[Federal Register Volume 72, Number 179 (Monday, September 17, 2007)]
[Notices]
[Pages 52850-52855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18257]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-602-806, A-570-919]


Notice of Initiation of Antidumping Duty Investigations: 
Electrolytic Manganese Dioxide from Australia and the People's Republic 
of China

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

EFFECTIVE DATE: September 17, 2007.

FOR FURTHER INFORMATION CONTACT: Hermes Pinilla at (202) 482-3477 
(Australia) or Eugene Degnan at (202) 482-0414 (People's Republic of 
China), 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 Petitions

    On August 22, 2007, the Department of Commerce (Department) 
received petitions concerning imports of electrolytic manganese dioxide 
(EMD) from Australia and the People's Republic of China (PRC) filed in 
proper form by Tronox LLC (the petitioner). See Antidumping Duty 
Petitions on Electrolytic Manganese Dioxide from Australia and the 
People's Republic of China (August 22, 2007) (Petitions). The 
petitioner is a domestic producer of EMD. On August 29, 2007, the 
Department issued a request for additional information and 
clarification of certain areas of the Petitions. On September 4, 2007, 
in response to the Department's request, the petitioner filed an 
amendment to the Petitions. See Electrolytic Manganese Dioxide from 
Australia and the People's Republic of China; Petitioner's Response to 
the August 19, 2007, Questions from the U.S. Department of Commerce 
(September 4, 2007) (Supplemental Responses).
    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (the Act), the petitioner alleges that imports of EMD from 
Australia and 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 threatening material injury to, an industry in 
the United States. The petitioner also alleges that sales of EMD by the 
Australian producer to Japan were made at prices below the cost of 
production (COP).
    The Department finds that the petitioner filed these Petitions on 
behalf of the domestic industry because it is an interested party as 
defined in section 771(9)(C) of the Act and has demonstrated sufficient 
industry support with respect to the initiation of the antidumping-duty 
investigations that the petitioner is requesting. See the 
``Determination of Industry Support for the Petitions'' section below.

Period of Investigation

    Because the Petitions were filed on August 22, 2007, the 
anticipated period of investigation (POI) for Australia is July 1, 
2006, through June 30, 2007. The anticipated POI for the PRC is January 
1, 2007, through June 30, 2007. See 19 CFR 351.204(b).

Scope of the Investigations

    The merchandise covered by each of these investigations includes 
all manganese dioxide (MnO[bdi2]) that has been manufactured in an 
electrolysis process, whether in powder, chip, or plate form. Excluded 
from the scope are natural manganese dioxide (NMD) and chemical 
manganese dioxide (CMD). The merchandise subject to these 
investigations is classified in the Harmonized Tariff Schedule of the 
United States (HTSUS) at subheading 2820.10.00.00. While the HTSUS 
subheading is provided for convenience and customs purposes, the 
written

[[Page 52851]]

description of the scope of these investigations is dispositive.

Comments on Scope of Investigations

    We are setting aside a period for interested parties to raise 
issues regarding product coverage. See, e.g., Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997). 
The Department encourages all interested parties to submit such 
comments within 20 calendar days of signature of this notice. Comments 
should be addressed to Import Administration's Central Records Unit 
(CRU), 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 to 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 who support the petition account for (i) at least 25 percent 
of the total production of the domestic like product and (ii) 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 
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 if there 
is a large number of producers in the industry.
    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 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 because the Department determines industry support at the 
time of initiation. 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. See Algoma Steel Corp. Ltd. 
v. United States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 865 F.2d 240 
(CAFC 1989).
    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 domestic like product, the petitioner does not 
offer a definition of domestic like product distinct from the scope of 
the investigations. Based on our analysis of the information submitted 
on the record, we have determined that EMD constitutes a single 
domestic like product and we have analyzed industry support in terms of 
that domestic like product. For a discussion of the domestic like-
product analysis in these cases, see the Antidumping Duty Investigation 
Initiation Checklist: Electrolytic Manganese Dioxide from Australia 
(Australia Initiation Checklist) at Attachment II and the Antidumping 
Duty Investigation Initiation Checklist: Electrolytic Manganese Dioxide 
from the People's Republic of China (PRC) (PRC Initiation Checklist) at 
Attachment II, on file in the Central Records Unit, Room B-099 of the 
main Department of Commerce building.
    Our review of the data provided in the Petitions, Supplemental 
Responses, and other information readily available to the Department 
indicates that the petitioner has established industry support. With 
regard to the Australia Petition, the domestic producers have met the 
statutory criteria for industry support under section 732(c)(4)(A)(i) 
of the Act because the domestic producers who support the Australia 
Petition account for at least 25 percent of the total production of the 
domestic like product. Second, the domestic producers have met the 
statutory criteria for industry support under section 732(c)(4)(A)(ii) 
of the Act because the domestic producers who support the Australia 
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 Australia Petition. 
Because the Petition established support from domestic producers 
accounting for more than 50 percent of the total production of the 
domestic like product, the Department is not required to take further 
action in order to evaluate industry support, e.g., polling. See 
section 732(c)(4)(D) of the Act. Accordingly, the Department determines 
that the Australia Petition was filed on behalf of the domestic 
industry within the meaning of section 732(b)(1) of the Act. See 
Australia Initiation Checklist at Attachment II.
    With regard to the PRC Petition, based on information provided in 
the Petition, we determine that the domestic producers have met the 
statutory criteria for industry support under section 732(c)(4)(A)(i) 
of the Act because the domestic producers who support the PRC Petition 
account for at least 25 percent of the total production of the domestic 
like product. The Petition did not establish support from domestic 
producers accounting for more than 50 percent of the total production 
of the domestic like product, however, and the Department was required 
to take further action in order to evaluate industry support. See 
section 732(c)(4)(D) of the Act. In this case, the Department was able 
to rely on other information, in accordance with section 
732(c)(4)(D)(i) of the Act, to determine industry support. See PRC 
Initiation Checklist at Attachment II. Based on information provided in 
the Petition and other submissions, the domestic producers have met the 
statutory criteria for industry support under section 732(c)(4)(A)(ii) 
of the Act because the domestic producers who support the PRC 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 PRC Petition. Accordingly, the Department 
determines that the PRC Petition was filed on behalf of the domestic 
industry within the meaning of section 732(b)(1) of the Act. See PRC 
Initiation Checklist at Attachment II.
    The Department finds that the petitioner filed the Petitions on 
behalf of the domestic industry in accordance with section 732(c)(4)(A) 
of the Act. The petitioner is an interested party as defined in section 
771(9)(C) of the Act and it has demonstrated sufficient

[[Page 52852]]

industry support in favor of the initiation of the antidumping duty 
investigations. See Australia Initiation Checklist at Attachment II and 
PRC Initiation Checklist at Attachment II.

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 imports of the subject 
merchandise sold at less than normal value. The petitioner contends 
that the industry's injured condition is illustrated by reduced market 
share, lost sales, smaller production, reduced capacity, a lower 
capacity-utilization rate, fewer shipments, underselling, price 
depression or suppression, lost revenue, decline in financial 
performance, and increase in import penetration. 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 Australia Initiation Checklist at Attachment III and 
PRC Initiation Checklist at Attachment III.

Allegations of Sales at Less Than Fair Value

    The following is a description of the allegations of sales at less 
than fair value upon which the Department based its decision to 
initiate investigations of imports of EMD from Australia and the PRC. 
The sources of data for the deductions and adjustments relating to U.S. 
price and normal value are discussed in greater detail in the Australia 
Initiation Checklist and PRC Initiation Checklist. We corrected certain 
information in the petitioner's margin calculations and these 
corrections are set forth in detail in the Initiation Checklists. 
Should the need arise to use any of this information as facts available 
under section 776 of the Act, we will re-examine this information and 
may revise the margin calculations if appropriate.

Alleged U.S. Price and Normal Value: Australia

    The petitioner calculated a single export price using the POI-
average unit customs values (AUVs) for U.S. import data, as reported on 
the ITC's Dataweb for the POI. The petitioner deducted an amount for 
foreign inland-freight costs. See Petition at Exhibit 11, Supplemental 
Responses at Exhibit R, and Australia Initiation Checklist.
    In calculating the export price, the petitioner relied exclusively 
on AUV data with respect to U.S. imports from Australia under the HTSUS 
number 2820.10.00.00. This HTSUS number is a ``basket category'' as it 
includes both subject EMD and non-subject chemical manganese dioxide 
(CMD) and natural manganese dioxide (NMD). The petitioner used PIERS 
data to demonstrate that the imports under HTSUS number 2820.10.00.00 
are in fact overwhelmingly subject merchandise because PIERS provides 
more specific product-identification information than official U.S. 
Census data as reported on the ITC's Dataweb import statistics 
(Dataweb). See Petitions at Exhibit 10. In addition, the petitioner 
provided information that indicates that there are no producers of CMD 
or NMD in Australia and that the majority of imports under this HTSUS 
number are from a company that only produces EMD. See Petitions at 
Exhibit 3. Therefore, in this case, we find that the petitioner has 
provided information on the record that supports its position that the 
overwhelming percentage of the imports from Australia are, in fact, 
within the scope of the investigation. As such, we are able to conclude 
that most, if not all, of the imports from Australia under this HTSUS 
number are EMD and are, therefore, adequate figures upon which to base 
export prices for Australia.
    With respect to normal value, the petitioner provided information 
that there were no sales in commercial quantities of EMD in the home 
market during the POI and that home-market prices were not reasonably 
available. Id. The petitioner proposed Japan as the largest third-
country comparison market and demonstrated that Japan is a viable 
third-country market. See Petitions at Exhibit 15. The petitioner 
provided Global Trade Atlas EMD import data for exports from Australia 
into Japan and compared them with U.S. EMD import data for imports from 
Australia. According to these figures, the sales volume to Japan was 
greater than five percent of the sales volume to the United States. The 
petitioner compared third-country prices with an estimate of the cost 
of producing EMD in powder form by Delta EMD Australia Pty Ltd. 
(Delta). Because these data indicate that sales of EMD were made at 
prices below the product's COP, the petitioner requests that the 
Department initiate a cost investigation of Delta.
    The petitioner has provided information demonstrating reasonable 
grounds to believe or suspect that sales of EMD from Australia to Japan 
were made at prices below the fully absorbed COP within the meaning of 
section 773(b) of the Act and has requested that the Department conduct 
a country-wide sales-below-cost investigation. See our analysis of the 
allegation below. An allegation of sales below cost in a petition does 
not need to be specific to individual exporters or producers. See, 
e.g., Statement of Administrative Action accompanying the Uruguay Round 
Agreements Act, H.R. Doc. No. 103 316, Vol. 1, at 833 (1994). Thus, the 
Department will consider allegations of below-cost sales in the 
aggregate for a foreign country. Id. Further, section 773(b)(2)(A) of 
the Act requires that the Department 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. See section 
773(b)(2)(A)(i) of the Act.
    The Department has calculated a country-specific COP for EMD in 
Australia. Based upon a comparison of sales prices of EMD in Japan and 
the country-specific cost of producing the product, we find reasonable 
grounds to believe or suspect that sales of EMD produced in Australia 
and sold in Japan were made at prices 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 with regard to sales of 
EMD from Australia to Japan. If we determine during the course of this 
investigation that the home market, i.e., Australia, is viable or that 
Japan is not the appropriate third-country market upon which to base 
normal value, our initiation of a country-wide cost investigation with 
respect to sales to Japan will be rendered moot. Because the petitioner 
alleged sales below cost pursuant to sections 773(a)(4), 773(b), and 
773(e) of the Act, the petitioner also based normal value for sales of 
EMD on constructed value.
    Pursuant to section 773(b)(3) of the Act, COP consists of the cost 
of manufacturing (COM), selling, general, and administrative expenses 
(SG&A), financial expenses, and packing expenses. To calculate the COM, 
the petitioner relied on its own costs during the 2006 fiscal year, 
adjusted for known differences between the costs in the United States 
and the costs in Australia. The petitioner obtained all of the cost 
differences between the United States and Australia that were used to 
calculate the COM from public sources. The petitioner used its own 
factory-

[[Page 52853]]

overhead costs (FOH) as a conservative estimate of the Australian FOH. 
This is because the petitioner's facilities are older than Delta's and 
would thus likely have lower depreciation. Also, the petitioner states 
that, according to Delta's annual report, it has limited production in 
Australia, which would increase Delta's actual per-unit cost of FOH.
    Because Delta's unconsolidated financial statements were not 
reasonably available, the petitioner used the financial statements of 
an Australian zinc producer because, it asserts, zinc undergoes a 
production process similar to EMD. The petitioner calculated SG&A and 
profit ratios using the 2006 consolidated financial statements of 
Zinifex Ltd. (Zinifex), an Australian conglomerate that has mining, 
smelting, and alloy segments that produce zinc. The petitioner 
calculated a financial-expense ratio based on the 2006 consolidated 
financial statements of Delta's parent company, Delta PLC. Where the 
petitioner used constructed value to determine normal value, it added 
an amount for profit from Zinifex's financial statements.
    We adjusted the petitioner's calculation of SG&A and profit ratios 
by using information from Delta PLC's consolidated financial statement 
pertinent to the Australian EMD segment of its business. We used Delta 
PLC's financial records because these records included Delta's actual 
costs of producing the merchandise under consideration. See Australia 
Initiation Checklist for a full description of the petitioner's 
methodology and the adjustments we made to those calculations.

Alleged U.S. Price and Normal Value: The People's Republic of China

    The petitioner based its U.S. price calculation on the POI-AUVs of 
U.S. imports from the PRC under HTSUS number 2820.10.00.00, as reported 
on the ITC's Dataweb for the POI. As noted above in the ``Alleged U.S. 
Price and Normal Value: Australia'' subsection, the petitioner 
demonstrated, using PIERS data, that the overwhelming percentage of the 
imports into the United States from the PRC were of subject EMD. The 
petitioner calculated an average Net U.S. Price for PRC alkaline-grade 
EMD by subtracting an estimate of foreign inland-freight costs from the 
AUV of imports for the POI. See PRC Initiation Checklist at 5.
    Because the Department considers the PRC to be a non-market-economy 
country (NME), the petitioner constructed normal value based on the 
factors-of-production methodology pursuant to section 773(c) of the 
Act. Recently, the Department examined the PRC's market status and 
determined that NME status should continue for the PRC. See Memorandum 
from the Office of Policy to David M. Spooner, Assistant Secretary for 
Import Administration, Regarding the People's Republic of China Status 
as a Non-Market Economy, dated August 30, 2006. (This document is 
available online at http://ia.ita.doc.gov/download/prc-nme-status/prc-lined-paper-memo-08302006.pdf.) In addition, in two recent 
investigations, the Department also determined that the PRC is an NME 
country. See Final Determination of Sales at Less Than Fair Value: 
Certain Activated Carbon from the People's Republic of China, 72 FR 
9508 (March 2, 2007), and Final Determination of Sales at Less Than 
Fair Value and Partial Affirmative Determination of Critical 
Circumstances: Certain Polyester Staple Fiber from the People's 
Republic of China, 72 FR 19690 (April 19, 2007). In accordance with 
section 771(18)(C)(i) of the Act, the NME status remains in effect 
until revoked by the Department. The presumption of 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 normal value of the product is based appropriately on 
factors of production valued in a surrogate market-economy country in 
accordance with section 773(c) of the Act. During 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.
    The petitioner asserts that India is the most appropriate surrogate 
country for the PRC because India is a significant producer of 
comparable merchandise and at a level of economic development 
comparable to the PRC. See Petition at 23. Based on the information 
provided by the petitioner, we believe that the petitioner's use of 
India as a surrogate country is appropriate for purposes of initiating 
this investigation. After the initiation of the investigation, we will 
solicit comments regarding surrogate-country selection. Also, pursuant 
to 19 CFR 351.301(c)(3)(i), interested parties will be provided an 
opportunity to submit publicly available information to value the 
factors of production within 40 calendar days after the date of 
publication of the preliminary determination.
    The petitioner provided dumping-margin calculations using the 
Department's NME methodology as required by 19 CFR 351.202(b)(7)(i)(C) 
and 19 CFR 351.408. The petitioner calculated normal value for the U.S. 
price discussed above based on its own consumption rates for producing 
alkaline-grade EMD which it stated should be similar to the consumption 
of PRC producers. The petitioner used its own consumption figures for 
the period covering July 1, 2006, through December 31, 2006. See 
Petitions at 23-24 and Exhibits 22 and 27, Attachment B. The petitioner 
states that, while the producer in the United States uses only 
manganese dioxide ore to produce EMD, producers in the PRC use both 
manganese dioxide ore and manganese carbonate ore to produce EMD. See 
Petitions at 23-24 and Exhibit 3. The petitioner explains, however, 
that, because it does not have reliable usage-rate data for PRC 
carbonate ore and because the petitioner reasonably believes that 
several producers/exporters in the PRC use manganese dioxide ore to 
manufacture EMD, the petitioner's allegations are based on its own 
usage rate for manganese dioxide ore. Id. The petitioner stated that it 
made no adjustments to the normal-value calculations because no known 
material differences exist between its production process in the United 
States and the manufacturing experience in the PRC. See Supplemental 
Responses at 8 and Exhibit A. Thus, the petitioner has assumed, for 
purposes of the Petitions, that producers in the PRC use the same 
inputs in the same quantities as those it uses.
    For the normal-value calculations, pursuant to section 773(c)(4) of 
the Act, the petitioner used surrogate values from a variety of 
sources, including Monthly Statistics of Foreign Trade of India, 
Volumes I and II, Directorate General of Commercial Intelligence & 
Statistics (Monthly) (MSFTI), the Department's NME Wage Rate for the 
PRC, the Department's factor-valuation memoranda from other NME 
proceedings, and publicly available financial statements, to value the 
factor of production (FOP). See Petitions at 24 and Supplemental 
Responses at Exhibit G. The petitioner converted the inputs valued in 
Indian rupees to U.S. dollars based on the average rupee/U.S. dollar 
exchange rate for the POI, as reported on the Department's website at 
http://ia.ita.doc.gov/exchange/index.html. See Supplemental Responses 
at 4 and Exhibits F and G.
    For manganese dioxide ore, the main raw material in the production 
of EMD, the petitioner provided a surrogate value based on the input 
price paid by Eveready Industries India, Ltd. (Eveready India), an 
Indian

[[Page 52854]]

manufacturer of the subject merchandise, as reflected in Eveready 
India's 2006 financial statements. See Petitions at 24, footnote 47. 
For other inputs, e.g., sulfuric acid, caustic soda, hydrogen sulfide, 
etc., the petitioner provided surrogate values based on pricing 
information from the World Trade Atlas. See Petitions at 24 and 
Supplemental Responses at Exhibits G and M. With regard to energy 
(electricity), the petitioner provided a surrogate value using the 
Department's Factors of Production Valuation Memorandum for the 
Preliminary Results of Partial Rescission of the Fourth Antidumping 
Duty Administrative Review and Eighth New Shipper Review of Honey from 
the People's Republic of China (December 21, 2006). See Petitions at 
Exhibit 21 and Supplemental Responses at Exhibit G. In addition, the 
petitioner provided a surrogate value for natural gas, a second energy 
source, using pricing information from the Gas Authority of India 
website. See Supplemental Responses at 5. Labor was valued using the 
expected wage rate for the PRC provided by the Department. See 
Petitions at 24 and Supplemental Responses at Exhibit G. Additionally, 
the petitioner explained that, where Indian surrogate values were not 
readily available and the costs of such factors were insignificant, it 
applied a ``zero'' value. See Petitions at 24 and Supplemental 
Responses at 5 and Exhibit G.
    For the normal-value calculations, the petitioner derived the 
figures for FOH, SG&A, and profit from the financial ratios of Eveready 
India and Manganese Ore (India) Limited (MOIL), two Indian producers of 
merchandise that is either identical or similar to the domestic like 
product. The financial statements that the petitioner provided covered 
the period of April 2005 to March 2006. Additionally, the petitioner 
calculated a simple average of the two companies' financial ratios for 
purposes of the Petition. Further, because Eveready India did not earn 
a profit while MOIL earned a profit, the petitioner calculated normal 
value using the profit ratio of MOIL, not Eveready India. See 
Supplemental Responses at 7 and Exhibit G.
    Since Eveready India's financial statement did not report a profit, 
we have determined not to use Eveready India in our calculation of 
surrogate financial ratios for purposes of this initiation. It is the 
Department's practice to disregard financial statements with zero 
profit when there are financial statements of other surrogate companies 
that have earned profit on the record. See Certain Frozen Warmwater 
Shrimp from the Socialist Republic of Vietnam: Final Results of the 
First Antidumping Administrative Review and First New Shipper Review 
(signed on September 5, 2007; expected publication on September 12, 
2007, in the Federal Register) and the Accompanying Issues and Decision 
Memorandum at Comment 2, section B. Based on our review of the 
information contained in the Petitions, we recalculated the surrogate 
financial ratios for the PRC using MOIL's financial information for 
material, labor, and energy (ML&E), FOH, SG&A, and profit. Although the 
petitioner calculated MOIL's financial ratios based on MOIL's 
consolidated financial statement, we calculated the ML&E, FOH, and 
profit ratios using the financial statement of MOIL's EMD division. 
Because MOIL did not have specific information regarding SG&A, we 
continued to use the consolidated financial statement to calculate the 
surrogate SG&A expense. We then calculated the profit ratio using the 
EMD division values for ML&E and FOH (i.e., COM) plus the SG&A amount 
(calculated as the SG&A ratio times the COM), and the EMD division 
profit value. We did not make any other adjustment to the normal value 
as calculated by the petitioner.

Fair-Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of EMD from Australia and the PRC are being, or 
are likely to be, sold in the United States at less than fair value. 
Based on comparisons of export price to constructed value that we 
revised as discussed above and calculated in accordance with section 
773(a)(4) of the Act, the estimated dumping margin for EMD from 
Australia is 52.94 percent. Based on comparisons of export price to 
normal value that we revised as discussed above and calculated in 
accordance with section 773(c) of the Act, the estimated dumping margin 
for EMD from the PRC is 133.76 percent.

Initiation of Antidumping Investigations

    Based upon the examination of the Petitions on EMD from Australia 
and the PRC, 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 EMD from Australia and 
the PRC are being, or are likely to be, sold in the United States at 
less than fair value. In accordance with section 733(b)(1)(A) of the 
Act and 19 CFR 351.205((b)(1), unless postponed, we will make our 
preliminary determinations no later than 140 days after the date of 
this initiation.

Separate Rates

    The Department modified the process by which exporters and 
producers may obtain separate-rate status in NME investigations. See 
Policy Bulletin 05.1: Separate-Rates Practice and Application of 
Combination Rates in Antidumping Investigations involving Non-Market 
Economy Countries (April 5, 2005) (Separate Rates and Combination Rates 
Bulletin), available on the Department's website at http://ia.ita.doc.gov/policy/bull05-1.pdf. The process requires the submission 
of a separate-rate status application. Based on our experience in 
processing the separate-rate applications in the following antidumping 
duty investigations, we have modified the application for this 
investigation to make it more administrable and easier for applicants 
to complete. See, e.g., Initiation of Antidumping Duty Investigation: 
Certain New Pneumatic Off-the-Road Tires from the People's Republic of 
China, 72 FR 43591, 43594-95 (August 6, 2007) (Tires from the PRC). The 
specific requirements for submitting the separate-rate application in 
this investigation are outlined in detail in the application itself, 
which will be available on the Department's website at http://ia.ita.doc.gov/ia-highlights-and-news.html on the date of publication 
of this initiation notice in the Federal Register. The separate-rate 
application is due no later than November 9, 2007.

Respondent Selection and Quantity and Value Questionnaire

    In prior NME investigations, it has been the Department's practice 
to request quantity and value information from all known exporters 
identified in the PRC Petition. See, e.g., Tires from the PRC, 72 FR at 
43595. For this investigation, because the HTSUS number 2820.10.00.00, 
as discussed above in the ``Scope of the Investigation,'' provides 
comprehensive coverage of imports of EMD, the Department expects to 
select respondents in this investigation based on U.S. Customs and 
Border Protection (CBP) data of U.S. imports under HTSUS number 
2820.10.00.00 during the POI.

Use of Combination Rates in an NME Investigation

    The Department will calculate combination rates for certain 
respondents that are eligible for a separate rate in this 
investigation. The

[[Page 52855]]

Separate Rates and Combination Rates Bulletin, at 6, explains that, 
while continuing the practice of assigning separate rates only to 
exporters, all separate rates that the Department will now assign in 
its NME investigations will be specific to those producers that 
supplied the exporter during the POI. Note, however, that one rate is 
calculated for the exporter and all of the producers which supplied 
subject merchandise to it during the POI. This practice applies both to 
mandatory respondents receiving an individually calculated separate 
rate as well as the pool of non-investigated firms receiving the 
weighted-average of the individually calculated rates. This practice is 
referred to as the application of ``combination rates'' because such 
rates apply to specific combinations of exporters and one or more 
producers. The cash-deposit rate assigned to an exporter will apply 
only to merchandise both exported by the firm in question and produced 
by a firm that supplied the exporter during the POI.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the Petitions has been provided to representatives of 
the governments of Australia and the PRC. We will attempt to provide a 
copy of the public version of the Petitions to all exporters named in 
the Petitions, as provided for in 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 Determinations by the ITC

    The ITC will preliminarily determine no later than October 9, 2007, 
whether there is a reasonable indication that imports of EMD from 
Australia and the PRC are materially injuring or threatening 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: September 11, 2007.
Joseph A. Spetrini,
Deputy Assistant Secretary for Import Administration.
[FR Doc. E7-18257 Filed 9-14-07; 8:45 am]
BILLING CODE 3510-DS-S