[Federal Register: June 10, 2003 (Volume 68, Number 111)]
[Notices]               
[Page 34579-34582]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jn03-27]                         

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-885, A-533-834, A-428-838]

 
Notice of Initiation of Antidumping Duty Investigations: 4,4'-
Diamino-2,2'-Stilbenedisulfonic Acid (DAS) and Stilbenic Fluorescent 
Whitening Agents (SFWA) from Germany, India, and the People's Republic 
of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Initiation of Antidumping Duty Investigations.

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EFFECTIVE DATE: June 10, 2003.

FOR FURTHER INFORMATION CONTACT: David Layton at (202) 482-0371, AD/CVD 
Enforcement Office 5, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Initiation of Investigations:

The Petitions

    On May 14, 2003, the Department received petitions filed in proper 
form by Ciba Specialty Chemicals Corporation (Ciba or petitioner). The 
Department received supplemental information to the petitions from Ciba 
on May 27, 2003 and May 30, 2003.
    In accordance with section 732(b)(1) of the Tariff Act of 1930, as 
amended (the Act), the petitioner alleges that imports of 4,4'-Diamino-
2,2'- stilbenedisulfonic acid (DAS) and stilbenic fluorescent whitening 
agents (SFWA) from Germany, India, and the People's Republic of China 
(PRC) are, 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 
imports from Germany, India, and the PRC are materially injuring, or 
are threatening to materially injure an industry in the United States.
    The Department finds that the petitioner filed these petitions on 
behalf of the domestic industry because it is an interested party as 
defined in section 771(9)(C) of the Act and they have demonstrated 
sufficient industry support with respect to each of the antidumping 
investigations that it is requesting the Department to initiate. See 
infra, ``Determination of Industry Support for the Petitions.''

Period of Investigation

    The anticipated period of investigation (POI) for Germany and India 
is April 1, 2002, through March 31, 2003; and October 1, 2002, through 
March 31, 2003 for the PRC.

Scope of Investigations

    These investigations cover 4,4'-diamino-2,2'-stilbenedisulfonic 
acid (DAS) and stilbenic fluorescent whitening agents (SFWA). DAS is a 
chemical compound used to produce SFWA. SFWA are synthetic organic 
products normally used as fluorescent brightening agents in the 
production of certain textiles, paper, and detergent. These 
investigations cover all DAS and SFWA regardless of end use.
    DAS is currently classifiable under subheading 2921.59.2000 of the 
Harmonized Tariff Schedule of the United States (HTSUS). This tariff 
classification only covers DAS. SFWA is currently classifiable under 
subheading 3204.20.80 of the HTSUS. This tariff classification 
represents a basket category which includes SFWA and other synthetic 
organic coloring matter. Although the HTSUS subheadings are provided 
for convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.
    During our review of the petitions, we sought additional 
information from the petitioner concerning the scope of the 
investigations. As a result of this supplemental information, we 
modified the scope language proposed by the petitioner with regard to 
the name of the subject merchandise and the description of the products 
covered.\1\
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    \1\ See Memorandum to the File Re: Change to Scope Description 
(June 3, 2003).
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    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 calendar days of publication 
of this notice. Comments should be addressed to Import Administration's 
Central Records Unit, 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 the preliminary determinations.

Determination of Industry Support for the Petitions

    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 the Department's industry support determination, which is 
to be made before the initiation of the investigation, be based on 
whether a minimum percentage of the relevant industry supports the 
petition. A petition satisfies 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. Moreover, section 732(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall either 
poll the industry or rely on other information in order to determine if 
there is support for the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a

[[Page 34580]]

domestic like product. Thus, to determine whether a petition has the 
requisite industry support, the statute directs the Department to look 
to producers and workers who produce the domestic like product. The 
U.S. 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 a 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.\2\
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    \2\ 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 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 which 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.
    In this case, the petitions cover a single class or kind of 
merchandise, DAS and its commercial agent SFWA as defined in the 
``Scope of Investigations'' section, above. The petitioner does not 
offer a definition of domestic like product distinct from the scope of 
the investigations. Thus, based on our analysis of the information 
presented to the Department by the petitioner and interested parties, 
we have determined that there is a single domestic like product which 
is consistent with the definition of the ``Scope of the Investigation'' 
section above and have analyzed industry support in terms of this 
domestic like product.
    The Department has determined that, pursuant to section 
732(c)(4)(A) of the Act, the petitions contain adequate evidence of 
industry support and, therefore, polling is unnecessary. See Office of 
AD Enforcement, Initiation Checklist: 4,4'-diamino-2,2'-
stilbenedisulfonic acid (DAS) and stilbenic fluorescent whitening 
agents (SFWA) from Germany, India, and the People's Republic of China 
(June 3, 2003) (the Initiation Checklist) at attachment II (on file in 
the Central Records Unit, Room B-099 of the Department of Commerce).
    On May 30, 2003, Bayer Chemicals Corporation (Bayer) submitted an 
argument in opposition to the petition, and on June 3, 2003, 3V Inc. 
also submitted an argument in opposition to the petition. However, 
neither party provided sufficient evidence that would call into 
question the sufficiency of the petitioner's industry support. See 
Initiation Checklist at attachment II for further details. Therefore, 
the Department has determined, based on information provided in the 
petition, that the petitioner represents over 50 percent of total 
production of the domestic like product. The petitioner is the only 
U.S. producer of DAS and accounts for over 50 percent of U.S. 
production of SFWA; thus, Ciba satisfies the requirements of section 
732(c)(4)(A)(i) of the Act because it accounts for at least 25 percent 
of the total production of the domestic like product. Furthermore, the 
requirements of section 732(c)(4)(A)(ii) of the act are also met. 
Accordingly, we determine that these petitions are filed on behalf of 
the domestic industry within the meaning of section 732(b)(1) of the 
Act. See the ``Injury Allegation'' section in the Initiation Checklist.

Initiation Standard for Cost Investigations

    Pursuant to section 773(b) of the Act, the petitioner provided 
information demonstrating reasonable grounds to believe or suspect that 
sales in the home market of India were made at prices below the cost of 
production (COP) and, accordingly, requested that the Department 
conduct a country-wide sales-below-COP investigation in connection with 
this investigation. The Statement of Administrative Action (SAA), 
submitted to the Congress in connection with the interpretation and 
application of the Uruguay Round Agreements Act (URAA), states that an 
allegation of sales below COP need not be specific to individual 
exporters or producers. The SAA states that ``Commerce will consider 
allegations of below-cost sales in the aggregate for a foreign country, 
just as Commerce currently considers allegations of sales at less than 
fair value on a country-wide basis for purposes of initiating an 
antidumping investigation.'' SAA, H.R. Doc. No. 103-316 at 833 
(1994).Further, the SAA provides that section 773(b)(2)(A) of the Act 
retains the requirement that before initiating such an investigation 
the Department have ``reasonable grounds to believe or suspect'' that 
below-cost sales have occurred. Reasonable grounds exist when an 
interested party provides specific factual information on costs and 
prices, observed or constructed, indicating that sales in the foreign 
market in question are at below-cost prices. We have analyzed the 
country-specific allegation as described below for India. Based on our 
analysis, we found reasonable grounds to believe or suspect that sales 
of DAS and SFWA in India were made at prices below cost. See the 
``Normal Value'' section for India, below.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which the Department based its decision to 
initiate these investigations. The sources of data for the deductions 
and adjustments relating to U.S. and home market prices, and 
constructed value (CV) are discussed in greater detail in the 
Initiation Checklist. Should the need arise to use any of this 
information as facts available under section 776 of the Act in our 
preliminary or final determinations, we may re-examine the information 
and revise the margin calculations, if appropriate.

Germany

Export Price

    The petitioner based export price (EP) on average unit values of 
DAS imports from Germany during the POI. The petitioner derived such 
values from import statistics under the HTSUS subheading 2921.59.2000. 
See Initiation Checklist for further information.

Normal Value

    With respect to normal value (NV), the petitioner calculated COM 
based on the production costs of a German DAS manufacturer, Ciba 
Spezialitatenschemie Grenzach GmbH, that is affiliated with the 
petitioner, because home market prices and information related to third 
country sales were unavailable during the fiscal year 2002. To 
calculate selling, general and administrative expenses (SG&A) and 
profit, the petitioner relied on amounts reported in the consolidated 
financial statements for the 2002 fiscal year of Bayer AG, a German 
producer of DAS. We relied on the cost data contained in the petition 
except in the following instances.
    1. We recalculated the selling, general and administrative (SG&A) 
expenses amount per pound of DAS exclusive of

[[Page 34581]]

movement and import duty expenses. First, we calculated the SG&A rate 
based on the amounts reported in the unconsolidated financial 
statements for the 2002 fiscal year of Bayer AG. Second, we applied 
this SG&A rate to the reported cost of manufacture (COM). Finally, we 
deducted the amounts contained in the petition for shipping cost from 
German port to U.S. port, and U.S. import duty from the calculated SG&A 
amount per pound of DAS because the selling amount contained in the 
unconsolidated financial statements may include the movement and duty 
expenses.
    2. We recalculated the financial expense amount per pound of DAS. 
We calculated the financial expense rate based on the amounts reported 
in the consolidated financial statements for the 2002 fiscal year of 
Bayer AG. and applied this financial expense rate to the reported COM.
    3. We calculated the profit amount per pound of DAS. We calculated 
the profit rate as a percentage of cost of goods sold and SG&A amounts 
reported in the unconsolidated financial statements for the 2002 fiscal 
year of Bayer AG because these unconsolidated financial statements did 
not itemize the financial expenses, but included them in the basket of 
non-operating expenses. Therefore, we applied this profit rate to the 
reported COM and the SG&A expense amount inclusive of shipping cost 
from German port to U.S. port, and U.S. import duty.
    4.We recalculated the CV by adding the reported COM to the 
calculated SG&A, financial expense, and profit amounts as discussed 
above.
    The estimated dumping margins for subject merchandise from Germany, 
based on a comparison between the U.S. prices and adjusted CV is 194.9 
percent.
    India

Export Price

    The petitioner based EP on average unit values of DAS imports from 
India during the POI. The petitioner derived such values from import 
statistics under the HTSUS subheading 2921.59.2000.

Normal Value

    With respect to NV, the petitioner provided a home market price for 
DAS using a price quote obtained from its joint venture in India. This 
price was quoted in U.S. dollars, FOB Hyderabad.
    The petitioner has provided information demonstrating reasonable 
grounds to believe or suspect that sales of DAS in the home market were 
made at prices below the fully absorbed COP, within the meaning of 
section 773(b) of the Act, and requested that the Department conduct a 
country-wide sales-below-cost investigation. Pursuant to section 
773(b)(3) of the Act, COP consists of the COM, SG&A expenses, financial 
expenses, and packing expenses.
    The petitioner calculated COM based on its own production 
experience, adjusted for known differences between costs incurred to 
produce DAS in the United States and in India using publicly available 
data. For one particular raw material, oleum, we noted that the cost 
was based on amounts purchased from two countries. In order to be 
conservative in using this estimated cost, we recalculated the oleum 
costs based on the lower per-unit purchase price. In addition, we also 
corrected a mathematical error for the cost of another raw material 
element.
    To calculate overhead and SG&A expenses, the petitioner relied upon 
amounts reported in the 2001-2002 financial statements of an Indian 
chemical producer. The petitioner did not include packing costs in the 
CV calculation. Based upon a comparison of the prices of the foreign 
like product in the home market to the calculated COP of the product, 
we find reasonable grounds to believe or suspect that sales of the 
foreign like product were made below the COP, within the meaning of 
section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is 
initiating a country-wide cost investigation.
    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the 
petitioner also based NV for sales in India on CV. The petitioner 
calculated CV using the same COM, overhead, and SG&A, and profit 
expense figures used to compute the Indian home market costs. 
Consistent with 773(e)(2) of the Act, the petitioner included in CV an 
amount for profit.
    The estimated dumping margin for subject merchandise from India, 
based on a comparison of EP and home market price, is 35.7 percent. The 
estimated dumping margin for India based on a comparison between EP and 
CV is 139.61 percent.

PRC

Export Price

    The petitioner based EP on average unit values of DAS imports from 
the PRC during the POI. The petitioner derived such values from import 
statistics under the HTSUS subheading 2921.59.2000.

Normal Value

    With respect to NV, the petitioner provided CV based on Indian 
surrogate values and the petitioner's own experience producing DAS (its 
factors of production), adjusted for any known differences between the 
petitioner's production process and the Chinese DAS production process. 
Where the petitioner was unable to obtain Indian surrogate values for 
material inputs, it used a value of zero for such inputs. We also 
adjusted the value of high pressure steam to zero due to the lack of an 
appropriate Indian surrogate value. Indian values were converted to 
U.S. dollars using the exchange rates from the Department's website. 
Where surrogate values were not contemporaneous with the POI, the 
petitioner adjusted such values using wholesale price indices from 
India. For SG&A expenses and profit, the petitioner relied upon amounts 
reported in the 2001 financial reports of Atul Ltd. (India) and Daurala 
Organics (India). The petitioner claims that said companies have 
similar costs to those of a producer of the subject merchandise because 
said companies produce chemicals similar to the subject merchandise.
    The estimated dumping margin for the PRC, based on a comparison of 
EP and CV, is 156.69 percent.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of DAS and SFWA from Germany, India, and the PRC 
are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

    The petitioner alleges that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the cumulated imports from Germany, 
India, and the PRC of the subject merchandise sold at less than NV.
    The petitioner contends that the industry's injured condition is 
evident in the declining trends in net operating profits, net sales 
volumes, domestic prices, revenue, profit-to-sales ratios, production 
employment, capacity utilization, and domestic market share. The 
allegations of injury and causation are supported by relevant evidence 
including U.S. 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 properly supported by adequate evidence and meet the 
statutory requirements for initiation. See the Initiation Checklist.

[[Page 34582]]

Initiation of Antidumping Investigations

    Based upon our examination of the petitions covering DAS and SFWA, 
we have found that they meet the requirements of section 732 of the 
Act. See the Initiation Checklist. Therefore, we are initiating 
antidumping duty investigations to determine whether imports of DAS and 
SFWA from Germany, India and 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 determinations no later than 
140 days after the date of these initiations.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of the governments of Germany, India, and the PRC. We 
will attempt to provide a copy of the public version of each petition 
to each exporter named in the petitions, as provided for under 19 CFR 
351.203(c)(2).

ITC Notification

    We have notified the ITC of our initiations as required by section 
732(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will determine no later than June 30, 2003, whether there 
is a reasonable indication that imports of DAS and SFWA from Germany, 
India, and the PRC are causing material injury, or threatening to cause 
material injury, to a U.S. industry. A negative ITC determination for 
any country will result in the investigation being terminated with 
respect to thatcountry; otherwise, these investigations will proceed 
according to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: June 3, 2003.
Joseph Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-14592 Filed 6-9-03; 8:45 am]
BILLING CODE 3510-DS-S