Initiation of Antidumping Duty Investigation: Synthetic Indigo From the People's Republic of China

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-856]

Initiation of Antidumping Duty Investigation: Synthetic Indigo

From the People's Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce

EFFECTIVE DATE: July 28, 1999.

FOR FURTHER INFORMATION CONTACT: Dinah McDougall or David J.

Goldberger, Import Administration, International Trade Administration,

U.S. Department of Commerce, 14th Street and Constitution Avenue, NW,

Washington, DC 20230; telephone: (202) 482-3773 or (202) 482-4136,

respectively.

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

[[Page 40832]]

(URAA). In addition, unless otherwise indicated, all citations to the

Department of Commerce's (the Department's) regulations are to 19 CFR

part 351 (1998).

The Petition

On June 30, 1999, the Department received a petition filed in

proper form by Buffalo Color Corporation (``BCC'') and the United Steel

Workers of America, AFL-CIO/CLC, which represents BCC's production

workers, collectively referred to hereinafter as ``the petitioners.''

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

that imports of indigo 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 threatening to injure an industry in

the United States. The petitioners filed supplemental information to

the petition on July 9, 1999 and July 13, 1999.

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 represent, at a

minimum, the required proportion of the United States industry (see

Determination of Industry Support for the Petition section below).

Scope of Investigation

The products subject to this investigation are the deep blue

synthetic vat dye known as synthetic indigo and those of its

derivatives designated commercially as ``Vat Blue 1.'' Included are Vat

Blue 1 (synthetic indigo), Color Index No. 73000, and its derivatives,

pre-reduced indigo or indigo white ( Color Index No. 73001) and

solubilized indigo (Color Index No. 73002). The subject merchandise may

be sold in any form (e.g., powder, granular, paste, liquid, or

solution) and in any strength. Synthetic indigo and its derivatives

subject to this investigation are currently classifiable under

subheadings 3204.15.10.00, 3204.15.40.00 or 3204.15.80.00 of the

Harmonized Tariff Schedule of the United States (HTSUS). Although the

HTSUS subheadings are provided for convenience and customs purposes,

the written description of the merchandise under investigation is

dispositive.

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

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 Act 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. Although this may result in different definitions of the

domestic like product, such differences do not render the decision of

either agency contrary to the law.1

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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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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 merchandise to be investigated, which

normally will be the scope as defined in the petition. Moreover, the

petitioners do not offer a definition of domestic like product distinct

from the scope of investigation.

To the best of the Department's knowledge, the petitioner is the

sole U.S. producer of the domestic like product. See memorandum to file

dated July 13, 1999, ``Industry Support and Petitioner Buffalo Color

Corporation's Sole Producer Claim''. Additionally, no person who would

qualify as an interested party pursuant to sections 771(9)(C), (D), (E)

or (F) of the Act has expressed opposition to the petitioner on the

record. Thus, the petitioner accounts for more than 50 percent of the

production of the domestic like product. Therefore, in accordance with

section 732(c)(4) of the Act, we determine that the petition has been

filed on behalf of the domestic industry within the meaning of section

732(b)(1) of the Act. See Initiation Checklist dated July 20, 1999

(public version on file in the Central Records Unit of the Department

of Commerce, Room B-099) (Initiation Checklist).

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 eleven potential PRC exporters and

exporter/producers of indigo. The petitioners based export price on

offers for sale of the subject merchandise to U.S. purchasers by one of

the PRC exporters in November 1998 and May 1999. From these starting

prices, the petitioners deducted international freight, marine

insurance, and foreign brokerage and handling charges. The petitioners

based international freight on an actual ocean freight invoice from a

market economy shipping company for a shipment of indigo from the PRC.

Marine insurance fees were based on a quote from a market economy

supplier. The foreign brokerage and handling charges, which were based

on the Department's ``Index of Factor Values for Use in Antidumping

Duty Investigations

[[Page 40833]]

Involving Products From the PRC'' (``Index of Factor Values''), were

adjusted for inflation using the Wholesale Price Index (WPI) published

in the International Monetary Fund's International Financial

Statistics.

Because the PRC is considered a non-market economy (NME) country

under section 771(18) of the Act, the petitioners based normal value

(NV) on the factors of production valued in a surrogate country, in

accordance with section 773(c)(3) of the Act. For purposes of the

petition, the petitioners selected India as the most appropriate

surrogate market economy. The petitioners calculated NV using publicly

available Indian prices to value all unit costs associated with the

factors of production. The petitioners established estimates for per-

unit consumption based on BCC's production experience adjusted for

differences in the PRC production process according to information

reasonably available to the petitioners.

Materials were valued based on Indian prices obtained from publicly

available information and published price lists, principally chemical

prices in the Indian publications Chemical Weekly and Monthly

Statistics of the Foreign Trade of India, and adjusted using the WPI

published in the International Financial Statistics, where appropriate.

Labor was valued using the regression-based wage rate for the PRC

provided by the Department, in accordance with 19 CFR 351.408(c)(3).

The values for water and electricity were obtained from international

publications containing the prices applicable to India, and adjusted

using the WPI published in the International Financial Statistics. The

fuel oil and natural gas values were based on the Department's Index of

Factor Values, and adjusted using the WPI published in the

International Financial Statistics. To determine factory overhead,

selling, general and administrative expenses, and profit, the

petitioners relied on data from an Indian producer of hydrogen

peroxide, which experiences similarly high fixed costs relative to

direct manufacturing costs, as those incurred by producers of synthetic

indigo. The valuation of packing factors was based on the Department's

Index of Factor Values and international publications containing the

prices applicable to India, and adjusted using the WPI published in the

International Financial Statistics, where appropriate.

Fair Value Comparisons

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

believe that imports of indigo from the PRC are being, or are likely to

be, sold at less than fair value. Based on a comparison of EP to NV,

the petitioners' calculated dumping margins ranging from 124.69 percent

to 129.60 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

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

merchandise sold at less than NV. The allegations of injury and

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

import statistics, lost sales, trade and financial data, 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 and adequate evidence and

meet the statutory requirements for initiation.

Initiation of Antidumping Investigation

Based on 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 indigo from the PRC 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 December 7,

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 the PRC.

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 August 16, 1999, 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 indigo from the PRC. 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 in accordance with section 777(i) of the

Act.

Dated: July 20, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-19299 Filed 7-27-99; 8:45 am]

BILLING CODE 3510-DS-P