[Federal Register Volume 69, Number 112 (Thursday, June 10, 2004)]
[Notices]
[Pages 32488-32491]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13066]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-898, A-469-814]


Initiation of Antidumping Duty Investigations: Chlorinated 
Isocyanurates From the People's Republic of China and Spain

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

ACTION: Initiation of antidumping duty investigation.

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DATES: Effective Date: June 10, 2004.

FOR FURTHER INFORMATION CONTACT: Paige Rivas (Spain) or Sochieta Moth 
(PRC), Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-0651 or (202) 482-0168, 
respectively.

Initiation of Investigations

The Petitions

    On May 14, 2004, the Department of Commerce (the Department) 
received petitions on imports of chlorinated isocyanurates (chlorinated 
isos) from the People's Republic of China (PRC), and Spain, filed in 
proper form by Clearon Corporation and Occidental Chemical Corporation 
(referred to hereafter as ``the petitioners''). On May 19, May 20, May 
25, and May 26, 2004 the Department requested additional information 
and clarification of certain areas of the petitions. The petitioners 
filed supplements to the petitions on May 24, 2004, and May 28, 2004. 
On June 2, 2004, Arch Chemicals, Inc., a U.S. importer of chlorinated 
isos from the PRC and Spain, submitted a letter challenging the 
assertion made by the petitioners that they represent more than 50 
percent of the domestic production of chlorinated isos. The petitioners 
rebutted this challenge to their industry support on June 3, 2004.
    In accordance with section 732(b)(i) of the Tariff Act of 1930, as 
amended (the Act), the petitioners allege that imports of chlorinated 
isos from the PRC and Spain 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 threaten 
to injure an industry in the United States.
    The Department finds that the petitioners filed these petitions on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(c) of the Act and the petitioners have 
demonstrated sufficient industry support with respect to the 
antidumping investigations that the petitioners are requesting the 
Department to initiate.

Period of Investigations

    The period of investigation (POI) for the PRC is October 1, 2003, 
through March 31, 2004. The POI for Spain is April 1, 2003, through 
March 31, 2004.

Scope of Investigations

    The products covered by these investigations are chlorinated isos. 
Chlorinated isos are derivatives of cyanuric acid, described as 
chlorinated s-triazine triones. There are three primary chemical 
compositions of chlorinated isos: (1) Trichloroisocyanuric acid 
(Cl3 (NCO)3), (2) sodium dichloroisocyanurate 
(dihydrate) (NaCl2(NCO)3  
2H2O), and (3) sodium dichloroisocyanurate (anhydrous) 
(NaCl2(NCO)3). Chlorinated isos are available in 
powder, granular,

[[Page 32489]]

and tabletted forms. These investigations cover all chlorinated isos.
    Chlorinated isos are currently classifiable under subheading 
2933.69.6050 of the Harmonized Tariff Schedule of the United States 
(HTSUS). This tariff classification represents a basket category that 
includes chlorinated isos and other compounds including an unfused 
triazine ring. Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the 
merchandise remains dispositive.
    During our review of the petitions, we discussed the scope with the 
petitioners to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the regulations (Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), 
we are setting aside a period for interested parties to raise issues 
regarding product coverage. The Department encourages all interested 
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 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 Petitions

    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 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 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.\1\
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    \1\ See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (CIT 
2001), citing Algoma Steel Corp. v. United States, 688 F. Supp. 639, 
642-44 (CIT 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 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 petitions cover a single class or kind of 
merchandise, chlorinated isos, as defined in the ``Scope of 
Investigations'' section, above. The petitioners do not offer a 
definition of domestic like product distinct from the scope of the 
investigations. Further, based on our analysis of the information 
presented by the petitioners, we have determined that there is a single 
domestic like product, chlorinated isos, which is defined in the 
``Scope of Investigations'' section above, and we have analyzed 
industry support in terms of the domestic like product.
    The Department has determinated that the petitioners 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 732(c)(4)(D) of the Act. In addition, 
the Department received no opposition to the petitions from domestic 
producers of the like product. The Department received opposition to 
the petitions from an importer of the domestic like product (see 
Industry Support Attachment to the Initiation Checklists for the PRC 
and Spain, dated June 3, 2004, on file in the Central Records Unit, 
Room B-099 of the Department of Commerce (``Industry Support 
Attachment'')). 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. Furthermore, the domestic producers or 
workers who support the petitions 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 petitions. 
Thus, the requirements of section 732(c)(4)(A)(ii) are also met.
    Accordingly, the Department determines that the petitions were 
filed on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act. See Industry Support Attachment.

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 these investigations. The sources of data for the deductions 
and adjustments relating to export price (EP) and normal value (NV) are 
discussed in greater detail in the Initiation Checklists. 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 petitions identified 19 producers of chlorinated isos in the 
PRC (see May 14, 2004, petition, Exhibit 5-G) and 2 producers in Spain 
(see May 14, 2004, petition, Exhibit 5-I).
Export Price--The PRC
    The petitioners based EP on ten contemporaneous quotations of PRC-
manufactured chlorinated isos from two PRC exporters. For prices quoted 
on an free-on-board PRC port basis, the petitioners deducted inland 
freight from the manufacturer's plant to the port of exportation. For 
prices quoted as delivered, the petitioners deducted ocean freight, 
brokerage and handling, and inland freight. We have examined the 
information provided regarding EP and have determined that it 
represents information reasonably available to the petitioners and have 
reviewed it for adequacy and accuracy. See Initiation Checklist.
Normal Value--The PRC
    The petitioners assert that the Department considers the PRC to be 
a non-market-economy (NME) country and, therefore, they constructed NV 
based on the factors-of-production methodology pursuant to section 
773(c) of the Act. In previous cases, the Department has determined 
that the PRC is an NME country. See e.g., Notice of Final Determination 
of Sales at Less Than Fair Value and Negative Final

[[Page 32490]]

Determination of Critical Circumstances: Certain Color Television 
Receivers From the People's Republic of China, 69 FR 20594 (April 16, 
2004). In accordance with section 771(18)(c)(i) of the Act, the NME 
status remains in effect until revoked by the Department. The NME 
status of the PRC has not been revoked by the Department and, 
therefore, remains in effect for purposes of the initiation of this 
investigation. Accordingly, the NV of the product is based on factors 
of production valued in a surrogate market-economy country in 
accordance with section 773(c) of the Act. In the course of this 
investigation, all parties will have the opportunity to provide 
relevant information related to the issues of the PRC'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).
    As required by 19 CFR 351.202(b)(7)(i)(c), the petitioners provided 
dumping margin calculations using the Department's NME methodology 
described in 19 CFR 351.408. For the calculation of NV, the petitioners 
based the factors of production, as defined by section 773(c)(3) of the 
Act (raw materials, labor, and overhead), for chlorinated isos on the 
quantities of inputs used by a U.S. producer of chlorinated isos. The 
petitioners adjusted the per-unit consumption values of certain inputs 
to reflect known differences in the production of trichlor and dichlor 
\2\ in the PRC. See Initiation Checklist.
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    \2\ Trichlor and dichlor are two types of chlorinated isos sold 
in the U.S. market. The petitioners are not aware of any chlorinated 
isos other than trichlor and dichlor that are currently produced and 
sold in commercial quantities.
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    The petitioners selected India as their surrogate country. The 
petitioners stated that India is comparable to the PRC in its level of 
economic development and is a significant producer of comparable 
merchandise. The petitioners selected calcium hypochlorite as the 
comparable merchandise for surrogate country selection since both 
products are used in swimming pools primarily because of their 
available chlorine content. Based on the information provided by the 
petitioners, we believe that the petitioners' use of India as a 
surrogate country is reasonable for purposes of initiation of this 
investigation. See Initiation Checklist.
    The petitioners valued the factors of production for chlorinated 
isos using publically available data from India for all production 
inputs except cyanuric acid and chlorine. Where Indian data is not 
contemporaneous to the POI, the petitioners have adjusted the Indian 
price to account for inflation using wholesale price indices. The 
petitioners converted Indian values to U.S. dollars at the POI exchange 
rate.
    The petitioners valued cyanuric acid using the average unit values 
of imports of this commodity into the United States from Taiwan. The 
petitioners outlined their unsuccessful efforts to identify a value for 
cyanuric acid in the countries which the Department has typically used 
as surrogates for the PRC in the past: India, Pakistan, Sri Lanka, 
Philippines, and Indonesia. The petitioners state that to their 
knowledge none of the aforementioned countries produce cyanuric acid. 
The petitioners also stated that there were no imports of cyanuric acid 
into the United States from Pakistan, Sri Lanka, the Philippines, or 
Indonesia.
    The petitioners also note that the harmonized tariff systems of the 
aforementioned countries classify imports of cyanuric acid and 
chlorinated isos under a single tariff subheading. The petitioners note 
that imports of this tariff subheading for cyanuric acid into any of 
these countries would overstate its value because chlorinated isos have 
greater monetary value. Similarly, the HTSUS classifies imports of 
cyanuric acid in a basket category. The petitioners demonstrated with 
Port Import-Export Reporting Service (PIERS) data that all imports from 
Taiwan within subheading 2933.69.60.50 into the United States consist 
of only cyanuric acid. Based on the explanations provided, we find 
petitioners' use of this factor value to be adequate for purposes of 
initiation as its use meets their burden of data reasonably available 
to them.
    The petitioners valued sulfuric acid and caustic soda using pricing 
data in the Indian publication Chemical Weekly. The petitioners point 
out that prices of liquid chlorine, a significant input in the 
production of dichlor and triclor, are not listed in Chemical Weekly. 
Therefore, the petitioners valued chlorine using Indonesian import 
statistics compiled in World Trade Atlas for 2002. Packing inputs 
include supersacks, plastic drums, and pallets. The petitioners used 
Monthly Statistics of the Foreign Trade of India and data from the 
Monthly Times of India to value these inputs. They valued water using 
information that they obtained from the Second Water Utilities Data 
Book: Asian and Pacific Region for 1997. The price of electricity was 
valued based on the most recent statistics available for India which 
were published by the U.S. Department of Energy in 2003.
    The petitioners stated that they are not aware of any producers of 
trichlor and dichlor in India or any other country commonly used. 
Therefore, the petitioners calculated factory overhead, selling, 
general, and administrative (SG&A) expenses, and profit ratios based on 
the 2002-2003 Annual Report of DSM Shriram Consolidated, Ltd., an 
Indian producer of sodium hypochlorite, chlorine, and caustic soda. 
Based on our analysis of the data in the petition, we believe that the 
petitioners' calculations of NV are reasonable and accurate.
    Based on comparisons of EP to NV, calculated in accordance with 
section 773(c) of the Act, the estimated dumping margins range from 
109.14 percent to 157.82 percent for trichlor and dichlor from the PRC.
Export Price--Spain
    To calculate EP, the petitioners started with three price quotes: 
Two price quotes for Spanish manufactured trichlor and one price quote 
for Spanish manufactured dichlor. The petitioners calculated net U.S. 
prices by deducting foreign inland freight, U.S. import duties, U.S. 
inland freight, insurance, ocean freight, and commission. We reviewed 
the information provided regarding EP and have determined that it 
represents information reasonably available to the petitioners. We have 
also reviewed the adequacy and accuracy of the petitioners' information 
and calculation. See Initiation Checklist.
Normal Value--Spain
    To calculate NV, the petitioners obtained through foreign market 
research, three price quotes for dichlor and three price quotes for 
trichlor. The petitioners calculated net Spanish prices by deducting 
the inland freight from the producer to the port of export. We reviewed 
the NV information provided and have determined that it represents 
information reasonably available to the petitioners. We have also 
reviewed the adequacy and accuracy of the petitioners' information and 
calculation. See Initiation Checklist.
    Although the petitioners provided margins based on price-to-price 
comparisons, the petitioners also provided information demonstrating 
reasonable grounds to believe or suspect that sales of trichlor and 
dichlor in the home market were made at prices below the fully absorbed 
cost of production (COP), within the meaning of section 773(b) of the 
Act, and requested that the Department conduct a country-wide sales-
below-cost investigation. See

[[Page 32491]]

Initiation of Cost Investigation section infra for further discussion.
    Pursuant to section 773 (b)(3) of the Act, COP consists of the cost 
of manufacture (COM), SG&A, financial expenses and packing. The 
petitioners calculated COP based on the experience of a U.S. trichlor 
and dichlor producer during 2003, adjusted for known differences 
between costs incurred to manufacture trichlor and dichlor products in 
the United States and in Spain using publicly available data which the 
petitioners stated is the most specific and recent cost data reasonably 
available. Based upon a comparison of the prices of the foreign like 
product to the calculated COP of the product, we find reasonable 
grounds to believe or suspect that sales of the foreign like product 
were made below the COP, within the meaning of section 773(b)(2)(A)(i) 
of the Act. Accordingly, the Department is initiating a country-wide 
cost investigation.
    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the 
petitioners also calculated NV based on constructed value (CV). The 
petitioners calculated CV using the same COM, SG&A and financial 
expense figures used to compute the COP. Consistent with 773(e)(2) of 
the Act, the petitioners included in CV an amount for profit. For 
profit, the petitioners relied upon amounts reported in Uralita Group's 
2002 financial statements.
    The petitioners revised the COM for trichlor and dichlor in their 
May 25, 2004, submission based on revised labor rates (i.e., the labor 
rates in Spain). We recalculated the dumping margin based the revised 
COM of trichlor and dichlor. Based on comparisons of EP (method derived 
from price quotes) to CV, calculated in accordance with section 773(a) 
of the Act, the estimated dumping margins range from 29.68 percent to 
42.36 percent for trichlor and dichlor from Spain. We note that these 
margins are conservative since the petitioners did not include packing 
in the CV calculation.

Initiation of Cost Investigation

    As noted above, pursuant to section 773(b) of the Act, the 
petitioners provided information demonstrating reasonable grounds to 
believe or suspect that sales in the home market of Spain were made at 
prices below the fully absorbed COP and, accordingly, requested that 
the Department conduct a country-wide sales-below-COP investigation in 
connection with the requested antidumping investigation for this 
country. The Statement of Administrative Action (SAA), accompanying the 
URAA, states that an allegation of sales below COP need not be specific 
to individual exporters or producers. See SAA, H.R. Doc. No. 103-316 at 
833 (1994). The SAA states that ``Commerce will consider allegations of 
below-cost sales in the aggregate for a foreign country, just as 
Commerce currently considers allegations of sales at less than fair 
value on a country-wide basis for purposes of initiating an antidumping 
investigation.'' Id.
    Further, the SAA provides that the ``new section 773(b)(2)(A) 
retains the current requirement that Commerce have `reasonable grounds 
to believe or suspect' that below cost sales have occurred before 
initiating such an investigation. `Reasonable grounds' * * * exist when 
an interested party provides specific factual information on costs and 
prices, observed or constructed, indicating that sales in the foreign 
market in question are at below-cost prices.'' Id. Based upon the 
comparison of the adjusted prices from the petition for the 
representative foreign like product to its COP, we find the existence 
of ``reasonable grounds to believe or suspect'' that sales of these 
foreign like products in Spain were made below their respective COPs 
within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, 
the Department is initiating the requested country-wide cost 
investigation.

Fair-Value Comparison

    Based on the data provided by the petitioners, there is reason to 
believe that imports of chlorinated isos from the PRC and Spain are 
being, or are likely to be, sold in the United States at less than fair 
value. As a result of a comparison of EP to NV, based on our 
recalculations described above, the estimated dumping margins range 
from 109.14 percent to 157.82 percent for the PRC and from 29.68 
percent to 42.36 percent for Spain.

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 and is threatened 
with material injury by reason of the imports of the subject 
merchandise sold at less than NV. The petitioners contend that the 
industry's injured condition is evidenced by declining trends in market 
share, pricing, production levels, profits, sales, utilization of 
capacity, reduction of labor force, and increasing inventory levels.
    These allegations are supported by relevant evidence including 
import data, lost sales, and pricing information. The Department 
assessed the allegations and supporting evidence regarding material 
injury and causation and determined that these allegations are 
supported by adequate evidence and meet the statutory requirements for 
initiation (See Initiation Checklists, Re: Material Injury).

Initiation of Antidumping Investigations

    Based upon the examination of the petitions on chlorinated isos 
from the PRC and Spain, and other information reasonably available to 
the Department, we find that the petitions meet the requirements of 
section 732 of the Act. Therefore, we are initiating antidumping duty 
investigations to determine whether imports of chlorinated isos from 
the PRC and Spain are being, or are likely to be, sold in the United 
States at less than fair value. Unless postponed, we will make our 
preliminary determinations no later than 140 days after the date of 
this initiation.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, copies of the 
public versions of the petitions have been provided to the 
representatives of the governments of the PRC and Spain. We will 
attempt to provide copies of the public versions of the petitions to 
each producer named in the petitions, as appropriate.

International Trade Commission Notification

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

Preliminary Determination by the ITC

    The ITC will preliminarily determine, no later than June 28, 2004, 
whether there is a reasonable indication that imports of chlorinated 
isos from the PRC and Spain are causing material injury, or threatening 
to cause material injury, to a U.S. industry. A negative ITC 
determination for any country will result in the investigation being 
terminated with respect to that country; otherwise, these 
investigations 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 3, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-13066 Filed 6-9-04; 8:45 am]
BILLING CODE 3510-DS-P