[Federal Register Volume 77, Number 154 (Thursday, August 9, 2012)]
[Notices]
[Pages 47596-47602]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19578]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-929]


Small Diameter Graphite Electrodes From the People's Republic of 
China: Affirmative Final Determination of Circumvention of the 
Antidumping Duty Order

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

SUMMARY: The Department of Commerce (``the Department'') continues to 
determine that certain small diameter graphite electrodes (``SDGE'') 
are being exported from the United Kingdom (``U.K.'') to the United 
States by UK Carbon and Graphite Co., Ltd. (``UKCG'') in circumvention 
of the antidumping duty order on SDGE from the People's Republic of 
China (``PRC''),\1\ as provided in section 781(b) of the Tariff Act of 
1930, as amended (``the Act'').
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    \1\ See Antidumping Duty Order: Small Diameter Graphite 
Electrodes from the People's Republic of China, 74 FR 8775 (February 
26, 2009) (``SDGE Order'').

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DATES: Effective Date: August 9, 2012.

FOR FURTHER INFORMATION CONTACT: Brendan Quinn, Office 8, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW., Washington, DC 
20230; telephone: (202) 482-5848.

SUPPLEMENTARY INFORMATION:

Background

    On June 6, 2012, the Department published in the Federal Register 
the affirmative preliminary determination that certain SDGE finished by 
UKCG from PRC-produced artificial graphite

[[Page 47597]]

rod/unfinished SDGE component \2\ inputs are exported to the United 
States in circumvention of the antidumping duty order on SDGE from the 
PRC, as provided in section 781(b) of the Act.\3\ Pursuant to section 
781(e) of the Act, on June 8, 2012, the Department notified the U.S. 
International Trade Commission (``ITC'') of its affirmative preliminary 
determination of circumvention, in accordance with section 781(e) of 
the Act, and informed the ITC of its ability to request consultation 
with the Department regarding the possible inclusion of the products in 
question within the SDGE Order pursuant to section 781(e)(2) of the 
Act. On July 6, 2012, the ITC informed the Department that 
consultations pursuant to section 781(e)(2) of the Act were not 
necessary.
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    \2\ According to Petitioners, the unfinished merchandise in 
question is defined in UKCG's submissions as, e.g., ``graphite 
electrodes,'' ``rods,'' ``graphite billets,'' graphite shapes,'' 
``synthetic graphite electrode rod,'' and ``re-machined graphite 
electrode.'' Petitioners characterize these inputs as ``unfinished 
SDGE,'' whereas UKCG refers to them as ``blanks'' or ``artificial 
graphite.'' For customs purposes, these materials are, generally, 
classified under Harmonized Tariff Schedule (``HTS'') sub-heading 
3801.10.00, defined as ``Artificial Graphite; Colloidal or Semi-
Colloidal Graphite; Preparations Based on Graphite or Other Carbon 
in the Form of Pastes, Blocks, Plates or Other Semi-Finished 
Goods.'' For ease of reference, these materials are referred to as 
``unfinished SDGE components'' or ``artificial graphite rods'' 
throughout this notice.
    \3\ See Small Diameter Graphite Electrodes from the People's 
Republic of China: Affirmative Preliminary Determination of 
Circumvention of the Antidumping Duty Order and Extension of Final 
Determination, 77 FR 33405 (June 6, 2012) (``Preliminary 
Determination'').
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    On June 20, 2012, UKCG, SGL Carbon LLC and Superior Graphite Co. 
(``Petitioners''), and the Government of the United Kingdom filed case 
briefs. On June 27, 2012, Petitioners and UKCG filed rebuttal briefs. 
On July 10, 2012, the Department held a public hearing, based on a 
timely filed request by UKCG.\4\
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    \4\ See transcript entitled, ``Public Hearing; In the Matter of: 
the Anti-circumvention Inquiry of the Antidumping Duty Order on 
Small Diameter Graphite Electrodes from the People's Republic of 
China (A-570-929) (UKCG),'' dated July 10, 2012 (``Hearing 
Transcript'').
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Scope of the Antidumping Duty Order

    The merchandise covered by this order includes all small diameter 
graphite electrodes of any length, whether or not finished, of a kind 
used in furnaces, with a nominal or actual diameter of 400 millimeters 
(16 inches) or less, and whether or not attached to a graphite pin 
joining system or any other type of joining system or hardware. The 
merchandise covered by this order also includes graphite pin joining 
systems for small diameter graphite electrodes, of any length, whether 
or not finished, of a kind used in furnaces, and whether or not the 
graphite pin joining system is attached to, sold with, or sold 
separately from, the small diameter graphite electrode. Small diameter 
graphite electrodes and graphite pin joining systems for small diameter 
graphite electrodes are most commonly used in primary melting, ladle 
metallurgy, and specialty furnace applications in industries including 
foundries, smelters, and steel refining operations. Small diameter 
graphite electrodes and graphite pin joining systems for small diameter 
graphite electrodes that are subject to this order are currently 
classified under the Harmonized Tariff Schedule of the United States 
(``HTSUS'') subheading 8545.11.0000 \5\ and 3801.10.\6\ The HTSUS 
number is provided for convenience and customs purposes, but the 
written description of the scope is dispositive.
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    \5\ The scope described in the SDGE Order refers to the HTSUS 
subheading 8545.11.0000. We note that, starting in 2010, imports of 
SDGEs are classified in the HTSUS under subheading 8545.11.0010 and 
imports of large diameter graphite electrodes are classified under 
subheading 8545.11.0020.
    \6\ HTSUS subheading 3801.10 is added to the scope of the order 
based on a determination in the instant anticircumvention 
proceeding. See Summary of Analysis of Statutory Provisions section, 
below, and the accompanying Memorandum from Christian Marsh, Deputy 
Assistant Secretary for Antidumping and Countervailing Duty 
Operations, to Paul Piquado, Assistant Secretary for Import 
Administration, Re: ``Anticircumvention Inquiry Regarding the 
Antidumping Duty Order on Small Diameter Graphite Electrodes from 
the People's Republic of China: Issues and Decision Memorandum for 
the Final Determination of the Anticircumvention Inquiry'' 
(``Decision Memorandum''), dated July 31, 2012 at Comment 6.
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Scope of the Anticircumvention Inquiry

    The products covered by this inquiry are small diameter graphite 
electrodes produced by UKCG from PRC-manufactured artificial/synthetic 
graphite forms, of a size and shape (e.g., blanks, rods, cylinders, 
billets, blocks, etc.) which requires additional machining processes 
(i.e., tooling and shaping) to become a finished SDGE (or graphite pin 
joining system).\7\ The SDGE products in question are finished graphite 
electrodes manufactured by UKCG from PRC-originated artificial graphite 
rod/unfinished SDGE components. While UKCG argues that the SDGE it 
produces and exports to the United States are of U.K. origin under U.K. 
law, the focus and intent of this inquiry is to determine whether 
artificial/synthetic graphite forms (1) Manufactured in the PRC; (2) 
exported to the United Kingdom for processing/machining (finishing); 
and (3) re-exported to the United States as U.K. origin merchandise 
constitute circumvention of the SDGE Order under 781(b) of the Act.
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    \7\ As noted above, these materials are referred to as 
``unfinished SDGE components'' or ``artificial graphite rods'' 
throughout this notice.
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Analysis of Comments Received

    All issues raised in the post-preliminary comments by parties in 
this proceeding are addressed in the Decision Memorandum and hereby 
adopted by this notice. A list of the issues which the parties raised 
and to which the Department responds in the Decision Memorandum is 
attached to this notice as Appendix I. The Decision Memorandum is a 
public document and is on file electronically via Import 
Administration's Antidumping and Countervailing Duty Centralized 
Electronic Service System (``IA ACCESS''). Access to IA ACCESS is 
available in the Central Records Unit, room 7046 of the main Department 
of Commerce building. In addition, a complete version of the Decision 
Memorandum can be accessed directly on the Internet at http://www.trade.gov/ia/. The signed Decision Memorandum and the electronic 
versions of the Decision Memorandum are identical in content.

Affirmative Final Determination of Circumvention

    For the final determination, we continue to rely on the statutory 
criteria that we considered in making our Preliminary Determination.\8\ 
Based on our review of the record evidence and our analysis of the 
comments received, the Department continues to find that certain SDGE 
finished by UKCG from PRC-produced artificial graphite rod/unfinished 
SDGE component inputs are exported to the United States in 
circumvention of the antidumping duty order on SDGE from the PRC. For a 
complete discussion of the Department's analysis, see the accompanying 
Decision Memorandum.
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    \8\ See Preliminary Determination, 77 FR at 33409.
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Summary of Analysis of Statutory Provisions

(A) Whether Merchandise Imported Into The United States Is of the Same 
Class Or Kind As Merchandise That Is Subject To The SDGE Order

    As noted in the Preliminary Determination, the finished products, 
as sold by UKCG to the United States, are identical to those covered by 
the SDGE Order.\9\ No interested party to this

[[Page 47598]]

proceeding has contested this fact during the course of the inquiry. As 
such, we continue to find that the finished SDGE products exported to 
the United States by UKCG are of the same class or kind as other 
merchandise that is subject to the SDGE Order.
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    \9\ See Preliminary Determination, 77 FR at 33410.
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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

    Pursuant to section 781(b)(1)(B) of the Act, and consistent with 
our findings in the Preliminary Determination, we continue to find that 
the totality of the sourcing/procurement information and corresponding 
sales documentation on record clearly demonstrate that the inputs in 
question are produced in the foreign country that is subject to the 
SDGE Order.\10\
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    \10\ See id., 77 FR at 33410-11. See also Memorandum from the 
Department entitled, ``Anti-Circumvention Inquiry Regarding the 
Antidumping Duty Order on Small Diameter Graphite Electrodes from 
the People's Republic of China: Preliminary Determination Analysis 
Memorandum of U.K. Carbon and Graphite Co., Ltd.,'' dated May 30, 
2012 (``Preliminary Analysis Memorandum'') at 5-8 and Attachment II.
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    Additionally, as discussed at length in the accompanying Decision 
Memorandum at Comment 1, the Department has analyzed the arguments with 
respect to the in-scope nature of UKCG's artificial graphite rod/
unfinished SDGE component inputs and continues to find that the ``rod'' 
inputs constitute unfinished SDGE explicitly included within the scope 
of the SDGE Order.\11\ As a result, the Department finds that certain 
subject merchandise may be properly categorized under HTSUS subheading 
3801.10. Because HTSUS numbers are included in the scope language for 
convenience and customs purposes, we are adding this HTS subheading to 
the scope language of the SDGE Order to aid U.S. Customs and Border 
Protection (``CBP'') by clarifying that products categorized under the 
HTSUS 3801.10 category, as imported, which otherwise fit the narrative 
description of unfinished products covered by the SDGE Order, should be 
considered merchandise subject to the order.\12\
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    \11\ See Decision Memorandum at Comment 1.
    \12\ See Decision Memorandum at Comment 6.
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(C) Whether the Process of Assembly or Completion in the Third Country 
is Minor or Insignificant

    Pursuant to 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:
    781(b)(2)(A): The level of investment in the third country;
    781(b)(2)(B): The level of research and development (``R&D'') in 
the third country;
    781(b)(2)(C): The nature of the production process in the third 
country;
    781(b)(2)(D): The extent of the production facilities in the third 
country; and
    781(b)(2)(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 explains that no single factor listed in section 781(b)(2) 
of the Act will be controlling.\13\ 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 particular anticircumvention 
inquiry.\14\ In this anticircumvention 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-sourced 
artificial graphite rod/unfinished SDGE component inputs in the U.K. 
was minor or insignificant, in accordance with section 781(b)(2) of the 
Act, consistent with our analysis in prior anticircumvention 
inquiries.\15\
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    \13\ See Statement of Administrative Action accompanying the 
Uruguay Round Agreements Act, H.R. Doc. 103-316, vol. 1 (1994) 
(``SAA'') at 893.
    \14\ 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 (October 3, 2008) at 
57592.
    \15\ See, e.g., Anticircumvention 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 Anticircumvention 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 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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Analysis of 781(b)(2)(A),(B),(C), & (D): The Levels of Investment, R&D, 
The Nature of Production Processes, and Extent of Production Facilities 
in the United Kingdom
    Pursuant to sections 781(b)(2)(A)-(D) of the Act, the Department 
continues to find, consistent with our Preliminary Determination, that 
the information on record with respect to UKCG's investment, R&D, 
production processes and production facilities continues to support the 
conclusion that the process of assembly or completion occurring in the 
United Kingdom is minor or insignificant in comparison to the totality 
of the production of subject merchandise.
Analysis of 781(b)(2)(E): Whether the Value of the Processing Performed 
in the United Kingdom Represents a Small Proportion of the Value of the 
Merchandise Imported Into the United States
    For the Preliminary Determination, the Department utilized a 
quantitative analysis to determine the proportion of UKCG's further 
processing value by comparing UKCG's further processing costs to the 
actual value of the merchandise exported to the United States during 
the period of review (i.e., U.S. price) and preliminarily found that 
the UKCG's value-added comprised only a small proportion of the total 
export value. The Department concluded that this quantitative finding 
lent additional support to the qualitative finding and that, pursuant 
to section 781(b)(2)(E) of the Act, the value of UKCG's processing 
represents a small proportion of the value of the merchandise sold in 
the United States.\16\
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    \16\ See Preliminary Determination 77 FR at 33413-15. See also 
Preliminary Analysis Memorandum at 16-18 and Attachment VI.
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    For this final determination, the Department agrees with UKCG that 
the methodology we used for the analysis under section 781(b)(2)(E) of 
the Act for Preliminary Determination warrants modification, but only 
to the extent that our measurement of the value-added in the United 
Kingdom did not properly account for profit (as well as selling, 
general, and administrative (``SG&A'') expenses and interest expenses) 
in the numerator of the calculation. We find that the inclusion of an 
amount for SG&A, interest, and profit would help to better reflect the 
value-added to the finished product in the United Kingdom. However, we 
do not agree with UKCG's suggested methodology. Instead, we have 
amended the Preliminary Determination calculation so that UKCG's profit 
margin and SG&A

[[Page 47599]]

and interest ratios are added to the reported further manufacturing 
cost.\17\ While the revised value-added figure increases the value-
added figure used in the Preliminary Determination, the Department 
finds that this figure still represents a small proportion of the 
overall sales value as exported to the United States. As a result, we 
continue to find that this criterion supports finding that the process 
of completion in the UK is minor.\18\
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    \17\ See Memorandum from the Department entitled, 
``Anticircumvention Inquiry Regarding the Antidumping Duty Order on 
Small Diameter Graphite Electrodes from the People's Republic of 
China: Final Determination Analysis Memorandum of U.K. Carbon and 
Graphite Co., Ltd.,'' dated July 31, 2012 (``Final Analysis 
Memorandum'').
    \18\ Information about the value-added figure is business 
proprietary. See Final Analysis Memorandum for exact values. See 
also ``Overall Analysis'' section, below, and Decision Memorandum at 
Comment 3.
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Overall Analysis of Section 781(b)(1)(C) of the Act (i.e., Sections 
781(b)(2)(A)-(E) of the Act)
    As discussed above and in the Preliminary Determination, it is 
clear from the legislative history that an analysis of possible 
circumvention should not be based solely on a quantitative analysis, 
but rather should examine the value added in qualitative terms as 
well.\19\ The SAA also 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 particular 
circumvention scenario. Therefore, the importance of any one of the 
factors listed under section 781(b)(2) of the Act can vary from case to 
case depending on the particular circumstances unique to each 
circumvention inquiry.
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    \19\ See Preliminary Determination 77 FR at 33413, citing to SAA 
at 893 (1994).
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    In this anticircumvention inquiry, we based our analysis on both 
qualitative and quantitative factors in determining whether the process 
of finishing the SDGE in the United Kingdom was minor or insignificant, 
in accordance with the criteria of section 781(b)(2) of the Act. This 
approach is consistent with our analysis in prior circumvention 
inquiries.\20\ Based on the above analysis, we determine that the 
process of finishing performed by UKCG in the United Kingdom is minor 
or insignificant primarily because we determine that the nature of the 
processing is minor when compared to the production of SDGE from raw 
materials and the value of the processing performed by UKCG in the 
United Kingdom represents a small proportion of the value of the 
merchandise imported into the United States. This qualitative 
determination is based on our analysis with respect to sections 
781(b)(2)(A),(B),(C), and (D) of the Act (as laid out in the 
Preliminary Determination and summarized above), as well as our finding 
that the input material itself constitutes merchandise subject to the 
SDGE Order. As stated in the Preliminary Determination, ``while the 
Department believes that this qualitative analysis is sufficient to 
determine whether the value of processing in the third country 
constitutes a small portion of the value of the merchandise exported to 
the United States, the Department has obtained the information 
necessary to {quantitatively{time}  evaluate the proportion of UKCG's 
processing.'' \21\ Thus, the quantitative analysis in the Preliminary 
Determination was issued in support of the qualitative finding based on 
the availability of the relevant data, but the Department plainly noted 
that the qualitative finding of relatively insignificant value added 
was, by itself, sufficient to fulfill the analysis required pursuant to 
section 781(b)(2)(E) of the Act. Although the Department has amended 
the methodology used to conduct this quantitative analysis for the 
instant final determination, as noted above, we find that the resultant 
values continue to indicate that the value added in the United Kingdom 
represents a small proportion of the overall sales value as exported to 
the United States. Further, we continue to find that the qualitative 
determination is itself sufficient and determinative to address the 
value-added criteria under the statute and that the corresponding 
quantitative analysis supports the Department's qualitative 
determination on this issue.\22\
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    \20\ See, e.g., Pasta Circumvention Prelim 68 FR at 46574 
(unchanged in Pasta Circumvention Final).
    \21\ See Preliminary Determination at 33413.
    \22\ See Decision Memorandum at Comment 3. See also Final 
Analysis Memorandum.
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(D) 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

    Because key elements of the Department's analysis under section 
781(b)(1)(D) of the Act necessitate obtaining a value for an NME input, 
the Department determined that an analysis of UKCG's input costs falls 
under the purview of the Department's NME methodology and, therefore, 
utilized a surrogate value (``SV'') to value UKCG's PRC-sourced 
artificial graphite rod/unfinished SDGE component inputs, consistent 
with both section 773(c)(1) of the Act as well as the Department's past 
practice.\23\ As a result, the Department determined that the 
appropriate calculation required by section 781(b)(1)(D) of the Act 
expresses the SV for the artificial graphite rod/unfinished SDGE 
component inputs in question as a percentage of UKCG's reported total 
sales value and found that the PRC-produced merchandise represents a 
significant percentage of the sales value of UKCG's U.S. exports of 
finished merchandise.\24\ A full discussion of the propriety of 
utilizing the Department's SV methodology with respect to the valuation 
of UKCG's inputs is provided in Comment 2 of the accompanying Decision 
Memorandum.
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    \23\ See Preliminary Determination 77 FR at 33407-09, citing to, 
e.g., 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, 76 FR 
27007 (May 10, 2011) (``Hangers Anticircumvention Prelim'') at 
27008, unchanged in Steel Wire Garment Hangers From the People's 
Republic of China: Affirmative Final Determination of Circumvention 
of the Antidumping Duty Order, 76 FR 66895 (October 28, 2011) 
(``Hangers Anticircumvention Final'').
    \24\ See Preliminary Determination 77 FR at 33415. See also 
Preliminary Analysis Memo for a discussion of the exact values used, 
as this information is business proprietary.
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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 the Department 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) of the Act have increased since the initiation of the 
original investigation. In the Preliminary Determination the Department 
found that:
    (A) Record information demonstrated that PRC exports of SDGE to the 
United States have decreased significantly whereas U.K. exports of SDGE 
to the United States, UKCG's exports of SDGE to the United States, and 
UKCG's sourcing of relevant inputs from the PRC, have increased since 
the initiation of the less-than-fair-value (``LTFV'') investigation. 
These patterns of trade

[[Page 47600]]

support a finding that circumvention has occurred.\25\
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    \25\ See Preliminary Determination 77 FR at 33416-17. See also 
Preliminary Analysis Memorandum at 20-22 and Attachments VII-XII
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    (B) UKCG is not affiliated with any PRC-producers of artificial 
graphite rod/unfinished SDGE component inputs.\26\
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    \26\ See Preliminary Determination 77 FR at 33417.
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    (C) In addition to the aforementioned increase in UKCG's sourcing 
of relevant inputs from the PRC, PRC exports of artificial graphite to 
the United Kingdom have also increased significantly since the 
initiation of the LTFV investigation.\27\
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    \27\ See Preliminary Determination 77 FR at 33417. See also 
Preliminary Analysis Memorandum at 23 and Attachments VII-XII.
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    No party to this proceeding has challenged any of the 
aforementioned findings since the issuance of the Preliminary 
Determination. The Department continues to find that UKCG is not 
affiliated with any of its PRC-producers of artificial graphite rod/
unfinished SDGE component inputs. However, the totality of the pattern 
of trade data--which shows an increase with respect to UKCG's 
importation of artificial graphite rod/unfinished SDGE component inputs 
from the PRC and exports of finished SDGE to the United States from the 
United Kingdom, an increase of artificial graphite imports into the 
United Kingdom on the whole, and a corresponding decrease in finished 
SDGE exported to the United States from the PRC--supports an 
affirmative determination of circumvention.

Summary of Statutory Analysis

    We find that UKCG has circumvented the SDGE Order in accordance 
with sections 781(b)(1) and (2) of the Act. Pursuant to sections 
781(b)(1)(A) and (B) of the Act, we find that the merchandise sold in 
the United States is identical to merchandise that is subject to the 
SDGE Order and was completed in the United Kingdom from merchandise 
which is: (a) Covered by the explicit language of the scope of the SDGE 
Order, and (b) produced in the PRC, the country to which the SDGE Order 
applies. Additionally, pursuant to section 781(b)(1)(C) of the Act, we 
find the process of completion in the United Kingdom to be minor and 
insignificant based on each facet of the analysis under section 
781(b)(2) of the Act. 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. Finally, upon taking into 
consideration section 781(b)(3) of the Act, our analysis of the pattern 
of trade, including sourcing, and an affirmative finding of an increase 
in imports of artificial graphite/unfinished SDGE into the United 
Kingdom from the PRC since the initiation of the initial LTFV 
investigation, we conclude that action is appropriate to prevent 
circumvention of the SDGE Order pursuant to 781(b)(1)(E) of the Act. 
Consequently, our statutory analysis leads us to find that, during the 
period of time examined, there was circumvention of the SDGE Order as a 
result of UKCG's processing/machining of the PRC-origin artificial 
graphite/unfinished SDGE components to finished SDGE in the United 
Kingdom, as discussed above.

Continuation of Suspension of Liquidation

    Based on the record evidence, the Department has determined that 
UKCG is able to provide documentation to its U.S. importers that 
identifies the input supplier for each SDGE UKCG sold in the United 
States.\28\ As a result, the Department is requiring UKCG and its 
importers to prepare and maintain certifications regarding the 
supplier.\29\ Additionally, for all merchandise exported by UKCG where 
the supplier was a PRC-entity, the Department will direct CBP to 
require cash deposits at the rate established for the PRC supplier if 
that supplier has its own rate or, alternatively, at the PRC-wide rate 
of 159.64 percent if the PRC supplier does not have its own rate or if 
the importer cannot identify the supplier.
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    \28\ See Preliminary Determination 77 FR at 33417-18.
    \29\ See id. 77 FR at 33417-18 and the certifications provided 
at 77 FR 33419-33420. See also Appendices II, III, IV, and V to this 
notice.
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    The Department continues to find that its preliminary cash deposit 
instructions are fully consistent with the Department's obligations 
under section 781(b) of the Act.\30\ The Department concludes, pursuant 
to Section 781(b) of the Act, that SDGE finished by UKCG from PRC-
produced inputs covered under the narrative description of the scope of 
the SDGE Order, are being exported to the United States in 
circumvention of the SDGE Order, and that the appropriate means of 
addressing that circumvention is to collect cash deposits on all 
merchandise meeting that description. As such, we find it appropriate 
and consistent with past practice to instruct CBP to suspend 
liquidation and collect cash deposits on all unliquidated entries of 
SDGE produced by UKCG from PRC-manufactured unfinished SDGE inputs at 
the rate applicable to the relevant PRC-manufacturer, including the 
PRC-wide entity if applicable.\31\ In requiring that CBP collect cash 
deposits on UKCG's exports of SDGE found to be in circumvention of the 
antidumping order as appropriate, the Department is making no final 
determination of UKCG's dumping duty liability at this time.\32\
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    \30\ See Decision Memorandum at Comment 5.
    \31\ See Certain Tissue Paper Products From the People's 
Republic of China: Affirmative Final Determination of Circumvention 
of the Antidumping Duty Order, 76 FR 47551 (August 5, 2011), and 
accompanying Issues and Decision Memorandum at Comments 4 and 5. For 
a full discussion of this issue, see the accompanying Decision 
Memorandum at Comment 5.
    \32\ See Decision Memorandum at Comment 5.
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    Accordingly, the Department will continue to direct CBP to suspend 
liquidation and to require a cash deposit of estimated duties at the 
applicable rate on unliquidated entries of SDGE produced and/or 
exported by UKCG that were entered, or withdrawn from warehouse, for 
consumption on or after March 18, 2011, the date of initiation of the 
anticircumvention inquiry. Where the importer can demonstrate that the 
primary input material was produced by a company that has a separate 
rate, CBP will collect that company's cash deposit rate. Where the 
importer can demonstrate that the SDGE at issue was produced from 
reclaimed/reconditioned electrode inputs \33\ or artificial graphite 
rod/unfinished SDGE component inputs sourced from a third country 
producer, CBP should not suspend those entries or collect AD duties on 
those entries. For all other entries of merchandise exported by UKCG, 
CBP will require a cash deposit equal to the PRC-wide rate of 159.64 
percent.
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    \33\ As noted in the Preliminary Determination 77 FR at 33418, 
UKCG purchases broken/cracked or otherwise unusable electrodes from 
sources in various non-PRC countries, refurbishes them, and re-sells 
them for use as finished electrodes. The broken, cracked, or 
otherwise unusable electrode inputs sourced by UKCG are 
``reclaimed'' electrodes, whereas the resulting finished product is 
a ``remanufactured,'' ``remachined,'' or ``reconditioned'' 
electrode. For ease of reference, these products are referred to as 
``reclaimed/reconditioned'' electrodes.
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    For all entries of finished SDGE produced from artificial graphite 
rod/unfinished SDGE component inputs subject to the scope of this 
anticircumvention proceeding which UKCG believes should be assessed at 
a rate other than the PRC-wide rate, UKCG is required to furnish its 
customers/importers with a certification identifying, as appropriate, 
the manufacturer/exporter of the primary input into the SDGE it 
processes in the U.K. prior to exportation to the United States. For 
all entries of SDGE produced from inputs not subject to the scope of

[[Page 47601]]

this anticircumvention proceeding (i.e., SDGE produced from reclaimed/
reconditioned inputs or inputs produced in a third country), UKCG is 
required to furnish its customers/importers with a certification 
identifying the supplier or producer (as appropriate) of the primary 
input into the SDGE it processes in the U.K. prior to exportation to 
the United States.\34\ Importers are also required to sign and maintain 
certifications for these types of entries. The certification formats 
are provided in Appendices II, III, IV, and V to this notice.\35\ The 
importer will be required to retain each certificate for individual 
entries for the later of: (1) A period of five years from the date of 
entry or (2) a period of three years after the conclusion of any 
antidumping duty litigation regarding such entries. It is the 
importer's responsibility to accurately declare to CBP the appropriate 
antidumping duty rate (or that no antidumping duty applies) for each 
entry.
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    \34\ See Decision Memorandum at Comment 4.
    \35\ The certification language has been slightly modified from 
that proposed in the Preliminary Determination to reflect the 
results of this final determination. See Decision Memorandum at 
Comment 4.
---------------------------------------------------------------------------

    Accordingly, the Department will instruct CBP to: (i) Require cash 
deposits at the rate established for the PRC supplier if that supplier 
has its own rate; (ii) require cash deposits at the PRC-wide rate of 
159.64 percent if the PRC supplier does not have its own rate or if the 
importer cannot identify the supplier. If the importer is able to 
demonstrate through the above-referenced certification process that the 
source of the artificial graphite rod/unfinished SDGE component inputs 
used in the production of finished SDGE imported from UKCG is not of 
PRC-origin or the finished SDGE is produced from reclaimed/
reconditioned inputs, then no suspension of liquidation or cash deposit 
is required.\36\ These instructions will apply to entries of SDGE 
produced and/or exported by UKCG that were entered, or withdrawn from 
warehouse, for consumption on or after March 18, 2011, the date of 
initiation of the anticircumvention inquiry. For unliquidated entries 
made prior to March 18, 2011, UKCG will not be required to provide the 
above-noted documentation to the importer. The importer will be 
required to provide the documentation to CBP within the time frame 
established by CBP. Consistent with past practice the Department has 
determined that a third-country antidumping duties case number for the 
United Kingdom is necessary as part of this determination for importers 
to identify merchandise as subject merchandise, and to ensure that CBP 
can collect antidumping duties on subject SDGEs that are processed in 
and exported from the United Kingdom.\37\
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    \36\ The exporter-supplied certification will serve as the 
initial demonstration supporting the importer's claim regarding 
which antidumping duty rate (or that no antidumping duty rate) is 
applicable. However, should CPB determine that further demonstration 
is warranted, it may seek additional documentation from the importer 
pursuant to 19 CFR 163.6(a) and other applicable regulations and 
statutory authority. Under 19 CFR 163.6(a), CBP may require the 
production of entry records from any party required to maintain such 
records as defined in 19 CFR 163.2(a). 19 CFR 163.1(a)(2)(vii) 
defines such records to include any information made or normally 
kept in the ordinary course of business that pertains to an activity 
``required to be undertaken pursuant to the laws or regulations 
administered by Customs,'' which would include the proper assessment 
of antidumping duties. As such, for the purpose of demonstrating 
that a rate other than the PRC-wide rate should be assessed to 
entries subject to this anticircumvention proceeding, UKCG should be 
prepared to provide to its importers, where applicable, 
documentation to substantiate the supplier claim made on the UKCG 
certification to the importer. Thus, if CBP should determine further 
demonstration is necessary and request supporting documentation from 
the importer, UKCG will be responsible for providing to the importer 
additional documentation pursuant to 19 CFR 163.6(a) to substantiate 
the certification.
    \37\ See, e.g., Laminated Woven Sacks From the People's Republic 
of China: Final Results of First Antidumping Duty Administrative 
Review, 76 FR 14906, 14907 (March 18, 2011) (noting that ``the 
Department has coordinated with CBP to resolve issues arising from 
differences between the Department's and CBP's respective country-
of-origin classifications and from technical restrictions in CBP's 
electronic filing systems. As a result, the Department has added 
several case numbers to the Case Reference file within the Automated 
Commercial Environment to ensure that requisite entries are and can 
be properly claimed as scope merchandise.'').
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Notification to Interested Parties

    This notice serves as the only reminder to parties subject to the 
administrative protective order (``APO'') of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 351.305. Timely written 
notification of the return or destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and terms of an APO is a violation which is 
subject to sanction.
    This final affirmative circumvention determination is published in 
accordance with section 781(b) of the Act and 19 CFR 351.225(h).

    Dated: July 31, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.

Appendix I

Discussion of the Issues

Comment 1: Whether ``Rods'' Are Covered Under the Scope of the Order
Comment 2: Use of Ukrainian Surrogate Values To Value Artificial 
Graphite Rod/Unfinished SDGE Component Inputs
Comment 3: Value-Added Methodology
Comment 4: Whether To Include Reconditioned Products in the Scope of 
the Anticircumvention Inquiry
Comment 5: Cash Deposit and Assessment of AD Duties
Comment 6: Inclusion of HTSUS Subheading 3801.10 in the Scope of the 
Order
Comment 7: Clarification That Graphitization Confers Country of 
Origin

Appendix II

Certification of UK Carbon and Graphite Co., Ltd. for SDGE Exports 
Produced From Reclaimed/Reconditioned Electrode Inputs or From Non-
Chinese-Origin Artificial Graphite Rod/Unfinished SDGE Component Inputs

    I hereby certify that I am an official of UK Carbon and Graphite 
Co., Ltd. (``UKCG'') and that that the small diameter graphite 
electrode products processed by UKCG in the United Kingdom into the 
small diameter graphite electrodes included within this shipment 
pursuant to Invoice numbers: \38\
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    \38\ If an individual invoice is representative of merchandise 
produced from both Chinese-origin artificial graphite rod inputs, as 
well as non-subject inputs, UKCG shall identify the non-subject 
merchandise in this certification, and will provide a companion 
certification identifying the subject merchandise based on the 
certification provided below in Appendix IV.
---------------------------------------------------------------------------

     Invoice
     Invoice * * *

were produced from reclaimed/reconditioned electrode inputs or from 
non Chinese-origin artificial graphite rod/unfinished SDGE component 
inputs.
    By signing this certificate, UKCG also hereby agrees to:
     Maintain sufficient documentation supporting the above 
statement for all reclaimed/reconditioned electrode inputs or non 
Chinese-origin artificial graphite rod/unfinished SDGE component 
inputs used to produce the exported small diameter graphite 
electrode products.
     Provide such documentation to the importer of the 
merchandise subject to this certification if required by U.S. 
Customs and Border Protection (``CBP''). UKCG is required to 
maintain all such documentation for individual entries until the 
later of (1) a period of five years from the date of entry or (2) a 
period of three years after the conclusion of any litigation in 
United States courts regarding such entries.
     Submit to verification by the U.S. Government of the 
underlying documentation supporting the above statement pursuant to 
the administration of

[[Page 47602]]

an antidumping duty proceeding covering small diameter graphite 
electrodes from the People's Republic of China.
     Provide this certification to the U.S. customer/
importer at the time of shipment.
    UKCG acknowledges that failure to submit to verification of the 
documentation by the U.S. Government may result in immediate 
revocation of certification rights and under such circumstances the 
importer of the merchandise will be required to post a cash deposit 
equal to the PRC-wide entity rate on all entries of small diameter 
graphite electrode products sourced from UKCG. In addition, if the 
Department of Commerce (``Commerce'') identifies any 
misrepresentation or inconsistencies regarding the certifications, 
UKCG recognizes that the matter may be reported to CBP by Commerce 
for possible enforcement action.
Signature:-------------------------------------------------------------
Printed Name:----------------------------------------------------------
Title:-----------------------------------------------------------------
Date:------------------------------------------------------------------

Appendix III

Certification of U.S. Importer for SDGE Exports Produced From 
Reclaimed/Reconditioned Electrode Inputs or From Non-Chinese-Origin 
Artificial Graphite Rod/Unfinished SDGE Component Inputs

    I hereby certify that I am an official of {insert name of 
company importing small diameter graphite electrodes (``SDGE'') from 
UK Carbon and Graphite Co., Ltd. (``UKCG''),{time}  and that, to the 
best of my knowledge, the SDGE imported under the following entry 
numbers was produced from either reclaimed/reconditioned electrode 
inputs or from non Chinese-origin artificial graphite rod/unfinished 
SDGE component inputs:
     Entry  Date of Entry:
     Entry  Date of Entry: * * *

    By signing this certificate, the importer stipulates its 
understanding that:
     It is the importer's responsibility to accurately 
declare this entry upon importation to U.S. Customs and Border 
Protection (``CBP'').
     The importer of the above certified merchandise is 
required to maintain this certification for individual entries for 
the later of (1) a period of five years from the date of entry or 
(2) a period of three years after the conclusion of any litigation 
in United States courts regarding such entries.
     The importer will be required to produce this 
certification and the exporter's certification upon the request of 
CBP.
     The importer may be required to produce additional 
documentation, sourced from UKCG, to substantiate the supplier claim 
made in the certification in response to a request from CBP.
     Should further investigation prove this certification 
to be false, CBP may take appropriate action to penalize the 
importer. As such, it is the importer's responsibility to provide 
any documentation from UKCG that may be needed to substantiate the 
above certified claims.
     The importer is required to complete this certification 
on the date of entry.
     If the importer is not able to demonstrate that the 
source of the input used in the production of finished SDGE imported 
from UKCG is a reclaimed/reconditioned electrode or a non Chinese-
origin artificial graphite rod/unfinished SDGE component, the 
imports are considered subject to the SDGE Order.

Signature:-------------------------------------------------------------
Printed Name:----------------------------------------------------------
Title:-----------------------------------------------------------------
Date:------------------------------------------------------------------

Appendix IV

Certification of UK Carbon and Graphite Co., Ltd. for Exports of PRC-
Origin SDGE Sourced From PRC-Producers

    I hereby certify that I am an official of UK Carbon and Graphite 
Co., Ltd. (``UKCG'') and that the small diameter graphite electrode 
(``SDGE'') products processed by UKCG in the United Kingdom into the 
small diameter graphite electrodes included within this shipment 
pursuant to Invoice numbers: \39\
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    \39\ If an individual invoice reflects the sale of subject and 
non-subject merchandise, UKCG shall provide to the customer/importer 
two certifications (and relevant supporting documentation) 
identifying the respective subject and non-subject merchandise, as 
discussed above.
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     Invoice
     Invoice * * *
were produced from Chinese-origin artificial graphite rod/unfinished 
SDGE component inputs subject to the antidumping duty order on small 
diameter graphite electrodes from the People's Republic of China 
(``PRC'') sourced from ---- (Name of PRC Manufacturer, or if the 
exporter is other than the manufacturer, the PRC exporter) \40\
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    \40\ If there is more than one exporter/manufacturer, identify 
the exporter/manufacturer with each product from each invoice.
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    By signing this certificate, UKCG also hereby agrees to:
     Maintain sufficient documentation supporting the above 
statement for all Chinese-origin artificial graphite rod/unfinished 
SDGE component inputs used to produce the exported small diameter 
graphite electrode products.
     Provide such documentation to the importer of the 
merchandise subject to this certification if required by U.S. 
Customs and Border Protection (CBP). UKCG is required to maintain 
all such documentation for individual entries until the later of (1) 
a period of five years from the date of entry or (2) a period of 
three years after the conclusion of any litigation in United States 
courts regarding such entries.
     Submit to verification by the U.S. Government of the 
underlying documentation supporting the above statement pursuant to 
the administration of an antidumping duty proceeding covering small 
diameter graphite electrodes from the People's Republic of China.
     Provide this certification to the U.S. customer/
importer at the time of shipment.
    UKCG acknowledges that failure to submit to verification of the 
documentation by the U.S. government may result in immediate 
revocation of certification rights and under such circumstances the 
importer of the merchandise will be required to post a cash deposit 
equal to the China-wide entity rate on all entries of small diameter 
graphite electrode products sourced from UKCG. In addition, if the 
Department of Commerce (``Commerce'') identifies any 
misrepresentation or inconsistencies regarding the certifications, 
UKCG recognizes that the matter may be reported to the U.S. Customs 
and Border Protection by Commerce for possible enforcement action.

Signature:-------------------------------------------------------------
Printed Name:----------------------------------------------------------
Title:-----------------------------------------------------------------
Date:------------------------------------------------------------------

Appendix V

Certification of U.S. Importer for PRC SDGE Exports

    I hereby certify that I am an official of {insert name of 
company importing small diameter graphite electrodes (``SDGE'') from 
UKCG,{time}  and that, to the best of my knowledge, the SDGE 
imported under the following entry numbers was produced from PRC-
origin artificial graphite rod/unfinished SDGE component inputs:
     Entry  Date of Entry:
     Entry  Date of Entry: * * *

By signing this certificate, the importer stipulates its 
understanding that:
     It is the importer's responsibility to accurately 
declare this entry upon importation to U.S. Customs and Border 
Protection (``CBP'') as an entry subject to antidumping duties and 
to accurately report the cash deposit rate applicable to these 
imports.
     The importer of the above certified merchandise is 
required to maintain this certification for individual entries for 
the later of (1) a period of five years from the date of entry or 
(2) a period of three years after the conclusion of any litigation 
in United States courts regarding such entries.
     The importer will be required to produce this 
certification and UKCG's certification upon the request of CBP.
     The importer may be required to produce additional 
documentation, sourced from UKCG, to substantiate the supplier claim 
made in the certification in response to a request from CBP.
     Should further investigation prove this certification 
to be false, CBP may take appropriate action to penalize the 
importer. As such, it is the importer's responsibility to provide 
any documentation from UKCG that may be needed to substantiate the 
above certified claims.
     The importer is required to complete this certification 
on the date of entry.
     For entries of SDGEs from UKCG which the importer 
believes should be assessed at a rate other than the PRC-wide rate, 
the importer must have a certification from UKCG identifying the 
supplier of the artificial graphite rod/unfinished SDGE component 
inputs subject to the antidumping duty order on SDGEs from the PRC.

Signature:-------------------------------------------------------------
Printed Name:----------------------------------------------------------
Title:-----------------------------------------------------------------
Date:------------------------------------------------------------------

[FR Doc. 2012-19578 Filed 8-8-12; 8:45 a.m.]
BILLING CODE 3510-DS-P