[Federal Register Volume 76, Number 154 (Wednesday, August 10, 2011)]
[Notices]
[Pages 49439-49443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20336]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-867]
Large Power Transformers From the Republic of Korea: Initiation
of Antidumping Duty Investigation
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
DATES: Effective Date: August 10, 2011.
FOR FURTHER INFORMATION CONTACT: Angelica Mendoza at (202) 482-3019 or
David Cordell at 202-482-0408, AD/CVD Operations, Office 7, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC
20230.
SUPPLEMENTARY INFORMATION:
The Petition
On July 14, 2011, the Department of Commerce (``the Department'')
received a petition concerning imports of large liquid dielectric power
transformers (``large power transformers'') from the Republic of Korea
(``Korea''), filed in proper form on behalf of ABB Inc., Delta Star,
Inc. and Pennsylvania Transformer Technology, Inc., (collectively,
``the Petitioners''). See the Petition for the Imposition of
Antidumping Duties on Large Power Transformers from the Republic of
Korea, filed on July 14, 2011 (``the Petition''). On July 20, 2011, the
Department issued a request for additional information and
clarification of certain areas of the Petition. The Petitioners filed a
response to this request on July 26, 2011 (hereinafter, ``Supplement to
the Petition''). In accordance with section 732(b) of the Tariff Act of
1930, as amended (``the Act''), the Petitioners allege that imports of
large power transformers from Korea are being, or are likely to be,
sold in the United States at less than fair value, within the meaning
of section 731 of the Act, and that such imports are materially
injuring, or threatening material injury to, an industry in the United
States. On July 28, 2011, the Petitioners filed an amendment to the
Petition in which they revised the scope language, amended the lost
sales listing and provided the Harmonized Tariff Schedule of the United
States (``HTSUS'') page for HTSUS number 8504.90.9540, (hereinafter,
``Second Supplement to the Petition''). On August 1, 2011, the
Petitioners filed an additional amendment to the Petition with respect
to industry support for the Petition (hereinafter, ``Third Supplement
to the Petition'').
On July 28, 2011, the Department received a standing challenge to
the Petition by Hyosung Corporation, a Korean producer and exporter of
the subject merchandise, and its U.S. affiliate HICO America Inc.
(collectively, ``Hyosung''). On July 29, 2011, the Department received
a standing challenge to the petition by Hyundai Corporation, a Korean
producer and exporter of the subject merchandise, and its U.S.
affiliate Hyundai Corporation, USA (collectively, ``Hyundai''). The
Petitioners responded to HICO's and Hyundai's submission on August 1,
2011 (hereinafter, ``Fourth Supplement to the Petition'').
The Department finds that the Petitioners filed the Petition on
behalf of
[[Page 49440]]
the domestic industry because the Petitioners are interested parties as
defined in section 771(9)(C) of the Act and have demonstrated
sufficient industry support with respect to the antidumping duty
investigation which the Petitioners are requesting that the Department
initiate (see ``Determination of Industry Support for the Petition''
section below).
Period of Investigation
The period of investigation (``POI'') is July 1, 2010, through June
30, 2011. See 19 CFR 351.204(b)(1).
Scope of Investigation
The products covered by this investigation are large power
transformers from Korea. For a full description of the scope of the
investigation, please see the ``Scope of Investigation,'' in Appendix I
of this notice.
Comments on Scope of Investigation
During our review of the Petition, we discussed the scope with the
Petitioners to ensure that it is an accurate reflection of the products
for which the domestic industry is seeking relief. Moreover, as
discussed in the preamble to the Department's regulations (Antidumping
Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19,
1997)), we are setting aside a period for interested parties to raise
issues regarding product coverage. The Department invites all
interested parties to submit such comments by August 23, 2011, 20
calendar days from the signature date of this notice. The period of
scope consultations is intended to provide the Department with ample
opportunity to consider all comments and to consult with parties prior
to the issuance of the preliminary determination.
All comments must be filed on the record of the investigation. If
filed after August 5, 2011, all comments and submissions to the
Department must be filed electronically using Import Administration's
Antidumping Countervailing Duty Centralized Electronic Service System
(``IA ACCESS'').\1\
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\1\ See http://www.gpo.gov/fdsys/pkg/FR-2011-07-06/pdf/2011-16352.pdf for details of the Department's Electronic Filing
Requirements, which go into effect on August 5, 2011. Information on
help using IAACCESS can be found at https://iaaccess.trade.gov/help.aspx and a handbook can be found at https://iaaccess.trade.gov/help/Handbook%20on%20Electronic%20Filling%20Procedures.pdf.
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Comments on Product Characteristics for Antidumping Duty Questionnaire
We are requesting comments from interested parties regarding the
appropriate physical characteristics of large power transformers to be
reported in response to the Department's antidumping questionnaire.
This information will be used to identify the key physical
characteristics of the subject merchandise in order to more accurately
report the relevant factors and costs of production, as well as to
develop appropriate product comparison criteria.
Interested parties may provide any information or comments that
they feel are relevant to the development of an accurate listing of
physical characteristics. Specifically, they may provide comments as to
which characteristics are appropriate to use as (1) general product
characteristics and (2) the product comparison criteria. We note that
it is not always appropriate to use all product characteristics as
product comparison criteria. We base product comparison criteria on
meaningful commercial differences among products. In other words, while
there may be some physical product characteristics utilized by
manufacturers to describe large power transformers, it may be that only
a select few product characteristics take into account commercially
meaningful physical characteristics. In addition, interested parties
may comment on the hierarchy under which the physical characteristics
should be considered in product matching.
In order to consider the suggestions of interested parties in
developing and issuing the antidumping duty questionnaire, we must
receive comments by August 23, 2011. Additionally, rebuttal comments
must be received by August 30, 2011.
Determination of Industry Support for the Petition
Section 732(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 732(c)(4)(A) of the Act
provides that a petition meets this requirement if the domestic
producers or workers who support the petition account for: (i) At least
25 percent of the total production of the domestic like product; and
(ii) more than 50 percent of the production of the domestic like
product produced by that portion of the industry expressing support
for, or opposition to, the petition. Moreover, section 732(c)(4)(D) of
the Act provides that, if the petition does not establish support of
domestic producers or workers accounting for more than 50 percent of
the total production of the domestic like product, the Department
shall: (i) Poll the industry or rely on other information in order to
determine if there is support for the petition, as required by
subparagraph (A); or (ii) determine industry support using a
statistically valid sampling method to poll the industry.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers as a whole of a domestic like product. Thus, to determine
whether a petition has the requisite industry support, the statute
directs the Department to look to producers and workers who produce the
domestic like product. The International Trade Commission (``ITC''),
which is responsible for determining whether ``the domestic industry''
has been injured, must also determine what constitutes a domestic like
product in order to define the industry. Although both the Department
and the ITC must apply the same statutory definition regarding the
domestic like product (see section 771(10) of the Act), they do so for
different purposes and pursuant to a separate and distinct authority.
In addition, the Department's determination is subject to limitations
of time and information. Although this may result in different
definitions of the like product, such differences do not render the
decision of either agency contrary to law. See USEC, Inc. v. United
States, 132 F. Supp. 2d 1, 8 (CIT 2001), citing Algoma Steel Corp.,
Ltd. v. United States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 865 F.2d
240 (Fed. Cir. 1989), cert. denied 492 U.S. 919 (1989).
Section 771(10) of the Act defines the domestic like product as ``a
product which is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this title.'' Thus, the reference point from which the domestic
like product analysis begins is ``the article subject to an
investigation'' (i.e., the class or kind of merchandise to be
investigated, which normally will be the scope as defined in the
petition).
With regard to the domestic like product, the Petitioners do not
offer a definition of domestic like product distinct from the scope of
the investigation. Based on our analysis of the information submitted
on the record, we have determined that large power transformers
constitute a single domestic like product and we have analyzed industry
support in terms of that domestic like product. For a discussion of the
domestic like product analysis in this case, see Antidumping Duty
Investigation Initiation Checklist: Large Power Transformers from the
[[Page 49441]]
Republic of Korea (``Checklist''), at Attachment II, Analysis of
Industry Support for the Petition Covering Large Power Transformers
from Korea, on file in the Central Records Unit, Room 7046 of the main
Department of Commerce building.
In determining whether the Petitioners have standing under section
732(c)(4)(A) of the Act, we considered the industry support data
contained in the Petition with reference to the domestic like product
as defined in the ``Scope of Investigation'' section above. To
establish industry support, the Petitioners provided their production
of the domestic like product in 2010 and compared this to the estimated
total production of the domestic like product for the entire domestic
industry. See Volume I of the Petition at Exhibit 2 and Supplement to
the Petition, at Exhibit 9. To estimate total 2010 production of the
domestic like product, the Petitioners used their own data and industry
specific knowledge. See Volume I of the Petition, at Exhibit 2 and
Supplement to the Petition, at Exhibit 9; see also Checklist at
Attachment II. We have relied upon data the Petitioners provided for
purposes of measuring industry support. For further discussion, see
Checklist at Attachment II.
As noted above, on July 28, 2011, and July 29, 2011, we received
submissions on behalf of Hyosung and Hyundai, respectively, Korean
producers and exporters of the subject merchandise, questioning the
domestic like product definition and the industry support calculation
in the Petition. On August 1, 2011, the Petitioners filed a reply. For
further discussion of these submissions, see Checklist at Attachment
II.
Based on information provided in the Petition, supplemental
submissions, and other information obtained by the Department, we
determine that the domestic producers and workers have met the
statutory criteria for industry support under section 732(c)(4)(A) of
the Act because the domestic producers (or workers) who support the
Petition account for at least 25 percent of the total production of the
domestic like product and more than 50 percent of the production of the
domestic like product produced by that portion of the industry
expressing support for, or opposition to, the Petition. See Checklist
at Attachment II for further details on the Department's evaluation of
industry support for the Petition. Accordingly, the Department
determines that the Petition was filed on behalf of the domestic
industry within the meaning of section 732(b)(1) of the Act.
The Department finds that the Petitioners filed the Petition on
behalf of the domestic industry because they are interested parties as
defined in section 771(9)(C) of the Act and they have demonstrated
sufficient industry support with respect to the antidumping duty
investigation that they are requesting the Department initiate, in
accordance with section 732(c)(4)(A) of the Act.
Allegations and Evidence of Material Injury and Causation
The Petitioners allege that the U.S. industry producing the
domestic like product is being materially injured, or is threatened
with material injury, by reason of the imports of the subject
merchandise sold at less than normal value (``NV''). In addition, the
Petitioners allege that subject imports exceed the negligibility
threshold provided for under section 771(24)(A) of the Act.
The Petitioners contend that the industry's injured condition is
illustrated by reduced market share, reduced shipments, reduced
capacity utilization, underselling and price depression or suppression,
a decline in financial performance, lost sales and revenue, an increase
in import penetration, and threat of future injury. See Volume I of the
Petition, at 21-22, 24-33, and Exhibits 5, 7-9, and 10-11, and Second
Supplement to the Petition at 3 and at Attachment 1. We have assessed
the allegations and supporting evidence regarding material injury,
threat of material injury, and causation, and we have determined that
these allegations are properly supported by adequate evidence and meet
the statutory requirements for initiation. See Checklist at Attachment
III, Analysis of Allegations and Evidence of Material Injury and
Causation for the Petition Covering Large Power Transformers from the
Republic of Korea.
Allegations of Sales at Less Than Fair Value
The following is a description of the allegations of sales at less
than fair value upon which the Department based its decision to
initiate this investigation of imports of large power transformers from
Korea. The sources of data for the deductions and adjustments relating
to the U.S. price, and cost of production (``COP'') are also discussed
in the initiation checklist. See Checklist at 6-9.
Export Price
The Petitioners based U.S. export price (``EP'') on the prices of
four large power transformers manufactured in Korea and offered for
sale in the United States by two Korean producers/exporters. See
Checklist at 7; see also Volume II of the Petition at II-2 and Exhibit
AD-2 and Supplement to the Petition at 29, 30 and Exhibits 18 and 21.
Based on the stated sales and delivery terms, the Petitioners then
adjusted the U.S. prices to account for certain expenses associated
with exporting and delivering the product to the U.S. customers (i.e.,
U.S. inland rail freight, ocean freight and U.S. port fees). While the
Department will normally make additional downward adjustments to U.S.
price for U.S. brokerage and handling, foreign brokerage and handling,
direct selling and credit expenses, the Petitioners took a conservative
approach and did not include any such adjustments in their calculation
of U.S. price. See Checklist at 7; see also Volume II of the Petition
at page II-3, 5, 7, and 10 and Exhibits AD-2-3, and Supplement to the
Petition, at 29-31 and Exhibits 18-21.
Normal Value
According to the Petitioners, large power transformers are highly
complex and specialized products that are manufactured to a customer's
unique specifications. As such, identifying sales of identical or
similar large power transformers in the U.S. and Korean markets that
could be compared on a price-to-price basis is virtually impossible
because they differ substantially. Accordingly, the Petitioners based
normal value on constructed value (``CV'') in accordance with section
773(a)(4) of the Act.
Constructed value consists of the cost of manufacturing, selling,
general and administrative (``SG&A'') expenses, financial expenses and
profit. See section 773(a)(4) of the Act. The Petitioners calculated
constructed value based on the U.S. producer's bid proposal cost of
production model for the U.S. sales of large power transformers used in
the Petition. The U.S. producer develops the cost of production for
each transformer when bidding on large power transformers contracts in
the United States, and thus the costs were developed based on the
specific transformer for each U.S. sale identified in the Petition.
In calculating constructed value, the Petitioners adjusted the U.S.
producer's cost of manufacturing for known differences, where
available, between the U.S. and Korean markets. Specifically, the
Petitioners based the cost of labor on the Korean manufacturing wage
from the International Labor Statistics as published on the
Department's Web site.
[[Page 49442]]
See Supplement to the Petition at Exhibit 13. The Petitioners also
adjusted the U.S. producer's energy costs based on publicly available
Korean electricity and natural gas costs. See Supplement to the
Petition at Exhibits 14 and 15. The Petitioners did not adjust the U.S.
producer's cost of materials for the differences between the U.S. and
Korean markets. According to the Petitioners such an adjustment is not
practical because the materials used in the production of large power
transformers are specialized inputs, the costs of which are not
reflected accurately in published data. The Petitioners also state that
the U.S. material costs are comparable to the costs in the Korean
market because most of the inputs are commodity-type products that are
widely traded on world markets. To calculate the variable and fixed
overhead costs, the Petitioners relied upon the variable and fixed
overhead rates of the U.S. producer calculated as a percentage of the
labor costs adjusted for known differences between the U.S. and Korean
markets. See Supplement to the Petition at Exhibit 16.
To determine constructed value, the Petitioners added to the cost
of manufacturing amounts for SG&A expenses, financial expenses and
profit based on financial statements of the Korean producers that
manufactured the specific transformers sold to the United States
pursuant to each U.S. sale identified in the Petition. See Supplement
to the Petition at Exhibits 16 and 17; see also Checklist, at 8 and 9.
Fair Value Comparisons
Based on the data provided by Petitioners, there is reason to
believe that imports of large power transformers from Korea are being,
or are likely to be, sold in the United States at less than fair value.
Based on a comparison of EPs and CV calculated in accordance with
section 773(a)(4) of the Act, the estimated dumping margins for large
power transformers range from 43.01 percent to 60.81 percent. See
Checklist at 9.
Initiation of Antidumping Investigation
Based upon the examination of the Petition on large power
transformers from Korea, the Department finds that the Petition meets
the requirements of section 732 of the Act. Therefore, we are
initiating an antidumping duty investigation to determine whether
imports of large power transformers are being, or are likely to be,
sold in the United States at less than fair value. In accordance with
section 733(b)(1)(A) of the Act and 19 CFR 351.205(b)(1), unless
postponed, we will make our preliminary determination no later than 140
days after the date of this initiation.
Targeted Dumping Allegations
On December 10, 2008, the Department issued an interim final rule
for the purpose of withdrawing 19 CFR 351.414(f) and (g), the
regulatory provisions governing the targeted dumping analysis in
antidumping duty investigations, and the corresponding regulation
governing the deadline for targeted dumping allegations, 19 CFR
351.301(d)(5). See Withdrawal of the Regulatory Provisions Governing
Targeted Dumping in Antidumping Duty Investigations, 73 FR 74930
(December 10, 2008). The Department stated that ``{w{time} ithdrawal
will allow the Department to exercise the discretion intended by the
statute and, thereby, develop a practice that will allow interested
parties to pursue all statutory avenues of relief in this area.'' Id.
at 74931.
In order to accomplish this objective, if any interested party
wishes to make a targeted dumping allegation in this investigation
pursuant to section 777A(d)(1)(B) of the Act, such allegations are due
no later than 45 days before the scheduled date of the preliminary
determination.
Respondent Selection
Following standard practice in AD investigations involving market
economy countries, in the event the Department determines that the
number of known exporters or producers for this investigation is large,
the Department intends to select respondents based on U.S. Customs and
Border Protection (``CBP'') data for U.S. imports under the HTSUS
numbers 8504.23.0040 and 8504.23.0080 for the large power
transformers.\2\ We intend to release the CBP data under Administrative
Protective Order (``APO'') to all parties with access to information
protected by APO within five days of publication of this Federal
Register notice and make our decision regarding respondent selection
within 20 days of publication of this notice. The Department invites
comments regarding the CBP data and respondent selection within seven
days of publication of this Federal Register notice.
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\2\ The scope also covers HTSUS number 8504.90.9540 of all
transformer parts. However, we will not use this number in our
respondent selection analysis as it is a basket category and would
not allow for a meaningful analysis.
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Interested parties must submit applications for disclosure under
APO in accordance with 19 CFR 351.305. Instructions for filing such
applications may be found on the Department's Web site at http://ia.ita.doc.gov/apo.
Distribution of Copy of the Petition
In accordance with section 732(b)(3)(A) of the Act and 19 CFR
351.202(f), a copy of the public version of the Petition has been
provided to the representatives of the Government of Korea. The
Department considers the service of the public version of the Petition
to the foreign producers/exporters satisfied by the delivery of the
public version of the Petition to the Government of Korea, consistent
with 19 CFR 351.203(c)(2).
ITC Notification
We have notified the ITC of our initiation, as required by section
732(d) of the Act.
Preliminary Determination by the ITC
The ITC will preliminarily determine, no later than August 29,
2011, whether there is a reasonable indication that imports of large
power transformers from Korea are materially injuring, or threatening
material injury to a U.S. industry. A negative ITC determination will
result in the investigation being terminated; otherwise, this
investigation will proceed according to statutory and regulatory time
limits.
Notification to Interested Parties
Interested parties must submit applications for disclosure under
APO in accordance with 19 CFR 351.305. On January 22, 2008, the
Department published Antidumping and Countervailing Duty Proceedings:
Documents Submission Procedures; APO Procedures, 73 FR 3634 (January
22, 2008). Parties wishing to participate in this investigation should
ensure that they meet the requirements of these procedures (e.g., the
filing of letters of appearance as discussed at 19 CFR 351.103(d)).
Any party submitting factual information in an AD/CVD proceeding
must certify to the accuracy and completeness of that information. See
section 782(b) of the Act. Parties are hereby reminded that revised
certification requirements are in effect for company/government
officials as well as their representatives in all segments of any AD/
CVD proceedings initiated on or after March 14, 2011. See Certification
of Factual Information to Import Administration During Antidumping and
Countervailing Duty Proceedings: Interim Final Rule, 76 FR 7491
(February 10, 2011) (``Interim Final Rule'') amending 19 CFR
351.303(g)(1) and (2). The formats for the revised certifications are
provided at the end of
[[Page 49443]]
the Interim Final Rule. The Department intends to reject factual
submissions in any proceeding segments initiated on or after March 14,
2011, if the submitting party does not comply with the revised
certification requirements.
This notice is issued and published pursuant to section 777(i) of
the Act.
Dated: August 3, 2011.
Ronald K. Lorentzen
Deputy Assistant Secretary for Import Administration.
Appendix I
Scope of Investigation
The scope of this investigation covers large liquid dielectric
power transformers (LPTs) having a top power handling capacity
greater than or equal to 60,000 kilovolt amperes (60 megavolt
amperes), whether assembled or unassembled, complete or incomplete.
Incomplete LPTs are subassemblies consisting of the active part
and any other parts attached to, imported with or invoiced with the
active parts of LPTs. The ``active part'' of the transformer
consists of one or more of the following when attached to or
otherwise assembled with one another: the steel core or shell, the
windings, electrical insulation between the windings, the mechanical
frame for an LPT.
The product definition encompasses all such LPTs regardless of
name designation, including but not limited to step-up transformers,
step-down transformers, autotransformers, interconnection
transformers, voltage regulator transformers, rectifier
transformers, and power rectifier transformers.
The LPTs subject to this investigation are currently
classifiable under subheadings 8504.23.0040, 8504.23.0080 and
8504.90.9540 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheadings are provided for convenience
and customs purposes, the written description of the scope of this
investigation is dispositive.
[FR Doc. 2011-20336 Filed 8-9-11; 8:45 am]
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