Initiation of Antidumping Duty Investigations: Certain Aperture Masks From Japan and South Korea

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-848, A-580-838]

Initiation of Antidumping Duty Investigations: Certain Aperture

Masks From Japan and South Korea

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: March 22, 1999.

FOR FURTHER INFORMATION CONTACT: Mark Ross, at (202) 482-4794, or

Thomas Schauer, at (202) 482-4852; Import Administration, International

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

Constitution Avenue, N.W., Washington, D.C. 20230.

Initiation of Investigations

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, as amended

(``the Act'') by the Uruguay Round Agreements Act (``URAA''). In

addition, unless otherwise indicated, all citations to Department of

Commerce (``Department'') regulations refer to the regulations codified

at 19 CFR Part 351 (1998).

The Petitions

On February 24, 1999, the Department received petitions filed in

proper form by BMC Industries, Inc. (``BMC,'' referred to hereafter as

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

the petitions on March 8, 12, and 16, 1999.

The petitioner alleges that imports of certain aperture masks from

Japan and South Korea 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 material injury to, a U.S. industry.

The Department finds that the petitioner has standing to file the

petitions 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 antidumping investigations it is requesting

the Department to initiate. See ``Determination of Industry Support for

the Petitions'' below.

Scope of Investigations

For purposes of these investigations, the products covered consist

of all aperture masks (also known as ``shadow

[[Page 13769]]

masks'') made from aluminum-killed, open-coil annealed steel

(decarburized) (known generally as ``AK steel'') for color picture

tubes (``CPTs'') used in television sets. AK steel includes the

following types of steel: low carbon, AF (annealing-free) steel, AK

type A steel (commonly referred to as AKM steel), AK type B steel, and

general AK steel. The aperture masks covered by the scope generally

have a vertical pitch (distance between the centers of two apertures)

of greater than .28mm. Specifically excluded from the scope are the

following products: (1) aperture masks made from FeNi 36 alloy (whether

sold under the brand names Invar, Inovar or LLTE); (2) aperture masks

that have a vertical pitch of less than .28 mm that are generally used

for color display tubes (``CDTs'') used in computer monitors; and (3)

grille masks (a grille mask replaces the slots in an aperture mask with

an array of finely tensioned vertical wires).

The merchandise subject to these investigations is classifiable

under 8540.91.50 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 is

dispositive.

During our review of the petitions, we discussed the scope with the

petitioner to ensure that the scope accurately reflects the merchandise

for which the domestic industry is seeking relief. Moreover, as we

discussed in the preamble to the Department's regulations (62 FR at

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 April 5, 1999. Comments should be addressed to

Import Administration's Central Records Unit at Room 1870, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 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.

Determination of Industry Support for the Petitions

Section 732(c)(4)(A) of the Act requires that the Department

determine, prior to the initiation of an investigation, that a minimum

percentage of the domestic industry supports an antidumping petition. A

petition meets this minimum 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. Under section 732(c)(4)(D) of the Act, if the

petitioner(s) account for more than 50 percent of the total production

of the domestic like product, the Department is not required to poll

the industry to determine the extent of industry support.

To determine whether a 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 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. However, while both the Department and

the ITC must apply the same statutory definition of domestic like

product, 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 Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.

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

and Display Glass Therefor 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 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 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.

The domestic like product referred to in the petitions, and as

clarified by the March 8 and 12, 1999, supplements to the petitions, is

the single product defined in the ``Scope of Investigation'' section,

above. No party has commented on the petitions'' definition of domestic

like product, and there is nothing on the record to indicate that this

definition is inaccurate. The Department, therefore, has adopted this

definition of the domestic like product.

With respect to the above-cited industry-support requirements, the

Department has determined that the petitions and supplemental

information contained adequate evidence of sufficient industry support.

See Initiation Checklist, dated March 16, 1999 (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 sections 771(A), (C), (D), (E), or (F) of the Act has

expressed on the record opposition to the petitions. Information

currently on the record indicates that the producer who supports the

petitions accounts for 100 percent of the production of the domestic

like product. Accordingly, the Department determines that these

petitions are filed on behalf of the domestic industry within the

meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

The petitioner identified three Japanese producers and one South

Korean producer in its less-than-fair-value allegations. The Japanese

producers are Dai Nippon Printing Co., Ltd. (``DNP''), Dainippon Screen

Manufacturing Company, Ltd. (``DNS''), and Toppan Printing Co., Ltd.

(``Toppan''). The South Korean producer is LG Micron Ltd. (``LGM'').

The petitioner determined export prices for each of these producers

based on price quotes obtained by the petitioner's sales personnel in

the ordinary course of business. These price quotes are for various

sizes of the aperture masks covered by the scope of the petitions. The

petitioner provided trip reports and an affidavit from a BMC sales

representative to support the validity of the price quotes. All U.S.

price quotes were denominated in U.S. dollars and, where appropriate,

the petitioner made adjustments for movement expenses. Our review of

the petitioner's calculation of export prices did not indicate the need

to make changes to those prices.

With respect to normal value for Japan, the petitioner could not

find data regarding Japanese home market prices. Moreover, the

petitioner alleges that the volume of Japanese domestic sales of in-

scope merchandise is insufficient to form a basis for normal value. In

support of its claims that pricing information is unavailable and that

the Japanese domestic market is not viable, the petitioner provided an

affidavit from a responsible BMC sales representative. The affidavit

documents the employee's efforts to uncover pricing information and

indicates that most of the aperture

[[Page 13770]]

masks sold in Japan are types specifically excluded from the scope of

the petitions (e.g., aperture masks made from Invar). Lacking pricing

information for sales of the foreign like product in the Japanese

market, the petitioner turned to third-country sales as the basis for

normal value in accordance with section 773(a)(1)(C) of the Act.

However, as described in more detail below, the petitioner provided

information in the petitions demonstrating reasonable grounds to

believe or suspect that sales of certain aperture masks from Japan to

third-country markets were made at prices below the cost of production

(i.e., the sum of the cost of materials and fabrication (i.e., COM),

selling, general and administrative (``SG&A'') expenses, and packing),

within the meaning of section 773(b) of the Act. The petitioner

therefore concluded that sales from Japan to third countries cannot

serve as the basis for normal value. Furthermore, the petitioner

requested that the Department conduct a countrywide investigation of

sales below cost for third-country market sales from Japan.

With respect to normal value for South Korea, the petitioner stated

that it believes that the volume of South Korean home market sales is

sufficient to form a basis for normal value. The petitioner also

provided information in the petitions demonstrating reasonable grounds

to believe or suspect that sales of certain aperture masks in South

Korea were made at prices below the cost of production, within the

meaning of section 773(b) of the Act. The petitioner therefore

concluded that sales in the South Korean home market cannot serve as

the basis for normal value. Furthermore, the petitioner requested that

the Department conduct a countrywide investigation of sales below cost

for home market sales in South Korea.

To support its allegations that prices from Japan to third-country

markets and prices in the South Korean home market are below the cost

of production, the petitioner compared price quotes for each of the

identified producers to each company's cost of production. The

petitioner calculated the COM and packing components of the cost of

production based on its own production experience with adjustments for

known differences in costs incurred in the United States and costs

incurred in Japan and South Korea. It derived company-specific SG&A

expenses for the Japanese producers using each company's financial

statements. For LGM, the South Korean producer of certain aperture

masks, the petitioner said it was not able to obtain a financial

statement for the calculation of SG&A expenses. However, since the

petitioner could obtain the financial statements of LGM's parent

company, LG Electronics, it calculated SG&A based on the financial

statements of LG Electronics. We reviewed the cost-of-production

calculations and accepted the underlying cost data contained in the

petitions, as revised and/or supplemented by the March 8, 12, and 16,

1999, submissions.

We compared the cost-of-production data supplied in the petitions

to the corresponding Japanese producers' third-country prices and the

South Korean producer's home market prices. We found that the prices in

every instance were below the cost of production. Thus, for both Japan

and South Korea, these findings constitute ``reasonable grounds to

believe or suspect'' that sales of the foreign like product were made

below their respective cost of production within the meaning of section

773(b)(2)(A)(i) of the Act. See ``Initiation of Cost Investigation,''

below.

Since the petitioner found that the third-country prices of the

Japanese producers and the home market prices of the South Korean

producer were below the cost of production, the petitioner based normal

value on constructed value. The petitioner calculated constructed value

by adding profit to the figures that it used to compute the cost of

production. It based profit on the same financial statements it used

for the calculation of SG&A expenses. We reviewed the calculation of

constructed value and accepted the underlying cost data contained in

the petitions, as revised and/or supplemented by the March 8, 12, and

16, 1999, submissions.

Fair Value Comparison

Based on the data provided by the petitioner, we find that there is

reason to believe that imports of certain aperture masks from Japan and

South Korea are being, or are likely to be, sold at less than fair

value.

The margin calculations in the petitions, as revised in the March

16, 1999, supplement to the petitions, indicate dumping margins ranging

from 3.77 to 85.34 percent for certain aperture masks from Japan and a

dumping margin of 10.61 percent for certain aperture masks from South

Korea.

If it becomes necessary at a later date to consider the petitions

as a source of facts available under section 776 of the Act, we may

review and, if necessary, revise the margin calculations.

Allegations and Evidence of Material Injury and Causation

The petitions allege that the U.S. industry producing the domestic

like product is being materially injured, and is threatened with

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

at less than normal value. The petitioner explained that the industry's

injured condition is evident in declining trends in capacity

utilization, income growth, and profits. The allegations of injury and

causation are supported by relevant evidence including lost sales and

pricing information. The Department assessed the allegations and

supporting evidence regarding material injury and causation and

determined that these allegations are sufficiently supported by

accurate and adequate evidence and they meet the statutory requirements

for initiation. See Initiation Checklist, dated March 16, 1999.

Initiation of Antidumping Investigations

We have examined the petitions on certain aperture masks from Japan

and South Korea and have found that they meet the requirements of

section 732 of the Act. Therefore, we are initiating antidumping duty

investigations to determine whether imports of certain aperture masks

from Japan and South Korea are being, or are likely to be, sold in the

United States at less than fair value.

Our preliminary determinations will be issued by August 3, 1999,

unless the deadline for the determinations is extended.

Initiation of Cost Investigation

As explained above, the Department has found that there are

``reasonable grounds to believe or suspect'' that sales of certain

aperture masks in the comparison markets for Japan and South Korea were

made below their respective cost of production within the meaning of

section 773(b)(2)(A)(i) of the Act. Therefore, we are initiating

countrywide sales-below-cost investigations with respect to certain

aperture masks from Japan and South Korea.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act, copies of

public versions of the petitions have been provided to the

representatives of the Governments of Japan and South Korea.

International Trade Commission Notification

We have notified the ITC of our initiation of these investigations,

as required by section 732(d) of the Act.

[[Page 13771]]

Preliminary Determination by the ITC

The ITC will determine by April 12, 1999, whether there is a

reasonable indication that imports of certain aperture masks from Japan

and South Korea are causing material injury, or threatening to cause

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

result in termination of the investigations; otherwise, the

investigations will proceed according to statutory and regulatory time

limits.

This notice is published in accordance with section 777(i) of the

Act.

Dated: March 16, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-6934 Filed 3-19-99; 8:45 am]

BILLING CODE 3510-DS-P