[Federal Register Volume 76, Number 90 (Tuesday, May 10, 2011)]
[Notices]
[Pages 27007-27016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-11394]



[[Page 27007]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-918]


Steel Wire Garment Hangers From the People's Republic of China: 
Affirmative Preliminary Determination of Circumvention of the 
Antidumping Duty Order and Extension of Final Determination

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

Preliminary Determination

    We preliminarily determine that steel wire garment hangers 
(``garment hangers'') exported by Angang Clothes Rack Manufacture Co., 
Ltd. (``Angang'') and Quyky Yanglei International Co., Ltd. (``Quyky'') 
are circumventing the antidumping duty order on garment hangers from 
the People's Republic of China (``PRC''), as provided in section 781(b) 
of the Tariff Act of 1930, as amended (``the Act''). See Notice of 
Antidumping Duty Order: Steel Wire Garment Hangers from the People's 
Republic of China, 73 FR 58111 (October 6, 2008) (``Order'').

DATES: Effective Date: May 10, 2011.

FOR FURTHER INFORMATION CONTACT: Irene Gorelik or Jamie Blair-Walker, 
Office 9, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-6905 or (202) 482-2615, 
respectively.

SUPPLEMENTARY INFORMATION: 

Background

    On May 5, 2010, M&B Metal Products Co., (``Petitioner'') requested 
that the Department of Commerce (``the Department'') initiate an anti-
circumvention inquiry pursuant to section 781(b) of the Act, and 19 CFR 
351.225(h), to determine whether U.S. imports of garment hangers 
shipped from Vietnam by Angang and Quyky, and made from PRC-origin, 
semi-finished garment hangers \1\ are circumventing the Order. In its 
request, Petitioner alleged that PRC manufacturers of subject 
merchandise have been circumventing the Order by using two Vietnamese 
companies to export their hangers.\2\ Specifically, Petitioner 
indicated that it had evidence that: (1) Angang is exporting hangers 
from Vietnam made from components manufactured and supplied by its 
alleged Chinese owner, Shaoxing Gangyuan Metal Manufactured Co., Ltd. 
(``Gangyuan'') \3\; (2) Quyky is exporting hangers from Vietnam made 
from components manufactured and supplied by a Chinese company, 
Shanghai Ruishan Metal Products Co., Ltd. (``Ruishan''); and (3) the 
evidence obtained by Petitioner supported a finding that these parties 
were circumventing the Order pursuant to section 781(b) of the Act.\4\
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    \1\ See Petitioner's Requests for Circumvention Inquiries dated 
May 5, 2010. In this proceeding, semi-finished steel wire garment 
hangers (``semi-finished hangers'') refer to both shirt hangers and 
strut hangers that have not been ``finished'' with coating powder or 
paint and paper capes or paper tubes.
    \2\ See Petitioner's Requests for Circumvention Inquiries dated 
May 5, 2010.
    \3\ The names of Angang's actual parent company in the PRC and 
another affiliated company, (hereinafter referred to as ``Company 
X'') are business proprietary information. For further details, see 
``Memorandum to the File through Catherine Bertrand, Program 
Manager, Office 9 from Irene Gorelik, Senior Analyst, re; 
Circumvention Inquiry on Steel Wire Garment Hangers from the 
People's Republic of China: Proprietary Analysis of Certain 
Statutory Factors for Angang Clothes Rack Manufacture Co., Ltd. for 
the Preliminary Determination,'' (``Angang Prelim Analysis Memo''), 
dated concurrently with this Federal Register notice.
    \4\ See id.
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    On May 20, 2010, the Department issued a letter to Petitioner with 
supplemental questions concerning both Angang and Quyky and Petitioner 
responded to this request on May 25, 2010. After reviewing Petitioner's 
submissions, on July 16, 2010, the Department initiated an anti-
circumvention inquiry on imports of garment hangers from Vietnam 
exported by Angang and Quyky.\5\ In the Initiation Notice, the 
Department stated that it would focus its analysis on the significance 
of the production process in Vietnam by Angang and Quyky.\6\
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    \5\ See Steel Wire Garment Hangers From the People's Republic of 
China: Initiation of Anti-Circumvention Inquiry, 75 FR 42685 (July 
22, 2010) (``Initiation Notice'').
    \6\ See id. at 42689.
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    The Department issued questionnaires to Quyky and Angang on July 
23, 2010. The Department has, to date, not received any responses to 
our requests for information from Quyky. The Department also issued 
multiple supplemental questionnaires to Angang between August 2010 and 
March 2011. On December 22, 2010, Angang requested that the Department 
preliminarily rule that it was not circumventing the Order and 
submitted arguments regarding its hanger production facilities and 
exports as they relate to the statutory criteria for anti-circumvention 
proceedings. Angang has stated on the record that its affiliates \7\ in 
the PRC were the sole suppliers \8\ of the PRC-origin semi-finished 
garment hangers \9\, to which Angang added either PRC-origin powder 
coating or paint and paper attachments such as tubes and then exported 
\10\ this merchandise to the United States.
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    \7\ Angang has stated on the record that it is affiliated with 
Company X. See Angang's Questionnaire Response dated September 17, 
2010 at 2-3 and Exhibit 3. The name of this affiliated company is 
business proprietary information.
    \8\ See Angang's Questionnaire Response dated November 19, 2010, 
at 27-28.
    \9\ For the purposes of these circumvention inquiries, we refer 
to the PRC-origin uncoated, paper-less hanger-shaped steel wire as 
``semi finished'' steel wire hangers.
    \10\ See, e.g., Angang's Questionnaire Response dated October 8, 
2010 at Exhibit 1; Angang's Questionnaire Response dated November 
19, 2010, at 13.
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Scope of the Antidumping Duty Order

    The merchandise that is subject to the order is steel wire garment 
hangers, fabricated from carbon steel wire, whether or not galvanized 
or painted, whether or not coated with latex or epoxy or similar 
gripping materials, and/or whether or not fashioned with paper covers 
or capes (with or without printing) and/or nonslip features such as 
saddles or tubes. These products may also be referred to by a 
commercial designation, such as shirt, suit, strut, caped, or latex 
(industrial) hangers. Specifically excluded from the scope of the order 
are wooden, plastic, and other garment hangers that are not made of 
steel wire. Also excluded from the scope of the order are chrome-plated 
steel wire garment hangers with a diameter of 3.4 mm or greater. The 
products subject to the order are currently classified under Harmonized 
Tariff Schedule of the United States (``HTSUS'') subheadings 
7326.20.0020, 7323.99.9060 and 7323.99.9080.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the merchandise is 
dispositive.

Scope of the Anti-Circumvention Inquiry

    The products covered by this inquiry are hangers, as described in 
the ``Scope of the Antidumping Duty Order'' section above, that are 
exported from Vietnam, but manufactured from PRC-origin, semi-finished 
garment hangers and completed in Vietnam with PRC-origin, paper 
attachments and other direct materials such as latex or glue. While we 
acknowledge that Angang has repeatedly stated on the record that it 
also self-produces garment hangers from

[[Page 27008]]

steel wire rod \11\, the focus and intent of this proceeding is to 
determine whether the semi-finished garment hangers: (1) Manufactured 
in the PRC; (2) exported to Angang's facility in Vietnam for completion 
(by adding PRC-origin paper attachments, such as tubes, PRC-origin 
latex or glue) \12\; and (3) then exported by Angang to the United 
States as Vietnamese-origin steel wire garment hangers constitutes 
circumvention of the Order under section 781(b) of the Act.
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    \11\ See, e.g., Angang's Questionnaire Response dated January 
19, 2011 at 5; Angang's Questionnaire Response dated February 1, 
2011 at Exhibit 9; and Angang's Comments dated December 22, 2010 at 
2-5.
    \12\ Angang has reported that the direct materials applied to 
the PRC-origin, semi-finished hangers are also manufactured in, and 
supplied from, the PRC. See, e.g., Angang's Questionnaire Response 
dated November 19, at Exhibit 5; Angang's Questionnaire Response 
dated March 21, 2011 at 4.
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Surrogate Country and Factor Valuation Comments

    In this case, both the country that produced the semi-finished 
garment hangers and the country that produced the steel wire hangers 
from the semi-finished garment hangers are considered to be non-market 
economy (``NME'') countries by the Department. In accordance with 
section 771(18)(C)(i) of the Act, any determination that a foreign 
country is an NME country shall remain in effect until revoked by the 
administering authority.\13\ No party has challenged the designation of 
the PRC or Vietnam as an NME country in this anti-circumvention 
inquiry. Therefore, we continue to treat the PRC and Vietnam as NME 
countries for purposes of the preliminary determination of this anti-
circumvention inquiry.
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    \13\ See, e.g., Preliminary Determination of Sales at Less Than 
Fair Value and Postponement of Final Determination: Coated Free 
Sheet Paper from the People's Republic of China, 72 FR 30758, 30760 
(June 4, 2007), unchanged in Final Determination of Sales at Less 
Than Fair Value: Coated Free Sheet Paper from the People's Republic 
of China, 72 FR 60632 (October 25, 2007); Certain Frozen Fish 
Fillets from the Socialist Republic of Vietnam: Final Results of the 
Second Administrative, 72 FR 13242 (March 21, 2007) (``Fish Fillets 
Anticircumvention'').
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    On January 7, 2011, the Department determined that India, the 
Philippines, Indonesia, Thailand, Ukraine, and Peru are countries 
comparable to the PRC and also determined that Bangladesh, Pakistan, 
India, Sri Lanka, the Philippines, and Indonesia are countries 
comparable to Vietnam in terms of economic development.\14\ On January 
12, 2011, the Department solicited comments from interested parties 
regarding the selection of a surrogate country and of surrogate factor 
valuations. On February 11, 2011, Petitioner submitted comments on the 
selection of a surrogate country. No other interested party commented 
on the selection of a surrogate country. On February 18, 2011, 
Petitioner submitted surrogate factor valuation comments. No other 
interested party submitted surrogate factor valuation comments.
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    \14\ See ``Memorandum from Carole Showers, Director, Office of 
Policy, to Catherine Bertrand, Program Manager, China/NME Group, 
Office 9; Anti-Circumvention Inquiry of the Antidumping Duty Order 
of Steel Wire Garment Hangers from the People's Republic of China 
(``PRC''): Request for a List of Surrogate Countries,'' dated 
January 7, 2011 (``Surrogate Country List'').
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Extension of Determination Deadline

    On February 28, 2011, the Department extended the final 
determination deadline of this anti-circumvention inquiry to November 
1, 2011.

Affirmative Preliminary Determination of Circumvention

    For the reasons described below, we preliminarily determine that, 
pursuant to section 781(b) of the Act, circumvention of the Order is 
occurring by reason of exports of semi-finished garment hangers from 
the PRC imported by, or sold to, Angang and Quyky, and which 
subsequently undergo further assembly in Vietnam before exportation to 
the United States.

Quyky

Facts Available
    Section 776(a) of the Act requires the Department to rely on facts 
otherwise available if necessary information is not available on the 
record or an interested party or any other person: (A) Withholds 
information requested by the Department; (B) fails to provide requested 
information by the deadlines for submission of the information or in 
the form and manner requested, subject to subsections (c)(1) and (e) of 
section 782 of the Act; (C) significantly impedes a proceeding; or (D) 
provides requested information, but the information cannot be verified 
as provided in section 782(i) of the Act. One of the Vietnamese 
companies subject to this anti-circumvention inquiry, Quyky, failed to 
respond to any of the Department's requests for information. Therefore, 
we preliminarily find that, pursuant to sections 776(a)(2)(A) and (B) 
of the Act, it is appropriate to apply facts available to Quyky. In 
addition, section 776(b) of the Act permits the Department to use an 
inference that is adverse to the interests of an interested party if 
that party fails to cooperate by not acting to the best of its ability 
to comply with a request for information. Such an adverse inference may 
include reliance on information derived from the petition, a final 
determination in the less-than-fair-value investigation, any previous 
administrative review, or any other information placed on the record.
    At no point during this entire proceeding, did Quyky notify the 
Department that it was unable to comply with our requests. Quyky's 
refusal to respond to our questionnaire precludes the Department from 
making an informed determination based on record evidence as to whether 
it is (or is not) circumventing the Order. In addition, because Quyky 
failed to provide the Department with any information at all, we are 
also unable to distinguish between its imports or purchase of semi-
finished garment hangers from the PRC for purposes other than assembly 
into merchandise covered by the Order. Consequently, because Quyky 
refused to comply with the Department's request for information, we 
find that it failed to cooperate to the best of its ability, and 
therefore, that an adverse inference is warranted pursuant to section 
776(b) of the Act. Accordingly, as an adverse inference, the Department 
preliminarily finds that all of the hangers produced and/or exported by 
Quyky to the United States are circumventing the Order.

Angang

Applicable Statute
    Section 781 of the Act addresses circumvention of antidumping or 
countervailing duty orders. With respect to merchandise assembled or 
completed in a third country, section 781(b)(1) of the Act provides 
that if: (A) The merchandise imported into the United States is of the 
same class or kind as any merchandise produced in a foreign country 
that is the subject of an antidumping duty order; (B) before 
importation into the United States, such imported merchandise is 
completed or assembled in a third country from merchandise which is 
subject to such an order or is produced in the foreign country with 
respect to which such order applies; (C) the process of assembly or 
completion in a third country is minor or insignificant; (D) the value 
of the merchandise produced in the foreign country to which the 
antidumping duty order applies is a significant portion of the total 
value of the merchandise exported to the United States; and (E) the 
Department determines that action is appropriate to prevent evasion of 
an order. The Department, after taking into account any advice provided 
by the United States International Trade Commission (``ITC''), under 
section 781(e) of the Act, may include such imported

[[Page 27009]]

merchandise within the scope of an order at any time an order is in 
effect.
    In determining whether the process of assembly or completion in a 
third country is minor or insignificant under section 781(b)(1)(C) of 
the Act, section 781(b)(2) of the Act directs the Department to 
consider: (A) The level of investment in the third country; (B) the 
level of research and development in the third country; (C) the nature 
of the production process in the third country; (D) the extent of 
production facilities in the third country; and (E) whether the value 
of processing performed in the third country represents a small 
proportion of the value of the merchandise imported into the United 
States. However, none of these five factors, by itself, is controlling 
on the Department's determination of whether the process of assembly or 
completion in a third country is minor or insignificant.\15\ 
Accordingly, it is the Department's practice to evaluate each of these 
factors as they exist in the third country depending on the particular 
anti-circumvention inquiry.\16\ Further, section 781(b)(3) of the Act 
sets forth the factors to consider in determining whether to include 
merchandise assembled or completed in a third country in an antidumping 
duty order. Specifically, the Department shall take into account such 
factors as: (A) The pattern of trade, including sourcing patterns; (B) 
whether the manufacturer or exporter of the merchandise is affiliated 
with the person who, in the third country, uses the merchandise to 
complete or assemble in the merchandise which is subsequently imported 
into the United States; and (C) whether imports into the third country 
of the merchandise have increased after the initiation of the 
investigation which resulted in the issuance of an order.
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    \15\ See SAA at 893.
    \16\ See Certain Tissue Paper Products from the People's 
Republic of China: Affirmative Final Determination of Circumvention 
of the Antidumping Duty Order, 73 FR 57591, 57592 (October 3, 2008) 
(``Tissue Paper Anti-Circumvention 2008 Final'').
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Statutory Analysis

(A) Whether Merchandise Imported Into the United States Is of the Same 
Class or Kind as Other Merchandise That is Subject to the Order

    The Order covers garment hangers produced from carbon steel wire, 
whether or not galvanized or painted, whether or not coated with latex 
or epoxy or similar gripping materials, and/or whether or not fashioned 
with paper covers or capes (with or without printing) and/or nonslip 
features such as saddles or tubes. These products may also be referred 
to by a commercial designation, such as shirt, suit, strut, caped, or 
latex (industrial) hangers. The merchandise subject to this inquiry is 
garment hangers exported to the United States by Angang produced from 
PRC-origin, semi-finished garment hangers.
    The Department has reviewed the information provided by Angang in 
its questionnaire responses and finds that this evidence indicates that 
Angang's garment hangers, produced from PRC-origin, semi-finished 
garment hangers and exported to the United States meet the written 
description of the products subject to the Order.\17\ Specifically, 
Angang submitted a product list showing that all the garment hanger 
types it produced and exported to the United States, which fit the 
description of the merchandise subject to the Order.\18\ Further, we 
preliminarily find that the products identified and described in the 
product list are no different than those identified in the scope of the 
Order.\19\ Angang also indicated that 100 percent of its production is 
steel wire garment hangers, that 100 percent of its production is for 
export to the United States, and provided sample invoices and packing 
lists which show the description of the exported merchandise, which we 
find also matches the descriptions in the scope of the Order.\20\ 
Finally, we note that Angang itself admitted that, from September 2008 
through August 2010, it sold steel wire hangers that meet the scope of 
the Order.\21\ Accordingly, we find that the merchandise subject to 
this inquiry is the same class or kind of merchandise as that subject 
to the Order.
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    \17\ See Angang's Questionnaire Response dated September 7, 2010 
at 6-11.
    \18\ See id.
    \19\ As the product descriptions in the product list are 
business proprietary information, see Angang Prelim Analysis Memo 
for further detail.
    \20\ See Angang's Questionnaire Response dated October 12, 2010 
at 3 and Exhibit 3.
    \21\ See Angang's Questionnaire Response dated November 22, 2010 
at 5.
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(B) Whether, Before Importation Into the United States, Such Imported 
Merchandise Is Completed or Assembled in A Third Country From 
Merchandise Which Is Subject to the Order or Produced in the Foreign 
Country That Is Subject to the Order

    As noted above, the merchandise subject to this proceeding are 
garment hangers exported to the United States that are finished or 
processed in Vietnam from PRC-origin, semi-finished garment hangers. As 
stated above, although Angang has repeatedly noted on the record that 
it also self-produces garment hangers from steel wire rod,\22\ we find 
the fact that Angang self-produces garment hangers from wire rod is 
irrelevant here. As stated above, the merchandise subject to this 
proceeding are Angang's exported garment hangers that were further 
processed from semi-finished garment hangers obtained from the PRC. 
Angang has also plainly stated on the record that between April 2009 
and August 2010, it purchased semi-finished garment hangers from the 
PRC as a main input and further processed these semi-finished garment 
hangers by applying either PRC-origin paint or powder coating and paper 
attachments, which were then packaged as Vietnamese-origin and exported 
to the United States.\23\ Accordingly, we find that the merchandise 
subject to this anti-circumvention inquiry was completed or assembled 
in Vietnam from PRC-origin merchandise which is subject to the Order.
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    \22\ See e.g., Angang's Comments dated December 22, 2010, at 2-
5. The Department notes that the fact that Angang also produces 
hangers from wire rod is irrelevant here because the products 
subject to this proceeding are Angang's exported garment hangers 
that were further processed from semi-finished hangers obtained from 
the PRC.
    \23\ See Angang's Questionnaire Response dated October 8, 2010, 
at Exhibit 1; Angang's Questionnaire Response dated November 19, 
2010, at 10; Angang's Questionnaire Response dated October 1, 2010, 
at Exhibit 1.
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Whether the Process of Assembly or Completion in the Third Country is 
Minor or Insignificant
    Under section 781(b)(1)(C) of the Act, section 781(b)(2) of the Act 
provides the criteria for determining whether the process of assembly 
or completion is minor or insignificant. These criteria are:
    (A) The level of investment in the third country;
    (B) The level of research and development in the third country;
    (C) The nature of the production process in the third country;
    (D) The extent of the production facilities in the third country; 
and
    (E) Whether the value of the processing performed in the third 
country represents a small proportion of the value of the merchandise 
imported into the United States.
    The SAA at 893 explains that no single factor listed in section 
781(b)(2) of the Act will be controlling. Accordingly, it is the 
Department's practice to evaluate each of the factors as they exist in 
the United States or foreign country depending on the

[[Page 27010]]

particular anti-circumvention inquiry.\24\ In this anti-circumvention 
inquiry, based on the record, we have considered and evaluated each 
statutory criterion and all factors in determining whether the process 
of converting the PRC-origin, semi-finished garment hangers in Vietnam 
were minor or insignificant, in accordance with section 781(b)(2) of 
the Act, consistent with our analysis in prior anti-circumvention 
inquiries.\25\
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    \24\ See Tissue Paper Anti-Circumvention 2008 Final.
    \25\ See, e.g., Anti-Circumvention Inquiry of the Antidumping 
and Countervailing Duty Orders on Certain Pasta From Italy: 
Affirmative Preliminary Determinations of Circumvention of 
Antidumping and Countervailing Duty Orders, 68 FR 46571 (August 6, 
2003) (``Pasta Circumvention Prelim'') (unchanged in Anti-
Circumvention Inquiry of the Antidumping and Countervailing Duty 
Orders on Certain Pasta From Italy: Affirmative Final Determinations 
of Circumvention of Antidumping and Countervailing Duty Orders, 68 
FR 54888 (September 19, 2003) (Pasta Circumvention Final''); and 
Hot-Rolled Lead and Bismuth Carbon Steel Products From Germany and 
the United Kingdom; Negative Final Determination of Circumvention of 
Antidumping and Countervailing Duty Orders, 64 FR 40336, 40347-48 
(July 26, 1999) (explaining that Congress has directed the 
Department to focus more on the nature of the production process and 
less on the difference in value between the subject merchandise and 
the parts and the imported parts or components and that any attempt 
to establish a numerical standard would be contrary to the intent of 
Congress).
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781(b)(2)(A): The Level of Investment in Vietnam
    For purposes of this anti-circumvention inquiry, we analyzed the 
level of investment in Angang by its Chinese parent company that is 
associated with converting the PRC-origin, semi-finished garment 
hangers into finished garment hangers for export to the United States. 
Specifically, we reviewed the level of investment in Angang for the 
conversion process by Angang's Chinese parent company and the parent 
company's Chinese affiliate, Company X, and Angang's investment on its 
own behalf. Angang reported that its operations in Vietnam for 
converting PRC-origin, semi-finished garment hangers into garment 
hangers are comprised of capital investment and equipment sourced in 
two ways: (1) Equipment and machinery that Angang purchased from its 
Chinese parent company; and (2) equipment that Angang purchased from 
other PRC companies.\26\ Angang stated that its total investment from 
the Chinese parent company included capital investment and equipment 
investment.\27\ Angang also stated that it made its own equipment 
investment in October 2008.\28\ However, we note that Angang also 
clearly states that ``all of these investments were made by its 
(Chinese) parent company.'' \29\ Additionally, Angang identified the 
types of equipment and where that equipment was used in the production 
of finished garment hangers, (i.e., Angang identified what type of 
equipment, such as powder coating, painting, paper tube and paper cape 
attaching, were used in the processing workshop where the PRC-origin, 
semi-finished garment hangers were converted to finished garment 
hangers).\30\
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    \26\ See, e.g., Angang's Questionnaire Response dated September 
17, 2010, at 10-12, and Exhibits 10-12; Angang's Questionnaire 
Response dated November 19, 2010, at 23-24.
    \27\ See Angang's Questionnaire Response dated September 17, 
2010, at 7.
    \28\ See id.
    \29\ See id.
    \30\ See id., at 14-21.
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    With respect to the equipment investment, Angang stated that ``all 
equipment was fully invested by'' its Chinese parent company and that 
``all equipment is brand-new and made by'' its parent company.\31\ 
However, while Angang provided a listing of machinery \32\ obtained for 
its facility, there were no equipment purchase invoices or receipts 
provided to the Department, except for one oven and other non-hanger 
specific machines purchased by Angang.\33\ Thus, we find that there is 
no information on the record of this proceeding to support Angang's 
claim that the hanger-making machinery supplied by its Chinese parent 
company was ``brand new.'' The only information placed on the record 
with respect to Angang obtaining machines specific to garment hanger 
production is limited to a Vietnamese customs declaration, which: (1) 
Does not indicate an invoice value; (2) if the machines were even 
purchased; or (3) whether the machines are brand new or previously used 
by a PRC company.\34\ Thus, without any other information on the record 
to substantiate its claim that the machinery supplied by the parent 
company, apart from one oven and a few non-hanger specific 
machines,\35\ was brand new, we find that the totality of the record 
does not support Angang's claim that the Chinese parent company's 
investment in Angang's production equipment was new investment.\36\
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    \31\ See id., at 12.
    \32\ See id., at Exhibit 10.
    \33\ See Angang's Questionnaire Response dated November 19, 2010 
at Exhibit 10.
    \34\ See Angang's Questionnaire Response dated September 17, 
2010, at Exhibit 11.
    \35\ See Angang's Questionnaire Response dated November 19, 
2010, at Exhibit 10, for the value-added tax (``VAT'') invoice of 
the fuel oven first reported on page 11 of the September 17, 2010, 
questionnaire response. Angang also provided several VAT invoices 
for machines that were not previously noted in the September 17, 
2010, response, as equipment investments. There is no indication on 
the record that these machines are used solely for garment hanger 
production. See Angang Prelim Analysis Memo.
    \36\ See Angang Prelim Analysis Memo at Attachment I.
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    Moreover, Angang has stated that all the direct materials required 
to complete the PRC-origin, semi-finished garment hangers were supplied 
by the Chinese parent company or affiliated Company X.\37\ Accordingly, 
based on the totality of the record evidence, we find that the level of 
investment by Angang for equipment and direct materials used in 
converting the semi-finished garment hangers to finished garment 
hangers is minor or insignificant compared to the level of investment 
provided by the Chinese parent company and its affiliated Chinese 
Company X.
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    \37\ See Angang's Questionnaire Response dated November 19, 
2010, at Exhibit 5.
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781(b)(2)(B): The Level of Research and Development (``R&D'') in 
Vietnam
    We find that the record evidence for this anti-circumvention 
inquiry demonstrates that Angang has not undertaken a significant level 
of R&D in order to process finished garment hangers. In describing the 
level of R&D in the garment hanger industry in Vietnam, Angang reported 
that R&D efforts are focused on quality control, work efficiency, and 
other efforts that were not substantiated by any supporting 
documentation.\38\ However, according to Angang, its production of 
garment hangers began within two months of the set-up of the operations 
and management teams,\39\ which we find is not indicative of a young 
industry that requires significant time for R&D prior to initial 
production. Furthermore, Angang reported that its Chairman, General 
Manager, and Production Manager are all previously employed by either 
the Chinese parent company or its affiliated Chinese Company X.\40\ 
Accordingly, based on the facts on the record of this anti-
circumvention inquiry, we find that the level of R&D in Vietnam was low 
because Angang employs senior individuals previously employed by its 
Chinese parent or affiliated producer of garment hangers and because 
there is no record evidence otherwise demonstrating that the level of 
R&D in Vietnam was high.
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    \38\ See Angang's Questionnaire Response dated September 17, 
2010, at 13.
    \39\ See id., at 10.
    \40\ See Angang's Questionnaire Response dated September 3, 
2010, at 1-2; see also Angang's Questionnaire Response dated 
September 17, 2010, at 2.

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[[Page 27011]]

781(b)(2)(C): The Nature of the Production Process in Vietnam
    As discussed above, the element of Angang's garment hanger 
production process in Vietnam that we are reviewing is the conversion 
of the PRC-origin, semi-finished garment hangers to finished garment 
hangers. According to Angang, the entire process to produce such 
garment hangers from steel wire rod occurs in twelve stages.\41\ Angang 
has reported that the process to produce semi-finished garment hangers 
comprises the first two steps of the twelve-step process and that these 
two steps are performed in the PRC, while the processes performed in 
Vietnam to produce ``finished'' garment hangers comprise the latter ten 
steps reported.\42\ Angang also provides a very detailed description of 
each stage of garment hanger production.\43\
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    \41\ See id., at 14. Although Angang reported all twelve stages 
of production, the first two stages, described as steel wire drawing 
and molding, were performed in the PRC by Company X.
    \42\ See id.
    \43\ See id., at 14-21.
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    First, the Department notes that Angang's description of the 
Chinese production processes for the first two steps (wire drawing 
stage and wire shaping forming stage) appear to be understated in its 
response compared to information we are placing on the record.\44\ 
According to Angang, the equipment and labor involved in the wire 
drawing, cutting, and shaping stages of the production process (which 
occur in the PRC) are limited, simple, and fully automated.\45\ 
However, the information we are placing on the record in conjunction 
with these preliminary results regarding certain garment hanger 
production processes, indicates that drawing wire rod into wire, 
cutting wire into pre-determined sizes, and shaping/forming the cut 
wire into semi-finished garment hangers are more material-labor-energy 
intensive than intimated by Angang in its responses.\46\
---------------------------------------------------------------------------

    \44\ See Angang Prelim Analysis Memo at Attachment I.
    \45\ See Angang's Questionnaire Response dated September 17, 
2010, at 14-15 (where Angang stated that ``the process of wire 
drawing is technically simple and fully automatic'' * * * and ``the 
process of molding is technically simple and fully automatic.'')
    \46\ See id. The information we compared shows that the 
production of the same products in the PRC requires a fraction of 
the steps identified by Angang.
---------------------------------------------------------------------------

    Moreover, Angang's narrative describing these two stages shows an 
apparent de-emphasis of the importance of these stages. Unlike the 
other stages (performed in Vietnam), such as paint dipping and glue 
application, which, according to Angang, are ``technically critical'' 
and require ``experienced'' workers,\47\ Angang provides scant 
description of the requirements for the Chinese wire drawing, cutting, 
and shaping stages. However, the Department notes that, based on 
information we are placing on the record, gauge and length of the drawn 
wire are directly and crucially associated with the product code (and 
the Department's CONNUM), which are determined in the wire drawing, 
cutting, and shaping/forming processes.\48\ Accordingly, we find that 
the production processes in Vietnam conducted by Angang in converting 
the PRC-origin, semi-finished garment hangers to finished garment 
hangers are minor when compared to the Chinese production process of 
the steel wire drawing, cutting, and shaping process, which result in 
the semi-finished garment hanger, the main input to Angang's processing 
of PRC-origin semi-finished garment hangers.
---------------------------------------------------------------------------

    \47\ See id.
    \48\ See Angang Prelim Analysis Memo at Attachment II.
---------------------------------------------------------------------------

781(b)(2)(D): The Extent of Production Facilities in Vietnam
    In analyzing the extent of Angang's production facilities, we have 
considered the capital equipment used in the production process, the 
types of employees, and whether the facilities used by Angang in the 
conversion process were permanent facilities. Angang states that when 
it first rented the space in 2007 for a five-year lease term,\49\ the 
facility had a workshop used to convert PRC-origin, semi-finished 
garment hangers into finished garment hangers.\50\ A review of the 
record of the equipment at Angang's rented facility shows that the 
capital equipment used to convert PRC-origin, semi-finished garment 
hangers to finished garment hangers only consisted of: (1) Fuel ovens 
used to dry the powder coating applied to the semi-finished garment 
hangers; (2) paint vats into which the semi-finished garment hangers 
are manually dipped while suspended from a metal rod, then dried and 
``baked''; (3) machines to coat paper tubes with glue, then dried; and 
(4) machines to attach the paper tubes; (5) and manual paper cape 
attachment to shirt garment hangers.\51\ Packing labor, packing 
materials, and ``warehouse management'' were also alleged by Angang to 
be ``crucial'' steps in the production process.\52\ However, the 
Department finds that Angang has overstated the importance of these 
steps vis-a-vis the steps relating to wire drawing, wire cutting, and 
wire shaping/forming, which Angang significantly understated \53\ when 
reviewing these same steps in the information we are placing on the 
record.
---------------------------------------------------------------------------

    \49\ See Angang's Questionnaire Response dated September 17, 
2010, at 10.
    \50\ See id., at 10-11.
    \51\ See Angang's Questionnaire Response dated November 19, 
2010, at 7-9.
    \52\ See Angang's Questionnaire Response dated September 17, 
2010, at 15-17.
    \53\ See id., at 14-15.
---------------------------------------------------------------------------

    Second, the Department is not persuaded by Angang's emphasis on the 
production steps performed in Vietnam, as several of the steps 
identified by Angang actually occur within a single step. For example, 
while Angang identifies stage 3 of the process alone as ``Dipping 
painting and blowing dry,'' \54\ Angang's detailed description of stage 
3 shows ``Stage 3 of the process (including stage 5 and stage 7): 
Dipping painting and blowing dry (including baking at high temperature 
and low temperature) * * *.'' \55\ Angang reported several steps of the 
production process in this overlapping manner, such that, we find the 
actual stages of converting semi-finished garment hangers to finished 
garment hangers to be actually less than the twelve individual stages 
reported by Angang. Another example of Angang's emphasis of the Vietnam 
production process is Angang's inclusion of Stage 9: ``paper wrapping 
and packing,'' as a production stage, which, while may be relevant to 
Angang's self-produced garment hangers, is not relevant to Angang's 
completion of PRC-origin, semi-finished garment hangers.\56\ Moreover, 
Angang included stages of production that are typically not comprised 
of workers that fit in the ``direct labor'' category, such as Warehouse 
Management, Packing, and Loading/Shipping.\57\ We find that Angang's 
inclusion of these ``stages'' as actual production stages indicates 
that Angang has attempted to overstate the nature of the Vietnamese 
production process for completing PRC-origin, semi-finished garment 
hangers, which is further contradicted by the information we are 
placing on the record.\58\
---------------------------------------------------------------------------

    \54\ See id., at 14.
    \55\ See Angang's Questionnaire Response dated September 17, 
2010, at 15.
    \56\ See, e.g., Angang's Questionnaire Response dated March 21, 
2011, at Exhibit 13.
    \57\ See Angang's Questionnaire Response dated September 17, 
2010, at 14, 17. See also the Department's supplemental 
questionnaire dated December 22, 2010, where we individually defined 
direct labor, indirect labor and packing labor.
    \58\ See Angang Prelim Analysis Memo at Attachment I, II, and 
III.
---------------------------------------------------------------------------

    Based on the above descriptions and information we placed on the 
record, we find that, in contrast to Angang's

[[Page 27012]]

description of the first two Chinese stages (wire drawing, wire 
cutting, and wire molding) of the overall production process, the first 
two Chinese stages require significant equipment and the largest direct 
material input involved in the process, the remaining Vietnamese stages 
of the overall production process (conversion of PRC-origin, semi-
finished garment hangers using materials that are also produced in the 
PRC) are limited to painting and drying the semi-finished garment 
hangers or coating and drying the semi-finished garment hangers, and 
attaching tubes (affixed with glue and dried) to semi-finished garment 
hangers.
    Angang further stated that intensive training was provided to 
unskilled workers \59\ in Vietnam before they engaged in processing the 
semi-finished garment hangers into finished garment hangers.\60\ With 
regard to the level of employees involved in the conversion of PRC-
origin, semi-finished garment hangers to finished garment hangers, 
Angang reported that experienced, skilled, and responsible workers are 
necessary for jobs such as ``Stage 11: warehouse management'' or, 
``Stage 12: loading and shipping.'' \61\ However, Angang's narrative 
describing the stages for drawing wire into wire rod, cutting the drawn 
wire, and shaping the wire into hanger forms does not discuss the same 
requirement for ``skilled,'' ``responsible,'' or ``experienced'' 
workers, despite, as we stated above, these stages being crucial to the 
finished product with respect to wire gauge and length.\62\
---------------------------------------------------------------------------

    \59\ See Angang's Questionnaire Response dated November 19, 
2010, at 29, where Angang stated that the unskilled Vietnamese 
workers it hired ``knew nothing about the production of wire 
hangers, and they did not understand the function of the equipment 
and their operation.'' Angang further stated that the intensive 
training they provided to the unskilled workers took from 15 to 30 
days depending on an individual's learning capabilities.
    \60\ See Angang's Questionnaire Response dated September 17, 
2010, at 12.
    \61\ See id., at 15-17.
    \62\ See id., at 14-15
---------------------------------------------------------------------------

    Further, we find that Angang over-emphasizes the skill level of its 
Vietnamese workers, who, according to Angang were trained to be 
``experienced'' and ``skilled'' with the ability to perform crucial 
production functions, considering that Angang trained these workers 
within the reported two-month time period of operations/management set-
up (May 2008) and the start of production (July 2008).\63\ Thus, based 
on Angang's submissions and the information we are placing on the 
record, the Department finds that the cost and labor involved in the 
stages for the production of the semi-finished garment hangers, as 
performed in the PRC in this case, requires as much, if not more, skill 
than attributed to these stages by Angang, especially when compared to 
the production stages performed in Vietnam, such as dip-painting or 
coating paper tubes with latex or glue.\64\
---------------------------------------------------------------------------

    \63\ See id., at 10.
    \64\ See id., at 15-17; see also Angang Prelim Analysis Memo at 
Attachment II.
---------------------------------------------------------------------------

    The totality of the information reported by Angang, when compared 
with the information we are placing on the record, indicates that 
Angang's stages of the production process for completing PRC-origin, 
semi-finished garment hangers are overstated to emphasize the 
Vietnamese production process versus that of Company X in the PRC, the 
sole producer of Angang's imported, semi-finished garment hangers.
781(b)(2)(E): Whether the Value of the Processing Performed in Vietnam 
Represents a Small Portion of the Value of the Merchandise Imported 
Into the United States
    In prior anti-circumvention inquiries, the Department has explained 
that Congress directed the agency to focus more on the nature of the 
production process and less on the difference in value between the 
subject merchandise and the parts and components imported into the 
processing country.\65\ Additionally, the Department has explained 
that, following the Uruguay Round Agreements Act, Congress redirected 
the agency's focus away from a rigid numerical calculation of value-
added toward a more qualitative focus on the nature of the production 
process.\66\ In this anti-circumvention inquiry, we note that semi-
finished garment hangers as well as certain paper attachments and the 
other direct material inputs added to the semi-finished garment hangers 
in Vietnam were manufactured and supplied by Company X in the PRC.\67\ 
Petitioner's request for an anti-circumvention inquiry contains clear 
evidence that the production process of garment hangers rests mainly 
with the production of the main (and largest) direct material input: 
steel wire.\68\ The data therein shows that consumption of steel wire 
far outweighs the relative consumption of all other inputs.\69\ Thus, 
because the production process of the semi-finished garment hangers, 
which involves production of the main input, as well as the source of 
all the other direct materials, are of PRC-origin, we preliminarily 
find that the total value of processing performed in the PRC is 
significant compared to the assembly or completion performed in 
Vietnam. Therefore, because the entirety of production of the semi-
finished garment hangers and the other direct materials applied to 
those semi-finished garment hangers are of PRC-origin and are supplied 
by Company X using the main direct material input and significant 
labor, energy, and equipment,\70\ we find that the processing performed 
in Vietnam represents a small portion of the total manufacture of the 
merchandise sold in the United States.
---------------------------------------------------------------------------

    \65\ See, e.g., Pasta Circumvention Prelim, 68 FR at 46575 
(unchanged in Pasta Circumvention Final, 68 FR 54888); and Lead and 
Bismuth from Germany and the UK, 64 FR at 40347. We note that, 
although these cases involved assembly or processing in the United 
States under section 781(a) of the Act, the language regarding the 
value of processing or assembly is essentially the same under both 
sections 781(a)(2)(E) and (b)(2)(E) of the Act. Accordingly, we find 
that our prior rationale is equally applicable to value of assembly 
or processing in a third-country under section 781(b)(2)(E) of the 
Act.
    \66\ See Pasta Circumvention Prelim, 68 FR at 46575; and Lead 
and Bismuth from Germany and the UK, 64 FR at 40348.
    \67\ See, e.g., Angang's Questionnaire Response dated November 
19, at Exhibit 5; Angang's Questionnaire Response dated March 21, 
2011 at 4.
    \68\ See Petitioner's May 5, 2010, request for an circumvention 
inquiry at Exhibit 5.
    \69\ See id.
    \70\ See Angang Prelim Analysis Memo at Attachment III, page 8, 
where information we placed on the record indicates that wire rod is 
the major cost factor of a finished garment hanger.
---------------------------------------------------------------------------

Summary of Analysis of Whether the Process of Assembly or Completion in 
Vietnam is Minor or Insignificant (Sections 781(b)(1)(C) and 781(b)(2) 
of the Act)
    In sum, pursuant to section 781(b)(1)(C) of the Act, we 
preliminarily conclude that the record evidence of this anti-
circumvention inquiry supports a finding that the process or completion 
of the PRC-origin, semi-finished garment hangers to finished garment 
hangers in Vietnam is minor or insignificant. Pursuant to section 
781(b)(2)(A) of the Act, we find that the level of investment in 
Vietnam by Angang in the equipment used to complete the PRC-origin, 
semi-finished garment hangers is minor compared to the level of 
investment, both capital and equipment, in the PRC provided by the 
parent company and its affiliate, Company X. Pursuant to section 
781(b)(2)(B) of the Act, we find that the lack of evidence of R&D 
initiatives by Angang in the production of garment hangers shows that 
R&D is not a significant factor in Angang's completion of PRC-origin, 
semi-finished garment hangers. Pursuant to section 781(b)(2)(C) of the 
Act, we find that the portion of the overall production process of 
garment hangers conducted by Angang in assembling or completing

[[Page 27013]]

the PRC-origin, semi-finished garment hangers into finished garment 
hangers is limited and minor compared to the Chinese parent company's 
and Chinese affiliate Company X's share of the overall production 
process in the production of the semi-finished garment hangers and the 
other direct materials they supply to Angang to finish the semi-
finished garment hangers in Vietnam. Pursuant to section 781(b)(2)(D) 
of the Act, we find that the extent of Angang's production facilities 
is minor with respect to completing PRC-origin, semi-finished garment 
hangers to finished garment hangers because the energy, labor, and 
capital equipment used by Angang in converting the PRC-origin, semi-
finished garment hangers into finished garment hangers is not 
substantial in comparison to the materials, labor, energy, and capital 
equipment used by Company X to produce the semi-finished garment 
hangers. Despite Angang's contention that its labor force is composed 
of skilled labor, we note that Angang hired primarily unskilled 
workers,\71\ and Angang's facilities were leased, not permanent. 
Finally, pursuant to section 781(b)(2)(E) of the Act, we find that the 
value of the processing performed by Angang to convert the PRC-origin, 
semi-finished garment hangers into finished garment hangers represents 
a small proportion of the value of the finished merchandise imported 
into the United States.
---------------------------------------------------------------------------

    \71\ See Angang's Questionnaire Response dated November 19, 
2010, at 29.
---------------------------------------------------------------------------

    Therefore, we preliminarily find that, pursuant to sections 
781(b)(2)(A)-(E) of the Act, Angang's processing operation to convert 
PRC-origin, semi-finished garment hangers into finished garment hangers 
in Vietnam is minor or insignificant. We have based our decision as to 
whether the processing operation to convert PRC-origin, semi-finished 
garment hangers into finished garment hangers is minor or insignificant 
based on the totality of the record evidence of this anti-circumvention 
inquiry and have compared the relative information regarding the 
production processes for Angang and Company X. Specifically, the 
legislative history to section 781(b) indicates that Congress intended 
the Department to make determinations regarding circumvention on a 
case-by-case basis in recognition that the facts of individual cases 
and the nature of specific industries vary widely.\72\
---------------------------------------------------------------------------

    \72\ See S. Rep. No. 103-412 (1994), at 81-82.
---------------------------------------------------------------------------

(C) Whether the Value of the Merchandise Produced in the Foreign 
Country to Which the Order Applies Is a Significant Portion of the 
Total Value of the Merchandise Exported to the United States

    Under section 781(b)(1)(D) of the Act, the value of the merchandise 
produced in the foreign country to which an antidumping duty order 
applies must be a significant portion of the total value of the 
merchandise exported to the United States in order to find 
circumvention. The major parts and components that consist of the total 
value of the finished garment hangers exported to the United States 
are: Semi-Finished garment hangers, coating powder or paint, paper 
attachments such as tubes, and packaging materials. As discussed in the 
section ``Whether Merchandise Sold in the United States Is Completed or 
Assembled in Another Foreign Country from Merchandise Which is Subject 
to the Order or Produced In The Foreign Country That is Subject to the 
Order,'' in all instances the semi-finished garment hangers, the 
coating powder and paint, and paper attachments such as tubes, and glue 
are all supplied to Angang by either the parent company or the 
affiliate, Company X, both located in the PRC. Additionally, with the 
production of these direct materials occurring in the PRC, the 
remaining production processes to complete or assemble a garment hanger 
are limited to the application of these imported materials to the PRC-
origin, semi-finished hanger, using only some machinery and manual 
labor. As discussed above, we find that the nature of the production 
process in the PRC to manufacture the main inputs and the fact that all 
the direct materials are sourced from the PRC, in addition to the 
limited production process in Vietnam, shows that a great majority of 
the value of the finished merchandise is based on the PRC-production of 
the semi-finished garment hangers and the other direct materials which 
are applied to those PRC-origin, semi-finished hangers in Vietnam. 
Based on our analysis and record evidence, we find that the value of 
the PRC-origin, semi-finished garment hangers taken as a whole 
constitutes a significant portion of the value of the finished product 
ultimately exported to the United States.

Other Factors To Consider

    In making a determination whether to include merchandise assembled 
or completed in a foreign country within an order, section 781(b)(3) of 
the Act instructs us to take into account such factors as: (A) The 
pattern of trade, including sourcing patterns; (B) whether affiliation 
exists between the manufacturer or exporter of the merchandise in the 
country subject to the order and the person who uses the merchandise to 
assemble or complete in the third country the merchandise that is 
exported to the United States; and (C) whether imports into the third 
country of the merchandise described in section 781(b)(1)(B) have 
increased since the initiation of the original investigation. Each of 
these factors is examined below.
(A) Pattern of Trade and Sourcing
    The first factor to consider under section 781(b)(3) is changes in 
the pattern of trade, including changes in the sourcing patterns. To 
evaluate the pattern of trade in this case, we examined the method in 
which Angang obtained the semi-finished garment hangers. According to 
Angang, it started sourcing PRC-origin, semi-finished garment hangers 
from its Chinese parent company and affiliate Company X in April 2009, 
to produce garment hangers that Angang exported to the United 
States.\73\ Additionally, Angang has stated on the record that it did 
not purchase PRC-origin, semi-finished garment hangers from any other 
supplier.\74\ Based on the facts on the record, we find that the fact 
that Angang sourced all of the semi-finished garment hangers that it 
purchased from a PRC supplier to produce finished garment hangers that 
were exported to the United States, supports a finding that 
circumvention was occurring during this period.
---------------------------------------------------------------------------

    \73\ See, e.g., Angang's Questionnaire Response dated October 1, 
2010, at Exhibit 1.
    \74\ See Angang's Questionnaire Response dated November 19, 
2010, at 27-28.
---------------------------------------------------------------------------

    We also examined the timing and quantities of Angang's exports to 
the United States of garment hangers that were produced from PRC-
origin, semi-finished garment hangers since the initiation of the LTFV 
investigation in September 2007. We note that, based on Angang's 
reported export data, Angang did not export any garment hangers to the 
United States until the amended final determination \75\ of the LTFV 
investigation which determined the dumping rates assigned to the PRC 
producers/exporters subject to the LTFV investigation.\76\ Further, a 
review of Angang's quarterly exports shows that from September 2008 to 
August 2010, Angang's exports of garment hangers significantly 
increased with the

[[Page 27014]]

additional purchases of PRC-origin, semi-finished garment hangers 
completed in Vietnam prior to exportation to the United States.\77\ 
These data indicate that the quarterly volume of Angang's exports of 
garment hangers produced from PRC-origin, semi-finished garment hangers 
to the United States was significant subsequent to the initiation of 
the LTFV investigation. Additionally, we examined import data obtained 
from the Global Trade Atlas (``GTA'') noting the timing and quantities 
of exports of garment hangers from the PRC to the United States between 
2008 and 2009, and exports of garment hangers from Vietnam to the 
United States between 2008 and 2009, using only HTSUS 7326.20.0020: 
Garment Wire Hangers Of Iron Or Steel.\78\ A review of the data shows 
that PRC exports of garment hangers to the United States under this 
HTSUS category, which is specific to the subject merchandise, decreased 
by 89 percent between 2008 and 2010, whereas imports to the United 
States from Vietnam under the identical HTSUS category increased by 777 
percent between 2008 and 2010, while there were zero imports from 
Vietnam under this HTSUS category in 2007.\79\ Accordingly, we find 
that the data show that PRC exports have decreased significantly 
whereas Vietnamese exports have increased exponentially since the 
initiation of the LTFV investigation. Therefore, based on the facts on 
the record, we find that the pattern of trade has changed since the 
initiation of the LTFV investigation and the imposition of the Order 
and thus, supports a finding that circumvention has occurred.
---------------------------------------------------------------------------

    \75\ See Steel Wire Garment Hangers From the People's Republic 
of China: Amended Final Determination of Sales at Less Than Fair 
Value, 73 FR 53188 (September 15, 2008).
    \76\ See, e.g., Angang's Questionnaire Response dated October 8, 
2010, at Exhibit 1a.
    \77\ See Angang's Questionnaire Response dated October 8, 2010 
at Exhibit 1a; Angang's Questionnaire Response dated October 1, 2010 
at Exhibit 1.
    \78\ See Angang Prelim Analysis Memo at Attachment IV. We used a 
2008 to 2010 comparison because there was no import data from 
Vietnam for this HTSUS category in 2007.
    \79\ See id.
---------------------------------------------------------------------------

(B) Affiliation
    The second factor to consider under section 781(b)(3) of the Act is 
whether the manufacturer or exporter of the semi-finished garment 
hangers in the country subject to the order is affiliated with the 
entity that assembles or completes the merchandise exported to the 
United States. Generally, we consider circumvention to be more likely 
to occur when the manufacturer of the covered merchandise is related to 
the third country assembler and is a critical element in our evaluation 
of circumvention.\80\ The record evidence of this anti-circumvention 
inquiry clearly shows that, Angang, a Vietnamese entity, that converted 
the PRC-origin, semi-finished garment hangers into finished garment 
hangers, is a wholly-owned subsidiary of a PRC company,\81\ which in 
turn, is affiliated with Company X.\82\ Accordingly, because Angang is 
wholly owned by the Chinese parent company, we find that Angang, the 
Chinese parent company, and Company X are affiliated, pursuant to 
section 771(33) of the Act. Additionally, the record evidence shows 
that the Chinese parent company and Company X were Angang's sole 
suppliers of PRC-origin, semi-finished garment hangers, which were 
produced by Company X in its production facility.\83\ Further, Company 
X also produced some of the paper attachments, and both the Chinese 
parent company and Company X supplied all of the direct materials to 
Angang, which were used to complete the semi-finished garment hangers 
in Vietnam.\84\ In sum, we find that the record evidence demonstrates 
that the relationship between Angang, its Chinese parent company and 
Company X supports a finding that circumvention of the Order may have 
occurred. For a detailed affiliation analysis, see Angang Prelim 
Analysis Memo.
---------------------------------------------------------------------------

    \80\ See, e.g., Certain Tissue Paper Products From the People's 
Republic of China: Affirmative Preliminary Determination of 
Circumvention of the Antidumping Duty Order and Extension of Final 
Determination, 73 FR 21580, 21586 (April 22, 2008) (``Tissue Paper 
Anti-Circumvention 2008 Prelim'') unchanged in Tissue Paper Anti-
Circumvention 2008 Final; Color Picture Tubes from Canada, Japan, 
Republic of Korea & Singapore: Negative Final Determinations of 
Circumvention of Antidumping Duty Orders, 56 FR 9667 (March 7, 1991) 
and accompanying Issues and Decision Memorandum at Comment 8.
    \81\ The names of the Chinese parent company and affiliated 
Company X in the PRC are business proprietary information. For a 
detailed affiliation analysis, see Angang Prelim Analysis Memo.
    \82\ For a detailed affiliation analysis, see Angang Prelim 
Analysis Memo.
    \83\ See Angang's Questionnaire Response dated September 17, 
2010, at 8.
    \84\ See Angang's Questionnaire Response dated March 21, 2011, 
at 4.
---------------------------------------------------------------------------

(C) Whether Imports Have Increased
    The third factor to consider under section 781(b)(3) is whether 
imports into the third country of the merchandise described in section 
781(b)(1)(B) have increased since the initiation of the LTFV 
investigation. Generally, we consider circumvention to be more likely 
when imports of semi-finished garment hangers, the merchandise imported 
from the PRC, have increased into Vietnam.\85\ Because Angang began 
importing semi-finished garment hangers from the PRC in April 2009, 
which is six months after the issuance of the Order, under a basket 
category in the PRC's Harmonized Tariff Schedule (``HTSCN''): HTSCN 
8308.90.9000: ``Claps, Buckles & Like, Beads & Spangles of Base 
Metal,'' we reviewed Angang's imports of PRC-origin, semi-finished 
garment hangers, which shows a steady increase in PRC exports to 
Vietnam since 2007.\86\ The Department finds that Angang's imports of 
PRC-origin, semi-finished garment hangers, under the HTSCN number 
reported by Angang, were at their highest levels in the months after 
the issuance of the Order in 2008 through 2010.\87\ Although HTSCN 
8308.90.9000 does not necessarily provide PRC export data specific to 
semi-finished garment hangers, we find that Angang's description of the 
imported PRC-origin, semi-finished garment hangers accompanied by 
sample invoices from affiliated Company X to Angang were sufficient for 
us to determine that there were exports from the PRC to Vietnam of 
merchandise that fits the description of the scope of the Order.
---------------------------------------------------------------------------

    \85\ See, e.g., Tissue Paper Anti-Circumvention 2008 Prelim 
unchanged in Tissue Paper Anti-Circumvention 2008 Final.
    \86\ See Angang Prelim Analysis Memo at Attachment IV. We 
acknowledge that the HTS number provided by Angang for its imports 
of PRC-origin, semi-finished hangers is a basket category; 
nevertheless, the import quantities still show a steady increase 
from 2007 through 2010. This is also consistent with the import 
quantities of HTSCN 7236.20.90: ``Articles Of Iron/Steel Wire, Nes, 
Not For Technical Use,'' which is similar to the ``clean'' HTSUS 
that is part of the scope of the Order.
    \87\ See id.
---------------------------------------------------------------------------

    In any case, upon review of PRC exports of HTSCN 8308.90.9000 
between 2007 and 2010, the Department finds that PRC exports to Vietnam 
have steadily increased since the initiation of the LTFV investigation. 
Specifically, the Department finds that the PRC total exports of HTSCN 
8308.90.9000 to Vietnam increased by 28.77 percent between 2007 and 
2009, and a 15.31 percent increase between 2008 and 2010. This increase 
corresponds with the initiation of the LTFV investigation and issuance 
of the Order. Accordingly, we find that both the increase in Angang's 
imports of PRC-origin, semi-finished garment hangers and the increase 
in PRC exports to Vietnam since the initiation of the LTFV 
investigation supports a finding that circumvention may have occurred.

Summary of Analysis

    As discussed above, in order to make an affirmative determination 
of

[[Page 27015]]

circumvention, all the elements under sections 781(b)(1) of the Act 
must be satisfied, taking into account the factors under section 
781(b)(2). In addition, section 781(b)(3) of the Act instructs the 
Department to consider, in determining whether to include merchandise 
assembled or completed in a foreign country within the scope of an 
order, such factors as: pattern of trade, affiliation, and whether 
imports into the foreign country of the merchandise described in 
section 781(b)(1)(B) have increased after the initiation of the 
investigation.
    With respect to Quyky, we preliminarily find that Quyky has 
circumvented the Order because it failed to provide the Department with 
any information at all, thus we are unable to distinguish between its 
imports or purchase of semi-finished garment hangers from the PRC for 
purposes other than assembly into merchandise covered by the Order. 
Consequently, because Quyky refused to comply with the Department's 
request for information, we find that it failed to cooperate to the 
best of its ability, and, therefore, that an adverse inference is 
warranted pursuant to section 776(b) of the Act. Accordingly, as stated 
above, as an adverse inference the Department preliminarily finds that 
all of the garment hangers produced and/or exported by Quyky to the 
United States are circumventing the Order. Therefore, in light of our 
preliminary determination, the Department will instruct U.S. Customs 
and Border Protection (``CBP'') to suspend liquidation on all entries 
of garment hangers produced and/or exported by Quyky that were entered, 
or withdrawn from warehouse, for consumption on or after the date of 
initiation of the anti-circumvention inquiry.
    Further, with respect to Angang, we preliminarily find that Angang 
has circumvented the Order in accordance with section 781(b)(1) and (2) 
of the Act. Pursuant to section 781(b)(1) of the Act, we find that the 
merchandise sold in the United States is within the same class or kind 
of merchandise that is subject to the Order and was completed or 
assembled in a third country. Additionally, pursuant to section 
781(b)(2), we find that the process or assembly of the PRC-origin semi-
finished garment hangers into finished garment hangers by Angang is 
minor and insignificant. Furthermore, in accordance with section 
781(b)(1)(D) of the Act, we find that the value of the merchandise 
produced in the PRC is a significant portion of the total value of the 
merchandise exported to the United States. While Angang did provide 
documentation showing quantity and value for PRC-origin, semi-finished 
garment hangers and the garment hangers it self-produces in 
Vietnam,\88\ Angang has also reported that it ``cannot further 
differentiate the source of each final product because the pre-formed 
steel wire that Angang procures from the PRC are stored in the same 
warehouse as the hanger forms that Angang itself fashions from 
purchased steel wire rod.'' \89\ Therefore, because it appears from the 
record that Angang's garment hangers are commingled prior to 
exportation to the United States, we preliminarily determine that 
Angang has not demonstrated on the record that there is a way for CBP 
to distinguish between the garment hangers which we preliminarily find 
to be circumventing the Order and the garment hangers which are self-
produced by Angang. Furthermore, the Department has an obligation to 
administer the law in a manner that prevents evasion of the Order.\90\ 
Section 781(b)(1)(E) of the Act directs the Department to take 
necessary action to ``prevent evasion'' of antidumping and 
countervailing duty orders when it concludes that ``merchandise has 
been completed or assembled in other foreign countries'' and is 
circumventing an order, therefore, we find that action is appropriate 
to prevent evasion of the Order.
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    \88\ See Angang's Questionnaire Response dated October 8, 2010, 
at Exhibit 1.
    \89\ See Angang's Questionnaire Response dated November 19, 
2011, at 12-13
    \90\ See, e.g., Tung Mung Development v. United States, 219 F. 
Supp. 2d 1333, 1343 (CIT 2002), affirmed 354 F.3d 1371 (January 15, 
2004) (finding that the Department has a responsibility to prevent 
the evasion of payment of antidumping duties).
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    Thus, we find affirmative evidence of circumvention in accordance 
with section 781(b)(1) and (2) of the Act. Moreover, we find the 
factors required by section 781(b)(3) of the Act indicate that there is 
circumvention of the Order. Consequently, our statutory analysis leads 
us to find that during the period of time examined there was 
circumvention of the Order as a result of Angang's assembly of the PRC-
origin, semi-finished garment hangers into finished garment hangers in 
Vietnam for export to the United States, as discussed above. Therefore, 
in light of our preliminary determination, the Department will instruct 
CBP to suspend liquidation on all entries of garment hangers produced 
and/or exported by Angang that were entered, or withdrawn from 
warehouse, for consumption on or after the date of initiation of the 
anti-circumvention inquiry.
    Should the Department conduct an administrative review of the Order 
in the future, both Quyky and Angang will have the opportunity to 
provide information related to their use of PRC-origin or self-produced 
garment hangers so that the appropriate assessment rate can be 
determined.

Suspension of Liquidation

    As stated above, the Department has made a preliminary affirmative 
finding of circumvention of the Order by both Quyky and Angang. In 
accordance with section 733(d) of the Act, the Department will direct 
CBP to suspend liquidation and to require a cash deposit of estimated 
duties, at the PRC-wide rate of 187.25 percent, on all unliquidated 
entries of garment hangers produced and/or exported by Angang and Quyky 
that were entered, or withdrawn from warehouse, for consumption on or 
after July 16, 2010, the date of initiation of the anti-circumvention 
inquiry.

Notification to the International Trade Commission

    The Department, consistent with section 781(e) of the Act, has 
notified the ITC of this preliminary determination to include the 
merchandise subject to this anti-circumvention inquiry within the 
antidumping duty order on garment hangers from the PRC. Pursuant to 
section 781(e) of the Act, the ITC may request consultations concerning 
the Department's proposed inclusion of the subject merchandise. If, 
after consultations, the ITC believes that a significant injury issue 
is presented by the proposed inclusion, it will have 15 days to provide 
written advice to the Department.

Public Comment

    Because the Department may seek additional information, the 
Department will establish the case and rebuttal brief schedule at a 
later time, and will notify parties of the schedule in accordance with 
19 CFR 351.309.
    Interested parties, who wish to request a hearing, or to 
participate if one is requested, must submit a written request to the 
Assistant Secretary for Import Administration within 30 days after the 
date of publication of this notice, pursuant to 19 CFR 351.310. 
Requests should contain the party's name, address, and telephone 
number, the number of participants, and a list of the issues to be 
discussed. At the hearing, each party may make an affirmative 
presentation only on issues raised in that party's case brief and may 
make rebuttal presentations only on arguments included in that party's

[[Page 27016]]

rebuttal brief. If a hearing is requested, we will notify those parties 
that requested a hearing of a hearing date and time.

Final Determination

    The final determination with respect to this anti-circumvention 
inquiry will be issued no later than November 1, 2011, including the 
results of the Department's analysis of any written comments. This 
preliminary affirmative circumvention determination is published in 
accordance with section 781(b) of the Act and 19 CFR 351.225.

    Dated: May 3, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2011-11394 Filed 5-9-11; 8:45 am]
BILLING CODE 3510-DS-P