[Federal Register Volume 67, Number 227 (Monday, November 25, 2002)]
[Notices]
[Pages 70579-70581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29914]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-570-881


Notice of Initiation of Antidumping Duty Investigation: Certain 
Malleable Iron Pipe Fittings From the People's Republic of China

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

EFFECTIVE DATE: November 25, 2002.

FOR FURTHER INFORMATION CONTACT: Anya Naschak or Helen Kramer at (202) 
482-6375 or (202) 482-0405, respectively; Antidumping and 
Countervailing Duty Enforcement Group III, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

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 (2002).

The Petition

    On October 30, 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 November 7, 2002, November 12, 2002, and 
November 15, 2002.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of malleable iron pipe fittings (malleable 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 
shipments of certain malleable iron pipe fittings, cast, other than 
grooved fittings, from the People's Republic of China. The merchandise 
is classified under item numbers 7307.19.90.30, 7307.19.90.60 and 
7307.19.90.80 of the Harmonized Tariff Schedule. HTSUS subheadings are 
provided for convenience and customs purposes. The written description 
of the scope of this proceeding is dispositive.

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. 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).
    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 states 
that the administering authority shall determine that a petition has 
been filed by or on behalf of the industry if: (1) the domestic 
producers or workers who support the petition account for at least 25 
percent of the total production of the domestic like

[[Page 70580]]

product; and (2) 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.
    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: Malleable Iron Pipe 
Fittings from the People's Republic of China (Pipe Fittings Petition), 
dated October 30, 2002, at pages 2-3 and Exhibits 1 and 2. See also 
Amendment to the Petition dated November 15, 2002, at Exhibit 1. 
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, as required by section 732(c)(4)(A)(i). See Import 
Administration AD Investigation Checklist, dated November 19, 2002 
(Initiation Checklist) (public version on file in the Central Records 
Unit of the Department of Commerce, 1401 Constitution Ave., NW, 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.

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 April 1, 2002, through September 30, 
2002. Regarding an investigation involving a NME country, the 
Department presumes, based on the extent of central government control 
in a 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 malleable 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 seven companies as 
producers and/or exporters of malleable pipe fittings from the PRC: 
Jinan Meide Casting Co., Ltd., National Steel Products Co., Ltd., 
Shandong Flying Casting & Forging Co., Ltd., Dalian Zhong Sheng Metal 
Products Co., Ltd., Hebei Great Wall Import & Export Corporation, 
Tianjin Foreign Trade Group, and Xiamen Jia Da Quan Valves & Fittings 
Co., Ltd. To calculate export price (EP), petitioners used publicly 
available price quotes for Chinese products from a U.S. distributer. 
From these price quotes, petitioners deducted a 10 percent rebate from 
the listed warehouse price, 5 percent of the net price for commission 
to the importer/wholesale distributor's sales representative, and 20 
percent of the net price as the importer/distributor's mark-up to 
arrive at the importer price. Petitioners reasonably based these 
deductions on affidavits by a senior Anvil International official 
attesting that this price structure is representative of prices charged 
throughout the United States. See Initiation Checklist. We will further 
examine the nature of these deductions during the investigation.
    Petitioners further deducted U.S. customs duty of 6.2 percent to 
arrive at a price net of customs duty. Petitioners calculated net U.S. 
price by deducting ocean freight and foreign inland freight from the 
price net of customs duty. See Exhibits 22 and 24 of the Petition. 
Petitioners estimated ocean freight by subtracting the average unit 
free alongside ship (FAS) value of subject imports from the average 
unit cost, insurance and freight (CIF) value using the Bureau of the 
Census IM145 import statistics. See Initiation Checklist.

Normal Value

    The petitioners assert that the PRC is a NME country and that no 
determination to the contrary has yet been made by the Department. In 
all of its previous investigations, the Department has treated the PRC 
as a NME. See, e.g., Notice of Final Determination Sales at Less Than 
Fair Value: Certain Folding Gift Boxes from the People's Republic of 
China, 66 FR 58115 (November 20, 2001), and Notice of Final 
Determination of Sales at Less Than Fair Value: Folding Metal Tables 
and Chairs from the People's Republic of China, 67 FR 20090 (April 29, 
2002). 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 a NME remains in effect, pursuant to section 771(18)(C)(i) of 
the Act, the petitioners determined the dumping margin using a FOP 
analysis.
    For normal value (NV), the petitioners based the FOP, with the 
exception of labor, as defined by section 773(c)(3) of the Act, on the 
quantities of inputs of one U.S. malleable pipe fittings producer, Ward 
Manufacturing, Inc. The petitioners based the FOP for labor, as defined 
by section 773(c)(3) of the Act, on the quantities of inputs from the 
public ranged data of labor hours in the production of non-malleable 
pipe fittings,\1\ reduced by 10 percent. The petitioners assert that 
information regarding the Chinese producers' consumption rates is not 
reasonably 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. 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.
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    \1\ Submitted as a Section D Questionnaire Response by Jinan 
Meide Casting Company in the investigation of Non-Malleable Cast 
Iron Pipe Fittings from China, A-570-875 (June 17, 2002)
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    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 income 
(GNI). The Department's regulations state that it will place primary 
emphasis on per capita GNI in determining whether a given market 
economy is at a level of economic development comparable to the NME 
country (see 19 CFR 351.408(b)). In recent antidumping cases involving 
the PRC, the Department identified a group of countries at a level of 
economic development comparable to the PRC based primarily on per 
capita GNI. This

[[Page 70581]]

group includes India, Indonesia, Sri Lanka, the Philippines, and 
Pakistan. With the exception of India, none of these countries is a 
significant producer of malleable pipe fittings. The petitioners assert 
that India is the most appropriate surrogate. 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, petitioners valued 
FOP, where possible, on reasonably available, public surrogate data 
from India. Materials were valued based on Indian import values, as 
published by Monthly Statistics of the Foreign Trade of India (Indian 
Import Statistics). Petitioners applied an inflation adjustment factor 
using the Indian Wholesale Price Index for September 2002. Petitioners 
divided the index for the period available by the index derived from 
the period in which the input price was located, and multiplied the 
input price by the resulting ratio. Petitioners calculated the 
surrogate value of steel scrap using the mill heavy average prices 
reported by the Indian newspaper, The Economic Times, which yields more 
contemporaneous publicly available prices. See Initiation Checklist.
    Labor was valued using the Department's regression-based wage rate 
for the PRC, in accordance with 19 CFR 351.408(c)(3). See Initiation 
Checklist.
    Electricity was valued using Indian electricity prices for 
industrial consumers taken from the second quarter 2002 issue of Energy 
Prices and Taxes published by the OECD's International Energy Agency. 
The electricity prices for industry for India are reported in U.S. 
dollars and for the year of 2000. In order to arrive at September 2002 
prices, petitioners multiplied the computed amount by a U.S. inflation 
factor because it was denominated in U.S. dollars. See Initiation 
Checklist.
    Petitioners derived the surrogate value for natural gas from a 
price in India found in the 1999 financial report of EOG Resources 
Inc., expressed in U.S. dollars per MCF. To inflate the price to 
September 2002 levels, petitioners multiplied the amount by a U.S. 
inflation factor because it was denominated in U.S. dollars. See 
Initiation Checklist.
    For overhead, selling, depreciation, and general and administrative 
(SG&A) expenses, petitioners calculated the financial ratios based on 
the Indian financial data used in the Preliminary Determination of Non-
Malleable Cast Iron Pipe Fittings from the People's Republic of China. 
See Memo to Holly A. Kuga dated September 19, 2002. 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. See 
Initiation Checklist.
    Based upon the comparison of EP to NV, the estimated dumping 
margins are between 34.69 and 148.08 percent. 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 will re-examine the 
information and may revise the margin calculation, if appropriate.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of malleable 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 profitability, shipments, 
production, capacity utilization, employment, 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 malleable pipe 
fittings, and the petitioners' response to our supplemental 
questionnaires 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 
malleable 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 December 16, 2002 whether 
there is a reasonable indication that imports of malleable 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: November 19, 2002.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 02-29914 Filed 11-22-02; 8:45 am]
BILLING CODE 3510-DS-S