Iron Construction Castings From Canada; Dismissal of Request for Institution of A Section 751(b) Review Investigation

INTERNATIONAL TRADE COMMISSION

Iron Construction Castings From Canada; Dismissal of Request for

Institution of A Section 751(b) Review Investigation

AGENCY: International Trade Commission.

ACTION: Dismissal of a request to institute a section 751(b) review

investigation concerning the Commission's affirmative determination in

investigation No. 731-TA-263 (Final), Iron Construction Castings from

Canada.

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SUMMARY: On August 8, 1994, the Commission determined, pursuant to

section 751(b) of the Tariff Act of 1930 (the ``Act'')(19 U.S.C.

1675(b)) and Commission rule 207.45 (19 CFR 207.45), that the subject

request does not show changed circumstances sufficient to warrant

institution of an investigation to review the Commission's affirmative

determination in investigation No. 731-TA-263 (Final), regarding iron

construction castings from Canada. Iron construction castings are

provided for in subheading 7325.10.00 of the Harmonized Tariff Schedule

of the United States.

FOR FURTHER INFORMATION CONTACT: Vera Libeau (202-205-3176), Office of

Investigations, U.S. International Trade Commission, 500 E Street SW,

Washington, DC 20436. Hearing-impaired persons can obtain information

on this matter by contacting the Commission's TDD terminal on 202-205-

1810. Persons with mobility impairments who will need special

assistance in gaining access to the Commission should contact the

Office of the Secretary at 202-205-2000. Information can also be

obtained by calling the Office of Investigations' remote bulletin board

system for personal computers at 202-205-1895 (N,8,1).

BACKGROUND INFORMATION: On March 5, 1986, the Commission issued an

affirmative injury determination with respect to investigation No. 731-

TA-263 (Final), Iron Construction Castings from Canada, 51 F.R. 7646

(March 5, 1986), following the U.S. Department of Commerce's final

determination that imports of the subject merchandise were being sold

at less than fair value (LTFV). 51 FR 2412 (Jan. 16, 1986). The

Commission's determination was based on a cumulative assessment of

subject imports from Canada with subject imports from Brazil, the

People's Republic of China (China), and India, which Commerce also

determined were being sold at LTFV. 51 FR 9477 (March 19, 1986).

Commerce issued antidumping orders covering subject imports from all

four countries.

On May 20, 1994, the Commission received a petition, filed pursuant

to section 751(b) of the Act, to review its final injury determination

with respect to Canada in light of changed circumstances. The petition

was filed by counsel on behalf of Associated Foundry, Ltd.; Laperle

Foundry Division of Fonderies Bibby-Ste-Croix; Fonderies Bibby-Ste-

Croix, Inc.; and Titan Foundry, Ltd.--producers of the subject products

in Canada. The alleged changed circumstances include: (1) an exclusion

of foreign producers from an estimated 60-75 percent of the U.S. market

due to a 1991 extension of Buy America provisions to iron products used

in highway construction; (2) an exclusion of foreign producers from an

additional 2 percent of the market due to a 1992 extension of Buy

America provisions to iron products used in airport and airway

construction; and (3) an effective exclusion of foreign producers from

an estimated 12 percent of the market for heavy iron castings due to

Customs' 1986 enforcement of a 1984 statutory requirement governing the

marking of manhole covers with regard to country of origin.

Pursuant to section 207.45(b)(2) of the Commission's Rules of

Practice and Procedure (19 CFR 207.45(b)(2)), the Commission published

a notice in the Federal Register requesting comments as to whether the

alleged changed circumstances warranted the institution of a review

investigation. 59 FR 29619 (June 8, 1994). Because the alleged changed

circumstances related to the U.S. market and were not unique to

Canadian imports, the Commission also sought comment on whether it

should self-initiate a review regarding imports of iron construction

castings from Brazil, India, and China. Comments were received both in

opposition to and in favor of the petition. Summarizing the impact of

the alleged changed circumstances in a supplemental comment to their

petition, the petitioners estimated that only 18-38 percent of the

total U.S. castings market is open to Canadian (and presumably other)

import competition. Petitioners' Comments at 8. The petitioners

maintain that with such a substantial portion of the United States

market ``closed'' to Canadian producers, domestic producers are

effectively protected from injury and would continue to be protected if

the order for Canada were to be revoked. Id. at 9-10. Counsel on behalf

of the Castings Panel of the Engineering Export Promotion Council of

India and the exporters of castings from India urge the Commission to

review not only its determination with respect to Canada but also its

determination with respect to India; however, they offer no arguments

for changed circumstances other than those of the petitioners. Indian

Parties' Comments at 2-3.

In opposition to the petition, comments were filed by counsel on

behalf of the U.S. producers of the subject merchandise. The U.S.

producers take issue with the petitioners regarding (1) the size of the

market affected by these two Buy America provisions, claiming that

there is no evidence of widespread implementation of these provisions

at either the State or local level and that the share of the market so

affected is on the order of 17 percent, rather than 62-82 percent; and

(2) the enforcement of country-of-origin marking requirements, claiming

that these were being fully enforced at least one year prior to 1986,

the year Commerce's antidumping-duty order went into effect. U.S.

Parties' Comments at 9-18. The domestic producers argue that section

751(b) and applicable Commission precedent preclude a review because

the changed circumstances alleged by the Canadian producers are

premised on inaccurate or incomplete factual assertions, exaggerated

estimates of the effect of Buy America restrictions, and speculation

regarding future action by states and municipalities. Id. at 18-21.

After consideration of the request and the comments submitted in

response to the Commission's Federal Register notice, the Commission

determines that the information of record does not show changed

circumstances sufficient to warrant institution of an investigation to

review the Commission's affirmative determination in Iron Construction

Castings from Canada, Inv. No. 731-TA-263 (Final), USITC Pub. 1811

(Feb. 1986) or its determination in Iron Construction Castings from

Brazil, India, and the People's Republic of China, Inv. Nos. 701-TA-

249; 731-TA-262, 264-265 (Final), USITC Pub. 1838 (April 1986).

DECISION OF THE COMMISSION: Section 751(b)(1) of the Act grants to the

Commission the authority to conduct an investigation to determine

whether to revoke or modify an outstanding antidumping order. The

Commission is required to conduct a review of a prior affirmative

injury determination whenever it receives a request for such a review

that shows ``changed circumstances sufficient to warrant a review.''

Congress, however, set forth ``very strict controls'' on the exercise

of that authority, demonstrating that it did not want prior Commission

injury determinations ``to remain in a state of flux.'' Royal Business

Machines, Inc. v. United States, 507 F. Supp. 1007, 1014 n. 18 (Ct.

Int'l Trade 1980), aff'd, 669 F.2d 692 (CCPA 1982). The statutory

requirements for instituting Section 751 reviews clearly demonstrate

the intent of Congress that the ``underlying finding of injury . . . is

entitled to deference and should not be disturbed lightly.'' Avesta AB

v. United States, 689 F. Supp. 1173, 1180 (Ct. Int'l Trade 1988)

(Avesta I); see also Matsushita Elec. Indus. Co., Ltd. v. United

States, 750 F.2d 927, 932 (Fed. Cir. 1984). In order for a review

investigation to be instituted, the information available to the

Commission, after notice and comment from all interested parties, must

be sufficient to persuade the Commission: (1) That there have been

significant changed circumstances from those in existence at the time

of the original investigation, (2) that those changed circumstances are

not the natural and direct result of the imposition of the antidumping

or countervailing duty order, and (3) that the changed circumstances

indicate that the domestic industry would not be materially injured

should the order be revoked thereby warranting a full investigation.

See A. Hirsh, Inc. v. United States, 737 F. Supp. 1186 (CIT 1990)(Hirsh

II); Avesta AB v. United States, 724 F. Supp. 974 (CIT 1989), aff'd 914

F.2d 232 (Fed. Cir. 1990), cert. denied, 111 S. Ct. 1308 (1991)(Avesta

II). Once instituted, the petitioner must persuade the Commission,

after a full investigation and hearing, that the domestic industry

would not be injured or threatened with injury if the order were

revoked. See Citizen Watch Co. v. United States, 733 F. Supp. 383 (CIT

1990).

The CIT has observed that ``Congress carefully limited the

availability of Sec. 1675(b) investigations'' and that ``the party

seeking review bears the initial burden of showing the existence of

changed circumstances sufficient to warrant a review.'' Avesta I, 689

F. Supp. at 1180, 1181; Avesta II, 724 F. Supp. at 978; A. Hirsh, Inc.

v. United States, 729 F. Supp. 1360 (Ct. Int'l Trade 1990) (Hirsh I),

aff'd following remand, 737 F. Supp. 1186 (Ct. Int'l Trade 1990) (Hirsh

II). This burden is placed upon the party seeking review because the

review investigation does not begin with a clean slate as though it

were an original investigation. Matsushita, 750 F.2d at 932. Although a

petition for institution of a review need not ``prove'' that changed

circumstances exist such that injury would not recur upon revocation,

it must nevertheless contain credible evidence which, if uncontroverted

by other evidence, would persuade the Commission that a full review is

warranted. Avesta I, 689 F. Supp. at 1181.

In determining whether a full review is warranted, the Commission

is permitted to weigh the evidence presented to it. The Commission

analyzes the specific facts alleged in the petition and fully evaluates

all the evidence submitted in support of, and in opposition to, the

petition. Full reviews will not be instituted based upon mere

allegations in a petition, allegations that are clearly contradicted by

evidence submitted by others in response to the Commission's notice, or

allegations that are contradicted or undermined by a petitioner's own

data. Thus, the Commission decides whether to initiate a review, not

based solely on the allegations contained in a petition, but also upon

a critical evaluation of the entire record. Avesta I, 689 F. Supp. at

1181.

In this case, the request alleged three changed circumstances

warranting review: (1) Changes in enforcement of country of origin

marking requirements for manhole covers; (2) the extension of Buy

America restrictions to procurement of iron construction castings in

airport construction; and (3) the extension of Buy America restrictions

to procurement of iron construction castings in all highway

construction that receives federal financing. The information available

on the record does not persuade us that a full investigation is

warranted for any of the three allegations.

The changes in country of origin marking requirements for manhole

covers significantly predate the Commission's original determination.

The statutory change occurred in 1984, and there is documented evidence

of its enforcement by Customs prior to 1986. Because those requirements

were in effect prior to the Commission's injury determination, they are

not ``changed'' circumstances. The two separate extensions of Buy

America restrictions, however, occurred after the Commission's

determination and do constitute ``changed circumstances'' that are not

the natural and direct consequence of the imposition of the order. With

respect to the extension of Buy America restrictions to airport

construction, the Canadian industry admits that the change only affects

2 percent of total U.S. consumption. In the context of this market and

the relative shares of the market reflected in the original record,

such a marginal impact alone is not a changed circumstance sufficient

to warrant review.

The third ``changed circumstance'' concerns a 1991 amendment to the

Buy America provisions (Section 165(a)) of the Surface Transportation

Assistance Act of 1982. Section 1048 of the Intermodal Surface

Transportation Efficiency Act of 1991 extended those Buy America

restrictions to iron. Amended section 165(a) reads as follows:

Notwithstanding any other provision of law, the Secretary of

Transportation shall not obligate any funds authorized to be

appropriated by the Act * * * unless steel, iron, cement, and

manufactured products used in such project are produced in the

United States.

23 U.S.C. 101 note (emphasis added). The Canadian producers insist that

this amendment has effectively precluded them from competing with the

domestic industry in 60-75 percent of the U.S. market.

In this case, because ``the vast bulk of construction castings are

ultimately purchased and used by utilities, municipalities, and other

such entities for civil construction purposes,'' government contracts

comprise a substantial portion of total sales. Iron Construction

Castings from Canada, USITC Pub. 1811 at A-9. It is not at all clear,

however, what percentage of the total market is covered by Buy America

restrictions and how the extension of Buy America restrictions has

affected the U.S. market generally, or any segment of the market in

particular.

The only available objective evidence of the impact of the Buy

America restrictions on U.S. sales of Canadian castings--import

trends--suggests that the restrictions have not had a significant

impact on such sales. If the extension of Buy America restrictions had

a significant impact on the ability of Canadian producers to compete in

the U.S. market, then one would expect to see a decline in imports from

Canada, and from all other sources as well, shortly after the

extensions took effect. Data supplied by the Canadian producers

regarding import trends, however, indicate that, after the extension of

the Buy America restrictions, imports did not decline significantly. In

1986, when the order was first imposed, imports of iron construction

castings from Canada reached 21,377 short tons. While imports declined

subsequently, the significant decline in imports predates the extension

of Buy America restrictions in 1991. Imports declined from 18,312 short

tons in 1989 to 11,996 short tons in 1990. In 1991, such imports

declined slightly to 10,233 short tons. Although imports dropped

further to 8,312 short tons in 1992, data available for the first three

quarters of 1993 indicate that imports from Canada already exceeded

1992 full-year levels and were likely to exceed 12,000 short tons by

the end of the year. See Petition at Appendix 22. Declines in imports

followed by larger increases in recent periods do not support the claim

that the 1991 amendments have significantly affected the ability of

Canadian producers to compete in the U.S. market.

To support their assertion of the size of the Buy America market,

the Canadian producers submitted only a conclusory and unsubstantiated

declaration by a member of the Canadian Foundry Association. No

methodology was identified and no source was cited for the estimates.

Further, the Canadian producers acknowledge that their estimates are

based on favorable assumptions regarding future actions by state and

local authorities in extending their own Buy America restrictions to

cover iron construction castings. They argue that such actions, while

not mandatory, ``are reasonable to expect.'' We find persuasive the

domestic producers' objection that such expectations of future state

and local administrative actions do not constitute changed

circumstances. See Avesta I, 689 F. Supp. at 1185 (``A future intention

does not show changed circumstances in the present.'').

Moreover, the Canadian producers did not provide any evidence

regarding their shipments to particular U.S. market segments and the

effect of the extension of Buy America restrictions, if any, on

shipments to each of those market segments. In sum, we believe that the

Canadian estimates of the Buy America market are overstated.

Although Buy America restrictions have been expanded as the result

of federal legislation, it is not clear how broad they are and how much

of the iron construction casting market is now affected by them.

Although the Canadian producers have arguably raised an issue of fact

that may have merit, if true, they have not provided sufficient

evidence to persuade us that the petition shows changed circumstances

warranting review. While the petitioner need not prove its case at the

institution stage, the petition, as filed, must contain more than the

conclusory allegations submitted in this case. Because neither

probative supporting evidence, an explanation of methodology, nor any

concrete indication of the significance of the extension of Buy America

restrictions has been provided, there is insufficient evidence to

warrant a full investigation. Absent such evidence, we determine that

it is inappropriate to institute a review. Accordingly, the request for

a review is denied. Finally, in the absence of a review of the Canadian

order, a self-initiated review of the order covering iron construction

castings from Brazil, India, and China is inappropriate.

By order of the Commission.

Issued: August 17, 1994.

Donna R. Koehnke,

Secretary.

[FR Doc. 94-20931 Filed 8-24-94; 8:45 am]

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