Certain Woven Electric Blankets From the People's Republic of China: Initiation of Antidumping Duty Investigation

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

DATES:

Effective Date: July 27, 2009.

FOR FURTHER INFORMATION CONTACT:

Drew Jackson at (202) 482-4406 or Rebecca Pandolph at (202) 482-3627, AD/CVD Operations, Office 4, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Petition

On June 30, 2009, the Department of Commerce (“Department”) received an antidumping duty (“AD”) petition concerning imports of certain woven electric blankets (“woven electric blankets”) from the People's Republic of China (“PRC”) filed in proper form by Jarden Consumer Solutions (“Petitioner”). On July 2, 2009, the Department issued a request to Petitioner for additional information and for clarification of certain areas of the Petition. Based on the Department's request, Petitioner filed a supplement to the Petition on July 8, 2009 (“Supplement to the Petition”). On July 10, 2009, the Department requested further information from Petitioner, including suggested refinements to the scope. Based on the Department's request, Petitioner filed a second supplement to the Petition on July 14, 2009 (“Second Supplement to the Petition”). Based on conversations with Petitioner regarding scope and certain other clarifications, Petitioner filed a supplement to the Petition on July 15, 2009 (“Third Supplement to the Petition”). On July 17, 2009, we received a submission on behalf of a U.S. importer of woven electric blankets and its affiliated Chinese producer and exporter, both interested parties to this proceeding as defined in section 771(9)(A) of the Act. This submission challenged the definition of the domestic like product. Petitioner filed its reply to this challenge on July 20, 2009.

In accordance with section 732(b) of the Tariff Act of 1930, as amended (“Act”), Petitioner alleges that imports of woven electric blankets from the 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 materially injure, and threaten further material injury to, an industry in the United States.

The Department finds that Petitioner filed the Petition on behalf of the domestic industry because Petitioner is an interested party, as defined in section 771(9)(C) of the Act, and has demonstrated sufficient industry support with respect to the investigation that it requests the Department to initiate (see “Determination of Industry Support for the Petition” below).

Scope of Investigation

The products covered by this investigation are woven electric blankets from the PRC. For a full description of the scope of the investigation, please see the “Scope of Investigation” in Appendix I of this notice.

Comments on the Scope of Investigation

During our review of the Petition, we discussed the scope of the investigation with Petitioner 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 the product coverage of the scope. The Department encourages all interested parties to submit such comments by August 10, 2009, the first business day after twenty calendar days from the signature date of this notice. Comments should be addressed to Import Administration's APO/Dockets Unit, 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 to consult with parties prior to the issuance of the preliminary determination in this investigation.

Comments on Product Characteristics for the Antidumping Duty Questionnaire

We are requesting comments from interested parties regarding the appropriate physical characteristics of woven electric blankets 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 of production, as well as to develop appropriate product reporting criteria.

Interested parties may provide any information or comments that they believe 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 reporting criteria. We note that it is not always appropriate to use all product characteristics as product reporting criteria. We base product reporting criteria on meaningful commercial differences among products. In other words, while there may be some physical product characteristics utilized by manufacturers to describe woven electric blankets, it may be that only a select few product characteristics take into account commercially meaningful physical characteristics.

In order to consider the suggestions of interested parties in developing the product characteristics for the antidumping duty questionnaire, we must receive comments at the above-referenced address by August 10, 2009. Additionally, rebuttal comments must be received by August 17, 2009.

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. 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 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.

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, Petitioner did not offer a definition of domestic like product distinct from the scope of the investigation. On July 17, 2009, Biddeford Blankets, LLC (“Biddeford”) a U.S. importer of woven electric blankets, and Hung Kuo Electronics (Shenzhen) Company Limited (Hung Kuo), Biddeford's affiliated PRC producer and exporter of woven electric blankets, submitted a letter challenging the definition of the domestic like product, and requesting that the Department delay its initiation. Specifically, Biddeford and Hung Kuo argue that the domestic like product, as defined in the Petition, is overly narrow and should include, at a minimum, electric mattress pads. In addition, Biddeford and Hung Kuo state that Westpoint Stevens, a U.S. manufacturer and seller of electric mattress pads should be polled to determine whether it supports or opposes the Petition. Further, Biddeford and Hung Kuo request that the Department confirm Petitioner's claim that while non-woven electric blankets could be an acceptable substitute for woven electric blankets, non-woven electric blankets are not produced in the United States. Both Biddeford and Hung Kuo are interested parties to this proceeding as defined in section 771(9)(A) of the Act. On July 20, 2009, Petitioner filed its reply to this challenge, stating that Biddeford and Hung Kuo failed to provide any specific evidence supporting their claim, and limited their discussion to only a cursory analysis of the factors used to make a like product determination. We have analyzed these comments, and based on our analysis of the information submitted on the record, we have determined that woven electric blankets constitute a single domestic like product and we have analyzed industry support in terms of that domestic like product.

In determining whether Petitioner has 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 and Appendix I of this notice. To establish industry support, Petitioner provided its 2008 production of the domestic like product and compared this to the estimated total production of the domestic like product for the entire domestic industry. Petitioner calculated total domestic production based on its own production plus data estimates for two non-petitioning companies that may have been producing the domestic like product in the United States in 2008.

Our review of the data provided in the Petition, supplemental submissions, and other information readily available to the Department, including a search of the Internet, indicates that Petitioner has established industry support. First, the Petition established support from domestic producers (or workers) accounting for more than 50 percent of the total production of the domestic like product and, as such, the Department is not required to take further action in order to evaluate industry support (e.g., polling). Second, the domestic producers (or workers) have met the statutory criteria for industry support under section 732(c)(4)(A)(i) 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. Finally, the domestic producers (or workers) have met the statutory criteria for industry support under section 732(c)(4)(A)(ii) of the Act because the domestic producers (or workers) who support the Petition account for 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. 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 Petitioner filed the Petition on behalf of the domestic industry because Petitioner is an interested party (e.g., domestic producer) as defined in section 771(9)(C) of the Act and has demonstrated sufficient industry support with respect to the antidumping investigation that it is requesting that the Department initiate.

Allegations and Evidence of Material Injury and Causation

Petitioner alleged 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, Petitioner alleged that subject imports exceed the negligibility threshold provided for under section 771(24)(A) of the Act.

Petitioner contended that the industry's injured condition is illustrated by reduced market share, increased import penetration, underselling and price depressing and suppressing effects, lost sales and revenue, reduced production, shipments, capacity, and capacity utilization, reduced employment, and an overall decline in financial performance. We have assessed the allegations and supporting evidence regarding material injury, threat of material injury, and causation, and have determined that these allegations are properly supported by adequate evidence and meet the statutory requirements for initiation.

Period of Investigation

In accordance with 19 CFR 351.204(b)(1), because the Petition was filed on June 30, 2009, the anticipated period of investigation (“POI”) is October 1, 2008, through March 31, 2009.

Allegations of Sales at Less Than Fair Value

The following is a description of the allegation of sales at less than fair value upon which the Department has based its decision to initiate an investigation of woven electric blankets from the PRC. The sources of data for the deductions and adjustments relating to U.S. price and NV are discussed in the Initiation Checklist. Should the need arise to use any of this information as facts available under section 776 of the Act, we may reexamine the information and revise the margin calculations, if appropriate.

U.S. Price

Petitioner obtained constructed export prices (“CEP”) for woven electric blankets in four standard sizes: Twin, full, queen, and king. These prices were based on U.S. offers for sale of woven electric blankets manufactured in the PRC. Petitioner presented an affidavit attesting that the offers were made during the POI.

To calculate the net U.S. price, Petitioner did not deduct from the starting U.S. prices any CEP selling expenses or movement expenses other than the U.S. customs duty of 11.40 percent that is imposed on woven electric blankets upon importation into the United States. This approach is conservative in that it does not understate the net U.S. price.

Normal Value

According to Petitioner, since the PRC is a non-market economy (“NME”) country, it based NV on factors of production and surrogate values. In accordance with section 771(18)(C)(i) of the Act, the presumption of NME status remains in effect until revoked by the Department. The presumption of NME status for the PRC has not been revoked by the Department and, therefore, remains in effect for purposes of the initiation of this investigation. Accordingly, the NV of the product is appropriately based on factors of production valued in a surrogate market economy country, in accordance with section 773(c) of the Act. In the course of this investigation, all parties will have the opportunity to provide relevant information related to the issues of the PRC's NME status and the granting of separate rates to individual exporters.

Petitioner used India as the surrogate country because it claimed India is at a level of economic development comparable to that of the PRC and is a significant producer of woven electric blankets. In support of this claim, Petitioner referenced the Department's previous findings that India is at a level of development comparable to the PRC, and provided the names of a number of Indian manufacturers/suppliers of electric blankets, and U.N. data showing that India exported 53.197 metric tons of electric blankets during 2007.

After examining the information provided by Petitioner, the Department has determined that the use of India as a surrogate country is appropriate for purposes of initiation. However, after initiation of the investigation, interested parties will have the opportunity to submit comments regarding surrogate country selection and, pursuant to 19 CFR 351.301(c)(3)(i), will be provided an opportunity to submit publicly available information to value factors of production within 40 days after the date of publication of the preliminary determination.

Petitioner calculated NVs and dumping margins using the Department's NME methodology as required by 19 CFR 351.202(b)(7)(i)(C) and 19 CFR 351.408. Petitioner calculated NVs for woven electric blankets of four standard sizes: Twin, full, queen, and king. Petitioner asserted that the production process and consumption quantities it used in manufacturing woven electric blankets are similar to those used by the PRC manufacturer of the woven electric blankets for which it obtained the U.S. price quotes noted above. Petitioner stated that it employed a conservative methodology in calculating NV by only valuing the major components of woven electric blankets, namely the shell of woven fabric, binding, wire, and controller.

Petitioner valued the factors of production using reasonably available, public surrogate country data, including Indian import data from the Indian Ministry of Commerce, published in the Monthly Statistics of Foreign Trade of India as compiled by the Global Trade Atlas (“GTA”), the internet version of the Word Trade Atlas, available at http://www.gtis.com/gta. Petitioner used GTA data for the period August 2008, through January 2009, the most recent six months of data available at the time of the filing of the Petition. In addition, Petitioner used exchange rates, as reported by the Federal Reserve, to convert Indian Rupees to U.S. Dollars.

Petitioner valued shells of woven fabric, binding, wire, controllers, and packing cartons using GTA data. Petitioner valued direct labor and packing labor using the wage rate data published on the Department's Web site, at http://ia.ita.doc.gov/wages/05wages/05wages-051608.html#table1. Petitioner valued electricity using Indian electricity rates from the Central Electricity Authority in India for 2006.

Petitioner valued brokerage and handling costs using an average of costs incurred by Essar Steel Limited, Agro Dutch Industries Limited, and Kerjiwal Paper Ltd., three Indian companies that participated in antidumping duty proceedings before the Department. Petitioner adjusted these values for inflation using wholesale price index data published by the International Monetary Fund, which is available online at http://www.imfstatistics.org/imf/.

Petitioner based factory overhead, selling, general and administrative expenses, and profit, on financial data for large public limited companies as reported by the Reserve Bank of India (“RBI”). Although Petitioner searched the internet, fee-based databases (e.g., Dun and Bradstreet, Hoovers) and records of the Indian Ministry of Company Affairs, Petitioner was unable to locate company-specific financial data for, or aggregate industry financial data that specifically include, Indian producers of woven electric blankets. Given that the only financial data reasonably available to Petitioner at this time are the RBI data, the Department has accepted the use of RBI data for the purposes of initiation. See Section 732 (b)(1) of the Act.

Fair-Value Comparisons

The data provided by Petitioner provide a reason to believe that imports of woven electric blankets from the PRC are being, or are likely to be, sold in the United States at less than fair value. Based on comparisons of net U.S. prices to NVs, Petitioner calculated estimated dumping margins ranging from 128.32 percent to 394.55 percent.

Initiation of Antidumping Investigation

Based upon our examination of the Petition concerning woven electric blankets from the PRC and other information reasonably available to the Department, 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 woven electric blankets from the PRC 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, 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). The Department stated that “{w}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.”

In order to accomplish this objective, interested parties that wish to make a targeted-dumping allegation in this investigation pursuant to section 777A(d)(1)(B) of the Act, should submit such an allegation to the Department no later than 45 days before the scheduled date of the preliminary determination.

Respondent Selection

The Department will request quantity and value information from the exporters and producers listed with complete contact information in the Petition. The quantity and value data received from NME exporters/producers will be used to select mandatory respondents.

The Department requires respondents to submit a response to both the quantity and value questionnaire and the separate-rate application by the respective deadlines in order to receive consideration for separate-rate status. Appendix II of this notice contains the quantity and value questionnaire that must be submitted by all NME exporters/producers no later than August 11, 2009. In addition, the Department will post the quantity and value questionnaire along with filing instructions on its website, at http://ia.ita.doc.gov/ia-highlights-and-news.html.

Separate Rates

In order to obtain separate-rate status in an NME investigation, exporters and producers must submit a separate-rate status application. The specific requirements for submitting the separate-rate application in this investigation are outlined in detail in the application itself, which will be available on the Department's Web site at http://ia.ita.doc.gov/ia-highlights-and-news.html on the date of publication of this initiation notice in the Federal Register. The separate-rate application will be due sixty (60) days from the date of publication of this initiation notice in the Federal Register. As noted in the “Respondent Selection” section above, the Department requires that respondents submit a response to both the quantity and value questionnaire and the separate rate application by the respective deadlines in order to receive consideration for separate rate status.

Use of Combination Rates in an NME Investigation

The Department will calculate combination rates for certain respondents that are eligible for a separate rate in this investigation. The Separate Rates/Combination Rates Bulletin states:

{w}hile continuing the practice of assigning separate rates only to exporters, all separate rates that the Department will now assign in its NME investigations will be specific to those producers that supplied the exporter during the period of investigation. Note, however, that one rate is calculated for the exporter and all of the producers which supplied subject merchandise to it during the period of investigation. This practice applies both to mandatory respondents receiving an individually calculated separate rate as well as the pool of non-investigated firms receiving the weighted-average of the individually calculated rates. This practice is referred to as the application of combination rates because such rates apply to specific combinations of exporters and one or more producers. The cash-deposit rate assigned to an exporter will apply only to merchandise both exported by the firm in question and produced by a firm that supplied the exporter during the period of investigation.

Distribution of Copies 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 the PRC. Because of the large number of producers/exporters identified in the Petition, 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 to the Government of the PRC, 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 14, 2009, whether there is a reasonable indication that imports of woven electric blankets from the PRC materially injure, or threaten material injury to, a U.S. industry. A negative ITC determination covering all classes or kinds of merchandise covered by the Petition would result in the investigation being terminated. Otherwise, this investigation will proceed according to statutory and regulatory time limits.

This notice is issued and published pursuant to section 777(i) of the Act.

Appendix I—Scope of the Investigation

The scope of this investigation covers finished, semi-finished, and unassembled woven electric blankets, including woven electric blankets commonly referred to as throws, of all sizes and fabric types, whether made of man-made fiber, natural fiber or a blend of both. Semi-finished woven electric blankets and throws consist of shells of woven fabric containing wire. Unassembled woven electric blankets and throws consist of a shell of woven fabric and one or more of the following components when packaged together or in a kit: (1) Wire; (2) controller(s). The shell of woven fabric consists of two sheets of fabric joined together forming a “shell.” The shell of woven fabric is manufactured to accommodate either the electric blanket's wiring or a subassembly containing the electric blanket's wiring (e.g., wiring mounted on a substrate).

A shell of woven fabric that is not packaged together, or in a kit, with either wire, controller(s), or both, is not covered by this investigation even though the shell of woven fabric may be dedicated solely for use as a material in the production of woven electric blankets.

The finished, semi-finished and unassembled woven electric blankets and throws subject to this investigation are currently classifiable under subheading 6301.10.0000 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Although the HTSUS subheading is provided for convenience and customs purposes, only the written description of the scope is dispositive.

Appendix II—Office of AD/CVD Enforcement

Quantity and Value Questionnaire

Requester(s): {insert name of company}:

{company address}

{contact name and title}

{contact telephone number}

{contact fax number}

{contact e-mail address}

Representation: {insert name of counsel and law firm and contact info}

Case: Certain Woven Electric Blankets from the People's Republic of China.

Period of Investigation: October 1, 2008 through March 31, 2009.

Publication Date of Initiation: {insert publication date}.

Officials in Charge:

Howard Smith, Program Manager, AD/CVD Operations, Office 4, Telephone: (202) 482-5193, Fax: (202) 482-5105, E-mail Address: Howard_Smith@ita.doc.gov.

Drew Jackson, International Trade Compliance Analyst, AD/CVD Operations, Office 4, Telephone: (202) 482-4406, Fax: (202) 482-5105, E-mail Address: Drew_Jackson@ita.doc.gov.

Rebecca Pandolph, International Trade Compliance Analyst, AD/CVD Operations, Office 4, Telephone: 202-482-3627, Fax: (202) 482-5105, E-mail Address: Rebecca.Pandolph@mail.doc.gov.

Filing Address: U.S. Department of Commerce, International Trade Administration, Import Administration, APO/Dockets Unit, Room 1870, 1401 Constitution Avenue, NW., Washington, DC 20230, Attn: Drew Jackson, Rebecca Pandolph.

On July 21, 2009, the Department of Commerce (“Department”) announced its decision to initiate an antidumping duty investigation to determine whether certain woven electric blankets from the PRC are being sold in the United States at less than fair value during the period of investigation of October 1, 2008 through March 31, 2009.

Section 777A(c)(1) of the Tariff Act of 1930, as amended (“Act”), directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. Where it is not practicable to examine all known producers/exporters of subject merchandise, as is the case in investigation, section 777A(c)(2) of the Act permits the Department to examine either (1) a sample of exporters, producers or types of products that is statistically valid based on the information available at the time of selection; or (2) exporters and producers accounting for the largest volume of the subject merchandise from the exporting country that can be reasonably examined.

In advance of the issuance of the full antidumping questionnaire, we ask that you respond to Attachments I of this Quantity and Value Questionnaire requesting information on production and the quantity and U.S. dollar sales value of all your sales to the United States during the period 1, 2008 through March 31, 2009, covered by the scope of this investigation (see Attachment II), produced in the PRC. A full and accurate response to the Quantity and Value Questionnaire from all participating respondents is necessary to ensure that the Department has the requisite information to appropriately select mandatory respondents.

The Department is also requiring all firms that wish to qualify for separate-rate status in this investigation to complete a separate-rate status application as described in the Notice of Initiation. In other words, the Department will not give consideration to any separate-rate status application made by parties that fail to timely respond to the Quality and Value Questionnaire or fail to timely submit the requisite separate-rate status application.

To allow for the possibility of sampling and to complete this segment within the statutory time frame, the Department will be limited in its ability to extend the deadline for the response to the Quantity and Value Questionnaire.

A definition of the scope of the merchandise subject to this review is included in Attachment II, and general instructions for responding to this Quantity and Value Questionnaire are contained in Attachment III. Your response to this questionnaire may be subject to on-site verification by Department officials.

Format for Reporting Quantity and Value of Sales

In providing the information in the chart below, please provide the total quantity in pieces/units, and kilograms, and total value (in U.S. dollars) of all your sales to the United States during the period 1, 2008 through March 31, 2009, covered by the scope of this investigation (see Attachment II), produced in the PRC.

• Please include only sales exported by your company directly to the United States.
• Please do not include any sales of subject merchandise manufactured in Hong Kong in your figures.

Additionally, if you believe that you should be treated as a single entity along with other named exporters, please complete the chart, below, both in the aggregate for all named parties in your group and, in separate charts, individually for each named entity. Please label each chart accordingly.