[Federal Register Volume 81, Number 219 (Monday, November 14, 2016)]
[Notices]
[Pages 79454-79458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27327]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-026, C-570-027]


Certain Corrosion-Resistant Steel Products From the People's 
Republic of China: Initiation of Anti-Circumvention Inquiries on the 
Antidumping Duty and Countervailing Duty Orders

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from ArcelorMittal USA LLC, Nucor 
Corporation, United States Steel Corporation, and AK Steel Corporation, 
as well as Steel Dynamics, Inc. and California Steel Industries, 
(collectively, Domestic Producers), the Department of Commerce (the 
Department) is initiating anti-circumvention inquiries to determine 
whether certain imports of corrosion-resistant steel products (CORE), 
produced in the Socialist Republic of Vietnam (Vietnam) using carbon 
hot-rolled steel (HRS) and cold-rolled steel (CRS) flat products 
manufactured in the People's Republic of China (PRC), are circumventing 
the antidumping duty (AD) and countervailing duty (CVD) orders on CORE 
from the PRC.

DATES: Effective November 14, 2016.

FOR FURTHER INFORMATION CONTACT: Nancy Decker, AD/CVD Operations, 
Office VII, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW., Washington, DC 20230; telephone: (202) 482-0196.

SUPPLEMENTARY INFORMATION: 

Background

    On June 3, 2015, AK Steel Corporation, ArcelorMittal USA LLC, Nucor 
Corporation, Steel Dynamics, Inc., and the United States Steel 
Corporation (collectively, Petitioners) filed petitions seeking the 
imposition of antidumping and countervailing duties on imports of CORE 
from India, Italy, the Republic of Korea, PRC, and Taiwan. Following 
the Department's affirmative determinations of dumping and 
countervailable subsidies,\1\ and the U.S. International Trade 
Commission (ITC) finding of material injury,\2\ the Department issued 
antidumping duty and countervailing duty Orders \3\ on imports of CORE 
from the PRC.
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    \1\ See Certain Corrosion-Resistant Steel Products from the 
People's Republic of China: Final Determination of Sales at Less 
Than Fair Value and Final Affirmative Critical Circumstances 
Determination, in Part, 81 FR 35316 (June 2, 2016), and 
Countervailing Duty Investigation of Certain Corrosion-Resistant 
Steel Products From the People's Republic of China: Final 
Affirmative Determination, and Final Affirmative Critical 
Circumstances Determination, in Part, 81 FR 35308 (June 2, 2016).
    \2\ See Certain Corrosion-Resistant Steel Products From China, 
India, Italy, Korea, and Taiwan; Determinations, 81 FR 47177 (July 
20, 2016).
    \3\ See Certain Corrosion-Resistant Steel Products From India, 
Italy, the People's Republic of China, the Republic of Korea and 
Taiwan: Amended Final Affirmative Antidumping Determination for 
India and Taiwan, and Antidumping Duty Orders, 81 FR 48390 (July 25, 
2016), and Certain Corrosion-Resistant Steel Products From India, 
Italy, Republic of Korea and the People's Republic of China: 
Countervailing Duty Order, 81 FR 48387 (July 25, 2016) (collectively 
Orders).
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    On September 22, 2016, pursuant to section 781(b) of the Tariff Act 
of 1930, as amended (the Act), and 19 CFR 351.225(h), Steel Dynamics, 
Inc. and California Steel Industries submitted requests for the 
Department to initiate anti-circumvention inquiries to determine 
whether producers in Vietnam of CORE are circumventing the Orders on 
CORE from the PRC by exporting to the United States CORE products 
completed or assembled in various Vietnamese facilities, from inputs of 
HRS and CRS sourced from the PRC.\4\ On September 23, 2016, pursuant to 
section 781(b) of the Act and 19 CFR 351.225(h), ArcelorMittal USA LLC, 
Nucor Corporation, United States Steel Corporation, and AK Steel 
Corporation, collectively, submitted a request for the Department to 
initiate anti-circumvention inquiries and to issue in conjunction with 
initiation of the inquiries preliminary determinations of circumvention 
of the Orders to suspend liquidation of imports of CORE from 
Vietnam.\5\
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    \4\ See Letter from Schagrin Associates to the Secretary of 
Commerce; ``Certain Corrosion-Resistant Steel Products from China: 
Request for Circumvention Ruling,'' dated September 22, 2016 
(Schagrin Request).
    \5\ See Letter from Kelley Drye & Warren LLP, King & Spalding 
LLP, Wiley Rein LLP, and Quinn Emanuel Urquhart & Sullivan, LLP to 
the Secretary of Commerce, regarding ``Certain Corrosion-Resistant 
Steel Products from the People's Republic of China--Request for 
Circumvention Ruling Pursuant to Section 781(b) of the Tariff Act of 
1930,'' dated September 23, 2016 (Petitioners Request).
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    On October 17, 2016, we received comments objecting to the 
allegations from Domestic Producers from Metallia U.S.A., LLC, 
Metallia, A Division of Hartree Partners, LP, Nippon Steel and Sumiken 
Bussan Americas Inc., Mitsui & Co. (U.S.A.), Inc., and Marubeni-Itochu 
Steel America Inc. (collectively, Metallia).\6\ Also on October 17, 
2016, we received comments objecting to the allegations from Minmetals, 
Inc. (Minmetals).\7\ On October 20, 2016, we received comments 
objecting to the allegations from China Steel Sumikin Vietnam Joint 
Stock Company (CSVC) \8\ and from Duferco Steel Inc. (Duferco).\9\ On 
October 21, 2016, we received comments objecting to the allegations 
from T.Co Metals LLC (TCO).\10\ On October 26, 2016, we received 
comments objecting to the allegations from Summit Global Trading, a 
subsidiary of Sumitomo Corporation of

[[Page 79455]]

Americas (Sumitomo).\11\ On October 28, 2016, we received comments 
objecting to the allegations from thyssenkrupp Materials NA, Inc.\12\ 
On October 31, 2016, we received comments objecting to the allegations 
from Hoa Sen Group (HSG) \13\ and from Maruichi Sun Steel Joint Stock 
Company (Maruichi).\14\ Also on October 31, 2016, we received a letter 
objecting to the allegations from Vietnam Competition Authority under 
the Ministry of Industry and Trade of Vietnam.\15\ On November 3, 2016, 
we received comments objecting to the allegations from Ton Dong A 
Company.\16\
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    \6\ See Letter from Morris, Manning & Martin, LLP to the 
Secretary of Commerce, regarding ``Certain Cold-Rolled Steel Flat 
Products and Corrosion-Resistant Steel Products from the People's 
Republic of China: Response to Request for Anti-Circumvention 
Inquiry,'' dated October 17, 2016.
    \7\ See Letter from Minmetals, Inc. to the Secretary of 
Commerce, dated October 17, 2016.
    \8\ See Letter from Mowry & Grimson, PLLC and Sidley Austin LLP, 
regarding ``Certain Corrosion-Resistant Steel Products from China--
Response to Petitioners' Circumvention Allegations,'' dated October 
20, 2016.
    \9\ See Letter from Arent Fox, regarding ``Certain Corrosion-
Resistant Steel Products from the People's Republic of China: 
Response to Request for Anti-Circumvention Inquiry,'' dated October 
20, 2016 (Duferco Comments).
    \10\ See Letter from Drinker Biddle & Reath, LLP, regarding 
``Certain Corrosion-Resistant Steel Products from the People's 
Republic of China: Response to Request for Anti-Circumvention 
Inquiry,'' dated October 21, 2016 (TCO Comments).
    \11\ See Letter from Sandler, Travis & Rosenberg, P.A., 
regarding ``Opposition to Request for Anti-Circumvention Inquiry: 
Certain Corrosion-Resistant Steel Products and Cold-Rolled Steel 
Flat Products From the People's Republic of China,'' dated October 
26, 2016.
    \12\ See Letter from Crowell Moring, regarding ``Certain 
Corrosion-Resistant and Cold-Rolled Steel Products from the People's 
Republic of China: Comments Opposing Petitioners' Circumvention 
Allegations,'' dated October 28, 2016.
    \13\ See Letter from Curtis, Mallet-Prevost, Colt & Mosle LLP, 
regarding ``Opposition to Request for Anti-Circumvention Inquiry; 
Certain Corrosion-Resistant Steel Products and Cold-Rolled Steel 
Flat Products from the People's Republic of China,'' dated October 
31, 2016.
    \14\ See Letter from Curtis, Mallet-Prevost, Colt & Mosle LLP, 
regarding ``Opposition to Request for Anti-Circumvention Inquiry; 
Certain Corrosion-Resistant Steel Products and Cold-Rolled Steel 
Flat Products from the People's Republic of China,'' dated October 
31, 2016.
    \15\ See Letter from Vietnam Competition Authority under the 
Ministry of Industry and Trade of Vietnam regarding ``Certain 
Corrosion-Resistant Steel Products from China; Certain Cold-Rolled 
Steel Flat Products from China--Opposition to Initiation of 
Anticircumvention Proceedings,'' dated October 31 2016, placed on 
the record on November 4, 2016.
    \16\ See Letter from Curtis, Mallet-Prevost, Colt & Mosle LLP, 
regarding ``Opposition to Request for Anti-Circumvention Inquiry; 
Certain Corrosion-Resistant Steel Products and Cold-Rolled Steel 
Flat Products from the People's Republic of China,'' dated November 
3, 2016.
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    On October 13, 2016, we received comments supporting the 
allegations from the United Steel Workers.\17\
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    \17\ See Letter from United Steel Workers, regarding 
``Corrosion-Resistant Steel Products from the People's Republic of 
China,'' dated October 13, 2016.
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Scope of the Orders

    The products covered by these orders are certain flat-rolled steel 
products, either clad, plated, or coated with corrosion-resistant 
metals such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-
based alloys, whether or not corrugated or painted, varnished, 
laminated, or coated with plastics or other non-metallic substances in 
addition to the metallic coating. The products covered include coils 
that have a width of 12.7 mm or greater, regardless of form of coil 
(e.g., in successively superimposed layers, spirally oscillating, 
etc.). The products covered also include products not in coils (e.g., 
in straight lengths) of a thickness less than 4.75 mm and a width that 
is 12.7 mm or greater and that measures at least 10 times the 
thickness. The products covered also include products not in coils 
(e.g., in straight lengths) of a thickness of 4.75 mm or more and a 
width exceeding 150 mm and measuring at least twice the thickness. The 
products described above may be rectangular, square, circular, or other 
shape and include products of either rectangular or non-rectangular 
cross-section where such cross-section is achieved subsequent to the 
rolling process, i.e., products which have been ``worked after 
rolling'' (e.g., products which have been beveled or rounded at the 
edges). For purposes of the width and thickness requirements referenced 
above:
    (1) Where the nominal and actual measurements vary, a product is 
within the scope if application of either the nominal or actual 
measurement would place it within the scope based on the definitions 
set forth above, and
    (2) where the width and thickness vary for a specific product 
(e.g., the thickness of certain products with non-rectangular cross-
section, the width of certain products with non-rectangular shape, 
etc.), the measurement at its greatest width or thickness applies.
    Steel products included in the scope of these orders are products 
in which: (1) Iron predominates, by weight, over each of the other 
contained elements; (2) the carbon content is 2 percent or less, by 
weight; and (3) none of the elements listed below exceeds the quantity, 
by weight, respectively indicated:

 2.50 percent of manganese, or
 3.30 percent of silicon, or
 1.50 percent of copper, or
 1.50 percent of aluminum, or
 1.25 percent of chromium, or
 0.30 percent of cobalt, or
 0.40 percent of lead, or
 2.00 percent of nickel, or
 0.30 percent of tungsten (also called wolfram), or
 0.80 percent of molybdenum, or
 0.10 percent of niobium (also called columbium), or
 0.30 percent of vanadium, or
 0.30 percent of zirconium
    Unless specifically excluded, products are included in this scope 
regardless of levels of boron and titanium.
    For example, specifically included in this scope are vacuum 
degassed, fully stabilized (commonly referred to as interstitial-free 
(IF)) steels and high strength low alloy (HSLA) steels. IF steels are 
recognized as low carbon steels with micro-alloying levels of elements 
such as titanium and/or niobium added to stabilize carbon and nitrogen 
elements. HSLA steels are recognized as steels with micro-alloying 
levels of elements such as chromium, copper, niobium, titanium, 
vanadium, and molybdenum.
    Furthermore, this scope also includes Advanced High Strength Steels 
(AHSS) and Ultra High Strength Steels (UHSS), both of which are 
considered high tensile strength and high elongation steels.
    Subject merchandise also includes corrosion-resistant steel that 
has been further processed in a third country, including but not 
limited to annealing, tempering, painting, varnishing, trimming, 
cutting, punching and/or slitting or any other processing that would 
not otherwise remove the merchandise from the scope of the orders if 
performed in the country of manufacture of the in-scope corrosion 
resistant steel.
    All products that meet the written physical description, and in 
which the chemistry quantities do not exceed any one of the noted 
element levels listed above, are within the scope of these orders 
unless specifically excluded. The following products are outside of 
and/or specifically excluded from the scope of these orders:
     Flat-rolled steel products either plated or coated with 
tin, lead, chromium, chromium oxides, both tin and lead (``terne 
plate''), or both chromium and chromium oxides (``tin free steel''), 
whether or not painted, varnished or coated with plastics or other non-
metallic substances in addition to the metallic coating;
     Clad products in straight lengths of 4.7625 mm or more in 
composite thickness and of a width which exceeds 150 mm and measures at 
least twice the thickness; and
     Certain clad stainless flat-rolled products, which are 
three-layered corrosion-resistant flat-rolled steel products less than 
4.75 mm in composite thickness that consist of a flat-rolled steel 
product clad on both sides with stainless steel in a 20%-60%-20% ratio.
    The products subject to the orders are currently classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) under item 
numbers: 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 
7210.49.0091, 7210.49.0095, 7210.61.0000, 7210.69.0000, 7210.70.6030, 
7210.70.6060, 7210.70.6090, 7210.90.6000,

[[Page 79456]]

7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 
7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, and 
7212.60.0000.
    The products subject to the orders may also enter under the 
following HTSUS item numbers: 7210.90.1000, 7215.90.1000, 7215.90.3000, 
7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 
7217.90.5030, 7217.90.5060, 7217.90.5090, 7225.91.0000, 7225.92.0000, 
7225.99.0090, 7226.99.0110, 7226.99.0130, 7226.99.0180, 7228.60.6000, 
7228.60.8000, and 7229.90.1000.
    The HTSUS subheadings above are provided for convenience and 
customs purposes only. The written description of the scope of the 
orders is dispositive.

Merchandise Subject to the Anti-Circumvention Inquiries

    These anti-circumvention inquiries cover CORE exported from Vietnam 
produced from HRS or CRS manufactured in the PRC.
    Domestic Producers request that the Department treat CORE imports 
from Vietnam as subject merchandise under the scope of the Orders and 
impose cash deposit requirements for estimated AD and CVD duties on all 
imports of CORE from Vietnam.\18\
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    \18\ See Schagrin Request at 1-2; and see Petitioners Request at 
1-2.
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Initiation of Anti-Circumvention Inquiries

    Section 781(b)(1) of the Act provides that the Department may find 
circumvention of an AD or CVD 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 an anti-circumvention inquiry, under section 781(b)(1) of 
the Act, the Department will rely on the following criteria: (A) 
Merchandise imported into the United States is of the same class or 
kind as any merchandise produced in a foreign country that is subject 
of an antidumping or countervailing duty order or finding; (B) before 
importation into the United States, such imported merchandise is 
completed or assembled in another foreign country from merchandise 
which is subject to the order or merchandise which is produced in the 
foreign country that is subject to the order; (C) the process of 
assembly or completion in the foreign country referred to in section 
(B) is minor or insignificant; (D) the value of the merchandise 
produced in the foreign country to which the AD or CVD order applies is 
a significant portion of the total value of the merchandise exported to 
the United States; and (E) the administering authority determines that 
action is appropriate to prevent evasion of such order or finding. As 
discussed below, Domestic Producers provided evidence with respect to 
these criteria.

A. Merchandise of the Same Class or Kind

    The Domestic Producers claim that CORE exported to the United 
States is the same class or kind as the CORE covered by the Orders in 
these inquiries.\19\ Domestic Producers provided evidence to show that 
the merchandise from Vietnam enters the United States under the same 
tariff classification as the subject merchandise.\20\
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    \19\ See Schagrin Request at 9, Petitioners Request at 8.
    \20\ See Petitioners Request at Attachment 1.
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B. Completion of Merchandise in a Foreign Country

    Section 78l(b)(l)(B)(ii) of the Act requires the Department to 
determine if, ``before import 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.'' Domestic Producers presented 
evidence demonstrating how CORE in Vietnam is produced from HRS or CRS 
manufactured and imported from the PRC. Additionally, Domestic 
Producers provided evidence that there is currently no capacity in 
Vietnam to produce HRS, and thus any CORE manufactured in Vietnam must 
use imported HRS.\21\ Domestic Producers stated that while imports of 
CORE from the PRC into the United States significantly decreased after 
the imposition of the Orders, imports of CORE from Vietnam into the 
United States have increased significantly. All the while, imports of 
Chinese HRS and CRS into Vietnam have also increased significantly.\22\ 
Finally, Domestic Producers state that China Minmetals Corporation, the 
state-owned Chinese trading company, currently has arrangements to ship 
HRS and/or CRS from the PRC to Vietnam, and to convert the PRC-sourced 
HRS or CRS to CORE for export to the United States with the purpose of 
evading the Orders.\23\
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    \21\ See Schagrin Request at 6 and 13 and Exhibits 2, 4, and 5, 
Petitioners Request at 10 and Attachments 4 and 5.
    \22\ See Schagrin Request at 11-16 and Exhibits 1 and 7, 
Petitioners Request at 9-11 and Attachments 1 and 3.
    \23\ See Schagrin Request at 18 and Exhibit 13.
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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 alleged that 
the production of HRS and CRS in the PRC, which is subsequently further 
processed into CORE in Vietnam, comprises the majority of the value 
associated with the merchandise imported from Vietnam into the United 
States, and that the processing of HRS and CRS into CORE which occurs 
in Vietnam adds relatively little to the overall value.
(1) Level of Investment
    Domestic Producers argue that the level of investment necessary to 
construct a factory which can produce CORE from CRS or HRS in Vietnam 
is insignificant. In support of their contention, Domestic Producers 
compare the investment necessary to install re-rolling and coating 
facilities with the investment necessary to produce HRS or CRS using a 
fully-integrated production process for melting iron and casting 
steel.\24\ Domestic Producers estimate that the investment necessary to 
construct re-rolling and coating (in some cases including a CRS mill) 
facilities in Vietnam that uses HRS and/or CRS substrate to produce 
CORE would be between $70 million and $90 million, with possible 
expansions of $150 million.\25\ In contrast, Domestic Producers 
estimate that the investment necessary to construct a fully integrated 
steel production facility, including a blast furnace or basic oxygen 
furnace in the PRC that produces HRS and/or CRS would be between $295 
million and $10.1 billion.\26\ Domestic Producers also argue that using 
investment levels in the PRC for basic steel making including a blast 
furnace or basic oxygen furnace, as opposed to an electric arc furnace 
which relies on scrap steel, is appropriate as approximately 90 percent 
of the steel production in the PRC comes from a fully integrated steel 
mill.\27\
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    \24\ See Schagrin Request at 18-20 and Exhibits 14-16 and 19, 
Petitioners Request at 12-14 and Attachments 7-10.
    \25\ See Schagrin Request at 19-20 and Exhibits 15, 16, and 19, 
Petitioners Request at 14 and Attachment 10.
    \26\ See Schagrin Request at 19 and Exhibit 14, Petitioners 
Request at 13-14 and Attachment 7-9.
    \27\ See Petitioners Request at 13 at Attachment 8.

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[[Page 79457]]

(2) Level of Research and Development
    Domestic Producers assert that the level of research and 
development in Vietnam to produce CORE from substrate is either minimal 
or non-existent. Domestic Producers state that Vietnam is importing 
technology from other sources and countries, rather than developing its 
own technology.\28\
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    \28\ See Schagrin Request at 20-21 and Exhibits 2 and 19, 
Petitioners Request at 14-15 and Attachments 1, 4, and 11.
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(3) Nature of Production Process in Vietnam
    According to Domestic Producers, the additional processing 
undertaken by Vietnamese producers of CORE is minimal.\29\ Conversely, 
the manufacturing process to produce HRS is complex. Specifically, the 
manufacturing processes for HRS consist of three stages: melting and 
refining, casting molten steel into semi-finished forms, and hot-
rolling the semi-finished forms into HRS.\30\ In contrast, the 
processing of CORE from HRS involves only unrolling, descaling, cold-
reducing (if HRS), and coating or plating, all of which is done by 
continuous processing lines.\31\
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    \29\ See Schagrin Request at 18 and 21, Petitioners Request at 
15 and Attachments 12-13 (ITC reports on HRS and CORE).
    \30\ See Petitioners Request at 15-18 and Attachment 12.
    \31\ Id., at 18 and Attachment 13.
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(4) Extent of Production in Vietnam
    Domestic Producers argue that production facilities in Vietnam are 
more limited compared to facilities in the PRC. This is because Vietnam 
has fewer than a dozen large producers of flat steel products.\32\ 
Moreover, Domestic Producers cite information indicating Vietnam had no 
HRS capacity, only a few cold-rolling facilities, and limited CORE 
production facilities, with only one coating facility that produces 
galvannealed steel sheet.\33\
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    \32\ See Schagrin Request at 21 and Exhibit 2.
    \33\ See Petitioners Request at 18-19 and Attachment 4, Schagrin 
Request at 21 and Exhibit 2.
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(5) Value of Processing in Vietnam
    Domestic Producers assert that production of HRS or CRS in the PRC 
accounts for a large percentage of the total value of CORE that is 
produced in Vietnam. Using information from the recent CORE 
investigation by the ITC, Domestic Producers state that the price of 
HRS is between 69 percent and 79 percent of the price of CORE, and CRS 
is between 84 percent and 90 percent of the price of CORE.\34\ Thus, 
the value added in Vietnam is estimated to be between 10 percent and 31 
percent, depending on whether the underlying substrate is already cold-
rolled. Using a different approach focusing solely on the cost of 
production in Vietnam, Domestic Producers estimate that the cost of 
manufacture for the CORE operations in Vietnam, including both cold-
rolling and coating, is a small portion of the export value.\35\
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    \34\ See Schagrin Request at 22 and Exhibit 17.
    \35\ See Petitioners Request at 19-20 and Attachment 14. This 
estimate incorporates business proprietary information, but falls 
within the range of 10 percent to 31 percent identified above.
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D. Value of Merchandise Produced in the PRC

    As Domestic Producers argued previously (and noted above), the 
price of HRS is between 69 percent and 79 percent of the price of CORE 
and the price of CRS is between 84 percent and 90 percent.\36\ 
Alternatively, using the other method (comparing the cost of 
manufacture of CORE in Vietnam to the export value of CORE), the value 
of the Chinese inputs constitute a significant portion of the total 
value of the merchandise exported to the United States.\37\
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    \36\ See Schagrin Request at 22 and Exhibit 17.
    \37\ See Petitioners Request at 20 and Attachment 14.
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E. Additional Factors To Consider in Determining Whether Inquiry Is 
Warranted

    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 
Orders, 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 CORE from the PRC, Vietnam was a very 
small source of U.S. CORE imports (in 2014), and that the volume of 
imports from Vietnam from January 2015 to July of 2015 was low.\38\ 
However, subsequent to the preliminary injury determination by the ITC, 
the last five months of 2015 saw imports of CORE from Vietnam 
increase.\39\ After the preliminary affirmative determination by the 
Department for countervailing duties on CORE from the PRC in November 
2015, Domestic Producers note that imports of CORE from Vietnam surged 
dramatically.\40\ Domestic Producers further note that imports of CORE 
from the PRC decreased substantially over the same time period.\41\ No 
other factual information on the record contradicts this claim.
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    \38\ Id., at 21 and Attachment 1.
    \39\ Id.
    \40\ See Petitioners Request at 21-22 and Attachment 1, Schagrin 
Request at 23 and Exhibit 18.
    \41\ See Petitioners Request at 6 and 21-22 and Attachment 1, 
Schagrin Request at 23 and Exhibit 18.
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(2) Affiliation
    Domestic Producers have provided no information regarding the 
affiliation between producers of HRS or CRS in the PRC and producers of 
CORE in Vietnam. However, Domestic Producers assert that China 
Minmetals Corporation, which as noted above currently has arrangements 
to ship HRS or CRS from the PRC to Vietnam and convert the HRS or CRS 
to CORE for export to the United States, is affiliated with a major 
Chinese steel producer.\42\
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    \42\ See Schagrin Request at 18.
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(3) Increase of HRS and CRS Shipments From the PRC to Vietnam After 
Initiation of the AD and CVD Investigation of CORE From the PRC
    Domestic Producers presented evidence indicating that shipments of 
HRS and CRS from the PRC to Vietnam have increased since the initiation 
of the CORE investigations.\43\ No other factual information 
contradicts this claim.
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    \43\ Id., at 14-16 and 24 and Exhibit 7, Petitioners Request at 
9-11, 22-23, and Attachment 3.
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Analysis of the Allegation

    Based on our analysis of Domestic Producers' anti-circumvention 
inquiry allegation, the Department determines that the Domestic 
Producers have satisfied the criteria under section 781(b)(1) of the 
Act to warrant an initiation of anti-circumvention inquiries of the AD 
and CVD Orders on CORE from the PRC.
    With regard to whether the merchandise from Vietnam is of the same 
class or kind as the merchandise produced in the RC, 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 Vietnam may be of the

[[Page 79458]]

same class or kind as CORE produced in the PRC, which is subject to the 
Orders.\44\ Consequently, the Department finds that Domestic Producers 
provided sufficient information in their request regarding the class or 
kind of merchandise to support the initiation of these anti-
circumvention inquiries.
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    \44\ See Schagrin Request at 9, Petitioners Request at 8 and 
Attachment 1.
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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 CORE exported from Vietnam to the United States is produced in 
Vietnam using HRS or CRS from the PRC that accounts for a significant 
portion of the total costs related to the production of CORE.\45\ We 
find that the information presented by Domestic Producers regarding 
this criterion supports their request to initiate these anti-
circumvention inquiries.
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    \45\ See Schagrin Request at 6 and 11-18 and Exhibits 1-2, 4-5, 
7 and 13, Petitioners Request at 8-11 and Attachments 1-5.
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    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 CORE in Vietnam is 
minor or insignificant. In particular, Domestic Producers' submission 
asserts that: (1) The level of investment of CORE facilities is minimal 
when compared with the level of investment for basic steel-making 
facilities; (2) research and development is not taking place in 
Vietnam; (3) the production process involves the simple processing of 
HRS or CRS from a country subject to the Orders; (4) the production 
facilities in Vietnam are more limited compared to facilities in the 
PRC; and (5) the value of the processing performed in Vietnam is 
minimal, as the production of HRS and CRS in the PRC accounts for 68 to 
90 percent of the value of finished CORE.\46\
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    \46\ See discussion of these five factors above.
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    With respect to the value of the merchandise produced in the PRC, 
pursuant to section 781(b)(1)(D) of the Act, Domestic Producers relied 
on published sources, a simulated cost structure for producing CORE in 
Vietnam, and arguments in the ``minor or insignificant process'' 
portion of their anti-circumvention allegations to indicate that the 
value of the major inputs, HRS or CRS, produced in the PRC may be 
significant relative to the total value of the CORE exported from 
Vietnam to the United States.\47\ We find that this information 
adequately meets the requirements of this factor, as discussed above, 
for the purposes of initiating these anti-circumvention inquiries.
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    \47\ See Schagrin Request at 22 and Exhibits 17, Petitioners 
Request at 20 and Attachments 14.
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    With respect to the additional factors listed under section 
781(b)(3) of the Act, we find that Domestic Producers presented 
evidence indicating that shipments of CORE from Vietnam to the United 
States increased since the imposition of the Orders and that shipments 
of HRS and CRS from the PRC to Vietnam also increased since the Orders 
took effect, further supporting initiation of these anti-circumvention 
inquiries.\48\
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    \48\ See Schagrin Request at 14-16 and 24 and Exhibit 7, 
Petitioners Request at 9-11, 22-23, and Attachment 3.
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    Accordingly, we are initiating a formal anti-circumvention inquiry 
concerning the AD and CVD Orders on CRS from the PRC, pursuant to 
section 781(b) of the Act.
    In connection with these anti-circumvention inquiries, in order to 
determine, (1) the extent to which PRC-sourced HRS or CRS is further 
processed into CORE in Vietnam before shipment to the United States, 
(2) the extent to which a country-wide finding applicable to all 
exports might be warranted, as alleged by Domestic Producers, and (3) 
whether the process of turning PRC-sourced HRS or CRS into CORE is 
minor or insignificant, the Department will issue questionnaires to 
Vietnamese producers or exporters of CORE to the United States. The 
Domestic Producers did not identify any Vietnamese producers or 
exporters in their allegations.\49\ The Department will issue 
questionnaires to solicit information from the Vietnamese producers and 
exporters concerning their shipments of CORE to the United States and 
the origin of the imported HRS or CRS being processed into CORE. 
Companies failing to respond completely and timely to the Department's 
questionnaire may be deemed uncooperative and an adverse inference may 
be applied in determining whether such companies are circumventing the 
Orders. See section 776 of the Act.
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    \49\ Domestic Producers only identified a Chinese trading 
company, China Minmetals Corporation, in its allegation. See 
Schagrin Request at 18.
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    Finally, while we believe sufficient factual information has been 
submitted by Domestic Producers supporting their request for an 
inquiry, we do not find that the record supports the simultaneous 
issuance of a preliminary ruling. Such inquiries are by their nature 
complicated and require additional information regarding production in 
both the country subject to the order and the third country completing 
the product. As noted above, the Department intends to request 
additional information regarding the statutory criteria to determine 
whether shipments of CORE from Vietnam are circumventing the AD and CVD 
Orders on CORE from the PRC. Thus, further development of the record is 
required before a preliminary ruling can be issued.

Notification to Interested Parties

    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 anti-circumvention inquiries. In addition, in 
accordance with 19 CFR 351.225(f)(1)(i) and (ii), in this notice of 
initiation issued under 19 CFR 351.225(e), we have included a 
description of the product that is the subject of these anti-
circumvention inquiries (i.e., CORE that contains the characteristics 
as provided in the scope of the Orders), and an explanation of the 
reasons for the Department's decision to initiate these anti-
circumvention inquiries, as provided above.
    In accordance with 19 CFR 351.225(l)(2), if the Department issues 
affirmative preliminary determinations, we will then instruct CBP to 
suspend liquidation and require cash deposits of estimated antidumping 
and countervailing duties, at the applicable rates, 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 inquiries. The Department will establish a schedule for 
questionnaires and comments for these inquiries. In accordance with 
section 781(f) of the Act and 19 CFR 351.225(f)(5), the Department 
intends to issue its final determinations within 300 days of the date 
of publication of this initiation.
    This notice is published in accordance with 19 CFR 351.225(f).

    Dated: November 4, 2016.
Paul Piquado,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2016-27327 Filed 11-10-16; 8:45 am]
 BILLING CODE 3510-DS-P