[Federal Register Volume 79, Number 145 (Tuesday, July 29, 2014)]
[Notices]
[Pages 44006-44008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-17492]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-520-803]
Polyethylene Terephthalate Film, Sheet, and Strip From the United
Arab Emirates: Initiation of Anti-Circumvention Inquiry on Antidumping
Duty Order
AGENCY: Enforcement and Compliance, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from Polyplex USA LLC and Flex USA,
Inc., (collectively Domestic Producers), the Department of Commerce
(the Department) is initiating an anti-circumvention inquiry pursuant
to section 781(b) of the Tariff Act of 1930, as amended (the Act), to
determine whether certain imports of polyethylene terephthalate film,
sheet, and strip (PET Film) are circumventing the antidumping duty (AD)
order on PET Film from the United Arab Emirates (UAE).\1\
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\1\ See Polyethylene Terephthalate Film, Sheet, and Strip From
Brazil, the People's Republic of China and the United Arab Emirates:
Antidumping Duty Orders and Amended Final Determination of Sales at
Less Than Fair Value for the United Arab Emirates, 73 FR 66595
(November 10, 2008) (Order).
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DATES: Effective Date: July 29, 2014.
FOR FURTHER INFORMATION CONTACT: Andrew Huston, AD/CVD Operations,
Office VII, Enforcement and Compliance, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
4261.
SUPPLEMENTARY INFORMATION:
Background
On September 28, 2007, DuPont Teijin Films; Mitsubishi Polyester
Film of America; SKC, Inc.; and Toray Plastics (America), Inc.,
(collectively Petitioners) filed a petition seeking the imposition of
antidumping duties on imports of PET film from Brazil, the People's
Republic of China (China), Thailand, and the UAE. Following the
Department's affirmative finding of dumping and the U.S. International
Trade Commission (ITC) finding of threat of injury, the Department
issued AD orders on imports of the subject merchandise. In the first
administrative review of the Order, Petitioners requested a review of
JBF RAK LLC (JBF RAK), and JBF RAK also requested a review of itself.
On December 23, 2009, the Department initiated an administrative review
of JBF RAK.\2\ The company has also been reviewed in each subsequent
administrative review. JBF RAK's current cash deposit rate is 1.41
percent.\3\
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\2\ See Initiation of Antidumping and Countervailing Duty
Administrative Reviews and Request for Revocation in Part, 74 FR
68229, 68232 (December 23, 2009).
\3\ See Polyethylene Terephthalate Film, Sheet, and Strip from
the United Arab Emirates: Final Results of Antidumping Duty
Administrative Review; 2011-2012, 79 FR 24401 (April 30, 2014).
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On May 27, 2014, pursuant to section 781(b) of the Act and section
19 CFR 351.225(h), Domestic Producers submitted a request for the
Department to initiate an anti-circumvention inquiry to determine
whether JBF RAK is circumventing the Order on PET Film from the UAE by
exporting to the United States products completed or assembled in its
Bahrain facility, JBF Bahrain S.P.C. (JBF Bahrain), from inputs sourced
from the subject countries India and the UAE.
Scope of the Order
The products covered by the order are all gauges of raw, pre-
treated, or primed polyethylene terephthalate film, whether extruded or
co-extruded. Excluded are metallized films and other finished films
that have had at least one of their surfaces modified by the
application of a performance-enhancing resinous or inorganic layer more
than 0.00001 inches thick. Also excluded is roller transport cleaning
film which has at least one of its surfaces modified by application of
0.5 micrometers of SBR latex. Tracing and drafting film is also
excluded. Polyethylene terephthalate film is classifiable under
subheading 3920.62.00.90 of the Harmonized Tariff Schedule of the
United States (HTSUS). While HTSUS subheadings are provided for
convenience and customs purposes, our written description of the scope
of the order is dispositive.
[[Page 44007]]
Merchandise Subject to the Anti-Circumvention Proceeding
This anti-circumvention proceeding covers PET film exported or
produced by JBF Bahrain. If, within sufficient time, the Department
receives a supported allegation from an interested party regarding
potential circumvention of the Order by other companies in Bahrain, we
will consider conducting any additional inquiry concurrently with this
inquiry.
Initiation of Anti-Circumvention Proceeding
Section 781(b)(1) of the Act provides that the Department may find
circumvention of an AD order when merchandise of the same class or kind
subject to the order is completed or assembled in a foreign country
other than the country to which the order applies. In conducting anti-
circumvention inquiries, under section 781(b)(1) of the Act, the
Department will also evaluate whether: (1) The process of assembly or
completion in the other foreign country is minor or insignificant; (2)
the value of the merchandise produced in the foreign country to which
the AD order applies is a significant portion of the total value of the
merchandise exported to the United States; and (3) action is
appropriate to prevent evasion of such an order or finding. As
discussed below, Domestic Producers provided evidence with respect to
these criteria.
A. Merchandise of the Same Class or Kind
Domestic Producers claim that the merchandise exported to the
United States by JBF Bahrain is the same class or kind as that covered
by the Order in this proceeding.\4\ Domestic Producers contend that ITC
data show that the merchandise from Bahrain enters the United States
under the same tariff heading as subject merchandise, and that JBF
Bahrain is the only producer of PET Film in Bahrain. Domestic Producers
also presented evidence that JBF Bahrain is sourcing inputs from JBF
RAK, and JBF RAK's parent company in India that are used in the
production of subject merchandise.\5\
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\4\ See Domestic Producers' ``Request for Anti-circumvention
Inquiry'' (Request) May 27, 2014, at 5.
\5\ Id., at 6.
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B. Completion of Merchandise in a Foreign Country
Domestic Producers note that the Act requires that ``before
importation into the United States, such imported merchandise is
completed or assembled in another foreign country from merchandise
which . . . is produced in the foreign country with respect to which
such order or finding applies . . .'' \6\ Domestic Producers presented
evidence that JBF sourced inputs from India and the UAE, which both
have AD orders on PET Film.
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\6\ See section 781(b)(1)(B) of the Act.
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C. Minor or Insignificant Process
Under section 781(b)(2) of the Act, the Department is required to
consider five factors to determine whether the process of assembly or
completion is minor or insignificant. Domestic Producers allege that
the production of resins, which JBF Bahrain sourced from affiliates in
India and the UAE, comprises the majority of the value associated with
the subject merchandise, and that the processing of PET resins into PET
Film, completed by JBF Bahrain, adds relatively little value.
(1) Level of Investment
Domestic Producers submitted documentation that JBF Bahrain has a
functioning line that produces PET film, and two additional lines
planned to start production of PET film in the ``near future,'' with
each of these lines having an estimated production of 30,000 metric
tons per year.\7\ Domestic Producers claim that the level of investment
is minimal compared to the volume of film that can be produced.
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\7\ See Request, at 7.
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(2) Level of Research and Development
Domestic Producers are not aware of any research and development
taking place in Bahrain, and note that production of PET film involves
mature technologies and processes.\8\
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\8\ Id., at 8.
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(3) Nature of Production Process
According to Domestic Producers, the production process undertaken
by JBF Bahrain involves the simple processing of resins sourced from
its affiliates in India and the UAE.\9\
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\9\ Id.
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(4) Extent of Production in Bahrain
Domestic Producers argue that, when compared to the volume of film
that can be produced, the investment in JBF Bahrain's processing
operation is not significant.\10\
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\10\ Id., at 9.
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(5) Value of Processing in Bahrain
Domestic Producers assert that producing PET resin accounts for
more than 70 percent of the value added of PET film.\11\ Domestic
Producers estimate that that local content is unlikely to exceed 20 of
the cost of merchandise.\12\ As JBF Bahrain sources its PET resin from
affiliates in India and the UAE, the processing performed by JBF
Bahrain represents a small portion of the value of finished PET film.
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\11\ Id., at 9 and Exhibit 7.
\12\ Id.
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D. Value of Merchandise Produced in India and the UAE
As Domestic Producers argued previously, the value of processing,
at issue in Bahrain, is a minor part of the cost, unlikely to exceed 20
percent of cost.
E. Additional Factors To Consider in Determining Whether Action Is
Necessary
Section 781(b)(3) of the Act directs the Department to consider
additional factors in determining whether to include merchandise
assembled or completed in a foreign country within the scope of the
Order, such as: ``(A) the pattern of trade, including sourcing
patterns, (B) whether the manufacturer or exporter of the merchandise .
. . is affiliated with the person who uses the merchandise . . . to
assemble or complete in the foreign country the merchandise that is
subsequently imported into the United States, and (C) whether imports
into the foreign country of the merchandise . . . have increased after
the initiation of the investigation which resulted in the issuance of
such order or finding.''
(1) Pattern of Trade
Domestic Producers note that at the time the petition was filed for
the original investigation of PET Film from the UAE, Bahrain was not a
source of U.S. PET Film imports.\13\ ITC data show that Bahrain first
exported PET Film to the United States in December 2013, and that
Bahrain has had exports of PET Film to the United States every month
thereafter.\14\ During the same time period exports of PET film from
the UAE declined.\15\ Domestic Producers further argue that there is no
economic rationale for adding a new production facility in Bahrain, as
there is no local market in Bahrain for the product, and the regional
market is insignificant.\16\ To increase production, it would have been
more efficient to add production lines to the JBF RAK facility in the
UAE, rather than build a new facility in Bahrain.
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\13\ Id., at 12.
\14\ Id., at 12 and Exhibit 10.
\15\ Id.
\16\ Id., at 13.
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(2) Affiliation
Domestic Producers note that JBF Bahrain, JBF India, and JBF RAK,
are
[[Page 44008]]
indisputably affiliated, as shown by the JBF Group Web site.\17\
Domestic Producers further argue that it is ``clear that JBF Bahrain is
merely taking PET resins produced by its affiliates and performing the
same operations using these resins that the affiliate was doing in the
UAE.'' \18\
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\17\ Id., at 13 and Exhibit 2.
\18\ Id., at 13.
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(3) Increase of Subject Imports From UAE to Bahrain After Investigation
Initiation
While unable to access comprehensive import data of the PET Film
inputs, bright and silica resin chips, into Bahrain for the period
between initiation of the investigation until the present, Domestic
Producers believe there were no such imports entered previously, as
there were no production facilities producing PET film in Bahrain at
this time.\19\ Domestic Producers presented evidence of shipments of
silica resin chips from JBF India to JBF Bahrain which coincide with
the start-up of the JBF Bahrain PET Film plant, and that JBF Bahrain is
sourcing PET resin from JBF RAK.\20\
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\19\ Id., at 14, Exhibit 3.
\20\ Id., at 14, Exhibit 4.
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Analysis of the Request
Based on our analysis of Petitioner's anti-circumvention inquiry
request, the Department determines that Domestic Producers satisfied
the criteria under section 781(b)(1) of the Act to warrant an
initiation of an anti-circumvention inquiry. In accordance with 19 CFR
351.225(e), the Department finds that the issue of whether a product is
included within the scope of an order cannot be determined based solely
upon the application and the descriptions of the merchandise.
Accordingly, the Department will notify by mail all parties on the
Department's scope service list of the initiation of an anti-
circumvention inquiry. In addition, in accordance with 19 CFR
351.225(f)(1)(i) and (ii), a notice of the initiation of an anti-
circumvention inquiry issued under 19 CFR 351.225(e) includes a
description of the product that is the subject of the anti-
circumvention inquiry, PET Film that contains the characteristics as
provided in the scope of the Order, and an explanation of the reasons
for the Department's decision to initiate an anti-circumvention
inquiry, as provided below.
With regard to whether the merchandise from the Bahrain is of the
same class or kind as the merchandise produced in the UAE, Domestic
Producers presented information to the Department indicating that,
pursuant to section 781(b)(1)(A) of the Act, the merchandise being
produced in and/or exported from Bahrain by JBF Bahrain may be of the
same class or kind as PET Film produced in the UAE, which is subject to
the Order.\21\ Consequently, the Department finds that Domestic
Producers provided sufficient information in its request regarding the
class or kind of merchandise to support the initiation of an anti-
circumvention inquiry.
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\21\ Id., at 5 and Exhibit 10.
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With regard to completion or assembly of merchandise in a foreign
country, pursuant to section 781(b)(1)(B) of the Act, Domestic
Producers also presented information to the Department indicating that
the PET Film exported from Bahrain to the United States are produced by
JBF Bahrain in Bahrain using key components from the UAE that account
for a significant portion of the total costs related to the production
of PET Film. We find that the information presented by Domestic
Producers regarding this criterion supports its request to initiate an
anti-circumvention inquiry.
The Department finds that Domestic Producers sufficiently addressed
the factors described in section 781(b)(1)(C) and 781(b)(2) of the Act
regarding whether the assembly or completion of PET Film in Bahrain is
minor or insignificant. In particular, Domestic Producers' submission
asserts that: (1) The level of investment is minimal when compared with
the volume of film that can be produced; (2) there is no evidence of
research and development taking place in Bahrain; (3) the production
processes undertaken by JBF Bahrain involve the simple processing of
resins in countries subject to the Order; (4) the investment in JBF
Bahrain's processing operations is not significant in the context of
production capacity; and (5) the value of the processing performed in
Bahrain is minimal, as the production of PET resin outside Bahrain
accounts for over 70 percent of the value of finished PET Film.\22\
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\22\ See discussion of these five factors above.
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With respect to the value of the merchandise produced in the UAE,
pursuant to section 781(b)(1)(D) of the Act, Domestic Producers relied
on published sources, a simulated cost structure for producing PET Film
in Bahrain, and arguments in the ``minor or insignificant process''
portion of its anti-circumvention request to indicate that the value of
the key components produced in the UAE may be significant relative to
the total value of the PET Film exported to the United States.\23\ We
find that this information adequately meets the requirements of this
factor, as discussed above, for the purposes of initiating an anti-
circumvention inquiry.
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\23\ See ``Request'' at 7, 9 and Exhibit 7.
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Finally, with respect to the additional factors listed under
section 781(b)(3) of the Act, we find that Domestic Producers presented
evidence indicating that imports of PET Film from Bahrain to the U.S.
increased since the imposition of the Order and that imports of bright
resin chips from the UAE to Bahrain also increased since the Order took
effect, further supporting initiation of this anti-circumvention
inquiry.\24\
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\24\ Id., at 12 and Exhibit 10.
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In accordance with 19 CFR 351.225(l)(2), if the Department issues a
preliminary affirmative determination, we will then instruct U.S.
Customs and Border Protection to suspend liquidation and require a cash
deposit of estimated duties on the merchandise. The Department will
establish a schedule for questionnaires and comments on the issues. In
accordance with section 781(f) of the Act and 19 CFR 351.225(f)(5), the
Department intends to issue its final determination within 300 days of
the date of publication of this initiation. This notice is published in
accordance with 19 CFR 351.225(f).
Dated: July 18, 2014.
Christian Marsh,
Deputy Assistant Secretary for Antidumping and Countervailing Duty
Operations.
[FR Doc. 2014-17492 Filed 7-28-14; 8:45 am]
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