[Federal Register Volume 63, Number 80 (Monday, April 27, 1998)]
[Notices]
[Pages 20575-20578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11148]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-827, A-580-833, A-201-821]
Initiation of Antidumping Investigations: Emulsion Styrene-
Butadiene Rubber from Brazil, the Republic of Korea, and Mexico
AGENCY: Import Administration, International Trade Administration,
Department of Commerce
EFFECTIVE DATE: April 27, 1998.
FOR FURTHER INFORMATION CONTACT: David Genovese, at (202) 482-0498,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230.
[[Page 20576]]
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 to the
regulations published in the Federal Register on May 19, 1997 (62 FR
27296).
The Petition
On April 1, 1998, the Department of Commerce (the Department)
received a petition filed in proper form by Ameripol Synpol Corporation
and DSM Copolymer. On April 3, 1998, the Department received an
amendment to the petition. On April 13, 1998, the Department received
supplemental information to the petition that it had requested from the
petitioners.
In accordance with section 732(b) of the Act, the petitioners
allege that imports of emulsion styrene-butadiene rubber (ESBR) from
Brazil, the Republic of Korea (Korea), and Mexico 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 the 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 (see discussion below).
Scope of Investigations
For purposes of these investigations, the product covered is ESBR.
ESBR is a synthetic polymer made via free radical cold emulsion
copolymerization of styrene and butadiene monomers in reactors. The
reaction process involves combining styrene and butadiene monomers in
water, with an initiator system, an emulsifier system, and molecular
weight modifiers. ESBR consists of cold non-pigmented rubbers and cold
oil extended non-pigmented rubbers that contain at least one percent of
organic acids from the emulsion polymerization process.
ESBR is produced and sold, both inside the United States and
internationally, in accordance with a generally accepted set of product
specifications issued by the International Institute of Synthetic
Rubber Producers (IISRP). The universe of products subject to these
investigations are grades of ESBR included in the IISRP 1500 series and
IISRP 1700 series of synthetic rubbers. The 1500 grades are light in
color and are often described as ``Clear'' or ``White Rubber.'' The
1700 grades are oil-extended and thus darker in color, and are often
called ``Brown Rubber.'' ESBR is used primarily in the production of
tires. It is also used in a variety of other products, including
conveyor belts, shoe soles, some kinds of hoses, roller coverings, and
flooring.
Products manufactured by blending ESBR with other polymers, high
styrene resin master batch, carbon black master batch (i.e., IISRP 1600
series and 1800 series) and latex (an intermediate product) are not
included within the scope of these investigations.
The products under investigation are currently classifiable under
subheading 4002.19.0010 of the Harmonized Tariff Schedule of the United
States (HTSUS). Although the HTSUS subheading is provided for
convenience and customs purposes, the written description of the scope
of these investigations is dispositive.
During our review of the petition, we discussed the scope with the
petitioners to ensure that the scope in the petition accurately
reflects the product for which they are seeking relief. As we discussed
in the preamble to the new regulations (62 FR 27323), we are setting
aside a period for parties to raise issues regarding product coverage.
The Department encourages all parties to submit such comments by May
18, 1998. Comments should be addressed to Import Administration's
Central Records Unit at Room 1874, U.S. Department of Commerce,
Pennsylvania Avenue and 14th Street, NW, Washington, D.C., 20230. This
period of scope consultation is intended to provide the Department with
ample opportunity to consider all comments and consult with 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 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 account for production
of 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 provision 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
domestic like product, such differences do not render the decision of
either agency contrary to the law.1 Section 771(10) of the
Act defines 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.
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\1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays
and Display Glass Therefor from Japan: Final Determination;
Rescission of Investigation and Partial Dismissal of Petition, 56 FR
32376, 32380-81 (July 16, 1991).
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The domestic like product referred to in the petition is the single
domestic like product defined in the ``Scope of Investigation''
section, above. The Department has no basis on the record to find the
petition's definition of the domestic like product to be inaccurate.
The Department has, therefore, adopted the domestic like product
definition set forth in the petition. In addition, the petitioners
established that they represent more than 50 percent of domestic
production of the like product. This level of industry support is above
the statutory requirement. Accordingly, the Department determines that
the 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 are descriptions of the allegations of sales at less
than fair value
[[Page 20577]]
upon which our decisions to initiate these investigations are based.
Should the need arise to use any of this information in our preliminary
or final determinations for purposes of facts available under section
776 of the Act, we may re-examine the information and revise the margin
calculations, if appropriate.
Brazil
The petitioners identified Petroflex Industria e Comercio S.A.
(Petroflex) as the sole exporter and producer of ESBR from Brazil. The
petitioners based export price on U.S. prices in call reports generated
by the petitioners' sales personnel in the normal course of business
and obtained from various customers over the last 12 months for ESBR
grades 1502 and 1712, the grades the petitioners claim are those used
most extensively by the tire industry. The petitioners converted U.S.
prices quoted in dollars per pound to dollars per metric ton by
multiplying the per pound amounts by 2204.60 pounds per metric ton. The
petitioners calculated net U.S. prices by subtracting an estimate of
the international freight and insurance expenses incurred to transport
the subject merchandise from the factory to a port in the United States
or to the U.S. customer, depending on the terms of sale specified in
the call reports. Where the terms of sale were not specified in the
call report, the petitioners assumed that the terms of sale were FOB
Brazil and no freight expense was deducted from the U.S. price. The
petitioners estimated the cost of international freight and insurance
based upon the difference in the CIF values and the U.S. Customs values
reported in the official U.S. import statistics for 1997.
With respect to normal value (NV), the petitioners obtained from a
local business contact in Brazil prices for contemporaneous sales of
ESBR grades 1502 and 1712 from Petroflex to a Brazilian consumer.
Because home market prices were quoted in U.S. dollars, prices were
converted from U.S. dollars to reals for purposes of making adjustments
based on the daily exchange rate corresponding to the date of the price
quotes. Daily exchange rates for 1997 were obtained from the database
of exchange rates maintained by Import Administration on the internet.
Daily exchange rates for 1998 were obtained from The Money Exchange
(internet address www.oanda.com). When comparing normal value to U.S.
price, the petitioners used the daily exchange rate corresponding to
the effective date of each U.S. sale to convert the normal values to
U.S. dollars. The petitioners calculated net home market prices by
subtracting an amount for the estimated expense incurred by Petroflex
to deliver the merchandise to the Brazilian consumer. This estimate was
provided by the local business contact noted above.
The petitioners made a circumstance of sale adjustment for imputed
credit expenses by subtracting home market credit expenses and by
adding U.S. credit expenses to the net home market prices calculated in
the petition. The petitioners calculated home market imputed credit
expenses based on payment terms of net 35 days, as reported by the
local business contact, and the annual average Brazilian bank rate
published by the International Financial Statistics of 26.4 percent.
The petitioners calculated U.S. credit expenses based on payment terms
of net 30 days and the annual average lending rate in the United States
published in the International Financial Statistics of 8.44 percent.
The petitioners did not adjust the reported prices for differences in
packing costs because the petitioners assumed that packing costs were
the same for home market and for U.S. sales.
Comparison of NV and net U.S. prices for sales of ESBR from Brazil
results in estimated dumping margins that range from 17.77 percent to
71.08 percent.
Korea
The petitioners identified two exporters and producers of ESBR:
Korea Kumho Petrochemical Company (Kumho) and Hyundai Petrochemical
Co., Ltd. (Hyundai). The petitioners based export price on U.S. prices
in call reports generated by the petitioners' sales personnel in the
normal course of business and obtained from various customers over the
last 12 months for ESBR grades 1502 and 1712. The petitioners converted
U.S. prices quoted in dollars per pound to dollars per metric ton by
mulitplying the per pound amounts by 2204.60 pounds per metric ton. The
petitioners calculated net U.S. prices by subtracting an estimate of
the international freight and insurance expenses incurred to transport
the subject merchandise from the factory to a port in the United States
or to the U.S. customer, depending on the terms of sales specified in
the call reports. Where the terms of sale were not specified in the
call reports, the petitioners assumed that the terms of sale were FOB
Korea and no freight expense was deducted from the U.S. price. The
petitioners estimated the cost of international freight and insurance
based upon the difference in the CIF values and the U.S. Customs values
reported in the official U.S. import statistics for 1997.
With respect to NV, the petitioners obtained from local business
contacts in Korea prices for contemporaneous sales of ESBR grades 1502
and 1712 from Kumho to Korean consumers. For Hyundai, the petitioners
obtained from local business contacts in Korea prices for
contemporaneous sales of ESBR grades 1500/1500H (rather than 1502) and
1712 from Hyundai to Korean consumers. However, the petitioners
provided documentation to show that ESBR grades 1500/1500H and 1502 are
priced the same by Hyundai in Korea. Due to the volatility in the
exchange rate, the petitioners received a set of price quotes from one
producer for a period before exchange rate volatility set in, as well
as for a period after the Korean won plummeted in value. Where home
market prices were quoted in U.S. dollars, prices were converted from
U.S. dollars to won for purposes of making adjustments based on the
daily exchange rate corresponding to the effective date of the price
quote. Daily exchange rates for 1997 were obtained from the database of
exchange rates maintained by Import Administration on the internet.
Daily exchange rates for 1998 were obtained from The Money Exchange
(internet address www.oanda.com). When comparing normal value to U.S.
price, the petitioners used the daily exchange rate corresponding to
the effective date of each U.S. sale to convert the normal values to
U.S. dollars. The petitioners calculated net home market prices by
subtracting an amount for the estimated expense incurred by Hyundai and
Kumho to deliver the merchandise to the consumer in Korea. This
estimate was provided by the local business contact noted above.
The petitioners made a circumstance of sale adjustment for imputed
credit expenses by subtracting home market credit expenses and by
adding U.S. credit expenses to the net home market prices calculated in
the petition. The petitioners calculated home market imputed credit
expenses based on the typical credit terms for ESBR in Korea as
obtained by local business contacts of 90 days, and the average
corporate bond rate in Korea published by the International Financial
Statistics for August 1997, of 12.1 percent (to reflect the corporate
bond rate before the won depreciated), and October 1997, of 12.5
percent (to reflect the corporate bond rate after the won depreciated).
See Exhibit 8 of the petition. The petitioners calculated U.S. credit
expenses based on payment terms of net 30 days, and the annual average
lending rate in the
[[Page 20578]]
United States published in the International Financial Statistics of
8.44 percent. The petitioners did not adjust the reported prices for
differences in packing costs because the petitioners assumed that
packing costs were the same for home market and for U.S. sales.
Comparison of NV and net U.S. prices for sales of ESBR from Korea
results in estimated dumping margins that range from 14.92 percent to
118.88 percent.
Mexico
The petitioners identified Industrias Negromex, S.A. de C.V.
(Negromex) as the sole exporter and producer of ESBR from Mexico. The
petitioners based export price on contemporaneous price quotes to an
unaffiliated U.S. consumer and U.S. prices in call reports generated by
the petitioners' sales personnel in the normal course of business over
the last 12 months for grades 1502 and 1712. The petitioners converted
U.S. prices quoted in dollars per pound to dollars per metric ton by
multiplying the per pound amounts by 2204.60 pounds per metric ton. The
petitioners calculated net U.S. prices by subtracting an estimate of
the international freight and insurance expenses incurred to transport
the subject merchandise from the factory to a port in the United States
or to the U.S. customer, depending on the terms of sales specified in
the call reports. Where the terms of sale were not specified in the
call report, the petitioners assumed that the terms of sale were FOB
Mexico and no freight expense was deducted from the U.S. price. The
petitioners estimated the cost of international freight and insurance
based upon the difference in the CIF values and the U.S. Customs values
reported in the official U.S. import statistics for 1997.
With respect to NV, the petitioners obtained from a local business
contact in Mexico contemporaneous price quotes for ESBR grades 1502 and
1712 from Negromex to Mexican consumers of ESBR. The petitioners
converted home market prices quoted in pesos per kilogram to U.S.
dollars per metric ton by using a conversion ratio of one kilogram
equals 1/1000 metric tons and the Mexican pesos/U.S. dollar exchange
rate in effect on the date of the U.S. sale. Daily exchange rates for
1997 were obtained from the database of exchange rates maintained by
Import Administration on the internet. Daily exchange rates for 1998
were obtained from The Money Exchange (internet address www.oanda.com).
The petitioners made a circumstance of sale adjustment for imputed
credit expenses by subtracting home market credit expenses and by
adding U.S. credit expenses to the net home market prices calculated in
the petition. The petitioners calculated home market imputed credit
expenses based on payment terms of net 60 days, as reported by the
local business contacts, and the annual average Mexican Treasury bill
rate published by the International Financial Statistics of 19.80
percent. The petitioners calculated U.S. credit expenses based on
payment terms of net 30 days and the annual average lending rate in the
United States published in the International Financial Statistics of
8.44 percent. The petitioners did not adjust the reported prices for
differences in packing costs because the petitioners assumed that
packing costs were the same for home market and for U.S. sales.
Comparison of NV and net U.S. prices for sales of ESBR from Mexico
results in estimated dumping margins that range from 6.06 percent to
25.16 percent.
Fair Value Comparisons
Based on the data provided by the petitioners, there is reason to
believe that imports of ESBR from Brazil, Korea, and Mexico 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, and is threatened with
material injury, by reason of imports of the subject merchandise sold
at less than NV. The allegations of injury and causation are supported
by relevant evidence including business proprietary data from the
petitioning firms and U.S. Customs import data. The Department assessed
the allegations and supporting evidence regarding material injury and
causation and determined that these allegations are sufficiently
supported by accurate and adequate evidence and meet the statutory
requirements for initiation.
Initiation of Antidumping Investigations
We have examined the petition on ESBR and have found that it meets
the requirements of section 732 of the Act. Therefore, we are
initiating antidumping duty investigations to determine whether imports
of ESBR from Brazil, Korea, and Mexico are being, or are likely to be,
sold in the United States at less than fair value. Unless extended, we
will make our preliminary determinations for the antidumping duty
investigations by September 8, 1998.
Distribution of Copies of the Petition
In accordance with section 732(b)(3)(A) of the Act, a copy of the
public version of each petition has been provided to the
representatives of the governments of Brazil, Korea, and Mexico. 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 initiations, as required by section
732(d) of the Act.
Preliminary Determinations by the ITC
The ITC will determine by May 18, 1998, whether there is a
reasonable indication that imports of ESBR from Brazil, Korea, and
Mexico are causing material injury, or threatening to cause material
injury, to a U.S. industry. Negative ITC determinations will result in
the particular investigations being terminated; otherwise, the
investigations will proceed according to statutory and regulatory time
limits.
Dated: April 21, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-11148 Filed 4-24-98; 8:45 am]
BILLING CODE 3510-DS-P
