[Federal Register Volume 81, Number 54 (Monday, March 21, 2016)]
[Notices]
[Pages 15039-15045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06299]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-967/C-570-968]


Aluminum Extrusions From the People's Republic of China: 
Initiation of Anti-Circumvention Inquiry

AGENCY: Enforcement & Compliance, International Trade Administration, 
Department of Commerce.

SUMMARY: In response to a request from the Aluminum Extrusions Fair 
Trade Committee (Petitioner), the Department of Commerce (the 
Department) is initiating an anti-circumvention inquiry pursuant to 
sections 781(c) and (d) of the Tariff Act of 1930, as amended, (the 
Act) to determine whether extruded aluminum products that meet the 
chemical specifications for 5050-grade aluminum alloy, which are heat-
treated, and exported by China Zhongwang Holdings Ltd. and its 
affiliates (collectively, Zhongwang) are circumventing the antidumping 
duty (AD) and countervailing duty (CVD) orders on aluminum extrusions 
from the People's Republic of China (PRC).\1\
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    \1\ See Aluminum Extrusions from the People's Republic of China: 
Antidumping Duty Order, 76 FR 30650 (May 26, 2011) and Aluminum 
Extrusions from the People's Republic of China: Countervailing Duty 
Order, 76 FR 30653 (May 26, 2011) (collectively, the Orders).

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DATE: Effective March 21, 2016.

FOR FURTHER INFORMATION CONTACT: Scott Hoefke or Robert James, AD/CVD 
Operations, Office VI, Enforcement &

[[Page 15040]]

Compliance, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW., Washington, DC 
20230; telephone: (202) 482-4947 or (202) 482-0649, respectively.

SUPPLEMENTARY INFORMATION:

Background

    In October 2015, Petitioner filed a joint Scope Clarification and 
Anti-Circumvention Inquiry Request for certain merchandise from 
Zhongwang. At the request of the Department, on December 30, 2015, 
Petitioner refiled its request that the Department conduct an anti-
circumvention inquiry pursuant to sections 781(c) and (d) of the Act 
with respect to extruded aluminum products that meet the chemical 
specifications for 5050-grade aluminum alloy, which are heat-treated, 
and exported by Zhongwang.\2\ In its request, Petitioner contends that 
Zhongwang's 5050-grade aluminum alloy extrusion products are 
circumventing the scope of the Orders, and requests that the Department 
address this alleged circumvention by initiating both a ``minor 
alterations'' anti-circumvention inquiry pursuant to section 781(c) of 
the Act, as well as a ``later-developed merchandise'' anti-
circumvention inquiry pursuant to section 781(d) of the Act.\3\ With 
this refiling, we accepted the Petitioner's submission and set the 
deadline for action as February 22, 2016. On February 22, 2016, the 
Department extended the deadline to initiate 21 days to March 14, 2016.
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    \2\ See Letter to the Secretary, Re ``Aluminum Extrusions from 
the People's Republic of China: Resubmission of Circumvention 
Inquiry Request Pursuant to the Department's Request,'' dated 
December 30, 2015 (Petitioner's Resubmission of Circumvention 
Inquiry).
    \3\ Id. at 39-66.
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    The scope of the Orders expressly includes extruded products made 
of alloy ``with an Aluminum Association series designation commencing 
with the number 6'' where ``magnesium account{s{time}  for at least 0.1 
percent but not more than 2.0 percent of total materials by weight, and 
silicon account{s{time}  for at least 0.1 percent but not more than 3.0 
percent of total materials by weight.'' \4\ In addition, expressly 
excluded from the Orders are extruded products made of alloy ``with an 
{Aluminum Association{time}  series designation commencing with the 
number 5 and containing in excess of 1.0 percent magnesium by weight.'' 
\5\ Petitioner argues that the scope of the Orders ``creates an overlap 
between the chemical composition standards {in that{time}  there is a 
narrow window in which a 5xxx-series alloy may and does exist that is 
comprised of more than one percent but less than two percent magnesium 
by weight{,{time} '' and that ``{i{time} n order to use 5xxx-series 
alloy (i.e., 5050 alloy) in an extrusion application, . . . the metal 
would have to be heat-treated to achieve the mechanical properties that 
make 6xxx-series alloy so attractive for extrusion 
applications{.{time} '' \6\
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    \4\ See Orders, 76 FR 30653.
    \5\ Id.
    \6\ Id.
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    Thus, Petitioner maintains that the aluminum alloy extrusion 
products at issue are manipulated in two ways to evade the scope of the 
Orders: First, the billet producer must create a precise ratio of 
silicon to magnesium to result in an alloy that satisfies the chemical 
composition limits of a 5050 alloy, but behaves and is extrudable like 
an in-scope 6xxx-series alloy.\7\ Second, once the alloy is subject to 
a heat-treatment tempering process, this allows the extruded alloy to 
achieve the desired tensile strength to mimic the functionality of in-
scope 6xxx-series alloy.\8\ Petitioner argues that The Aluminum 
Association, the certifying body for the domestic aluminum industry, 
does not currently recognize heat-treatment as a tempering process for 
5050-grade aluminum alloy, which is historically tempered through 
strain-hardening and/or cold-working processes.\9\ Rather, The Aluminum 
Association recognizes heat-treatment as a tempering process for 6xxx-
series alloy.\10\ In short, Petitioner alleges that these aluminum 
alloy products are subject to chemical and mechanical manipulation, 
i.e., tempering, which results in circumvention of the Orders.
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    \7\ Id. at 42-44.
    \8\ Id. at 42-45
    \9\ Id. at 46-47.
    \10\ Id. at Exhibit 21.
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    Petitioner provided evidence that was reasonably available of 
Zhongwang's alleged circumvention of the Orders through its shipment of 
such 5050-grade aluminum alloy extrusion products.\11\ Petitioner 
provided Zhongwang's financial statements.\12\ Petitioner points out 
that Zhongwang has yet to be selected for an administrative review for 
the Orders, because there were no reported entries of subject 
merchandise.\13\ Petitioner also points out that after the imposition 
of the Orders, the volume of Zhongwang's U.S. exports decreased, but 
subsequently rebounded since the ``sudden'' appearance and timing of 
its importation of such 5050-grade aluminum alloy products.\14\ 
Petitioner argues that these facts taken together indicate that 
Zhongwang is engaging in manipulation to avoid duties.
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    \11\ Id. at 41 and 62.
    \12\ Id. at 50 and Exhibit 3.
    \13\ Id. at 50.
    \14\ Id. at 50.
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Scope of Orders

    The merchandise covered by the orders is aluminum extrusions which 
are shapes and forms, produced by an extrusion process, made from 
aluminum alloys having metallic elements corresponding to the alloy 
series designations published by The Aluminum Association commencing 
with the numbers 1, 3, and 6 (or proprietary equivalents or other 
certifying body equivalents). Specifically, the subject merchandise 
made from aluminum alloy with an Aluminum Association series 
designation commencing with the number 1 contains not less than 99 
percent aluminum by weight. The subject merchandise made from aluminum 
alloy with an Aluminum Association series designation commencing with 
the number 3 contains manganese as the major alloying element, with 
manganese accounting for not more than 3.0 percent of total materials 
by weight. The subject merchandise is made from an aluminum alloy with 
an Aluminum Association series designation commencing with the number 6 
contains magnesium and silicon as the major alloying elements, with 
magnesium accounting for at least 0.1 percent but not more than 2.0 
percent of total materials by weight, and silicon accounting for at 
least 0.1 percent but not more than 3.0 percent of total materials by 
weight. The subject aluminum extrusions are properly identified by a 
four-digit alloy series without either a decimal point or leading 
letter. Illustrative examples from among the approximately 160 
registered alloys that may characterize the subject merchandise are as 
follows: 1350, 3003, and 6060.
    Aluminum extrusions are produced and imported in a wide variety of 
shapes and forms, including, but not limited to, hollow profiles, other 
solid profiles, pipes, tubes, bars, and rods. Aluminum extrusions that 
are drawn subsequent to extrusion (drawn aluminum) are also included in 
the scope.
    Aluminum extrusions are produced and imported with a variety of 
finishes (both coatings and surface treatments), and types of 
fabrication. The types of coatings and treatments applied to subject 
aluminum extrusions include, but are not limited to, extrusions that

[[Page 15041]]

are mill finished (i.e., without any coating or further finishing), 
brushed, buffed, polished, anodized (including bright-dip anodized), 
liquid painted, or powder coated. Aluminum extrusions may also be 
fabricated, i.e., prepared for assembly. Such operations would include, 
but are not limited to, extrusions that are cut-to-length, machined, 
drilled, punched, notched, bent, stretched, knurled, swedged, mitered, 
chamfered, threaded, and spun. The subject merchandise includes 
aluminum extrusions that are finished (coated, painted, etc.), 
fabricated, or any combination thereof.
    Subject aluminum extrusions may be described at the time of 
importation as parts for final finished products that are assembled 
after importation, including, but not limited to, window frames, door 
frames, solar panels, curtain walls, or furniture. Such parts that 
otherwise meet the definition of aluminum extrusions are included in 
the scope. The scope includes the aluminum extrusion components that 
are attached (e.g., by welding or fasteners) to form subassemblies, 
i.e., partially assembled merchandise unless imported as part of the 
finished goods `kit' defined further below. The scope does not include 
the non-aluminum extrusion components of subassemblies or subject kits.
    Subject extrusions may be identified with reference to their end 
use, such as fence posts, electrical conduits, door thresholds, carpet 
trim, or heat sinks (that do not meet the finished heat sink 
exclusionary language below). Such goods are subject merchandise if 
they otherwise meet the scope definition, regardless of whether they 
are ready for use at the time of importation.
    The following aluminum extrusion products are excluded: Aluminum 
extrusions made from aluminum alloy with an Aluminum Association series 
designations commencing with the number 2 and containing in excess of 
1.5 percent copper by weight; aluminum extrusions made from aluminum 
alloy with an Aluminum Association series designation commencing with 
the number 5 and containing in excess of 1.0 percent magnesium by 
weight; and aluminum extrusions made from aluminum alloy with an 
Aluminum Association series designation commencing with the number 7 
and containing in excess of 2.0 percent zinc by weight.
    The scope also excludes finished merchandise containing aluminum 
extrusions as parts that are fully and permanently assembled and 
completed at the time of entry, such as finished windows with glass, 
doors with glass or vinyl, picture frames with glass pane and backing 
material, and solar panels. The scope also excludes finished goods 
containing aluminum extrusions that are entered unassembled in a 
``finished goods kit.'' A finished goods kit is understood to mean a 
packaged combination of parts that contains, at the time of 
importation, all of the necessary parts to fully assemble a final 
finished good and requires no further finishing or fabrication, such as 
cutting or punching, and is assembled ``as is'' into a finished 
product. An imported product will not be considered a ``finished goods 
kit'' and therefore excluded from the scope of the investigation merely 
by including fasteners such as screws, bolts, etc. in the packaging 
with an aluminum extrusion product.
    The scope also excludes aluminum alloy sheet or plates produced by 
other than the extrusion process, such as aluminum: Products produced 
by a method of casting. Cast aluminum products are properly identified 
by four digits with a decimal point between the third and fourth digit. 
A letter may also precede the four digits. The following Aluminum 
Association designations are representative of aluminum alloys for 
casting: 208.0, 295.0, 308.0, 355.0, C355.0, 356.0, A356.0, A357.0, 
360.0, 366.0, 380.0, A380.0, 413.0, 443.0, 514.0, 518.1, and 712.0. The 
scope also excludes pure, unwrought aluminum in any form.
    The scope also excludes collapsible tubular containers composed of 
metallic elements corresponding to alloy code 1080A as designated by 
The Aluminum Association where the tubular container (excluding the 
nozzle) meets each of the following dimensional characteristics: (1) 
Length of 37 millimeters (``mm'') or 62 mm, (2) outer diameter of 11.0 
mm or 12.7 mm, and (3) wall thickness not exceeding 0.13 mm.
    Also excluded from the scope of these orders are finished heat 
sinks. Finished heat sinks are fabricated heat sinks made from aluminum 
extrusions the design and production of which are organized around 
meeting certain specified thermal performance requirements and which 
have been fully, albeit not necessarily individually, tested to comply 
with such requirements.
    Imports of the subject merchandise are provided for under the 
following categories of the Harmonized Tariff Schedule of the United 
States (HTSUS): 7609.00.00, 7610.10.00, 7610.90.00, 7615.10.30, 
7615.10.71, 7615.10.91, 7615.19.10, 7615.19.30, 7615.19.50, 7615.19.70, 
7615.19.90, 7615.20.00, 7616.99.10, 7616.99.50, 8479.89.98, 8479.90.94, 
8513.90.20, 9403.10.00, 9403.20.00, 7604.21.00.00, 7604.29.10.00, 
7604.29.30.10, 7604.29.30.50, 7604.29.50.30, 7604.29.50.60, 
7608.20.00.30, 7608.20.00.90, 8302.10.30.00, 8302.10.60.30, 
8302.10.60.60, 8302.10.60.90, 8302.20.00.00, 8302.30.30.10, 
8302.30.30.60, 8302.41.30.00, 8302.41.60.15, 8302.41.60.45, 
8302.41.60.50, 8302.41.60.80, 8302.42.30.1 0, 8302.42.30.15, 
8302.42.30.65, 8302.49.60.35, 8302.49.60.45, 8302.49.60.55, 
8302.49.60.85, 8302.50.00.00, 8302.60.90.00, 8305.10.00.50, 
8306.30.00.00, 8414.59.60.90, 8415.90.80.45, 8418.99.80.05, 
8418.99.80.50, 8418.99.80.60, 8419.90.10.00, 8422.90.06.40, 
8473.30.20.00, 8473.30.51.00, 8479.90.85.00, 8486.90.00.00, 
8487.90.00.80, 8503.00.95.20, 8508.70.00.00, 8515.90.20.00, 
8516.90.50.00, 8516.90.80.50, 8517.70.00.00, 8529.90.73.00, 
8529.90.97.60, 8536.90.80.85, 8538.10.00.00, 8543.90.88.80, 
8708.29.50.60, 8708.80.65.90, 8803.30.00.60, 9013.90.50.00, 
9013.90.90.00, 9401.90.50.81, 9403.90.10.40, 9403.90.10.50, 
9403.90.10.85, 9403.90.25.40, 9403.90.25.80, 9403.90.40.05, 
9403.90.40.10, 9403.90.40.60, 9403.90.50.05, 9403.90.50.10, 
9403.90.50.80, 9403.90.60.05, 9403.90.60.10, 9403.90.60.80, 
9403.90.70.05, 9403.90.70.10, 9403.90.70.80, 9403.90.80.10, 
9403.90.80.15, 9403.90.80.20, 9403.90.80.41, 9403.90.80.51, 
9403.90.80.61, 9506.11.40.80, 9506.51.40.00, 9506.51.60.00, 
9506.59.40.40, 9506.70.20.90, 9506.91.00.10, 9506.91.00.20, 
9506.91.00.30, 9506.99.05.10, 9506.99.05.20, 9506.99.05.30, 
9506.99.15.00, 9506.99:20.00, 9506.99.25.80, 9506.99.28.00, 
9506.99.55.00, 9506.99.60.80, 9507.30.20.00, 9507.30.40.00, 
9507.30.60.00, 9507.90.60.00, and 9603.90.80.50.
    The subject merchandise entered as parts of other aluminum products 
may be classifiable under the following additional Chapter 76 
subheadings: 7610.10, 7610.90, 7615.19, 7615.20, and 7616.99 as well as 
under other HTSUS chapters. In addition, fin evaporator coils may be 
classifiable under HTSUS numbers: 8418.99.80.50 and 8418.99.80.60. 
While HTSUS subheadings are provided for convenience and customs 
purposes, the written description of the scope of these orders is 
dispositive.

[[Page 15042]]

Merchandise Subject to the Anti-Circumvention Inquiry

    This anti-circumvention inquiry covers extruded aluminum products 
that meet the chemical specifications for 5050-grade aluminum alloy, 
which are heat-treated, and exported by Zhongwang.\15\ The Department 
intends to consider whether the inquiry should apply to all imports of 
extruded aluminum products that meet the chemical specifications for 
5050-grade aluminum alloy and are heat-treated, regardless of producer, 
exporter, or importer, from the PRC.
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    \15\ Petitioner provided names of known Zhongwang's Chinese and 
U.S. affiliates. Through the course of inquiry, we intend to examine 
in addition to Zhongwang the following affiliated companies: Dalian 
Liwan Trade Co., Ltd.; Tianjin Boruxin Trading Co., Ltd.; and Dragon 
Luxe Limited; Pencheng Aluminum Enterprise Inc. USA; Global Aluminum 
(USA) Inc.; Signature Aluminum Canada Inc.; Aluminum Shapes, LLC; 
Perfectus Aluminum Inc.; and Perfectus Aluminum Acquisitions LLC. We 
also intend to examine whether any Zhongwang's affiliates are the 
producers of the merchandise at issue.
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Request for a Minor Alterations Anti-Circumvention Inquiry

    Section 781(c)(1) of the Act provides that the Department may find 
circumvention of an AD or CVD order when products which are of the 
class or kind of merchandise subject to an AD or CVD order have been 
``altered in form or appearance in minor respects . . . whether or not 
included in the same tariff classification.'' Section 781(c)(2) of the 
Act provides an exception that ``{p{time} aragraph 1 shall not apply 
with respect to altered merchandise if the administering authority 
determines that it would be unnecessary to consider the altered 
merchandise within the scope of the {AD or CVD{time}  order{.{time} ''
    The Department notes that, while the statute is silent as to what 
factors to consider in determining whether alterations are properly 
considered ``minor,'' the legislative history of this provision 
indicates there are certain factors which should be considered before 
reaching an anti-circumvention determination. In conducting an anti-
circumvention inquiry under section 781(c) of the Act, the Department 
has generally relied upon ``such criteria as the overall physical 
characteristics of the merchandise, the expectations of the ultimate 
users, the use of the merchandise, the channels of marketing and the 
cost of any modification relative to the total value of the imported 
product.'' \16\ The Department will examine these factors in evaluating 
an allegation of minor alteration under section 781(c) of the Act and 
19 CFR 351.225(i). Each case is highly dependent on the facts on the 
record, and must be analyzed in light of those specific facts. Thus, 
although not specified in the statute, the Department has also included 
additional factors in its analysis, such as the circumstances under 
which the products at issue entered the United States and the timing 
and quantity of said entries during the circumvention review 
period.\17\
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    \16\ See S. Rep. No. 71, 100th Cong., 1st Sess. 100 (1987) (``In 
applying this provision, the Commerce Department should apply 
practical measurements regarding minor alterations, so that 
circumvention can be dealt with effectively, even where such 
alterations to an article technically transform it into a 
differently designated article.'').
    \17\ See, e.g., Brass Sheet and Strip From West Germany; 
Negative Preliminary Determination of Circumvention of Antidumping 
Duty Order, 55 FR 32655 (August 10, 1990) unchanged in Brass Sheet 
and Strip From Germany; Negative Final Determination of 
Circumvention of Antidumping Duty Order, 56 FR 65884 (December 19, 
1991), see also, e.g., Small Diameter Graphite Electrodes From the 
People's Republic of China: Initiation of Anticircumvention Inquiry, 
77 FR 37873 (June 25, 2012).
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    As discussed above, Petitioner argues that the manipulation in 
chemical composition and tempering to create an aluminum extrusions 
product which technically meets the scope exclusion for 5xxx-series but 
behaves like in-scope 6xxx-series subject merchandise results in 
circumvention of the Orders as a minor alteration of in-scope 
merchandise, pursuant to section 781(c) of the Act.\18\ Specifically, 
Petitioner argues that the products at issue, given their heat-
treatment, would otherwise be subject 6xxx-series alloy but for the 
minor increase in magnesium levels, which allows for a superficial 
designation as a 5050 alloy.\19\ According to Petitioner, this would 
require a shift in chemistry of a 6063 alloy at the top end of its 
magnesium content range (i.e., 0.45 to 0.90 percent by weight) by 
increasing the magnesium content level by a mere 0.2 percent by weight 
to achieve a magnesium content of 1.1 percent by weight, which is 
within the low end of the range of the magnesium content range for 5050 
alloy.\20\ Petitioner states this increase at today's magnesium market 
price would result in a 4.63 percent increase to the 5050 billet's 
overall per pound alloying cost, which in turn represents a negligible 
0.52 percent increase to the overall per-pound billet production 
cost.\21\ Petitioner states that in Cut-to-Length Plate from China,\22\ 
the Department found similar minor changes to alloying elements are not 
sufficient to remove what would otherwise be subject merchandise from 
the scope.\23\
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    \18\ See Petitioner's Resubmission of Circumvention Inquiry at 
52-53.
    \19\ Id.
    \20\ Id. at 52.
    \21\ Id.
    \22\ See Affirmative Final Determination of Circumvention of the 
Antidumping Duty Order on Certain Cut-to-Length Carbon Steel Plate 
from the People's Republic of China, 76 FR 50996 (August 17, 2011) 
(Cut-to-Length Plate from China).
    \23\ See Petitioner's Resubmission of Circumvention Inquiry at 
52.
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    Finally, once a precise ratio of silicon to magnesium is achieved, 
which falls within the chemical composition limits for a 5050 alloy, 
but is virtually indistinguishable from the chemical composition limits 
for a 6xxx-series alloy, the product is ready to be heat-treated--the 
same tempering process used for 6xxx-series alloy, and which is not 
recognized by The Aluminum Association as a tempering process for 5050 
alloy--which results in a product similar to a 6xxx-series aluminum 
extrusion product, save for the minor increase in magnesium.
    In its request for a minor alterations anti-circumvention inquiry, 
Petitioner presented the following evidence with respect to each of the 
aforementioned criteria.

A. Overall Physical Characteristics

    Petitioner contends that companies such as Zhongwang have created 
and shipped extruded aluminum products meeting the chemical 
specifications for 5050-grade aluminum alloy and which are heat-
treated, which results in aluminum extrusion products whose chemical 
and mechanical properties have been manipulated to be similar to those 
of in-scope 6xxx-series alloy products. Petitioner has provided 
information relating to an importer that has admitted to sourcing 5050-
grade aluminum alloy products for use in products and applications 
which have traditionally used 6xxx-series alloys, as well as 
information relating to a domestic producer that has been asked to 
provide price quotes for the manufacture of products using 5050 alloy 
which have been made previously with 6xxx-series alloy. Petitioner also 
obtained and tested specimens labeled as 5050-grade aluminum alloy 
products, which demonstrated that the chemical composition overlapped 
with 6xxx-series standards, and had been heat-treated. While Petitioner 
did not test specimens of Zhongwang's products, information reasonably 
available to Petitioner indicates that the overall physical 
characteristics of Zhongwang's 5050-grade aluminum alloy extrusion 
products would be no different from the tested products, and therefore 
should be found similar to products made of series 6xxx aluminum 
alloys.\24\
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    \24\ See Petitioner's Resubmission of Circumvention Inquiry at 
page 56-58.

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[[Page 15043]]

B. Expectations of the Ultimate Users and Use of the Merchandise

    Petitioner alleges that the expectations of the purchasers and 
ultimate use of Zhongwang's 5050-grade aluminum alloy extrusion 
products are identical to those of products produced from 6xxx-series 
alloy.\25\ Petitioner states that the specific alloy out of which the 
aluminum extrusion is produced has no apparent bearing or impact on the 
ultimate use.\26\ Petitioner provided evidence suggesting that the type 
of alloy had no bearing on customers' selection of aluminum extrusion 
products, and that, in some cases, 5050-grade aluminum alloy products 
were used specifically to avoid antidumping and countervailing 
duties.\27\ Petitioner also provided information indicating that 
domestic producers are competing with Chinese-sourced 5050-grade 
aluminum alloy products for the same shower enclosure components 
designed to be manufactured in 6463 alloy.\28\ Petitioner further 
contends that, although it does not have access to Zhongwang's specific 
5050-grade aluminum alloy extrusion products, evidence confirms that 
Zhongwang began importing a large volume of 5050-grade aluminum alloy 
products after the Orders came into place.\29\ Further, Petitioner 
contends that there is no indication that Zhongwang's products are any 
different from the 5050-grade aluminum alloy products which have been 
competing directly with the U.S. industry.\30\
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    \25\ Id. at 58-60.
    \26\ Id.
    \27\ Id. at 58-60, Exhibit 30, Exhibit 28, and Exhibit 22.
    \28\ Id. at 59 and Exhibit 28.
    \29\ Id. at 65.
    \30\ Id. at 59.
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C. Channels of Marketing

    Petitioner maintains that there is no difference between the 
channels of marketing for aluminum extrusions made from in-scope alloy, 
i.e., 6xxx-series aluminum extrusions, and those of 5050-grade aluminum 
alloy extrusion products. For instance, Petitioner provided evidence 
showing that such 5050-grade aluminum alloy extruded products are 
marketed by Chinese producers to purchasers in the same manner that 
6xxx-series are marketed, and such marketing demonstrates to customers 
and end-users that these products are interchangeable with 6xxx-series 
products.\31\ Moreover, Petitioner states that Zhongwang's Web site 
advertises a collection of products in a single location on its Web 
site without designation or differentiation between products crafted or 
capable of being crafted of different alloys. This demonstrates, 
Petitioner contends, that Zhongwang's 5050-grade aluminum alloy 
extrusion products are not marketed any differently from merchandise 
produced from in-scope 6xxx-series alloy.\32\
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    \31\ Id. at 60.
    \32\ Id. at 60-61 and Exhibit 19.
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D. Cost of Modification

    Petitioner indicates that the cost of the minor alterations to 
shift the chemistry of a high-magnesium series 6xxx alloy to one that 
one could be designated as 5050 alloy is minimal at best.\33\ As 
discussed above, Petitioner specifically mentions that one would need 
to increase a 6063 alloy's maximized magnesium content level by 0.2 
percent by weight.\34\ Petitioner states that this increase at 
magnesium's market price at the time of filing would result in a 4.63 
percent increase to the 5050 billet's overall per pound alloying cost 
which, Petitioner avers, is insignificant given the Orders antidumping 
and countervailing duties are over 180 percent.\35\
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    \33\ Id. at 63.
    \34\ Id.
    \35\ Id.
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E. Circumstance Under Which the Subject Products Entered the United 
States

    Petitioner argues that at the completion of the original 
investigations, the PRC-wide antidumping rate was 33.28 percent, and 
the PRC-wide countervailing duty rate was 374.15 percent.\36\ 
Petitioner asserts that these considerable margins have given Zhongwang 
tremendous financial incentive to circumvent the Orders so as not to 
incur the costs associated with the duties levied on the entries of 
subject merchandise.\37\
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    \36\ Id. at 63-64.
    \37\ Id. at 64.
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F. Timing of Entries

    Petitioner asserts that the timing of the entries of Zhongwang's 
5050-grade aluminum alloy products show Zhongwang's attempt to 
circumvent the Orders.\38\ Petitioner supported this assertion by 
providing import data showing Zhongwang's shipments of 5050-grade 
aluminum alloy products began after the imposition of the Orders in 
2011.\39\
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    \38\ Id.
    \39\ Id. at 65.
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Request for a Later-Developed Merchandise Anti-Circumvention Inquiry

    Section 781(d)(1) of the Act provides that the Department may 
initiate an anti-circumvention inquiry to determine whether merchandise 
developed after an AD or CVD investigation is initiated (``later-
developed merchandise'') is within the scope of the order(s). In 
conducting later-developed merchandise anti-circumvention inquiries 
under section 781(d)(1) of the Act, the Department will evaluate 
whether the general physical characteristics of the merchandise under 
consideration are the same as subject merchandise covered by the order, 
whether the expectations of the ultimate purchasers of the merchandise 
under consideration are no different than the expectations of the 
ultimate purchases of subject merchandise, whether the ultimate use of 
the subject merchandise and the merchandise under consideration are the 
same, whether the channels of trade of both products are the same, 
whether there are any differences in the advertisement and display of 
both products,\40\ and if the merchandise under consideration was 
commercially available at the time of the investigation, i.e., the 
product was present in the commercial market or the product was tested 
and ready for commercial production.\41\
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    \40\ See section 781(d)(1) of the Act.
    \41\ See Later-Developed Merchandise Anticircumvention Inquiry 
of the Antidumping Duty Order on Petroleum Wax Candles from the 
People's Republic of China: Affirmative Preliminary Determination of 
Circumvention of the Antidumping Duty Order, 71 FR 32033, 32035 
(June 2, 2006) unchanged in Later-Developed Merchandise 
Anticircumvention Inquiry of the Antidumping Duty Order on Petroleum 
Wax Candles from the People's Republic of China: Affirmative Final 
Determination of Circumvention of the Antidumping Duty Order, 71 FR 
59075 (October 6, 2006).
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    As discussed above, Petitioner argues that the manipulation in 
chemical composition and tempering to create an aluminum extrusions 
product which technically meets the scope exclusion for 5xxx-series but 
behaves like in-scope 6xxx-series subject merchandise results in 
circumvention of the Orders as later-developed merchandise, pursuant to 
section 781(d) of the Act. Specifically, Petitioner argues that the 
products constitute later-developed merchandise because: (1) While the 
5050-grade alloy designation existed at the time of the investigation, 
The Aluminum Association did not, and still does not, recognize heat-
treatment as a tempering process for 5050-grade aluminum alloy; (2) 
documents from the investigation indicate that soft alloys, i.e., 1xxx-
,

[[Page 15044]]

3xxx-, and 6xxx-series alloys, were used in a wide variety of aluminum 
extrusion products, while hard alloys--such as 5xxx-series--were 
extremely limited and highly specific, appearing primarily in marine 
and aerospace applications; and (3) at the time of the filing of the 
petition, The Aluminum Association recognized only four 5xxx-series 
alloys employed in extrusion applications--which did not include 5050-
grade aluminum alloy.\42\
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    \42\ See Petitioner's Resubmission of Circumvention Inquiry at 
54-55.
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    As described in the ``Request for a Minor Alterations Anti-
Circumvention Inquiry'' section above, Petitioner has provided evidence 
and argument pertaining to the general physical characteristics of the 
merchandise under consideration as being the same as subject 
merchandise covered by the order, whether the expectations of the 
ultimate purchasers of the merchandise under consideration are no 
different than the expectations of the ultimate purchases of subject 
merchandise, and whether the ultimate use of the subject merchandise 
and the merchandise under consideration are the same. In the context of 
its later-developed merchandise request, Petitioner has further 
provided the following evidence pertaining to the remaining 
aforementioned criteria.

A. Advertisement, Display, and Channel of Trade

    Petitioner maintains that the advertisement, display, and channels 
of trade of manipulated 5050-grade aluminum alloy extruded products are 
identical to those of merchandise produced from in-scope alloys, i.e., 
6xxx-series.\43\ With respect to advertisement and display, Petitioner 
provided evidence showing that such 5050-grade aluminum alloy extruded 
products are advertised by Chinese producers to purchasers in the same 
manner that 6xxx-series are advertised, which demonstrates to customers 
and end-users that these products are interchangeable with 6xxx-series 
products.\44\ Moreover, Petitioner states that Zhongwang's Web site 
advertises and displays a collection of products in a single location 
on its Web site without designation or differentiation between products 
crafted or capable of being crafted of different alloys, thus 
demonstrating that Zhongwang's 5050-grade aluminum alloy extrusion 
products are not advertised or displayed any differently from 
merchandise produced from in-scope 6xxx-series alloy.\45\
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    \43\ Id. at 60-62.
    \44\ Id. at 60.
    \45\ Id. at 60-61 and Exhibit 19.
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    With respect to channels of trade, Petitioner provided information 
relating to a domestic producer that has been asked to provide price 
quotes for the manufacture of products using 5050-grade alloy which 
have been made previously with 6xxx-series alloy.\46\ In addition, 
Petitioner provided evidence demonstrating a company's loss of business 
as a result of the replacement of 6xxx-series alloy in products with 
Chinese 5050-grade alloy.\47\ Petitioner argues that these 5050-grade 
aluminum alloy extrusion products, which caused lost U.S. business, are 
likely being sold in the identical channels of trade as the original 
series 6xxx alloy versions.\48\
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    \46\ Id. at 61, Exhibit 22.
    \47\ Id. at 61, Exhibit 30.
    \48\ Id. at 61.
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    With respect to Zhongwang, Petitioner notes that the importer of 
record for nearly all of Zhongwang's shipments of aluminum product to 
the United States from 2009 to date was the same, regardless of whether 
those shipments were 6xxx-series profiles prior to the imposition of 
the orders or 5050-grade products after the imposition of the 
orders.\49\ According to Petitioner, there is no evidence reasonably 
available which indicates that the channels of trade in which 
Zhongwang's 5050-grade aluminum alloy extrusion products are sold are 
different from those in which similar 6xxx-series products are 
sold.\50\ However, the evidence that is reasonably available, i.e., 
Zhongwang's Web site, shows that Zhongwang advertises a collection of 
products manufactured exclusively from series 6xxx-series alloy and one 
product manufactured from 7xxx-series alloy, but makes no mention of 
series 5xxx products.\51\ Petitioner contends that given Zhongwang's 
importation levels of 5050-grade aluminum alloy extrusion products into 
the United States it would be advertising these products separately or 
at the very least mentioned on its Web site.\52\ Petitioner argues that 
the silence with which Zhongwang's Web site treats 5xxx-series products 
which it is manufacturing and shipping to the United States 
demonstrates that these products are interchangeable with 6xxx-series 
alloy products and intended to circumvent the orders.\53\
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    \49\ Id. at 61, Exhibit 8.
    \50\ Id. at 61-62.
    \51\ Id. at 62 and Exhibit 19.
    \52\ Id. at 62.
    \53\ Id.
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B. Commercial Availability

    Petitioner states that, at the time of the investigation, series 
5050 alloy existed but was associated with rolling applications, rather 
than extrusions.\54\ Furthermore, Petitioner states that heat-treated 
5050 alloy extrusions are not recognized by The Aluminum Association 
for the purposes of aluminum extrusions.\55\ Additionally, Petitioner 
adds that The Aluminum Association did not recognize heat-treating 
series 5050 alloys at the time of the Petition, and still does not 
recognize doing so to the present day.\56\ Thus, Petitioner argues that 
extruded aluminum products meeting the chemical specifications for 
5050-grade aluminum alloy and which are heat-treated were not 
commercially available at the time of the investigations; they were 
developed and made available after the publication of the Orders.
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    \54\ Id. at 54.
    \55\ See Petitioner's Resubmission of Circumvention Inquiry at 
54.
    \56\ Id. at 54, Exhibit 21, and Exhibit 27.
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Conclusion

    Based on the information provided by Petitioner, the Department 
finds there is sufficient basis to initiate an anti-circumvention 
inquiry, pursuant to sections 781(c) and 781(d) of the Act. The 
Department will determine whether the merchandise subject to the 
inquiry (identified in the ``Merchandise Subject to the Anti-
Circumvention Inquiry'' section above) involves either a minor 
alteration to subject merchandise in such minor respects that it should 
be subject to the Orders, and/or represents a later-developed product 
that can be considered subject to the Orders.
    The Department will not order the suspension of liquidation of 
entries of any additional merchandise at this time. However, 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, at the applicable rate, for each 
unliquidated entry of the merchandise at issue, entered or withdrawn 
from warehouse for consumption on or after the date of initiation of 
the inquiry.
    In the event we issue a preliminary affirmative determination of 
circumvention pursuant to section 781(d) of the act (later-developed 
merchandise), we intend to notify the International Trade Commission, 
in accordance with section 781(e)(1) of the Act and 19 CFR 
351.225(f)(7)(i)(C), if applicable.

[[Page 15045]]

    The Department will, following consultation with interested 
parties, establish a schedule for questionnaires and comments on the 
issues. The Department intends to issue its final determination within 
300 days of this initiation, in accordance with section 781(f) of the 
Act.
    This notice is published in accordance with sections 781(c) and 
781(d) of the Act and 19 CFR 351.225(i) and (j).

    Dated: March 14, 2016.
Paul Piquado,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2016-06299 Filed 3-18-16; 8:45 am]
 BILLING CODE 3510-DS-P