Initiation of Antidumping Duty Investigation: Anhydrous Sodium Sulfate From Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

August 4, 2000.

FOR FURTHER INFORMATION CONTACT:

Irina Itkin or Shawn Thompson at (202) 482-0656 and (202) 482-1776, respectively; Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

Initiation of Investigations

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 references to the provisions codified at 19 CFR Part 351 (1999).

The Petition

On July 10, 2000, the Department of Commerce (the Department) received a petition filed in proper form by Cooper Natural Resources and IMC Chemicals, Inc. (hereinafter collectively, “the petitioners”). The Department received information supplementing the petition throughout the initiation period.

In accordance with section 732(b) of the Act, the petitioners allege that imports of anhydrous sodium sulfate from Canada 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 an industry in the United States.

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 have demonstrated sufficient industry support with respect to the antidumping duty investigation that they are requesting the Department to initiate (see Determination of Industry Support for the Petition, below).

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 the Department's industry support determination, which is to be made before the initiation of the investigation, be based on whether a minimum percentage of the relevant industry supports the petition. 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 in the region, 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 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 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 the 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 subtitle.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” i.e., the merchandise described in the scope of the petition.

The domestic like product referred to in the petition is the single domestic like product defined in the “Scope of Investigation” section, below. No party has commented on the petition's definition of the domestic like product, and there is nothing on the record to indicate that this definition is inaccurate. The Department, therefore, has adopted the domestic like product definition set forth in the petition.

Moreover, the Department has determined that the petition contains adequate evidence of industry support; therefore, polling is unnecessary. In this case, the petitioners represent over 50 percent of total production of the domestic like product in the United States. See Initiation Checklist, dated July 31, 2000 (Initiation Checklist), at page 3. Accordingly, the Department determines that this petition is filed on behalf of the domestic industry within the meaning of section 732(c)(4)(A) of the Act.

Scope of Investigation

For purposes of this investigation, the product covered is anhydrous sodium sulfate, also referred to as “salt cake” or “disodium sulfate,” from Canada. Anhydrous sodium sulfate is an inorganic chemical with a chemical composition of Na₂ SO₄. The “Chemical Abstract Service” number for anhydrous sodium sulfate is 7757-82-6. All forms and variations of anhydrous sodium sulfate are included within the scope of the investigation, regardless of grade, level of purity, production method, or form of packaging. Anhydrous sodium sulfate is currently classifiable under subheadings 2833.11.10 and 2833.11.50 of the Harmonized Tariff Schedule of the United States (HTSUS). Although these HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this investigation is dispositive.

During our review of the petition, we discussed the scope with the petitioners to ensure that it accurately reflects the product for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations (see Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295, 27323 (May 19, 1997)), we are setting aside a period of time for parties to raise issues regarding product coverage. The Department encourages all parties to submit such comments by August 31, 2000. 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 the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determination.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less than fair value upon which the Department based its decision to initiate this investigation. The sources of data for the deductions and adjustments relating to home market price and U.S. price are also discussed in the Initiation Checklist. Should the need arise to use any of this information as facts available under section 776 of the Act in our preliminary or final determinations, we may re-examine the information and revise the margin calculations, if appropriate.

Export Price

The petitioner identified Saskatchewan Minerals and Millar Western Industries Ltd. as the major producers and exporters of subject merchandise in Canada.

The petitioner determined export price (EP) based on direct and contemporaneous sales or offers for sales to U.S. unaffiliated purchasers of anhydrous sodium sulfate, through invoices and affidavits. This information was obtained from industry sources in the United States. The petitioner calculated a net U.S. price by subtracting freight expenses.

Normal Value

With respect to normal value (NV), the petitioner provided home market prices based on invoices and affidavits. These products are comparable to the products exported to the United States which serve as the basis for EP. The petitioners calculated NV by deducting foreign movement expenses, commissions, and domestic packing expenses. The petitioners also adjusted NV for differences in credit expenses.

In addition, the petitioner provided information demonstrating reasonable grounds to believe or suspect that sales of anhydrous sodium sulfate in the home market were made at prices below the cost of production (COP), in accordance with section 773(b) of the Act, and requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacturing (COM), sales, general, and administrative (SG&A) expenses, and packing. To calculate the foreign producers' COM, the petitioners used the production costs and consumption rates of one of the petitioning companies, adjusted for known differences between costs incurred to produce sodium sulfate in the United States and in Canada using publicly available data. To calculate depreciation and SG&A, the petitioners relied upon the experience of the same U.S. producer. We recalculated SG&A using the consolidated financial statements of GoldCorp Inc., the parent company of Saskatchewan Minerals because this information better reflects the experience of Saskatchewan Minerals. The petitioners also based financing expenses on the consolidated financial statements of this parent company. Based upon the comparison of the adjusted prices of the foreign like product in the home market to the calculated COP of the product, we find reasonable grounds to believe that sales of the foreign like product were made below the COP, in accordance with section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation.

In addition, pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the petitioners also based NV for sales in Canada on constructed value (CV). The petitioners calculated CV using the same COM, SG&A, and financial expense figures used to compute Canadian home market costs. We recalculated SG&A expenses as noted above. Consistent with section 773(e)(2) of the Act, the petitioners also added to CV an amount for profit. Profit was based upon a 1999 management report for GoldCorp Inc.

Based on these separate comparisons, the estimated dumping margins for anhydrous sodium sulfate from Canada ranged from 19.29 to 100.10 percent.

Initiation of Cost Investigation

As noted above, pursuant to section 773(b) of the Act, the petitioner provided information demonstrating reasonable grounds to believe or suspect that sales in the home market were made at prices below the fully allocated COP and, accordingly, requested that the Department conduct a country-wide sales-below-COP investigation in connection with the requested antidumping investigation. The Statement of Administrative Action (SAA), submitted to the U.S. Congress in connection with the interpretation and application of the URAA, states that an allegation of sales below the COP need not be specific to individual exporters or producers. SAA, H.R. Doc. No. 316 at 833 (1994). The SAA, at 833, states that “Commerce will consider allegations of below-cost sales in the aggregate for a foreign country, just as Commerce currently considers allegations of sales at less than fair value on a country-wide basis for purposes of initiating an antidumping investigation.”

Further, the SAA provides that “new section 773(b)(2)(A) retains the current requirement that Commerce have 'reasonable grounds to believe or suspect' that below cost sales have occurred before initiating such an investigation. ‘Reasonable grounds’ * * * exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices.” Id. Based upon the comparison of the adjusted prices from the petition for the representative foreign like products to their costs of production, we find the existence of “reasonable grounds to believe or suspect” that sales of these foreign like products were made below their respective COPs within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating the requested country-wide cost investigation.

Fair Value Comparisons

Based on the data provided by the petitioners, there is reason to believe that imports of anhydrous sodium sulfate from Canada are being, or are likely to be, sold at less than fair value.

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, or is threatened with material injury, by reason of the imports of the subject merchandise sold at less than NV. The petitioner contends that the industry's injured condition is evident in the declining trends in net operating profits, net sales volumes, profit-to-sales ratios, and production volumes. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. We have assessed the allegations and supporting evidence regarding material injury and causation, and have determined that these allegations are properly supported by accurate and adequate evidence and meet the statutory requirements for initiation (see Initiation Checklist at page 4).

Initiation of Antidumping Investigation

Based upon our examination of the petition on anhydrous sodium sulfate, 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 anhydrous sodium sulfate from Canada 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 no later than 140 days after the date of this initiation.

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 Canada. We will attempt to provide a copy of the public version of each petition to each exporter named in the petition, as appropriate.

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, no later than August 24, 2000, whether there is a reasonable indication that imports of sodium sulfate from Canada are causing material injury, or threatening to cause material injury, to a U.S. industry. 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 pursuant to section 777(i) of the Act.