Oldfields in the following manner: (1) the petitioner calculated the
cost of materials by weighing the various material inputs, including
packing materials, and valuing the cost of each material using publicly
available data; (2) for labor and electricity, the petitioner estimated
the consumption amounts based on its analysis of the product and the
production experience of its members; and (3) for factory overhead and
SG&A, the petitioner used information from publicly available 1997
financial statements pertaining to the Indonesian industrial grouping
which includes manufacturers of paintbrushes.
With the exception of the values for labor and natural bristle, the
petitioner relied on the information used to value the factors of
production of paintbrushes from the PRC, as described above, to
calculate the COP of the analyzed paintbrush. To value labor, the
petitioner used the April 1999 regional minimum wage rate applicable in
West Java, Indonesia, as obtained from the February 1999 issue of the
Indonesian Commercial Newsletter. The petitioner calculated the cost of
natural bristles based on values obtained from the October 1997 issue
of the Foreign Trade Statistical Bulletin: Imports for the period
January 1997 through October 1997.
Based upon the comparison of the adjusted prices from the petition
of the foreign like product in Indonesia to the COP calculated in the
petition, we do not find ``reasonable grounds to believe or suspect''
that sales of these foreign like products were made below their
respective COP within the meaning of section 773(b)(2)(A)(i) of the
Act. Accordingly, based on information currently on the record, the
Department is not initiating a country-wide cost investigation for
Indonesia, as requested by the petitioner.
[[Page 46884]]
Fair Value Comparisons
Based on the data provided by the petitioner, there is reason to
believe that imports of paintbrushes and paintbrush heads, other than
natural bristle paintbrushes and paintbrush heads, from the PRC and
paintbrushes and paintbrush heads from Indonesia are being, or are
likely to be, sold at less than fair value.
Allegations and Evidence of Material Injury and Causation
The petitioner 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 members of PATAC 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. See Initiation Checklist (public
version on file in the Central Records Unit of the Department of
Commerce, Room B-099).
Initiation of Antidumping Investigations
We have examined the petitions on paintbrushes and paintbrush
heads, other than natural bristle paintbrushes and paintbrush heads,
from the PRC and paintbrushes and paintbrush heads from Indonesia and
have found that they meet the requirements of section 732 of the Act.
Therefore, we are initiating antidumping duty investigations to
determine whether imports of paintbrushes and paintbrush heads, other
than natural bristle paintbrushes and paintbrush heads, from the PRC
and paintbrushes and paintbrush heads from Indonesia 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 January 10, 2000.
Distribution of Copies of the Petitions
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 the PRC and Indonesia. We will
attempt to provide a copy of the public version of each 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 September 16, 1999, whether there is a
reasonable indication that imports of paintbrushes and paintbrush
heads, other than natural bristle paintbrushes and paintbrush heads,
from the PRC and paintbrushes and paintbrush heads from Indonesia 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.
This notice is published in accordance with section 777(i)(1) of
the Act.
Dated: August 23, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-22354 Filed 8-26-99; 8:45 am]
BILLING CODE 3510-DS-P