[Federal Register Volume 84, Number 87 (Monday, May 6, 2019)]
[Notices]
[Pages 19757-19762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09214]
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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 and Scope Inquiries on the Antidumping
Duty and Countervailing Duty Orders
AGENCY: Enforcement and Compliance, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from Air Master Awning LLC (Air
Master), the Department of Commerce (Commerce) is initiating anti-
circumvention inquiries to determine whether imports of aluminum
jalousie shutters that are processed in the Dominican Republic from
window frame extrusions produced in the People's Republic of China
(China), are circumventing the antidumping duty (AD) and countervailing
duty (CVD) orders on aluminum extrusions from China. We are also self-
initiating scope inquiries to determine whether the aluminum jalousie
shutters are subject to the AD and CVD orders.
DATES: Applicable May 6, 2019.
FOR FURTHER INFORMATION CONTACT: 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) 482-2924.
SUPPLEMENTARY INFORMATION:
Background
Following Commerce's final affirmative determinations of dumping
and countervailable subsidies,\1\ and the U.S. International Trade
Commission (ITC)'s finding of material injury,\2\ Commerce issued AD
and CVD orders on imports of aluminum extrusions from China, which were
published in the Federal Register on May 26, 2011.\3\
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\1\ See Aluminum Extrusions from the People's Republic of China:
Final Determination of Sales at Less Than Fair Value, 76 FR 18524
(April 4, 2011); and Aluminum Extrusions from the People's Republic
of China: Final Affirmative Countervailing Duty Determination, 76 FR
18521 (April 4, 2011).
\2\ See Certain Aluminum Extrusions from China, 76 FR 29007 (May
19, 2011).
\3\ 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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On September 25, 2018, pursuant to section 781(b) of the Tariff Act
of 1930, as amended (the Act) and 19 CFR 351.225(h), Air Master
requested that Commerce initiate anti-circumvention inquiries on
imports of aluminum jalousie shutters completed or assembled in the
Dominican Republic using window frame extrusions sourced from China
that are subject to the Orders.\4\ Air Master alleges that the
completion/assembly of the aluminum jalousie shutters constitutes a
``minor alteration,'' within the meaning of 781(c) of the Act.\5\
Further, pursuant to 19 CFR 351.225(f), Air Master requested that
Commerce issue preliminary determinations of circumvention of the
Orders concurrently with the initiation, to suspend liquidation of
imports of aluminum jalousie shutters from the Dominican Republic.\6\
Air Master submitted supplements to its request in October and December
2018.\7\ Separately, Commerce issued a supplemental questionnaire to
Air Master on February 11, 2019,\8\ to which Air Master responded on
February 19, 2019.\9\
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\4\ See Air Master Letter, ``Aluminum Extrusions from the
People's Republic of China, A-570-967 and C-570-968; Request for
Circumvention Ruling Pursuant to Section 781(c) of the Tariff Act of
1930,'' dated September 25, 2018 (Anti-Circumvention Ruling
Request).
\5\ Id. at 2. We note that Air Master's Anti-Circumvention
Ruling Request alleges that the assembly of the aluminum jalousie
shutters in the Dominican Republic represents a minor alteration
within the meaning of section 781(c) of the Act. Because section
781(b) of the Act relates to ``merchandise completed or assembled in
other foreign countries,'' and section 781(c) of the Act relates to
``minor alterations of merchandise,'' we are initiating anti-
circumvention inquiries under both 781(b) and (c) of the Act.
\6\ Id. at 2 and 19.
\7\ See Air Master Letter, ``Aluminum Extrusions from the
People's Republic of China, A-570-967 and C-570-968; Request for
Circumvention Ruling Pursuant to Section 781(c) of the Tariff Act of
1930,'' dated October 1, 2018 (First Supplement to Anti-
Circumvention Ruling Request); and Air Master Letter, ``Aluminum
Extrusions from the People's Republic of China, A-570-967 and C-570-
968; Request for Circumvention Ruling Pursuant to Section 781(c) of
the Tariff of 1930; Submission of Supplemental Information,'' dated
December 18, 2018.
\8\ See Commerce Letter, ``Aluminum Extrusions from the People's
Republic of China Anti-Circumvention Inquiry: Air Master Awning,
LLP,'' dated February 11, 2019.
\9\ See Air Master Letter, ``Aluminum Extrusions from the
People's Republic of China, A-570-967 and C-570-968;
Anticircumvention Inquiry; Response of Air Master Awning LLC to the
Department's Request for Further Information,'' dated February 19,
2019 (Second Anti-Circumvention Ruling Request).
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[[Page 19758]]
On October 19, 2018, the Puerto Rico Agencies Co., Inc., submitted
comments on the proposed anti-circumvention inquiries.\10\ On April 18,
2019, the Aluminum Extrusions Fair Trade Committee (the petitioner)
submitted a letter in support of Air Master's request for anti-
circumvention inquiries.\11\
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\10\ See Letter, ``Re: Aluminum Windows from the Dominican
Republic/Air Master Awing (sic) LLC,'' placed on the record by
Commerce in a Memorandum dated April 25, 2019.
\11\ See Petitioner's Letter, ``Aluminum Extrusions from the
People's Republic of China: Letter in Support of Air Master Awning
LLC's Request for an Anti-Circumvention Inquiry,'' dated April 18,
2019.
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Commerce exercised its discretion to toll all deadlines affected by
the partial federal government closure from December 22, 2018, through
the resumption of operations on January 29, 2019.\12\ If the new
deadline falls on a non-business day, in accordance with Commerce's
practice, the deadline will become the next business day. Between
November 9, 2018, and April 26, 2019, Commerce extended the initiation
deadline for Air Master's request.\13\ The revised deadline is now May
2, 2019.
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\12\ See Memorandum to the Record from 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, ``Deadlines
Affected by the Partial Shutdown of the Federal Government,'' dated
January 28, 2019. All deadlines in these segments of the proceedings
have been extended by 40 days.
\13\ See Memorandum, ``Aluminum Extrusions from the People's
Republic of China--Extension of Time to Determine Whether to
Initiate Anti-Circumvention Inquiry,'' dated November 9, 2018;
Memorandum, ``Aluminum Extrusions from the People's Republic of
China--Extension of Time to Determine Whether to Initiate Anti-
Circumvention Inquiry,'' dated December 20, 2018; Memorandum,
``Aluminum Extrusions from the People's Republic of China--Extension
of Time to Determine Whether to Initiate Anti-Circumvention
Inquiry,'' dated April 5, 2019; Memorandum, ``Aluminum Extrusions
from the People's Republic of China--Extension of Time to Determine
Whether to Initiate Anti-Circumvention Inquiry,'' dated April 12,
2019; and Memorandum, ``Aluminum Extrusions from the People's
Republic of China--Extension of Time to Determine Whether to
Initiate Anti-Circumvention Inquiry,'' dated April 23, 2019, and
Memorandum, ``Aluminum Extrusions from the People's Republic of
China--Extension of Time to Determine Whether to Initiate Anti-
Circumvention Inquiry,'' dated April 26, 2019.
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Scope of the 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
are mill finished (i.e., without any coating or further finishing),
brushed, buffed, polished, anodized (including brightdip 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 Orders merely by
including fasteners such as
[[Page 19759]]
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 the 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): 8541.90.00.00, 8708.10.30.50, 8708.99.68.90,
6603.90.8100, 7616.99.51, 8479.89.94, 8481.90.9060, 8481.90.9085,
9031.90.9195, 8424.90.9080, 9405.99.4020, 9031.90.90.95, 7616.10.90.90,
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,
8302.42.30.10, 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 the Orders is
dispositive.
Merchandise Subject to the Anti-Circumvention and Scope Inquiries
These anti-circumvention and scope inquiries cover aluminum
jalousie shutters exported from the Dominican Republic that are
manufactured from window frame extrusions produced in China. Commerce
intends to consider whether these inquiries should apply to all exports
of extruded aluminum products from the Dominican Republic that meet the
description of the Orders.
Allegations Supporting Initiation of Anti-Circumvention Proceedings:
Merchandise Completed or Assembled in Other Foreign Countries
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 AD
or CVD 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, Air Master provided evidence
with respect to these criteria.
A. Merchandise of the Same Class or Kind
Air Master claims that aluminum jalousie shutters exported to the
United States are of the same class or kind as that covered by the
Orders and substantiated its claim with evidence showing that the
merchandise from the Dominican Republic enters the United States under
the same tariff classification as subject merchandise.\14\
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\14\ See Anti-Circumvention Ruling Request at 7 and 18.
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B. Completion of Merchandise in a Foreign Country
Section 781(b)(l)(B)(ii) of the Act requires that Commerce must
determine whether, ``before importation into the United States, such
imported merchandise is completed or assembled in another foreign
country from merchandise which . . . is produced in the foreign country
with respect to which such an order or finding applies.'' Air Master
presented evidence from United Nations Commodity Trade
[[Page 19760]]
Statistics Database (UN COMTRADE) showing substantial imports of
Chinese doors, windows, and frames into the Dominican Republic
following imposition of the Orders in 2011.\15\ Air Master also
provided evidence from the ITC's Trade Dataweb showing that imports
into Puerto Rico of aluminum windows and frames from China
significantly decreased after the imposition of the Orders,\16\ and
that imports into Puerto Rico of aluminum windows and frames from the
Dominican Republic decreased significantly after imposition of the
Orders. However, imports increased again beginning in March 2018, when
Air Master alleges the circumvention began.\17\
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\15\ Id. at 18. Air Master notes that because UN COMTRADE data
does not report imports at the 10-digit statistical subheading
level, it is not possible to obtain data specific to aluminum
windows and frames.
\16\ Id. at 6.
\17\ Id. at 18.
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C. Minor or Insignificant Process
Air Master maintains that the process for manufacturing aluminum
jalousie shutters from window frame extrusions represents a minor
alteration.\18\ Under section 781(b)(2) of the Act, Commerce considers
five factors in determining whether the process of assembly or
completion in the foreign country is minor or insignificant: (1) The
level of investment in the foreign country in which the merchandise is
completed or assembled; (2) the level of research and development in
the foreign country in which the merchandise is completed or assemble;
(3) the nature of the production process in the foreign country in
which the merchandise is completed or assembled; (4) the extent of
production facilities in the foreign country in which the merchandise
is completed or assembled, and (5) 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.
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\18\ Id. at 2.
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(1) Level of Investment
Air Master contends that the level of investment necessary to
support the assembly operations of Dominican companies that can produce
aluminum jalousie shutters from window frame extrusions in the
Dominican Republic is insignificant.\19\ In support of its contention,
Air Master compares the investment necessary to perform the finishing
operations in the Dominican Republic with the investment necessary to
produce window frame extrusions.\20\ Air Master's analysis included the
building and all equipment.\21\ According to Air Master, even the
smallest extruder in China would require an initial investment at least
2,000 times greater than the investment required to perform the
finishing operations in the Dominican Republic.\22\ Air Master
concludes, therefore, that in comparison to the investment necessary to
extrude aluminum in China, the cost of the finishing operations in the
Dominican Republic is insignificant.\23\
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\19\ Id. at 12.
\20\ Id. at 12-14.
\21\ Id.
\22\ Id. at 14.
\23\ Id.
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(2) Level of Research and Development
Air Master asserts that there is no research or development for
aluminum jalousie shutters taking place in the Dominican Republic, as
aluminum jalousie shutters are not a technologically advanced or
sophisticated product.\24\ According to Air Master, there has been no
significant technological advancement in the product itself or in its
production for years.\25\
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\24\ Id. at 16.
\25\ Id.
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(3) Nature of Production Process
According to Air Master, the finishing operations performed in the
Dominican Republic consist of merely cutting to length and screwing
together Chinese window frame extrusions.\26\ This process, Air Master
argues, constitutes approximately 15 percent of the value of an
aluminum jalousie shutter,\27\ and is, thus, only a minor alteration of
the merchandise.\28\
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\26\ Id. at 9.
\27\ Id. at 15.
\28\ Id. at 9.
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(4) Extent of Production Facilities in the Dominican Republic Air
Master asserts that the production facilities for aluminum jalousie
shutters in the Dominican Republic are limited to the operations that
assemble Chinese window frame extrusions into aluminum jalousie
shutters that are then exported to Puerto Rico.\29\ Air Master also
states that there are only three such production facilities in the
Dominican Republic. \30\
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\29\ Id. at 17.
\30\ Id.; see also First Supplement to Anti-Circumvention Ruling
Request at 2.
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(5) Value of Processing in the Dominican Republic
Air Master asserts that producing window frame extrusions in China
accounts for a large percentage of the total value of aluminum jalousie
shutters that are produced in the Dominican Republic using window frame
extrusions from China.\31\ Using its own costs as a reference, Air
Master estimates that the aluminum window frame extrusions account for
at least 85 percent of the cost of the aluminum jalousie shutter
assembled in the Dominican Republic.\32\
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\31\ See Anti-Circumvention Ruling Request at 15.
\32\ Id.
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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, Air Master contends that publicly
available import data from UN COMTRADE document that imports of Chinese
aluminum doors, windows, and frames into the Dominican Republic have
increased significantly in recent years.\33\ It also states that the
ITC Trade Dataweb shows that there has been a surge in imports of
aluminum windows and frames from the Dominican Republic into Puerto
Rico starting in March 2018.\34\ Air Master did not provide evidence
that Chinese exporters of window frame extrusions are affiliated with
the Dominican finishers.
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\33\ Id. at 18.
\34\ Id. at 18-19.
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Allegations Supporting Initiation of Anti-Circumvention Proceedings:
Minor Alterations of Merchandise
Section 781(c)(1) of the Act provides that Commerce 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
[[Page 19761]]
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} ''
Although 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 that 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, Commerce 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.'' \35\ Commerce
will examine these factors in evaluating an allegation of minor
alteration under section 781(c) of the Act and 19 CFR 351.225(i).
Still, because each case is highly dependent on the facts on the
record, each must be analyzed in light of the specific facts. Moreover,
although not specified in the statute, Commerce has also considered
additional factors as part of its anti-circumvention analysis.\36\
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\35\ 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'').
\36\ 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 Small Diameter Graphite Electrodes from the People's
Republic of China: Initiation of Anticircumvention Inquiry, 77 FR
37873, 37876 (June 25, 2012).
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A. Overall Physical Characteristics
Air Master contends that the window frame extrusions are shipped in
profiles that dedicate them for use only as frames and other components
of a window.\37\ Furthermore, Air Master alleges that when exported
from China, the window frame extrusions are already powder coated in
the color of the jalousie shutter.\38\ Thus, Air Master argues, the
dedicated profile of the window frame extrusion, the powder-coated
finish, and the basic assembly steps performed to assemble a jalousie
shutter, establish that the window frame extrusions already have the
essential characteristics of a jalousie shutter.\39\
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\37\ See Anti-Circumvention Ruling Request at 9-10.
\38\ Id. at 10.
\39\ Id.
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Moreover, Air Master notes that, because window frame extrusions
and jalousie shutters are both classified under the same HTS subheading
(i.e., 7610.10.00.10), the assembly into a jalousie shutter does not
transform the window frame extrusion into a different article for
Customs purposes.\40\
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\40\ Id.
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B. Expectations of the Ultimate Users
Air Master argues that, as explained above, window frame extrusions
have only one purpose: to be assembled into aluminum jalousie
shutters.\41\ Thus, Air Master states, the ultimate customers have the
same expectations for window frame extrusions as they have for aluminum
jalousie shutters.\42\
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\41\ Id.
\42\ Id. at 10-11.
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C. Channels of Marketing
Air Master contends that, prior to issuance of the Orders, window
frame extrusions imported from China were sold in Puerto Rico through
an aluminum extrusions broker, but that the issuance of the Orders put
an end to that direct channel of sales and marketing.\43\ Air Master
further states that, at present, the same broker imports and sells
aluminum jalousie shutters in Puerto Rico that are assembled in the
Dominican Republic from Chinese-origin window frame extrusions.\44\ In
this way, Air Master argues, the customs broker has developed a scheme
to circumvent the Orders by diverting window frame extrusions to the
Dominican Republic, where they undergo a minor alteration before re-
exportation to Puerto Rico.\45\ With respect to the Puerto Rico channel
of marketing, Air Master contends that the channels for marketing
window frame extrusions and aluminum jalousie shutters are
identical.\46\
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\43\ Id. at 11.
\44\ Id.
\45\ Id.
\46\ Id.
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D. Cost of Modification
Air Master contends that the cost of assembling window frame
extrusions into aluminum jalousie shutters is low relative to the cost
to produce a jalousie shutter, and must be viewed relative to: (1) The
cost of the investment required to support the assembly operations of
Dominican companies relative to the investment required to produce a
window frame extrusion; and (2) the direct cost of assembling a
jalousie shutter relative to the total cost of a jalousie shutter.\47\
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\47\ Id. at 12.
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With respect to the relative cost of initial investment, Air Master
compares the investment necessary to perform the finishing operations
in the Dominican Republic with the investment necessary to produce
window frame extrusions.\48\ Air Master's analysis includes the
building and all equipment.\49\ According to Air Master, even the
smallest extruder in China would require an initial investment at least
2,000 times greater than the investment required to perform the
finishing operations in the Dominican Republic.\50\ Air Master
concludes, therefore, that, in comparison to the investment necessary
to extrude aluminum in China, the cost of the finishing operations in
the Dominican Republic is insignificant.\51\
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\48\ Id. at 12-14.
\49\ Id.
\50\ Id. at 14.
\51\ Id.
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With respect to the direct cost of assembly of a jalousie shutter
compared to the direct cost to produce a window frame extrusion, Air
Master asserts that producing window frame extrusions in China accounts
for a large percentage of the total value of aluminum jalousie shutters
that are produced in the Dominican Republic using window frame
extrusions from China.\52\ Using its own costs as a reference, Air
Master estimates that the aluminum window frame extrusions account for
at least 85 percent of the cost of the aluminum jalousie shutter
assembled in the Dominican Republic.\53\
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\52\ Id. at 15.
\53\ Id.
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E. Additional Factors To Consider in Determining Whether Action Is
Necessary
Air Master argues that, in addition to the factors above, Commerce
may also consider several of the factors set forth in 781(b) of the Act
with respect to determining whether merchandise completed or assembled
in third countries is circumventing the AD and CVD Orders. According to
Air Master, several of these factors mirror those in a ``minor
alteration'' analysis brought under 781(c) of the Act, while others do
not, but, nonetheless, support a conclusion that assembling aluminum
jalousie shutters in the Dominican Republic is merely a minor
alteration of Chinese window frame extrusions.\54\
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\54\ Id. at 16.
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(1) Level of Research and Development
Air Master asserts that there is no research or development for
aluminum
[[Page 19762]]
jalousie shutters taking place in the Dominican Republic, as aluminum
jalousie shutters are not a technologically advanced or sophisticated
product.\55\ According to Air Master, there has been no significant
technological advancement in the product itself, or in its production,
for years.\56\
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\55\ Id.
\56\ Id.
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(2) Aluminum Facilities in the Dominican Republic Manufacture Only for
Export Markets
Air Master asserts that the production facilities for aluminum
jalousie shutters in the Dominican Republic are limited to the
operations that assemble Chinese window frame extrusions into aluminum
jalousie shutters that are then exported to Puerto Rico.\57\ Air Master
also states that there are only three such production facilities in the
Dominican Republic. \58\
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\57\ Id. at 17.
\58\ Id.; see also First Supplement to Anti-Circumvention Ruling
Request at 2.
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(3) Pattern of Trade
Air Master contends that publicly available import data from UN
COMTRADE document that imports of Chinese aluminum doors, windows, and
frames into the Dominican Republic have increased significantly in
recent years.\59\ Air Master also states that the ITC Trade Dataweb
shows that there has been a surge in imports of aluminum windows and
frames from the Dominican Republic into Puerto Rico starting in March
2018.\60\
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\59\ See Anti-Circumvention Ruling Request at 18.
\60\ Id. at 18-19.
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Analysis of the Allegations
Based on our analysis of the information provided by Air Master,
Commerce finds that there exists a sufficient basis to initiate anti-
circumvention inquiries, pursuant to sections 781(b) and (c) of the
Act. Commerce will determine whether the merchandise subject to the
inquiries (identified in the ``Merchandise Subject to the Anti-
Circumvention Inquiries and Scope Inquiries'' section, above) involves
merchandise either completed or assembled in other foreign countries
which can be considered subject to the Orders, and/or represents a
minor alteration to subject merchandise in such minor respects that it
should be subject to the Orders.
Commerce intends to issue questionnaires to solicit information
from Dominican producers and exporters identified by Air Master
concerning their shipments of aluminum jalousie shutters to the United
States and the origin of the imported window frame extrusions being
processed into aluminum jalousie shutters.\61\ 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.
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\61\ Id. at 4; see also First Supplement to Anti-Circumvention
Ruling Request at 2.
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While we find that sufficient factual information has been
submitted by Air Master supporting its 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 aluminum jalousie shutters from the Dominican Republic are
circumventing the Orders. 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.
Initiation of Scope Inquiries
The scope of the Orders states that the scope ``{e{time} xcludes
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.''
Air Master states that both the window frame extrusions exported
from China and the aluminum jalousie shutters exported from the
Dominican Republic are not finished merchandise, and are subject to the
Orders.\62\ However, because the scope of the Orders provides that
certain types of windows are not subject to the Orders, we find it
appropriate to self-initiate scope inquiries, in accordance with 19 CFR
351.225(b), to determine whether the aluminum jalousie shutters at
issue constitute subject merchandise.
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\62\ See Anti-Circumvention Ruling Request at 5-6; see also Air
Master Second Anti-Circumvention Ruling Request at 2 and 5.
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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
proceedings.
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
proceedings (i.e., aluminum extrusions) and an explanation of the
reasons for Commerce's decision to initiate these inquiries, as
provided above.
Furthermore, in accordance with 19 CFR 351.225(l)(2), if Commerce
issues preliminary affirmative determinations, 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 inquiries.
Moreover, in the event we issue preliminary affirmative
determinations of circumvention, pursuant to section 781(b) of the act
(Merchandise Completed or Assembled in Other Foreign Countries), we
intend to notify the ITC, in accordance with section 781(b)(1) of the
Act and 19 CFR 351.225(f)(7)(i)(B), if applicable.
Commerce will, following consultation with interested parties,
establish a schedule for questionnaires and comments on the issues. In
accordance with 19 CFR 351.225(f)(5), Commerce intends to issue its
final scope ruling within 120 days of this initiation. In accordance
with section 781(f) of the Act and 19 CFR 351.225(f)(5), Commerce
intends to issue its final anti-circumvention determinations within 300
days of the date of publication of this initiation.
This notice is published in accordance with sections 781(b) and (c)
of the Act and 19 CFR 351.225(h) and (i).
Dated: April 30, 2019.
Jeffrey I. Kessler,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2019-09214 Filed 5-3-19; 8:45 am]
BILLING CODE 3510-DS-P