Glycine from India, Japan, and the Republic of Korea: Initiation of Antidumping Duty Investigations, 20816-20820 [E7-8017]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 80 (Thursday, April 26, 2007)]
[Notices]
[Pages 20816-20820]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-8017]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-845, A-580-858, A-588-868]


Glycine from India, Japan, and the Republic of Korea: Initiation 
of Antidumping Duty Investigations

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

EFFECTIVE DATE:  April 26, 2007.

FOR FURTHER INFORMATION CONTACT: Scott Lindsay (India), Toni Page 
(Japan), or Dmitry Vladimirov and Janis Kalnins (Republic of Korea), 
AD/CVD Operations, Office 6 and Office 5, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-0780, (202) 482-1398, (202) 482-0665, or (202) 482-1392 
respectively.

SUPPLEMENTARY INFORMATION:

The Petitions

    On March 30, 2007, the Department of Commerce (the Department) 
received petitions concerning imports of glycine from India (Indian 
Petition), Japan (Japanese Petition), and the Republic of Korea (Korea) 
(Korean Petition) (collectively, the Petitions), filed in proper form 
by Geo Specialty Chemicals, Inc. (Petitioner). See the Petitions for 
the Imposition of Antidumping Duties on Imports of Glycine from India, 
Japan, and the Republic of Korea filed on March 30, 2007. On April 5, 
2007, the Department issued a request for additional information and 
clarification of certain areas of the Petitions. Based on the 
Department's request, Petitioner filed Petition Supplements on April 3, 
12, 13, 17, and 18, 2007. In the April 18, 2007, Petition Supplement, 
Petitioner confirmed the final scope language. In addition, Petitioner 
submitted certain revisions to their cost calculations for India, Japan 
and Korea. We note that, although this revised cost data

[[Page 20817]]

contained minor errors, Petitioner's revisions to that data were 
generally consistent with the revisions made by the Department. See 
``Cost of Production and Constructed Value section,'' below. Also based 
on the Department's request, the Petitioner refiled certain submissions 
to correct (1) the designation of information that may not be released 
under APO and (2) their request for business proprietary treatment of 
certain information on April 10 and 13, 2007.
    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (the Act), Petitioner alleges that imports of glycine from 
India, Japan, and 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, an industry in the United States.

Period of Investigation (POI)

    In accordance with section 351.204(b) of the Department's 
regulations, because the petition was filed on March 30, 2007, the 
proposed period of investigation for India, Japan and Korea is January 
1, 2006 through December 31, 2006, as this includes the four most 
recently completed fiscal quarters as of February 2007.

Scope of the Investigations

    The merchandise covered by each of these three investigations is 
glycine, which in its solid (i.e., crystallized) form is a free-flowing 
crystalline material. Glycine is used as a sweetener/taste enhancer, 
buffering agent, reabsorbable amino acid, chemical intermediate, metal 
complexing agent, dietary supplement, and is used in certain 
pharmaceuticals. The scope of each of these investigations covers 
glycine in any form and purity level. Although glycine blended with 
other materials is not covered by the scope of each of these 
investigations, glycine to which relatively small quantities of other 
materials have been added is covered by the scope. Glycine's chemical 
composition is C2H5NO2 and is normally 
classified under subheading 2922.49.4020 of the Harmonized Tariff 
Schedule of the United States (HTSUS).
    The scope of each of these investigations also covers precursors of 
dried crystalline glycine, including, but not limited to, glycine 
slurry (i.e., glycine in a non-crystallized form) and sodium glycinate. 
Glycine slurry is classified under the same HTSUS subheading as 
crystallized glycine (2922.49.4020) and sodium glycinate is classified 
under subheading HTSUS 2922.49.8000.
    While HTSUS subheadings are provided for convenience and Customs 
purposes, our written description of the scope of these investigations 
is dispositive.

Comments on the Scope of the Investigations

    During our review of the Petitions, we discussed the scope with 
Petitioner to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the regulations (Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), 
we are setting aside a period for interested parties to raise issues 
regarding product coverage. The Department encourages all interested 
parties to submit such comments within 20 calendar days of the 
publication of this notice. Comments should be addressed to Import 
Administration's Central Records Unit (CRU), 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 to 
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 by 
an interested party on behalf of the domestic industry. Section 
732(c)(4)(A) of the Act provides that a petition meets this requirement 
if (1) the domestic producers or workers who support the petition 
account for at least 25 percent of the total production of the domestic 
like product and (2) the domestic producers or workers who support the 
petition account for 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 as a whole 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 produce the 
domestic like product. The International Trade Commission (ITC) is 
responsible for determining whether ``the domestic industry'' has been 
injured and must also determine what constitutes a domestic like 
product in order to define the industry. While the Department and the 
ITC must apply the same statutory definition regarding the domestic 
like product, they do so for different purposes and pursuant to 
separate and distinct authority. See section 771(10) of the Act. 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 law.\1\
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    \1\ See USEC, Inc. v. United States, 25 CIT 49, 55-56 (January 
24, 2001) (citing Algoma Steel Corp. v. United States, 12 CIT 518 
(June 8, 1988)).
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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.
    With regard to domestic like product, Petitioner does not offer a 
definition of domestic like product distinct from the scope of each 
investigation. Based on our analysis of the information submitted in 
the petitions, we have determined that the domestic like product 
consists of all grades of glycine, as well as sodium glycinate, which 
is defined in the ``Scope of the Investigations'' section above, and we 
have analyzed industry support in terms of the domestic like product.
    We received no expression of opposition to these petitions from any 
member of the domestic industry. Petitioner accounts for a sufficient 
percentage of the total production of the domestic like product, and 
the requirements of section 732(c)(4)(A) are met. Accordingly, the 
Department determines that the Petitions were filed on behalf of the 
domestic industry within the meaning of section 732(b)(1) of the Act. 
See ``Office of AD/CVD Operations Initiation Checklist for the 
Antidumping Duty Petition on Glycine from India,'' at Attachment II 
(April 19, 2007) (India AD Initiation Checklist), ``Office of AD/CVD 
Operations Initiation Checklist for the Antidumping Duty Petition on 
Glycine from Japan,'' at Attachment II (April 19, 2007) (Japan AD 
Initiation Checklist), and ``Office of AD/CVD Operations Initiation 
Checklist for the Antidumping Duty Petition on Glycine from Korea,'' at 
Attachment II (April 19, 2007) (Korea AD Initiation Checklist), on file 
in the CRU.

[[Page 20818]]

Allegations and Evidence of Material Injury and Causation

    Petitioner alleges that the U.S. industry producing the domestic 
like product is materially injured, or is threatened with material 
injury, by reason of the individual and cumulated imports of the 
subject merchandise sold at less than normal value (NV). Petitioner 
contends that the industry's injured condition is illustrated by the 
decline in customer base, market share, domestic shipments, prices, 
financial performance, and lost sales. We have assessed the allegations 
and supporting evidence regarding material injury and causation, and we 
have determined that these allegations are properly supported by 
adequate evidence and meet the statutory requirements for initiation. 
See the country-specific Initiation Checklists at Attachment III.

Allegations of Sales at Less Than Fair Value

    The following is a description of the allegations of sales at less 
than fair value upon which the Department based its decision to 
initiate these investigations on imports of glycine from India, Japan, 
and Korea. The sources of data for the deductions and adjustments 
relating to the U.S. price as well as NV for India, Japan, and Korea 
are also discussed in the country-specific Initiation Checklists. 
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 will reexamine the information and revise the margin 
calculations, if appropriate.

Export Price (EP)

    Petitioner calculated EP using information from sales the company 
lost to Indian, Japanese, and Korean exporters. When based on lost sale 
prices, Petitioner adjusted U.S. prices for home market inland freight, 
international freight, U.S. inland freight, distributor mark-up, and 
credit expenses. See Indian Petition at page 28, Japanese Petition at 
page 30, and Korean Petition at pages 31-32.
    Petitioner also calculated EP from Korea using the free-on-board 
(FOB) foreign-port average unit customs values (AUVs) for 2006 for 
import data obtained from the U.S. International Trade Commission data 
website. Petitioner used the HTSUS subheading under which all three 
grades of subject merchandise (pharmaceutical, technical, and food) are 
imported (2922.49.4020). Petitioner provided shipment data from PIERS 
Global Intelligence Services for the same HTSUS subheading to 
demonstrate that most entries of glycine from Korea during 2006 were of 
``pure food grade'' glycine. See Volume II of the Petitions at Exhibit 
DOC-15. Petitioner made an adjustment to the AUV-based EP from Korea 
for foreign inland freight.

Revisions to Export Price (EP)

    Based on our review of the information contained in the Petitions, 
we recalculated net EP (when based on a price quotation) by excluding 
an adjustment to EP for U.S. credit expenses. We also recalculated net 
EP (when based on a price quotation) by revising the reported amount 
associated with a distributor's mark-up to reflect the percentage mark-
up. Petitioner stated that this mark-up was an average mark-up for 
glycine sales in the United States. See Volume II of the Petitions at 
Exhibits DOC-27 through DOC-29; also April 13, 2007, Petition 
Supplement at Exhibits L, M, and N. See Initiation Checklists.

Normal Value (NV)

India and Japan

    Petitioner stated that, since it does not sell glycine in the 
Indian, Japanese, or Korean markets, it does not have specific 
knowledge of how glycine is sold, marketed, or packaged in those 
domestic markets. Petitioner was able to determine domestic Indian and 
Japanese prices for glycine by obtaining price quotations, through an 
economic consultant, from Indian and Japanese manufacturers of glycine. 
See memoranda ``Telephone Call to Market Research Firm Regarding the 
Antidumping Petition on Glycine from India,'' and ``Telephone Call to 
Market Research Firm Regarding the Antidumping Petition on Glycine from 
Japan,'' dated April 19, 2007. These price quotations identified 
specific terms of sale and payment terms. Petitioner made adjustments 
for home market credit for Indian sales. Petitioner did not make 
adjustment for home market credit to Japanese prices. See Volume II of 
the Petitions at Exhibits DOC-17-18 and 22-23.

Revisions to Normal Value

    Based on our review of the information contained in the Petitions, 
we recalculated NV for India and Japan (when based on price quotations) 
by excluding the adjustment for home market and U.S. credit expenses. 
See India AD Initiation Checklist and Japan AD Initiation Checklist.

Sales Below Cost Allegation for India and Japan

    Petitioner has provided information demonstrating reasonable 
grounds to believe or suspect that certain sales of glycine in India 
and Japan were made at prices below the fully absorbed cost of 
production (COP), within the meaning of section 773(b) of the Act, and 
has requested that the Department conduct country-wide sales below COP 
investigations. An allegation of sales below COP in a petition need not 
be specific to individual exporters or producers. See Statement of 
Administrative Action accompanying the Uruguay Round Agreements Act, 
H.R. Doc. No. 103-316, Vol. 1 (1994) at 833. Thus, Commerce will 
consider allegations of below-cost sales in the aggregate for a foreign 
country. Id. Further, section 773(b)(2)(A) of the Act requires that the 
Department have ``reasonable grounds to believe or suspect'' that 
below-cost sales have occurred before initiating such an investigation. 
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. Id.
    As described in the section below on ``Cost of Production and 
Constructed Value,'' the Department calculated a country-specific COP 
for a certain grade of glycine for India and Japan. Based upon a 
comparison of price quotations for sales of that same grade glycine in 
India and Japan and the country-specific COP of the product, we find 
reasonable grounds to believe or suspect that sales of glycine in India 
and Japan were made below the COP, within the meaning of section 
773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating 
country-wide cost investigations with regard to both India and Japan. 
Because it alleged sales below cost, pursuant to sections 773(a)(4), 
773(b) and 773(e) of the Act, Petitioner also based NV for Indian and 
Japanese sales of a certain grade glycine on constructed value (CV).

Korea

    Petitioner claimed that, despite extensive efforts to determine 
prices in Korea, it was not able to obtain usable price information for 
calendar year 2006 either for sales of glycine in Korea or for sales of 
glycine by Korean producers/exporters in third countries. See e.g., 
Korean Petition at pages 27 and 35 and April 19, 2007; as well as 
Memorandum to File, ``Telephone Call to Market Research Firm Regarding 
the

[[Page 20819]]

Antidumping Petition on Glycine from Korea'' (April 19, 2007). 
Consequently, Petitioner relied on COP and CV information in 
determining NV for Korea. See ``Cost of Production and Constructed 
Value,'' section below.

Cost of Production and Constructed Value

    As noted above, Petitioner was unable to obtain usable price 
information for Korea; therefore, the appropriate basis for normal 
value for comparison to EP from Korea is CV. Also, as discussed above, 
Petitioner has established that certain sales of glycine in India and 
Japan were made at prices below the fully absorbed COP, within the 
meaning of section 773(b) of the Act. As such, CV was used for India 
and Japan when the home market prices for a certain grade glycine used 
in the cost comparisons fell below the COP. The calculation of COP and 
CV for each of the three countries is set forth below.

India

    Pursuant to section 773(b)(3) of the Act, COP consists of the cost 
of manufacturing (COM); selling, general and administrative (SG&A) 
expenses; financial expenses; and packing expenses. To calculate the 
COM, Petitioner multiplied the usage quantity of each input needed to 
produce one metric ton (MT) of glycine by the value of that input. 
Petitioner obtained all of the quantity and value data it used to 
calculate the COM from public sources. Petitioner obtained the input 
usage factors from the public record of the 1997-1998 administrative 
review of glycine from the People's Republic of China (PRC). The 
producer in the 1997-1998 review produced glycine by the same 
production method that producers in India use. The petitioner obtained 
the values for the inputs from various public sources. Petitioner 
calculated factory overhead, SG&A and the financial expense rate based 
on the Indian surrogate ratios that the Department used in the 
preliminary results of the 2005-2006 administrative review of glycine 
from the PRC. Where we used CV to determine NV, Petitioner added an 
amount for profit from the same financial statements.
    We adjusted Petitioner's calculation of SG&A to apply the rate to 
COM inclusive of factory overhead. We did not include a separate 
financial expense amount as petitioner did because the SG&A ratio 
already included financial expense. See the India AD Initiation 
Checklist for a full description of Petitioner's methodology and the 
adjustments the Department made to those calculations.

Japan

    Pursuant to section 773(b)(3) of the Act, COP consists of COM; SG&A 
expenses; financial expenses; and packing expenses. To calculate the 
COM, Petitioner multiplied the usage quantity of each input needed to 
produce one MT of glycine by the value of that input. Petitioner 
obtained all of the quantity and value data it used to calculate the 
COM from public sources. As it did for the allegation involving India, 
Petitioner obtained the input usage factors from the public record of 
the 1997-1998 administrative review of glycine from the PRC. The 
producer in the 1997-1998 review produced glycine by the same 
production method that producers in Japan use. Petitioner obtained the 
values for the inputs from various public sources. Petitioner 
calculated average factory overhead, SG&A and the financial expense 
rate based on current financial statements of a Japanese producer of 
glycine. Where we used CV to determine NV, Petitioner added an amount 
for profit from the same financial statements.
    We adjusted Petitioner's calculation of SG&A to apply the rate to 
COM inclusive of factory overhead. See Japan AD Initiation Checklist 
for a full description of Petitioner's methodology and the adjustments 
the Department made to those calculations.

Korea

    Petitioner calculated the Korean COP using the same methodology to 
calculate COM as it used for Japan and India. That is, Petitioner 
calculated the Korean COM by multiplying the usage quantity of each 
input needed to produce one MT of glycine by the value of that input. 
Petitioner obtained all of the quantity and value data it used to 
calculate the COM from public sources. Petitioner obtained the input 
usage factors from the public record of the 1997-1998 administrative 
review of glycine from the PRC. The respondent in the 1997-1998 Chinese 
review produced glycine by the same production method that producers in 
Korea use. Petitioner obtained the values for the inputs from various 
public sources. Petitioner calculated factory overhead, SG&A and the 
financial expense rate based on the financial statements of a Korean 
producer of lysine and threonine, amino acids which use production 
methods similar to glycine. Because Petitioner used CV for NV for 
Korea, it added an amount for profit in accordance with section 
773(e)(2) of the Act. The profit rate was based on the financial 
statements of the same Korean producer of lysine and threonine. See 
Korea AD Initiation Checklist.
    We adjusted Petitioner's calculated factory overhead to eliminate 
double counting of depreciation and amortization. We applied the SG&A 
rate to COM inclusive of factory overhead. We also adjusted 
Petitioner's calculation of the financial expense ratio to include 
interest income as a reduction to financial expense. See Korea AD 
Initiation Checklist for a full description of Petitioner's methodology 
and the adjustments the Department made to those calculations.

Fair Value Comparisons

    Based on the data provided by Petitioner, and adjusted by the 
Department as described above, there is sufficient basis to find that 
imports of glycine from India, Japan, and Korea are being, or are 
likely to be, sold in the United States at less than fair value. Based 
on comparisons of EP to home market prices and CV in India and Japan, 
and to CV for Korea, which were calculated in accordance with section 
773(a)(4) of the Act, the dumping margins for glycine range from 5.67 
to 121.62 percent for India, 70.21 to 280.57 percent for Japan, and 
138.37 to 138.83 for Korea.

Initiation of Antidumping Duty Investigations

    Based upon the examination of the Petitions on glycine from India, 
Japan, and Korea, the Department finds that the Petitions meet the 
requirements of section 732 of the Act. Therefore, we are initiating 
antidumping duty investigations to determine whether imports of glycine 
from India, Japan, and Korea are being, or are likely to be, sold in 
the United States at less than fair value. In accordance with section 
733(b)(1)(A) of the Act, unless postponed, we will make our preliminary 
determinations no later than 140 days after the date of this 
initiation.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, copies of the 
public versions of the Petitions have been provided to the 
representatives of the Governments of India, Japan, and Korea. We will 
attempt to provide a copy of the public version of the Petitions to the 
foreign producers/exporters named in the Petitions.

International Trade Commission Notification

    We have notified the International Trade Commission of our 
initiations, as required by section 732(d) of the Act.

[[Page 20820]]

Preliminary Determination by the International Trade Commission

    The International Trade Commission will preliminarily determine, no 
later than May 14, 2007, whether there is a reasonable indication that 
imports of glycine from India, Japan, and/or Korea are materially 
injuring, or threatening material injury to, a U.S. industry. A 
negative ITC determination with respect to any of the investigations 
will result in that investigation being terminated; 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: April 19, 2007.
Joseph A. Spetrini,
Deputy Assistant Secretary for Import Administration.
[FR Doc. E7-8017 Filed 4-25-07; 8:45 am]
BILLING CODE 3510-DS-S