[Federal Register Volume 59, Number 164 (Thursday, August 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20931]
[[Page Unknown]]
[Federal Register: August 25, 1994]
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INTERNATIONAL TRADE COMMISSION
Iron Construction Castings From Canada; Dismissal of Request for
Institution of A Section 751(b) Review Investigation
AGENCY: International Trade Commission.
ACTION: Dismissal of a request to institute a section 751(b) review
investigation concerning the Commission's affirmative determination in
investigation No. 731-TA-263 (Final), Iron Construction Castings from
Canada.
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SUMMARY: On August 8, 1994, the Commission determined, pursuant to
section 751(b) of the Tariff Act of 1930 (the ``Act'')(19 U.S.C.
1675(b)) and Commission rule 207.45 (19 CFR 207.45), that the subject
request does not show changed circumstances sufficient to warrant
institution of an investigation to review the Commission's affirmative
determination in investigation No. 731-TA-263 (Final), regarding iron
construction castings from Canada. Iron construction castings are
provided for in subheading 7325.10.00 of the Harmonized Tariff Schedule
of the United States.
FOR FURTHER INFORMATION CONTACT: Vera Libeau (202-205-3176), Office of
Investigations, U.S. International Trade Commission, 500 E Street SW,
Washington, DC 20436. Hearing-impaired persons can obtain information
on this matter by contacting the Commission's TDD terminal on 202-205-
1810. Persons with mobility impairments who will need special
assistance in gaining access to the Commission should contact the
Office of the Secretary at 202-205-2000. Information can also be
obtained by calling the Office of Investigations' remote bulletin board
system for personal computers at 202-205-1895 (N,8,1).
BACKGROUND INFORMATION: On March 5, 1986, the Commission issued an
affirmative injury determination with respect to investigation No. 731-
TA-263 (Final), Iron Construction Castings from Canada, 51 F.R. 7646
(March 5, 1986), following the U.S. Department of Commerce's final
determination that imports of the subject merchandise were being sold
at less than fair value (LTFV). 51 FR 2412 (Jan. 16, 1986). The
Commission's determination was based on a cumulative assessment of
subject imports from Canada with subject imports from Brazil, the
People's Republic of China (China), and India, which Commerce also
determined were being sold at LTFV. 51 FR 9477 (March 19, 1986).
Commerce issued antidumping orders covering subject imports from all
four countries.
On May 20, 1994, the Commission received a petition, filed pursuant
to section 751(b) of the Act, to review its final injury determination
with respect to Canada in light of changed circumstances. The petition
was filed by counsel on behalf of Associated Foundry, Ltd.; Laperle
Foundry Division of Fonderies Bibby-Ste-Croix; Fonderies Bibby-Ste-
Croix, Inc.; and Titan Foundry, Ltd.--producers of the subject products
in Canada. The alleged changed circumstances include: (1) an exclusion
of foreign producers from an estimated 60-75 percent of the U.S. market
due to a 1991 extension of Buy America provisions to iron products used
in highway construction; (2) an exclusion of foreign producers from an
additional 2 percent of the market due to a 1992 extension of Buy
America provisions to iron products used in airport and airway
construction; and (3) an effective exclusion of foreign producers from
an estimated 12 percent of the market for heavy iron castings due to
Customs' 1986 enforcement of a 1984 statutory requirement governing the
marking of manhole covers with regard to country of origin.
Pursuant to section 207.45(b)(2) of the Commission's Rules of
Practice and Procedure (19 CFR 207.45(b)(2)), the Commission published
a notice in the Federal Register requesting comments as to whether the
alleged changed circumstances warranted the institution of a review
investigation. 59 FR 29619 (June 8, 1994). Because the alleged changed
circumstances related to the U.S. market and were not unique to
Canadian imports, the Commission also sought comment on whether it
should self-initiate a review regarding imports of iron construction
castings from Brazil, India, and China. Comments were received both in
opposition to and in favor of the petition. Summarizing the impact of
the alleged changed circumstances in a supplemental comment to their
petition, the petitioners estimated that only 18-38 percent of the
total U.S. castings market is open to Canadian (and presumably other)
import competition. Petitioners' Comments at 8. The petitioners
maintain that with such a substantial portion of the United States
market ``closed'' to Canadian producers, domestic producers are
effectively protected from injury and would continue to be protected if
the order for Canada were to be revoked. Id. at 9-10. Counsel on behalf
of the Castings Panel of the Engineering Export Promotion Council of
India and the exporters of castings from India urge the Commission to
review not only its determination with respect to Canada but also its
determination with respect to India; however, they offer no arguments
for changed circumstances other than those of the petitioners. Indian
Parties' Comments at 2-3.
In opposition to the petition, comments were filed by counsel on
behalf of the U.S. producers of the subject merchandise. The U.S.
producers take issue with the petitioners regarding (1) the size of the
market affected by these two Buy America provisions, claiming that
there is no evidence of widespread implementation of these provisions
at either the State or local level and that the share of the market so
affected is on the order of 17 percent, rather than 62-82 percent; and
(2) the enforcement of country-of-origin marking requirements, claiming
that these were being fully enforced at least one year prior to 1986,
the year Commerce's antidumping-duty order went into effect. U.S.
Parties' Comments at 9-18. The domestic producers argue that section
751(b) and applicable Commission precedent preclude a review because
the changed circumstances alleged by the Canadian producers are
premised on inaccurate or incomplete factual assertions, exaggerated
estimates of the effect of Buy America restrictions, and speculation
regarding future action by states and municipalities. Id. at 18-21.
After consideration of the request and the comments submitted in
response to the Commission's Federal Register notice, the Commission
determines that the information of record does not show changed
circumstances sufficient to warrant institution of an investigation to
review the Commission's affirmative determination in Iron Construction
Castings from Canada, Inv. No. 731-TA-263 (Final), USITC Pub. 1811
(Feb. 1986) or its determination in Iron Construction Castings from
Brazil, India, and the People's Republic of China, Inv. Nos. 701-TA-
249; 731-TA-262, 264-265 (Final), USITC Pub. 1838 (April 1986).
DECISION OF THE COMMISSION: Section 751(b)(1) of the Act grants to the
Commission the authority to conduct an investigation to determine
whether to revoke or modify an outstanding antidumping order. The
Commission is required to conduct a review of a prior affirmative
injury determination whenever it receives a request for such a review
that shows ``changed circumstances sufficient to warrant a review.''
Congress, however, set forth ``very strict controls'' on the exercise
of that authority, demonstrating that it did not want prior Commission
injury determinations ``to remain in a state of flux.'' Royal Business
Machines, Inc. v. United States, 507 F. Supp. 1007, 1014 n. 18 (Ct.
Int'l Trade 1980), aff'd, 669 F.2d 692 (CCPA 1982). The statutory
requirements for instituting Section 751 reviews clearly demonstrate
the intent of Congress that the ``underlying finding of injury . . . is
entitled to deference and should not be disturbed lightly.'' Avesta AB
v. United States, 689 F. Supp. 1173, 1180 (Ct. Int'l Trade 1988)
(Avesta I); see also Matsushita Elec. Indus. Co., Ltd. v. United
States, 750 F.2d 927, 932 (Fed. Cir. 1984). In order for a review
investigation to be instituted, the information available to the
Commission, after notice and comment from all interested parties, must
be sufficient to persuade the Commission: (1) That there have been
significant changed circumstances from those in existence at the time
of the original investigation, (2) that those changed circumstances are
not the natural and direct result of the imposition of the antidumping
or countervailing duty order, and (3) that the changed circumstances
indicate that the domestic industry would not be materially injured
should the order be revoked thereby warranting a full investigation.
See A. Hirsh, Inc. v. United States, 737 F. Supp. 1186 (CIT 1990)(Hirsh
II); Avesta AB v. United States, 724 F. Supp. 974 (CIT 1989), aff'd 914
F.2d 232 (Fed. Cir. 1990), cert. denied, 111 S. Ct. 1308 (1991)(Avesta
II). Once instituted, the petitioner must persuade the Commission,
after a full investigation and hearing, that the domestic industry
would not be injured or threatened with injury if the order were
revoked. See Citizen Watch Co. v. United States, 733 F. Supp. 383 (CIT
1990).
The CIT has observed that ``Congress carefully limited the
availability of Sec. 1675(b) investigations'' and that ``the party
seeking review bears the initial burden of showing the existence of
changed circumstances sufficient to warrant a review.'' Avesta I, 689
F. Supp. at 1180, 1181; Avesta II, 724 F. Supp. at 978; A. Hirsh, Inc.
v. United States, 729 F. Supp. 1360 (Ct. Int'l Trade 1990) (Hirsh I),
aff'd following remand, 737 F. Supp. 1186 (Ct. Int'l Trade 1990) (Hirsh
II). This burden is placed upon the party seeking review because the
review investigation does not begin with a clean slate as though it
were an original investigation. Matsushita, 750 F.2d at 932. Although a
petition for institution of a review need not ``prove'' that changed
circumstances exist such that injury would not recur upon revocation,
it must nevertheless contain credible evidence which, if uncontroverted
by other evidence, would persuade the Commission that a full review is
warranted. Avesta I, 689 F. Supp. at 1181.
In determining whether a full review is warranted, the Commission
is permitted to weigh the evidence presented to it. The Commission
analyzes the specific facts alleged in the petition and fully evaluates
all the evidence submitted in support of, and in opposition to, the
petition. Full reviews will not be instituted based upon mere
allegations in a petition, allegations that are clearly contradicted by
evidence submitted by others in response to the Commission's notice, or
allegations that are contradicted or undermined by a petitioner's own
data. Thus, the Commission decides whether to initiate a review, not
based solely on the allegations contained in a petition, but also upon
a critical evaluation of the entire record. Avesta I, 689 F. Supp. at
1181.
In this case, the request alleged three changed circumstances
warranting review: (1) Changes in enforcement of country of origin
marking requirements for manhole covers; (2) the extension of Buy
America restrictions to procurement of iron construction castings in
airport construction; and (3) the extension of Buy America restrictions
to procurement of iron construction castings in all highway
construction that receives federal financing. The information available
on the record does not persuade us that a full investigation is
warranted for any of the three allegations.
The changes in country of origin marking requirements for manhole
covers significantly predate the Commission's original determination.
The statutory change occurred in 1984, and there is documented evidence
of its enforcement by Customs prior to 1986. Because those requirements
were in effect prior to the Commission's injury determination, they are
not ``changed'' circumstances. The two separate extensions of Buy
America restrictions, however, occurred after the Commission's
determination and do constitute ``changed circumstances'' that are not
the natural and direct consequence of the imposition of the order. With
respect to the extension of Buy America restrictions to airport
construction, the Canadian industry admits that the change only affects
2 percent of total U.S. consumption. In the context of this market and
the relative shares of the market reflected in the original record,
such a marginal impact alone is not a changed circumstance sufficient
to warrant review.
The third ``changed circumstance'' concerns a 1991 amendment to the
Buy America provisions (Section 165(a)) of the Surface Transportation
Assistance Act of 1982. Section 1048 of the Intermodal Surface
Transportation Efficiency Act of 1991 extended those Buy America
restrictions to iron. Amended section 165(a) reads as follows:
Notwithstanding any other provision of law, the Secretary of
Transportation shall not obligate any funds authorized to be
appropriated by the Act * * * unless steel, iron, cement, and
manufactured products used in such project are produced in the
United States.
23 U.S.C. 101 note (emphasis added). The Canadian producers insist that
this amendment has effectively precluded them from competing with the
domestic industry in 60-75 percent of the U.S. market.
In this case, because ``the vast bulk of construction castings are
ultimately purchased and used by utilities, municipalities, and other
such entities for civil construction purposes,'' government contracts
comprise a substantial portion of total sales. Iron Construction
Castings from Canada, USITC Pub. 1811 at A-9. It is not at all clear,
however, what percentage of the total market is covered by Buy America
restrictions and how the extension of Buy America restrictions has
affected the U.S. market generally, or any segment of the market in
particular.
The only available objective evidence of the impact of the Buy
America restrictions on U.S. sales of Canadian castings--import
trends--suggests that the restrictions have not had a significant
impact on such sales. If the extension of Buy America restrictions had
a significant impact on the ability of Canadian producers to compete in
the U.S. market, then one would expect to see a decline in imports from
Canada, and from all other sources as well, shortly after the
extensions took effect. Data supplied by the Canadian producers
regarding import trends, however, indicate that, after the extension of
the Buy America restrictions, imports did not decline significantly. In
1986, when the order was first imposed, imports of iron construction
castings from Canada reached 21,377 short tons. While imports declined
subsequently, the significant decline in imports predates the extension
of Buy America restrictions in 1991. Imports declined from 18,312 short
tons in 1989 to 11,996 short tons in 1990. In 1991, such imports
declined slightly to 10,233 short tons. Although imports dropped
further to 8,312 short tons in 1992, data available for the first three
quarters of 1993 indicate that imports from Canada already exceeded
1992 full-year levels and were likely to exceed 12,000 short tons by
the end of the year. See Petition at Appendix 22. Declines in imports
followed by larger increases in recent periods do not support the claim
that the 1991 amendments have significantly affected the ability of
Canadian producers to compete in the U.S. market.
To support their assertion of the size of the Buy America market,
the Canadian producers submitted only a conclusory and unsubstantiated
declaration by a member of the Canadian Foundry Association. No
methodology was identified and no source was cited for the estimates.
Further, the Canadian producers acknowledge that their estimates are
based on favorable assumptions regarding future actions by state and
local authorities in extending their own Buy America restrictions to
cover iron construction castings. They argue that such actions, while
not mandatory, ``are reasonable to expect.'' We find persuasive the
domestic producers' objection that such expectations of future state
and local administrative actions do not constitute changed
circumstances. See Avesta I, 689 F. Supp. at 1185 (``A future intention
does not show changed circumstances in the present.'').
Moreover, the Canadian producers did not provide any evidence
regarding their shipments to particular U.S. market segments and the
effect of the extension of Buy America restrictions, if any, on
shipments to each of those market segments. In sum, we believe that the
Canadian estimates of the Buy America market are overstated.
Although Buy America restrictions have been expanded as the result
of federal legislation, it is not clear how broad they are and how much
of the iron construction casting market is now affected by them.
Although the Canadian producers have arguably raised an issue of fact
that may have merit, if true, they have not provided sufficient
evidence to persuade us that the petition shows changed circumstances
warranting review. While the petitioner need not prove its case at the
institution stage, the petition, as filed, must contain more than the
conclusory allegations submitted in this case. Because neither
probative supporting evidence, an explanation of methodology, nor any
concrete indication of the significance of the extension of Buy America
restrictions has been provided, there is insufficient evidence to
warrant a full investigation. Absent such evidence, we determine that
it is inappropriate to institute a review. Accordingly, the request for
a review is denied. Finally, in the absence of a review of the Canadian
order, a self-initiated review of the order covering iron construction
castings from Brazil, India, and China is inappropriate.
By order of the Commission.
Issued: August 17, 1994.
Donna R. Koehnke,
Secretary.
[FR Doc. 94-20931 Filed 8-24-94; 8:45 am]
BILLING CODE 7020-02-P