Notice of Initiation of Countervailing Duty Investigations: Bottle-Grade Polyethylene Terephthalate (PET) Resin from India (C-533- 842) and Thailand (C-549-824)

DEPARTMENT OF COMMERCE

International Trade Administration

Notice of Initiation of Countervailing Duty Investigations:

Bottle-Grade Polyethylene Terephthalate (PET) Resin from India (C-533-

842) and Thailand (C-549-824)

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: April 20, 2004.

FOR FURTHER INFORMATION CONTACT: Douglas Kirby (India) or Christian

Hughes (Thailand) at (202) 482-3782 or (202) 482-0190 respectively,

Office of AD/CVD Enforcement VII, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Initiation of Investigations

The Petition

On March 24, 2004, the U.S. Department of Commerce (the Department)

received a countervailing duty petition filed in proper form by the

United States PET Resin Producers Coalition (``Petitioner''). The

Department received supplemental information to the petition from the

petitioner on April 5, 2004. In accordance with section 702(b)(1) of

the Tariff Act of 1930, as amended (the Act), petitioner alleges that

producers or exporters of bottle-grade PET resin in India and Thailand

receive countervailable subsidies within the meaning of section 701 of

the Act, and that imports from India and Thailand are materially

injuring, or are threatening material injury to, an industry in the

United States.

The Department finds that the petitioner filed the petition on

behalf of the domestic industry because it is an interested party as

defined in section 771(9)(C) of the Act and it has demonstrated

sufficient industry support with respect to the countervailing duty

investigations that it is requesting the Department to initiate. See

infra, ``Determination of Industry Support for the Petition.''

Period of Investigation

The anticipated period of investigation (POI) for both

investigations is January 1, 2003 through December 31, 2003. See

section 351.204(b)(2) of the Department's regulations (Antidumping

Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27385 (May 19,

1997)).

Scope of Investigations

The merchandise covered by each of these investigations is bottle-

grade polyethylene terephthalate (PET) resin, defined as having an

intrinsic viscosity of at least 0.68 deciliters per gram but not more

than 0.86 deciliters per gram. The scope includes bottle-grade PET

resin that contains various additives introduced in the manufacturing

process. The scope does not include post-consumer recycle (PCR) or

post-industrial recycle (PIR) PET resin; however, included in the scope

is any bottle-grade PET resin blend of virgin PET bottle-grade resin

and recycled PET (RPET). Waste and scrap PET is outside the scope of

the investigations. Fiber-grade PET resin, which has an intrinsic

viscosity of less than 0.68 deciliters per gram, is also outside the

scope of the investigations.

The merchandise subject to these investigations is properly

classified under subheading 3907.60.0010 of the Harmonized Tariff

Schedule of the United States (HTSUS); however, merchandise classified

under HTSUS subheading 3907.60.0050 that otherwise meets the written

description of the scope is also subject to these investigations.

Although the HTSUS subheadings are provided for convenience and 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 it is an accurate reflection of the products

for which the domestic industry is seeking relief. 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 calendar days of publication of this notice.

Comments should be addressed to Import Administration's Central Records

Unit, Room 1870, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW, Washington, DC 20230. The period of scope

consultations 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.

Consultations

In accordance with Article 13.1 of the Agreement on Subsidies and

Countervailing Measures and section 702(b)(4)(A)(ii) of the Act, we

held separate consultations regarding this petition with the Government

of India (``GOI'') and the Government of Thailand on April 7, 2004. See

Memorandum to the File from Douglas Kirby: Consultations with the

Government of India Regarding the Countervailing Duty Petition on PET

Resin, dated April 9, 2004; see also Memorandum to the File from

Christian Hughes: Consultations with the Government of Thailand

Regarding the Countervailing Duty Petition on PET Resin, dated April 8,

2004. Following consultations, the GOI provided information to support

its statements at consultations regarding several of the GOI programs

alleged by the petitioner. This information was placed in the record

and provided to petitioner. See Memorandum to the File from Dana

Mermelstein, ``Petition for the Imposition of Countervailing Duties on

Bottle-Grade Polyethylene Terephthalate (PET) Resin from India:

Information Submitted by the

[[Page 21087]]

Government of India,'' April 12, 2004, on file in the Import

Administration Central Records Unit , Room B-099 of the Department of

Commerce Building. The Department's consideration of this information

is fully discussed in the Countervailing Duty Investigation Initiation

Checklist: Bottle-Grade Polyethylene Terephthalate (PET) Resin from

India (April 13, 2004) (India CVD Initiation Checklist).

Determination of Industry Support for the Petition

Section 702(b)(1) of the Act requires that a petition be filed on

behalf of the domestic industry. Section 702(c)(4)(A) of the Act

provides that the Department's industry support determination, which is

to be made before the initiation of the investigations, be based on

whether a minimum percentage of the relevant industry supports the

petition. A petition satisfies 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. Moreover, section 702(c)(4)(D) of the Act

provides that, if the petition does not establish support of domestic

producers or workers accounting for more than 50 percent of the total

production of the domestic like product, the Department shall either

poll the industry or rely on other information in order to determine if

there is support for the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the

producers of a domestic like product. Thus, to determine whether a

petition has the requisite industry support, the statute directs the

Department to look to producers and workers who produce the domestic

like product. The U.S. 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\

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\1\ See USEC, Inc., v. United States, 132 F. Supp. 2d 1,8 (CIT

2001), citing Algoma Steel Corp. Ltd., v. United States, 688 F.

Supp. 639, 642-44 (CIT 1988). See also 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).

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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.

In this case, the petition covers a single class or kind of

merchandise, bottle-grade PET resin, as defined in the ``Scope of

Investigations'' section, above. The petitioner does not offer a

definition of domestic like product distinct from the scope of the

investigations. Further, based on our analysis of the information

presented to the Department by the petitioner, we have determined that

there is a single domestic like product, also bottle-grade PET resin,

which is consistent with the definition in the ``Scope of

Investigations'' section above and have analyzed industry support in

terms of this domestic like product.

The Department has determined that the petitioner has established

industry support representing over 50 percent of total production of

the domestic like product. See India CVD Initiation Checklist; see also

Countervailing Duty Investigation Initiation Checklist: Bottle-Grade

Polyethylene Terephthalate (PET) Resin from Thailand (Thailand CVD

Initiation Checklist) (April 13, 2004). Thus, no polling of the

domestic industry by the Department pursuant to section 702(c)(4)(D) of

the Act is required. In addition, the Department received no opposition

to the petition from domestic producers of the like product. Therefore,

the petitioner and the domestic producers who support the petition

account for at least 25 percent of the total production of the domestic

like product, and the requirements of section 702(c)(4)(A)(i) of the

Act are met. Furthermore, the petitioner and the domestic producers 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. Thus, the

requirements of section 702(c)(4)(A)(ii) of the Act also are met.

Accordingly, we determine that the petition is filed on behalf of

the domestic industry within the meaning of section 702(b)(1) of the

Act. See India CVD Initiation Checklist at Attachment II; see also

Thailand CVD Initiation Checklist, at Attachment II, on file in the

Central Records Unit, Room B-099 of the Department of Commerce.

Injury Test

Both India and Thailand are ``Subsidies Agreement Countries''

within the meaning of section 701(b) of the Act. Therefore, section

701(a)(2) applies to each investigation. Accordingly, the ITC must

determine whether imports of the subject merchandise from India and

Thailand are materially injuring, or are threatening material injury

to, an industry in the United States.

Allegations of Subsidies

Section 702(b) of the Act requires the Department to initiate a

countervailing duty proceeding whenever an interested party files a

petition, on behalf of an industry, that; (1) alleges the elements

necessary for an imposition of a duty under section 701(a), and (2) is

accompanied by information reasonably available to petitioner

supporting the allegations.

India

We are initiating an investigation of the following programs

alleged in the petition to have provided countervailable subsidies to

manufacturers, producers and exporters of the subject merchandise in

India (a full description of each program is provided in the India CVD

Initiation Checklist):

1. The Duty Entitlement Passbook Scheme (DEPS)/ Post-Export Credits

2. Pre-Shipment and Post-Shipment Export Financing

3. Export Promotion Capital Goods Scheme (EPCGS)

4. Income Tax Exemption Scheme (Sections 10A, 10B, and 80 HHC)

5. Exemption of Export Credit from Interest Taxes

6. Export Processing Zones/Export-Oriented Units Program

7. Market Development Assistance (MDA)

8. Status Certificate Program

9. Loan Guarantees from the GOI

10. State of Maharashtra Program: Industrial Policy 2001

11. State of Gujurat Program: Sales-Tax Incentive Scheme

12. State of West Bengal Program: New Economic Policy on Industrial

Development

[[Page 21088]]

Thailand

We are initiating an investigation of the following programs

alleged in the petition to have provided countervailable subsidies to

manufacturers, producers and exporters of the subject merchandise in

Thailand (a full description of each program is provided in the

Thailand CVD Initiation Checklist):

1. Section 28 of the Investment Promotion Act: Exemption from

Payment of Import Duties on Machinery

2. Section 30 of the Investment Promotion Act: Reduction of Import

Duties on Raw or Essential Materials

3. Section 31 of the Investment Promotion Act: Income Tax

Exemptions

4. Section 35 of the Investment Promotion Act: Special Rights and

Benefits Granted to Promoted Activities Located in Investment Promotion

Zones

Critical Circumstances Allegation

In the petition, the petitioner claims that, following the

initiation of these countervailing duty investigations, there is a

reasonable basis to believe or suspect that critical circumstances will

exist with regard to imports of bottle-grade PET resin from India and

Thailand.

Section 703(e)(1) of the Act states that, if a petitioner alleges

critical circumstances, the Department will find that such critical

circumstances exist, at any time after the date of initiation, when

there is a reasonable basis to believe or suspect that, under paragraph

(A), the alleged countervailable subsidies are inconsistent with the

Subsidies Agreement, and that, under paragraph (B), there have been

massive imports of the subject merchandise over a relatively short

period of time. Section 351.206(h) of the Department's regulations

defines ``massive imports'' as imports that have increased by at least

by 15 percent over the imports during an immediately preceding period

of comparable duration. Section 351.206(i) of the regulations states

that the ``relatively short period'' will normally be defined as the

period beginning on the date the proceeding begins and ending at least

three months later. To date, the petitioner has not demonstrated that

the requirement of ``massive imports . . . over a relatively short

period'' has been met.

The petitioner requests that, pursuant to section 702(e) of the

Act, the Department request U.S. Customs and Border Protection (CBP) to

compile information on an expedited basis regarding entries of subject

merchandise. We note that section 702(e) of the Act states that if, at

any time after initiation, there is a reasonable basis to believe or

suspect that the alleged countervailable subsidies are inconsistent

with the Subsidies Agreement, the Department may request the

Commissioner of Customs to compile such information on an expedited

basis. The petitioner alleges that certain programs listed in the

petition with respect to both India and Thailand constitute export

subsidies, which would be inconsistent with the Subsidies Agreement.

As noted above, the petitioner has not met the criteria for a

finding of critical circumstances. Therefore, at this time, we have no

reasonable basis to believe or suspect that critical circumstances

exist. However, the petitioner can resubmit its request for a finding

of critical circumstances and, if the criteria for such a finding are

met, we will issue a critical circumstances finding at the earliest

possible date. See Policy Bulletin 98/4, 63 FR 55364 (October 15, 1998)

(determination of critical circumstances may be made any time after

initiation). In addition, we are considering the petitioner's request

to obtain information from CBP for monitoring purposes, and will inform

interested parties of our determination as soon as practicable.

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 subsidized imports from India and

Thailand of the subject merchandise.

The petitioner contends that the industry's injured condition is

evident in lost sales and customers, in the declining trends in prices,

profits, and domestic market share, and in its reduced ability to

reinvest and pursue research and development activities. The

allegations of injury and causation are supported by relevant evidence

including U.S. import data, affidavits supporting claims of lost sales

and declining revenues, and pricing information. The petitioner also

alleges the imminent threat of further material injury based on the

likely increases in foreign production volume of bottle-grade PET

resin, the likelihood of substantially increased imports, and the

prices of these imports having the likely effect of depressing or

suppressing domestic prices.

The Department has assessed the allegations and supporting evidence

regarding material injury and causation and threat of material injury,

and has determined that these allegations are properly supported by

accurate and adequate evidence and meet the statutory requirements for

initiation. See India CVD Initiation Checklist; see also Thailand CVD

Initiation Checklist.

Initiation of Countervailing Duty Investigations

Based on our examination of the petition on bottle-grade PET resin,

and petitioner's responses to our requests for supplemental information

clarifying the petition, we have found that the petition meets the

requirements of section 702(b) of the Act. Therefore, in accordance

with section 702(b) of the Act, we are initiating two countervailing

duty investigations to determine whether manufacturers, producers, or

exporters of bottle-grade PET resin from India and from Thailand

receive countervailable subsidies. Unless the deadline is extended, we

will make our preliminary determinations no later than 65 days after

the date of this initiation.

Distribution of Copies of the Petition

In accordance with section 702(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 India and Thailand. We will

attempt to provide a copy of the public version of the petition to each

known exporter as provided for under 19 CFR 351.203(c)(2).

ITC Notification

We have notified the ITC of our initiations, as required by section

702(d) of the Act.

Preliminary Determination by the ITC

The ITC will determine no later than May 10, 2004, whether there is

a reasonable indication that imports of bottle-grade PET resin from

India and Thailand are materially injuring, or threatening material

injury to, a U.S. industry. A negative ITC determination will result in

these investigations being terminated; otherwise, these investigations

will proceed according to statutory and regulatory time limits. This

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

Dated: April 13, 2004.

Jeffrey May,

Acting Assistant Secretary for Import Administration.

[FR Doc. 04-8937 Filed 4-19-04; 8:45 am]

BILLING CODE 3510-DS-S