[Federal Register Volume 67, Number 153 (Thursday, August 8, 2002)]
[Notices]
[Pages 51536-51539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20076]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-878]


Initiation of Antidumping Duty Investigation: Saccharin from the 
People's Republic of China

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

EFFECTIVE DATE:  August 8, 2002.

FOR FURTHER INFORMATION CONTACT:  Javier Barrientos or Sally Gannon, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-2243, (202) 482-0162, 
respectively.

SUPPLEMENTARY INFORMATION:

Initiation Of Investigation

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the Tariff Act of 1930 (``Act''), as amended. In 
addition, unless otherwise indicated, all citations to the Department 
of Commerce's (``Department'') regulations are to 19 CFR Part 351 
(2002).

The Petition

    On July 11, 2002, the Department received a petition on imports of 
saccharin from the People's Republic of China (``PRC'') filed in proper 
form by PMC Specialities Group, Inc., hereinafter referred to as ``the 
Petitioner.'' On July 23, 2002, the Department requested clarification 
of certain areas of the petition and received a response on July 26, 
2002.
    In accordance with section 732(b) of the Act, the Petitioner 
alleges that imports of saccharin from the 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, and threatening material injury to, an industry in the United 
States.
    The Petitioner is a saccharin producer and accounts for over fifty 
percent of domestic production of saccharin, as defined in the 
petition. Therefore, the Department finds that the Petitioner has 
standing to file the petition because it is an interested party as 
defined under section 771(9)(C) of the Act, with respect to the 
merchandise subject to this investigation. The Petitioner has 
demonstrated sufficient industry support with respect to the 
antidumping duty investigation, which it is requesting the Department 
to initiate (see ``Determination of Industry Support for the Petition'' 
below).

Scope of Investigation

    The product covered by this investigation is saccharin. Saccharin 
is a non-nutritive sweetener used in beverages and foods, personal care 
products such as toothpaste, table top sweeteners, and animal feeds. It 
is also used in metalworking fluids. There are four primary chemical 
compositions of saccharin: (1) sodium saccharin (American Chemical 
Society Chemical Abstract Service (``CAS'') Registry 128-44-
9); (2) calcium saccharin (CAS Registry 6485-34-3); (3) acid 
(or insoluble) saccharin (CAS Registry 81-

[[Page 51537]]

07-2); and (4) research grade saccharin. Most of the U.S.-produced and 
imported grades of saccharin from the PRC are sodium and calcium 
saccharin, which are available in granular, powder, spray-dried powder, 
and liquid forms.
    The merchandise subject to this investigation is classifiable under 
subheading 2925.11.00 of the Harmonized Tariff Schedule of the United 
States (HTSUS) and includes all types of saccharin imported under this 
HTSUS subheading, including research and specialized grades.\1\ 
Although the HTSUS subheading is provided for convenience and Customs 
purposes, the Department's written description of the scope of this 
investigation remains dispositive.
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    \1\ See Harmonized Tariff Schedule of the United States (2002) 
(Rev. 3), Chapter 29, Section VI at 29-60.
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    During our review of the petitions, we discussed the scope with the 
petitioner 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 (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 
calendar days of 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, NW., 
Washington, DC 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 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 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 who 
produce 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 the 
Department and the ITC must apply the same statutory definition 
regarding the domestic like product (see 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 law.\2\
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    \2\ 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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    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 subtitle.'' 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 case, the domestic like product referred to in the petition 
is the single domestic like product defined in the ``Scope of 
Investigation'' section, above. At this time, the Department has no 
basis on the record to find the petition's definition of the domestic 
like product to be inaccurate. The Department, therefore, has adopted 
the domestic like product definition set forth in the petition.
    Moreover, the Department has determined that the petition contains 
adequate evidence of industry support; therefore, polling was 
unnecessary. See Import Administration AD Investigation of Saccharin 
from the PRC: Initiation Checklist, (July 31, 2002) (``Initiation 
Checklist''), at Attachment II (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 Petitioner supporting the petition 
represents over 50 percent of total production of the domestic like 
product. Additionally, no person who would qualify as an interested 
party pursuant to section 771(9) (C), (D), (E), (F), or (G) of the Act 
has expressed opposition 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.

Export Price and Normal Value

    The following is a description of the allegation of sales at less 
than fair value (``LTFV'') upon which the Department 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 are 
also discussed in the Initiation Checklist. Should the need arise to 
use any of this information as facts available under section 776 of the 
Act in our preliminary or final determination, we may reexamine the 
information and revise the margin calculations, if appropriate. The 
anticipated period of investigation (``POI'') is January 1, 2002 
through June 30, 2002.
    The Petitioner identified five PRC companies as producers and 
exporters of saccharin in the PRC. See Initiation Checklist at 
Attachment I.
    The Petitioner submitted an LTFV analysis for the PRC as a non-
market economy (``NME''). The Petitioner provided a dumping margin 
calculation using the Department's NME methodology as required by 19 
C.F.R. Sec.  351.202(b)(7)(i)(C).

Export Price

    Petitioner calculated a range of export prices using average unit 
values (AUVs) of saccharin imports reported by the U.S. Census Bureau 
and the price quotes it obtained, subtracting ocean freight, insurance, 
brokerage and handling charges and foreign inland freight, where 
appropriate. See Petition at Exhibit 6; and Letter from Petitioner to 
the Department: Response to Petition Clarifications Questions (July 26, 
2002) (``Petition Clarifications'') at Exhibits 1 and 2, for a detailed 
calculation of these export prices. Petitioner did not calculate 
imputed credit expenses for PRC sales because the petition bases normal 
value (``NV'') on a factors of production analysis pursuant to section 
773(c) of the Act. See Initiation Checklist for further information.
    Petitioner argues that, because at least one PRC producer of 
saccharin sells to an affiliated reseller in the United States, some 
sales during the period of investigation (``POI'') should be considered 
constructed export price (``CEP'') sales.\3\ See Initiation Checklist.
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    \3\ Petitioner alleges that Suzhou maintains an affiliated 
reseller, Suzhou-Chem USA, Inc., which is located at 17 Appleby Rd., 
Suite B1 Wellesley, MA 02482.

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[[Page 51538]]

Normal Value

    For the normal value (``NV'') calculation, Petitioner based the 
factors of production, as defined by section 773(c)(3) of the Act (raw 
materials, labor and energy), for saccharin on information from PRC 
producers. See Initiation Checklist.
    The Petitioner selected India as the surrogate country for purposes 
of valuing the factors of production. The Petitioner argued that, 
pursuant to section 773(c)(4) of the Act, India is an appropriate 
surrogate because it is a market-economy country that is at a 
comparable level of economic development to the PRC and is a 
significant producer of comparable merchandise. Based on the 
information provided by the Petitioner, we believe that the 
Petitioner's use of India as a surrogate country is appropriate for 
purposes of initiation of this investigation. See Initiation Checklist.
    In accordance with section 773(c)(4) of the Act, the Petitioner 
valued factors of production, where possible, on reasonably available, 
public, surrogate country data. To value certain raw materials, the 
Petitioner used various sources including import statistics from India, 
the periodical Chemical Weekly, and U.S. Census data. See Initiation 
Checklist. Where Indian import statistics were used, the Department 
recalculated the data to exclude NME countries and countries determined 
to provide non-industry specific export subsidies. See Final 
Determination of Sales at Less Than Fair Value: Certain Automotive 
Replacement Glass Windshields from the People's Republic of China, 67 
FR 6482 (February 12, 2002) and accompanying Issues and Decision 
Memorandum. For inputs valued in Indian Rupees and not contemporaneous 
with the POI, the Petitioner used information from the wholesale price 
indices (``WPI'') in India, as published by the International Monetary 
Fund, to determine the inflation adjustment.
    The Petitioner explained that, as a result of the saccharin 
production process, certain byproducts are created that can in turn be 
sold by the producer to offset the cost of production. Petitioner 
calculated the quantity of byproducts released per pound of saccharin 
production, and identified Indian prices to value sales of these 
byproducts. The quantity of byproduct was then multiplied by the Indian 
price to determine the total amount of byproduct offset, and subtracted 
this amount from the total variable cost of producing saccharin. See 
Initiation Checklist.
    To value electricity, Petitioner obtained industrial electricity 
costs in India from the 2000-2001 annual report of National Peroxide 
Limited (``National Peroxide''), a publicly traded Indian chemical 
producer. Petitioner maintains that this information is appropriate for 
use as a surrogate value because it accurately reflects the cost 
associated with an Indian chemical company's purchases of electricity 
and is the most contemporaneous pricing data available to Petitioner. 
See Initiation Checklist.
    To value coal, Petitioner obtained coal costs in India based on the 
1999-2000 financial statement of Hindustan Lever Limited 
(``Hindustan''), a publicly traded Indian chemical producer. This 
represents the most contemporaneous information available to Petitioner 
because National Peroxide's more recent annual report does not contain 
data regarding purchases of coal. See Initiation Checklist.
    Pursuant to 19 C.F.R. Sec. 351.408(c)(3), the Department calculates 
and publishes the surrogate values for labor to be used in non-market 
economy cases. The Petitioner applied the regression formula published 
on the Department's website to derive the PRC labor rate that would be 
calculated using the Department's methodology. See Initiation 
Checklist.
    For factory overhead (``overhead''), selling, general, and 
administrative expenses (``SG&A''), and profit, Petitioner states that 
its research indicated that several companies currently produce 
saccharin in India. However, to the best of Petitioner's knowledge, all 
of these companies are privately owned. Consequently, financial 
statements for an Indian producer of saccharin were not reasonably 
available to Petitioner. Overhead was, therefore, calculated based on 
the most recent financial statements of two Indian chemical producers: 
Calibre Chemicals Pvt. Limited (``Calibre'') and National Peroxide. 
Petitioner states that data from the 2000 annual report of Calibre was 
used by the Department in its recent preliminary and final results of 
the annual administrative review of Persulfates from the PRC, and that 
the 2000-2001 annual report for National Peroxide has been placed on 
the record of the current annual review of the dumping order in the 
same case. The overhead, SG&A, and profit ratios for each company were 
averaged to obtain the respective surrogate values used. See Initiation 
Checklist.
    We made adjustments to NV for packing materials. For further 
information, see the Initiation Checklist.
    Based on comparisons of EP and CEP to NV, calculated in accordance 
with section 773(c) of the Act, the estimated dumping margins for 
saccharin from the PRC range from 116.64 percent to 355.55 percent.

Fair Value Comparisons

    Based on the data provided by the Petitioner, there is reason to 
believe that imports of saccharin from the PRC are being, or are likely 
to be, sold in the United States 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 the imports of the subject merchandise 
sold at LTFV. The Petitioner contends that the industry's injured 
condition is demonstrated by: (1) reduced shipments; (2) reduced market 
share; (3) reduced prices; (4) declining production and capacity 
utilization; (5) growing inventories; (6) significant operating losses; 
and, (7) lost sales.
    The Department assessed the allegations and 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 at 
Attachment IV.

Initiation of Antidumping Investigation

    Based upon our examination of the petition on saccharin from the 
PRC, we find 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 saccharin from the PRC are being, or 
are likely to be, sold in the United States at LTFV. Unless postponed, 
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 government 
representatives 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, pursuant to 19 CFR 351.203(c)(2).

[[Page 51539]]

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 preliminarily determine, no later than August 25, 
2002, whether there is a reasonable indication that imports of 
saccharin from the PRC are materially injuring, or threatening material 
injury to, a U.S. industry. A negative ITC determination will result in 
this investigation being terminated; otherwise, this investigation will 
proceed according to statutory and regulatory time limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: July 31, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-20076 Filed 8-7-02; 8:45 am]
BILLING CODE 3510-DS-S