[Federal Register Volume 88, Number 129 (Friday, July 7, 2023)]
[Notices]
[Pages 43275-43277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14371]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-028]


Hydrofluorocarbon Blends From the People's Republic of China: 
Initiation of Circumvention Inquiries on the Antidumping Duty Order

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

SUMMARY: In response to a request from the American HFC Coalition (the 
petitioner), the U.S. Department of Commerce (Commerce) is initiating 
four country-wide circumvention inquiries to determine whether: (1) 
U.S. imports from the People's Republic of China (China) of R-410B, R-
407G, and a custom blend, which are further processed in the United 
States, are circumventing the antidumping duty (AD) order on 
hydrofluorocarbon (HFC) blends from China; (2) U.S. imports from 
Malaysia of R-410A and R-407C, which are completed in Malaysia using 
Chinese components, are circumventing the AD order on HFC blends from 
China; (3) U.S. imports of R-410B from Turkey, which are completed in 
Turkey using Chinese components and further processed in the United 
States, are circumventing the AD order on HFC blends from China; and 
(4) U.S. imports of R-410A from Turkey, which are completed in Turkey 
using Chinese components, are circumventing the AD order on HFC blends 
from China.

DATES: Applicable July 7, 2023.

FOR FURTHER INFORMATION CONTACT: Genevieve Coen or Melissa Porpotage, 
AD/CVD Operations, Office II, Enforcement and Compliance, International 
Trade Administration, U.S. Department of Commerce, 1401 Constitution 
Avenue NW, Washington, DC 20230; telephone: (202) 482-3251 or (202) 
482-1413, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On May 15 and 16, 2023, pursuant to sections 781(a) and 781(b) of 
the Tariff Act of 1930, as amended, (the Act) and 19 CFR 351.226(c), 
the American HFC Coalition filed circumvention inquiry requests 
alleging that HFC blends from China, which are further processed in the 
United States, and HFC blends completed in Malaysia or Turkey from 
Chinese components are circumventing the order \1\ and, accordingly, 
should be included within the scope of the Order.\2\ On June 9, 2023, 
we extended the deadline to initiate these circumvention inquiries, in 
accordance with 19 CFR 351.226(d)(1).\3\ On June 9, 2023, Commerce 
issued supplemental questionnaires to the American HFC Coalition.\4\ On 
June 14, 2023, the American HFC Coalition responded to our supplemental 
questionnaires.\5\
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    \1\ See Hydrofluorocarbon Blends and Components Thereof from the 
People's Republic of China: Antidumping Duty Order, 81 FR 55436 
(August 19, 2016) (Order).
    \2\ See American HFC Coalition's Letters, ``Request to Initiate 
Anti-Circumvention Inquiry with Respect to Imports of R410B, R-407G, 
and Certain `Custom' HFC Blends from China,'' and ``Request to 
Initiate Anti-Circumvention Inquiries with Respect to Imports of R-
410A and R-407C Blended in Malaysia,'' dated May 15, 2023; and 
``Request to Initiate Anti-Circumvention Inquiries with Respect to 
Imports of R-410A and R-410B from Turkey Pursuant to Sections 781(a) 
and (b) of the Act,'' dated May 16, 2023 (collectively, Inquiry 
Requests).
    \3\ See Memorandum, ``Extension of Time to Determine Whether to 
Initiate Circumvention Inquiry,'' dated June 9, 2023.
    \4\ See Commerce's Letters, ``U.S. Custom Blends Circumvention 
Inquiry Request Supplemental Questionnaire,'' ``Custom Blends from 
Malaysia Circumvention Inquiry Request Supplemental Questionnaire,'' 
and ``Custom Blends from Turkey Circumvention Inquiry Request 
Supplemental Questionnaire,'' dated June 9, 2023.
    \5\ See American HFC Coalition's Letters, ``Response to 
Circumvention Supplemental Questionnaire--United States,'' 
``Response to Circumvention Supplemental Questionnaire--Malaysia,'' 
and ``Response to Circumvention Supplemental Questionnaire--
Turkey,'' dated June 14, 2023.
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Scope of the Order

    The products subject to the Order are HFC blends. HFC blends 
covered by the scope are R-404A, a zeotropic mixture consisting of 52 
percent 1,1,1-Trifluoroethane, 44 percent Pentafluoroethane, and 4 
percent 1,1,1,2-Tetrafluoroethane; R-407A, a zeotropic mixture of 20 
percent Difluoromethane, 40 percent Pentafluoroethane, and 40 percent 
1,1,1,2-Tetrafluoroethane; R-407C, a zeotropic mixture of 23 percent 
Difluoromethane, 25 percent Pentafluoroethane, and 52 percent 1,1,1,2-
Tetrafluoroethane; R-410A, a zeotropic mixture of 50 percent 
Difluoromethane and 50 percent Pentafluoroethane; and R-507A, an 
azeotropic mixture of 50 percent Pentafluoroethane and 50 percent 
1,1,1-Trifluoroethane also known as R-507. The foregoing percentages 
are nominal percentages by weight. Actual percentages of single 
component refrigerants by weight may vary by plus or minus two percent 
points from the nominal percentage identified above.\6\
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    \6\ R-404A is sold under various trade names, including 
Forane[supreg] 404A, Genetron[supreg] 404A, Solkane[supreg] 404A, 
Klea[supreg] 404A, and Suva[supreg]404A. R-407A is sold under 
various trade names, including Forane[supreg] 407A, Solkane[supreg] 
407A, Klea[supreg]407A, and Suva[supreg]407A. R-407C is sold under 
various trade names, including Forane[supreg] 407C, Genetron[supreg] 
407C, Solkane[supreg] 407C, Klea[supreg] 407C and Suva[supreg] 407C. 
R-410A is sold under various trade names, including EcoFluor R410, 
Forane[supreg] 410A, Genetron[supreg] R410A and AZ-20, 
Solkane[supreg] 410A, Klea[supreg] 410A, Suva[supreg] 410A, and 
Puron[supreg]. R-507A is sold under various trade names, including 
Forane[supreg] 507, Solkane[supreg] 507, Klea[supreg]507, 
Genetron[supreg]AZ-50, and Suva[supreg]507. R-32 is sold under 
various trade names, including Solkane[supreg]32, Forane[supreg]32, 
and Klea[supreg]32. R-125 is sold under various trade names, 
including Solkane[supreg]125, Klea[supreg]125, Genetron[supreg]125, 
and Forane[supreg]125. R-143a is sold under various trade names, 
including Solkane[supreg]143a, Genetron[supreg]143a, and 
Forane[supreg]125.
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    Any blend that includes an HFC component other than R-32, R-125, R-
143a, or R-134a is excluded from the scope of the Order.
    Excluded from the Order are blends of refrigerant chemicals that 
include products other than HFCs, such as blends including 
chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), 
hydrocarbons (HCs), or hydrofluoroolefins (HFOs).
    Also excluded from the Order are patented HFC blends, including, 
but not limited to, ISCEON[supreg] blends, including MO99\TM\ (R-438A), 
MO79 (R-422A), MO59 (R-417A), MO49Plus\TM\ (R-437A) and MO29\TM\ (R-4 
22D), Genetron[supreg] Performax\TM\ LT (R-407F), Choice[supreg] R-
421A, and Choice[supreg] R-421B.
    HFC blends covered by the scope of the Order are currently 
classified in the Harmonized Tariff Schedule of the United States 
(HTSUS) at subheadings 3827.61.0000, 3827.63.0000, 3827.64.0000, 
3827.65.0000, 3827.68.0000, 3827.69.0000. Although the HTSUS 
subheadings are provided for convenience and customs purposes, the 
written description of the scope is dispositive.\7\
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    \7\ See Order.

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[[Page 43276]]

Merchandise Subject to the Circumvention Inquiries

    (1) One circumvention inquiry covers R-410B, R-407G, and a custom 
blend of 50 percent R-125 and 50 percent R-134a exported from China 
that are further processed in the United States into in-scope blends.
    (2) The second circumvention inquiry covers R-410A and R-407C from 
Malaysia that are completed in Malaysia using Chinese R-32 and R-125 
(for R-410A), and R-32, R-125, and R-134a (for R-407C), and 
subsequently exported from Malaysia to the United States.
    (3) The third circumvention inquiry covers R-410B from Turkey that 
is completed in Turkey using Chinese R-32 and R-125 and subsequently 
exported to and further processed in the United States into an in-scope 
blend.
    (4) The fourth circumvention inquiry covers R-410A from Turkey that 
is completed in Turkey using Chinese R-32 and R-125 and subsequently 
exported from Turkey to the United States.

Initiation of Circumvention Inquiries

    Section 351.226(d) of Commerce's regulations states that if 
Commerce determines that a request for a circumvention inquiry 
satisfies the requirements of 19 CFR 351.226(c), then Commerce ``will 
accept the request and initiate a circumvention inquiry.'' Section 
351.226(c)(1) of Commerce's regulations, in turn, requires that each 
circumvention inquiry request allege ``that the elements necessary for 
a circumvention determination under section 781 of the Act exist'' and 
be ``accompanied by information reasonably available to the interested 
party supporting these allegations.'' The American HFC Coalition 
alleged circumvention pursuant to sections 781(a) and 781(b) of the Act 
(merchandise completed or assembled in the United States and 
merchandise completed or assembled in other foreign countries, 
respectively).
    Section 781(a)(1) of the Act provides that Commerce may find 
circumvention of an order when merchandise of the same class or kind 
subject to the order is completed or assembled in the United States. In 
conducting a circumvention inquiry, under section 781(a)(1) of the Act, 
Commerce relies on the following criteria: (A) merchandise sold in the 
United States is of the same class or kind as any merchandise that is 
the subject of an AD or countervailing duty (CVD) order; (B) such 
merchandise sold in the United States is completed or assembled in the 
United States from parts or components produced in the foreign country 
with respect to which such order or finding applies; (C) the process of 
assembly or completion in the United States is minor or insignificant; 
and (D) the value of the parts or components referred to in 
subparagraph (B) is a significant portion of the total value of the 
merchandise.
    In determining whether the process of assembly or completion in the 
United States is minor or insignificant under section 781(a)(1)(C) of 
the Act, section 781(a)(2) of the Act directs Commerce to consider: (A) 
the level of investment in the United States; (B) the level of research 
and development in the United States; (C) the nature of the production 
process in the United States; (D) the extent of production facilities 
in the United States; and (E) whether the value of the processing 
performed in the United States represents a small proportion of the 
value of the merchandise sold in the United States. However, no single 
factor, by itself, controls Commerce's determination of whether the 
process of assembly or completion in the United States is minor or 
insignificant.\8\ Accordingly, it is Commerce's practice to evaluate 
each of these five factors as they exist in the United States, and to 
reach an affirmative or negative circumvention determination based on 
the totality of the circumstances of the particular circumvention 
inquiry.\9\
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    \8\ See Statement of Administrative Action Accompanying the 
Uruguay Round Agreements Act, H.R. Doc. No. 103-316, Vol. 1 (1994) 
(SAA), at 893.
    \9\ See Hydrofluorocarbon Blends from the People's Republic of 
China: Final Negative Scope Ruling on Gujarat Fluorochemicals Ltd.'s 
R-410A Blend; Affirmative Final Determination of Circumvention of 
the Antidumping Duty Order by Indian Blends Containing CCC 
Components, 85 FR 61930 (October 1, 2020), and accompanying Issues 
and Decision Memorandum (IDM), at 20 (specifying same in the context 
of a section 781(b) inquiry).
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    In addition, section 781(a)(3) of the Act sets forth additional 
factors to consider in determining whether to include merchandise 
assembled or completed in the United States within the scope of an AD 
or CVD order. Specifically, Commerce shall take into account such 
factors as: (A) the pattern of trade, including sourcing patterns; (B) 
whether the manufacturer or exporter of the parts or components is 
affiliated with the person who assembles or completes the merchandise 
sold in the United States from the parts or components produced in the 
foreign country with respect to which the order applies; and (C) 
whether imports into the United States of the parts or components 
products in such foreign country have increased after the initiation of 
the investigation which resulted in the issuance of such order.
    Section 781(b)(1) of the Act provides that Commerce may find 
circumvention of an 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 a 
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; (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 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.
    In determining whether the process of assembly or completion in a 
foreign country is minor or insignificant under section 781(b)(1)(C) of 
the Act, section 781(b)(2) of the Act directs Commerce to consider: (A) 
the level of investment in the foreign country; (B) the level of 
research and development in the foreign country; (C) the nature of the 
production process in the foreign country; (D) the extent of production 
facilities in the foreign country; and (E) whether or not the value of 
processing performed in the foreign country represents a small 
proportion of the value of the merchandise imported into the United 
States. However, no single factor, by itself, controls Commerce's 
determination of whether the process of assembly or completion in a 
foreign country is minor or insignificant.\10\ Accordingly, it is 
Commerce's practice to evaluate each of these five factors as they 
exist in the foreign country, depending on the totality of the 
circumstances of the particular circumvention inquiry.\11\
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    \10\ See SAA at 893.
    \11\ See Uncovered Innerspring Units from the People's Republic 
of China: Final Affirmative Determination of Circumvention of the 
Antidumping Duty Order, 83 FR 65626 (December 21, 2018), and 
accompanying IDM at 4.
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    In addition, section 781(b)(3) of the Act sets forth additional 
factors to

[[Page 43277]]

consider in determining whether to include merchandise assembled or 
completed in a foreign country within the scope of an AD or CVD order. 
Specifically, Commerce shall take into account such factors as: (A) the 
pattern of trade, including sourcing patterns; (B) whether the 
manufacturer or exporter of the merchandise that was shipped to the 
foreign country is affiliated with the person who, in the foreign 
country, uses the merchandise to complete or assemble the merchandise 
which is subsequently imported into the United States; and (C) whether 
imports of the merchandise into the foreign country have increased 
after the initiation of the investigation that resulted in the issuance 
of such order.

Analysis

    Based on our analysis of American HFC Coalition's circumvention 
requests, Commerce determines that American HFC Coalition has satisfied 
the criteria under 19 CFR 351.226(c) to warrant the initiation of 
circumvention inquiries of the Order. For a full discussion of the 
basis for our decision to initiate these circumvention inquiries, see 
the Initiation Checklists.\12\ As explained in the Initiation 
Checklists, the information provided by domestic interested parties 
warrants initiating these circumvention inquiries on a country-wide 
basis. Commerce has taken this approach in prior circumvention 
inquiries, where the facts warranted initiation on a country-wide 
basis.\13\
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    \12\ See Checklist, ``Enforcement and Compliance, Office of AD/
CVD Operations, U.S. Custom Blends Circumvention Initiation 
Checklist,'' dated June 29, 2023; see also Checklist, ``Enforcement 
and Compliance, Office of AD/CVD Operations, Custom Blends from 
Malaysia Circumvention Initiation Checklist,'' dated June 29, 2023; 
Checklist, ``Enforcement and Compliance, Office of AD/CVD 
Operations, R410A from Turkey Circumvention Initiation Checklist,'' 
dated June 29, 2023; and Checklist, ``Enforcement and Compliance, 
Office of AD/CVD Operations, R10B from Turkey Circumvention 
Initiation Checklist,'' dated June 29, 2023 (Collectively, 
Initiation Checklists).
    \13\ See, e.g., Certain Corrosion-Resistant Steel Products from 
the Republic of Korea and Taiwan: Initiation of Anti-Circumvention 
Inquiries on the Antidumping Duty and Countervailing Duty Orders, 83 
FR 37785 (August 2, 2018); Carbon Steel Butt-Weld Pipe Fittings from 
the People's Republic of China: Initiation of Anti-Circumvention 
Inquiry on the Antidumping Duty Order, 82 FR 40556, 40560 (August 
25, 2017) (stating at initiation that Commerce would evaluate the 
extent to which a country-wide finding applicable to all exports 
might be warranted); and 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, 81 FR 79454, 79458 (November 14, 2016) (stating at 
initiation that Commerce would evaluate the extent to which a 
country-wide finding applicable to all exports might be warranted).
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    Consistent with the approach in the prior circumvention inquiries 
that were initiated on a country-wide basis, Commerce intends to issue 
four questionnaires (one for China, one for Malaysia, and two for 
Turkey) to solicit information from producers and exporters in China, 
Malaysia, and Turkey, respectively, concerning their shipments to the 
United States and the origin of any imported HFC blends being further 
processed into HFC blends subject to the Order.

Respondent Selection

    Commerce intends to base respondent selection on U.S. Customs and 
Border and Protection (CBP) data. Commerce intends to place CBP data on 
each record within five days of the publication of the initiation 
notice. Comments regarding the CBP data and respondent selection should 
be submitted within seven days after placement of the CBP data on the 
record of the relevant inquiry.
    Commerce intends to establish a schedule for questionnaire 
responses after respondent selection. A company's failure to completely 
respond 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.

Suspension of Liquidation

    Pursuant to 19 CFR 351.226(l)(1), Commerce will notify CBP of the 
initiation of these circumvention inquiries and direct CBP to continue 
the suspension of liquidation of entries of products subject to the 
circumvention inquiries that were already subject to the suspension of 
liquidation under the Order and to apply the cash deposit rate that 
would be applicable if the products were determined to be covered by 
the scope of the Order. Should Commerce issue preliminary or final 
circumvention determinations, Commerce will follow the suspension of 
liquidation rules under 19 CFR 351.226(l)(2)-(4).

Notification to Interested Parties

    In accordance with 19 CFR 351.226(d) and sections 781(a) and (b) of 
the Act, Commerce determines that the American HFC Coalition's requests 
for these circumvention inquiries satisfies the requirements of 19 CFR 
351.226(c). Accordingly, Commerce is notifying all interested parties 
of the initiation of these four circumvention inquiries to determine 
whether: (1) U.S. imports from China of R-410B, R-407G, and a custom 
blend that are further processed in the United States, are 
circumventing the Order; (2) U.S. imports from Malaysia of R-410A and 
R-407C that are completed in Malaysia using Chinese components are 
circumventing the Order; (3) U.S. imports of R-410B from Turkey that 
are completed in Turkey using Chinese components and further processed 
in the United States into in-scope blends are circumventing the Order; 
and (4) U.S. imports from Turkey of R-410A that are completed in Turkey 
using Chinese components are circumventing the Order. In addition, we 
included a description of the products that are the subject of these 
inquiries and an explanation of the reasons for Commerce's decision to 
initiate these inquiries as provided above and in the accompanying 
Initiation Checklists. In accordance with 19 CFR 351.226(e)(1), 
Commerce intends to issue its preliminary determination no later than 
150 days from the date of publication of the notice of initiation of 
these circumvention inquiries in the Federal Register.
    This notice is published in accordance with sections 781(a) and (b) 
of the Act and 19 CFR 351.226(d)(1)(ii).

    Dated: June 29, 2023.
Lisa W. Wang,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2023-14371 Filed 7-6-23; 8:45 am]
BILLING CODE 3510-DS-P