03-31478. Notice of Preliminary Determination of Sales at Less Than Fair Value: Wax and Wax/Resin Thermal Transfer Ribbons From France

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

December 22, 2003.

FOR FURTHER INFORMATION CONTACT:

Sebastian Wright at [phone], or Mark Hoadley at [phone]; Office of AD/CVD Enforcement 7, Group III, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

 

Preliminary Determination

We preliminarily determine that wax and wax/resin thermal transfer ribbons (TTR) from France are being sold, or are likely to be sold, in the United States at less than fair value (LTFV), as provided in section 733 of the Tariff Act of 1930, as amended (the Act). Because the sole respondent involved in this investigation, Armor, S.A. (Armor), withdrew its participation in the investigation, the preliminary margin assigned to Armor is based on adverse facts available (AFA). The estimated margin of sales at LTFV is shown in the Suspension of Liquidation section of this notice.

Interested parties are invited to comment on this preliminary determination. Unless extended, we will make our final determination not later than 75 days after the date of this preliminary determination.

Case History

This investigation was initiated on June 19, 2003.^[1] See Notice of Initiation of Antidumping Duty Investigation: Thermal Transfer Ribbons From France, Japan and the Republic of Korea, 68 FR 38305 (June 27, 2003) (Initiation Notice). Since the initiation of the investigation, the following events have occurred.

On July 14, 2003, the United States International Trade Commission (ITC) preliminarily determined that “there is a reasonable indication that an industry in the United States is materially injured by reason of imports from France, Japan, and Korea of certain wax and wax/resin thermal transfer ribbons.” See Certain Wax and Wax/Resin Thermal Transfer Ribbons From France, Japan, and Korea, 68 FR 42759 (July 18, 2003).

On July 14, 2003, counsel for Armor met with the Department to discuss product characteristics. On July 17, 2003, Armor submitted comments regarding product characteristics and the Department's upcoming tour of petitioner's TTR production facilities in New York. On July 21, 2003, the Department toured these facilities and met with petitioner to discuss product characteristics.

On August 4, 2003, August 6, 2003, and August 18, 2003, petitioner submitted comments regarding the model match criteria. On August 5, 2003, and August 6, 2003, Armor submitted comments regarding the model match criteria. Additional model match comments were submitted by other interested parties on this record, as follows: Illinois Tool Works Inc. and ITW Specialty Films Co., Ltd. (collectively, ITW), on July 21, 2003, and August 4, 2003; Dai Nippon Printing Company, Ltd., on August 5, 2003; and Brother International Corporation, on August 6, 2003. On August 8, 2003, the Department issued its model match criteria via sections B and C of the questionnaire. On August 28, 2003, the Department clarified its model match criteria. On September 4, 2003, petitioner submitted additional comments regarding model match criteria. On October 9, 2003, the Department met with petitioner's counsel to discuss its model match comments.

On July 28 and July 30, 2003, petitioner submitted comments regarding the scope of the investigation. On August 7, 2003, General Company Limited, an interested party, submitted comments regarding the scope of the investigation. On September 2, 2003, petitioner submitted a “test” description to the Department, for the purpose of determining whether a product should be classified as a wax, resin enhanced wax, or wax/resin ribbon. On September 9, 2003, Armor submitted comments on petitioner's September 2 test proposal. On September 11, 2003, the Department issued a clarification to the scope of this investigation. See Memorandum from Edward C. Yang, Director, Office of AD/CVD Enforcement 9, to Joseph A. Spetrini, Deputy Assistant Secretary; Antidumping Investigation on Certain Wax and Wax/Resin Thermal Transfer Ribbon from France, Japan and Korea: Scope Clarification. The Department removed the word “pure” from the section discussing the exclusion of resin TTR in the scope language.

On November 4, 2003, petitioner submitted a letter to the Department correcting a typographical error in the color specification of the scope, as written in the petition and initiation notice. Petitioner stated that “−20>a*<35” should read, “−20<a*<35.”

On August 1, 2003, the Department issued section A of its questionnaire to Armor, the only known French producer/exporter of TTR to the United States.^[2] As mentioned above, on August 8, 2003, the Department issued sections B through E of its questionnaire, including model match criteria. On August 20, 2003, the Department, pursuant to Armor's request, extended the deadlines for responding to all sections of the questionnaire, to September 5 for section A, and to September 24 for sections B through E. On September 5, 2003, the Department received a response to section A of its questionnaire. On September 22, 2003, the Department again extended the deadlines for sections B through E to September 29, again at Armor's request. On September 29, 2003, the Department received a response to sections B and C. On September 26, 2003, pursuant to a third extension request from Armor, the Department again extended the deadline for sections D and E until October 2, 2003. On October 14, 2003, petitioner submitted comments on Armor's section B and C responses.

On September 4, 2003, the Department met with Armor's counsel to discuss various issues regarding its forthcoming cost reporting. On September 5, 2003, Armor submitted documents to the Department used in the September 4 meeting for illustrative purposes. On September 10, 2003, petitioner submitted comments on these cost reporting issues. On September 12, 2003, the Department issued its positions on Armor's cost reporting issues. See Letter to Armor, S.A. from Sally Gannon, Program Manager, Office of AD/CVD Enforcement 7; Regarding Antidumping Duty Investigation of Certain Wax and Wax/Resin Thermal Transfer Ribbons from France; Clarification of Cost Reporting. The Department received a response to sections D and E on October 2, 2003. On October 20, 2003, petitioner submitted comments on the section D and E responses.

On October 22, 2003, the Department issued a supplemental questionnaire to Armor pertaining to its section A through C responses. In the questionnaire, we also asked Armor to consider rebracketing significant portions of all sections of its questionnaire response, reducing the amount of information it claimed to be business proprietary. On October 27, 2003, pursuant to Armor's request, we granted deadline extensions to Armor, to October 28 for rebracketing, and to November 7 for answering supplemental questions. On October 29 and 30, 2003, the Department issued supplemental questionnaires pertaining to Armor's section D and E responses, respectively.

On October 3, 2003, petitioner made a timely request for a forty-day postponement of the preliminary determination pursuant to section 733(c)(1)(A) of the Act. On October 21, 2003, we postponed the preliminary determination until no later than December 16, 2003. See Wax and Wax/Resin Thermal Transfer Ribbons from France, Japan, and the Republic of Korea; Notice of Postponement of Preliminary Determinations in Antidumping Duty Investigations, 68 FR 60085 (October 21, 2003).

On October 30, 2003, Armor withdrew from the investigation, requesting that all business proprietary copies of its questionnaire responses be returned or destroyed. It cited “the burdensome nature and extreme expense of participating” in the investigation as its reason for withdrawing. On December 16, 2003, the Department notified Armor that it had destroyed all business proprietary copies of its questionnaire responses. See Letter to Armor, S.A. from Sally Gannon, Program Manager, Office of AD/CVD Enforcement 7.

Selection of Respondents

Section 777A(c)(1) of the 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, section 777A(c)(2) of the Act permits the Department to investigate 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 that can reasonably be examined.

During the period of investigation (POI), only Armor was identified as a producer/exporter of subject merchandise from France. Therefore, we selected Armor as the sole respondent in the investigation of TTR from France.

Period of Investigation

The POI is April 1, 2002, through March 31, 2003. This period corresponds to the four most recent fiscal quarters prior to the month of filing of the petition (i.e., June 2003) involving imports from a market economy, and is in accordance with our regulations. See 19 CFR 351.204(b)(1).

Scope of Investigation

This investigation covers wax and wax/resin thermal transfer ribbons (TTR), in slit or unslit (“jumbo”) form originating from France with a total wax (natural or synthetic) content of all the image side layers, that transfer in whole or in part, of equal to or greater than 20 percent by weight and a wax content of the colorant layer of equal to or greater than 10 percent by weight, and a black color as defined by industry standards by the CIELAB (International Commission on Illumination) color specification such that L*<35, −20<a*<35, and −40<b*<31, and black and near-black TTR. TTR is typically used in printers generating alphanumeric and machine-readable characters, such as bar codes and facsimile machines.

The petition does not cover resin TTR, and finished thermal transfer ribbons with a width greater than 212 millimeters (mm), but not greater than 220 mm (or 8.35 to 8.66 inches) and a length of 230 meters (m) or less (i.e., slit fax TTR, including cassetted TTR), and ribbons with a magnetic content of greater than or equal to 45 percent, by weight, in the colorant layer.The merchandise subject to this investigation may be classified in the Harmonized Tariff Schedule of the United States (HTSUS) at heading 3702 and subheadings 3921.90.40.25, 9612.10.90.30, 3204.90, 3506.99, 3919.90, 3920.62, 3920.99 and 3926.90. The tariff classifications are provided for convenience and Customs and Border Protection (CBP) purposes; however, the written description of the scope of the investigation is dispositive.

On October 28, 2003 and November 21, 2003, petitioner submitted documents it claims suggest the respondents in the TTR investigations are attempting to circumvent a potential TTR antidumping order by slitting subject merchandise jumbo rolls in a third country. Petitioner contends that the country of origin of slit TTR should be determined by the country of origin of the jumbo TTR roll from which it was slit, regardless of where the slitting occurred. Petitioner argues that slitting subject merchandise jumbo TTR rolls does not involve a substantial transformation, and therefore, does not change the country of origin of slit TTR rolls.

On November 26, 2003, Armor submitted comments regarding petitioner's allegation. Armor argues that the further manufacturing process does in fact substantially transform the jumbo TTR rolls, and, thus, does change the country of origin of the merchandise. On December 5, 2003, petitioner submitted a response to Armor's November 26 submission. On December 12, 2003, Armor submitted additional comments regarding this issue.

We have reviewed petitioner's and Armor's comments. However, since a determination of whether or not slitting jumbo TTR rolls constitutes substantial transformation and changes the country of origin of the merchandise may affect the scope of this investigation and future proceedings, it is necessary to provide interested parties the opportunity to comment on this issue. See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997). Therefore, the Department encourages all interested parties to submit such comments. Comments are due within 14 days of the publication of this notice. Rebuttal comments must be filed within five days after the deadline for the submission of the initial country of origin comments. We remind parties that case and rebuttal briefs, whether commenting on this country of origin issue, or any other issue, must be limited to the facts already on the record in accordance with section 351.301 of the Department's regulations.

Facts Available

For the reasons discussed below, we determine that the use of AFA is appropriate for the preliminary determination with respect to Armor.

A. Use of Facts Available

Section 776(a)(2) of the Act provides that, if an interested party withholds information requested by the Department, fails to provide such information by the deadline or in the form or manner requested, significantly impedes a proceeding, or provides information which cannot be verified, the Department shall use facts otherwise available in reaching the applicable determination. As stated above, Armor has informed the Department that it will no longer participate in this investigation and has requested that all of its responses be returned or destroyed. Therefore, the Department has no choice but to rely on the facts otherwise available in order to determine a margin for this party. Thus, in reaching our preliminary determination, pursuant to section 776(a)(2) of the Act, we have based Armor's margin rate on the facts available.

B. Application of Adverse Inferences for Facts Available

In applying facts otherwise available, section 776(b) of the Act provides that the Department may use an inference adverse to the interests of a party that has failed to cooperate by not acting to the best of its ability to comply with the Department's requests for information. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value and Final Negative Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (August 30, 2002). Adverse inferences are appropriate “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Rep. No. 103-316, at 870 (1994) (SAA). Furthermore, “{a}ffirmative evidence of bad faith on the part of a respondent is not required before the Department may make an adverse inference.” See Antidumping Countervailing Duties: Final Rule, 62 FR 27296, 27340 (May 19, 1997). In this case, Armor has failed to cooperate to the best of its ability by withdrawing its responses to the Department's antidumping questionnaires and declining any further participation in this investigation. We note that the Department granted all four of Armor's extension requests (as discussed above), albeit not necessarily always for the full extension requested by Armor. Therefore, the Department has preliminarily determined that in selecting from among the facts otherwise available, an adverse inference is warranted. See, e.g., Notice of Final Determination of Sales at Less than Fair Value: Circular Seamless Stainless Steel Hollow Products from Japan, 65 FR 42985, 42986 (July 12, 2000) (the Department applied total AFA where respondent failed to respond to the antidumping questionnaires).

C. Selection and Corroboration of Information Used as Facts Available

Where the Department applies AFA because a respondent failed to cooperate by not acting to the best of its ability to comply with a request for information, section 776(b) of the Act authorizes the Department to rely on information derived from the petition, a final determination, a previous administrative review, or other information placed on the record. See also 19 CFR 351.308(c); SAA at 829-831. In this case, because we are unable to calculate margins for the respondent in this investigation, we are assigning to Armor the highest margin from the proceeding, which is the highest margin alleged for France in the petition, 60.60 percent. See Initiation Notice, 68 FR at 38307.

When using facts otherwise available, section 776(c) of the Act provides that, when the Department relies on secondary information (such as the petition) in using facts otherwise available, it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. The SAA clarifies that “corroborate” means that the Department will satisfy itself that the secondary information to be used has probative value. See SAA at 870. The Department's regulations state that independent sources used to corroborate such evidence may include, for example, published price lists, official import statistics and customs data, and information obtained from interested parties during the particular investigation. See 19 CFR 351.308(d); see also SAA at 870.

To assess the reliability of the petition margin for the purposes of this investigation, to the extent appropriate information was available, we reviewed the adequacy and accuracy of the information in the petition during our pre-initiation analysis. See Antidumping Investigations Initiation Checklist; Wax and Wax/Resin Thermal Transfer Ribbon From France, Japan, and South Korea, pages 5 through 7 (June 25, 2003) (Initiation Checklist). In accordance with section 776(c) of the Act, to the extent practicable, we examined the key elements of the constructed export price (CEP) and normal value (NV) calculations on which the highest margin in the petition was based.^[3]

1. Corroboration of Constructed Export Price

To calculate constructed export price (CEP) petitioner obtained pricing information for sales by Armor of certain wax and wax/resin products sold in the United States, comparable to products sold in the home market. Petitioner made certain adjustments to this selling price for specific expenses that would be incurred by foreign producers of the subject merchandise for sales made in the United States. Because petitioner was unable to obtain actual data for selling expenses incurred by respondents in the United States, petitioner obtained price quotes as a basis for its estimates of certain expenses, and also based its estimates of such expenses on actual figures incurred in the course of its own selling activities. Petitioner claimed this approach is a reasonable and appropriate way to calculate CEP because the selling process for TTR is uniform within the United States, and the selling activities performed by respondent's U.S. affiliates for their U.S. customers are largely the same as those performed by petitioner for its U.S. customers. Where known differences between petitioner's and respondent's operations exist, petitioner adjusted selling expenses accordingly to account for such differences.

With respect to selling expenses incurred in France, petitioner indicated there is no basis to believe that such expenses would differ for TTR destined for the United States versus merchandise sold in the home market. Therefore, according to petitioner, it is reasonable to consider such expenses to be equal for sales to the United States and in the home market.

As detailed in the Initiation Checklist, the petition contained documentation supporting the figures used in this CEP calculation, which was analyzed by the Department and revised by petitioner through answers to supplemental questions issued by the Department.

2. Corroboration of Normal Value

With respect to normal value (NV), petitioner relied on foreign market research to obtain price estimates for TTR sold in the home market. Petitioner obtained foreign market research relating to two grades of TTR sold in the French market. This sales information is contemporaneous with the sales information used as the basis for CEP and represents sales of products that are either identical or similar to those products for which petitioner obtained U.S. sales information.

As detailed in the Initiation Checklist, the petition contained documentation supporting the figures used in this NV calculation, which was analyzed by the Department and revised by petitioner through answers to supplemental questions issued by the Department.

All Others Rate

Section 735(c)(5)(B) of the Act provides that, where the estimated weighted-averaged dumping margins established for all exporters and producers individually investigated are zero or de minimis or are determined entirely under section 776 of the Act, the Department may use any reasonable method to establish the estimated all-others rate for exporters and producers not individually investigated. This provision contemplates that we weight-average margins other than zero, de minimis, and facts available margins to establish that “All Others” rate. Where the data do not permit weight-averaging such rates, the SAA provides that we use other reasonable methods. See SAA at 873. The petition contained only information relating to U.S. sales by Armor, compared against home market sales prices and cost. Since Armor is the only known French producer/exporter of subject merchandise, it is reasonable to use the sales by Armor used in the petition. Accordingly, we have applied a margin of 44.93 percent, a simple average of the two margins based on price and the one margin based on constructed value contained in the petition, as the “All Others” rate.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, we are directing CBP to suspend liquidation of all entries of TTR from France that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We are also instructing CBP to require a cash deposit or the posting of a bond equal to the dumping margins as indicated in the chart below. These instructions suspending liquidation will remain in effect until further notice.

The dumping margins are as follows:

Producer/exporter	Margin (percentage)
Armor, S.A	60.60
All Others	44.93

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the ITC of the Department's preliminary affirmative determination. If the final determination in this proceeding is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether imports of TTR from France are materially injuring, or threatening material injury to, the U.S. industry.

Public Comment

Interested parties are invited to comment on the preliminary determination. Interested parties may submit case briefs within 50 days of the date of publication of this notice. See 19 CFR 351.309(c)(1)(i). Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days after the deadline for the submission of case briefs. See 19 CFR 351.309(d). A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes. Further, we request that parties submitting briefs and rebuttal briefs provide the Department with a copy of the public version of such briefs on diskette.

In accordance with section 774 of the Act, we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs. If a request for a hearing is made, we will tentatively hold the hearing two days after the deadline for submission of rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230, at a time and in a room to be determined. Parties should confirm by telephone the date, time, and location of the hearing 48 hours before the scheduled date.

Interested parties who wish to request a hearing, or to participate in a hearing if one is requested, must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. At the hearing, oral presentations will be limited to issues raised in the briefs. See 19 CFR 351.310(c). Unless extended, the Department will make its final determination no later than 75 days after the date of this preliminary determination. However, as this date falls on a weekend, the due date will fall on the next business day, March 1, 2004.

This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act.

Dated: December 16, 2003.

James J. Jochum,

Assistant Secretary for Import Administration.

Footnotes

1.  The petitioner in this investigation is International Imaging Materials, Inc. (IIMAK).

2.  See VII-1 of the preliminary report of the ITC, publication 3613, July 2003, for proprietary information concerning Armor's share of French production and exports.

3.  The petition contains three margins. Two are comparisons of CEP to NV based on home market sales, and the third is based on a comparison of CEP to constructed value. The highest margin is one of the two that bases NV on home market sales.