Certain Steel Nails from the People's Republic of China and the United Arab Emirates:Initiation of Antidumping Duty Investigations, 38816-38823 [E7-13721]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 135 (Monday, July 16, 2007)]
[Notices]
[Pages 38816-38823]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13721]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-909, A-520-802]


Certain Steel Nails from the People's Republic of China and the 
United Arab Emirates:Initiation of Antidumping Duty Investigations

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

EFFECTIVE DATE: July 16, 2007.

FOR FURTHER INFORMATION CONTACT: Nicole Bankhead (People's Republic of 
China) or David Goldberger (United Arab Emirates), AD/CVD Operations, 
Offices 9 and 2, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202)

[[Page 38817]]

482-9068 or (202) 482-4136, respectively.

SUPPLEMENTARY INFORMATION:

The Petitions

    On May 29, 2007, the Department of Commerce (the Department) 
received petitions concerning imports of certain steel nails from the 
People's Republic of China (PRC) (PRC petition) and the United Arab 
Emirates (UAE) (UAE petition) filed in proper form by Mid Continent 
Nail Corporation, Davis Wire Corporation, Gerdau Ameristeel Corporation 
(Atlas Steel & Wire Division), Maze Nails (Division of W.H. Maze 
Company), Treasure Coast Fasteners, Inc., and the United Steel, Paper 
and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and 
Service Workers International Union (collectively, petitioners). See 
the Petitions on Certain Steel Nails from the People's Republic of 
China and the United Arab Emirates filed on May 29, 2007, and the 
petitioners' submission dated June 22, 2007. On June 1 and June 18, 
2007, the Department issued requests for additional information and 
clarification of certain areas of the petitions. Based on the 
Department's requests, the petitioners filed additional information on 
June 1, June 7 (three distinct submissions on General, PRC-only, and 
UAE-only material), and June 20, 2007. The period of investigation 
(POI) for the UAE is April 1, 2006, through March 31, 2007. The POI for 
the PRC is October 1, 2006, through March 31, 2007. See 19 CFR 
351.204(b).
    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (the Act), the petitioners allege that imports of certain steel 
nails from the PRC and the UAE 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.
    The Department finds that the petitioners filed these petitions on 
behalf of the domestic industry because the petitioners are interested 
parties as defined in section 771(9)(C) and (D) of the Act, and have 
demonstrated sufficient industry support with respect to the 
antidumping duty investigations that the petitioners are requesting 
that the Department initiate (see ``Determination of Industry Support 
for the Petitions'' section below).

Scope of Investigations

    The merchandise covered by each of these investigations includes 
certain steel nails having a shaft length up to 12 inches. Certain 
steel nails include, but are not limited to, nails made of round wire 
and nails that are cut. Certain steel nails may be of one piece 
construction or constructed of two or more pieces. Certain steel nails 
may be produced from any type of steel, and have a variety of finishes, 
heads, shanks, point types, shaft lengths and shaft diameters. Finishes 
include, but are not limited to, coating in vinyl, zinc (galvanized, 
whether by electroplating or hot-dipping one or more times), phosphate 
cement, and paint. Head styles include, but are not limited to, flat, 
projection, cupped, oval, brad, headless, double, countersunk, and 
sinker. Shank styles include, but are not limited to, smooth, barbed, 
screw threaded, ring shank and fluted shank styles. Screw-threaded 
nails subject to these proceedings are driven using direct force and 
not by turning the fastener using a tool that engages with the head. 
Point styles include, but are not limited to, diamond, blunt, needle, 
chisel and no point. Finished nails may be sold in bulk, or they may be 
collated into strips or coils using materials such as plastic, paper, 
or wire.
    Certain steel nails subject to these proceedings are currently 
classified under the Harmonized Tariff Schedule of the United States 
(HTSUS) subheadings 7317.00.55, 7317.00.65 and 7317.00.75.
    Excluded from the scope of these proceedings are roofing nails of 
all lengths and diameter, whether collated or in bulk, and whether or 
not galvanized. Steel roofing nails are specifically enumerated and 
identified in ASTM Standard F 1667 (2005 revision) as Type I, Style 20 
nails. Also excluded from the scope of these proceedings are corrugated 
nails. A corrugated nail is made of a small strip of corrugated steel 
with sharp points on one side. Also excluded from the scope of these 
proceedings are fasteners suitable for use in powder-actuated hand 
tools, not threaded and threaded, which are currently classified under 
HTSUS 7317.00.20 and 7317.00.30. Also excluded from the scope of these 
proceedings are thumb tacks, which are currently classified under HTSUS 
7317.00.10.00.
    While the HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the scope of these 
investigations is dispositive.

Comments on Scope of Investigations

    During our review of the petitions, we discussed the scope with the 
petitioners 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 signature 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.

Comments on Product Characteristics for Antidumping Duty Questionnaires

    We are requesting comments from interested parties regarding the 
appropriate physical characteristics of certain steel nails to be 
reported in response to the Department's antidumping questionnaires. 
For example, we are considering whether physical characteristics such 
as steel grade, shaft length, finish type, head style, shank style, and 
point style are relevant. This information will be used to identify the 
key physical characteristics of the subject merchandise in order to 
more accurately report the relevant factors and costs of production, as 
well as to develop appropriate product comparison criteria.
    Interested parties may provide any information or comments that 
they feel are relevant to the development of an accurate listing of 
physical characteristics. Specifically, they may provide comments as to 
which characteristics are appropriate to use 1) as general product 
characteristics and 2) as the product comparison criteria. We note that 
it is not always appropriate to use all product characteristics as 
product comparison criteria. We base product comparison criteria on 
meaningful commercial differences among products. In other words, while 
there may be some physical product characteristics utilized by 
manufacturers to describe certain steel nails, it may be that only a 
select few product characteristics take into account commercially 
meaningful physical characteristics. In addition, interested parties 
may comment on the order in which the physical characteristics should 
be used in model matching.

[[Page 38818]]

Generally, the Department attempts to list the most important physical 
characteristics first and the least important characteristics last.
    In order to consider the suggestions of interested parties in 
developing and issuing the antidumping duty questionnaires, we must 
receive comments at the above-referenced address by July 30, 2007. 
Additionally, rebuttal comments must be received by August 9, 2007.

Determination of Industry Support for the Petitions

    Section 732(b)(1) of the Act requires that a petition be filed by 
or on behalf of the domestic industry. In order to determine whether a 
petition has been filed by or on behalf of the domestic industry, the 
Department, pursuant to section 732(c)(4)(A) of the Act, determines 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (i) at least 25 
percent of the total production of the domestic like product; and (ii) 
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: (i) poll 
the industry or rely on other information in order to determine if 
there is support for the petition, as required by subparagraph (A); or 
(ii) determine industry support using any statistically valid sampling 
method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a 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 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 law. See Algoma Steel Corp. Ltd. v. United States, 
688 F. Supp. 639, 642-44 (CIT 1988); see also 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).
    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 subtitle.'' 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 the domestic like product, the petitioners do not 
offer a definition of domestic like product distinct from the scope of 
the investigations. Based on our analysis of the information submitted 
in the petitions, we have determined there is a single domestic like 
product, certain steel nails, which is defined further in the ``Scope 
of the Investigations'' section above, and we have analyzed industry 
support in terms of that domestic like product. See PRC Initiation 
Checklist at Attachment II and UAE Initiation Checklist at Attachment 
II.
    Based on information provided in the petitions, the share of total 
estimated U.S. production of the domestic like product in calendar year 
2006 represented by the petitioners did not account for more than 50 
percent of the total production of the domestic like product. 
Therefore, in accordance with section 732(c)(4)(D) of the Act, we 
polled the industry.
    On June 1, 2007, we issued polling questionnaires to all known 
domestic producers of certain steel nails identified in the petitions 
and by the Department's research. On June 6, 2007, we issued a polling 
questionnaire to an additional producer whose identity we learned from 
the ITC. The questionnaires are on file in the CRU in room B-099 of the 
main Department of Commerce building. We requested that each company 
complete the polling questionnaire and certify its response by faxing 
its response to the Department by the due date. For a detailed 
discussion of the responses received, see PRC Initiation Checklist at 
Attachment II and UAE Initiation Checklist at Attachment II.
    Section 732(c)(4)(B) of the Act states that (i) the Department 
``shall disregard the position of domestic producers who oppose the 
petition if such producers are related to foreign producers, as defined 
in section 771(4)(B)(ii), unless such domestic producers demonstrate 
that their interests as domestic producers would be adversely affected 
by the imposition of an antidumping duty order'' and (ii) the 
Department ``may disregard the position of domestic producers of a 
domestic like product who are importers of the subject merchandise.'' 
In addition, 19 CFR 351.203(e)(4) states that the position of a 
domestic producer that opposes the petition (i) will be disregarded if 
such producer is related to a foreign producer or to a foreign exporter 
under section 771(4)(B)(ii) of the Act, unless such domestic producer 
demonstrates to the Secretary's satisfaction that its interests as a 
domestic producer would be adversely affected by the imposition of an 
antidumping order, and (ii) may be disregarded if the producer is an 
importer of the subject merchandise or is related to such an importer 
under section 771(4)(B)(ii) of the Act.
    Certain producers of the domestic like product that opposed the 
petition against the PRC are related to foreign producers and/or 
imported subject merchandise from the PRC. We have analyzed the 
information provided by these producers in their polling questionnaire 
responses and information provided in other submissions to the 
Department (see the petitioners' June 18, 2007, submission and Illinois 
Tool Works Inc.'s June 25, 2007, submission). Based on our analysis, we 
have determined that it would be appropriate to disregard the position 
of any of the opposing producers under section 732(c)(4)(B) of the Act. 
When the position of any of these producers is disregarded, the 
petitioners satisfy the statutory industry support requirements of 
section 732(c)(4)(A) of the Act. See PRC Initiation Checklist at 
Attachment II and UAE Initiation Checklist at Attachment II.
    With regard to the PRC petition, the data collected demonstrate 
that the domestic producers of certain steel nails who support the PRC 
petition account for at least 25 percent of the total production of the 
domestic like product and, once the opposition of certain producers is 
disregarded, 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 PRC

[[Page 38819]]

petition. See PRC Initiation Checklist at Attachment II.
    Our analysis of the data collected with regard to the UAE petition 
indicates that the domestic producers of certain steel nails who 
support the UAE petition account for at least 25 percent of the total 
production of the domestic like product and 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 UAE petition. 
See UAE Initiation Checklist at Attachment II. We note that certain 
U.S. producers oppose the petition against the UAE; however, despite 
such opposition, the petitioners still 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 UAE 
petition. As a result, we need not examine whether the U.S. producers 
that opposed the petition against the UAE are related to, or import 
from, producers of the subject merchandise in the UAE.
    Therefore, the Department determines that the petitioners filed 
these petitions on behalf of the domestic industry because they are 
interested parties as defined in sections 771(9)(C) and (D) of the Act 
and they have demonstrated sufficient industry support with respect to 
the antidumping investigations that they are requesting the Department 
initiate. See PRC Initiation Checklist at Attachment II and UAE 
Initiation Checklist at Attachment II.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the imports of the subject 
merchandise sold at less than normal value (NV). The petitioners 
contend that the industry's injured condition is illustrated by reduced 
market share, lost sales, reduced production, reduced capacity and 
capacity utilization rate, reduced shipments, underselling and price 
depression or suppression, lost revenue, reduced employment, decline in 
financial performance, and an increase in import penetration. 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 PRC Initiation Checklist at Attachment 
III (Injury) and UAE Initiation Checklist at Attachment III (Injury).

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 of imports of certain steel nails from 
the PRC and the UAE. The sources of data for the deductions and 
adjustments relating to the U.S. price, constructed value (CV) (for the 
UAE), and the factors of production (for the PRC) are also discussed in 
the country-specific initiation checklists. See PRC Initiation 
Checklist and UAE 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 will reexamine the 
information and revise the margin calculations, if appropriate.

UAE

Export Price (EP)

    The petitioners calculated two EPs using price offers for UAE-
produced steel nails obtained from customer contacts. The petitioners 
made adjustments for the importer's markup, U.S. inland freight, ocean 
freight, marine insurance, U.S. port fees, and foreign inland freight. 
The petitioners derived the importer profit margin from published 
financial statement data of a trading company that imports nails into 
the United States. The petitioners estimated U.S. inland freight based 
on their knowledge and experience in shipping steel nails within the 
United States. They calculated ocean freight and marine insurance based 
on the difference between the average per-unit customs value and the 
average per-unit CIF value reported in U.S. import statistics for the 
HTSUS category corresponding to the price data at the likely U.S. port 
of entry. U.S. port fees were based on standard U.S. government 
percentages, as applied to the petitioners' estimate of entered value. 
Finally, the petitioners calculated foreign inland freight based on a 
UAE freight quote obtained through market research. See UAE Initiation 
Checklist.

NV Based on CV

    With respect to NV, the petitioners provided information that the 
UAE home market is not viable. According to the petitioners, the UAE 
steel nail industry is geared almost exclusively to exports. See, e.g., 
Volume III of the UAE petition at 9 and Exhibit UAE 5. Through market 
research, the petitioners learned that the type of wood-frame 
construction used predominantly in North America makes the United 
States a desirable market for exports, while other types of specialty 
fasteners are more prevalent in the UAE home market. See Supplement to 
the UAE petition, dated June 1, 2007.
    Further, the petitioners provided information that no third-country 
market for the UAE's principal exporter of the merchandise, Dubai Wire, 
is viable. Based on available export data from the UAE, the petitioners 
state that Germany is the next largest country to which subject 
merchandise was exported, and that the volume of merchandise exported 
to Germany was 1.01 percent of the volume exported to the United 
States. See Volume III of the UAE petition at 9 and Exhibit UAE 5, and 
Supplement to the UAE petition, dated June 1, 2007. As this is less 
than the 5-percent threshold provided for in section 
773(a)(1)(B)(ii)(II) of the Act, Germany is not a viable third-country 
market. Accordingly, the petitioners based NV on CV.
    Pursuant to section 773(e) of the Act, CV consists of the cost of 
manufacture (COM); selling, general and administrative (SG&A) expenses; 
financial expenses; packing expenses; and profit. In calculating COM 
and packing, the petitioners based the quantity of each of the inputs 
used to manufacture and pack steel nails on the production experience 
of two U.S. steel nail producers during the prospective POI, and 
multiplied it by the value of inputs used to manufacture steel nails in 
the UAE using either publicly available data or data obtained from a 
market research study. See Volume III of the UAE petition at 10-14, the 
June 7, 2007, supplement to the UAE petition at Exhibit UAE Supp-12 and 
the June 20, 2007, supplement to the UAE petition at 3-5 and Exhibits 
UAE Supp2-12A, Supp2-12B and Supp2-20.
    Raw material (i.e., steel wire rod) is the most significant input 
used in the production of steel nails. The petitioners determined the 
usage of steel wire rod based on the quantities used by two U.S. 
manufacturers to produce a metric ton of steel nails. The value of 
steel wire rod was based on price data obtained through market 
research. The price data from the market research study were 
contemporaneous with the POI. The values for other inputs and packing 
(i.e., scrap, stearic acid, polypropylene, and vinyl resins) were based 
on statistics from the World Trade Atlas for the period of July 2005 to 
August 2006. See Volume III of the UAE petition at 10-11 and Exhibits 
UAE 13-14, the June 1, 2007, supplement to the UAE petition at Exhibit 
1, and the June 7, 2007, supplement to the UAE petition at Exhibit UAE 
Supp-12.

[[Page 38820]]

    The petitioners determined labor costs using the labor inputs 
derived from the experience of two U.S. steel nail producers and valued 
these inputs using UAE labor costs obtained from a market research 
study. Based on the study, the petitioners calculated an hourly rate 
using an average of four industrial sources in the UAE. For the value 
of indirect labor, the petitioners calculated an hourly rate using an 
average of two industrial sources in the UAE for accountants, 
engineers, managers, supervisors, and general managers. See Volume III 
of the UAE petition at 11 and Exhibit UAE 8, the June 1, 2007, 
supplement to the UAE petition at Exhibit 1, and the June 7, 2007, 
supplement to the UAE petition at Exhibit UAE Supp-12.
    To calculate energy, factory overhead, and SG&A expenses, the 
petitioners relied on the financial statements of a steel fabricating 
company in the UAE, Arab Heavy Industries (AHI), for the fiscal year 
ending December 31, 2006, the period most contemporaneous with the POI. 
The petitioners stated that the surrogate financial statements did not 
separately itemize other operating expenses (i.e., energy, SG&A); 
therefore, to avoid double-counting energy expenses in the calculation 
of CV it was necessary to use a combined ratio for energy, factory 
overhead, and SG&A expenses. Specifically, the petitioners calculated 
the total of depreciation, other operating expenses, and other income 
from AHI's financial statements as a percentage of materials and labor 
from AHI's financial statements. This ratio was then applied to the 
materials (excluding packing) and labor costs calculated as discussed 
above. The petitioners believe this is a conservative calculation of 
the energy, factory overhead, and SG&A expenses as they have included 
all other income from AHI's financial statements. Additionally, based 
on AHI's financial statements, they believe packing expenses were 
included in the denominator of the energy, factory overhead, and SG&A 
ratio calculation, but not in the materials and labor figure to which 
they applied it (packing expenses were added after this calculation), 
thus potentially understating CV. See the June 20, 2007, supplement to 
the UAE petition at 3-5 and Exhibits UAE Supp2-12A, Supp2-12B and 
Supp2-20.
    To calculate the average financial expense and profit rates, the 
petitioners relied on the financial statements of the same UAE steel 
fabricator, AHI. The petitioners note that based on the surrogate 
financial statements, the financial expense ratio was zero. See the 
June 20, 2007, supplement to the UAE petition at 3-5 and Exhibits UAE 
Supp2-12A, Supp2-12B and Supp2-20.

PRC

EP

    The petitioners relied on three U.S. prices for certain steel nails 
manufactured in the PRC and offered for sale in the United States. The 
prices quoted were for three different types of steel nails falling 
within the scope of the PRC petition, for delivery to the U.S. customer 
within the POI. The petitioners deducted from the prices the costs 
associated with exporting and delivering the product, including U.S. 
inland freight, ocean freight and insurance charges, U.S. duty, port 
and wharfage fees, foreign inland freight costs, and foreign brokerage 
and handling. See PRC Initiation Checklist. The petitioners based the 
importer profit margin and U.S. inland freight on their knowledge and 
experience. The petitioners used the Department's standard all-distance 
freight rate for foreign inland freight. They calculated ocean freight 
and marine insurance based on the difference between the average per-
unit customs value and the average per-unit CIF value reported in U.S. 
import statistics for the HTSUS category corresponding to the price 
data at the likely U.S. port of entry. U.S. port fees were based on 
standard percentages of U.S. government fees. The petitioners estimated 
foreign brokerage and handling based on Indian surrogate value data 
applied in another Department proceeding. See Volume II of the PRC 
petition at 1-15, and Exhibits PRC 1A, 1B, 2A, 2B, 3A, 3B, 6A - 10F, 
and the June 7, 2007, PRC-only submission at 15-18, and Exhibit 10.

PRC NV

    The petitioners stated that the PRC remains a non-market economy 
(NME) country and no determination to the contrary has yet been made by 
the Department. Recently, the Department examined the PRC's market 
status and determined that NME status should continue for the PRC. See 
Memorandum from the Office of Policy to David M. Spooner, Assistant 
Secretary for Import Administration, Regarding The People's Republic of 
China Status as a Non-Market Economy, dated May 15, 2006 (This document 
is available online at https://ia.ita.doc.gov/download/prc-nme-status/
prc-nme-status-memo.pdf.) In addition, in two recent investigations, 
the Department also determined that the PRC is an NME country. See 
Final Determination of Sales at Less Than Fair Value: Certain Activated 
Carbon from the People's Republic of China, 72 FR 9508 (March 2, 2007) 
and Final Determination of Sales at Less Than Fair Value and Partial 
Affirmative Determination of Critical Circumstances: Certain Polyester 
Staple Fiber from the People's Republic of China, 72 FR 19690 (April 
19, 2007). In accordance with section 771(18)(C)(i) of the Act, the 
presumption of NME status remains in effect until revoked by the 
Department. The presumption of NME status for the PRC has not been 
revoked by the Department and remains in effect for purposes of the 
initiation of this investigation. Accordingly, the NV of the product is 
appropriately based on factors of production valued in a surrogate 
market economy country in accordance with section 773(c) of the Act. In 
the course of this investigation, all parties will have the opportunity 
to provide relevant information related to the issues of the PRC's NME 
status and the granting of separate rates to individual exporters.
    The petitioners selected India as the surrogate country arguing 
that, pursuant to section 773(c)(4) of the Act, India is an appropriate 
surrogate because it is a market economy country that is at a level of 
economic development comparable to that of the PRC and is a significant 
producer and exporter of certain steel nails. See Volume II of the PRC 
petition at 16-20. Based on the information provided by the 
petitioners, we believe that the use of India as a surrogate country is 
appropriate for purposes of initiation. After the initiation of the 
investigation, we will solicit comments regarding surrogate country 
selection.
    The petitioners provided dumping margin calculations using the 
Department's NME methodology as required by 19 CFR 351.202(b)(7)(i)(C) 
and 19 CFR 351.408. However, because information regarding the factors 
of production consumed by Chinese producers is not available to the 
petitioners, the petitioners calculated NVs for each U.S. price 
discussed above based on consumption rates for producing certain steel 
nails as experienced by U.S. producers. See Volume II of the PRC 
petition at 19-20. The petitioners used U.S. producer consumption 
figures for 2006, stating that such information provides as 
contemporaneous a time period as possible with the POI and is 
reasonably available to the petitioners. See id. With the exception of 
labor, the petitioners state that U.S. input consumption quantities 
reflect efficient production methods and they provide a conservative 
estimate of the factors of production used by the Chinese. See id.

[[Page 38821]]

For labor, the petitioners adjusted the number of labor hours per unit 
of output to account for a known difference between the U.S. and 
Chinese production processes. Specifically, the petitioners stated that 
the production of subject merchandise is more labor intensive in the 
PRC than in the United States, requiring significantly more labor to 
produce the same amount of finished product. The petitioners provide 
affidavits to support this labor adjustment. See Volume II of the PRC 
petition at 20, Exhibits PRC 11A - 11C, and the June 7, 2007, PRC-only 
supplement to the PRC petition at 4 and Exhibit PRC 11. Accordingly, we 
found the petitioners use of the production data to be reasonable.
    For the NV calculations, the petitioners were unable to obtain 
surrogate value figures contemporaneous with the POI for all material 
inputs, and accordingly relied upon the most recent information 
available. The sources of these data include the published national 
market prices for carbon steel commodities by Joint Plant Committee of 
India and the World Trade Atlas compilation of Indian import 
statistics, which provided data through September 2006 at the time the 
petition was filed. See Volume II of the PRC petition at Exhibits PRC 
14A and PRC 15. Where an input price reflected a period preceding the 
POI, the petitioners adjusted it for inflation using the wholesale 
price index for India reported by the Reserve Bank of India. See Volume 
II of the PRC petition at Exhibit PRC 13. For fuel-, energy-, and 
lubricant-related inputs, the petitioners used the energy-specific 
inflators published by the International Monetary Fund. See id. The 
petitioners excluded those values from countries previously determined 
by the Department to be NME countries and imports into India from 
Indonesia, the Republic of Korea and Thailand, because the Department 
has previously excluded prices from these countries because they 
maintain broadly available, non-industry-specific export subsidies, as 
well as imports from unspecified countries. See Hand Trucks and Certain 
Parts Thereof From the People's Republic of China: Final Results of 
Administrative Review and Final Results of New Shipper Review, 72 FR 
27287 (May 15, 2007), and accompanying Issues and Decision Memorandum 
at Comment 23. The surrogate values used by the petitioners for the 
material and packing inputs consist of information reasonably available 
to the petitioners and are, therefore, acceptable for purposes of 
initiation.
    With respect to the surrogate financial expenses, the petitioners 
relied on the factory overhead, SG&A expenses and profitability of an 
Indian steel fastener producer, Lakshmi Precision Screws Ltd. 
(``LPS''), taken from the company's most recently available annual 
report that is closest to the POI. See Volume II of the PRC petition at 
Exhibit PRC 20. The petitioners claim that LPS is a modern producer 
using state of the art equipment and is India's only publicly traded 
producer of steel fasteners. The petitioners stated that they were 
unable to find public financial statements from other Indian nail 
producers; therefore, the petitioners argue, LPS provides the best 
information reasonably available as a surrogate for the production of 
certain steel nails in the PRC. We find that the petitioners' use of 
LPS as the source for the surrogate financial expenses is appropriate 
for purposes of initiation. The Department made minor modifications to 
the surrogate financial ratios calculated by the petitioners. As a 
result, the calculations for the three NVs and the resulting margin 
calculations changed slightly. See PRC Initiation Checklist at 
Attachment V.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of certain steel nails from the PRC and the UAE 
are being, or are likely to be, sold in the United States at less than 
fair value. Based on comparisons of EP to CV, calculated in accordance 
with section 773(a)(4) of the Act, the estimated dumping margins for 
certain steel nails from the UAE are 70.77 and 71.50 percent. Based on 
comparisons of EP to NV, calculated in accordance with section 773(c) 
of the Act, the estimated dumping margins for certain steel nails from 
the PRC are 55.19, 97.15 and 118.04 percent.

Initiation of Antidumping Investigations

    Based upon the examination of the petitions on certain steel nails 
from the PRC and the UAE, 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 certain steel nails from the PRC and the UAE 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.

Separate Rates and Quantity and Value Questionnaire

    The Department recently modified the process by which exporters and 
producers may obtain separate-rate status in NME investigations. See 
Policy Bulletin 05.1: Separate-Rates Practice and Application of 
Combination Rates in Antidumping Investigations involving Non-Market 
Economy Countries (April 5, 2005) (Separate Rates and Combination Rates 
Bulletin), available on the Department's website at https://
ia.ita.doc.gov/policy/bull05-1.pdf. The process requires the submission 
of a separate-rate status application. Based on our experience in 
processing the separate-rate applications in the following antidumping 
duty investigations, we have modified the application for this 
investigation to make it more administrable and easier for applicants 
to complete. See Initiation of Antidumping Duty Investigations: Certain 
Lined Paper Products From India, Indonesia, and the People's Republic 
of China, 70 FR 58374, 58379 (October 6, 2005), Initiation of 
Antidumping Duty Investigation: Certain Artist Canvas From the People's 
Republic of China, 70 FR 21996, 21999 (April 28, 2005), and Initiation 
of Antidumping Duty Investigations: Diamond Sawblades and Parts Thereof 
from the People's Republic of China and the Republic of Korea, 70 FR 
35625, 35629 (June 21, 2005). The specific requirements for submitting 
the separate-rate application in this investigation are outlined in 
detail in the application itself, which will be available on the 
Department's website at https://ia.ita.doc.gov/ia-highlights-and-
news.html on the date of publication of this initiation notice in the 
Federal Register. The separate-rate application is due no later than 
September 7, 2007.

NME Respondent Selection and Quantity and Value Questionnaire

    For NME investigations, it is the Department's practice to request 
quantity and value information from all known exporters identified in 
the PRC petition. Although many NME exporters respond to the quantity 
and value information request, at times some exporters may not have 
received the quantity and value questionnaire or may not have received 
it in time to respond by the specified deadline. Therefore, the 
Department typically requests the assistance of the NME government in 
transmitting the Department's quantity and value questionnaire to all 
companies that manufacture and export subject merchandise to the United

[[Page 38822]]

States, as well as to manufacturers that produce the subject 
merchandise for companies that were engaged in exporting subject 
merchandise to the United States during the POI. The quantity and value 
data received from NME exporters is used as the basis to select the 
mandatory respondents.
    The Department requires that the respondents submit a response to 
both the quantity and value questionnaire and the separate-rate 
application by the respective deadlines in order to receive 
consideration for separate-rate status. Appendix I of this notice 
contains the quantity and value questionnaire that must be submitted by 
all NME exporters no later than July 30, 2007. In addition, the 
Department will post the quantity and value questionnaire along with 
the filing instructions on the IA website at https://ia.ita.doc.gov/ia-
highlights-and-news.html. The Department will send the quantity and 
value questionnaire to those companies identified in Exhibit I-5 of 
Volume I of the PRC petition and those identified by the NME 
government.

Use of Combination Rates in an NME Investigation

    The Department will calculate combination rates for certain 
respondents that are eligible for a separate rate in the PRC 
investigation. The Separate Rates and Combination Rates Bulletin, 
states:
    [w]hile continuing the practice of assigning separate rates only to 
exporters, all separate rates that the Department will now assign in 
its NME investigations will be specific to those producers that 
supplied the exporter during the period of investigation. Note, 
however, that one rate is calculated for the exporter and all of the 
producers which supplied subject merchandise to it during the period of 
investigation. This practice applies both to mandatory respondents 
receiving an individually calculated separate rate as well as the pool 
of non-investigated firms receiving the weighted-average of the 
individually calculated rates. This practice is referred to as the 
application of ``combination rates'' because such rates apply to 
specific combinations of exporters and one or more producers. The cash-
deposit rate assigned to an exporter will apply only to merchandise 
both exported by the firm in question and produced by a firm that 
supplied the exporter during the period of investigation.
See Separate Rates and Combination Rates Bulletin, at 6.

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 the PRC and the UAE. We will 
attempt to provide a copy of the public version of the petitions to the 
foreign producers/exporters, consistent with 19 CFR 351.203(c)(2).

International Trade Commission Notification

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

Preliminary Determinations by the International Trade Commission

    The ITC will preliminarily determine, no later than July 30, 2007, 
whether there is a reasonable indication that imports of certain steel 
nails from the PRC and the UAE are materially injuring, or threatening 
material injury to, a U.S. industry. A negative ITC determination with 
respect to either 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: July 9, 2007.
David M. Spooner,
Assistant Secretaryfor Import Administration.

Appendix - I

Where it is not practicable to examine all known producers/exporters of 
subject merchandise, section 777A(c)(2) of the Tariff Act of 1930 (as 
amended) permits us to investigate 1) a sample of exporters, producers, 
or types of products that is statistically valid based on the 
information available at the time of selection, or 2) exporters and 
producers accounting for the largest volume and value of the subject 
merchandise that can reasonably be examined.
In the chart below, please provide the total quantity and total value 
of all your sales of merchandise covered by the scope of this 
investigation (see scope section of this notice), produced in the PRC, 
and exported/shipped to the United States during the period October 1, 
2006, through March 31, 2007.

----------------------------------------------------------------------------------------------------------------
                             Market                               Total Quantity   Terms of Sale    Total Value
----------------------------------------------------------------------------------------------------------------
United States...................................................  ..............  ..............  ..............
1. Export Price Sales...........................................  ..............  ..............  ..............
2...............................................................  ..............  ..............  ..............
 a. Exporter name...............................................  ..............  ..............  ..............
 b. Address.....................................................  ..............  ..............  ..............
 c. Contact.....................................................  ..............  ..............  ..............
 d. Phone No....................................................  ..............  ..............  ..............
 e. Fax No......................................................  ..............  ..............  ..............
3. Constructed Export Price Sales...............................  ..............  ..............  ..............
4. Further Manufactured.........................................  ..............  ..............  ..............
Total Sales.....................................................  ..............  ..............  ..............
----------------------------------------------------------------------------------------------------------------

Total Quantity:
     Please report quantity on a metric ton basis. If any 
conversions were used, please provide the conversion formula and 
source.
Terms of Sales:
     Please report all sales on the same terms (e.g., free on 
board).
Total Value:
     All sales values should be reported in U.S. dollars. 
Please indicate any exchange rates used and their respective dates and 
sources.
Export Price Sales:
     Generally, a U.S. sale is classified as an export price 
sale when the first sale to an unaffiliated person occurs before 
importation into the United States.
     Please include any sales exported by your company directly 
to the

[[Page 38823]]

United States;
     Please include any sales exported by your company to a 
third-country market economy reseller where you had knowledge that the 
merchandise was destined to be resold to the United States.
     If you are a producer of subject merchandise, please 
include any sales manufactured by your company that were subsequently 
exported by an affiliated exporter to the United States.
     Please do not include any sales of merchandise 
manufactured in Hong Kong in your figures.
Constructed Export Price Sales:
     Generally, a U.S. sale is classified as a constructed 
export price sale when the first sale to an unaffiliated person occurs 
after importation. However, if the first sale to the unaffiliated 
person is made by a person in the United States affiliated with the 
foreign exporter, constructed export price applies even if the sale 
occurs prior to importation.
     Please include any sales exported by your company directly 
to the United States;
     Please include any sales exported by your company to a 
third-country market economy reseller where you had knowledge that the 
merchandise was destined to be resold to the United States.
     If you are a producer of subject merchandise, please 
include any sales manufactured by your company that were subsequently 
exported by an affiliated exporter to the United States.
     Please do not include any sales of merchandise 
manufactured in Hong Kong in your figures.
Further Manufactured:
     Further manufacture or assembly costs include amounts 
incurred for direct materials, labor and overhead, plus amounts for 
general and administrative expense, interest expense, and additional 
packing expense incurred in the country of further manufacture, as well 
as all costs involved in moving the product from the U.S. port of entry 
to the further manufacturer.
[FR Doc. E7-13721 Filed 7-13-07; 8:45 am]
BILLING CODE 3510-DS-S