[Federal Register Volume 67, Number 54 (Wednesday, March 20, 2002)]
[Notices]
[Pages 12966-12968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6739]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-875]


Notice of Initiation of Antidumping Duty Investigation: Non-
Malleable Cast Iron Pipe Fittings from the People's Republic of China

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

ACTION: Initiation of Antidumping Duty Investigation.

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EFFECTIVE DATE: March 20, 2002.

FOR FURTHER INFORMATION CONTACT: Ron Trentham or Paige Rivas at (202) 
482-6320 and (202) 482-0651, respectively; 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 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 of Commerce's (the 
Department's) regulations are references to the provisions codified at 
19 CFR Part 351 (2001).

The Petition

    On February 21, 2002, the Department received a petition filed in 
proper form by Anvil International, Inc., and Ward Manufacturing Inc. 
(collectively, the petitioners). The Department received information 
supplementing the petition on March 5, 2002 and March 11, 2002.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of non-malleable cast iron pipe fittings and 
ductile cast iron pipe fittings that have the same physical 
characteristics as non-malleable cast iron pipe fittings (pipe 
fittings) from the People's Republic of China (PRC) 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 are threatening to materially injure, 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 sections 771(9)(C) of the Act and have demonstrated 
sufficient industry support with respect to the antidumping 
investigation that they are requesting the Department to initiate (see 
the Determination of Industry Support for the Petition section below).

Scope of Investigation

    For purposes of this investigation, the products covered are 
finished and unfinished non-malleable cast iron pipe fittings with an 
inside diameter ranging from 1/4 inch to 6 inches, whether threaded or 
un-threaded, regardless of industry or proprietary specifications. The 
subject fittings include elbows, ells, tees, crosses, and reducers as 
well as flanged fittings. These pipe fittings are also known as cast 
iron pipe fittings or gray iron pipe fittings. These cast iron pipe 
fittings are normally produced to ASTM A-126 and ASME B.l6.4 
specifications and are threaded to ASME B1.20.1 specifications. Most 
building codes require that these products are Underwriters 
Laboratories (UL) certified. The scope does not include cast iron soil 
pipe fittings or grooved fittings or grooved couplings.
    Fittings that are made out of ductile iron that have the same 
physical characteristics as the gray or cast iron fittings subject to 
the scope above or which have the same physical characteristics and are 
produced to ASME B.16.3, ASME B.16.4, or ASTM A-395 specifications, 
threaded to ASME B1.20.1 specifications and UL certified, regardless of 
metallurgical differences between gray and ductile iron, are also 
included in the scope of this petition. These ductile fittings do not 
include grooved fittings or grooved couplings. Ductile cast iron 
fittings with mechanical joint ends (MJ), or Push On ends (PO), or 
flanged ends and produced to the American Water Works Association 
(AWWA) specifications-AWWA C110 or AWWA C153 are not included.
    Imports of covered merchandise are classifiable in the Harmonized 
Tariff Schedule of the United States (HTSUS) under item numbers 
7307.11.00.30, 7307.11.00.60, 7307.19.30.60 and 7307.19.30.85. HTSUS 
subheadings are provided for convenience and Customs purposes. The 
written description of the scope of this proceeding is dispositive.
    During our review of the petition, we discussed the scope with the 
petitioners to ensure that it accurately reflects the product for which 
the domestic industry is seeking relief. Moreover, as 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 27295, 
27323 (May 19, 1997). The Department encourages all parties to submit 
such comments within 20 days from the 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 scope comment 
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 determination.

Determination of Industry Support for 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 produce the domestic 
like product. The United States 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 domestic 
like product (see section 771(10) of the Act), they do so for different 
purposes and pursuant to their 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 like product, such differences do not render the decision of 
either agency contrary to the law.\1\
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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 Therefore from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).

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[[Page 12967]]

    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 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.
    In this petition, the petitioners do not offer a definition of 
domestic like product distinct from the scope of these investigations. 
Thus, based on our analysis of the information presented to the 
Department by the petitioners, and the information obtained and 
received independently by the Department, we have determined that there 
is a single domestic like product, which is defined in the Scope of 
Investigation section above, and have analyzed industry support in 
terms of this domestic like product.
    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. Information contained in the petition 
demonstrates that the domestic producers or workers who support the 
petition account for over 50 percent of total production of the 
domestic like product. See, Petition for Imposition of Antidumping 
Duties: Non-Malleable Cast Iron Pipe Fittings from the People's 
Republic of China (Pipe Fittings Petition), dated February 21, 2002, at 
page 3. Therefore, the domestic producers or workers who support the 
petitions account for at least 25 percent of the total production of 
the domestic like product, and the requirements of section 
732(c)(4)(A)(i) are met. See, Import Administration AD Investigation 
Checklist, dated March 13, 2002 (Initiation Checklist) (public version 
on file in the Central Records Unit of the Department of Commerce, Room 
B-099). Furthermore, because the Department received no opposition to 
the petition, 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. See, Initiation 
Checklist. Thus, the requirements of section 732(c)(4)(A)(ii) are met.
    Accordingly, the Department determines that the petition was filed 
on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act. See, Initiation Checklist.

Export Price and Normal Value

    The following is a description of the allegation of sales at less 
than fair value upon which the Department has based its decision to 
initiate this investigation. The sources of data for the deductions and 
adjustments relating to U.S. price and factors of production (FOP) are 
detailed in the Initiation Checklist.
    The anticipated period of investigation (POI) for the PRC, a non-
market economy (NME) country, is July 1, 2001 through December 31, 
2001. Regarding an investigation involving an NME country, the 
Department presumes, based on the extent of central government control 
in an NME, that a single dumping margin, should there be one, is 
appropriate for all NME exporters in the given country. See, e.g., 
Final Determination of Sales at Less Than Fair Value: Silicon Carbide 
from the PRC, 59 FR 22585 (May 2, 1994). In the course of the 
investigation of pipe fittings from the PRC, all parties will have the 
opportunity to provide relevant information related to the issue of the 
PRC's status and the granting of separate rates to individual 
exporters.
Export Price
    The petitioners identified the following three companies as 
producers and/or exporters of pipe fittings from the PRC: Eathu Casting 
& Forging Co., Ltd., GMS Pipe Fittings Industries, and ShenYang 
Metalcast Co., Ltd. To calculate export price (EP), the petitioners 
provided the average unit value (AUV) calculated from import statistics 
released by the Census Bureau. The petitioners calculated the AUV using 
the quantity and value of imports during the POI of pipe-fittings from 
the PRC, entered under HTSUS subheadings 7307.11.00.30 and 
7307.11.00.60, the two HTSUS numbers covering non-malleable cast iron 
pipe fittings.
    The petitioners calculated a net U.S. price by deducting from the 
AUV foreign inland freight. See Initiation Checklist.
Normal Value
    The petitioners assert that the PRC is an NME country and no 
determination to the contrary has yet been made by the Department. In 
previous investigations, the Department has determined that the PRC is 
an NME. See, Steel Concrete Reinforcing Bars from the People's Republic 
of China; Notice of Final Determination of Sales at Less Than Fair 
Value (Re-Bars from China), 66 FR 33522 (June 22, 2001), and Notice of 
Final Determination of Sales at Less Than Fair Value: Foundry Coke 
Products from the People's Republic of China (Foundry Coke from China), 
66 FR 39487 (July 31, 2001). In accordance with section 771(18)(C)(i) 
of the Act, the presumption of NME status remains in effect until 
revoked by the Department. The presumption of NME status for the PRC 
has not been revoked by the Department and, therefore, remains in 
effect for purposes of the initiation of this investigation. Because 
the PRC's status as an NME remains in effect, the petitioners 
determined the dumping margin using an FOP analysis.
    For normal value (NV), the petitioners based the FOP, as defined by 
section 773(c)(3) of the Act, on the consumption rates of one U.S. pipe 
fittings producer for non-malleable cast iron pipe fittings. The 
petitioners assert that information regarding the Chinese producers' 
consumption rates is not available, and have therefore assumed, for 
purposes of the petition, that producers in the PRC use the same inputs 
in the same quantities as the petitioners use, except where a variance 
from the petitioners' cost model can be justified on the basis of 
available information. Based on the information provided by the 
petitioners, we believe that the petitioners' FOP methodology 
represents information reasonably available to the petitioners and is 
appropriate for purposes of initiating this investigation.
    Pursuant to section 773(c) of the Act, the petitioners assert that 
India is the most appropriate surrogate country for the PRC, claiming 
that India is: (1) a market economy; (2) a significant producer of 
comparable merchandise; and (3) at a level of economic development 
comparable to the PRC in terms of per capita gross national product 
(GNP). Based on the information provided by the petitioners, we believe 
that the petitioners' use of India as a surrogate country is 
appropriate for purposes of initiating this investigation.
    In accordance with section 773(c)(4) of the Act, the petitioners 
valued FOP, where possible, on reasonably available, public surrogate 
data from India. Raw materials were valued based on Indian import 
values, as published by Monthly Statistics of the Foreign Trade of 
India (Indian Import Statistics) for February

[[Page 12968]]

2001. Because these values are from a period preceding the POI, the 
petitioners inflated the value to December 2001 levels where 
appropriate, using the Indian Wholesale Prices Index (as published in 
the International Financial Statistics of the International Monetary 
Fund).
    Labor was valued using the Department's regression-based wage rate 
for the PRC, in accordance with past Department practice. See, Pipe 
Fittings Petition at 14 and citations discussed therein. Electricity 
was valued using the 1997 Indian electricity prices for industry as 
published in the fourth quarter 2001 issue of Energy Prices and Taxes, 
published by the Organization for Economic Cooperation and 
Development's International Energy Agency. To inflate the price to 
December 2001 levels, the petitioners multiplied the computed amount by 
an inflation factor. See, Pipe Fittings Petition at 15 and 16.
    Foundry coke was valued using Indian Import Statistics for February 
2001. To inflate the price to December 2001 levels, the petitioners 
multiplied the computed amount by an inflation factor, and adjusted for 
price differences between U.S. foundry coke and blast furnace coke 
prices in the first quarter of 2001. See, Pipe Fittings Petition at 14 
and 15.
    We find the petitioners' calculation of foundry coke to be 
inappropriate because there is no evidence based on the actual Indian 
data that: (1) the data included the import value for both blast 
furnace coke and foundry coke, as claimed in the petition, and (2) the 
majority of Indian imports was of blast furnace coke. Accordingly, we 
have recalculated the surrogate value for foundry coke based on the 
figures in the Indian Import Statistics without any further 
adjustments.
    The petitioners derived the surrogate value for natural gas from a 
price the Department utilized in the Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Certain Hot-Rolled 
Carbon Steel Flat Products From the People's Republic of China, 66 FR 
22183 (May 3, 2001). To convert to the unit of measurement used in the 
production factors of the U.S. surrogate, the petitioners multiplied 
the amount by 1,000. To inflate the price to December 2001 levels, the 
petitioners multiplied the computed amount by a U.S. inflation factor 
because it was denominated in U.S. dollars. See, Pipe Fittings Petition 
at 16. For overhead, depreciation, selling general and administrative 
(SG&A) expenses, the petitioners applied rates derived from the fiscal 
year financial statements as of December 31, 2000, of an Indian pipe 
fittings producer that the petitioners believe to produce iron and 
steel castings, including cast iron pipes and fittings. The Indian pipe 
fittings producer did not make any profits in both 2000 and 2001; 
therefore, the petitioners calculated the profit ratio using the 
financial statements of another Indian steel producer using the 
financial statements of that company as of March 31, 2001. See, Pipe 
Fittings Petition at 17. Based on the information provided by the 
petitioners, we believe that the surrogate values represent information 
reasonably available to the petitioners and are acceptable for purposes 
of initiating this investigation.
    The petitioners did not include packing materials in its 
computation because it was unable to obtain information on this 
expense. The petitioners valued packing labor using the direct labor 
rate published on the Department's website. See, Pipe Fittings Petition 
at 17.
    Based upon the comparison of EP to NV, the estimated dumping margin 
is 38.25 percent.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of pipe fittings from the PRC are being, or are 
likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of imports of the subject merchandise 
sold at less than NV. The volume of imports from the PRC, using the 
latest available data, exceeded the statutory threshold of seven 
percent for a negligibility exclusion. See, section 771(24)(A)(ii) of 
the Act. The petitioners contend that the industry's injured condition 
is evidenced in the declining trends in operating income, decreased 
U.S. market share, and increasing Chinese imports. The allegations of 
injury and causation are supported by relevant evidence including U.S. 
Customs import data, domestic consumption, and domestic production 
information. We have assessed the allegations and supporting evidence 
regarding material injury and causation, and have determined that these 
allegations are properly supported by accurate and adequate evidence 
and meet the statutory requirements for initiation. See, Initiation 
Checklist.

Initiation of the Antidumping Investigation

    Based on our examination of the petition on pipe fittings, and the 
petitioners' response to our supplemental questionnaire clarifying the 
petition, and additional independent data, we find that the petition 
meets the requirements of section 732 of the Act. See, Initiation 
Checklist. Therefore, we are initiating the antidumping duty 
investigation to determine whether imports of pipe fittings from the 
PRC 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 no later than 140 days after the date of this 
initiation.

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 the PRC. 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 initiation, as required by section 
732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will determine, no later than April 8, 2002 whether there 
is a reasonable indication that imports of pipe fittings from the PRC 
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, this investigation will 
proceed according to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: March 13, 2002.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 02-6739 Filed 3-19-02; 8:45 am]
BILLING CODE 3510-DS-S