[Federal Register Volume 81, Number 54 (Monday, March 21, 2016)]
[Notices]
[Pages 15039-15045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06299]
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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 Inquiry
AGENCY: Enforcement & Compliance, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from the Aluminum Extrusions Fair
Trade Committee (Petitioner), the Department of Commerce (the
Department) is initiating an anti-circumvention inquiry pursuant to
sections 781(c) and (d) of the Tariff Act of 1930, as amended, (the
Act) to determine whether extruded aluminum products that meet the
chemical specifications for 5050-grade aluminum alloy, which are heat-
treated, and exported by China Zhongwang Holdings Ltd. and its
affiliates (collectively, Zhongwang) are circumventing the antidumping
duty (AD) and countervailing duty (CVD) orders on aluminum extrusions
from the People's Republic of China (PRC).\1\
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\1\ 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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DATE: Effective March 21, 2016.
FOR FURTHER INFORMATION CONTACT: Scott Hoefke or Robert James, AD/CVD
Operations, Office VI, Enforcement &
[[Page 15040]]
Compliance, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue NW., Washington, DC
20230; telephone: (202) 482-4947 or (202) 482-0649, respectively.
SUPPLEMENTARY INFORMATION:
Background
In October 2015, Petitioner filed a joint Scope Clarification and
Anti-Circumvention Inquiry Request for certain merchandise from
Zhongwang. At the request of the Department, on December 30, 2015,
Petitioner refiled its request that the Department conduct an anti-
circumvention inquiry pursuant to sections 781(c) and (d) of the Act
with respect to extruded aluminum products that meet the chemical
specifications for 5050-grade aluminum alloy, which are heat-treated,
and exported by Zhongwang.\2\ In its request, Petitioner contends that
Zhongwang's 5050-grade aluminum alloy extrusion products are
circumventing the scope of the Orders, and requests that the Department
address this alleged circumvention by initiating both a ``minor
alterations'' anti-circumvention inquiry pursuant to section 781(c) of
the Act, as well as a ``later-developed merchandise'' anti-
circumvention inquiry pursuant to section 781(d) of the Act.\3\ With
this refiling, we accepted the Petitioner's submission and set the
deadline for action as February 22, 2016. On February 22, 2016, the
Department extended the deadline to initiate 21 days to March 14, 2016.
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\2\ See Letter to the Secretary, Re ``Aluminum Extrusions from
the People's Republic of China: Resubmission of Circumvention
Inquiry Request Pursuant to the Department's Request,'' dated
December 30, 2015 (Petitioner's Resubmission of Circumvention
Inquiry).
\3\ Id. at 39-66.
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The scope of the Orders expressly includes extruded products made
of alloy ``with an Aluminum Association series designation commencing
with the number 6'' where ``magnesium account{s{time} for at least 0.1
percent but not more than 2.0 percent of total materials by weight, and
silicon account{s{time} for at least 0.1 percent but not more than 3.0
percent of total materials by weight.'' \4\ In addition, expressly
excluded from the Orders are extruded products made of alloy ``with an
{Aluminum Association{time} series designation commencing with the
number 5 and containing in excess of 1.0 percent magnesium by weight.''
\5\ Petitioner argues that the scope of the Orders ``creates an overlap
between the chemical composition standards {in that{time} there is a
narrow window in which a 5xxx-series alloy may and does exist that is
comprised of more than one percent but less than two percent magnesium
by weight{,{time} '' and that ``{i{time} n order to use 5xxx-series
alloy (i.e., 5050 alloy) in an extrusion application, . . . the metal
would have to be heat-treated to achieve the mechanical properties that
make 6xxx-series alloy so attractive for extrusion
applications{.{time} '' \6\
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\4\ See Orders, 76 FR 30653.
\5\ Id.
\6\ Id.
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Thus, Petitioner maintains that the aluminum alloy extrusion
products at issue are manipulated in two ways to evade the scope of the
Orders: First, the billet producer must create a precise ratio of
silicon to magnesium to result in an alloy that satisfies the chemical
composition limits of a 5050 alloy, but behaves and is extrudable like
an in-scope 6xxx-series alloy.\7\ Second, once the alloy is subject to
a heat-treatment tempering process, this allows the extruded alloy to
achieve the desired tensile strength to mimic the functionality of in-
scope 6xxx-series alloy.\8\ Petitioner argues that The Aluminum
Association, the certifying body for the domestic aluminum industry,
does not currently recognize heat-treatment as a tempering process for
5050-grade aluminum alloy, which is historically tempered through
strain-hardening and/or cold-working processes.\9\ Rather, The Aluminum
Association recognizes heat-treatment as a tempering process for 6xxx-
series alloy.\10\ In short, Petitioner alleges that these aluminum
alloy products are subject to chemical and mechanical manipulation,
i.e., tempering, which results in circumvention of the Orders.
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\7\ Id. at 42-44.
\8\ Id. at 42-45
\9\ Id. at 46-47.
\10\ Id. at Exhibit 21.
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Petitioner provided evidence that was reasonably available of
Zhongwang's alleged circumvention of the Orders through its shipment of
such 5050-grade aluminum alloy extrusion products.\11\ Petitioner
provided Zhongwang's financial statements.\12\ Petitioner points out
that Zhongwang has yet to be selected for an administrative review for
the Orders, because there were no reported entries of subject
merchandise.\13\ Petitioner also points out that after the imposition
of the Orders, the volume of Zhongwang's U.S. exports decreased, but
subsequently rebounded since the ``sudden'' appearance and timing of
its importation of such 5050-grade aluminum alloy products.\14\
Petitioner argues that these facts taken together indicate that
Zhongwang is engaging in manipulation to avoid duties.
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\11\ Id. at 41 and 62.
\12\ Id. at 50 and Exhibit 3.
\13\ Id. at 50.
\14\ Id. at 50.
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Scope of 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
[[Page 15041]]
are mill finished (i.e., without any coating or further finishing),
brushed, buffed, polished, anodized (including bright-dip 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 investigation merely
by including fasteners such as 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 these 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): 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, 8302.42.30.1 0, 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 these orders is
dispositive.
[[Page 15042]]
Merchandise Subject to the Anti-Circumvention Inquiry
This anti-circumvention inquiry covers extruded aluminum products
that meet the chemical specifications for 5050-grade aluminum alloy,
which are heat-treated, and exported by Zhongwang.\15\ The Department
intends to consider whether the inquiry should apply to all imports of
extruded aluminum products that meet the chemical specifications for
5050-grade aluminum alloy and are heat-treated, regardless of producer,
exporter, or importer, from the PRC.
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\15\ Petitioner provided names of known Zhongwang's Chinese and
U.S. affiliates. Through the course of inquiry, we intend to examine
in addition to Zhongwang the following affiliated companies: Dalian
Liwan Trade Co., Ltd.; Tianjin Boruxin Trading Co., Ltd.; and Dragon
Luxe Limited; Pencheng Aluminum Enterprise Inc. USA; Global Aluminum
(USA) Inc.; Signature Aluminum Canada Inc.; Aluminum Shapes, LLC;
Perfectus Aluminum Inc.; and Perfectus Aluminum Acquisitions LLC. We
also intend to examine whether any Zhongwang's affiliates are the
producers of the merchandise at issue.
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Request for a Minor Alterations Anti-Circumvention Inquiry
Section 781(c)(1) of the Act provides that the Department 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 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} ''
The Department notes that, while 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 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, the Department
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.'' \16\ The Department will examine these factors in evaluating
an allegation of minor alteration under section 781(c) of the Act and
19 CFR 351.225(i). Each case is highly dependent on the facts on the
record, and must be analyzed in light of those specific facts. Thus,
although not specified in the statute, the Department has also included
additional factors in its analysis, such as the circumstances under
which the products at issue entered the United States and the timing
and quantity of said entries during the circumvention review
period.\17\
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\16\ 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.'').
\17\ 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, e.g., Small Diameter Graphite Electrodes From the
People's Republic of China: Initiation of Anticircumvention Inquiry,
77 FR 37873 (June 25, 2012).
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As discussed above, Petitioner argues that the manipulation in
chemical composition and tempering to create an aluminum extrusions
product which technically meets the scope exclusion for 5xxx-series but
behaves like in-scope 6xxx-series subject merchandise results in
circumvention of the Orders as a minor alteration of in-scope
merchandise, pursuant to section 781(c) of the Act.\18\ Specifically,
Petitioner argues that the products at issue, given their heat-
treatment, would otherwise be subject 6xxx-series alloy but for the
minor increase in magnesium levels, which allows for a superficial
designation as a 5050 alloy.\19\ According to Petitioner, this would
require a shift in chemistry of a 6063 alloy at the top end of its
magnesium content range (i.e., 0.45 to 0.90 percent by weight) by
increasing the magnesium content level by a mere 0.2 percent by weight
to achieve a magnesium content of 1.1 percent by weight, which is
within the low end of the range of the magnesium content range for 5050
alloy.\20\ Petitioner states this increase at today's magnesium market
price would result in a 4.63 percent increase to the 5050 billet's
overall per pound alloying cost, which in turn represents a negligible
0.52 percent increase to the overall per-pound billet production
cost.\21\ Petitioner states that in Cut-to-Length Plate from China,\22\
the Department found similar minor changes to alloying elements are not
sufficient to remove what would otherwise be subject merchandise from
the scope.\23\
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\18\ See Petitioner's Resubmission of Circumvention Inquiry at
52-53.
\19\ Id.
\20\ Id. at 52.
\21\ Id.
\22\ See Affirmative Final Determination of Circumvention of the
Antidumping Duty Order on Certain Cut-to-Length Carbon Steel Plate
from the People's Republic of China, 76 FR 50996 (August 17, 2011)
(Cut-to-Length Plate from China).
\23\ See Petitioner's Resubmission of Circumvention Inquiry at
52.
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Finally, once a precise ratio of silicon to magnesium is achieved,
which falls within the chemical composition limits for a 5050 alloy,
but is virtually indistinguishable from the chemical composition limits
for a 6xxx-series alloy, the product is ready to be heat-treated--the
same tempering process used for 6xxx-series alloy, and which is not
recognized by The Aluminum Association as a tempering process for 5050
alloy--which results in a product similar to a 6xxx-series aluminum
extrusion product, save for the minor increase in magnesium.
In its request for a minor alterations anti-circumvention inquiry,
Petitioner presented the following evidence with respect to each of the
aforementioned criteria.
A. Overall Physical Characteristics
Petitioner contends that companies such as Zhongwang have created
and shipped extruded aluminum products meeting the chemical
specifications for 5050-grade aluminum alloy and which are heat-
treated, which results in aluminum extrusion products whose chemical
and mechanical properties have been manipulated to be similar to those
of in-scope 6xxx-series alloy products. Petitioner has provided
information relating to an importer that has admitted to sourcing 5050-
grade aluminum alloy products for use in products and applications
which have traditionally used 6xxx-series alloys, as well as
information relating to a domestic producer that has been asked to
provide price quotes for the manufacture of products using 5050 alloy
which have been made previously with 6xxx-series alloy. Petitioner also
obtained and tested specimens labeled as 5050-grade aluminum alloy
products, which demonstrated that the chemical composition overlapped
with 6xxx-series standards, and had been heat-treated. While Petitioner
did not test specimens of Zhongwang's products, information reasonably
available to Petitioner indicates that the overall physical
characteristics of Zhongwang's 5050-grade aluminum alloy extrusion
products would be no different from the tested products, and therefore
should be found similar to products made of series 6xxx aluminum
alloys.\24\
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\24\ See Petitioner's Resubmission of Circumvention Inquiry at
page 56-58.
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[[Page 15043]]
B. Expectations of the Ultimate Users and Use of the Merchandise
Petitioner alleges that the expectations of the purchasers and
ultimate use of Zhongwang's 5050-grade aluminum alloy extrusion
products are identical to those of products produced from 6xxx-series
alloy.\25\ Petitioner states that the specific alloy out of which the
aluminum extrusion is produced has no apparent bearing or impact on the
ultimate use.\26\ Petitioner provided evidence suggesting that the type
of alloy had no bearing on customers' selection of aluminum extrusion
products, and that, in some cases, 5050-grade aluminum alloy products
were used specifically to avoid antidumping and countervailing
duties.\27\ Petitioner also provided information indicating that
domestic producers are competing with Chinese-sourced 5050-grade
aluminum alloy products for the same shower enclosure components
designed to be manufactured in 6463 alloy.\28\ Petitioner further
contends that, although it does not have access to Zhongwang's specific
5050-grade aluminum alloy extrusion products, evidence confirms that
Zhongwang began importing a large volume of 5050-grade aluminum alloy
products after the Orders came into place.\29\ Further, Petitioner
contends that there is no indication that Zhongwang's products are any
different from the 5050-grade aluminum alloy products which have been
competing directly with the U.S. industry.\30\
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\25\ Id. at 58-60.
\26\ Id.
\27\ Id. at 58-60, Exhibit 30, Exhibit 28, and Exhibit 22.
\28\ Id. at 59 and Exhibit 28.
\29\ Id. at 65.
\30\ Id. at 59.
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C. Channels of Marketing
Petitioner maintains that there is no difference between the
channels of marketing for aluminum extrusions made from in-scope alloy,
i.e., 6xxx-series aluminum extrusions, and those of 5050-grade aluminum
alloy extrusion products. For instance, Petitioner provided evidence
showing that such 5050-grade aluminum alloy extruded products are
marketed by Chinese producers to purchasers in the same manner that
6xxx-series are marketed, and such marketing demonstrates to customers
and end-users that these products are interchangeable with 6xxx-series
products.\31\ Moreover, Petitioner states that Zhongwang's Web site
advertises a collection of products in a single location on its Web
site without designation or differentiation between products crafted or
capable of being crafted of different alloys. This demonstrates,
Petitioner contends, that Zhongwang's 5050-grade aluminum alloy
extrusion products are not marketed any differently from merchandise
produced from in-scope 6xxx-series alloy.\32\
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\31\ Id. at 60.
\32\ Id. at 60-61 and Exhibit 19.
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D. Cost of Modification
Petitioner indicates that the cost of the minor alterations to
shift the chemistry of a high-magnesium series 6xxx alloy to one that
one could be designated as 5050 alloy is minimal at best.\33\ As
discussed above, Petitioner specifically mentions that one would need
to increase a 6063 alloy's maximized magnesium content level by 0.2
percent by weight.\34\ Petitioner states that this increase at
magnesium's market price at the time of filing would result in a 4.63
percent increase to the 5050 billet's overall per pound alloying cost
which, Petitioner avers, is insignificant given the Orders antidumping
and countervailing duties are over 180 percent.\35\
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\33\ Id. at 63.
\34\ Id.
\35\ Id.
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E. Circumstance Under Which the Subject Products Entered the United
States
Petitioner argues that at the completion of the original
investigations, the PRC-wide antidumping rate was 33.28 percent, and
the PRC-wide countervailing duty rate was 374.15 percent.\36\
Petitioner asserts that these considerable margins have given Zhongwang
tremendous financial incentive to circumvent the Orders so as not to
incur the costs associated with the duties levied on the entries of
subject merchandise.\37\
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\36\ Id. at 63-64.
\37\ Id. at 64.
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F. Timing of Entries
Petitioner asserts that the timing of the entries of Zhongwang's
5050-grade aluminum alloy products show Zhongwang's attempt to
circumvent the Orders.\38\ Petitioner supported this assertion by
providing import data showing Zhongwang's shipments of 5050-grade
aluminum alloy products began after the imposition of the Orders in
2011.\39\
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\38\ Id.
\39\ Id. at 65.
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Request for a Later-Developed Merchandise Anti-Circumvention Inquiry
Section 781(d)(1) of the Act provides that the Department may
initiate an anti-circumvention inquiry to determine whether merchandise
developed after an AD or CVD investigation is initiated (``later-
developed merchandise'') is within the scope of the order(s). In
conducting later-developed merchandise anti-circumvention inquiries
under section 781(d)(1) of the Act, the Department will evaluate
whether the general physical characteristics of the merchandise under
consideration are the same as subject merchandise covered by the order,
whether the expectations of the ultimate purchasers of the merchandise
under consideration are no different than the expectations of the
ultimate purchases of subject merchandise, whether the ultimate use of
the subject merchandise and the merchandise under consideration are the
same, whether the channels of trade of both products are the same,
whether there are any differences in the advertisement and display of
both products,\40\ and if the merchandise under consideration was
commercially available at the time of the investigation, i.e., the
product was present in the commercial market or the product was tested
and ready for commercial production.\41\
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\40\ See section 781(d)(1) of the Act.
\41\ See Later-Developed Merchandise Anticircumvention Inquiry
of the Antidumping Duty Order on Petroleum Wax Candles from the
People's Republic of China: Affirmative Preliminary Determination of
Circumvention of the Antidumping Duty Order, 71 FR 32033, 32035
(June 2, 2006) unchanged in Later-Developed Merchandise
Anticircumvention Inquiry of the Antidumping Duty Order on Petroleum
Wax Candles from the People's Republic of China: Affirmative Final
Determination of Circumvention of the Antidumping Duty Order, 71 FR
59075 (October 6, 2006).
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As discussed above, Petitioner argues that the manipulation in
chemical composition and tempering to create an aluminum extrusions
product which technically meets the scope exclusion for 5xxx-series but
behaves like in-scope 6xxx-series subject merchandise results in
circumvention of the Orders as later-developed merchandise, pursuant to
section 781(d) of the Act. Specifically, Petitioner argues that the
products constitute later-developed merchandise because: (1) While the
5050-grade alloy designation existed at the time of the investigation,
The Aluminum Association did not, and still does not, recognize heat-
treatment as a tempering process for 5050-grade aluminum alloy; (2)
documents from the investigation indicate that soft alloys, i.e., 1xxx-
,
[[Page 15044]]
3xxx-, and 6xxx-series alloys, were used in a wide variety of aluminum
extrusion products, while hard alloys--such as 5xxx-series--were
extremely limited and highly specific, appearing primarily in marine
and aerospace applications; and (3) at the time of the filing of the
petition, The Aluminum Association recognized only four 5xxx-series
alloys employed in extrusion applications--which did not include 5050-
grade aluminum alloy.\42\
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\42\ See Petitioner's Resubmission of Circumvention Inquiry at
54-55.
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As described in the ``Request for a Minor Alterations Anti-
Circumvention Inquiry'' section above, Petitioner has provided evidence
and argument pertaining to the general physical characteristics of the
merchandise under consideration as being the same as subject
merchandise covered by the order, whether the expectations of the
ultimate purchasers of the merchandise under consideration are no
different than the expectations of the ultimate purchases of subject
merchandise, and whether the ultimate use of the subject merchandise
and the merchandise under consideration are the same. In the context of
its later-developed merchandise request, Petitioner has further
provided the following evidence pertaining to the remaining
aforementioned criteria.
A. Advertisement, Display, and Channel of Trade
Petitioner maintains that the advertisement, display, and channels
of trade of manipulated 5050-grade aluminum alloy extruded products are
identical to those of merchandise produced from in-scope alloys, i.e.,
6xxx-series.\43\ With respect to advertisement and display, Petitioner
provided evidence showing that such 5050-grade aluminum alloy extruded
products are advertised by Chinese producers to purchasers in the same
manner that 6xxx-series are advertised, which demonstrates to customers
and end-users that these products are interchangeable with 6xxx-series
products.\44\ Moreover, Petitioner states that Zhongwang's Web site
advertises and displays a collection of products in a single location
on its Web site without designation or differentiation between products
crafted or capable of being crafted of different alloys, thus
demonstrating that Zhongwang's 5050-grade aluminum alloy extrusion
products are not advertised or displayed any differently from
merchandise produced from in-scope 6xxx-series alloy.\45\
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\43\ Id. at 60-62.
\44\ Id. at 60.
\45\ Id. at 60-61 and Exhibit 19.
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With respect to channels of trade, Petitioner provided information
relating to a domestic producer that has been asked to provide price
quotes for the manufacture of products using 5050-grade alloy which
have been made previously with 6xxx-series alloy.\46\ In addition,
Petitioner provided evidence demonstrating a company's loss of business
as a result of the replacement of 6xxx-series alloy in products with
Chinese 5050-grade alloy.\47\ Petitioner argues that these 5050-grade
aluminum alloy extrusion products, which caused lost U.S. business, are
likely being sold in the identical channels of trade as the original
series 6xxx alloy versions.\48\
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\46\ Id. at 61, Exhibit 22.
\47\ Id. at 61, Exhibit 30.
\48\ Id. at 61.
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With respect to Zhongwang, Petitioner notes that the importer of
record for nearly all of Zhongwang's shipments of aluminum product to
the United States from 2009 to date was the same, regardless of whether
those shipments were 6xxx-series profiles prior to the imposition of
the orders or 5050-grade products after the imposition of the
orders.\49\ According to Petitioner, there is no evidence reasonably
available which indicates that the channels of trade in which
Zhongwang's 5050-grade aluminum alloy extrusion products are sold are
different from those in which similar 6xxx-series products are
sold.\50\ However, the evidence that is reasonably available, i.e.,
Zhongwang's Web site, shows that Zhongwang advertises a collection of
products manufactured exclusively from series 6xxx-series alloy and one
product manufactured from 7xxx-series alloy, but makes no mention of
series 5xxx products.\51\ Petitioner contends that given Zhongwang's
importation levels of 5050-grade aluminum alloy extrusion products into
the United States it would be advertising these products separately or
at the very least mentioned on its Web site.\52\ Petitioner argues that
the silence with which Zhongwang's Web site treats 5xxx-series products
which it is manufacturing and shipping to the United States
demonstrates that these products are interchangeable with 6xxx-series
alloy products and intended to circumvent the orders.\53\
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\49\ Id. at 61, Exhibit 8.
\50\ Id. at 61-62.
\51\ Id. at 62 and Exhibit 19.
\52\ Id. at 62.
\53\ Id.
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B. Commercial Availability
Petitioner states that, at the time of the investigation, series
5050 alloy existed but was associated with rolling applications, rather
than extrusions.\54\ Furthermore, Petitioner states that heat-treated
5050 alloy extrusions are not recognized by The Aluminum Association
for the purposes of aluminum extrusions.\55\ Additionally, Petitioner
adds that The Aluminum Association did not recognize heat-treating
series 5050 alloys at the time of the Petition, and still does not
recognize doing so to the present day.\56\ Thus, Petitioner argues that
extruded aluminum products meeting the chemical specifications for
5050-grade aluminum alloy and which are heat-treated were not
commercially available at the time of the investigations; they were
developed and made available after the publication of the Orders.
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\54\ Id. at 54.
\55\ See Petitioner's Resubmission of Circumvention Inquiry at
54.
\56\ Id. at 54, Exhibit 21, and Exhibit 27.
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Conclusion
Based on the information provided by Petitioner, the Department
finds there is sufficient basis to initiate an anti-circumvention
inquiry, pursuant to sections 781(c) and 781(d) of the Act. The
Department will determine whether the merchandise subject to the
inquiry (identified in the ``Merchandise Subject to the Anti-
Circumvention Inquiry'' section above) involves either a minor
alteration to subject merchandise in such minor respects that it should
be subject to the Orders, and/or represents a later-developed product
that can be considered subject to the Orders.
The Department will not order the suspension of liquidation of
entries of any additional merchandise at this time. However, in
accordance with 19 CFR 351.225(l)(2), if the Department issues a
preliminary affirmative determination, we will then instruct U.S.
Customs and Border Protection to suspend liquidation and require a cash
deposit of estimated duties, at the applicable rate, for each
unliquidated entry of the merchandise at issue, entered or withdrawn
from warehouse for consumption on or after the date of initiation of
the inquiry.
In the event we issue a preliminary affirmative determination of
circumvention pursuant to section 781(d) of the act (later-developed
merchandise), we intend to notify the International Trade Commission,
in accordance with section 781(e)(1) of the Act and 19 CFR
351.225(f)(7)(i)(C), if applicable.
[[Page 15045]]
The Department will, following consultation with interested
parties, establish a schedule for questionnaires and comments on the
issues. The Department intends to issue its final determination within
300 days of this initiation, in accordance with section 781(f) of the
Act.
This notice is published in accordance with sections 781(c) and
781(d) of the Act and 19 CFR 351.225(i) and (j).
Dated: March 14, 2016.
Paul Piquado,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2016-06299 Filed 3-18-16; 8:45 am]
BILLING CODE 3510-DS-P