[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)] [Notices] [Pages 40831-40833] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 99-19299] ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE International Trade Administration [A-570-856] Initiation of Antidumping Duty Investigation: Synthetic Indigo From the People's Republic of China AGENCY: Import Administration, International Trade Administration, Department of Commerce EFFECTIVE DATE: July 28, 1999. FOR FURTHER INFORMATION CONTACT: Dinah McDougall or David J. Goldberger, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-3773 or (202) 482-4136, respectively. 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 [[Page 40832]] (URAA). In addition, unless otherwise indicated, all citations to the Department of Commerce's (the Department's) regulations are to 19 CFR part 351 (1998). The Petition On June 30, 1999, the Department received a petition filed in proper form by Buffalo Color Corporation (``BCC'') and the United Steel Workers of America, AFL-CIO/CLC, which represents BCC's production workers, collectively referred to hereinafter as ``the petitioners.'' In accordance with section 732(b) of the Act, the petitioners allege that imports of indigo from the People's Republic of China (PRC) 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 to injure an industry in the United States. The petitioners filed supplemental information to the petition on July 9, 1999 and July 13, 1999. The Department finds that the petitioners filed this petition on behalf of the domestic industry because they are interested parties as defined in section 771(9)(C) of the Act and they represent, at a minimum, the required proportion of the United States industry (see Determination of Industry Support for the Petition section below). Scope of Investigation The products subject to this investigation are the deep blue synthetic vat dye known as synthetic indigo and those of its derivatives designated commercially as ``Vat Blue 1.'' Included are Vat Blue 1 (synthetic indigo), Color Index No. 73000, and its derivatives, pre-reduced indigo or indigo white ( Color Index No. 73001) and solubilized indigo (Color Index No. 73002). The subject merchandise may be sold in any form (e.g., powder, granular, paste, liquid, or solution) and in any strength. Synthetic indigo and its derivatives subject to this investigation are currently classifiable under subheadings 3204.15.10.00, 3204.15.40.00 or 3204.15.80.00 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 merchandise under investigation is dispositive. 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 parties to raise issues regarding product coverage. The Department encourages all parties to submit such comments within 20 days of publication of this notice. 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 for scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of our preliminary determination. 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: (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 Act 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 regarding the 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 domestic like product, such differences do not render the decision of either agency contrary to the law.1 --------------------------------------------------------------------------- \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 Therefore from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991). --------------------------------------------------------------------------- Section 771(10) of the Act defines the domestic like product as ``a product that 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 merchandise to be investigated, which normally will be the scope as defined in the petition. Moreover, the petitioners do not offer a definition of domestic like product distinct from the scope of investigation. To the best of the Department's knowledge, the petitioner is the sole U.S. producer of the domestic like product. See memorandum to file dated July 13, 1999, ``Industry Support and Petitioner Buffalo Color Corporation's Sole Producer Claim''. Additionally, no person who would qualify as an interested party pursuant to sections 771(9)(C), (D), (E) or (F) of the Act has expressed opposition to the petitioner on the record. Thus, the petitioner accounts for more than 50 percent of the production of the domestic like product. Therefore, in accordance with section 732(c)(4) of the Act, we determine that the petition has been filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act. See Initiation Checklist dated July 20, 1999 (public version on file in the Central Records Unit of the Department of Commerce, Room B-099) (Initiation Checklist). Export Price and Normal Value The following is a description of the allegation of sales at less than fair value upon which our decision to initiate this investigation is based. Should the need arise to use any of this information in our preliminary or final determination for purposes of facts available under section 776 of the Act, we may re-examine the information and revise the margin calculations, if appropriate. The petitioners identified eleven potential PRC exporters and exporter/producers of indigo. The petitioners based export price on offers for sale of the subject merchandise to U.S. purchasers by one of the PRC exporters in November 1998 and May 1999. From these starting prices, the petitioners deducted international freight, marine insurance, and foreign brokerage and handling charges. The petitioners based international freight on an actual ocean freight invoice from a market economy shipping company for a shipment of indigo from the PRC. Marine insurance fees were based on a quote from a market economy supplier. The foreign brokerage and handling charges, which were based on the Department's ``Index of Factor Values for Use in Antidumping Duty Investigations [[Page 40833]] Involving Products From the PRC'' (``Index of Factor Values''), were adjusted for inflation using the Wholesale Price Index (WPI) published in the International Monetary Fund's International Financial Statistics. Because the PRC is considered a non-market economy (NME) country under section 771(18) of the Act, the petitioners based normal value (NV) on the factors of production valued in a surrogate country, in accordance with section 773(c)(3) of the Act. For purposes of the petition, the petitioners selected India as the most appropriate surrogate market economy. The petitioners calculated NV using publicly available Indian prices to value all unit costs associated with the factors of production. The petitioners established estimates for per- unit consumption based on BCC's production experience adjusted for differences in the PRC production process according to information reasonably available to the petitioners. Materials were valued based on Indian prices obtained from publicly available information and published price lists, principally chemical prices in the Indian publications Chemical Weekly and Monthly Statistics of the Foreign Trade of India, and adjusted using the WPI published in the International Financial Statistics, where appropriate. Labor was valued using the regression-based wage rate for the PRC provided by the Department, in accordance with 19 CFR 351.408(c)(3). The values for water and electricity were obtained from international publications containing the prices applicable to India, and adjusted using the WPI published in the International Financial Statistics. The fuel oil and natural gas values were based on the Department's Index of Factor Values, and adjusted using the WPI published in the International Financial Statistics. To determine factory overhead, selling, general and administrative expenses, and profit, the petitioners relied on data from an Indian producer of hydrogen peroxide, which experiences similarly high fixed costs relative to direct manufacturing costs, as those incurred by producers of synthetic indigo. The valuation of packing factors was based on the Department's Index of Factor Values and international publications containing the prices applicable to India, and adjusted using the WPI published in the International Financial Statistics, where appropriate. Fair Value Comparisons Based on the data provided by the petitioners, there is reason to believe that imports of indigo from the PRC are being, or are likely to be, sold at less than fair value. Based on a comparison of EP to NV, the petitioners' calculated dumping margins ranging from 124.69 percent to 129.60 percent. 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 further material injury, by reason of the imports of the subject merchandise sold at less than NV. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import statistics, lost sales, trade and financial data, and pricing information. The Department assessed the allegations and supporting evidence regarding material injury and causation and determined that these allegations are supported by accurate and adequate evidence and meet the statutory requirements for initiation. Initiation of Antidumping Investigation Based on our examination of the petition, we have found 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 indigo from the PRC are being, or are likely to be, sold in the United States at less than fair value. Unless this deadline is extended, we will make our preliminary determination by December 7, 1999. Distribution of Copies of the Petition In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of the petition has been provided to the representatives of the government of the PRC. International Trade Commission 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 determine by August 16, 1999, 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 indigo from the PRC. A negative ITC determination will result in the investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits. This notice is published in accordance with section 777(i) of the Act. Dated: July 20, 1999. Robert S. LaRussa, Assistant Secretary for Import Administration. [FR Doc. 99-19299 Filed 7-27-99; 8:45 am] BILLING CODE 3510-DS-P