Initiation of Antidumping Duty Investigation: Foundry Coke Products From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

October 17, 2000.

FOR FURTHER INFORMATION CONTACT:

James Doyle, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-0159.

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 (“Act”) by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department of Commerce's (“Department”) regulations are to 19 CFR part 351 (2000).

The Petition

On September 20, 2000, the Department received a petition on imports of foundry coke products from the People's Republic of China (“PRC”) filed in proper form by ABC Coke, Citizens Gas and Coke Utility, Erie Coke, Tonawanda Coke Corporation, and United Steelworkers of America, AFL-CIO, hereinafter referred to as “the petitioners.” On September 25, 2000, the Department received a supplement to the petition. On September 27, 2000, the Department requested clarification of certain areas of the petition and received a response on October 2, 2000.

In accordance with section 732(b) of the Act, the petitioners allege that imports of foundry coke products 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 are materially injuring and threaten to injure 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) and (D) of the Act and they have demonstrated sufficient industry support with respect to the antidumping duty investigation they are requesting the Department to initiate (see “Determination of Industry Support for the Petition” below).

Scope of Investigation

For purposes of this investigation, the product covered is coke larger than 100 mm (4 inches) in maximum diameter and at least 50 percent of which is retained on a 100-mm (4 inch) sieve, of a kind used in foundries.

The foundry coke products subject to this investigation are currently classifiable under subheading 2704.00.00.10 of the Harmonized Tariff Schedules of the United States (HTSUS). Although the 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 (62 FR 27323), we are setting aside a period for interested parties to raise issues regarding product coverage. The Department encourages all interested parties to submit such comments within 20 calender 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 of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with interested parties prior to the issuance of the preliminary determinations.

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 as a whole 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 the Department and the ITC must apply the same statutory definition regarding the domestic like product (see 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 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.

In this case, the domestic like product referred to in the petition is the single domestic like product defined in the “Scope of Investigation” section, above. At this time, the Department has no basis on the record to find the petition's definition of the domestic like product to be 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 was not unnecessary (see Initiation Checklist Re: Industry Support, October 10, 2000) (“Initiation Checklist”). To the best of the Department's knowledge, producers supporting the petition represent over 50 percent of total production of the domestic like product. Additionally, no person who would qualify as an interested party pursuant to section 771(9) (A), (C), (D), (E), or (F) of the Act has expressed opposition to the petition.

Accordingly, the Department determines that this petition is filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

The following is a description of the allegation 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 U.S. price and factors of production 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 determination, we may reexamine the information and revise the margin calculations, if appropriate.

Based on information obtained from the ITC's section 332 study on the foundry coke industries in the United States and the PRC, Foundry Coke: A Review of the Industries in the United States and China, July 2000 (“332 Study”), the petitioners identified the following PRC companies as major producers of foundry coke products in the PRC: Ying Xian, Top Reach (De-Rui), Ju Fu, Xiao Shan, Sanjia, Yuan Hui, Feng Yang Wen Feng, Ping Yao Feng Yang, Shuang Fa, Zhong Pu, Bai Zhang, Jin Yang, Military Farmland, Huang He, Jia Wei, Liangyu, Ping Yao Hua Feng, San Sheng, Tang Xin, Ying Xing, Wen Fei, Ying Dong, Fu You, Bao Wan, and Yao Long. Of these 25 companies the petitioners identified Ying Xian, Top Reach (De-Rui), Ju Fu, and Xiao Shan as the producers of a large quantity of foundry coke products exported to the United States.

The petitioners based export price (“EP”) on import values declared to the U.S. Customs Service. In calculating import values declared to the U.S. Customs Service, the petitioners used the HTSUS category under which subject merchandise is currently classified (i.e, 2704.00.00.10). The petitioners calculated one EP based on the average unit values for entries of subject merchandise during February and March 2000. In order to obtain ex-factory prices, the petitioners deducted foreign inland freight from the Customs value. According to the ITC's 332 study on the foundry coke industries in the United States and the PRC, in the PRC foundry coke is transported to the port by either truck or train. For purposes of calculating foreign inland freight, the petitioners used the surrogate value for rail because of the large distances involved and the lower expense of shipping by rail, as compared to shipments by truck. For purposes of initiation we have found that this is a conservative estimate. We relied on the data in the petition except for valuing foreign inland freight. See Initiation Checklist.

The petitioners assert that the Department considers the PRC to be a non-market economy country (“NME”) and, therefore, constructed normal value (“NV”) based on the factors of production methodology pursuant to section 773(c) of the Act. In previous cases, the Department has determined that the PRC is an NME country. See, e.g., Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from the People's Republic of China (“Cold-Rolled Steel from China”), 65 FR 34660 (May 31, 2000). In accordance with section 771(18)(c)(i) of the Act, the NME status remains in effect until revoked by the Department. The NME status of 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 appropriately is 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.

As required by 19 CFR 351.202(b)(7)(i)(C), the petitioners provided a dumping margin calculation using the Department's NME methodology described in 19 CFR 351.408. For the NV calculation, the petitioners based the factors of production, as defined by section 773(c)(3) of the Act (raw materials, labor, energy and capital cost), for foundry coke products on the quantities of inputs used by one of the petitioning firms, Citizens Gas & Coke. See Initiation Checklist

The petitioners selected India as their surrogate country. Citing the Department's recent determination in cold-rolled steel from the PRC, the petitioners stated that India is comparable to the PRC in its level of economic development and is a significant producer of foundry coke products. Based on the information provided by the petitioners, we believe that the petitioners' use of India as a surrogate country is appropriate for purposes of initiation of this investigation. See Initiation Checklist.

In accordance with section 773(c)(4) of the Act, the petitioners valued factors of production for foundry coke products, where possible, on reasonably available, public surrogate country data. To value coal (the sole raw material input), the petitioners used a value for coking coal as reported in the Monthly Statistics of Foreign Trade of India, Vol. II—Imports, Directorate General of Commercial Intelligence & Statistics, Ministry of Commerce, Government of India, Calcutta. Labor was valued using the regression-based wage rate for the PRC, in accordance with 19 CFR 351.408(c)(3). Energy (coke oven gas) was valued using an Indian surrogate value for natural gas, adjusted for the relative difference in heating values between natural gas and coke oven gas. For overhead, SG&A and profit, the petitioners applied rates derived from the publicly available annual report of an Indian producer of comparable merchandise, Tata Iron and Steel Co., Ltd.

Based on comparisons of EP to NV, calculated in accordance with section 773(c) of the Act, the estimated dumping margin for foundry coke products from the PRC is 226.38 percent.

Fair Value Comparisons

Based on the data provided by the petitioners, there is reason to believe that imports of foundry coke products from the PRC are being, or are likely to be, sold in the United States 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 and is threatened with material injury, by reason of the imports of the subject merchandise sold at less than NV. The petitioners contend that the industry's injured condition is evident in the declining trends in: (1) U.S. market share, (2) domestic production, (3) shipments, (4) capacity utilization, (5) employment, and (6) profit margins.

The allegations of injury and causation are supported by relevant evidence including ITC section 332 import data, lost sales, 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 (see Attachments to Initiation Checklist, Re: Material Injury).

Initiation of Antidumping Investigation

Based upon our examination of the petition on foundry coke imports from the PRC, we find 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 foundry coke products from the PRC are being, or are likely to be, sold in the United States at less than fair value. Unless postponed, 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 PRC. We will attempt to provide a copy of the public version of the 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 preliminarily determine, no later than November 6, 2000, whether there is a reasonable indication that imports of foundry coke products from the PRC are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination will result in this 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.