E5-1664. Partial Affirmative Preliminary Determination of Critical Circumstances: Chlorinated Isocyanurates from the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

April 11, 2005.

FOR FURTHER INFORMATION CONTACT:

Cindy Lai Robinson or Brian C. Smith, AD/CVD Operations, Office 9, 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:

PRELIMINARY DETERMINATION OF CRITICAL CIRCUMSTANCES

Based on allegations contained in the Petitioners'¹ March 4, 2005, amendment to the May 14, 2004 petition, we preliminarily find, pursuant to section 733(e) of the Tariff Act of 1930, as amended (“the Act”), and section 351.206 of the Department of Commerce (“Department”) regulations, that critical circumstances exist with regard to imports of chlorinated isocyanurates from the PRC for the PRC-wide entity and Shanghai Tian Yuan International Trading Co., Ltd. (“Tian Yuan”), one of the Section A Respondents.² Critical circumstances do not exist with regard to imports of chlorinated isocyanurates from the PRC for the following entities: Hebei Jiheng Chemical Co., Ltd. (“Jiheng”), Nanning Chemical Industry Co., Ltd. (“Nanning”), and the remaining four Section A Respondents.

Background

The Petitioners filed a timely allegation of critical circumstances on March 4, 2005 (“critical circumstances petition”), in accordance with section 733(e)(1) of the Act and section 351.206(c)(1) of the Department's regulations. On March 8 and 14, 2005, the Department requested that Jiheng and Nanning report their monthly shipment data of subject merchandise to the United States for 2002 through 2005. Nanning and Jiheng provided the requested information. In its March 14, 2005, response, pursuant to section 351.301(c) of the Department's regulations, Jiheng argued that the evidence on the record does not support an affirmative finding of critical circumstances with respect to Jiheng.

Period of Investigation

The period of investigation (“POI”) is October 1, 2003, through March 31, 2004. This period corresponds to the two most recent fiscal quarters prior to the month of the filing of the Petition (May 14, 2004). See 19 CFR 351.204(b)(1).

Scope of Investigation

The products covered by this investigation are chlorinated isocyanurates. Chlorinated isocyanurates are derivatives of cyanuric acid, described as chlorinated s-triazine triones. There are three primary chemical compositions of chlorinated isocyanurates: (1) trichloroisocyanuric acid (“TCCA”) (Cl3 (NCO)3), (2) sodium dichloroisocyanurate (dihydrate) (NaCl2(NCO)3) • 2H2O), and (3) sodium dichloroisocyanurate (anhydrous) (NaCl2(NCO)3). Chlorinated isocyanurates are available in powder, granular, and tableted forms. This investigation covers all chlorinated isocyanurates.

Chlorinated isocyanurates are currently classifiable under subheadings 2933.69.6015, 2933.69.6021, and 2933.69.6050 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The tariff classification 2933.69.6015 covers sodium dichloroisocyanurates (anhydrous and dihydrate forms) and trichloroisocyanuric acid. The tariff classifications 2933.69.6021 and 2933.69.6050 represent basket categories that include chlorinated isocyanurates and other compounds including an unfused triazine ring. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this investigation is dispositive. Arch's patented chlorinated isocyanurates tablet is also included in the scope of this investigation. See Preliminary Determination³ and Amended Preliminary Determination.⁴

Critical Circumstances

On March 4, 2005, the Petitioners alleged that there is a reasonable basis to believe or suspect critical circumstances exist with respect to the antidumping investigation of chlorinated isocyanurates from the PRC. Because the Petitioners submitted critical circumstances allegations more than 30 days before the scheduled date of the final determination but later than 20 days before the preliminary determination, the Department must issue a preliminary determination of critical circumstances within 30 days after the Petitioners submitted the allegation. See Section 351.206(c)(2)(ii) of the Department's regulations. Section 733(e)(1) of the Act provides that, upon receipt of a timely allegation of critical circumstances, the Department will determine whether there is a reasonable basis to believe or suspect that: (A)(i) there is a history of dumping and material injury by reason of dumped imports in the United States or elsewhere of the subject merchandise or (ii) the person by whom, or for whose account, the merchandise was imported knew or should have known that the exporter was selling the subject merchandise at less than its fair value and that there was likely to be material injury by reason of such sales, and (B) there have been massive imports of the subject merchandise over a relatively short period.

Section 351.206(h)(1) of the Department's regulations provides that, in determining whether imports of the subject merchandise have been “massive,” the Department normally will examine (i) the volume and value of the imports, (ii) seasonal trends, and (iii) the share of domestic consumption accounted for by the imports. In addition, section 351.206(h)(2) of the Department's regulations provides that, “In general, unless the imports during the 'relatively short period' . . . have increased by at least 15 percent over the imports during an immediately preceding period of comparable duration, the Secretary will not consider the imports massive.”

Section 351.206(i) of the Department's regulations defines “relatively short period” as generally the period beginning on the date the proceeding begins (i.e., the date the petition is filed) and ending at least three months later. This section provides further that, if the Department “finds that importers, or exporters or producers, had reason to believe, at some time prior to the beginning of the proceeding, that a proceeding was likely,” then the Department may consider a period of not less than three months from that earlier time.

In determining whether the above statutory criteria have been satisfied, we examined the following information: (1) the evidence presented in the Petitioners' March 4, 2005, submission; (2) evidence obtained since the initiation of the less-than-fair-value (“LTFV”) investigation (i.e., import statistics released by the U.S. Census Bureau); and (3) the International Trade Commission's (“ITC”) preliminary material injury determination. See Chlorinated Isocyanurates from China and Spain, 69 FR 40417 (July 2, 2004) (“ITC Preliminary Determination”).In determining whether a history of dumping and material injury exists, the Department generally considers current or previous antidumping duty orders on subject merchandise from the country in question in the United States and current orders in any other country with regard to imports of chlorinated isocyanurates from the PRC. In their March 4, 2005, submission, the Petitioners made no statement concerning a history of dumping chlorinated isocyanurates from the PRC. However, we are aware of an antidumping order in Mexico on trichloroisocyanuric acid from the PRC dated December 20, 2002. See WTO Committee on Anti-Dumping Practices, Semi-Annual Report Under Article 16.4 of the Agreement, G/ADP/N/126/MEX at 7 (Feb. 25, 2005).⁵ As discussed in the “scope of investigation” section of the accompanying Federal Register notice, TCCA (i.e., one of three primary chemical compositions of chlorinated isocyanurates) is included in the scope of this investigation. Therefore, the Department finds that there is a history of injurious dumping of chlorinated isocyanurates from the PRC pursuant to section 733(e)(1)(A)(i) of the Act. See, e.g., Initiation of Antidumping Duty Investigation: Certain Steel Concrete Reinforcing Bar From Turkey, 61 FR 15039, 15040 (April 4, 1996).

Having satisfied Section 733(e)(1)(A)(i) of the Act, the first prong of the test is met. However, for these preliminary findings, we have also examined the applicability of Sections 733(e)(1)(A)(ii) and 733(e)(1)(B) as discussed below.

In determining whether an importer knew or should have known that the exporter was selling subject merchandise at LTFV, the Department must rely on the facts before it at the time the determination is made. The Department generally bases its decision with respect to knowledge on the margins calculated in the preliminary antidumping duty determination.

The Department normally considers margins of 25 percent or more for export price (“EP”) sales and 15 percent or more for constructed export price (“CEP”) sales sufficient to impute importer knowledge of sales at LTFV. See e.g., Carbon and Alloy Steel Wire Rod From Germany, Mexico, Moldova, Trinidad and Tobago, and Ukraine: Preliminary Determination of Critical Circumstances, 67 FR 6224, 6225 (February 11, 2002). See also Affirmative Preliminary Determination of Critical Circumstances: Magnesium Metal from the People's Republic of China, 70 FR 5606 (February 3, 2005). Our Amended Preliminary Determination found margins of 86.79 percent and 179.48 percent for the two mandatory respondents, Jiheng and Nanning, respectively. The five Section A Respondents received a separate rate margin of 111.03 percent based on the weighted-average margins of Jiheng and Nanning, the mandatory respondents in this investigation. See Amended Preliminary Determination. The PRC-wide entity received a margin of 179.48 percent. See Amended Preliminary Determination; see also Antidumping Duty Investigation of Chlorinated Isocyanurates from the People's Republic of China (the “PRC”) - Partial Affirmative Preliminary Determination of Critical Circumstances (“Preliminary Critical Circumstances Memorandum”) at Attachment II, dated April 4, 2005, from James C. Doyle, Office Director, AD/CVD Operations, Office 9, to Barbara E. Tillman, Acting Deputy Assistant Secretary, Import Administration.

In determining whether an importer knew or should have known that there was likely to be material injury caused by reason of such imports, the Department normally will look to the preliminary injury determination of the ITC. If the ITC finds a reasonable indication of present material injury to the relevant U.S. industry, the Department will determine that a reasonable basis exists to impute importer knowledge that material injury is likely by reason of such imports. See Final Determination of Sales at Less Than Fair Value: Certain Cut-To-Length Carbon Steel Plate from the People's Republic of China, 62 FR 61964 (November 20, 1997). In the present case, the ITC preliminarily found a reasonable indication that an industry in the United States is materially injured by imports of chlorinated isocyanurates from the PRC. See ITC Preliminary Determination.

Based on the ITC's preliminary determination of material injury and the preliminary dumping margins for Jiheng, Nanning, the Section A Respondents, and the PRC-wide entity, the Department preliminarily finds that there is a reasonable basis to believe or suspect that the importers knew or should have known that there was likely to be material injury by reason of sales at LTFV of subject merchandise from the PRC from these exporters.

Pursuant to section 351.206(h) of the Department's regulations, we will not consider imports to be massive unless imports in the comparison period have increased by at least 15 percent during a relatively “short period” over imports in the base period. The Department normally considers a “relatively short period” as the period beginning on the date the proceeding begins and ending at least three months later. See 19 C.F.R. 351.206(I). According to section 351.206(i) of the Department's regulations, “if the Secretary finds that importers, or exporters or producers, had reason to believe, at some time prior to the beginning of the proceeding, that a proceeding was likely, then the Secretary may consider a time period of not less than three months from that earlier time.” The Department normally compares the import volumes of the subject merchandise for at least three months immediately preceding the filing of the petition (i.e., the “base period”) to a comparable period of at least three months following the filing of the petition (i.e., the “comparison period”). Imports normally will be considered massive when imports during the comparison period have increased by 15 percent or more compared to imports during the base period. See 19 C.F.R. 351.206(c)(2).

Based on information contained in an e-mail dated March 2004, the Petitioners maintain that there was an awareness in both the United States and China of an impending antidumping proceeding prior to the May 14, 2004, filing of the petition. Accordingly, the Petitioners requested that the Department use an eight-month base period and eight-month comparison period, and use March 2004 as the knowledge month.

Our analysis shows that we obtain the same conclusion regarding whether there are massive imports for Jiheng, Nanning, the Section A Respondents, and the China-wide entity, regardless of whether we use March 2004 as the knowledge month, as suggested by the Petitioners, or use May 2004 as the knowledge month, in which this proceeding was filed.

According to section 351.206(i) of the Department's regulations, the comparison period normally should be at least three months. In this case, we determine that a seven-month period is appropriate to be used as the “relatively short period.” The Department requested that the respondents in this investigation provide monthly shipment data for 2002 through 2005. See Letters to Jiheng and Nanning dated March 8 and 14, 2005, respectively. In addition, the Department obtained U.S. import data for subject merchandise for 2002, 2003, and 2004 as reported at the ITC's website, http://dataweb.usitc.gov.

On March 14, 15, and 17, 2005, the Department received company-specific data from Jiheng and Nanning. When we compared these companies' import data during the base period with the comparison period, we found that the volumes of imports of chlorinated isocyanurates from Jiheng and Nanning decreased over the base period, regardless of whether we used March or May 2004 as the knowledge month. See Preliminary Critical Circumstances Memorandum at Attachment I. Therefore, we find no massive imports from Jiheng and Nanning.

Because the PRC NME entity did not respond to the Department's antidumping questionnaire, we were unable to obtain shipment data from the PRC NME entity for purposes of our critical circumstances analysis and there is therefore no verifiable information on the record with respect to its export volumes. Section 776(a)(2) of the Act provides that, if an interested party or any other person (A) withholds information that has been requested by the administering authority or the Commission under this title, (B) fails to provide such information by the deadlines for submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782, (C) significantly impedes a proceeding under this title, or (D) provides such information but the information cannot be verified as provided in section 782(i), the administering authority and the Commission shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title. Furthermore, Section 776(b) of the Act provides that, if a party has failed to act to the best of its ability, the Department may apply an adverse inference.

The PRC NME entity did not respond to the Department's request for information. Thus, we are using facts available, in accordance with section 776(a) of the Act, in preliminarily determining whether there were massive imports of merchandise from the PRC NME entity. In accordance with section 776(b) of the Act, we also find that an adverse facts available is warranted.

In this case, the only source of available data from which to measure whether imports from the PRC entity were massive are the aggregate import statistics from the PRC, as reported on the ITC DataWeb site (http://dataweb.usitc.gov). Therefore, we have used these statistics to determine whether imports from the PRC entity were massive during the comparison period. We made adjustments for shipments reported by the mandatory respondents. Section 776(c) of the Act provides that, when the Department selects from among the facts otherwise available and relies on “secondary information,” the Department shall, to the extent practicable, corroborate that information from independent sources reasonably at the Department's disposal. The Statement of Administrative Action (“SAA”), accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994), states that “corroborate” means to determine that the information used has probative value. See SAA at 870. The aggregate import statistics from the ITC DataWeb are publicly available data by which the Department can determine import volumes of chlorinated isocyanurates into the United States on a month-by-month basis. Furthermore, this data is reported on a U.S. government website, enhancing its reliability.

Our analysis of the import statistics, adjusted for shipments by the mandatory respondents, indicates that shipments in the comparison period increased over those for the base period. In comparing import statistics from the base period to the comparison period, imports of chlorinated isocyanurates have increased by more than 15 percent,⁶ regardless of whether we used March or May 2004 as the knowledge month. See Preliminary Critical Circumstances Memorandum at Attachment IV. This comparison is based on the HTSUS number identified in the scope of the Preliminary Determination, HTSUS 2933.69.6050.⁷ As a result of our analysis, we determine that there were massive imports from the PRC-wide entity during the applicable relatively short period of time.

For the five Section A Respondents that voluntarily submitted information (Section A questionnaire responses) and received a separate rate, we did not request the monthly shipment information necessary to determine if there were massive imports. Tian Yuan, one of the Section A Respondents in this investigation, refused to participate in the Department's verification. Therefore, for the reasons expressed above with respect to the PRC-wide entity, we determine that imports from Tian Yuan were “massive” within the meaning of the Act during the applicable relatively short period of time and, as such, justify a preliminary determination of critical circumstances.

As the basis for determining whether massive imports existed for the remaining four Section A Respondents, we calculated a weighted-average increase/decrease in import volume based on the mandatory respondents' import volumes. When we compared these companies' import data during the base period with the comparison period, we found that the volume of imports of chlorinated isocyanurates decreased over the base period. Therefore, for all Section A respondents except for Tian Yuan, we find no massive imports during the applicable relatively short period of time.

We will issue a final determination concerning critical circumstances for all producers/ exporters of subject merchandise from the PRC when we issue our final determination in this investigation, which will be no later than May 2, 2005.

Case briefs or other written comments may be submitted to the Assistant Secretary for Import Administration no later than three days after the publication of the preliminary determination of critical circumstances in this proceeding. Rebuttal briefs limited to issues raised in the aforementioned case briefs will be due no later than two days after the deadline date for case briefs.

Suspension of Liquidation

With respect to Tian Yuan and the PRC-wide entity for chlorinated isocyanurates, we will direct U.S. Customs and Border Protection (“CBP”) to suspend liquidation of all unliquidated entries of chlorinated isocyanurates from the PRC that were entered, or withdrawn from warehouse, for consumption on or after 90 days prior to the date of publication in the Federal Register of our preliminary determination in these investigation. In accordance with section 733(d) of the Act, with respect to Jiheng, Nanning, and all Section A Respondents other than Tian Yuan for chlorinated isocyanurates, we will make no changes to our instructions to the CBP with respect to the suspension of liquidation of all entries of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of our preliminary determination in the Federal Register.

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

Dated: April 4, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

Footnotes

1. . The petitioners in this antidumping duty investigation are Clearon Corporation and Occidental Chemical Corporation (“the Petitioners”).

2.  The five Section A respondents include: Liaocheng Huaao Chemical Industry Co., Ltd. (“Huaao”); Shanghai Tian Yuan International Trading Co., Ltd., (“Tian Yuan”); Changzhou Clean Chemical Co., Ltd. (“Clean Chemical”); Sinochem Hebei Import & Export Corporation (“Sinochem Hebei”); and Sinochem Shanghai Import & Export Corporation (“Sinochem Shanghai”) (collectively “Section A Respondents”).

3.  Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Chlorinated Isocyanurates from the People's Republic of China, 69 FR 75293 (December 16, 2004) (“Preliminary Determination”).

4.  Notice of Amended Preliminary Antidumping Duty Determination of Sales at Less Than Fair Value: Chlorinated Isocyanurates from the People's Republic of China, 70 FR 9035 (February 24, 2005) (“””).

5.  We also note that the European Communities reported to the WTO that an investigation on trichloroisocyanuric acid (TCCA) was initiated in July 2004. See WTO Committee on Anti-Dumping Practices, Semi-Annual Report Under Article 16.4 of the Agreement, G/ADP/N/126/EEC at 39 (Mar. 8, 2005). The existence of this investigation is not a factor in our conclusion that there is a history of injurious dumping of chlorinated isocyanurates from the PRC pursuant to section 733(e)(1)(A)(i) of the Act.

6.  See Prelimniary Critical Circumstances Memorandum at Attachment III.

7.  There were no shipments under the two additional HTSUS numbers identified in the scope of the Amended Preliminary Determination investigation, HTSUS 2933.69.6015 and 2933.69.6021.