[Federal Register Volume 83, Number 149 (Thursday, August 2, 2018)]
[Notices]
[Pages 37790-37795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16566]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-881, C-580-882]


Certain Cold-Rolled Steel Flat Products From the Republic of 
Korea: 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, Steel Dynamics, Inc. and 
California Steel Industries (collectively, the domestic producers), the 
Department of Commerce (Commerce) is initiating a country-wide anti-
circumvention inquiries to determine whether imports of certain cold-
rolled steel flat products (CRS), which are completed in the Socialist 
Republic of Vietnam (Vietnam) from hot-rolled steel (HRS) produced in 
the Republic of Korea (Korea), are circumventing the antidumping duty 
(AD) and countervailing duty (CVD) orders on CRS from Korea.

DATES: Applicable August 2, 2018.

FOR FURTHER INFORMATION CONTACT: Tyler Weinhold or Fred Baker, AD/CVD 
Operations, Office VI, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW, Washington, DC 20230; telephone: (202) 482-1121 or (202) 482-2924, 
respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 28, 2015, AK Steel Corporation, ArcelorMittal USA LLC, 
Nucor Corporation, Steel Dynamics, Inc., and the United States Steel 
Corporation (the domestic producers) filed petitions seeking the 
imposition of antidumping and countervailing duties on imports of CRS 
from Brazil, the

[[Page 37791]]

People's Republic of China, India, Japan, Korea, the Netherlands, 
Russia, and the United Kingdom.\1\ In response to these petitions, 
Commerce initiated AD and CVD investigations on August 24, 2015.\2\ 
Following Commerce's final affirmative determinations of dumping and 
countervailable subsidies,\3\ and the U.S. International Trade 
Commission (ITC)'s finding of material injury,\4\ Commerce issued AD 
and CVD orders on imports of CRS from Korea (collectively, Orders).\5\
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    \1\ See Petitioners' Letter, ``Certain Cold-Rolled Steel Flat 
Products from Brazil, China, India, Japan, Korea, Netherlands, 
Russia, and the United Kingdom,'' dated July 28, 2015.
    \2\ See Certain Cold-Rolled Steel Flat Products from Brazil, 
India, the People's Republic of China, the Republic of Korea, and 
the Russian Federation: Initiation of Countervailing Duty 
Investigations, 80 FR 51206 (August 24, 2015); and Certain Cold-
Rolled Steel Flat Products from Brazil, the People's Republic of 
China, India, Japan, the Republic of Korea, the Netherlands, the 
Russian Federation, and the United Kingdom: Initiation of Less-Than-
Fair-Value Investigations, 80 FR 51198 (August 24, 2015).
    \3\ See Certain Cold-Rolled Steel Flat Products from the 
Republic of Korea: Final Determination of Sales at Less Than Fair 
Value, 81 FR 49953 (July 29, 2016); and Countervailing Duty 
Investigation of Certain Cold-Rolled Steel Flat Products from the 
Republic of Korea: Final Affirmative Determination, 81 FR 49943 
(July 29, 2016).
    \4\ See Cold-Rolled Steel Flat Products from Brazil, India, 
Korea, Russia, and the United Kingdom; Determinations, 81 FR 63806 
(September 16, 2016).
    \5\ See Certain Cold-Rolled Steel Flat Products from Brazil, 
India, the Republic of Korea, and the United Kingdom: Amended Final 
Affirmative Antidumping Determinations for Brazil and the United 
Kingdom and Antidumping Duty Orders, 81 FR 64432 (September 20, 
2016) (AD Order); see also Certain Cold-Rolled Steel Flat Products 
from Brazil, India, and the Republic of Korea: Amended Final 
Affirmative Countervailing Duty Determination and Countervailing 
Duty Order (the Republic of Korea) and Countervailing Duty Orders 
(Brazil and India), 81 FR 64436 (September 20, 2016) (CVD Order) 
(collectively Orders).
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    On June 12, 2018, pursuant to section 781(b) of the Tariff Act of 
1930, as amended (the Act) and 19 CFR 351.225(h), the domestic 
producers submitted a request for Commerce to initiate anti-
circumvention inquiries to determine whether entities in Vietnam are 
circumventing the Orders by exporting, to the United States, CRS which 
is completed or assembled in Vietnam using HRS sourced from Korea.\6\ 
Further, pursuant to 19 CFR 351.225(f), the domestic producers request 
that Commerce initiate anti-circumvention inquiries and issue in 
conjunction with initiation of the inquiries a preliminary 
determination of circumvention of the Orders to suspend liquidation of 
imports of CRS from Vietnam.\7\
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    \6\ See the Domestic Producers' Letter, ``Certain Cold-Rolled 
Steel Flat Products from the Republic of Korea: Request for 
Circumvention Ruling Pursuant to Section 781(b) of the Tariff Act of 
1930,'' dated June 12, 2018 (Anti-Circumvention Ruling Request).
    \7\ Id., at 25.
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Scope of the Orders

    The products covered by the orders are certain cold-rolled (cold-
reduced), flat-rolled steel products, whether or not annealed, painted, 
varnished, or coated with plastics or other non-metallic substances. 
The products covered do not include those that are clad, plated, or 
coated with metal. The products covered include coils that have a width 
or other lateral measurement (``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 the 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, high strength low alloy (HSLA) steels, motor lamination 
steels, Advanced High Strength Steels (AHSS), and Ultra High Strength 
Steels (UHSS). 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. Motor lamination 
steels contain micro-alloying levels of elements such as silicon and 
aluminum. AHSS and UHSS are considered high tensile strength and high 
elongation steels, although AHSS and UHSS are covered whether or not 
they are high tensile strength or high elongation steels.
    Subject merchandise includes cold-rolled 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 cold-rolled 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 the orders unless 
specifically excluded. The following products are outside of and/or 
specifically excluded from the scope of the orders:
     Ball bearing steels; \8\
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    \8\ Ball bearing steels are defined as steels which contain, in 
addition to iron, each of the following elements by weight in the 
amount specified: (i) Not less than 0.95 nor more than 1.13 percent 
of carbon; (ii) not less than 0.22 nor more than 0.48 percent of 
manganese; (iii) none, or not more than 0.03 percent of sulfur; (iv) 
none, or not more than 0.03 percent of phosphorus; (v) not less than 
0.18 nor more than 0.37 percent of silicon; (vi) not less than 1.25 
nor more than 1.65 percent of chromium; (vii) none, or not more than 
0.28 percent of nickel; (viii) none, or not more than 0.38 percent 
of copper; and (ix) none, or not more than 0.09 percent of 
molybdenum.

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[[Page 37792]]

     Tool steels; \9\
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    \9\ Tool steels are defined as steels which contain the 
following combinations of elements in the quantity by weight 
respectively indicated: (i) More than 1.2 percent carbon and more 
than 10.5 percent chromium; or (ii) not less than 0.3 percent carbon 
and 1.25 percent or more but less than 10.5 percent chromium; or 
(iii) not less than 0.85 percent carbon and 1 percent to 1.8 
percent, inclusive, manganese; or (iv) 0.9 percent to 1.2 percent, 
inclusive, chromium and 0.9 percent to 1.4 percent, inclusive, 
molybdenum; or (v) not less than 0.5 percent carbon and not less 
than 3.5 percent molybdenum; or (vi) not less than 0.5 percent 
carbon and not less than 5.5 percent tungsten.
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     Silico-manganese steel; \10\
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    \10\ Silico-manganese steel is defined as steels containing by 
weight: (i) Not more than 0.7 percent of carbon; (ii) 0.5 percent or 
more but not more than 1.9 percent of manganese, and (iii) 0.6 
percent or more but not more than 2.3 percent of silicon.
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     Grain-oriented electrical steels (GOES) as defined in the 
final determination of the U.S. Department of Commerce in Grain-
Oriented Electrical Steel From Germany, Japan, and Poland.\11\
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    \11\ Grain-Oriented Electrical Steel from Germany, Japan, and 
Poland: Final Determinations of Sales at Less Than Fair Value and 
Certain Final Affirmative Determination of Critical Circumstances, 
79 FR 42501, 42503 (July 22, 2014). This determination defines 
grain-oriented electrical steel as ``a flat-rolled alloy steel 
product containing by weight at least 0.6 percent but not more than 
6 percent of silicon, not more than 0.08 percent of carbon, not more 
than 1.0 percent of aluminum, and no other element in an amount that 
would give the steel the characteristics of another alloy steel, in 
coils or in straight lengths.''
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     Non-Oriented Electrical Steels (NOES), as defined in the 
antidumping orders issued by the U.S. Department of Commerce in Non-
Oriented Electrical Steel From the People's Republic of China, Germany, 
Japan, the Republic of Korea, Sweden, and Taiwan.\12\
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    \12\ Non-Oriented Electrical Steel from the People's Republic of 
China, Germany, Japan, the Republic of Korea, Sweden, and Taiwan: 
Antidumping Duty Orders, 79 FR 71741, 71741-42 (December 3, 2014). 
The orders define NOES as ``cold-rolled, flat-rolled, alloy steel 
products, whether or not in coils, regardless of width, having an 
actual thickness of 0.20 mm or more, in which the core loss is 
substantially equal in any direction of magnetization in the plane 
of the material. The term `substantially equal' means that the cross 
grain direction of core loss is no more than 1.5 times the straight 
grain direction (i.e., the rolling direction) of core loss. NOES has 
a magnetic permeability that does not exceed 1.65 Tesla when tested 
at a field of 800 A/m (equivalent to 10 Oersteds) along (i.e., 
parallel to) the rolling direction of the sheet (i.e., 
B800 value). NOES contains by weight more than 1.00 
percent of silicon but less than 3.5 percent of silicon, not more 
than 0.08 percent of carbon, and not more than 1.5 percent of 
aluminum. NOES has a surface oxide coating, to which an insulation 
coating may be applied.''
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    The products subject to the orders are currently classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) under item 
numbers: 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0070, 
7209.16.0091, 7209.17.0030, 7209.17.0060, 7209.17.0070, 7209.17.0091, 
7209.18.1530, 7209.18.1560, 7209.18.2510, 7209.18.2520, 7209.18.2580, 
7209.18.6020, 7209.18.6090, 7209.25.0000, 7209.26.0000, 7209.27.0000, 
7209.28.0000, 7209.90.0000, 7210.70.3000, 7211.23.1500, 7211.23.2000, 
7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6090, 
7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 
7211.90.0000, 7212.40.1000, 7212.40.5000, 7225.50.6000, 7225.50.8080, 
7225.99.0090, 7226.92.5000, 7226.92.7050, and 7226.92.8050.
    The products subject to the orders may also enter under the 
following HTSUS numbers: 7210.90.9000, 7212.50.0000, 7215.10.0010, 
7215.10.0080, 7215.50.0016, 7215.50.0018, 7215.50.0020, 7215.50.0061, 
7215.50.0063, 7215.50.0065, 7215.50.0090, 7215.90.5000, 7217.10.1000, 
7217.10.2000, 7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030, 
7217.90.5060, 7217.90.5090, 7225.19.0000, 7226.19.1000, 7226.19.9000, 
7226.99.0180, 7228.50.5015, 7228.50.5040, 7228.50.5070, 7228.60.8000, 
and 7229.90.1000.
    The HTSUS subheadings above are provided for convenience and U.S. 
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 imports of CRS exported 
from Vietnam manufactured from HRS produced in Korea.

Initiation of Anti-Circumvention Inquiries

    Section 781(b)(1) of the Act provides that Commerce 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, Commerce relies 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 the 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, the domestic producers provided evidence with respect 
to these criteria.

A. Merchandise of the Same Class or Kind

    The domestic producers claim that CRS exported to the United States 
is the same class or kind as that covered by the Orders in these 
inquiries.\13\ The domestic producers provided evidence to show that 
the merchandise from Vietnam enters the United States under the same 
tariff classification as subject merchandise.\14\
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    \13\ See Anti-Circumvention Ruling Request at 7. See also 
sections 781(b)(1)(A)(i) and (iii) of the Act.
    \14\ See Anti-Circumvention Ruling Request at Exhibit 1.
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B. Completion of Merchandise in a Foreign Country

    The domestic producers note that section 781(b)(l)(B)(ii) of the 
Act requires that Commerce ``must determine whether, prior to 
importation into the United States, the merchandise in the third 
country is completed from merchandise produced in the country subject 
to the antidumping or countervailing duty order.'' \15\ The domestic 
producers presented evidence showing substantial imports of Korean HRS 
into Vietnam following Commerce's August 2015 initiation of AD and CVD 
investigations concerning CRS from Korea.\16\ Additionally, the 
domestic producers provide evidence that, from 2015 through 2017, 
little to no capacity existed in Vietnam to produce HRS, and that HRS 
production in Vietnam did not begin until 2017.\17\ Nevertheless, the 
domestic producers maintain that despite Vietnamese imports of HRS 
being significant even before the initiation of AD and CVD 
investigations on CRS from Korea in mid-2015, imports increased by 26 
percent between 2014 and 2016, before

[[Page 37793]]

dropping only slightly in 2017.\18\ The domestic producers also provide 
information reflecting the fact that imports into the United States of 
CRS from Korea significantly decreased after the imposition of the 
Orders, and that imports into the United States of CRS from Vietnam, as 
well as imports into Vietnam of Korean HRS, also increased 
significantly.\19\
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    \15\ Id. at 7. See also section 781(b)(1)(B)(ii) of the Act.
    \16\ Id. at 7-8 and Exhibit 3
    \17\ Id. at 8, Exhibit 4, and Exhibit 5.
    \18\ Id. at 8 and Exhibit 3.
    \19\ Id. at 5-6, 8-9, and Exhibit 1.
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C. Minor or Insignificant Process

    The domestic producers maintain that the process for completing CRS 
from HRS is minor or insignificant. Under section 781(b)(2) of the Act, 
Commerce considers five factors to determine whether the process of 
assembly or completion in the foreign country in which the merchandise 
is completed or assembled is minor or insignificant: (A) The level of 
investment in the foreign country in which the merchandise is completed 
or assembled; (B) the level of research and development in the foreign 
country in which the merchandise is completed or assemble; (C) the 
nature of the production process in the foreign country in which the 
merchandise is completed or assembled; (D) the extent of production 
facilities in the foreign country in which the merchandise is completed 
or assembled, and (E) whether the value of the processing performed in 
the foreign country in which the merchandise is completed or assembled 
represents a small proportion of the value of the merchandise imported 
into the United States.
(1) Level of Investment
    The domestic producers contend that the level of investment 
necessary to construct a factory that can produce CRS from HRS in 
Vietnam is insignificant. In support of its contention, the domestic 
producers compare the investment necessary to install a cold-rolling 
facility with the investment necessary to produce HRS using a fully-
integrated production process.\20\ The domestic producers cite 
Commerce's findings in the earlier anti-circumvention ruling regarding 
Vietnamese CRS using Chinese HRS inputs (i.e., substrate).\21\ There, 
Commerce pointed to record evidence showing the cost to build an 
integrated steel mill in China to produce HRS was in the range of 250 
million to 10 billion U.S. dollars (USD) and that the cost to build a 
cold-rolling mill in Vietnam to produce CRS from HRS substrate was as 
low as 28 million USD.\22\ The domestic producers also provide evidence 
that the cost to build one integrated steel mill in Korea was 5 billion 
USD, and that the cost of building an integrated steel mill in Vietnam 
to one Vietnamese firm, Formosa Ha Tinh, was 10.6 billion USD.\23\ 
Finally, the domestic producers provided evidence that the cost of 
building a coated steel sheet factory, including a cold-rolling mill, 
was only 70 million USD.\24\ The domestic producers, therefore, 
conclude that in comparison to the investment necessary for an 
integrated steel mill in Korea, the cost of a cold-rolling mill in 
Vietnam is insignificant.\25\
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    \20\ Id. at 10-11.
    \21\ Id.
    \22\ Id. (citing Certain Cold-Rolled Steel Flat Products from 
the People's Republic of China: Affirmative Preliminary 
Determination of Anti Circumvention Inquiries on the Antidumping 
Duty and Countervailing Duty Orders, 82 FR 58178 (December 11, 2017) 
(CRS China Circumvention Preliminary) and accompanying Preliminary 
Decision Memorandum at 16-17; and Certain Cold-Rolled Steel Flat 
Products from the People's Republic of China: Affirmative Final 
Determination of Circumvention of the Antidumping Duty and 
Countervailing Duty Orders, 83 FR 23891 (May 23, 2018) (CRS China 
Circumvention Final), and the accompanying Issues and Decision 
Memorandum at 32).
    \23\ See Anti-Circumvention Ruling Request at 11-12.
    \24\ Id. at 12.
    \25\ Id.
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(2) Level of Research and Development
    The domestic producers assert that the level of research and 
development (R&D) in Vietnam is either minimal or non-existent.\26\ The 
domestic producers cite to Commerce's findings in CRS China 
Circumvention Final, where Commerce found that no R&D investments had 
been made by mandatory respondents POSCO Vietnam and VNSteel Phu My 
Flat Steel Limited.\27\ The domestic producers contend that rather than 
developing its own technology, CRS producers in Vietnam are using 
technology developed abroad.\28\ As an example of Vietnamese producers 
using technology developed abroad, the domestic producers provided 
evidence that Dong A, a Vietnamese steel company, uses European and 
Japanese equipment in its coated sheet facility (which includes a 
pickling and cold-rolling mill).\29\ In contrast, the domestic 
producers point to POSCO's R&D activities in Korea, which included 
employing an R&D laboratory staff of 934 personnel as of December 31, 
2017, as well as total R&D expenses of hundreds of billions of Korean 
Won from 2015 through 2017.\30\
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    \26\ Id. at 12-14.
    \27\ Id. at 12-13 (citing CRS China Circumvention Final and the 
accompanying Issues and Decision Memorandum at 37-38).
    \28\ Id. at 13.
    \29\ Id.
    \30\ Id. at 13-14.
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(3) Nature of Production Process
    According to the domestic producers, the production process 
undertaken by Vietnamese producers of CRS is less complex than 
steelmaking, and it is minimal in nature.\31\ Citing the ITC report in 
the underlying investigation of CRS from Korea, the domestic producers 
describe the process to produce HRS as consisting of three distinct 
stages (melting and refining steel, casting molten steel into semi-
finished forms, and hot-rolling the semi-finished forms into HRS).\32\ 
In contrast, the domestic producers provide information indicating that 
the production of CRS from HRS involves less processing (cleaning and 
pickling, rolling, annealing, and tempering).\33\ Further, the domestic 
producers cite Commerce's findings in CRS China Circumvention Final, 
where Commerce found the production process to produce CRS from HRS 
inputs in Vietnam to be comparatively minor.\34\
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    \31\ Id. at 14-18.
    \32\ Id. at 15-18 (citing Certain Hot-Rolled Steel Flat Products 
from Australia, Brazil, Japan, Korea, the Netherlands, Turkey, and 
The United Kingdom, Inv. Nos. 701-TA-545-547 and 73l-TA-1291-1297, 
USITC Publication 4570 (Oct. 2015) (Preliminary) at I-18 to I-22).
    \33\ See id. at 17 (citing Cold-Rolled Steel Flat Products from 
Brazil, China, India, Japan, Korea, Netherlands, Russia and the 
United Kingdom, Inv. Nos. 701-TA-540-544 and 731-TA-1283-1290, USITC 
Publication 4564 (Sept. 2015) (Preliminary) at 1-21).
    \34\ See id. at 14-15 (citing CRS China Circumvention Final and 
the accompanying Issues and Decision Memorandum at 39).
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(4) Extent of Production Facilities in Vietnam
    The domestic producers provide information indicating that 
production facilities in Vietnam are more limited compared to 
facilities in Korea.\35\ They maintain that Vietnam had little to no 
HRS capacity during the relevant period. The domestic producers also 
point to CRS China Circumvention Final, where Commerce found that ``the 
vast majority of production activities necessary to produce CRS occur 
at the molten steel, semi-finished steel, and hot-rolling stages.'' 
\36\ The domestic producers conclude that the extent of production 
facilities in Vietnam required to convert Korean HRS to CRS are no 
greater than those facilities

[[Page 37794]]

required to convert Chinese HRS to CRS.\37\
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    \35\ Id. at 18-19 (citing CRS China Circumvention Final and the 
accompanying Issues and Decision Memorandum at 39).
    \36\ Id. at 18-19 (citing CRS China Circumvention Final and the 
accompanying Issues and Decision Memorandum at 39).
    \37\ Id. at 19.
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(5) Value of Processing in Vietnam
    The domestic producers assert that producing HRS in Korea accounts 
for a large percentage of the total value of CRS that is produced in 
Vietnam using HRS from Korea. As support, the domestic producers again 
point to CRS China Circumvention Final, where Commerce found that CRS 
producers did not incur significant additional costs in the production 
of CRS, beyond the cost of HRS substrate inputs, that the value of 
further processing in Vietnam comprised only a small proportion of the 
total export value, and that the value of HRS produced in China 
constituted a significant portion of the value of the CRS exported to 
the United States.\38\ Additionally, the domestic producers cite the 
recent ITC investigation of CRS from China and Japan, stating that the 
information contained therein demonstrates that the cost of Korean HRS 
inputs account for ``roughly 81 to 89 percent'' of the value of 
CRS.\39\ Finally, citing a 2017 Financial Times article, the domestic 
producers further argue that the cost of producing HRS in Korea is 
higher than the cost of producing HRS in China.\40\
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    \38\ Id. at 19-20 (citing CRS China Circumvention Final and the 
accompanying Issues and Decision Memorandum at 10, 21, and 21).
    \39\ Id. at 21 (citing Cold-Rolled Steel Flat Products from 
China and Japan, Inv. Nos. 701-TA-541 and 731-TA-1284 and 1286, 
USITC Publication 4619 (July 2016) (Final) at VII-30 (Table VII-
41)).
    \40\ Id. at 20-21 and exhibit 13.
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D. Additional Factors To Consider in Determining Whether Action Is 
Necessary

    Section 781(b)(3) of the Act directs Commerce 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.''
    Regarding patterns of trade, the domestic producers contend that 
exports of CRS from Vietnam to the United States skyrocketed as exports 
from Korea declined in the period after the initiation of the 
underlying investigation, as compared to the period before it.\41\ The 
domestic producers further explain that while recent exports of CRS 
from Vietnam to the United States have declined slightly, this decline 
is largely due to Commerce's investigation of circumvention of the AD 
and CVD orders on CRS from the China.\42\ The domestic producers also 
point to the fact that exports of HRS from Korea to Vietnam also 
increased after the original investigations commenced.\43\ Finally, 
regarding affiliation, the domestic producers point out that major 
Vietnamese CRS producer POSCO Vietnam is wholly owned by Korea's 
largest steel manufacturer, POSCO.\44\
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    \41\ Id. at 22.
    \42\ Id.
    \43\ Id.
    \44\ Id.
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Analysis of the Allegations

    Based on our analysis of the domestic producer's anti-circumvention 
allegations and the information provided therein, Commerce determines 
that anti-circumvention inquiries of the AD and CVD orders on CRS from 
Korea are warranted.
    With regard to whether the merchandise from Vietnam is of the same 
class or kind as the merchandise produced in Korea, the domestic 
producers presented information to Commerce indicating that, pursuant 
to section 781(b)(1)(A) of the Act, the merchandise being produced in 
and/or exported from Vietnam is of the same class or kind as CRS 
produced in Korea, which is subject to the Orders.\45\ Consequently, 
Commerce finds that the domestic producers provided sufficient 
information in their requests regarding the class or kind of 
merchandise to support the initiation of these anti-circumvention 
inquiries.
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    \45\ Id. at 7 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, the domestic 
producers also presented information to Commerce indicating that the 
CRS exported from Vietnam to the United States is produced in Vietnam 
using HRS from Korea.\46\ We find that the information presented by the 
domestic producers regarding this criterion supports its request to 
initiate these anti-circumvention inquiries.
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    \46\ Id. at 5-9, Exhibit 3, Exhibit 4, and Exhibit 5.
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    Commerce finds that the domestic producers sufficiently addressed 
the factors described in sections 781(b)(1)(C) and 781(b)(2) of the Act 
regarding whether the process of assembly or completion of CRS in 
Vietnam is minor or insignificant. In particular, information in the 
domestic producers' submission indicates that: (1) The level of 
investment in cold-rolling facilities is minimal when compared with the 
level of investment for basic steel making facilities; \47\ (2) there 
is little or no research and development taking place in Vietnam; \48\ 
(3) the CRS production processes involve the simple processing of HRS 
from a country subject to the Orders; \49\ (4) the CRS production 
facilities in Vietnam are more limited compared to facilities in Korea; 
\50\ and (5) the value of the processing performed in Vietnam is a 
small proportion of the value of the CRS imported into the United 
States.\51\
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    \47\ Id. at 10-12.
    \48\ Id. at 12-13.
    \49\ Id. at 14-18.
    \50\ Id. at 18-19.
    \51\ Id. at 19-21.
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    With respect to the value of the merchandise produced in Korea, 
pursuant to section 781(b)(1)(D) of the Act, the domestic producers 
relied on published sources, Commerce's prior conclusions in CRS China 
Circumvention Final, and information presented in the ``minor or 
insignificant process'' portion of its anti-circumvention allegation to 
indicate that the value of the key material, HRS, produced in Korea is 
significant relative to the total value of the CRS exported to the 
United States.\52\ 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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    \52\ Id. at 14-18.
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    Finally, with respect to the additional factors listed under 
section 781(b)(3) of the Act, we find that the domestic producers 
presented evidence indicating that shipments of CRS from Vietnam to the 
United States increased since the imposition of the Orders \53\ and 
that shipments of HRS from Korea to Vietnam also increased since the 
Orders took effect.\54\ Furthermore, we find that the domestic 
producers have presented evidence that the largest Korean manufacturer 
of CRS (POSCO) is affiliated with a company in Vietnam that completes 
the merchandise.\55\ Accordingly, we are initiating formal anti-
circumvention inquiries concerning the AD and CVD orders on CRS from 
Korea, pursuant to section 781(b) of the Act.
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    \53\ Id. at 5.
    \54\ Id. at 6.
    \55\ Id. at 6 and Exhibit 2.
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    As these inquiries are initiated on a country-wide basis (i.e., not 
exclusive to

[[Page 37795]]

the producers mentioned immediately above), Commerce intends to issue 
questionnaires to solicit information from the Vietnamese producers and 
exporters concerning their shipments of CRS to the United States and 
the origin of the imported HRS being processed into CRS. A company's 
failure to respond completely to Commerce's requests for information 
may result in the application of partial or total facts available, 
pursuant to section 776(a) of the Act, which may include adverse 
inferences, pursuant to section 776(b) of the Act.
    While we believe sufficient factual information has been submitted 
by the domestic producers supporting their request for inquiries, we do 
not find that the record supports the simultaneous issuance of a 
preliminary ruling. Such inquiries are by their nature typically 
complicated and can require information regarding production in both 
the country subject to the order and the third country completing the 
product. As noted above, Commerce intends to request additional 
information regarding the statutory criteria to determine whether 
shipments of CRS from Vietnam are circumventing the AD and CVD orders 
on CRS from Korea. Thus, with further development of the record 
required before a preliminary ruling can be issued, Commerce does not 
find it appropriate to issue a preliminary ruling at this time.

Notification to Interested Parties

    In accordance with 19 CFR 351.225(e), Commerce 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, Commerce will notify by mail all parties 
on Commerce's scope service list of the initiation of these 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., CRS that 
contains the characteristics as provided in the scope of the Orders) 
and an explanation of the reasons for Commerce's decision to initiate 
an anti-circumvention inquiry, as provided above.
    In accordance with 19 CFR 351.225(l)(2), if Commerce 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 antidumping and countervailing 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. Commerce 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), Commerce 
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 27, 2018.
Gary Taverman,
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations, performing the non-exclusive functions and duties of the 
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2018-16566 Filed 8-1-18; 8:45 am]
BILLING CODE 3510-DS-P