02-8071. Notice of Initiation of Antidumping Duty Investigation: Certain Ball Bearings and Parts Thereof From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Initiation of antidumping duty investigation.

EFFECTIVE DATE:

April 3, 2002.

FOR FURTHER INFORMATION CONTACT:

Cindy Lai Robinson or Geoffrey Craig at [phone] or [phone], respectively; Office VI, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

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, as amended (“the Act”), by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department of Commerce's (“the Department's”) regulations are references to the provisions codified at 19 CFR Part 351 (2001).

The Petition

On February 13, 2002, the Department received a petition filed in proper form by the American Bearing Manufacturers Association (“ABMA” or “the petitioner”). On February 21, 2002, we sent the petitioner a letter with questions regarding the petition. The Department received information supplementing the petition on February 27, 2002.

In accordance with section 732(b) of the Act, the petitioner alleges that imports of ball bearings and parts thereof from the People's Republic of China (“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, or are threatening to materially injure, an industry in the United States.

The Department finds that the petitioner filed this petition on behalf of the domestic industry because it is an interested party, as defined in sections 771(9)(E) and 771(9)(F) of the Act and has demonstrated sufficient industry support with respect to the antidumping investigation that it is requesting the Department to initiate. (See the Determination of Industry Support for the Petition section below.)

Scope of Investigation

The scope of the investigation includes all antifriction bearings, regardless of size, precision grade or use, that employ balls as the rolling element (whether ground or unground) and parts thereof (inner ring, outer ring, cage, balls, seals, shields, etc.) that are produced in China. Imports of these products are classified under the following categories: Antifriction balls, ball bearings with integral shafts and parts thereof, ball bearings (including thrust, angular contact, and radial ball bearings) and parts thereof, and housed or mounted ball bearing units and parts thereof. The scope includes ball bearing type pillow blocks and parts thereof; and wheel hub units incorporating balls as the rolling element. With regard to finished parts, all such parts are included in the scope of the petition. With regard to unfinished parts, such parts are included if (1) they have been heat-treated, or (2) heat treatment is not required to be performed on the part. Thus, the only unfinished parts that are not covered by the petition are those that will be subject to heat treatment after importation.

Imports of these products are classified under the following Harmonized Tariff Schedules of the United States (HTSUS) subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00, 8431.39.0010, 8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00, 8482.99.05, 8482.99.2580, 8482.99.35, 8482.99.6595, 8483.20.40, 8483.20.80, 8483.30.40, 8483.30.80, 8483.50.90, 8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.60.80, 8708.70.6060, 8708.93.30, 8708.93.6000, 8708.93.75, 8708.99.06, 8708.99.31, 8708.99.4000, 8708.99.4960, 8708.99.5800, 8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 8803.90.90.

Specifically excluded from the scope are unfinished parts that are subject to heat treatment after importation. Also excluded from the scope are cylindrical roller bearings, mounted or unmounted, and parts thereof (“CRB”) and spherical plain bearings, mounted and unmounted, and parts thereof (“SPB”). CRB products include all antifriction bearings that employ cylindrical rollers as the rolling element. SPB products include all spherical plain bearings that employ a spherically shaped sliding element and include spherical plain rod ends. Although the HTSUS subheadings are provided for convenience and U.S. Customs Service (“Customs”) purposes, the written description of the merchandise under investigation is dispositive.

During our review of the petition, we discussed the scope with the petitioner to ensure that the scope in the petition accurately reflects the product for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations (Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), we are setting aside a period for parties to raise issues regarding product coverage. The Department encourages all parties to submit such comments within 20 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 for scope comments is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determination.

Determination of Industry Support for the Petition

Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, when determining the degree of 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 both the Department and the ITC must apply the same statutory definition 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 like product, such differences do not render the decision of either agency contrary to the law.^[1]

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. Moreover, the petitioner does not offer a definition of domestic like product distinct from the scope of the investigation.

The petition covers ball bearings and parts thereof (“BB&P”) as defined in the Scope of the Investigation section, above, a single class or kind of merchandise. The Department has no basis on the record to find the petitioner'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. However, the Department will take into account any comments submitted by parties in connection with this issue during the course of the proceeding, and revisit the issue, if appropriate.

On March 4, 2002, the Department received comments regarding industry support from the following six PRC producers of the merchandise subject to this investigation: Ningbo MOS Group, Ningbo Cixin Bearing, Ningbo Huanchi Group, Wangxiang China, Ningbo General Bearing Co., Limited, and Jiangsu General Ball & Roller Co., Limited.

On March 5, 2002, the above six PRC producers filed additional information regarding their challenge to the standing of the petitioner. Specifically, they asserted that many products covered by the scope of the product definition are not represented by ABMA member companies.

On March 5, 2002, the Department also received a submission from the petitioner to correct a “software sorting error” with respect to the shipment volumes reported for certain ABMA member companies. It claimed that this error does not affect the reported shipments to production ratio of ABMA member companies.

The petitioner submitted another response on March 13, 2002, to rebut the industry support challenge filed by the six foreign producers on March 4 and 5, 2002. In this submission, the petitioner revised its ABMA member companies' production volume, and the shipments volume and value for “complete bearings.” It also provided similar information for “parts.” It demonstrated that the industry support for its petition is over 50 percent either by “parts,” or by “complete bearings,” or by “ball bearings and parts thereof.” In addition, it rebutted the six PRC producers' March 5, 2002, allegations by showing that none of the named products in the foreign producers' submission, (i.e., casters, constant velocity joints, hardware, and linear bearings (used, for example, in furniture and desk drawers)) are covered by the scope of the petition.

On March 15, 2002, the above six PRC producers filed additional information regarding their challenge to the standing of the petitioner. Specifically, they state that if the petition excludes those products referenced in the March 5 submission (i.e., casters, constant velocity joints, hardware, and linear bearings) then the petition should be amended to say so explicitly. Further, they submitted a list of companies that they believe manufacture ball bearings or ball bearing parts that are not listed in the petition, and assert that by failing to provide the Department with a complete listing of the U.S. producers of ball bearings and ball bearings parts, the ABMA has complicated our effort to rule on its standing to petition for antidumping relief.

On March 19, 2002, the petitioner filed a rebuttal to the PRC producers' March 15, 2002 submission. The petitioner states that given its reported industry support figures, there is no need for the Department to poll individual companies since there is no possibility that the remaining companies represent more than a small minority of the domestic ball bearing industry. Further, the petitioner takes issue with the list of companies submitted by foreign producers, and notes that in any event none of the companies has registered opposition to the petition.

The Department has reviewed the comments of these PRC producers and the petitioner's revision to its petition. For further discussion of the comments and the petitioner's revision to its petition, see the Industry Support Attachment to the Import Administration AD Investigation Checklist, dated March 25, 2002 (“Initiation Checklist”) (public version on file in the Central Records Unit of the Department of Commerce, Room B-099) for further description.

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.

In order to estimate production for the domestic industry as defined for purposes of this case, the Department has relied on the petition. The only industry-wide data available was shipment data for calendar year (“CY”) 2000. Thus, the petition contained production and shipment data (by volume) of its members for CY 2000. To estimate industry-wide production, the petitioner compared its member companies' shipment data by volume with their production data by volume and derived a shipment to production ratio. The petitioner then divided the total industry-wide shipment figure by this ratio to derive an estimated total industry-wide ball bearing production.

Foreign producers contend that the petitioners' calculation of industry support, in using “complete bearings” figures, would be inaccurate by not taking into account “parts.” The petitioner subsequently provided industry support information taking into account “parts” as well as “complete bearings.” Based on this information, the petitioner has demonstrated that industry support was greater than 50 percent. See Initiation Checklist.

Accordingly, we find that information contained in the petition and its supplements demonstrate that the domestic producers or workers who support the petition account for over 50 percent of total production of the domestic like product. Therefore, the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and the requirements of section 732(c)(4)(A)(i) and section 732(c)(4)(D) are met. See Initiation Checklist at Attachment I. Furthermore, because the Department received no domestic opposition to the petition, the domestic producers or workers who support the petition account for 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. See Initiation Checklist. Thus, the requirement of section 732(c)(4)(A)(ii) is met.

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

Period of Investigation

The anticipated period of investigation is July 1, 2001, through December 31, 2001.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less than fair value upon which the Department has based its decision to initiate this investigation. The sources of data for the deductions and adjustments relating to home market and U.S. price are detailed in the Initiation Checklist.

The Department has analyzed the information in the petition and considers the country-wide import statistics for the anticipated period of investigation (“POI”) and pricing information used to calculate the estimated margin to be sufficient for purposes of initiation. Based on the information submitted in the petition, adjusted where appropriate, we are initiating this investigation, as discussed below and 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 will re-examine the information and may revise the margin calculation, if appropriate.

Export Price

The petitioner based export prices ^[2] on price lists and quotes of four representative sample products (6201-2RS, 6201ZZ, 6203-2RS, and 6203ZZ) from Chinese distributors of Chinese ball bearings and U.S. distributors of Chinese ball bearings for the period October to December 2001. Some prices were FOB Chinese port, for which the petitioner made no deductions to arrive at a net-price. In most instances, the prices were FOB from a U.S. location. In these instances, the petitioner calculated a net price by deducting from the price movement expenses and a U.S. distributor markup of 15 percent. Movement expenses include costs for duties, ocean insurance and freight, and other import charges. See Initiation Checklist.

Normal Value

The petitioner asserts that the PRC is a nonmarket economy country (“NME”) within the meaning of section 771(18) of the Act. In previous investigations, the Department has determined that the PRC is an NME. See, e.g., Certain Hot-Rolled Carbon Steel Flat Products from the People's Republic of China; Notice of Preliminary Results of Antidumping Duty Administrative Review, 66 FR 22183 (May 31, 2001); Steel Wire Rope from the People's Republic of China; Notice of Final Determination of Sales at Less Than Fair Value, 66 FR 12759 (February 28, 2001). In accordance with section 771(18)(C)(i) of the Act, the presumption of NME status remains in effect until revoked by the Department. The presumption of NME status for the PRC has not been revoked by the Department and, therefore, remains in effect for purposes of the initiation of this investigation. Accordingly, the normal value of the product appropriately is based on the producer's 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. See, e.g., Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994).

For the normal value calculation, the petitioner based the factors of production, as defined by section 773(c)(3) of the Act, on the quantities of inputs used to produce four representative ball bearings reported by one of its major member companies. The petitioner uses the actual usage rates of a U.S. production facility in accordance with 19 CFR 351.202(b)(7)(B) because information on actual usage rates of representative Chinese bearing producers is not reasonably available to the petitioner. The petitioner claims that this company was selected because it is one of the most efficient ball bearing producers in the world. Therefore, this company's usage rates should yield conservative estimates of the degree of dumping for the selected products. The petitioner asserts that India is the most appropriate surrogate country for the PRC, claiming that India is: (1) A market economy; (2) a significant producer of comparable merchandise; and (3) at a level of economic development comparable to the PRC in terms of per capita gross national product. Based on the information provided by the petitioner, we believe that the petitioner's use of India as a surrogate country is appropriate for purposes of initiating this investigation.

In accordance with section 773(c)(4) of the Act, the petitioner valued factors of production, where possible, on reasonably available, public surrogate country data. Specifically, the factor costs for all but one of the material inputs, including inner and outer rings, retainers, shields, and seats, were based on the Monthly Statistics of the Foreign Trade of India for the period January to December 2000. The petitioner did not rely on Indian import values for the factor cost of balls because it claims that such Indian import values are not reliable. Therefore, for balls, the petitioner conservatively used the value of steel used to produce rollers derived during the twelfth administrative review of tapered roller bearings. The value was adjusted for inflation. The petitioner asserts that using this value is appropriate because the balls used in the representative products, like the rollers reviewed, are made of AISI 52100 chrome steel.

Where scrap from the production process is recyclable, the recovery value for the scrap is subtracted from the gross cost. Values for scrap steel and the scrap offset were based on Indian imports of scrap. Unit energy costs were obtained from publicly available Indian energy prices, TERI Energy Data Directory and Yearbook 1999/2000, adjusted for inflation.

Labor was valued using the regression-based wage rate for China provided by the Department, in accordance with 19 CFR 351.408(c)(3).

The factory overhead rate, selling, general & administrative expenses (“SG&A”) rate, and profit rate, were based on the average respective rates derived from the 1999 financial statements of three surrogate Indian ball bearing producers. The petitioner did not include costs of packing in its normal value calculation.

Based on the information provided by the petitioner, we believe that the petitioner's factors of production methodology represents information reasonably available to the petitioner and is appropriate for purposes of initiating this investigation.

Based on comparisons of export price to normal value, the petitioner calculated dumping margins ranging from 17 to 249 percent. See Initiation Checklist.

Fair Value Comparisons

The Department has examined the adequacy and accuracy of the information the petitioner used in its calculations of U.S. and home market prices and has found that it represents information reasonably available to the petitioner supporting the allegation of dumping.

Based on the data provided by the petitioner, there is reason to believe that imports of ball bearings and parts thereof from the PRC are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

The petitioner alleges that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the imports of the subject merchandise sold at less than NV. The petitioner contends that the industry's injured condition is evident in the decline of U.S. producers' output, sales, market share, profits, productivity, return on investment, and capacity utilization, as well as negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital, investment, and existing development and production efforts. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, and lost sales, and pricing information. We have examined the accuracy and adequacy of the evidence provided in the petition and have determined that the petition alleges the elements necessary for the imposition of a duty under section 731 of the Act and contains information reasonably available to the petitioner supporting the allegations (see Initiation Checklist at Attachment II).

Initiation of Antidumping Investigation

Based upon our examination of the petition on ball bearings and parts thereof from the PRC and the petitioner's responses to our supplemental questionnaire clarifying the petition, we have found that the petition meets the requirements of section 732 of the Act. See Initiation Checklist. Therefore, we are initiating an antidumping duty investigation to determine whether imports of ball bearings and parts thereof from the PRC are being, or are likely to be, sold in the United States at less than fair value. Unless this deadline is postponed, we will make our preliminary determination no later than 140 days after the date of this initiation. See “Case Calendar” section of the Initiation Checklist.

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 government 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 determine, no later than April 1, 2002, whether there is a reasonable indication that imports of ball bearings and parts thereof 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 the investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits.

This notice is issued and published pursuant to section 777(i) of the Act.

Dated: March 25, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Footnotes

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 from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).

2.  The petitioner states that its dumping analysis proceeded under the conservative assumption that the vast majority of Chinese ball bearing sales in the Untied States are export price transactions.