2011-3889. Affirmative Preliminary Determination of Circumvention of the Antidumping Duty Order on Certain Cut-to-Length Carbon Steel Plate From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Determination of Circumvention of Antidumping Duty Order.

SUMMARY:

We preliminarily determine that imports from the People's Republic of China (PRC) of certain cut-to-length carbon steel plate products with 0.0008 percent or more boron, by weight, regardless of the producer or exporter or importer of the merchandise, and otherwise meeting the description of in-scope merchandise, are within the class or kind of merchandise subject to the order on certain cut-to-length carbon steel plate from the PRC.

DATES:

Effective Date: February 22, 2011.

FOR FURTHER INFORMATION CONTACT:

Steve Bezirganian or Robert James, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On February 17, 2010, ArcelorMittal USA, Inc., Nucor Corporation, SSAB N.A.D., Evraz Claymont Steel and Evraz Oregon Steel Mills (collectively Domestic Producers) requested that the Department of Commerce (the Department) make a final circumvention ruling with respect to certain cut-to-length carbon steel plate produced by Wuyang Iron and Steel Co., Ltd. (Wuyang), regardless of the exporter or importer, or imported by Stemcor USA Inc. (Stemcor), regardless of the producer or exporter, which contain 0.0008 percent or more, by weight, of boron. The Department initiated an antidumping circumvention inquiry pursuant to section 781(c) of the Tariff Act of 1930, as amended (the Act). See Certain Cut-to-Length Carbon Steel Plate from the People's Republic of China: Initiation of Antidumping Circumvention Inquiry, 75 FR 21241 (April 23, 2010) (Initiation Notice). That initiation indicated the merchandise subject to the inquiry was produced by Wuyang Iron and Steel Co., Ltd. (Wuyang), but also noted the Department intended “to address whether its circumvention ruling will apply to particular producers, exporters and/or importers (e.g., Stemcor) or to all U.S. imports” of certain cut-to-length carbon steel plate from the PRC. Id. at 21242.

On May 3, 2010, the Department issued a questionnaire to Wuyang. On June 1, 2010, Wuyang submitted its response to that questionnaire. On July 2, 2010, Nucor Corporation submitted comments on Wuyang's questionnaire response. On July 22, 2010, Domestic Producers submitted additional information they indicated is relevant to the inquiry. On October 22, 2010, the Department issued a supplemental questionnaire to Wuyang, and on November 23, 2010, Wuyang provided its response to that supplemental questionnaire. On December 8, 2010, the Department issued another supplemental questionnaire to Wuyang, and on December 16, 2010, Wuyang provided its response to that supplemental questionnaire. SSAB N.A.D., Evraz Claymont Steel and Evraz Oregon Steel Mills submitted comments and new information on January 3, 2011. On January 21, 2011, the following each submitted new information and/or comments: Wuyang, Nucor, and ArcelorMittal USA, Inc.

Scope of the Order

The product covered by this order is certain cut-to-length carbon steel plate from the People's Republic of China. Included in this description is hot-rolled iron and non-alloy steel universal mill plates (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm but not exceeding 1250 mm and of a thickness of not less than 4 mm, not in coils and without patterns in relief), of rectangular shape, neither clad, plated nor coated with metal, whether or not painted, varnished, or coated with plastics or other nonmetallic substances; and certain iron and non-alloy steel flat-rolled products not in coils, of rectangular shape, hot-rolled, neither clad, plated, nor coated with metal, whether or not painted, varnished, or coated with plastics or other nonmetallic substances, 4.75 mm or more in thickness and of a width which exceeds 150 mm and measures at least twice the thickness. Included as subject merchandise in this order are flat-rolled products of nonrectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been “worked after rolling”)—for example, products which have been bevelled or rounded at the edges. This merchandise is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers 7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this order is dispositive. Specifically excluded from subject merchandise within the scope of this order is grade X-70 steel plate.

Merchandise Subject to the Minor Alterations Antidumping Circumvention Proceeding

The merchandise subject to this antidumping circumvention inquiry (Inquiry Merchandise) consists of all merchandise produced by Wuyang containing 0.0008 percent or more boron, by weight, and otherwise meeting the requirements of the scope of the antidumping duty order as listed under the “Scope of the Order” section above, with the exception of merchandise meeting all of the following requirements: aluminum level of 0.02 percent or greater, by weight; a ratio of 3.4 to 1 or greater, by weight, of titanium to nitrogen; and a hardenability test (i.e., Jominy test) result indicating a boron factor of 1.8 or greater. This merchandise is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers 7225.40.3050, 7225.99.0090, 7226.91.5000, and 7226.99.0180. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of Inquiry Merchandise is dispositive.

Legal Framework

Section 781(c) of the Act, dealing with minor alterations of merchandise, states: (1) In general. The class or kind of merchandise subject to—(A) an investigation under this title, (B) an antidumping duty order issued under section 736, (C) a finding issued under the Antidumping Act, 1921, or (D) a countervailing duty order issued under section 706 or section 303, shall include articles altered in form or appearance in minor respects (including raw agricultural products that have undergone minor processing), whether or not included in the same tariff classification. (2) Exception. Paragraph (1) shall not apply with respect to altered merchandise if the administering authority determines that it would be unnecessary to consider the altered merchandise within the scope of the investigation, order, or finding.

Section 351.225(i) of the Department's regulations states that under section 781(c) of the Act, the Secretary may include within the scope of an antidumping or countervailing duty order articles altered in form or appearance in minor respects.

Criteria for Analysis

While the statute is silent regarding what factors to consider in determining whether alterations are properly considered “minor,” the legislative history of this provision indicates there are certain factors that should be considered before reaching a circumvention determination. Previous circumvention cases ^[1] have relied on the factors listed in the Senate Finance Committee report on the Omnibus Trade and Competitiveness Act of 1988 (which amended the Tariff Act of 1930 to include the anti-circumvention provisions contained in section 781), which states:

{i}n applying this provision, the Commerce Department should apply practical measurements regarding minor alterations, so that circumvention can be dealt with effectively, even where such alterations to an article technically transform it into a differently designated article. The Commerce Department should consider such criteria as the overall physical characteristics of the merchandise, the expectations of the ultimate users, the use of the merchandise, the channels of marketing and the cost of any modification relative to the total value of the imported products.^[2]

In the case of an allegation of a “minor alteration” under section 781(c) of the Act, it is the Department's practice to look at the five factors listed in the Senate Finance Committee report (Senate Report Criteria) to determine if circumvention exists in a particular case. See, e.g., Canadian Plate, 65 FR at 64929. In circumvention cases we sometimes analyze additional criteria to determine if circumvention of the order is taking place. Id. at 64930. These may be case-specific. For example, in Canadian Plate additional factors analyzed included the circumstances under which the products entered the United States, the timing of the entries during the circumvention review period, and the quantity of merchandise entered during the circumvention review period. Id. at 64930-31. In a more recent circumvention case, the additional factors analyzed included not only the timing of the entries during the period, but also other factors, such as the input of customers in the design phase. See Affirmative Preliminary Determination of Circumvention of the Antidumping Duty Order on Folding Metal Tables and Chairs from the People's Republic of China, 73 FR 63684 (October 27, 2008), unchanged in Affirmative Final Determination of Circumvention of the Antidumping Duty Order on Folding Metal Tables and Chairs from the People's Republic of China, 74 FR 20920 (May 6, 2009). Analysis

We examined the evidence and argument submitted by interested parties in the course of this inquiry in the context of the Senate Report Criteria and an additional factor, the timing of the entries during the period.

Based on our review of the record evidence and our analysis of the comments received, the Department preliminarily determines that imports from the PRC of Inquiry Merchandise produced by Wuyang are within the class or kind of merchandise subject to the order on certain cut-to-length carbon steel plate from the PRC. For a complete discussion of the Department's analysis, see the Preliminary Analysis Memorandum for the Circumvention Inquiry of the Antidumping Duty Order on Certain Cut-to-Length Carbon Steel Plate from the People's Republic of China, for the Producer known as Wuyang Iron and Steel Co., Ltd. (Preliminary Analysis Memorandum), dated concurrently with this notice.

As explained in the Preliminary Analysis Memorandum, we preliminarily determine that the Inquiry Merchandise has the same physical characteristics as products in the scope of the order on certain cut-to-length carbon steel plate from the PRC and the ITC Final Report except for the presence of boron in excess of 0.0008 percent, by weight.^[3] We find no evidence of significant differences in the physical characteristics, the expectations of the ultimate users, uses of the merchandise, or channels of marketing between products in the scope of the order and the Inquiry Merchandise. We find that the only difference in the production process is the addition of the boron, and the cost of such boron is insignificant. See Preliminary Analysis Memorandum.

As a result of our inquiry, we preliminarily determine that imports from the PRC of Inquiry Merchandise produced by Wuyang, regardless of the exporter or the importer of the merchandise, are within the class or kind of merchandise subject to the order on certain cut-to-length carbon steel plate from the PRC. See section 781(c) of the Act.

Application of Ruling to Inquiry Merchandise Regardless of Producer

As noted above, the Department preliminarily finds Inquiry Merchandise produced by Wuyang circumventing the order. The Department reached a similar conclusion in its previous circumvention inquiry involving cut-to-length carbon steel plate from the PRC, where the Department found a producer and an importer circumventing the order. See Tianjin Plate.^[4] In that case, three criteria were identified that, collectively, and in conjunction with the presence of 0.0008 percent or more boron, by weight, distinguish the resulting merchandise from merchandise covered by the scope of the order: aluminum level of 0.02 percent or greater, by weight; a ratio of 3.4 to 1 or greater, by weight, of titanium to nitrogen; and a hardenability test (i.e., Jominy test) result indicating a boron factor of 1.8 or greater. Those three distinguishing criteria were identified in the Initiation Notice, and no parties have suggested other objective criteria that would result in merchandise with 0.0008 percent or more, by weight, of boron being distinguishable from subject merchandise.

The Department indicated in the Initiation Notice that it would consider applying the results of the current inquiry to Inquiry Merchandise regardless of producer. See Initiation Notice. No parties have commented on this. The current inquiry and Tianjin Plate demonstrate that circumvention through use of boron has involved multiple parties producing and importing different specifications of plate. Therefore, the Department preliminarily determines that all merchandise, regardless of producer, containing 0.0008 percent or more boron and otherwise meeting the description of the scope, and not meeting the three distinguishing criteria listed above, are covered by the order. The Department has applied rulings in other circumvention inquiries on a country-wide basis. See, e.g., Affirmative Final Determination of Circumvention of the Antidumping Duty Order on Folding Metal Tables and Chairs from the People's Republic of China, 74 FR 20920 (May 6, 2009), and Later-Developed Merchandise Anticircumvention Inquiry of the Antidumping Duty Order on Petroleum Wax Candles from the People's Republic of China: Affirmative Final Determination of Circumvention of the Antidumping Duty Order, 71 FR 59075 (October 6, 2006). While we preliminarily determine that imports from the PRC of Inquiry Merchandise are subject to the order on certain cut-to-length carbon steel plate from the PRC, interested parties are not precluded by this determination from applying for a ruling as to whether a particular product is within the scope of the order. See 19 CFR 351.225(c).

Conclusion

As noted above, we preliminarily determine that imports from the PRC of Inquiry Merchandise are subject to the order on certain cut-to-length carbon steel plate from the PRC. Also as noted above, we preliminarily determine that imports of such products are subject to the order regardless of the producer.

Suspension of Liquidation

In accordance with section 351.225(l)(2) of the Department's regulations, we are directing U.S. Customs and Border Protection (CBP) to suspend liquidation of Inquiry Merchandise (regardless of producer) entered, or withdrawn from warehouse, for consumption on or after April 23, 2010, the date of the initiation of this inquiry. We will also instruct CBP to require a cash deposit of estimated duties at the applicable rates for each unliquidated entry of the product entered, or withdrawn from warehouse, for consumption on or after April 23, 2010, the date of the initiation of this inquiry, in accordance with section 351.225(l)(2) of the Department's regulations.

Public Comment

Interested parties are invited to comment on the preliminary results and may submit case briefs and/or written comments within 20 days of the publication of this notice. See 19 CFR 351.225(f)(3). Interested parties may file rebuttal briefs and rebuttals to written comments, limited to issues raised in such briefs or comments, no later than 10 days after the date on which the case briefs are due. Id. Interested parties may request a hearing within 20 days of the publication of this notice. Interested parties will be notified by the Department of the location and time of any hearing, if one is requested.

This preliminary determination of circumvention is in accordance with section 781(c) of the Act and 19 CFR 351.225.

Dated: February 14, 2011.

Ronald K. Lorentzen,

Deputy Assistant Secretary for Import Administration.

Footnotes

1.   See, e.g., Preliminary Determination of Circumvention of Antidumping Order; Cut-to-Length Carbon Steel Plate from Canada, 65 FR 64926, 64929 (October 31, 2000) (unchanged in final results, 66 FR 7617, 7618 (January 24, 2001)) (Canadian Plate); Final Results of Anti-Circumvention Review of Antidumping Order: Corrosion-Resistant Carbon Steel Flat Products From Japan, 68 FR 33676, 33679 (June 5, 2003); and Affirmative Preliminary Determination of Circumvention of the Antidumping Duty Order on Certain Cut-to-Length Carbon Steel Plate from the People's Republic of China, 74 FR 33991 (July 14, 2009) (unchanged in final results, 74 FR 40565, 40566 (August 12, 2009)) (Tianjin Plate).

2.  Omnibus Trade Act of 1987, Report of the Senate Finance Committee, S. Rep. No. 71, 100th Cong., 1st Sess., at 100 (1987) (emphasis added).

3.  Furthermore, Wuyang does not claim that the merchandise it shipped meets the additional requirements that would exclude it from this circumvention inquiry (i.e., aluminum level of 0.02 percent or greater, by weight; a ratio of 3.4 to 1 or greater, by weight, of titanium to nitrogen; and a hardenability test (i.e., Jominy test) result indicating a boron factor of 1.8 or greater), and the documentation on the record regarding the merchandise Wuyang manufactured and sold to the United States does not indicate those additional criteria were met.

4.  Furthermore, such a conclusion was reached in another proceeding involving plate products. See Canadian Plate.