[Federal Register Volume 68, Number 138 (Friday, July 18, 2003)]
[Notices]
[Pages 42686-42689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18321]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-887]


Notice of Initiation of Antidumping Duty Investigation: 
Tetrahydrofurfuryl Alcohol from the People's Republic of China

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

ACTION: Initiation of an Antidumping Duty Investigation.

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EFFECTIVE DATE: July 18, 2003.

FOR FURTHER INFORMATION CONTACT: Robert Bolling at (202) 482-3434 or 
Laurel LaCivita at (202) 482-4243, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

INITIATION OF INVESTIGATION:

The Petition

    On June 23, 2003, the Department of Commerce (``the Department'') 
received a petition filed in proper form by Penn Specialty Chemicals, 
Inc. (``petitioner''). On July 7, 2003, July 10, 2003 and July 11, 
2003, the Department received amendments to the petition filed in 
proper form by the petitioner.
    In accordance with section 732(b)(1) of the Tariff Act of 1930 
(``the Act''), the petitioner alleges that imports of 
tetrahydrofurfuryl alcohol (``THFA'') from the People's Republic of 
China (``the PRC'') are, 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 imports from the PRC are materially injuring, or are 
threatening to materially injure, an industry in the United States.
    The Department finds that the petitioner filed this petition on 
behalf of the domestic industry because it is an interested party as 
defined in sections 771(9)(c) and 771(9)(D) of the Act and has 
demonstrated sufficient industry support with respect to the 
antidumping investigation that they are requesting the Department to 
initiate. See infra, ``Determination of Industry Support for the 
Petition.''

Scope of the Investigation

    For the purpose of this investigation, the product covered is 
tetrahydrofurfuryl alcohol (C5H10O2). THFA, a primary alcohol, is a 
clear, water white to pale yellow liquid. THFA is a member of the 
heterocyclic compounds known as furans and is miscible with water and 
soluble in many common organic solvents. THFA is currently classified 
in the Harmonized Tariff Schedules of the United States (``HTSUS'') 
under subheading 2932.13.00.00. Although the HTS subheadings are 
provided for convenience and for the purposes of the U.S. Bureau of 
Customs and Border Protection (``Customs''), the Department's written 
description of the merchandise under review is dispositive.
    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.

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 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 732(c)(4)(D) of the Act 
provides 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

[[Page 42687]]

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 USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (Ct. 
Int'l Trade 2001), citing Algoma Steel Corp. Ltd. v. United States, 
688 F. Supp. 639, 642-44 (Ct. Int'l Trade 1988).
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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.
    Based on our analysis of the information presented by the 
petitioner, we have determined that there is a single domestic like 
product, THFA, which is defined in the ``Scope of the Investigation'' 
section above, and we have analyzed industry support in terms of this 
domestic like product.
    In its initial petition and subsequent submissions, the petitioner 
states that it comprises 100 percent of U.S. THFA production. Based on 
all available information, we agree that the petitioner comprises 100 
percent of the domestic THFA production.
    Our review of the data provided in the petition and other 
information readily available to the Department indicates that the 
petitioner has established industry support representing 100 percent of 
the total production of the domestic like product, requiring no further 
action by the Department pursuant to section 732(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 
producer (or workers) who supports the petition accounts for at least 
25 percent of the total production of the domestic like product, and 
the requirements of section 732(c)(4)(A)(i) of the Act are met. 
Furthermore, the domestic producer who supports the petition accounts 
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 
732(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 732(b)(1) of the Act.

Period of Investigation

    The anticipated period of investigation (``POI'') is October 1, 
2002, through March 31, 2003.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which the Department based its decision to 
initiate this investigation. The sources of data for the deductions and 
adjustments relating to U.S. and foreign market prices, constructed 
value (``CV''), and factors of production are discussed in greater 
detail 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 determinations, we may re-examine the information 
and revise the margin calculations, if appropriate.
    Regarding an investigation involving a non-market economy (``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. In the course of this investigation, all parties will have the 
opportunity to provide relevant information related to the issues of a 
country's NME status and the granting of separate rates to individual 
exporters. See e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Silicon Carbide from the People's Republic of China, 
59 FR 22585, 22586-87 (May 2, 1994).

Export Price

    The petitioner based export price (``EP'') on price quotes from 
Chinese exporters of THFA to unaffiliated purchasers in the United 
States. The petitioner calculated net U.S. price by deducting foreign 
inland freight, domestic inland insurance, ocean freight, and brokerage 
and handling. Petitioner alleged that India was the appropriate 
surrogate country (see discussion below) and calculated the adjustments 
to the EP using the surrogate values recorded in the memoranda to the 
file from Drew Jackson to Howard Smith, Surrogate Values Used for the 
Preliminary Results of the Administrative Review of Potassium 
Permanganate from the People's Republic of China: January 1, 2001 
through December 31, 2001 dated January 31, 2003 (``Surrogate Value 
Memorandum I''), and Surrogate Values Used for the Preliminary Results 
of the Administrative Review of Potassium Permanganate from the 
People's Republic of China: January 1, 1999 through December 31, 1999 
dated January 30, 2002 (``Surrogate Value Memorandum II'').
    We adjusted petitioner's calculation of the surrogate values used 
to calculate foreign inland freight, domestic inland insurance, ocean 
freight, and brokerage and handling for inflation. Petitioner used the 
unadjusted surrogate values recorded in the Department's surrogate 
value memoranda for potassium permanganate, but did not account for 
inflation from the date of the source data to the POI. Therefore, we 
went back to the original source data for each adjustment and inflated 
the reported price to the POI using the website of the Office of the 
Economic Adviser to the Government of India, Ministry of Commerce and 
Industry, http://www.eaindustry.nic.in. We then converted all unit 
prices expressed in rupees per metric tons to dollars per pound.
    The petitioner provided price quotes for the subject merchandise 
which we determined were sufficient for initiation purposes. In 
addition, petitioner provided average unit values (``AUVs'') calculated 
from U.S. import statistics as a second basis to estimate dumping 
margins. However, since these AUVs were calculated using information 
from a basket category HTS number, we did not use these average unit 
values calculated from U.S. import statistics as a basis of estimated 
dumping margins. Should the need arise to use any of this information 
as facts available under section 776 of the Act in our preliminary or 
final determinations, we may re-examine the information and revise the 
margin calculations, if appropriate. For our complete analysis of EP, 
see the Initiation Checklist.

Normal Value

    The petitioner asserts that the PRC is an NME country, and notes 
that in all previous investigations the Department has determined that 
the PRC is an NME. See e.g., Notice of Final Determination of Sales at 
Less Than Fair Value: Bulk Aspirin From the People's Republic of China, 
65 FR 33805 (May 25, 2000). The PRC will be treated as an NME unless 
and until its NME status is revoked. See section 771(18)(C)(i) of the 
Act. Because the PRC's status as an NME remains in effect, the 
petitioner's estimated the dumping margin using a NME methodology.
    For normal value (``NV''), the petitioner based the factors of 
production (``FOP''), as defined by section 773(c)(3) of Act, on the 
consumption rates for furfuryl alcohol (``FA'') reported in Technical 
Progress in Furfuryl Alcohol Production, by Ma Bao-Qi and Chen Fan-Geng 
of Xian

[[Page 42688]]

Petroleum College (``Xian Report''), Xian, and on its own experience. 
Petitioner contends that consumption rates for the Chinese THFA 
industry are not reasonably available, and that FA is an intermediate 
product and feedstock in the production process for THFA. Therefore, 
petitioner used the factor values included in the Xian Report for the 
production of FA and its own experience as the basis of factor values 
for the production steps required to convert FA to THFA. As a result, 
petitioner contends that information provided in the Xian Report, and 
petitioner's own production experience, is the only information 
reasonably available to petitioner concerning THFA production in China. 
Thus, when information from the Xian Report was not available, 
petitioner assumed that producers in the PRC use the same inputs in the 
same quantities as the petitioner. Based on the information provided by 
the petitioner, we believe that the petitioner's FOP methodology 
represents information reasonably available to the petitioner and is 
appropriate for purposes of initiating this investigation.
    The petitioner asserts that India is the most appropriate surrogate 
country for the PRC, claiming that India is: i) a market economy, and, 
ii) at a level of economic development comparable to the PRC in terms 
of per capita GNP. Petitioner asserts that China is the only other 
country known to produce THFA. Therefore, none of the potential 
surrogate countries, including India, are significant producers of the 
subject merchandise. Petitioners note however, that India is a 
significant producer of furfural and FA which are intermediate products 
and feedstocks in the production process for THFA and based on the 
information provided by the petitioner, we believe that the 
petitioner's use of India as a surrogate country is appropriate for the 
purpose of initiating this investigation.
    In accordance with section 773(c)(4) of the Act, petitioner valued 
FOP, where possible, on reasonably available, public surrogate data 
from India. Petitioner valued furfural, hydrogen and nitrogen based on 
Indian import values, as published in the 2000 and 2001 Monthly 
Statistics of Foreign Trade of India, and inflated based on the Indian 
wholesale price index (``WPI''). Petitioner was not able to obtain 
publicly available data for the furfural-to-FA and the FA-to-THFA 
catalysts, and therefore, used imports into the United States from 
India for HTS 3815.90.30.00 (furfural-to-FA catalyst) and HTS 
3815.11.00.00 (FA-to-THFA catalyst) as reported in the World Trade 
Atlas. The Department is not using Indian import values into the United 
States because India maintains broadly available, non-industry specific 
export subsidies. It is the Department's policy, based on our earlier 
determinations and legislative history, to reject such factor input 
values, whether they are market economy purchases or import statistics 
into a surrogate country, on the basis that we have found that the 
existence of these subsidies provide sufficient reason to believe or 
suspect that export prices from those countries are distorted. 
Therefore, we set the surrogate values for these factors to zero. See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Ball Bearings and Parts Thereof from the People's Republic of China, 68 
FR 10685 (March 6, 2003) and accompanying Issues and Decision 
Memorandum. See Attachment IV of the Initiation Checklist.
    Petitioner valued labor using the regression-based wage rate for 
the PRC provided by the Department, in accordance with section 
351.408(c)(3) of the Department's regulations. Petitioner valued 
maintenance supplies based on its own experience. However, the 
Department has determined that maintenance expenses should be 
classified as and included in overhead expenses in the calculation of 
normal value based on the factors of production. See Persulfates from 
the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review, 64 FR 69494 (December 13, 1999). Therefore, in 
order to eliminate the possibility of double counting overhead expenses 
which are otherwise included in our analysis, we have set the value of 
maintenance supplies to zero. Petitioner valued steam produced from 
coal, water, electricity, factory overhead, SG&A and profit using the 
Surrogate Values Memorandum I. We revised petitioner's factor value 
calculation for water to take into account inflation from the time 
period of the original source documentation to the POI. The petitioner 
inflated these figures to the current POI using the WPI reported on the 
Indian Office of Economic Advisor website, www.eaindustry.nic.in, for 
chemicals and chemical products.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of THFA from the PRC are being, or are likely to 
be, sold at less than fair value. As a result of a comparison of EP to 
NV, petitioner's calculated estimated dumping margins, as adjusted by 
the Department, range from 159.26 to 200.00 percent.

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, or is threatened 
with material injury, by reason of the individual and cumulated imports 
of the subject merchandise sold at less than fair value.
    The petitioner contends that the industry's injured condition is 
evident in the declining trends in financial performance, production 
volume, capacity utilization rates, U.S. shipments, domestic prices, 
market share, reduced profitability, capital expenditures and research, 
and development expenditures. The allegations of injury and causation 
are supported by relevant evidence including affidavits of company 
officials, U.S. Census Bureau import statistics, 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 the statutory requirements for initiation. See 
Initiation Checklist.

Initiation of Antidumping Investigation

    Based upon our examination of the petition on THFA, we have found 
that it meets the requirements of section 732 of the Act. Therefore, we 
are initiating an antidumping duty investigation to determine whether 
imports of THFA 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 pursuant to section 733(b)(1)(A) of the Act, 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 provided for under 19 CFR 351.203(c)(2).

ITC 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 7, 2003, 
whether there is a reasonable indication that imports of THFA from the 
PRC are

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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.

    July 14, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Grant Aldonas, Under Secretary.
[FR Doc. 03-18321 Filed 7-17-03; 8:45 am]
BILLING CODE 3510-DS-S