[Federal Register Volume 71, Number 65 (Wednesday, April 5, 2006)]
[Notices]
[Pages 17138-17140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-4934]


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INTERNATIONAL TRADE COMMISSION


Polychloroprene Rubber From Japan: Dismissal of Request for 
Institution of a Section 751(b) Review Investigation

AGENCY: United States International Trade Commission.

ACTION: Dismissal of a request to institute a section 751(b) review 
concerning the Commission's affirmative finding in investigation No. 
AA1921-129: Polychloroprene Rubber from Japan.

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SUMMARY: The Commission determines, pursuant to section 751(b) of the 
Tariff Act of 1930 (the Act) \1\ and Commission rule 207.45,\2\ that 
the subject request does not show changed circumstances sufficient to 
warrant institution of an investigation to review the Commission's 
affirmative finding in investigation No. AA1921-129, Polychloroprene 
Rubber from Japan.
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    \1\ 19 U.S.C. 1675(b).
    \2\ 19 CFR 207.45.

FOR FURTHER INFORMATION CONTACT: George L. Deyman (202-205-3197), 
Office of Investigations, U.S. International Trade Commission, 500 E 
Street SW., Washington, DC 20436. Hearing-impaired persons can obtain 
information on this matter by contacting the Commission's TDD terminal 
on 202-205-1810. Persons with mobility impairments who will need 
special assistance in gaining access to the Commission should contact 
the Office of the Secretary at 202-205-2000. General information 
concerning the Commission may also be obtained by accessing its 
Internet server (http://www.usitc.gov). The public record for this 
matter may be viewed on the Commission's electronic docket (EDIS) at 
http://edis.usitc.gov.

Background Information

    On July 31, 1973, the Treasury Department (Treasury) determined 
that imports of polychloroprene rubber (PCR) from Japan are being sold 
in the United States at less than fair value (LTFV) within the meaning 
of the Antidumping Act, 1921, as amended (19 U.S.C. 160 et seq.) (38 FR 
20630, August 2, 1973), and on October 31, 1973, the Commission 
determined that an industry in the United States is being, or is likely 
to be, injured by reason of imports of such LTFV merchandise. 
Accordingly, Treasury ordered that antidumping duties be imposed on 
such imports (38 FR 33593, December 6, 1973). On December 8, 1998, the 
Commerce Department (Commerce) determined that revocation of the 
antidumping finding on PCR from Japan would be likely to lead to 
continuation or recurrence of dumping (63 FR 67656, December 8, 1998), 
and on July 30, 1999, the Commission determined that revocation of the 
antidumping finding would be likely to lead to continuation or 
recurrence of material injury to an industry in the United States 
within a reasonably foreseeable time (64 FR 41458, July 30, 1999, and 
64 FR 42962, August 6, 1999). Accordingly, Commerce ordered that the 
antidumping finding be continued (64 FR 47765, September 1, 1999). On 
November 4, 2004, Commerce determined that revocation of the 
antidumping finding on PCR from Japan would be likely to lead to 
continuation or recurrence of dumping (69 FR 64276, November 4, 2004), 
and on July 21, 2005, the Commission determined that revocation of the 
antidumping finding would be likely to lead to continuation or 
recurrence of material injury to an industry in the United States 
within a reasonably foreseeable time (70 FR 42101, July 21, 2005). 
Accordingly, Commerce again ordered that the antidumping finding be 
continued (70 FR 44893, August 4, 2005).
    On November 22, 2005, the Commission received a request to review 
its affirmative determination in investigation No. AA1921-129 pursuant 
to section 751(b) of the Act (19 U.S.C. 1675(b)). The request was filed 
by the Gates Corp. (``Gates''). Gates alleged that the October 2005 
announcement by the European PCR producer Polimeri Europa 
(``Polimeri'') that it was permanently closing its sole manufacturing 
plant is a fundamental change that constitutes changed circumstances 
sufficient to warrant a review of the antidumping finding. 
Specifically, Gates contended that this development ``represents a very 
important change in the status quo,'' that the loss of a supplier of 
this magnitude will have a major impact on the availability of supply 
and conditions of competition of PCR, that continuation of the 
antidumping finding undermines access to PCR, and that revocation of 
the antidumping finding is not likely to result in the continuation or 
recurrence

[[Page 17139]]

of material injury to the domestic PCR industry.
    Pursuant to Commission rule 207.45(b),\3\ the Commission published 
a notice in the Federal Register on December 27, 2005,\4\ requesting 
comments as to whether the alleged changed circumstances warranted the 
institution of a review. The Commission received comments in support of 
Gates' request from Excel Polymers L.L.C.; Gates; The Goodyear Tire & 
Rubber Co.; Mark IV Industries, Inc.; the Motor & Equipment 
Manufacturers Association; and Tosoh Corp. The Commission received 
letters supporting a changed circumstances review from the following 
PCR purchasers: Avon Custom Mixing Service, Inc.; Blair Rubber Co.; BRC 
Rubber & Plastics, Inc.; Carlisle Power Transmission Products, Inc.; 
Chardon Rubber Co.; Custom Rubber Co.; Custom Rubber Technologies, LLC; 
Federal-Mogul Corp.; Mount Hope Products LLC; R-H Products Co., Inc.; 
Specification Rubber Products, Inc.; Standard Rubber Products, Inc.; 
Trostel Ltd.; and Westland Technologies, Inc. The Commission also 
received letters supporting the institution of a changed circumstances 
review from Congressman John Boozman (Arkansas); and from Senators 
Wayne Allard (Colorado), Blanche Lambert Lincoln (Arkansas), Ken 
Salazar (Colorado), and James Talent (Missouri).
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    \3\ 19 CFR 207.45(b).
    \4\ 70 FR 76468.
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    The Commission received submissions opposing institution of a 
changed circumstances review from DuPont Performance Elastomers L.L.C., 
the U.S. producer of PCR, and from LANXESS Corporation, a U.S. 
affiliate of the German PCR producer LANXESS AG.
    Analysis: After consideration of the request for review and the 
responses to the notice inviting comments, the Commission has 
determined, pursuant to section 751(b) of the Act and Commission rule 
207.45, that the information available to the Commission does not show 
changed circumstances sufficient to warrant institution of an 
investigation to review the Commission's affirmative finding in 
investigation No. AA1921-129: Polychloroprene Rubber from Japan.
    The Commission will not institute a review under section 751(b) 
unless it is persuaded there is sufficient information demonstrating:
    (1) That there have been significant changed circumstances from 
those in existence at the time of the original investigation;
    (2) That those changed circumstances are not the natural and direct 
result of the imposition of the antidumping and/or countervailing duty 
order, and
    (3) That the changed circumstances, allegedly indicating that 
revocation of the order would not be likely to lead to continuation or 
recurrence of material injury to the domestic industry, warrant full 
investigation.\5\
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    \5\ See Gray Portland Cement and Cement Clinker From Mexico, 66 
FR 65740 (Dec. 20, 2001); Heavy Forged Handtools from the People's 
Republic of China, 62 FR 36305 (July 7, 1997); Certain Cold-Rolled 
Carbon Steel Plate Products from Germany and the Netherlands, 61 FR 
17319 (April 19, 1996); see generally, A. Hirsh, Inc. v. United 
States, 737 F. Supp. 1186 (CIT 1990); Avesta AB v. United States, 
724 F. Supp. 974 (CIT 1989), aff'd 914 F.2d 233 (Fed. Cir. 1990); 
and Avesta AB v. United States, 689 F. Supp. 1173 (CIT 1988).
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    The decision to undertake a review is ``a threshold question, * * * 
[which] may be made only when it reasonably appears that positive 
evidence adduced by the petitioner together with other evidence 
gathered by the Commission leads the ITC to believe that there are 
changed circumstances sufficient to warrant review.'' \6\
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    \6\ Avesta, 689 F. Supp. at 1181 (CIT 1988); A. Hirsh, Inc. v. 
United States, 729 F. Supp. 1360, 1363-64 (CIT 1990), aff'd 
following remand, 737 F. Supp. at 1188 (CIT 1990).
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    The asserted changed circumstance consists of the closure of 
Polimeri's PCR manufacturing plant in France. The closure of this plant 
and the consequent disappearance of Polimeri as a supplier of 
nonsubject imports (i.e., imports that are not subject to the 
antidumping finding on PCR from Japan) does not in any significant way 
affect the information relied on by the Commission, including existing 
and projected market conditions and, thus, the Commission's reasoning 
in its most recent five-year review of this antidumping finding.
    In finding that subject import volumes were likely to be 
significant if the antidumping finding were revoked, the Commission 
relied on factors such as: The production capacity of Japanese PCR 
producers, trends in worldwide demand for PCR, the export orientation 
of the Japanese PCR industry, and relatively high average prices in the 
United States as compared with other markets.\7\ The closure of 
Polimeri's plant does not in any significant way alter the analysis 
underlying the Commission's likely volume finding. Indeed, it could be 
argued that Polimeri's withdrawal from the U.S. PCR market makes it 
more likely that subject imports would be significant if the finding 
were revoked.
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    \7\ Polychloroprene Rubber From Japan, Inv. No. AA-1921-129 
(Second Review), USITC Pub. 3786 at 9-10 (June 2005).
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    In finding that revocation of the antidumping finding would be 
likely to lead to significant price effects, the Commission relied on 
factors such as: Moderately high substitutability between subject 
imports and the domestic like product, pricing of Japanese imports in 
the Commission's original investigation, and pricing practices of 
Japanese PCR producers in third-country markets.\8\ As with the likely 
volume finding, Polimeri's plant closure does not in any significant 
way alter the analysis underlying the Commission's likely price effects 
finding. It is true--as Gates notes in its request for a review--that 
competition by nonsubject imports, such as those from Polimeri, was a 
factor in the Commission's analysis of likely price effects.\9\ 
However, it was only one of a number of factors that went into the 
Commission's analysis. Moreover, based on Polimeri's past share of the 
U.S. market (the details of which are business proprietary), its 
withdrawal from that market is very unlikely to lead to the elimination 
of all nonsubject imports.
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    \8\ Id. at 11-12.
    \9\ The Commission explained that ``[a]s demand continues to 
decline and the domestic industry faces greater competition from 
nonsubject imports, the increased and significant volumes of subject 
imports that would be added to the supply of PCR in the U.S. market 
were the finding to be revoked would likely have significant 
depressing or suppressing effects on prices for the domestic like 
product.'' Id. at 12.
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    In finding that revocation of the antidumping finding would be 
likely to have a significant adverse impact on the domestic industry 
within a reasonably foreseeable time, the Commission noted that the 
condition of the domestic industry had deteriorated significantly since 
the first five-year review of the antidumping finding. It concluded 
that if the finding were revoked, a significant volume of low-priced 
subject imports would likely have a significant adverse impact on the 
production, shipments, sales, and revenue levels of the domestic 
industry; and that this reduction in the industry's production, sales, 
and revenue levels would have a direct adverse impact on the industry's 
profitability and employment levels as well as on its ability to raise 
capital and make and maintain necessary capital investments.\10\ Again, 
Polimeri's plant closure does not in any significant way alter the 
analysis underlying the Commission's likely adverse impact finding.
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    \10\ Id. at 12-14.
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    The Commission also notes that many of the market conditions 
discussed by

[[Page 17140]]

the parties supporting the institution of a changed circumstances 
review (for example, the closure of one of the domestic PCR producer's 
plants, projected increases in worldwide demand, and strong demand for 
Japanese PCR in China) were known at the time of the most recent five-
year review, and were explicitly considered in the Commission's 
analysis.\11\
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    \11\ Id. at 7-8 and 10.
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    Finally, while short supply conditions are a relevant condition of 
competition, as the Commission has previously noted, ``there is no 
short supply provision in the statute'' and ``the fact that the 
domestic industry may not be able to supply all of demand does not mean 
the industry may not be materially injured or threatened with material 
injury by reason of subject imports.'' \12\
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    \12\ Softwood Lumber from Canada, Inv. Nos. 701-TA-414 and 731-
TA-928 (Article 1904 NAFTA Remand) at 108, n. 310 (December 2003). 
See also Metal Calendar Slides from Japan, Inv. No. 731-TA-1094 
(Preliminary), USITC Pub. 3792 (August 2005) at 9, n. 45 (``To the 
extent that Respondents claim that the Commission is legally unable 
to make an affirmative finding of material injury by reason of 
subject imports because the domestic industry is incapable of 
supplying domestic demand, they are incorrect.'').
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    In sum, the asserted changed circumstance in this case, the closure 
of a non-subject producer's plant, does not have a significant bearing 
on either the condition of the domestic industry or the likely effect 
of subject imports on that industry if the finding were revoked.
    In light of the above analysis, the Commission unanimously 
determines that institution of a review under section 751(b) of the Act 
concerning the Commission's affirmative finding in investigation No. 
AA1921-129, Polychloroprene Rubber from Japan, is not warranted.

    By order of the Commission.

    Issued: March 31, 2006.
Marilyn R. Abbott,
Secretary to the Commission.
[FR Doc. E6-4934 Filed 4-4-06; 8:45 am]
BILLING CODE 7020-02-P