Initiation of Antidumping Duty Investigation: Elastic Rubber Tape From India

DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-815]

Initiation of Antidumping Duty Investigation: Elastic Rubber Tape

From India

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: September 16, 1998.

FOR FURTHER INFORMATION CONTACT: Craig Matney or Cynthia Thirumalai at

(202) 482-1778 and (202) 482-4087, respectively, 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 (the Act) by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department's regulations are to 19 CFR

Part 351 (1998).

The Petition

On August 18, 1998, the Department of Commerce (the Department)

received a petition filed in proper form by Fulflex, Inc., Elastomer

Technologies Group, Inc., and RM Engineered Products, Inc.,

collectively referred to hereinafter as ``the petitioners.'' Elastomer

and RM are both wholly owned subsidiaries of M-Tec Corporation. The

petitioners filed supplemental information to the petition on September

1, 1998.

In accordance with section 732(b) of the Act, the petitioners

allege that imports of elastic rubber tape (ERT) from India are being,

or are likely to be, sold in the United States at less than fair value

within the meaning of section 731 of the Act, and that such imports are

materially injuring an industry in the United States.

The Department finds that the petitioners filed this petition on

behalf of the domestic industry because they are interested parties as

defined in section 771(9)(C) of the Act and they have demonstrated that

they are the only producers of ERT in the United States (see

Determination of Industry Support for the Petition section below).

Scope of the Investigation

For purposes of this investigation, the product covered is elastic

rubber tape. Elastic rubber tape is defined as vulcanized, non-cellular

rubber strips, of either natural or synthetic rubber, 0.006 inches to

0.100 inches (0.15 mm to 2.54 mm) in thickness, and \1/8\ inches to

1\5/8\ inches (3 mm to 42 mm) in width. Such product is generally used

in swimwear and underwear.

The merchandise subject to this investigation is classified in the

Harmonized Tariff Schedule of the United States (HTSUS) at subheading

4008.21.00. Although the HTSUS subheading is 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

petitioners to insure the petition accurately reflects the product for

which they are seeking relief. Moreover, as discussed in the preamble

to the new regulations (62 FR 27323), we are setting aside a period for

parties to raise issues regarding product coverage. The Department

encourages all parties to submit such comments by September 29, 1998.

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 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 our preliminary determination.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on

behalf of the domestic industry. Section 732(c)(4)(A) of the Act

provides that a petition meets this requirement if the domestic

producers or workers who support the petition account for: (1) at least

25 percent of the total production of the domestic like product; and

(2) more than 50 percent of the production of the domestic like product

produced by that portion of the industry expressing support for, or

opposition to, the petition.

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

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

petition has the requisite industry support, the statute directs the

Department to look to producers and workers who account for production

of the domestic like product. The International Trade Commission (ITC),

which is responsible for determining whether ``the domestic industry''

has been injured, must also determine what constitutes a domestic like

product in order to define the industry. While both the Department and

the ITC must apply the same statutory 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.

[[Page 49547]]

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 that is like, or in the absence of like,

most similar in characteristics and uses with, the article subject to

an investigation under this title.'' Thus, the reference point from

which the domestic like product analysis begins is ``the article

subject to an investigation,'' i.e., the class or kind of merchandise

to be investigated, which normally will be the scope as defined in the

petition.

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\1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp.

639, 642-44 (CIT 1988); High Information Content Flat Panel Displays

and Display Glass Therefore from Japan: Final Determination;

Rescission of Investigation and Partial Dismissal of Petition, 56 FR

32376, 32380-81 (July 16, 1991).

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The domestic like product referred to in the petition is the single

domestic like product defined in the ``Scope of Investigation''

section, above. The Department has no basis on the record to find this

definition of the domestic like product to be inaccurate. The

Department, therefore, has adopted this domestic like product

definition.

In this case, the Department has determined that the petition and

supplemental information contained adequate evidence of sufficient

industry support; therefore, polling was not necessary. See Initiation

Checklist, dated September 8, 1998 (public document on file in the

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

Additionally, no person who would qualify as an interested party

pursuant to section 771(A), (C), (D), (E) or (F) has expressed

opposition on the record to the petition. To the best of the

Department's knowledge, the producers who support the petition account

for 100 percent of the production of the domestic like product.

Accordingly, the Department determines that this petition is filed on

behalf of the domestic industry within the meaning of section 732(b)(1)

of the Act.

Export Price and Normal Value

The following is a description of the allegation of sales at less

than fair value upon which our decision to initiate this investigation

is based. Should the need arise to use any of this information in our

preliminary or final determination for purposes of facts available

under section 776 of the Act, we may re-examine the information and

revise the margin calculations, if appropriate.

The petitioners identified Garware as the only Indian exporter to

the United States of ERT. Because information obtained by the

petitioners indicates that most of Garware's U.S. sales are through its

affiliated importer in the United States, the petitioners have based

U.S. price on constructed export price (CEP). For Garware's CEP prices,

the petitioners used prices and offers for sale to unaffiliated

purchasers in the United States in April and June of 1998. Because the

terms of Garware's U.S. sales were delivered, the petitioners

calculated a net U.S. price by subtracting estimated costs for shipment

from Garware's factory in India to the port of export using publicly

available information. In addition, the petitioners subtracted ocean

freight expenses calculated from a Garware shipping document obtained

by the petitioners. U.S. import duties were estimated by the

petitioners using the HTSUS schedule and then subtracted from the

prices. The petitioners also subtracted amounts for U.S. merchandise

processing fees and U.S. harbor maintenance fees in accordance with

section 772(c)(2)(A) of the Act. Based upon their own experience, the

petitioners then subtracted estimated U.S. inland freight costs from

the port of importation to customers' delivery locations. Finally, the

petitioners calculated a selling expense rate based on an average of

the selling costs in the domestic industry and subtracted this amount.

With respect to normal value (NV), the petitioners stated that they

believe the volume of Indian home market sales was sufficient to form a

basis for NV, pursuant to section 773(a)(1)(C)(ii) of the Act. The

petitioners obtained gross unit prices and offers for sale during the

period contemporaneous with the U.S. sales and offers for sale for

products which are either identical or similar to those sold to the

United States. Since the home market prices and offers for sale were

ex-factory, the petitioners made no adjustment to these prices. These

home market prices were then converted to U.S. dollar prices using the

official exchange rate in effect for the month of the comparison U.S.

sale.

While the petitioners believe that Garware's home market is viable,

they have also made a dumping analysis based on constructed value (CV)

in order to show dumping is occurring under either scenario. The

petitioners' calculations are for the Garware ERT compound which was

sold/offered for sale in the United States. To calculate CV, the

petitioners relied on a chemical analysis of Garware's product to

determine its composition. To value the components of Garware's

product, the petitioners used Indian data, where possible. Where Indian

data was not obtainable, the petitioners used their own costs, stating

that the prices they pay are equivalent to world-market prices. We

adjusted the petitioners' calculation to reflect that products of

various dimensions but of identical chemical composition have the same

material usage per unit of weight. To value overhead and SG&A, the

petitioners used percentages from the Notice of Final Determination of

Sales at Less Than Fair Value: Persulfates from the People's Republic

of China, 62 FR 27222, 27229 (May 19, 1997) (Persulfates). In

Persulfates the Department derived the overhead and SG&A percentages

from the financial statement of an Indian producer of hydrogen

peroxide. Because the information in the petition does not indicate

that the production of hydrogen peroxide closely resembles that of ERT,

we have not used the overhead and SG&A rates from Persulfates. Instead,

we have relied on publicly available information from the Reserve Bank

of India on the chemical industry, in general. To derive a profit rate,

the petitioners compared Garware's home market prices to the cost of

production of the product sold.

Fair Value Comparisons

Based on the data provided by the petitioners, there is reason to

believe that imports of ERT from India are being, or are likely to be,

sold at less than fair value. Based on a comparison of CEP to home

market prices, the petitioners calculated dumping margins range from

49.43 to 66.51 percent. The estimated dumping margins based on a

comparison between the CV of Garware's product and CEP range from 28.93

to 43.66 percent.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic

like product is being materially injured, and is threatened with

material injury, by reason of the imports of the subject merchandise

sold at less than NV. The petitioners explained that the industry's

injured condition is evident in the declining trends in net operating

profits and income, net sales volumes and values, profit to sales

ratios, and capacity utilization. The allegations of injury and

causation are supported by relevant evidence including U.S. Customs

import data, lost sales, and pricing information. The Department

assessed the allegations and supporting evidence regarding material

injury and causation and determined that these allegations are

supported by accurate

[[Page 49548]]

and adequate evidence and meet the statutory requirements for

initiation. See Initiation Checklist, dated September 8, 1998 (public

document on file in the Central Records Unit of the Department of

Commerce, Room B-099).

Allegation of Critical Circumstances

The petitioners have alleged that critical circumstances exist. To

support their allegation, the petitioners have provided evidence in the

petition of a trend of increasing imports recently and the potential

for even greater increases in the near future. The petitioners also

provided evidence suggesting the person by whom, or for whose account,

ERT is imported knew or should have known that the merchandise was

being sold at less than fair value and that there was likely to be

material injury as a result. In taking into consideration the

foregoing, we find that the petitioners have alleged the elements of

critical circumstances and supported it with reasonably available

information. We, therefore, will investigate this matter further.

Initiation of Antidumping Investigation

Based upon our examination of the petition, we have found that the

petition meets the requirements of section 732 of the Act. Therefore,

we are initiating an antidumping duty investigation to determine

whether imports of ERT from India are being, or are likely to be, sold

in the United States at less than fair value. Unless this deadline is

extended, we will make our preliminary determination by January 26,

1999.

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 India. We will attempt to provide a copy of the

public version of the petition to the exporter named in the petition.

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 by October 2, 1998, whether there is a

reasonable indication that an industry in the United States is

materially injured, or is threatened with material injury by reason of

imports of ERT from India. 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 published pursuant to sections 732(d) and 777(i) of

the Act.

Dated: September 8, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-24750 Filed 9-15-98; 8:45 am]

BILLING CODE 3510-DS-P