[Federal Register Volume 68, Number 127 (Wednesday, July 2, 2003)]
[Notices]
[Pages 39523-39526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16670]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-837]


Notice of Initiation of Countervailing Duty Investigation: 
Certain Colored Synthetic Organic Oleoresinous Pigment Dispersions From 
India

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

ACTION: Initiation of Countervailing Duty Investigation.

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EFFECTIVE DATE: July 2, 2003.

FOR FURTHER INFORMATION CONTACT: Geoffrey Craig at (202) 482-5256 or 
Stephen Cho at (202) 482-3798, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

Initiation of Investigation

The Petition

    On June 5, 2003, the Department of Commerce (``the Department'') 
received a petition filed in proper form by Apollo Colors Inc., General 
Press Colors, Ltd., Magruder Color Company, Inc., and Sun Chemical 
Corporation (collectively, ``the petitioners''). The Department 
received petition supplements on June 16, June 18, and June 20, 2003.
    In accordance with section 702(b)(1) of the Tariff Act of 1930 
(``the Act''), as amended, the petitioners allege that manufacturers, 
producers, or exporters of certain colored synthetic organic 
oleoresinous pigment dispersions (``colored pigment dispersions'') from 
India receive countervailable subsidies within the meaning of section 
701 of the Act, and that such imports from India 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 section 771(9)(C) of the Act and they have demonstrated 
sufficient industry support with respect to the countervailing 
investigation that they are requesting the Department to initiate. See 
infra, ``Determination of Industry Support for the Petition.''

Scope of Investigation

    The products covered by this investigation are colored synthetic 
organic pigment dispersions containing pigments classified in either 
the Azo or Phthalocyanine chemical classes that have been dispersed in 
an oleoresinous varnish comprised of various combinations of solvents, 
oils and resins. The subject pigment dispersions are commonly known as 
``flush'' or ``flushed color,'' but the base form of the subject 
pigment dispersions is also included in the scope of this 
investigation. The subject pigment dispersions are a thick putty or 
paste that contain by weight typically 20 percent or more pigment 
dispersed in the varnish, and are used primarily for the manufacture of 
letterpress and lithographic printing inks. The presence of additives, 
such as surfactants, antioxidants, wetting agents, and driers, in the 
subject pigment dispersions does not exclude them from the scope of 
this investigation.
    Excluded from the scope of this investigation are dry powder 
pigments and pigment press cakes, as well as water and flammable 
solvent based colored pigment dispersions, which typically are used in 
manufacturing liquid or fluid inks. Also excluded is Yellow 75, which 
is typically used to make the yellow paint to line roads.
    The merchandise subject to this investigation is classifiable under 
subheadings 3204.17.6020 (Pigment Blue 15:4), 3204.17.6085 (Pigments 
Red 48:1, Red 48:2, Red 48:3, and Yellow 174), 3204.17.9005 (Pigment 
Blue 15:3), 3204.17.9010 (Pigment Green 7), 3204.17.9015 (Pigment Green 
36), 3204.17.9020 (Pigment Red 57:1), 3204.17.9045 (Pigment Yellow 12), 
3204.17.9050 (Pigment Yellow 13), 3204.17.9055 (Pigment Yellow 74), and 
3204.17.9086 \1\ (Pigments Red 22, Red 48:4, Red 49:1, Red 49:2, Red 
52:1, Red 53:1, Yellow 14, and Yellow 83) of the Harmonized Tariff 
Schedule of the United States (``HTS''). Although the HTS subheadings 
are provided for convenience and customs purposes, the

[[Page 39524]]

written description of the merchandise under investigation is 
dispositive.
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    \1\ Prior to July 2002, this number was 3204.17.9085.
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    As discussed in the preamble to the Department's regulations 
(Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997)), 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 publication 
of this notice. Comments should be addressed to Import Administration's 
Central Records Unit, 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 determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of India (``GOI'') for 
consultations with respect to the petition filed in this proceeding. 
However, the GOI declined our invitation, and therefore consultations 
were not held.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act require that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provide that the Department's industry support determination, which is 
to be made before the initiation of the investigation, be based on 
whether a minimum percentage of the relevant industry supports the 
petition. 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. Moreover, section 702(c)(4)(D) of the Act 
provide that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall: (i) poll 
the industry or rely on other information in order to determine if 
there is support for the petition, as required by subparagraph (A), or 
(ii) determine industry support using a statistically valid sampling 
method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether a 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers 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 both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to a 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.\2\
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    \2\ See USEC, Inc. v. United States, 132 F. Supp. 2d 1,8 (Ct. 
Intl Trade 2001), citing Algoma Steel Corp. Ltd. v. United States, 
688 F Supp. 639, 642-44 (Ct. Int'l Trade 1988) (``the ITC does not 
look behind ITA's determination, but accepts ITAs determination as 
to which merchandise is in the class of merchandise sold at LTFV'').
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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 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.
    With regard to the definition of domestic like product, the 
petitioners do not offer a definition of domestic like product distinct 
from the scope of the investigation. Based on our analysis of the 
information presented by the petitioners, we have determined that there 
is a single domestic like product, colored pigment dispersions, which 
is defined in the ``Scope of Investigation'' section above, and we have 
analyzed industry support in terms of this domestic like product.
    In their initial petition and subsequent submissions, the 
petitioners state that they comprise over 50 percent of U.S. colored 
pigment dispersions production. The petition identifies nine additional 
U.S. companies engaged in the production of colored pigment 
dispersions, none of which have taken a position on (either for or 
against) the petition. Through data provided by the petitioners and our 
own independent research, we have determined that the colored pigment 
dispersions production of these nine companies is not high enough to 
place the petitioners' industry support in jeopardy. Based on all 
available information, we agree that the petitioners comprise over 50 
percent of all domestic colored pigment dispersions production.
    Our review of the data provided in the petition and other 
information readily available to the Department indicates that the 
petitioners have established industry support representing over 50 
percent of total production of the domestic like product, requiring no 
further action by the Department pursuant to section 702(c)(4)(D) of 
the Act. In addition, the Department received no opposition to the 
petition from domestic producers of the like product. Therefore, the 
domestic producers or workers who support the petition account for at 
least 25 percent of the total production of the domestic like product, 
and the requirements of section 702(c)(4)(A)(i) of the Act are met. 
Furthermore, 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. Thus, the requirements of section 
702(c)(4)(A)(ii) of the Act also are met. Accordingly, the Department 
determines that the petition was filed on behalf of the domestic 
industry within the meaning of section 702(b)(1) of the Act. For more 
information on our analysis and the data upon which we relied, see 
Import Administration AD/CVD Enforcement Initiation Checklist 
(``Initiation Checklist''), Industry Support section and Attachment II, 
dated June 25, 2003, on file in the Central Records Unit of the main 
Department of Commerce building.

Injury Test

    Because India is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) applies to 
these investigations. Accordingly, the ITC must determine whether 
imports of the subject merchandise from India materially injure, or 
threaten material injury to, a U.S. industry.

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.

[[Page 39525]]

    The petitioners contend that the industry's injured condition is 
evident in the declining trends in net operating profits, net sales 
volumes, profit-to-sales ratios, and production employment. The 
allegations of injury and causation are supported by relevant evidence 
including U.S. import data, lost sales, and pricing information. We 
have assessed the allegations and supporting evidence regarding 
material injury and causation, and we have determined that these 
allegations are properly supported by adequate evidence and meet 
statutory requirements for initiation. See the Initiation Checklist.

Initiation of Countervailing Duty Investigation

    The Department has examined the countervailing duty petition on 
colored pigment dispersions from India and found that it complies with 
the requirements of section 702(b) of the Act. Therefore, in accordance 
with section 702(b) of the Act, we are initiating countervailing duty 
investigation to determine whether manufacturers, producers, or 
exporters of colored pigment dispersions receive countervailable 
subsidies. We will make our preliminary determination no later than 65 
days after the date of this initiation, unless this deadline is 
extended pursuant to section 703(b)(1) of the Act.
    We are including in our investigation the following programs 
alleged in the petition to have provided a countervailable subsidy to 
manufacturers, producers, or exporters of colored pigment dispersions:

1. Duty Entitlement Passbook Scheme
2. Advance Licenses
3. Duty Free Replenishment Certificate Scheme
4. Import Mechanism (Sale of Licenses)
5. Pre-Shipment and Post-Shipment Export Financing
6. Export Promotion Capital Goods Scheme (``EPCGS'')
7. Benefits for Export Processing Zones/Export Oriented Units (``EPZ/
EOU'')
8. Special Imprest Licenses (Deemed Exports)
9. Incentive Scheme for Export Oriented Park, Export Oriented Units 
(State of Gujarat Infrastructure Assistance Scheme)
10. Subsidy Scheme for Medium and Large Industries (State of Gujarat 
Infrastructure Assistance Scheme)
11. Income Tax Exemption Scheme (``ITES'') (Sections 10A, 10B and 
80HHC)
12. Re-Discounting of Export Bills Abroad (``EBR'')
13. Pre-Export and Post-Export Credits in Foreign Country
14. Exemption of Export Credit from Interest Taxes
15. Central Value Added Tax (``CENVAT'') Scheme
16. Market Access Initiative (``MAI'')

    A discussion of evidence supporting our initiation determination on 
these programs is contained in the Initiation Checklist.
    At this time, we are not including in our investigation of colored 
pigment dispersions the following programs alleged to benefit producers 
and exporters of the subject merchandise in India.
1. Special Economic Zones (State of Gujarat Infrastructure Assistance 
Scheme)
    According to the petitioners, the State of Gujarat infrastructure 
provides assistance to industrial units located in special economic 
zones under its Special Economic Zones scheme. Under the program, 
industrial units located in SEZs in Gujarat will receive incentives 
including exemption from electrical duty for ten years and exemption 
from payment of sales and other levies. Petitioners claim that this 
program results in revenue forgone by the State of Gujarat and is 
specific to companies located within a designated geographic region of 
Gujarat.
    In Final Negative Countervailing Duty Determination; Carbon Steel 
Wire Rod From Singapore, 51 FR 3357 (January 27, 1986), we found that 
the right to locate in an industrial park can confer a subsidy only if 
the government limits the firms that can locate in the industrial park. 
The petitioners have provided no information indicating that the State 
of Gujarat is limiting access to the SEZ. Thus, the petitioners have 
not provided sufficient evidence that this alleged subsidy is specific 
within the meaning of section 771(5A) of the Act and section 351.502 of 
the Department's regulations.
2. Financial Assistance for Upgradation of Quality in SSI/Medium & 
Large Scale Sector (State of Gujarat Infrastructure Assistance Scheme)
    According to the petitioners, the State of Gujarat provides 
infrastructure assistance to registered industrial units under its 
Financial Assistance for Upgradation of Quality in SSI/Medium & Large 
Scale Section. This alleged program applies to ``all industrial units 
which have been registered as a SSI/SSEB with respective DICs or/and 
industries registered under Industries (Development & Regulation) Act, 
1951 as amended * * *.'' Under this alleged program, eligible 
industrial units are eligible for government reimbursements of up to 50 
percent for expenditures such as consultant fees and equipment for 
research and development, and testing equipment. Petitioners claim that 
this alleged program results in a direct transfer of funds from the 
State of Gujarat that benefit the recipients in the amount of the 
infrastructure expenses paid.
    The petitioners have provided no information indicating that the 
benefits provided under this program are specific. In particular, there 
is no information that the eligible companies comprise a specific group 
of industries within the meaning of section 771(5A) of the Act and 
section 351.502 of the Department's regulations.
3. GOI Loans, Loan Guarantees, and Loan Forgiveness
    According to the petitioners, the Indian Ministry of Finance 
extends loan guarantees to selected Indian companies on an ad hoc basis 
and continues to extend loan guarantees to non-steel industrial sectors 
on an ad hoc basis. Petitioners assert that the GOI has been found to 
provide loans on terms that are more favorable than commercially 
available. Petitioners also claim that the GOI has forgiven past loans 
in some cases. Lastly, the petitioners allege that Hindustan and other 
Indian producers and exporters of subject merchandise have received 
countervailable subsidies in the forms of GOI loans, loan guarantees, 
and loan forgiveness.
    The petitioners have provided no information to support their 
supposition that manufacturers and exporters of the subject merchandise 
received loans, loan guarantees, or debt forgiveness.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i)) of the Act, a copy of 
the public version of the petition has been provided to the 
representatives of the Government of India. We will attempt to provide 
a copy of the public version of the petition to each exporter named in 
the petition, as provided for under 19 CFR 351.203(c)(2).

ITC Notification

    We have notified the ITC of our initiation as required by section 
702(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine no later than July 21, 2003, 
whether there is a reasonable indication that imports of Certain 
Colored Synthetic Organic Oleoresinous Pigment Dispersions from India 
are causing material injury, or threatening to cause material injury, 
to a U.S. industry. A

[[Page 39526]]

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: June 25, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-16670 Filed 7-1-03; 8:45 am]
BILLING CODE 3510-DS-P