[Federal Register Volume 63, Number 179 (Wednesday, September 16, 1998)]
[Notices]
[Pages 49549-49551]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24749]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-533-816]


Notice of Initiation of Countervailing Duty Investigation: 
Elastic Rubber Tape from India

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: September 16, 1998.

FOR FURTHER INFORMATION CONTACT: Todd Hansen or Javier Barrientos at 
(202) 482-1276 and (202) 482-4207, respectively, Import Administration, 
U.S. Department of Commerce, Room 1870, 14th Street and Constitution 
Avenue, NW., Washington, DC 20230.

Initiation of Investigation

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to 19 CFR 
Part 351 (1998).

The Petition

    On August 18, 1998, the Department of Commerce (the Department) 
received a petition filed in proper form by or on behalf of Fulflex, 
Inc., Elastomer Technologies Group, Inc. (Elastomer), and RM Engineered 
Products, Inc. (RM) (collectively referred to hereinafter as ``the 
petitioners''). Elastomer and RM are both wholly owned subsidiaries of 
M-Tec Corporation. A supplement to the petition was filed on September 
1, 1998.
    In accordance with section 702(b)(1) of the Act, the petitioners 
allege that manufacturers, producers, or exporters of the subject 
merchandise in India receive countervailable subsidies within the 
meaning of section 701 of the Act, and that such imports are materially 
injuring an industry in the United States. The petitioners estimate the 
countervailing duty rate for Garware to be 50 percent. This figure is 
based on the findings of the EU in its Imposition of Provisional 
Countervailing Duty on Imports of Certain Broad Spectrum Antibiotics 
Originating in India (OJ L 166/17, Commission Regulation (EC) No. 1204/
98, June 11, 1998) and the Department's determination in Certain Iron-
Metal Castings from India: Preliminary Results of Countervailing Duty 
Administrative Review (63 FR 37534, July 13, 1998).
    The petitioners state that they have standing to file the petition 
because they are interested parties, as defined under sections 
771(9)(C) and (D) of the Act, and they have demonstrated that they are 
the only producers of ERT in the United States (see ``Determination of 
Industry Support for the Petition'' section below).

Scope of the Investigation

    For purposes of this investigation, the product covered is elastic 
rubber tape. Elastic rubber tape is defined as vulcanized, non-cellular 
rubber strips, of either natural or synthetic rubber, 0.006 inches to 
0.100 inches (0.15 mm to 2.54 mm) in thickness, and \1/8\ inches to 
1\5/8\ inches (3 mm to 42 mm) in width. Such product is generally used 
in swimwear and underwear.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') at 
subheading 4008.21.00. Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.
    During our review of the petition, we discussed scope with the 
petitioners to insure that the scope in the petitions accurately 
reflects the product for which they are seeking relief. Moreover, as 
discussed in the preamble to our regulations (62 FR 27323), we are 
setting aside a period for parties to raise issues regarding product 
coverage. The Department encourages all parties to submit such comments 
by September 29, 1998. Comments should be addressed to Import 
Administration's Central Records Unit at Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230. The period of scope consultations is intended to provide us with 
ample opportunity to consider all comments and consult with parties 
prior to the issuance of our preliminary determinations.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of India (GOI) for 
consultations with respect to the petition. On September 1, 1998, the 
GOI submitted written comments regarding the programs alleged in the 
petition. Consultations were held on September 4, 1998. See memorandum 
to the file regarding the consultations with the GOI, dated September 
4, 1998 (public document on file in the Central Records Unit of the 
Department of Commerce, Room B-099).

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(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: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) 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.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who account for production 
of 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. While both the Department and 
the ITC must apply the same statutory definition of domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to 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

[[Page 49550]]

render the decision of either agency contrary to the law. 1
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    \1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefor from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines 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.
    The domestic like product referred to in the petition is the single 
domestic like product defined in the ``Scope of Investigation'' 
section, above. The Department has no basis on the record to find the 
petition's definition of the domestic like product to be inaccurate. 
The Department has therefore adopted the domestic like product 
definition set forth in the petition.
    In this case, the Department has determined that the petition and 
supplemental information contained adequate evidence of sufficient 
industry support and, therefore, polling is unnecessary. See the 
Initiation Checklist prepared for this case, dated September 8, 1998 
(public documents on file in the Central Records Unit of the Department 
of Commerce, Room B-099). The petitioners established industry support 
representing 100 percent of total production of the domestic like 
product.
    Additionally, no person who would qualify as an interested party 
pursuant to sections 771(9)(A)(B)(C)(D)(E) or (F) has expressed 
opposition on the record to the petition. Therefore, to the best of the 
Department's knowledge, the producers who support this petition account 
for 100 percent of the production of the domestic like product produced 
by the portion of the industry expressing an opinion regarding the 
petition. Accordingly, the Department determines that this petition is 
filed on behalf of the domestic industry within the meaning of section 
702(b)(1) of the Act.

Injury Test

    Because India is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) applies to this 
investigation. Accordingly, the U.S. International Trade Commission 
(ITC) must determine whether imports of the subject merchandise from 
India materially injure, or threaten material injury to, a U.S. 
industry.

Allegations and Evidence of Material Injury and Causation

    The petition alleges that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of the subsidized imports of the subject 
merchandise from India. The petitioners explain that the industry's 
injured condition is evident in the declining trends in net operating 
profits and income, net sales volumes and values, profit to sales 
ratios, and capacity utilization. The allegations of injury and 
causation are supported by relevant evidence including U.S. Customs 
import data, lost sales, and pricing information. The Department 
assessed the allegations and supporting evidence regarding material 
injury and causation, and it determined that these allegations are 
sufficiently supported by accurate and adequate evidence and meet the 
statutory requirements for initiation (see Attachment 2 to the 
September 8, 1998, Initiation Checklist entitled ``Analysis of 
Allegations and Evidence of Material Injury and Causation'').

Allegation of Critical Circumstances

    The petitioners allege that critical circumstances exist with 
respect to imports of ERT from India. To support this allegation, the 
petitioners have provided evidence in the petition of a trend of 
increasing imports recently and the potential for even greater 
increases in the near future. The petitioners also have asserted that 
the alleged subsidies are inconsistent with the Subsidies Agreement, 
based on the fact that both the Department and the European Union have 
determined several of the alleged subsidies to be countervailable 
export or import substitution subsidies in other countervailing duty 
proceedings. In taking into consideration the foregoing, we find that 
petitioners have alleged the elements of critical circumstances and 
supported it with reasonably available information. We, therefore, will 
investigate this matter further.

Initiation of Countervailing Duty Investigation

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition, on behalf of an industry, that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a), and (2) is 
accompanied by information reasonably available to the petitioners 
supporting the allegations.
    The Department has examined the petition on elastic rubber tape 
(ERT) from India and found that it complies with the requirements of 
section 702(b) of the Act. Therefore, in accordance with section 702(b) 
of the Act, we are initiating a countervailing duty investigation to 
determine whether manufacturers, producers, or exporters of ERT from 
India receive subsidies. See the September 8, 1998, Initiation 
Checklist regarding the initiation of this investigation. We will make 
our preliminary determination by November 12, 1998, unless this 
deadline is extended.
    We are including in our investigation the following programs 
alleged in the petition to have provided subsidies to producers and 
exporters of the subject merchandise in India:
    1. Passbook/Duty Entitlement Passbook Schemes.
    2. Export Promotion Capital Goods Scheme.
    3. Export Processing Zones/Export Oriented Units Programs.
    4. Income Tax Exemption Scheme.
    5. Pre-Shipment Export Financing.
    6. Post-Shipment Export Financing.
    7. Import Mechanism (Sale of Import Licenses).
    8. Exemption of the Interest Tax on Export Credits.
    9. Rediscounting of Export Bills Abroad.
    10. Programs Operated by the Small Industries Development Bank of 
India.
    11. Special Imprest Licenses.
    12. Market Development Assistance.
    13. Special Benefits to Export and Trading Houses and Super Star 
Trading Houses.
    14. Duty Drawback on Excise Taxes.
    15. Pre-Shipment Export Financing in Foreign Currency.
    We are not including in our investigation the following program 
alleged to be benefitting producers and exporters of the subject 
merchandise in India:

Location Grants

    The petitioners alleged that Garware may have received grants 
during the POI for having located its facilities in the ``Maharashtra 
Industrial Zone.'' The petitioners did not provide any additional 
information such as the name of a particular program, the government 
agency administering the program, the eligibility requirements, or the 
specific manner in which benefits are provided.
    We are not including this alleged subsidy in our investigation 
because the petitioners have not provided sufficient information. While 
the petitioners have

[[Page 49551]]

asserted that Garware received government grants due to its location in 
an industrial zone, they have provided no factual information regarding 
a specific program under which these alleged grants may have been 
provided. Furthermore, the petitioners have not provided evidence that 
companies located in ``industrial zones'' are eligible for certain 
benefits. (We note that we are including in our investigation Export 
Processing Zones, Falta Free Trade Zones and Other Free Trade Zones.) 
Given the lack of information regarding this allegation, we are not 
including it in our investigation.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, copies of 
the public version of the petition have been provided to the 
representatives of the Government of India. We will attempt to provide 
copies of the public version of the petition to all the exporters named 
in the petition, as provided for under section 351.203(c)(2) of our 
regulations.

ITC Notification

    Pursuant to section 702(d) of the Act, we have notified the ITC of 
this initiation.

Preliminary Determination by the ITC

    The ITC will determine by October 2, 1998, whether there is a 
reasonable indication that an industry in the United States is 
materially injured, or is threatened with material injury, by reason of 
imports of ERT from India. A negative ITC determination will result in 
the investigation being terminated; otherwise, the investigation will 
proceed according to statutory and regulatory time limits.
    This notice is published pursuant to sections 702(c) and 777(i) of 
the Act.

    Dated: September 8, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-24749 Filed 9-15-98; 8:45 am]
BILLING CODE 3510-DS-P