E7-18071. Notice of Preliminary Determination of Sales at Less Than Fair Value: Glycine From the Republic of Korea

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

DATES:

Effective Date: September 13, 2007.

SUMMARY:

We preliminarily determine that imports of glycine from the Republic of Korea are being, or are likely to be, sold in the United States at less than fair value, as provided in section 733 of the Tariff Act of 1930, as amended. Interested parties are invited to comment on this preliminary determination. We will make our final determination within 75 days after the date of this preliminary determination.

FOR FURTHER INFORMATION CONTACT:

Dmitry Vladimirov or Richard Rimlinger, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On April 26, 2007, the Department of Commerce (the Department) published in the Federal Register the initiation of an antidumping investigation on glycine from the Republic of Korea. See Glycine from India, Japan, and the Republic of Korea: Initiation of Antidumping Duty Investigations, 72 FR 20816 (April 26, 2007) (Initiation Notice). The Department set aside a period for all interested parties to raise issues regarding product coverage. See Initiation Notice. We did not receive comments regarding product coverage from any interested party.

On May 21, 2007, we selected Korea Bio-Gen Co., Ltd. (Korea Bio-Gen) as the mandatory respondent in this investigation. See the Memorandum to Laurie Parkhill entitled “Antidumping Duty Investigation Glycine from the Republic of Korea—Respondent Selection,” dated May 21, 2007.

On May 25, 2007, the International Trade Commission (ITC) issued its affirmative preliminary determination that there is a reasonable indication that an industry in the United States is materially injured by reason of imports of glycine from the Republic of Korea. See Glycine from India, Japan, and Korea, 72 FR 29352 (May 25, 2007).

Period of Investigation

The period of investigation is January 1, 2006, through December 31, 2006.

Scope of Investigation

The merchandise covered by this investigation is glycine, which in its solid (i.e., crystallized) form is a free-flowing crystalline material. Glycine is used as a sweetener/taste enhancer, buffering agent, reabsorbable amino acid, chemical intermediate, metal complexing agent, dietary supplement, and is used in certain pharmaceuticals. The scope of this investigation covers glycine in any form and purity level. Although glycine blended with other materials is not covered by the scope of this investigation, glycine to which relatively small quantities of other materials have been added is covered by the scope. Glycine's chemical composition is C₂ H₅ NO₂ and is normally classified under subheading 2922.49.4020 of the Harmonized Tariff Schedule of the United States (HTSUS).

The scope of this investigation also covers precursors of dried crystalline glycine, including, but not limited to, glycine slurry (i.e., glycine in a non-crystallized form) and sodium glycinate. Glycine slurry is classified under the same HTSUS subheading as crystallized glycine (2922.49.4020) and sodium glycinate is classified under subheading HTSUS 2922.49.8000.

While HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this investigation is dispositive.

Issuance of Questionnaire

On June 21, 2007, we issued Sections A, B, C, D, and E ^[1] of the antidumping questionnaire to Korea Bio-Gen. We did not receive a response from Korea Bio-Gen by the close of business on July 16, 2007, the established deadline.

On July 19, 2007, we issued a letter to Korea Bio-Gen extending the deadline for submission of the antidumping questionnaire response to July 26, 2007, thereby affording it additional time to respond. We have not received any response to our questionnaire or any other communication from Korea Bio-Gen since we issued the questionnaire to it.

In our July 19, 2007, letter to Korea Bio-Gen, we also informed it that any submissions that were not filed in accordance with 19 CFR 351.303 and 304 of our regulations would be deemed untimely filed pursuant to 19 CFR 351.302 and that we may use facts otherwise available for Korea Bio-Gen's antidumping margin in this investigation pursuant to sections 776(a) and (b) of the Tariff Act of 1930, as amended (the Act).

Use of Facts Otherwise Available

For the reasons discussed below, we determine that the use of adverse facts available (AFA) is appropriate for the preliminary determination with respect to Korea Bio-Gen.

A. Use of Facts Available

Section 776(a)(2) of the Act provides that, if an interested party withholds information requested by the administering authority, fails to provide such information by the deadlines for submission of the information and in the form or manner requested, subject to subsections (c)(1) and (e) of section 782, significantly impedes a proceeding under this title, or provides such information but the information cannot be verified as provided in 782(i), the administering authority shall use, subject to section 782(d) of the Act, facts otherwise available in reaching the applicable determination. Section 782(d) of the Act provides that, if the administering authority determines that a response to a request for information does not comply with the request, the administering authority shall promptly inform the responding party and provide an opportunity to remedy the deficient submission. Section 782(e) of the Act states further that the Department shall not decline to consider submitted information if all of the following requirements are met: (1) The information is submitted by the established deadline; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability; and (5) the information can be used without undue difficulties.

In this case, Korea Bio-Gen did not provide pertinent information we requested that is necessary to calculate an antidumping margin for the preliminary determination. Specifically, Korea Bio-Gen failed to respond to our questionnaire entirely, thereby withholding, among other things, home-market and U.S. sales information that is necessary for reaching the applicable determination, pursuant to section 776(a)(2)(A) of the Act. Thus, in reaching our preliminary determination, pursuant to sections 776(a)(2)(A), (B), and (C) of the Act, we have based the dumping margin on facts otherwise available for Korea Bio-Gen.

B. Application of Adverse Inferences for Facts Available

In applying the facts otherwise available, section 776(b) of the Act provides that, if the administering authority finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information from the administering authority, in reaching the applicable determination under this title, the administering authority may use an inference adverse to the interests of that party in selecting from among the facts otherwise available. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value, and Postponement of Final Determination: Certain Circular Welded Carbon-Quality Line Pipe From Mexico, 69 FR 59892 (October 6, 2004).

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. Doc. No. 103-316, vol.1 (1994) at 870 (SAA). Further, “affirmative evidence of bad faith on the part of a respondent is not required before the Department may make an adverse inference.” See Antidumping Duties; Countervailing Duties, 62 FR 27296, 27340 (May 19, 1997). Although the Department provided Korea Bio-Gen with notice informing it of the consequences of its failure to respond adequately to the questionnaire in this case, pursuant to section 782(d) of the Act, Korea Bio-Gen did not respond to the questionnaire. This constitutes a failure on the part of Korea Bio-Gen to cooperate to the best of its ability to comply with a request for information by the Department within the meaning of section 776(b) of the Act. Because Korea Bio-Gen did not provide the information requested, section 782(e) of the Act is not applicable. Based on the above, the Department has preliminarily determined that Korea Bio-Gen failed to cooperate to the best of its ability and, therefore, 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 (July 12, 2000) (the Department applied total AFA where the respondent failed to respond to the antidumping questionnaire).

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) and the SAA at 829-831. It is the Department's practice to use the highest calculated rate from the petition in an investigation when a respondent fails to act to the best of its ability to provide the necessary information and there are no other respondents. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Purified Carboxymethylcellulose From Finland, 69 FR 77216 (December 27, 2004) (unchanged in Notice of Final Determination of Sales at Less Than Fair Value: Purified Carboxymethylcellulose From Finland, 70 FR 28279 (May 17, 2005)). Therefore, because an adverse inference is warranted, we have assigned to Korea Bio-Gen the highest margin alleged in the petition, as recalculated in the Initiation Notice, of 138.83 percent (see Petition for the Imposition of Antidumping Duties on Imports of Glycine from India, Japan, and the Republic of Korea filed on March 30, 2007 (Petition), and April 3, 12, 13, 17, and 18, 2007, supplements to the Petition filed on behalf of Geo Specialty Chemicals, Inc. (the petitioner)), as recalculated in the April 19, 2007, “Office of AD/CVD Operations Initiation Checklist for the Antidumping Duty Petition on Glycine from the Republic of Korea” (Initiation Checklist) on file in Import Administration's Central Records Unit, Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. We included the range of margins we re-calculated in the Initiation Checklist in the notice of initiation of this investigation. See Initiation Notice, 72 FR at 20819.

When using facts otherwise available, section 776(c) of the Act provides that, when the Department relies on secondary information (such as the petition) rather than on information obtained in the course of an investigation, it must corroborate, to the extent practicable, information from independent sources that are reasonably available at its disposal.

The SAA clarifies that “corroborate” means the Department will satisfy itself that the secondary information to be used has probative value. See SAA at 870. As stated in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, from Japan; Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 61 FR 57391, 57392 (November 6, 1996) (unchanged in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Final Results of Antidumping Duty Administrative Reviews and Termination in Part, 62 FR 11825, 11843 (March 13, 1997)), to corroborate secondary information, the Department will examine, to the extent practicable, the reliability and relevance of the information used. 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) and the SAA at 870.

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 and for purposes of this preliminary determination. See Initiation Checklist. We examined evidence supporting the calculations in the Petition to determine the probative value of the margins alleged in the Petition for use as AFA for purposes of this preliminary determination. During our pre-initiation analysis, we examined the key elements of the export-price and normal-value calculations used in the Petition to derive margins. During our pre-initiation analysis, we also examined information from various independent sources provided either voluntarily in the Petition or, based on our requests, in supplements to the Petition, that corroborates key elements of the export-price and normal-value calculations used in the Petition to derive estimated margins.

Specifically, the petitioner calculated an export price using the U.S. price quote it obtained for food-grade glycine from the Republic of Korea for sale to a large customer in the United States during 2006. We obtained affidavits from persons who obtained the U.S. price quote. See Initiation Checklist at 6-8. The petitioner also calculated a second export price using the average monthly Customs Unit Values (AUVs) ‘F.O.B. foreign port,’ of glycine imports from the Republic of Korea for consumption in the United States, classified under HTSUS number 2922.49.4020 for year 2006, gathered from the Bureau of the Census IM145 import statistics. The petitioner used information from PIERS Global Intelligence Services to demonstrate that most, if not all, entries of glycine during 2006 were of the food-grade glycine. U.S. official import statistics are sources that we consider reliable. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value: Superalloy Degassed Chromium from Japan, 70 FR 48538 (August 18, 2005), and applicable Memorandum to the File from Dmitry Vladimirov entitled “Preliminary Determination in the Antidumping Duty Investigation of Superalloy Degassed Chromium from Japan: Corroboration of Total Adverse Facts Available Rate,” dated August 11, 2005 (Chromium from Japan) (unchanged in Notice of Final Determination of Sales at Less Than Fair Value: Superalloy Degassed Chromium from Japan, 70 FR 65886 (November 1, 2005)). We then compared the U.S. price quote to the AUVs for 2006 and confirmed that the value of the U.S. price quote was consistent with 2006 U.S. import prices. See Initiation Checklist at 6-8. Further, we obtained no other information that would make us question the reliability of the pricing information provided in the Petition.

The petitioner adjusted export prices for foreign inland freight, international freight, U.S. inland freight, distributor mark-up, and credit charges. The petitioner used publicly available data, such as PIERS Global Intelligence Services, information at http://www.freightcenter.com, data queries from USITC Interactive Tariff and Trade DataWeb, etc., to estimate charges for foreign inland freight, international freight, and U.S. inland freight. See Initiation Checklist at 6-8. These are sources of information that we consider reliable. Further, we obtained no other information that would make us question the reliability of the adjusted information provided in the Petition. In addition, because the petitioner reported that there were no credit expenses in the home market, our regulations at 19 CFR 351.410(c) do not require an adjustment for differences in circumstances of sale in the instant case. Therefore, the net U.S. prices we re-calculated in the Initiation Checklist did not include an adjustment for U.S. credit expenses. As such, it was not necessary to corroborate the petitioner's calculation of U.S. credit expenses. The petitioner estimated the distributor mark-up based on GEO Specialty Chemicals, Inc.'s sales personnel's knowledge of distributor mark-ups in the domestic glycine industry. The petitioner provided an affidavit from persons attesting to the validity of the distributor mark-up value the petitioner used in the calculation of net U.S. price. See Initiation Checklist at 6-8.

Based on our examination of the aforementioned information, we consider the petitioner's calculation of net U.S. prices corroborated.

With respect to normal value, the petitioner claimed that, despite extensive efforts to determine prices in the Republic of Korea, it was not able to obtain usable price information for the year 2006 either for sales of glycine in the Republic of Korea or for sales of the Korean-origin glycine in third markets. The petitioner provided an affidavit from an economic consultant attesting to this fact. See Initiation Checklist at 8. We also examined the efforts that were made to obtain pricing information of the Korean-origin glycine. See Memorandum to the File entitled “Telephone Call to Market Research Firm Regarding the Antidumping Petition on Glycine from Korea,” dated April 19, 2007. Consequently, the petitioner based normal value for the Korean sales of a certain grade glycine on constructed value.

Pursuant to section 773(b)(3) of the Act, the cost of production consists of the cost of manufacturing (COM), selling, general and administrative (SG&A) expenses, financial expenses, and packing expenses. As we stated in the Initiation Notice, to calculate the COM, the petitioner multiplied the usage quantity of each input needed to produce one metric ton of glycine by the value of that input. The petitioner obtained all of the quantity and value data it used to calculate the COM from public sources. Specifically, the petitioner obtained the input-usage factors from the public record of the 1997-1998 administrative review of antidumping duty order on glycine from the People's Republic of China. See Initiation Notice, 72 FR 20819. The producer in the 1997-1998 review produced glycine by the same production method utilized by producers in the Republic of Korea. In exhibit O of its April 13, 2007, supplement to the Petition, the petitioner provided a declaration from a chemist and a director of technology at Specialty Chemicals, Inc., who acknowledged that, once the particular production process is chosen, the consumption quantities of inputs are dictated by the particular steps and chemistry of the process. As such, the petitioner claimed, the input-consumption factors it had used in its cost-of-production/constructed-value build-up that were reported by a Chinese glycine producer in the 1997-1998 administrative review are equally valid as a basis for estimating the inputs needed during the current period of investigation and, thus, for developing an accurate cost of producing glycine. See April 13, 2007, supplement to the Petition at page 2 and exhibit O.

The petitioner obtained the values for the inputs from various public sources. Specifically, the petitioner valued raw materials using import statistics in the World Trade Data Atlas for the year 2006, exclusive of imports from non-market and heavily subsidized economies, which is the latest Korean import data available. See Initiation Checklist at 8-9. The petitioner valued labor costs using year 2004 average per-hour wages for the Republic of Korea using the International Labour Organization's Yearbook of Labour Statistics and per-capita gross national income obtained from the World Bank. The petitioner did not adjust labor data for wage inflation. See Initiation Checklist at 8. The petitioner valued electricity and water consumption using data from page 43 of the Key World Energy Statistics 2003, published by the International Energy Agency. The petitioner did not adjust electricity data for inflation. See Initiation Checklist at 8-9. The petitioner calculated average factory overhead, SG&A, and the financial-expense ratios based on current audited financial statements of a publically traded Korean producer of lysine and threonine which are amino acids similar to glycine. See Initiation Checklist at 10-12. Because the petitioner used constructed value to determine normal value, it added an amount for profit calculated using the same financial statements. See Initiation Checklist at 10-12. The petitioner did not report a home-market interest rate or a home-market credit expense. Thus, we did not make an adjustment to normal value for home-market credit expenses.

Because the petitioner had demonstrated, and we confirmed, the validity of the input-usage quantities it used in its cost-of-production/constructed-value build-up, used public sources of information, such as official import statistics that we confirmed were accurate to value inputs of production, and used audited current financial statements of a publicly traded Korean producer of amino acids similar to glycine to compute factory overhead, SG&A, financial expense, and profit that we confirmed were accurate, we consider the petitioner's calculation of normal value, based on constructed value, corroborated. Further, we consider the petitioner's calculation of normal value corroborated because the bulk of the calculations relied on publicly available information or import statistics which do not require further corroboration. See, e.g., Chromium from Japan. Therefore, because we confirmed the accuracy and validity of the information underlying the derivation of margins in the Petition by examining source documents as well as publically available information, we preliminarily determine that the margins in the Petition are reliable for the purposes of this investigation.

In making a determination as to the relevance aspect of corroboration, the Department will consider information reasonably at its disposal as to whether there are circumstances that would render a margin not relevant. Where circumstances indicate that the selected margin is not appropriate as adverse facts available, the Department will disregard the margin and determine an appropriate margin. For example, in Fresh Cut Flowers from Mexico: Final Results of Antidumping Duty Administrative Review, 61 FR 6812 (February 22, 1996), the Department disregarded the highest margin as “best information available” (the predecessor to “facts available”) because the margin was based on another company's uncharacteristic business expense that resulted in an unusually high dumping margin.

In Am. Silicon Techs. v. United States, 273 F. Supp. 2d 1342, 1346 (CIT 2003), the court found that the adverse facts-available rate bore a “rational relationship” to the respondent's “commercial practices,” and was, therefore, relevant. In the pre-initiation stage of this investigation, we confirmed that the calculation of margins in the Petition reflects commercial practices of the particular industry during the period of investigation. Further, no information has been presented in the investigation that calls into question the relevance of this information. As such, we preliminarily determine that the highest margin in the Petition, which we determined during our pre-initiation analysis was based on adequate and accurate information and which we have corroborated for purposes of this preliminary determination, is relevant as the adverse facts-available rate for Korea Bio-Gen in this investigation.

Similar to our position in Polyethylene Retail Carrier Bags from Thailand: Preliminary Results of Antidumping Duty Administrative Review, 71 FR 53405 (September 11, 2006) (unchanged in Polyethylene Retail Carrier Bags from Thailand: Final Results of Antidumping Duty Administrative Review, 72 FR 1982 (January 17, 2007)), because this is the first proceeding involving Korea Bio-Gen, there are no probative alternatives. Accordingly, by using information that was corroborated in the pre-initiation stage of this investigation and preliminarily determined to be relevant to Korea Bio-Gen in this investigation, we have corroborated the adverse facts-available rate “to the extent practicable.” See section 776(c) of the Act, 19 CFR 351.308(d), and NSK Ltd. v. United States, 346 F. Supp. 2d 1312, 1336 (CIT 2004) (stating, “pursuant to the ‘to the extent practicable’ language * * * the corroboration requirement itself is not mandatory when not feasible”). Therefore, we find that the estimated margin of 138.83 percent in the Initiation Notice has probative value. Consequently, in selecting AFA with respect to Korea Bio-Gen, we have applied the margin rate of 138.83 percent, the highest estimated dumping margin set forth in the notice of initiation. See Initiation Notice.

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. Our recent practice under these circumstances has been to assign, as the all-others rate, the simple average of the margins in the petition. See Notice of Final Determinations of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products From Argentina, Japan and Thailand, 65 FR 5520, 5527-28 (February 4, 2000); see also Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coil from Canada, 64 FR 15457 (March 31, 1999), and Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coil from Italy, 64 FR 15458, 15459 (March 31, 1999). Consistent with our practice we calculated a simple average of the rates in the Petition, as recalculated in the Initiation Checklist at Attachment VI and as listed in the Initiation Notice, and assigned this rate to all other manufacturers/exporters. For details of these calculations, see the memorandum from Dmitry Vladimirov to File entitled “Antidumping Duty Investigation on Glycine from the Republic of Korea—Analysis Memo for All-Others Rate,” dated September 6, 2007.

Suspension of Liquidation

In accordance with section 733(d) of the Act, we are directing U.S. Customs and Border Protection (CBP) to suspend liquidation of all entries of glycine from the Republic of Korea that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We will instruct CBP to require a cash deposit or the posting of a bond equal to the margins, as indicated in the chart below. These suspension-of-liquidation instructions will remain in effect until further notice. The dumping margins are as follows:

Manufacturer or exporter	Margin (percent)
Korea Bio-Gen Co., Ltd.	138.83
All Others	138.60

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the ITC of our preliminary determination of sales at less than fair value. If our final antidumping determination is affirmative, the ITC will determine whether the imports covered by that determination are materially injuring, or threatening material injury to, the U.S. industry. The deadline for the Commission's determination would be the later of 120 days after the date of this preliminary determination or 45 days after the date of our final determination.

Public Comment

Case briefs for this investigation must be submitted no later than 30 days after the publication of this notice. Rebuttal briefs must be filed within five days after the deadline for submission of case briefs. 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.

Section 774 of the Act provides that the Department will hold a hearing to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by an interested party. If a request for a hearing is made in an investigation, the hearing normally will be held two days after the deadline for submission of the rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request within 30 days of the publication of this notice. Requests should specify the number of participants and provide a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs. We will make our final determination within 75 days after the date of this preliminary determination.

This determination is issued and published pursuant to sections 733(f) and 777(i)(1) of the Act.

Dated: September 6, 2007.

David M. Spooner,

Assistant Secretary for Import Administration.

Footnotes

1.  Section A of the antidumping duty questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all of the company's home-market sales of the foreign like product or, if the home market is not viable, of sales of the foreign like product in the most appropriate third-country market. Section C requests a complete listing of the company's U.S. sales of subject merchandise. Section D requests information of the cost of production of the foreign like product and the constructed value of the merchandise under investigation. Section E requests information on further-manufacturing activities.