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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-852]

Initiation of Antidumping Duty Investigation: Creatine From the

People's Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: March 10, 1999.

FOR FURTHER INFORMATION CONTACT: Marian Wells, Blanche Ziv or Rosa

Jeong, Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, NW,

Washington, DC 20230; telephone: (202) 482-6309, (202) 482-4207, or

(202) 482-3853, 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 (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 February 12, 1999, the Department received a petition filed in

proper form by Pfanstiehl Laboratories, Inc., referred to hereinafter

as ``the petitioner.'' The petitioner filed supplemental information to

the petition on March 1, 1999.

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

alleges that imports of creatine 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 an industry in the United States.

The Department finds that the petitioner filed this 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 represents, at a

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

Determination of Industry Support for the Petition section below).

Scope of Investigation

For purposes of this investigation, the product covered is commonly

referred to as creatine monohydrate or creatine. The chemical name for

creatine covered under this investigation is N-(aminoiminomethyl)-N-

methylglycine monohydrate. The Chemical Abstracts Service (CAS)

registry numbers for this product are 57-00-1 and 6020-87-7. Pure

creatine is a white, tasteless, odorless powder, that is a naturally

occurring metabolite found in muscle tissue. The merchandise subject to

this investigation is classifiable under subheading 2925.20.90 of the

Harmonized Tariff Schedule of the United States (HTSUS). 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

petitioner to ensure the petition accurately reflects the product for

which the domestic industry is seeking relief. Moreover, as discussed

in the preamble to the Department's regulations (62 FR 27296, 27323),

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 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

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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 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.

On February 19, 1999, the ITC presented us with information

indicating that there are three additional producers of the domestic

like product that were not included in the petition. Subsequently, our

research also revealed one additional producer of the domestic like

product not included in the petition. To determine whether the

petitioner met the statutory requirement cited above, we contacted all

companies identified by the ITC and the Department as well as the two

companies included in the petition. Based on production data supplied

by the petitioner and collected by the Department and now on the

record, 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 March 4, 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 petitioner identified five potential PRC exporters and

producers of creatine. The petitioner based export price on offers for

sale of the subject merchandise to U.S. purchasers by PRC exporters in

November 1998 and January 1999. From these starting prices, the

petitioner deducted international freight, marine insurance, and

foreign brokerage and handling. The petitioner based international

freight and marine insurance fees on current quotations from a U.S.

freight forwarding company. In order to calculate foreign brokerage and

handling, the petitioner used the value of Indian brokerage and

handling charges, claiming that the petitioner does not have

information on the costs associated with brokerage and handling

incurred in the PRC prior to export to the United States. The foreign

brokerage and handling charges, which were based on the Department's

``Index of Factor Values for Use in Antidumping Duty Investigations

Involving Products From the PRC,'' dated June 1996 (``Index of Factor

Values''), were adjusted for inflation using the Indian Wholesale Price

Index (WPI).

Because the PRC is considered a nonmarket economy (NME) country

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

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

accordance with section 773(c)(3) of the Act. The petitioner selected

India as the most appropriate surrogate market economy. For the factors

of production, the petitioner used its own factor inputs and

consumption data for materials, labor and energy, based on the

production process that the petitioner employed in 1993 and 1994. The

petitioner did not include an amount for representative capital costs,

including depreciation, as provided in subsection 773(c)(3)(D) of the

Act. Thus, petitioner potentially understated costs, thereby providing

a conservative calculation of the alleged dumping. According to

information presented by the petitioner, the operation of the PRC

producers of the subject merchandise has not reached the level of

technology and efficiency represented by the petitioner's present

manufacturing process. As such, the petitioner alleged that its

production process of 1993 and 1994 most closely approximates that

currently being utilized by the PRC producers of the subject

merchandise. Where the 1993 and 1994 consumption data were unavailable

(i.e., electricity and water), the petitioner used its current data.

Materials were valued based on Indian prices obtained from the

petitioner's market research of publicly available information and

published price lists. 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.

The natural gas value was based on the Department's Index of Factor

Values. The petitioner also valued the cost of disposing the waste

generated in the production process using its own cost information. The

petitioner used its own cost of waste disposal as facts available

because it has no direct knowledge of the actual means of disposing of

waste by the PRC producers. For factory overhead, selling, general and

administrative expenses, and profit, the petitioner applied rates

derived from information gathered from the Reserve Bank of India

Bulletin. Packing factors were based on the Department's Index of

Factor Values.

Fair Value Comparisons

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

believe that imports of creatine 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 petitioner's calculated dumping margins range from 120.9 percent to

153.7 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 allegations of injury and causation are

supported by relevant evidence including U.S. Customs import data, lost

sales, and pricing information. The

[[Page 11836]]

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. See Initiation Checklist.

Allegation of Critical Circumstances

The petitioner has alleged that critical circumstances exist and

has asked the Department to make an expedited finding. To support its

allegation, the petitioner has provided evidence in the petition in the

form of PIERS data showing, among other things, a trend of increased

imports of the subject merchandise from the third to the fourth quarter

of 1998. Specifically, petitioner contends that creatine imports from

the PRC surged more than 150 percent from the third to the fourth

quarter. The petitioner also provided evidence suggesting the person by

whom, or for whose account, the merchandise 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. Petitioner

argues that its January 25, 1999 press release regarding alleged

dumping of creatine in the United States provides the basis for this

knowledge, and that the Department has accepted similar evidence of

knowledge in other cases. See Preliminary Determination of Critical

Circumstances: Certain Flat-Rolled Carbon Quality Steel Products from

Japan and the Russian Federation, 63 FR 65750, 65751 (November 30,

1998). We find that the petitioner has alleged the elements of critical

circumstances and supported them with reasonably available information.

For these reasons, we will investigate this matter further and will

make a preliminary determination based on available information at the

appropriate time in accordance with 19 CFR 351.206. See Initiation

Checklist.

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 creatine 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

July 22, 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 March 29, 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 creatine 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: March 4, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-5943 Filed 3-9-99; 8:45 am]

BILLING CODE 3510-DS-P