Small Diameter Graphite Electrodes From the People's Republic of China: Initiation of Anti-Circumvention Inquiry, 14910-14917 [2011-6451]
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14910
Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices
the rate selected is the rate currently
applicable to the PRC-wide entity and
was corroborated in the LTFV Final
Determination, using Zibo Aifudi’s
CONNUM margins. See LTFV Final
Determination, 73 FR at 35648. The
Department assumes that if an
uncooperative respondent could have
obtained a lower rate, it would have
cooperated.24 Consequently, as there is
no information on the record of this
review that demonstrates that this rate
is not appropriate for use as AFA, we
determine that this rate continues to
have relevance.
Based on our analysis as described
above, we find that the margin of 91.73
percent is reliable and has relevance. As
the 91.73 percent rate is both reliable
and relevant, we determine that it has
probative value. Accordingly, we
determine that the calculated rate of
91.73 percent, which is the current PRCwide rate, is in accordance with the
requirement of section 776(c) of the Act
that secondary information be
corroborated to the extent practicable
(i.e., that it have probative value).
Consequently, we have assigned this
AFA rate to exports of the subject
merchandise from the PRC-wide entity,
including Zibo Aifudi.
Final Results of Review
The weighted-average dumping
margins for the POR are as follows:
Exporter
Weighted
Average
Percent Margin
PRC–Wide Rate 25 ...........
91.73
Emcdonald on DSK2BSOYB1PROD with NOTICES
Assessment
Pursuant to section 751(a)(2)(A) of the
Act and 19 CFR 351.212(b), the
Department will determine, and CBP
shall assess, antidumping duties on all
appropriate entries of subject
merchandise in accordance with the
final results of this review. For
assessment purposes, we calculated
importer (or customer)-specific
assessment rates for merchandise
subject to this review. Where
appropriate, we calculated an ad
valorem rate for each importer (or
customer) by dividing the total dumping
margins for reviewed sales to that party
From the Socialist Republic of Vietnam: Final
Results and Final Partial Rescission of
Antidumping Duty Administrative Review, 73 FR
52273 (September 9, 2008).
24 See Rhone Poulenc, Inc. v. United States, 899
F.2d 1185, 1190–91 (Fed. Cir. 1990); Ta Chen
Stainless Steel Pipe, Inc. v. United States, 24 CIT
841, 848 (2000) (respondents should not benefit
from failure to cooperate).
25 The PRC–Wide entity, including Zibo Aifudi
Plastic Packaging Co., Ltd.
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18:30 Mar 17, 2011
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by the total entered values associated
with those transactions. For dutyassessment rates calculated on this
basis, we will direct CBP to assess the
resulting ad valorem rate against the
entered customs values for the subject
merchandise. Where appropriate, we
calculated a per-unit rate for each
importer (or customer) by dividing the
total dumping margins for reviewed
sales to that party by the total sales
quantity associated with those
transactions. For duty-assessment rates
calculated on this basis, we will direct
CBP to assess the resulting per-unit rate
against the entered quantity of the
subject merchandise. Where an importer
(or customer)-specific assessment rate is
de minimis (i.e., less than 0.50 percent),
the Department will instruct CBP to
assess that importer (or customer’s)
entries of subject merchandise without
regard to antidumping duties, in
accordance with 19 CFR 351.106(c)(2).
The Department intends to issue
assessment instructions to CBP 15 days
after the date of publication of these
final results of review.
Cash Deposit Requirements
The following cash-deposit
requirements will be effective upon
publication of the final results of this
administrative review for all shipments
of the subject merchandise entered, or
withdrawn from warehouse, for
consumption on or after the publication
date, as provided for by section
751(a)(2)(C) of the Act: (1) The cash
deposit rate for each of the reviewed
companies that received a separate rate
in this review will be the rate listed in
the final results of review (except that
if the rate for a particular company is de
minimis, i.e., less than 0.5 percent, no
cash deposit will be required for that
company); (2) for previously
investigated companies not listed above,
the cash deposit rate will continue to be
the company-specific rate published for
the most recent POR; (3) if the exporter
is not a firm covered in this review, a
prior review, or the original less than
fair value investigation, but the
manufacturer is, the cash deposit rate
will be the rate established for the most
recent period for the manufacturer of
the merchandise; and (4) the cash
deposit rate for all other manufacturers
or exporters will be the PRC-wide rate
of 91.73 percent. These deposit
requirements, when imposed, shall
remain in effect until further notice.
Reimbursement of Duties
This notice also serves as a final
reminder to importers of their
responsibility under 19 CFR 351.402(f)
to file a certificate regarding the
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reimbursement of antidumping duties
prior to liquidation of the relevant
entries during this POR. Failure to
comply with this requirement could
result in the Department’s presumption
that reimbursement of antidumping
duties has occurred and the subsequent
assessment of doubled antidumping
duties.
Administrative Protective Orders
This notice also serves as a reminder
to parties subject to administrative
protective order (‘‘APO’’) of their
responsibility concerning the return or
destruction of proprietary information
disclosed under APO in accordance
with 19 CFR 351.305, which continues
to govern business proprietary
information in this segment of the
proceeding. Timely written notification
of the return/destruction of APO
materials or conversion to judicial
protective order is hereby requested.
Failure to comply with the regulations
and terms of an APO is a violation
which is subject to sanction.
We are issuing and publishing this
administrative review and notice in
accordance with sections 751(a)(1) and
777(i) of the Act.
Dated: March 14, 2011.
Kim Glas,
Acting Deputy Assistant Secretary for Import
Administration.
Appendix I—Issues and Decision
Memorandum
Comment 1: Preliminary Decision
Regarding Country of Origin
1a. Procedures in Determining
Country of Origin
1b. Department’s Decision of Country
of Origin of Sacks
1c. Authority to Issue Clarification
Instruction to CBP
1d. Finalizing the Country-of-Origin
Memorandum
Comment 2: Liquidation Instructions
[FR Doc. 2011–6450 Filed 3–17–11; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
International Trade Administration
[A–570–929]
Small Diameter Graphite Electrodes
From the People’s Republic of China:
Initiation of Anti-Circumvention Inquiry
Import Administration,
International Trade Administration,
Department of Commerce.
SUMMARY: In response to requests from
SGL Carbon LLC and Superior Graphite
Co. (‘‘Petitioners’’), Petitioners in the
original investigation, the Department of
AGENCY:
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Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices
Commerce (‘‘Department’’) is initiating
an anti-circumvention inquiry pursuant
to section 781(b) of the Tariff Act of
1930, as amended (‘‘the Act’’), to
determine whether certain merchandise
from the United Kingdom (‘‘U.K.’’) is
being exported to the United States by
U.K. Carbon and Graphite Co., Ltd.
(‘‘UKCG’’) in circumvention of the
antidumping duty order on small
diameter graphite electrodes (‘‘SDGE’’)
from the People’s Republic of China
(‘‘PRC’’).1
DATES: Effective Date: March 18, 2011.
FOR FURTHER INFORMATION CONTACT:
Brendan Quinn, AD/CVD Operations,
Office 8, Import Administration,
International Trade Administration,
U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202)
482–5848.
SUPPLEMENTARY INFORMATION:
Background
Emcdonald on DSK2BSOYB1PROD with NOTICES
On October 12, 2010, Petitioners filed
a submission alleging that UKCG, a
company located in the United
Kingdom, is engaged in circumvention
of the SDGE Order, by importing
unfinished SDGE components 2 from the
PRC to the United Kingdom, performing
minor completion and assembly on
these items, and exporting finished
subject merchandise to the United
States as SDGE of U.K. origin, thus, not
subject to the SDGE Order.3 In this
submission, Petitioners request that the
Department initiate and conduct a
proceeding to clarify whether the scope
of the SDGE Order includes unfinished
graphitized SDGE components, as
imported by UKCG from the PRC based
on either the dispositive written
descriptions of the scope pursuant to 19
CFR 351.225(k)(1) or, a further analysis
of the product in question pursuant to
1 See Antidumping Duty Order: Small Diameter
Graphite Electrodes from the People’s Republic of
China, 74 FR 8775 (February 26, 2009) (‘‘SDGE
Order’’).
2 According to Petitioners, the unfinished
merchandise in question is defined in UKCG’s
submissions as, e.g., ‘‘graphite electrodes,’’ ‘‘rods,’’
‘‘graphite billets,’’ graphite shapes,’’ ‘‘synthetic
graphite electrode rod,’’ and ‘‘re-machined graphite
electrode.’’ Petitioners characterize these inputs as
‘‘unfinished SDGE,’’ whereas UKCG refers to them
as ‘‘artificial graphite.’’ For customs purposes, these
materials are, generally, classified under HTS
3801.10.00, defined as ‘‘Artificial Graphite;
Colloidal or Semi-Colloidal Graphite; Preparations
Based on Graphite or Other Carbon in the Form of
Pastes, Blocks, Plates or Other Semi-Finished
Goods.’’ For ease of reference, these materials are
referred to as ‘‘unfinished SDGE components’’ or
‘‘artificial graphite rods’’ throughout this notice.
3 See Letter from Petitioners entitled, ‘‘Small
Diameter Graphite Electrodes from the People’s
Republic of China,’’ dated October 12, 2010
(‘‘Initiation Request’’).
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factors enumerated in 19 CFR
351.225(k)(2). Alternatively, Petitioners
request that the Department initiate an
anti-circumvention proceeding,
pursuant to 19 CFR 351.225(h), to
determine whether the importation of
the aforementioned SDGE components
by UKCG from the PRC for finishing in
the United Kingdom and subsequent
sale to the United States constitutes
circumvention of the SDGE Order, as
defined in section 781(b) of the Act.
On October 29, 2010, the Department
received a letter on behalf UKCG in
rebuttal to Petitioners’ request for a
scope or anti-circumvention ruling.4 In
this submission, UKCG asserts that there
is no need for the Department to
undertake a full scope or anticircumvention inquiry, arguing that the
unfinished SDGE component inputs in
question have already been excluded
from the scope of the SDGE Order. On
November 12, 2010, we received further
comments from Petitioners in response
to UKCG’s October 29, 2010,
submission.5
On November 24, 2010, the
Department requested that Petitioners
supplement their scope request with
certain additional information to aide in
our decision whether to initiate a formal
scope or anti-circumvention inquiry.6 In
this questionnaire, the Department
requested that Petitioners provide
further information regarding both the
pattern of trade for imports of
unfinished SDGE components into the
United Kingdom from the PRC and
domestic U.K. production of unfinished
SDGE components during the relevant
time period. On November 30, 2010, we
received Petitioners’ response to the
Department’s pre-initiation
questionnaire.7 On December 14, 2010,
4 See Letter from UKCG entitled, ‘‘Small Diameter
Graphite Electrodes from the People’s Republic of
China: Response to Petitioners’ Submission of
October 12, 2010, On Behalf of UK Graphite and
Carbon Co., Ltd.,’’ dated October 29, 2010
(‘‘Initiation Rebuttal Comments’’).
5 See Letter from Petitioners entitled, ‘‘Small
Diameter Graphite Electrodes from the People’s
Republic of China,’’ dated November 12, 2010
(‘‘Petitioners’ Response to UKCG’s Initiation
Rebuttal Comments’’).
6 See the Department’s Letter to Petitioners
entitled, ‘‘Small Diameter Graphite Electrodes from
the People’s Republic of China: Scope Inquiry
Request Regarding Certain Merchandise Imported
By UK Carbon and Graphite Company, Ltd.,’’ dated
November 24, 2010 (‘‘Pre-Initiation Supplemental
Questionnaire’’ or Pre-Initiation SQ’’).
7 See Letter from Petitioners entitled, ‘‘Small
Diameter Graphite Electrodes from the People’s
Republic of China,’’ dated November 30, 2010
(‘‘Petitioners’ Pre-Initiation Supplemental
Questionnaire Response’’ or ‘‘Petitioners’ SQR’’).
Upon receipt of this submission, we found that the
record, henceforth, contained sufficient information
from which the Department may determine whether
a formal anti-circumvention inquiry is warranted.
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14911
we received a rebuttal from UKCG in
response to Petitioners’ SQR.8
On November 29, 2010, the
Department received, via e-mail, a
document from the British Embassy in
support of UKCG’s arguments, which
the Department placed on the record of
this proceeding.9
On January 13, 2011, the Department
extended the deadline to initiate an
anti-circumvention inquiry by 21 days,
pursuant to 19 CFR 351.302(b).10 On
February 4, 2011, the Department
further extended the deadline to initiate
by 14 days, pursuant to 19 CFR
351.302(b).11
Scope of the Order
The merchandise covered by this
order includes all small diameter
graphite electrodes of any length,
whether or not finished, of a kind used
in furnaces, with a nominal or actual
diameter of 400 millimeters (16 inches)
or less, and whether or not attached to
a graphite pin joining system or any
other type of joining system or
hardware. The merchandise covered by
this order also includes graphite pin
joining systems for small diameter
graphite electrodes, of any length,
whether or not finished, of a kind used
in furnaces, and whether or not the
graphite pin joining system is attached
to, sold with, or sold separately from,
the small diameter graphite electrode.
Small diameter graphite electrodes and
graphite pin joining systems for small
8 See Letter from UKCG entitled, ‘‘Small Diameter
Graphite Electrodes from the People’s Republic of
China: Response to Petitioners’ Submission of
November 30, 2010, On Behalf of UK Graphite and
Carbon Co., Ltd.,’’ dated December 14, 2010
(‘‘UKCG’s Rebuttal to Petitioners’ Pre-Initiation
Supplemental Questionnaire Response’’ or ‘‘UKCG’s
SQR Rebuttal’’).
9 See the Department’s Memorandum from
Brendan Quinn to The File entitled, ‘‘Scope/AntiCircumvention Inquiry of Small Diameter Graphite
Electrodes from the People’s Republic of China:
Placing Document on the Record,’’ dated February
2, 2011. In this document, the British Government
related its support for UKCG and implored the
Department to take into consideration certain
arguments forwarded in UKCG’s submissions,
particularly with regard to the Binding Origin
Information ruling discussed below. Because this
document did not provide any new argument or
information onto the record, we have not further
summarized the British Embassy’s letter for the
purposes of this notice.
10 See the Department’s letter to Petitioners
entitled, ‘‘Small Diameter Graphite Electrodes from
the People’s Republic of China: Scope Inquiry
Request Regarding Certain Unfinished Merchandise
Imported By UK Carbon and Graphite Company,
Ltd.,’’ dated January 13, 2011 (‘‘Initiation Extension
Letter’’).
11 See the Department’s letter to Petitioners
entitled, ‘‘Small Diameter Graphite Electrodes from
the People’s Republic of China: Scope Inquiry
Request Regarding Certain Unfinished Merchandise
Imported By UK Carbon and Graphite Company,
Ltd.,’’ dated February 4, 2011 (‘‘Second Initiation
Extension Letter’’).
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diameter graphite electrodes are most
commonly used in primary melting,
ladle metallurgy, and specialty furnace
applications in industries including
foundries, smelters, and steel refining
operations. Small diameter graphite
electrodes and graphite pin joining
systems for small diameter graphite
electrodes that are subject to this order
are currently classified under the
Harmonized Tariff Schedule of the
United States (‘‘HTSUS’’) subheading
8545.11.0000. The HTSUS number is
provided for convenience and customs
purposes, but the written description of
the scope is dispositive.
Determination Not To Initiate a Scope
Proceeding
As noted above, Petitioners have
requested the Department initiate either
a scope proceeding to clarify whether
the scope of the SDGE Order includes
the merchandise in question pursuant to
19 CFR 351.225(k) or an anticircumvention proceeding pursuant to
section 781(b) of the Act and 19 CFR
351.225(h).
In the instant case, although
Petitioners have provided substantial
record evidence which may support the
initiation of either type of inquiry, the
Department has concluded that the
issues raised by the parties are better
addressed in the context of an anticircumvention proceeding pursuant to
section 781(b) of the Act and 19 CFR
351.225(h).12 In particular, due to the
specificity of Petitioners’ request as it
pertains to a particular company (i.e.,
UKCG) and certain record information
as to the timing of the pattern of trade
(as discussed below), the Department
has determined that a decision to
initiate an anti-circumvention inquiry is
the most appropriate course of action to
address Petitioners’ concerns at present.
As a result of this determination, the
Department will not initiate a scope
proceeding pursuant to 19 CFR
351.225(k) at this time.
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Statutory Criteria for Initiation of AntiCircumvention Proceeding
Section 781(b)(1) of the Act provides
that the Department may find that
12 As such, the remainder of this notice will focus
on the statutory criteria for the initiation of an anticircumvention inquiry, as defined in section 781(b)
of the Act. See the Initiation of Anti-Circumvention
Proceeding section of this notice, below, for a full
summary of both Petitioners’ and UKCG’s
comments regarding initiation of an anticircumvention inquiry. See also the Analysis
section of this notice, below, for the full discussion
of the Department’s determination to initiate an
anti-circumvention inquiry pursuant to section
781(b) of the Act and 19 CFR 351.225(h).
18:30 Mar 17, 2011
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Petitioners’ Request for Initiation of an
Anti-Circumvention Proceeding 14
In their October 12, 2010, Initiation
Request, Petitioners presented the
Initiation of Anti-Circumvention
Proceeding
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importation of certain merchandise
completed or assembled in a third
country constitutes circumvention of an
antidumping duty order if:
(A) The merchandise imported into
the United States is of the same class or
kind as merchandise produced in a
foreign country that is subject to the
order.
(B) Before importation to the United
States, such imported merchandise is
completed or assembled in another
foreign country from merchandise
which is either subject to the order or
is produced in the foreign country
subject to the order.
(C) The process of assembly or
completion in the third country is minor
or insignificant.13
(D) The value of the merchandise
produced in the country subject to the
order amounts to a significant portion of
the total value of the merchandise
exported to the United States.
(E) Such action would be appropriate
to prevent evasion of the order in
question. In evaluating these
aforementioned criteria, section
781(b)(3) of the Act further instructs the
Department to take into account:
1. The pattern of trade, including
sourcing patterns.
2. Whether the manufacturer or
exporter of the merchandise in question
from the country subject to the order
(i.e., the PRC producer of unfinished
SDGE components) is affiliated with the
third country party that completes or
assembles the merchandise for
subsequent importation into the United
States (i.e., UKCG).
3. Whether imports into the third
country (i.e., the United Kingdom) of the
merchandise in question (i.e.,
unfinished SDGE components from the
PRC) have increased after the initiation
of the investigation which resulted in
the issuance of the order.
13 In determining whether the process of assembly
or completion is minor or insignificant, section
781(b)(2) of the Act instructs the Department into
account: (a) The level of investment in the foreign
country; (b) the level of research and development
in the foreign country; (c) the nature of the
production process in the foreign country; (d) the
extent of production facilities in the foreign
country; and (e) whether the value of the processing
performed in the foreign country represents a small
proportion of the value of the merchandise
imported into the United States.
14 Petitioners’ request included arguments for
both the initiation of a scope and anticircumvention inquiry. Because, as noted in the
Determination Not To Initiate a Scope Proceeding,
above, we are focusing this notice on the
determination as to whether to initiate an anti-
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following evidence with respect to each
of the aforementioned statutory criteria:
A. Merchandise of the Same Class or
Kind
Petitioners contend that the SDGE
products exported to the United States
by UKCG are identical to those subject
to the SDGE Order.15
B. Completion of Merchandise in a
Foreign Country
Petitioners further assert that the
unfinished SDGE component inputs
imported by UKCG from the PRC for
further processing before exportation to
the United States are themselves subject
merchandise.16 Petitioners argue that
the language of the scope (as included
in the initial Petition, SDGE Order, and
Final ITC Determination) identifies the
graphitization process as the point at
circumvention ruling, we have not summarized or
addressed the arguments forwarded by Petitioners,
which were submitted to specifically support the
initiation of a scope ruling. However, we have
included and addressed all arguments submitted in
support of the initiation of an anti-circumvention
inquiry, even in the instance that they were first
presented in support of a scope initiation.
15 See Initiation Request at 23.
16 With respect to the description of in-scope
merchandise, Petitioners cite to the Letter from
Petitioners entitled, ‘‘Small Diameter Graphite
Electrodes from the People’s Republic of China—
Antidumping Duty Petition,’’ dated January 17,
2008 (‘‘Petition’’), Small Diameter Graphite
Electrodes, Inv. 731–TA–1143 (Final), Pub. 4062,
dated February 2009 (‘‘Final ITC Determination’’),
and the SDGE Order. They argue that the scope of
the SDGE Order, as established in these documents,
explicitly includes ‘‘unfinished’’ SDGEs whether or
not attached to a pin joining system. They assert
that the inclusion of the ‘‘unfinished’’ language
reflects the fact that unfinished SDGEs undergo no
further processing beyond the graphitization stage,
other than machining, as stated in the Final ITC
Determination. As such, Petitioners contend that
the scope is unambiguously dispositive regarding
the inclusion of unfinished SDGE. Contrary to
UKCG’s claims that the SDGE components
purchased from the PRC were not ‘‘unfinished’’
SDGE but, rather, inputs transformed into SDGE by
manufacturing operations in the United Kingdom,
Petitioners note that: (a) The 2009 UKCG financial
statement describes the business of UKCG as the
‘‘purchasing, processing, and sale of synthetic
graphite electrodes for the steel and foundry
industries;’’ (b) the unfinished SDGE components in
question contain the correct grade of petroleum
coke mix, and have been baked, formed,
carbonized, impregnated, and graphitized, thus, the
resulting cylindrical rod, as produced in the PRC
and imported into the U.K., has all the essential
characteristics of a graphite electrode; (c) UKCG’s
own proprietary description of the U.K. processing
on these artificial graphite rods demonstrates that
only minor machining and finishing operations are
performed, which do not impart any essential
performance characteristics to the finished product.
Therefore, according to Petitioners, the
merchandise that UKCG imports from the PRC is
‘‘unfinished’’ SDGE as defined by the scope of the
SDGE Order and, because the concept of scope
encompasses both the product description and the
country of origin of the product, the merchandise
in question is of PRC origin and is subject
merchandise both before and after finishing in the
United Kingdom. See Initiation Request at 8–16.
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which an electrode form becomes a
graphite electrode subject to the SDGE
Order.17 As such, Petitioners contend
that this graphitization process
(performed in the PRC) confers both
country of origin and, thus, ‘‘unfinished’’
subject merchandise status on the SDGE
components in question, even if further
machining occurs in a third country to
become ‘‘finished’’ subject merchandise.
Therefore, Petitioners conclude, the
finished merchandise exported to the
United States is not only produced from
subject merchandise but, due to the
nature of further processing not being
sufficient to alter the country of origin,
the finished merchandise is itself
subject merchandise produced in the
PRC.18
C. Minor or Insignificant Process
1. Level of Investment
Petitioners note that PRC producers
have invested extensively in the SDGE
industry, which includes significant
investment in both manufacturing
facilities and production equipment
worth many millions of dollars.
Petitioners contend that the bulk of this
investment goes to the heavy industrial
processes required for the production of
SDGE (e.g., raw material handling,
mixing, forming, baking, impregnating,
and graphitizing), each of which occur
prior to the final machining stage.
Petitioners point out that, on the
contrary, the total worth of UKCG’s
plant, including its single machine shop
and finishing equipment, as shown in
UKCG’s financial statement,
demonstrates that the level of
investment required for a PRC
manufacturer to produce an unfinished
graphitized electrode is far greater than
the level of investment needed by UKCG
to perform its finishing processes.19
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2. Level of Research and Development
Petitioners argue that, although they
do not have detailed information
regarding research and development
(‘‘R&D’’) expenses incurred by either
UKCG or Chinese producers of SDGE, as
17 With respect to the specific argument that the
graphitization process confers ‘‘unfinished’’ status to
the SDGE in process and is, thus, at that point
‘‘subject’’ to the SDGE Order and, furthermore,
origin of the country in which this process takes
place, Petitioners cite to the Petition at 3, stating,
‘‘The electrode form then undergoes the
graphitization process, in which the electrode is
heated in a furnace to an extremely high
temperature (2600–3000 degrees centigrade).
Through this process, the electrodes are
transformed into graphite.’’ Petitioners also cite to
the Final ITC Determination at 4, stating,
‘‘unfinished SDGEs undergo no further processing
beyond the graphitization stage other than
machining.’’
18 See Initiation Request at 23–24.
19 See Initiation Request at 25–26.
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explained in the ‘‘Level of Production
Processes’’ section, immediately below,
the technology required to manufacture
merchandise up to the graphitization
process of production (and, thus, the
related R&D costs), should greatly
exceed the R&D costs associated with
finishing of the merchandise and that
the R&D costs associated with the
finishing of the merchandise are
relatively insignificant by comparison.20
3. Level of Production Processes
Petitioners contend that an
understanding of the production of
subject merchandise is essential to the
analysis of whether or not UKCG is
engaged in minor or insignificant
production. As such, Petitioners detail
the SDGE production process,
demonstrating how raw materials are
formed, baked, impregnated (if needed),
re-baked, graphitized, finished and
packaged. Petitioners emphasize the
significant energy needed to graphitize
the product and emphasize that, upon
completion of this process, the electrode
becomes an ‘‘unfinished’’ SDGE subject
to the SDGE Order. Petitioners point out
that, for PRC manufacturers to produce
unfinished SDGE components for
shipment to UKCG, they must perform
each of these processes from the mixing
of raw materials through to packaging,
save finishing, which accounts for the
vast majority of production costs (based
on an analysis of proprietary
information provided in the initial
antidumping petition). In contrast,
Petitioners argue that UKCG merely
finishes 21 and repackages SDGE into
UKCG branded cartons, processes
amounting to insignificant costs when
compared to those incurred by PRC
producers to perform the heavy
industrial processes summarized
above.22
4. Extent of Production Facilities
As detailed above, Petitioners note
that the facilities needed to form, bake,
impregnate, re-bake, graphitize and pack
the subject merchandise in the PRC for
exportation to the United Kingdom (e.g.,
equipment such as mills, sifters,
calcinatories, presses, ovens, and tanks)
is far more significant than the single
machining shop needed to finish the
20 See
Initiation Request at 26.
note that the ‘‘finishing’’ process
involves machining of an electrode’s outside
surface so that it is sized to exact dimensions and
tolerances (according to National Electrical
Manufacturers Association standards for U.S.
bound products), and may also include machining
and fitting the ends of an electrode with a threaded
graphite pin connecting/joining system. See
Initiation Request at 28.
22 See Initiation Request at 27–30.
21 Petitioners
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14913
products exported by UKCG to the
United States.23
5. Value of Further Processing
Compared to Total Value of Exported
Merchandise
As noted above, Petitioners assert
that, based on proprietary information
supplied in the Petition, the cost of
finishing a graphite electrode represents
an insignificant amount of the total cost
of manufacture for a SDGE.24
D. Value of Merchandise Produced in
the PRC
Petitioners argue that, for reasons
summarized above, the value of
merchandise produced in the PRC
represents the vast majority of the total
value of the product.25
E. Whether Action Is Appropriate To
Prevent Evasion of the Order
Petitioners reassert that UKCG
imports graphitized components of
SDGE (which, they contend are, subject
merchandise) from PRC producers of
subject merchandise, which are then
finished and packaged for export to the
United States as a product of the United
Kingdom. Petitioners note that UKCG
has relied on a European Binding Origin
Information (‘‘BOI’’) ruling as support for
the U.K. origin designation it applied to
the merchandise in question. However,
Petitioners argue, this ruling was issued
for the purposes of trade within the
European common market, and has no
legal status in the United States.
Moreover, Petitioners conclude that
their arguments, as summarized above,
invalidate any claim by UKCG that the
finishing process is so substantial that it
warranted a change in country of origin
from the PRC to the United Kingdom.26
F. Additional Factors
1. Pattern of Trade
Petitioners argue that, since the filing
of the antidumping Petition and
issuance of the preliminary
determination in the initial less than fair
value (‘‘LTFV’’) investigation in August
2008,27 UKCG has shipped SDGE to the
United States, sourced and finished
from PRC-produced graphitized
components, in significant and
increasing quantities. According to
23 See
Initiation Request at 30–31.
Initiation Request at 31–32.
25 See Initiation Request at 32.
26 See Initiation Request at 32–35.
27 See Small Diameter Graphite Electrodes From
the People’s Republic of China: Preliminary
Determination of Sales at Less Than Fair Value,
Postponement of Final Determination, and
Affirmative Preliminary Determination of Critical
Circumstances, in Part, 73 FR 49408 (August 21,
2008).
24 See
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Petitioners, at the time of initiation of
the LTFV investigation in February
2008,28 the United Kingdom had no
exports of SDGE of U.K. origin to the
United States, but that UKCG began
exporting the merchandise in question
to the United States beginning two
months after the publication of the
preliminary determination.29 According
to Petitioners, during the period
November 2008 through March 2010,
UKCG exports of SDGE represented 96
percent of the total SDGE exports from
the United Kingdom to the United
States, and such exports occurred in
significant and increasing quantities
subsequent to the issuance of the SDGE
Order. Petitioners also placed Chinese
Customs data on the record, which they
claim demonstrates a significant
increase in imports of finished SDGE
from the PRC into the U.K.
corresponding to the aforementioned
increase in exports to the U.S.30
2. Affiliation
Though Petitioners do not claim that
UKCG is affiliated with any of the PRC
producers from which it sourced the
merchandise in question, they cite to
UKCG’s existing business relationship
with PRC producers of merchandise
subject to the SDGE Order.31
3. Import Volume Subsequent to the
Investigation and Order
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As noted above, Petitioners identify
the following trends since the filing of
the antidumping petition and issuance
of the preliminary determination of the
initial LTFV investigation in August
2008: UKCG has shipped Chinesesourced subject merchandise to the
United States in significant and
increasing quantities; UKCG exports of
SDGE represent the vast majority of the
total SDGE exports from the United
Kingdom to the United States; and
customs data from the PRC and United
States show a significant increase in
PRC exports of SDGE to the United
Kingdom and U.K exports to the United
States.32
28 See Small Diameter Graphite Electrodes From
the People’s Republic of China: Initiation of
Antidumping Duty Investigation, 73 FR 8287
(February 13, 2008).
29 Petitioners note that the preliminary margins
ranged from 132.80 to 159.34, indicating that
significant dumping margins might be levied
against SDGE from the PRC in the final
determination.
30 See Initiation Request at 35–37.
31 See Initiation Request at 38.
32 See id.
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Comments Received Subsequent to the
Initiation Request
A. UKCG’s Rebuttal Comments
On October 29, 2010, the Department
received a letter on behalf UKCG in
rebuttal to Petitioners’ October 12, 2010,
requests for a scope and/or anticircumvention ruling. In this
submission, UKCG asserts that there is
no need for the Department to undertake
a full scope or anti-circumvention
inquiry, arguing that the unfinished
SDGE component inputs in question
have already been excluded from the
scope of the SDGE Order, the finished
SDGE exports are of U.K. origin, and
that Petitioners’ October 12, 2010,
submission merely reiterates old
allegations which have been previously
rebutted based on record evidence.33
UKCG presents the following arguments
in support of its position:
Legal Standards: UKCG argues that
the scope of the SDGE Order, which was
drafted by Petitioners, explicitly
excludes the unfinished material in
question. Citing to Hylsa, S.A. de C.V.
v. United States, 22 C.I.T. 44, 49 (1998),
UKCG asserts that it is legally
impermissible to bring such excluded
merchandise back into the case, either
as part of a scope or anti-circumvention
proceeding.34
Artificial Graphite Is Not Covered by
the SDGE Order: UKCG argues that the
addition of the term ‘‘unfinished’’ to the
scope of the SDGE Order is a lawyercreated term with no meaning in the
industry and, as such, the term
‘‘unfinished’’ electrode could be applied
to even the raw materials used to create
SDGE. UKCG claims that the items
imported into the United Kingdom are
not ‘‘unfinished’’ SDGE but, rather,
artificial graphite rods. UKCG cites to
separate customs rulings from the
United States and the United Kingdom/
European Union (‘‘E.U.’’) that it purports
define the product in question as
artificial graphite and not unfinished
SDGE.35
Petitioners Did Not Include Artificial
Graphite Rods in the Scope of the Order:
UKCG notes that SGL Carbon, a
Petitioner, and Graftech, a producer of
electrodes who supported Petitioners in
their filing of the initial Petition, have
themselves imported items classified as
artificial graphite rods under the 3801
tariff classification used by UKCG in its
classification of the unfinished
materials in question. As such, UKCG
asserts that Petitioners knew of such
materials and their classification under
HTS subheading 3801, but expressly did
not include them within the scope of
the SDGE Order, either in the
dispositive scope narrative or in the
HTS classification listed in the
narrative. Therefore, UKCG concludes
that, because Petitioners were aware of
the use of separate terminology and HTS
classification for artificial graphite
products and finished graphite electrode
products, considering the fact that they
refrained from including the former
within the scope of the SDGE Order,
their request to include such products
in the order is inappropriate at this stage
of the proceeding.36
Petitioners’ Country of Origin Citation
Is Without Factual Basis: UKCG avers
that Petitioners have provided no
factual basis for their assertion that the
ITC Final Determination holds that the
graphitization process confers the final
country of origin status for the purposes
of the SDGE Order, and that any
offhanded remark on this issue in the
ITC Final Determination is without
authority and contradicted by customs
rulings from both the United Kingdom
and the United States.37
A U.K. BOI Ruling Found That
Artificial Graphite Rods Are Not
Electrodes, and Petitioners Misstate the
Effect of This BOI Ruling: UKCG argues
that U.K. authorities examined the issue
at hand and determined that the
unfinished SDGE components in
question were properly classified as
‘‘Artificial Graphite’’ under HTS
subcategory 3801.10, rather than as
‘‘Carbon Electrodes’’ under HTS
subcategory 8548.11. UKCG asserts that
Petitioners have misunderstood the
impact of this BOI, because the
submission of any untrue information
on an E.U. export declaration is
considered an illegal act.38
A U.S. CBP Ruling Also Found That
Artificial Graphite Rods Are Not
Electrodes: UKCG notes that a February
23, 2009, ruling by U.S. Customs and
Border Protection (‘‘CBP’’) found that
semi-manufactures of artificial graphite
rods are expressly included in the
explanatory note of HTSUS 3801. UKCG
points out the CPB ruling states that
‘‘artificial graphite rods in their
imported condition will consist of unmachined semi-manufactures that must
be cut, machined to fine tolerances and
surface finished before they can be
considered finished articles in {HTSUS}
36 See
33 See
UKCG’s Initiation Rebuttal Comments at
1–2.
37 See
34 See
UKCG’s Initiation Rebuttal Comments at 3.
35 See UKCG’s Initiation Rebuttal Comments at
3–4.
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UKCG’s Initiation Rebuttal Comments at 6.
UKCG’s Initiation Rebuttal Comments at 6–
8. This BOI ruling is provided in UKCG’s Initiation
Rebuttal Comments at Exhibit 2.
38 See
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heading 8545,’’ and ultimately
determines that unfinished artificial
graphite electrode rods identical to the
product at issue in the instant case
should be classified under HTSUS
3801.10.5000. UKCG asserts that, in this
ruling, CBP specifically declares that the
items in question are a form of artificial
graphite rods, which are semimanufactured inputs that have not yet
taken on the nature of an electrode.39
B. Petitioners’ Response to UKCG’s
Rebuttal
On November 12, 2010, Petitioners
submitted a response to UKCG’s
Rebuttal Comments. Petitioners first
note their disagreement with UKCG’s
categorization of the unfinished SDGE
components in question as artificial
graphite rods not subject to the SDGE
Order, and reiterate their contention
that the scope of the SDGE Order clearly
includes such merchandise.40
Petitioners then present specific
rebuttals to certain arguments forwarded
by UKCG, summarized below:
‘‘Unfinished’’ SDGE Are Clearly
Defined: Petitioners argue that, despite
UKCG’s assertion that the term
‘‘unfinished’’ is a term without meaning
and that Petitioners’ conclusion that
graphitization confers country of origin
to the SDGE in question is unfounded,
the Petition and Final ITC
Determination clearly define
‘‘unfinished SDGE’’ as SDGE that have
been graphitized but not further
machined or finished. Furthermore,
Petitioners argue that whether or not the
term ‘‘unfinished’’ has a specific
meaning in the trade is irrelevant for
antidumping purposes.41
UKCG’s Argument That Artificial
Graphite Was Expressly Excluded From
the Scope Is Flawed: Petitioners argue
that, because the ‘‘unfinished’’ SDGE
language was included within the scope
of the SDGE Order (which, according to
Petitioners, includes the unfinished
SDGE components in question), there
was no need to consider the
classification of artificial graphite rods.
Furthermore, Petitioners note that the
scope clearly indicates that the HTSUS
number provided is for convenience and
customs purposes, but should not be
considered dispositive.42
The BOI Ruling Is Not Relevant to
This Proceeding: Petitioners contend
that the BOI Ruling cited to by UKCG
39 See
UKCG’s Initiation Rebuttal Comments at
8–9.
40 See Petitioners’ Response to UKCG’s Initiation
Rebuttal Comments at 1–4.
41 See Petitioners’ Response to UKCG’s Initiation
Rebuttal Comments at 4–5.
42 See Petitioners’ Response to UKCG’s Initiation
Rebuttal Comments at 6.
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as evidence that the merchandise in
question is of U.K. origin is not relevant
for antidumping purposes because: (a) It
speaks to HTS classifications, which are
not dispositive to the scope of the SDGE
Order; (b) the BOI does not address the
specific issue relevant in the instant
proceeding (i.e., whether artificial
graphite rods are unfinished SDGE); (c)
the BOI is a ruling applicable to trade
within the European Community and
has no application for exports to other
countries, including the United States;
and (d) no customs ruling, whether
United Kingdom or United States in
origin, can bind or limit the scope of a
U.S. antidumping duty order.43
Commerce Should Request Immediate
Suspension of Liquidation: Petitioners
argue that because UKCG has
incorrectly reported the country of
origin in its entry documents (i.e.,
listing the United Kingdom rather than
the PRC) and, in so doing, has avoided
suspension of liquidation and
antidumping duty deposits that are
required under the SDGE Order, the
Department should immediately request
that CBP reverse the liquidation of such
entries in order to properly suspend
liquidation and collect the appropriate
antidumping duty deposits.44
Responses to the Department’s Request
for Supplemental Information
On November 24, 2010, the
Department requested that Petitioners
supplement their scope request with
certain additional information to aide in
the Department’s decision to initiate a
formal scope or anti-circumvention
inquiry.45 In this questionnaire, the
Department requested that Petitioners
provide further information regarding
both the pattern of trade for imports of
‘‘unfinished SDGE’’ into the United
Kingdom from the PRC and domestic
U.K. production of ‘‘unfinished SDGE’’
during the relevant time period. On
November 30, 2010, we received
Petitioners’ response to the
Department’s pre-initiation
questionnaire.46 On December 14, 2010,
we received a rebuttal from UKCG in
response to Petitioners’ submission.47
43 See Petitioners’ Response to UKCG’s Initiation
Rebuttal Comments at 6–7. Citing to Tapered Roller
Bearings and Parts Thereof, Finished and
Unfinished, From the People’s Republic of China:
Final Results of Antidumping Duty Administrative
Review, 74 FR 3987 (January 22, 2009), and
accompanying Issues and Decisions Memorandum
(‘‘Tapered Roller Bearings’’) at Comment 1,
Petitioners assert that only the Department has the
authority to define what products are within or
outside the scope of an order.
44 See Petitioners’ Response to UKCG’s Initiation
Rebuttal Comments at 7–8.
45 See Pre-Initiation Supplemental Questionnaire.
46 See Petitioners’ SQR.
47 See UKCG’s SQR Rebuttal.
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A. Petitioners’ Supplemental
Questionnaire Response
In their November 30, 2010, response,
Petitioners submitted information onto
the record regarding U.K. imports under
HTS 3801.10.00 48 from the PRC (i.e.,
the HTS subcategory most specific to
unfinished SDGE components in
question) for the years 2008–2010.49
Petitioners assert that these data show a
direct correlation between the
antidumping investigation on SDGE and
imports of the unfinished merchandise
in question into the United Kingdom
from the PRC, noting that:
• The monthly average volume of
imports of merchandise classified under
HTS 3801.10.00 from January through
August 2008 was 66,208 kg, but in
September 2008, the month following
the preliminary determination, imports
increased to a monthly average of
603,944 kg.50
• In the four months between the
announcement of the preliminary
determination and the final
determination, September through
December 2008, the average monthly
imports were 574,162 kg, but the
volume of imports rose to 815,061 kg in
January 2009, the month corresponding
to the announcement of the final
determination.51
• The volume of imports, by year, has
increased dramatically since the filing
of the initial antidumping duty petition,
with 2,152,370 kg (averaging 180,198 kg
per month) imported in 2008, 3,097,554
kg (averaging 258,130 per month) in
2009, and 8,751,286 kg (annualized,
averaging 729,273 kg per month) in
2010.52
Petitioners argue that these data
demonstrate that the antidumping duty
investigation resulted in a significant
increase of imports of ‘‘unfinished
SDGE’’ into the United Kingdom from
the PRC, and allege that this increase is
attributable to a scheme undertaken by
PRC producers to unlawfully avoid U.S.
antidumping duties.53 Finally,
Petitioners maintain that they do not
know of any SDGE manufacturing
operations in the United Kingdom
during the relevant time period, other
48 ‘‘Artificial Graphite; Colloidal or SemiColloidal Graphite; Preparations Based on Graphite
or Other Carbon in the Form of Pastes, Blocks,
Plates or Other Semi-Finished Goods.’’
49 See Petitioners’ SQR at Attachment 1. These
data were obtained from HM Revenue and Customs’
UK Overseas Trade Statistics and Regional Trade
Statistics Web site, available at https://
www.hmrc.gov.uk/stats/trade-statistics.htm.
50 See Petitioners’ SQR at 1.
51 See Petitioners’ SQR at 1–2.
52 See Petitioners’ SQR at 2.
53 See Petitioners’ SQR at 2–3.
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than the finishing operations performed
by UKCG.54
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B. UKCG’s Rebuttal to Petitioners’
Supplemental Questionnaire Response
In rebuttal, UKCG asserts that the
information submitted by Petitioners in
both their Initiation Request and SQR is
misleading because it: (a) Misstates the
amounts of SDGE exported by UKCG to
the United States, (b) misinterprets the
significance of UKCG’s increase of
business with the United States as an
attempt to circumvent the Order when
it is only a result of increased global
marketing on behalf of the company,
and (c) draws incorrect conclusions
regarding circumvention due to a
reliance on publicly available
information for HTS subcategory 3801,
which is a basket category containing
items much more broad than just
artificial graphite rods.55
UKCG argues that the CBP data used
by Petitioners in the Initiation Request
to demonstrate the amount of SDGE
exported to the United States by UKCG
during the relevant time period do not
accurately reflect the volume of exports.
UKCG also disputes Petitioners’
assertion from the Initiation Request
that UKCG did not export SDGE to the
United States until November 2008 (two
months after the Department’s
announcement of the preliminary
determination), and demonstrates that
the company had certain exports of
SDGE produced in the same manner as
the merchandise in question prior to
that date.56
Furthermore, UKCG attributes its
increase in U.S. business to certain
factors unrelated to the LTFV
investigation and subsequent SDGE
Order, including:
• The actual significance of any U.S.
sales being overstated, because the low
base of existing sales volume would
yield any increase (or decrease) to
appear significant in percentage terms,
even though the actual change in sales
volume was considerably less
meaningful.57
• Internal efforts to obtain a larger
global market share, which predate the
SDGE Order.58
• The increase in demand due to the
shortage of electrodes in the United
States, created by high antidumping
duties imposed on PRC SDGE.59
Finally, UKCG argues that it is
misleading for Petitioners to point to a
54 See
Petitioners’ SQR at 3.
UKCG’s SQR Rebuttal at 2.
56 See UKCG’s SQR Rebuttal at 2–4.
57 See UKCG’s SQR Rebuttal at 4.
58 See UKCG’s SQR Rebuttal at 4–5.
59 See UKCG’s SQR Rebuttal at 4.
55 See
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swing in the import figures for a broadbasket 3801.10.00 ‘‘artificial graphite’’
HTS subcategory, such as the large
increase in January 2009, and attribute
such an increase to UKCG’s sales of
finished SDGE to the United States,
since the total amount UKCG sales of
finished SDGE to the United States
during that year was lower than the
imports of unfinished artificial graphite
imported into the country in that single
month. UKCG also points out that,
though Petitioners submitted import
data extracted from the uktradeinfo.com
website in the November 30, 2010 SQR,
they did not provide other information
available at the same Web site, which
shows that over 40 U.K. companies
imported products under HTS
3801.10.00 in 2008. UKCG asserts that
this information undermines
Petitioners’ arguments regarding
circumvention, and shows the import
data for HTS 3801.10.00 to be overstated
and unreliable.60
Analysis
Based on our analysis of Petitioners’
anti-circumvention inquiry request,
summarized above, the Department
determines that Petitioners have
satisfied the criteria to warrant an
initiation of a formal anti-circumvention
inquiry pursuant to section 781(b)(1) of
the Act and 19 CFR 351.225(h). In
accordance with 19 CFR 351.225(e), if
the Department finds that the issue of
whether a product is included within
the scope of an order cannot be
determined based solely upon the
application and the descriptions of the
merchandise, the Department will notify
by mail all parties on the Department’s
scope service list of the initiation of a
scope inquiry, including an anticircumvention inquiry. In addition, in
accordance with 19 CFR
351.225(f)(1)(ii), a notice of the
initiation of an anti-circumvention
inquiry issued under paragraph (e) of
this section will include a description of
the product that is the subject of the
anti-circumvention inquiry, i.e., SDGE,
as provided in the scope of the SDGE
Order, produced from unfinished
artificial graphite rod components from
the PRC that are further machined and
finished in the United Kingdom for
exportation to the United States.
Furthermore, in accordance with 19
CFR 351.225(f)(1)(ii), the Department
will explain the reasoning for its
decision to initiate an anticircumvention inquiry, which is
provided below.
With regard to whether the
merchandise exported to the United
60 See
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States is of the same class or kind as
subject merchandise produced in the
PRC, Petitioners have presented
information to the Department
indicating that, pursuant to section
781(b)(1)(A) of the Act, the merchandise
being exported from the United
Kingdom by UKCG may be of the same
class or kind as SDGE produced in the
PRC, which are subject to the SDGE
Order. While UKCG contends that its
finished SDGE exports to the United
States are of U.K. origin, UKCG has not
presented evidence demonstrating that
the merchandise exported to the United
States is not of the same class or kind
as merchandise subject to the SDGE
Order. Consequently, the Department
finds that Petitioners have provided
sufficient information in their requests
regarding the class or kind of
merchandise to warrant initiation of an
anti-circumvention inquiry.
With regard to completion or
assembly of merchandise in a foreign
country, pursuant to section 781(b)(1)(B)
of the Act, Petitioners have also
presented information to the
Department indicating that the SDGE
exported from the United Kingdom are
being processed by UKCG from
unfinished components which are
produced in the PRC (i.e., the country
subject to the SDGE Order) and which
might be, themselves, ‘‘unfinished
SDGE’’ subject to the SDGE Order. While
UKCG argues that such inputs are not
subject to the SDGE Order, it does not
provide evidence to contradict
Petitioners’ claim that the finished
SDGE exported to the United States by
UKCG are produced from inputs
sourced from the PRC. Therefore, we
find that the information presented by
Petitioners regarding this criterion
supports their request to initiate an anticircumvention inquiry.
Further, we find that Petitioners have
provided sufficient evidence to
demonstrate that the processing
performed in the United Kingdom may
be minor or insignificant, as described
by sections 781(b)(1)(C) and 781(b)(2) of
the Act. In particular, we find that
Petitioners’ submissions suggest that the
level of overall investment, R&D,
sophistication of production processes
(and the degree to which they alter the
fundamental characteristics of the
merchandise), and production facilities
needed for UKCG to machine and finish
the components in question into
finished SDGE for exportation to the
United States may be insignificant,
especially when compared to the level
of investment, facilities, R&D, and
processes required by SDGE producers
in the PRC to manufacture said
components. We find that Petitioners
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have also provided evidence to
demonstrate that finishing processes in
the United Kingdom may add little
value to the merchandise imported into
the United Kingdom, as exported to the
United States. Though UKCG provides
rebuttal evidence to demonstrate that
the processes performed in the United
Kingdom are, indeed, sophisticated and
contend that Petitioners’ arguments are
based on the incorrect conclusion that
the SDGE component inputs sourced
from the PRC are in-scope (citing to the
U.K. Customs and CBP rulings noted
above), we do not find that their
arguments are sufficient to deter the
Department from initiating an anticircumvention inquiry to attain more
information regarding the concerns
raised by Petitioners. As a result, our
subsequent analysis will focus on
UKCG’s machining and finishing
operations in the United Kingdom (in
addition to information regarding
pattern of trade, as discussed below)
and we will closely examine the nature
of the materials sourced from the PRC
and whether those materials are subject
to the scope of the SDGE Order.
With respect to the value of the
merchandise produced in the PRC
pursuant to section 781(b)(1)(D) of the
Act, Petitioners rely on their ‘‘minor or
insignificant processing’’ arguments
summarized above, as well as certain
proprietary cost information provided in
the initial Petition, to indicate that the
value of the unfinished SDGE
components may be significant relative
to the total value of a the finished SDGE
exported to the United States. We find
that the information, as discussed
above, adequately meets the
requirements for initiation pursuant to
section 781(b)(1)(D) of the Act.
Regarding whether action is needed to
prevent evasion of the SDGE Order,
pursuant to section 781(b)(1)(E) of the
Act, Petitioners do not address this
issue directly, instead addressing this
criterion in their arguments regarding
‘‘pattern of trade’’ pursuant to section
781(b)(3) of the Act. Specifically, they
rebut UKCG’s reliance on the BOI ruling
and the CBP ruling as support for either
the appropriateness of the HTS 3801
sub-classification for the unfinished
components or confirmation of U.K.
origin of the finished merchandise in
question. Petitioners conclude that
neither ruling is relevant for the
purposes of the issues present in the
instant proceeding. Conversely, UKCG
emphasizes the weight of these
determinations and implores the
Department to consider them in its
analysis on the issue of proper
classification of the unfinished SDGE
components for the purposes of this
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initiation determination. We will seek
more information regarding the proper
country of origin classification for the
finished SDGE imported into the United
States; however, we note that Petitioners
are correct to point out that neither the
BOI nor the CBP ruling are legally
binding for the purposes of antidumping
proceedings in the United States.61
While we will give each document due
consideration for the purposes of our
ultimate anti-circumvention
determination, we do not find the
content of either document sufficient to
compel the Department to decline to
initiate such a proceeding.
Finally, we find that Petitioners have
provided sufficient evidence, in both
their Initiation Request and SQR, to
fulfill the additional initiation criteria
specified in section 781(b)(3) of the Act.
Though Petitioners do not show that
UKCG is affiliated with any PRC
producer of subject merchandise, they
demonstrate that the company has a
business relationship with PRC
producers of subject merchandise.
Furthermore, information provided by
Petitioners regarding imports and
exports under HTS 3801 and 8545,
suggests that (a) U.K. importers are
sourcing PRC-produced unfinished
SDGE components in increasing
quantities, and (b) exports of finished
SDGE from the United Kingdom have
increased since the beginning of the
initial SDGE investigation. Although
UKCG provides evidence to demonstrate
that Petitioners’ information may be
distorted or misstated due to certain
factors, the Department intends to seek
further information on this pattern of
trade issue during the course of this
inquiry, and will request greater detail
as to the nature of UKCG’s relationship
with PRC producers of subject
merchandise and timing of sales and
sourcing. As such, though we recognize
UKCG’s concerns regarding the
conclusions reached by Petitioners in
their analysis of the pattern of trade data
placed on the record, we do not agree
with UKCG that the Department should
conclude that such concerns are
sufficient to refrain from further inquiry.
Therefore, for the reasons stated
above, we have determined that
Petitioners have provided sufficient
basis for the Department to initiate a
formal anti-circumvention inquiry
concerning the SDGE Order, pursuant to
section 781(b) of the Act. In accordance
with 19 CFR 351.225(l)(2), if the
Department issues a preliminary
affirmative determination, we will then
instruct CBP to suspend liquidation and
61 See,
e.g., Tapered Roller Bearings at Comment
1.
PO 00000
Frm 00024
Fmt 4703
Sfmt 4703
14917
require a cash deposit of estimated
duties on the merchandise.
This anti-circumvention inquiry
covers UKCG only. If, within sufficient
time, the Department receives a formal
request from an interested party
regarding potential circumvention of the
SDGE Order by other companies in the
United Kingdom, we will consider
conducting additional inquiries
concurrently.
The Department will, following
consultation with interested parties,
establish a schedule for questionnaires
and comments on the issues. The
Department intends to issue its final
determination within 300 days of the
date of publication of this initiation
pursuant to section 781(f) of the Act.
This notice is published in accordance
with 19 CFR 351.225(f).
Dated: February 17, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import
Administration.
[FR Doc. 2011–6451 Filed 3–17–11; 8:45 am]
BILLING CODE P
DEPARTMENT OF COMMERCE
International Trade Administration
North American Free-Trade Agreement
(NAFTA), Article 1904 Binational Panel
Reviews
NAFTA Secretariat, United
States Section, International Trade
Administration, Department of
Commerce.
ACTION: Notice of decision of panel.
AGENCY:
On March 10, 2011, the
binational panel issued its decision in
the review of the determination on
remand made by the International Trade
Commission, respecting Light-Walled
Rectangular Pipe and Tube from
Mexico: Final Determination of Material
Injury to a U.S. Industry (NAFTA
Secretariat File Number USA–MEX–
2008–1904–04). The binational panel
affirmed the International Trade
Commission’s determination on
remand. Copies of the panel’s order are
available from the U.S. Section of the
NAFTA Secretariat.
FOR FURTHER INFORMATION CONTACT:
Valerie Dees, United States Secretary,
NAFTA Secretariat, Suite 2061,14th and
Constitution Avenue, Washington, DC
20230, (202) 482–5438.
SUPPLEMENTARY INFORMATION: Chapter
19 of the North American Free-Trade
Agreement (‘‘Agreement’’) establishes a
mechanism to replace domestic judicial
review of final determinations in
antidumping and countervailing duty
SUMMARY:
E:\FR\FM\18MRN1.SGM
18MRN1
]]>Agencies
[Federal Register Volume 76, Number 53 (Friday, March 18, 2011)]
[Notices]
[Pages 14910-14917]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6451]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-929]
Small Diameter Graphite Electrodes From the People's Republic of
China: Initiation of Anti-Circumvention Inquiry
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to requests from SGL Carbon LLC and Superior
Graphite Co. (``Petitioners''), Petitioners in the original
investigation, the Department of
[[Page 14911]]
Commerce (``Department'') is initiating an anti-circumvention inquiry
pursuant to section 781(b) of the Tariff Act of 1930, as amended (``the
Act''), to determine whether certain merchandise from the United
Kingdom (``U.K.'') is being exported to the United States by U.K.
Carbon and Graphite Co., Ltd. (``UKCG'') in circumvention of the
antidumping duty order on small diameter graphite electrodes (``SDGE'')
from the People's Republic of China (``PRC'').\1\
---------------------------------------------------------------------------
\1\ See Antidumping Duty Order: Small Diameter Graphite
Electrodes from the People's Republic of China, 74 FR 8775 (February
26, 2009) (``SDGE Order'').
---------------------------------------------------------------------------
DATES: Effective Date: March 18, 2011.
FOR FURTHER INFORMATION CONTACT: Brendan Quinn, AD/CVD Operations,
Office 8, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-5848.
SUPPLEMENTARY INFORMATION:
Background
On October 12, 2010, Petitioners filed a submission alleging that
UKCG, a company located in the United Kingdom, is engaged in
circumvention of the SDGE Order, by importing unfinished SDGE
components \2\ from the PRC to the United Kingdom, performing minor
completion and assembly on these items, and exporting finished subject
merchandise to the United States as SDGE of U.K. origin, thus, not
subject to the SDGE Order.\3\ In this submission, Petitioners request
that the Department initiate and conduct a proceeding to clarify
whether the scope of the SDGE Order includes unfinished graphitized
SDGE components, as imported by UKCG from the PRC based on either the
dispositive written descriptions of the scope pursuant to 19 CFR
351.225(k)(1) or, a further analysis of the product in question
pursuant to factors enumerated in 19 CFR 351.225(k)(2). Alternatively,
Petitioners request that the Department initiate an anti-circumvention
proceeding, pursuant to 19 CFR 351.225(h), to determine whether the
importation of the aforementioned SDGE components by UKCG from the PRC
for finishing in the United Kingdom and subsequent sale to the United
States constitutes circumvention of the SDGE Order, as defined in
section 781(b) of the Act.
---------------------------------------------------------------------------
\2\ According to Petitioners, the unfinished merchandise in
question is defined in UKCG's submissions as, e.g., ``graphite
electrodes,'' ``rods,'' ``graphite billets,'' graphite shapes,''
``synthetic graphite electrode rod,'' and ``re-machined graphite
electrode.'' Petitioners characterize these inputs as ``unfinished
SDGE,'' whereas UKCG refers to them as ``artificial graphite.'' For
customs purposes, these materials are, generally, classified under
HTS 3801.10.00, defined as ``Artificial Graphite; Colloidal or Semi-
Colloidal Graphite; Preparations Based on Graphite or Other Carbon
in the Form of Pastes, Blocks, Plates or Other Semi-Finished
Goods.'' For ease of reference, these materials are referred to as
``unfinished SDGE components'' or ``artificial graphite rods''
throughout this notice.
\3\ See Letter from Petitioners entitled, ``Small Diameter
Graphite Electrodes from the People's Republic of China,'' dated
October 12, 2010 (``Initiation Request'').
---------------------------------------------------------------------------
On October 29, 2010, the Department received a letter on behalf
UKCG in rebuttal to Petitioners' request for a scope or anti-
circumvention ruling.\4\ In this submission, UKCG asserts that there is
no need for the Department to undertake a full scope or anti-
circumvention inquiry, arguing that the unfinished SDGE component
inputs in question have already been excluded from the scope of the
SDGE Order. On November 12, 2010, we received further comments from
Petitioners in response to UKCG's October 29, 2010, submission.\5\
---------------------------------------------------------------------------
\4\ See Letter from UKCG entitled, ``Small Diameter Graphite
Electrodes from the People's Republic of China: Response to
Petitioners' Submission of October 12, 2010, On Behalf of UK
Graphite and Carbon Co., Ltd.,'' dated October 29, 2010
(``Initiation Rebuttal Comments'').
\5\ See Letter from Petitioners entitled, ``Small Diameter
Graphite Electrodes from the People's Republic of China,'' dated
November 12, 2010 (``Petitioners' Response to UKCG's Initiation
Rebuttal Comments'').
---------------------------------------------------------------------------
On November 24, 2010, the Department requested that Petitioners
supplement their scope request with certain additional information to
aide in our decision whether to initiate a formal scope or anti-
circumvention inquiry.\6\ In this questionnaire, the Department
requested that Petitioners provide further information regarding both
the pattern of trade for imports of unfinished SDGE components into the
United Kingdom from the PRC and domestic U.K. production of unfinished
SDGE components during the relevant time period. On November 30, 2010,
we received Petitioners' response to the Department's pre-initiation
questionnaire.\7\ On December 14, 2010, we received a rebuttal from
UKCG in response to Petitioners' SQR.\8\
---------------------------------------------------------------------------
\6\ See the Department's Letter to Petitioners entitled, ``Small
Diameter Graphite Electrodes from the People's Republic of China:
Scope Inquiry Request Regarding Certain Merchandise Imported By UK
Carbon and Graphite Company, Ltd.,'' dated November 24, 2010 (``Pre-
Initiation Supplemental Questionnaire'' or Pre-Initiation SQ'').
\7\ See Letter from Petitioners entitled, ``Small Diameter
Graphite Electrodes from the People's Republic of China,'' dated
November 30, 2010 (``Petitioners' Pre-Initiation Supplemental
Questionnaire Response'' or ``Petitioners' SQR''). Upon receipt of
this submission, we found that the record, henceforth, contained
sufficient information from which the Department may determine
whether a formal anti-circumvention inquiry is warranted.
\8\ See Letter from UKCG entitled, ``Small Diameter Graphite
Electrodes from the People's Republic of China: Response to
Petitioners' Submission of November 30, 2010, On Behalf of UK
Graphite and Carbon Co., Ltd.,'' dated December 14, 2010 (``UKCG's
Rebuttal to Petitioners' Pre-Initiation Supplemental Questionnaire
Response'' or ``UKCG's SQR Rebuttal'').
---------------------------------------------------------------------------
On November 29, 2010, the Department received, via e-mail, a
document from the British Embassy in support of UKCG's arguments, which
the Department placed on the record of this proceeding.\9\
---------------------------------------------------------------------------
\9\ See the Department's Memorandum from Brendan Quinn to The
File entitled, ``Scope/Anti-Circumvention Inquiry of Small Diameter
Graphite Electrodes from the People's Republic of China: Placing
Document on the Record,'' dated February 2, 2011. In this document,
the British Government related its support for UKCG and implored the
Department to take into consideration certain arguments forwarded in
UKCG's submissions, particularly with regard to the Binding Origin
Information ruling discussed below. Because this document did not
provide any new argument or information onto the record, we have not
further summarized the British Embassy's letter for the purposes of
this notice.
---------------------------------------------------------------------------
On January 13, 2011, the Department extended the deadline to
initiate an anti-circumvention inquiry by 21 days, pursuant to 19 CFR
351.302(b).\10\ On February 4, 2011, the Department further extended
the deadline to initiate by 14 days, pursuant to 19 CFR 351.302(b).\11\
---------------------------------------------------------------------------
\10\ See the Department's letter to Petitioners entitled,
``Small Diameter Graphite Electrodes from the People's Republic of
China: Scope Inquiry Request Regarding Certain Unfinished
Merchandise Imported By UK Carbon and Graphite Company, Ltd.,''
dated January 13, 2011 (``Initiation Extension Letter'').
\11\ See the Department's letter to Petitioners entitled,
``Small Diameter Graphite Electrodes from the People's Republic of
China: Scope Inquiry Request Regarding Certain Unfinished
Merchandise Imported By UK Carbon and Graphite Company, Ltd.,''
dated February 4, 2011 (``Second Initiation Extension Letter'').
---------------------------------------------------------------------------
Scope of the Order
The merchandise covered by this order includes all small diameter
graphite electrodes of any length, whether or not finished, of a kind
used in furnaces, with a nominal or actual diameter of 400 millimeters
(16 inches) or less, and whether or not attached to a graphite pin
joining system or any other type of joining system or hardware. The
merchandise covered by this order also includes graphite pin joining
systems for small diameter graphite electrodes, of any length, whether
or not finished, of a kind used in furnaces, and whether or not the
graphite pin joining system is attached to, sold with, or sold
separately from, the small diameter graphite electrode. Small diameter
graphite electrodes and graphite pin joining systems for small
[[Page 14912]]
diameter graphite electrodes are most commonly used in primary melting,
ladle metallurgy, and specialty furnace applications in industries
including foundries, smelters, and steel refining operations. Small
diameter graphite electrodes and graphite pin joining systems for small
diameter graphite electrodes that are subject to this order are
currently classified under the Harmonized Tariff Schedule of the United
States (``HTSUS'') subheading 8545.11.0000. The HTSUS number is
provided for convenience and customs purposes, but the written
description of the scope is dispositive.
Determination Not To Initiate a Scope Proceeding
As noted above, Petitioners have requested the Department initiate
either a scope proceeding to clarify whether the scope of the SDGE
Order includes the merchandise in question pursuant to 19 CFR
351.225(k) or an anti-circumvention proceeding pursuant to section
781(b) of the Act and 19 CFR 351.225(h).
In the instant case, although Petitioners have provided substantial
record evidence which may support the initiation of either type of
inquiry, the Department has concluded that the issues raised by the
parties are better addressed in the context of an anti-circumvention
proceeding pursuant to section 781(b) of the Act and 19 CFR
351.225(h).\12\ In particular, due to the specificity of Petitioners'
request as it pertains to a particular company (i.e., UKCG) and certain
record information as to the timing of the pattern of trade (as
discussed below), the Department has determined that a decision to
initiate an anti-circumvention inquiry is the most appropriate course
of action to address Petitioners' concerns at present. As a result of
this determination, the Department will not initiate a scope proceeding
pursuant to 19 CFR 351.225(k) at this time.
---------------------------------------------------------------------------
\12\ As such, the remainder of this notice will focus on the
statutory criteria for the initiation of an anti-circumvention
inquiry, as defined in section 781(b) of the Act. See the Initiation
of Anti-Circumvention Proceeding section of this notice, below, for
a full summary of both Petitioners' and UKCG's comments regarding
initiation of an anti-circumvention inquiry. See also the Analysis
section of this notice, below, for the full discussion of the
Department's determination to initiate an anti-circumvention inquiry
pursuant to section 781(b) of the Act and 19 CFR 351.225(h).
---------------------------------------------------------------------------
Initiation of Anti-Circumvention Proceeding
Statutory Criteria for Initiation of Anti-Circumvention Proceeding
Section 781(b)(1) of the Act provides that the Department may find
that importation of certain merchandise completed or assembled in a
third country constitutes circumvention of an antidumping duty order
if:
(A) The merchandise imported into the United States is of the same
class or kind as merchandise produced in a foreign country that is
subject to the order.
(B) Before importation to the United States, such imported
merchandise is completed or assembled in another foreign country from
merchandise which is either subject to the order or is produced in the
foreign country subject to the order.
(C) The process of assembly or completion in the third country is
minor or insignificant.\13\
---------------------------------------------------------------------------
\13\ In determining whether the process of assembly or
completion is minor or insignificant, section 781(b)(2) of the Act
instructs the Department into account: (a) The level of investment
in the foreign country; (b) the level of research and development in
the foreign country; (c) the nature of the production process in the
foreign country; (d) the extent of production facilities in the
foreign country; and (e) whether the value of the processing
performed in the foreign country represents a small proportion of
the value of the merchandise imported into the United States.
---------------------------------------------------------------------------
(D) The value of the merchandise produced in the country subject to
the order amounts to a significant portion of the total value of the
merchandise exported to the United States.
(E) Such action would be appropriate to prevent evasion of the
order in question. In evaluating these aforementioned criteria, section
781(b)(3) of the Act further instructs the Department to take into
account:
1. The pattern of trade, including sourcing patterns.
2. Whether the manufacturer or exporter of the merchandise in
question from the country subject to the order (i.e., the PRC producer
of unfinished SDGE components) is affiliated with the third country
party that completes or assembles the merchandise for subsequent
importation into the United States (i.e., UKCG).
3. Whether imports into the third country (i.e., the United
Kingdom) of the merchandise in question (i.e., unfinished SDGE
components from the PRC) have increased after the initiation of the
investigation which resulted in the issuance of the order.
Petitioners' Request for Initiation of an Anti-Circumvention Proceeding
\14\
---------------------------------------------------------------------------
\14\ Petitioners' request included arguments for both the
initiation of a scope and anti-circumvention inquiry. Because, as
noted in the Determination Not To Initiate a Scope Proceeding,
above, we are focusing this notice on the determination as to
whether to initiate an anti-circumvention ruling, we have not
summarized or addressed the arguments forwarded by Petitioners,
which were submitted to specifically support the initiation of a
scope ruling. However, we have included and addressed all arguments
submitted in support of the initiation of an anti-circumvention
inquiry, even in the instance that they were first presented in
support of a scope initiation.
---------------------------------------------------------------------------
In their October 12, 2010, Initiation Request, Petitioners
presented the following evidence with respect to each of the
aforementioned statutory criteria:
A. Merchandise of the Same Class or Kind
Petitioners contend that the SDGE products exported to the United
States by UKCG are identical to those subject to the SDGE Order.\15\
---------------------------------------------------------------------------
\15\ See Initiation Request at 23.
---------------------------------------------------------------------------
B. Completion of Merchandise in a Foreign Country
Petitioners further assert that the unfinished SDGE component
inputs imported by UKCG from the PRC for further processing before
exportation to the United States are themselves subject
merchandise.\16\ Petitioners argue that the language of the scope (as
included in the initial Petition, SDGE Order, and Final ITC
Determination) identifies the graphitization process as the point at
[[Page 14913]]
which an electrode form becomes a graphite electrode subject to the
SDGE Order.\17\ As such, Petitioners contend that this graphitization
process (performed in the PRC) confers both country of origin and,
thus, ``unfinished'' subject merchandise status on the SDGE components
in question, even if further machining occurs in a third country to
become ``finished'' subject merchandise. Therefore, Petitioners
conclude, the finished merchandise exported to the United States is not
only produced from subject merchandise but, due to the nature of
further processing not being sufficient to alter the country of origin,
the finished merchandise is itself subject merchandise produced in the
PRC.\18\
---------------------------------------------------------------------------
\16\ With respect to the description of in-scope merchandise,
Petitioners cite to the Letter from Petitioners entitled, ``Small
Diameter Graphite Electrodes from the People's Republic of China--
Antidumping Duty Petition,'' dated January 17, 2008 (``Petition''),
Small Diameter Graphite Electrodes, Inv. 731-TA-1143 (Final), Pub.
4062, dated February 2009 (``Final ITC Determination''), and the
SDGE Order. They argue that the scope of the SDGE Order, as
established in these documents, explicitly includes ``unfinished''
SDGEs whether or not attached to a pin joining system. They assert
that the inclusion of the ``unfinished'' language reflects the fact
that unfinished SDGEs undergo no further processing beyond the
graphitization stage, other than machining, as stated in the Final
ITC Determination. As such, Petitioners contend that the scope is
unambiguously dispositive regarding the inclusion of unfinished
SDGE. Contrary to UKCG's claims that the SDGE components purchased
from the PRC were not ``unfinished'' SDGE but, rather, inputs
transformed into SDGE by manufacturing operations in the United
Kingdom, Petitioners note that: (a) The 2009 UKCG financial
statement describes the business of UKCG as the ``purchasing,
processing, and sale of synthetic graphite electrodes for the steel
and foundry industries;'' (b) the unfinished SDGE components in
question contain the correct grade of petroleum coke mix, and have
been baked, formed, carbonized, impregnated, and graphitized, thus,
the resulting cylindrical rod, as produced in the PRC and imported
into the U.K., has all the essential characteristics of a graphite
electrode; (c) UKCG's own proprietary description of the U.K.
processing on these artificial graphite rods demonstrates that only
minor machining and finishing operations are performed, which do not
impart any essential performance characteristics to the finished
product. Therefore, according to Petitioners, the merchandise that
UKCG imports from the PRC is ``unfinished'' SDGE as defined by the
scope of the SDGE Order and, because the concept of scope
encompasses both the product description and the country of origin
of the product, the merchandise in question is of PRC origin and is
subject merchandise both before and after finishing in the United
Kingdom. See Initiation Request at 8-16.
\17\ With respect to the specific argument that the
graphitization process confers ``unfinished'' status to the SDGE in
process and is, thus, at that point ``subject'' to the SDGE Order
and, furthermore, origin of the country in which this process takes
place, Petitioners cite to the Petition at 3, stating, ``The
electrode form then undergoes the graphitization process, in which
the electrode is heated in a furnace to an extremely high
temperature (2600-3000 degrees centigrade). Through this process,
the electrodes are transformed into graphite.'' Petitioners also
cite to the Final ITC Determination at 4, stating, ``unfinished
SDGEs undergo no further processing beyond the graphitization stage
other than machining.''
\18\ See Initiation Request at 23-24.
---------------------------------------------------------------------------
C. Minor or Insignificant Process
1. Level of Investment
Petitioners note that PRC producers have invested extensively in
the SDGE industry, which includes significant investment in both
manufacturing facilities and production equipment worth many millions
of dollars. Petitioners contend that the bulk of this investment goes
to the heavy industrial processes required for the production of SDGE
(e.g., raw material handling, mixing, forming, baking, impregnating,
and graphitizing), each of which occur prior to the final machining
stage. Petitioners point out that, on the contrary, the total worth of
UKCG's plant, including its single machine shop and finishing
equipment, as shown in UKCG's financial statement, demonstrates that
the level of investment required for a PRC manufacturer to produce an
unfinished graphitized electrode is far greater than the level of
investment needed by UKCG to perform its finishing processes.\19\
---------------------------------------------------------------------------
\19\ See Initiation Request at 25-26.
---------------------------------------------------------------------------
2. Level of Research and Development
Petitioners argue that, although they do not have detailed
information regarding research and development (``R&D'') expenses
incurred by either UKCG or Chinese producers of SDGE, as explained in
the ``Level of Production Processes'' section, immediately below, the
technology required to manufacture merchandise up to the graphitization
process of production (and, thus, the related R&D costs), should
greatly exceed the R&D costs associated with finishing of the
merchandise and that the R&D costs associated with the finishing of the
merchandise are relatively insignificant by comparison.\20\
---------------------------------------------------------------------------
\20\ See Initiation Request at 26.
---------------------------------------------------------------------------
3. Level of Production Processes
Petitioners contend that an understanding of the production of
subject merchandise is essential to the analysis of whether or not UKCG
is engaged in minor or insignificant production. As such, Petitioners
detail the SDGE production process, demonstrating how raw materials are
formed, baked, impregnated (if needed), re-baked, graphitized, finished
and packaged. Petitioners emphasize the significant energy needed to
graphitize the product and emphasize that, upon completion of this
process, the electrode becomes an ``unfinished'' SDGE subject to the
SDGE Order. Petitioners point out that, for PRC manufacturers to
produce unfinished SDGE components for shipment to UKCG, they must
perform each of these processes from the mixing of raw materials
through to packaging, save finishing, which accounts for the vast
majority of production costs (based on an analysis of proprietary
information provided in the initial antidumping petition). In contrast,
Petitioners argue that UKCG merely finishes \21\ and repackages SDGE
into UKCG branded cartons, processes amounting to insignificant costs
when compared to those incurred by PRC producers to perform the heavy
industrial processes summarized above.\22\
---------------------------------------------------------------------------
\21\ Petitioners note that the ``finishing'' process involves
machining of an electrode's outside surface so that it is sized to
exact dimensions and tolerances (according to National Electrical
Manufacturers Association standards for U.S. bound products), and
may also include machining and fitting the ends of an electrode with
a threaded graphite pin connecting/joining system. See Initiation
Request at 28.
\22\ See Initiation Request at 27-30.
---------------------------------------------------------------------------
4. Extent of Production Facilities
As detailed above, Petitioners note that the facilities needed to
form, bake, impregnate, re-bake, graphitize and pack the subject
merchandise in the PRC for exportation to the United Kingdom (e.g.,
equipment such as mills, sifters, calcinatories, presses, ovens, and
tanks) is far more significant than the single machining shop needed to
finish the products exported by UKCG to the United States.\23\
---------------------------------------------------------------------------
\23\ See Initiation Request at 30-31.
---------------------------------------------------------------------------
5. Value of Further Processing Compared to Total Value of Exported
Merchandise
As noted above, Petitioners assert that, based on proprietary
information supplied in the Petition, the cost of finishing a graphite
electrode represents an insignificant amount of the total cost of
manufacture for a SDGE.\24\
---------------------------------------------------------------------------
\24\ See Initiation Request at 31-32.
---------------------------------------------------------------------------
D. Value of Merchandise Produced in the PRC
Petitioners argue that, for reasons summarized above, the value of
merchandise produced in the PRC represents the vast majority of the
total value of the product.\25\
---------------------------------------------------------------------------
\25\ See Initiation Request at 32.
---------------------------------------------------------------------------
E. Whether Action Is Appropriate To Prevent Evasion of the Order
Petitioners reassert that UKCG imports graphitized components of
SDGE (which, they contend are, subject merchandise) from PRC producers
of subject merchandise, which are then finished and packaged for export
to the United States as a product of the United Kingdom. Petitioners
note that UKCG has relied on a European Binding Origin Information
(``BOI'') ruling as support for the U.K. origin designation it applied
to the merchandise in question. However, Petitioners argue, this ruling
was issued for the purposes of trade within the European common market,
and has no legal status in the United States. Moreover, Petitioners
conclude that their arguments, as summarized above, invalidate any
claim by UKCG that the finishing process is so substantial that it
warranted a change in country of origin from the PRC to the United
Kingdom.\26\
---------------------------------------------------------------------------
\26\ See Initiation Request at 32-35.
---------------------------------------------------------------------------
F. Additional Factors
1. Pattern of Trade
Petitioners argue that, since the filing of the antidumping
Petition and issuance of the preliminary determination in the initial
less than fair value (``LTFV'') investigation in August 2008,\27\ UKCG
has shipped SDGE to the United States, sourced and finished from PRC-
produced graphitized components, in significant and increasing
quantities. According to
[[Page 14914]]
Petitioners, at the time of initiation of the LTFV investigation in
February 2008,\28\ the United Kingdom had no exports of SDGE of U.K.
origin to the United States, but that UKCG began exporting the
merchandise in question to the United States beginning two months after
the publication of the preliminary determination.\29\ According to
Petitioners, during the period November 2008 through March 2010, UKCG
exports of SDGE represented 96 percent of the total SDGE exports from
the United Kingdom to the United States, and such exports occurred in
significant and increasing quantities subsequent to the issuance of the
SDGE Order. Petitioners also placed Chinese Customs data on the record,
which they claim demonstrates a significant increase in imports of
finished SDGE from the PRC into the U.K. corresponding to the
aforementioned increase in exports to the U.S.\30\
---------------------------------------------------------------------------
\27\ See Small Diameter Graphite Electrodes From the People's
Republic of China: Preliminary Determination of Sales at Less Than
Fair Value, Postponement of Final Determination, and Affirmative
Preliminary Determination of Critical Circumstances, in Part, 73 FR
49408 (August 21, 2008).
\28\ See Small Diameter Graphite Electrodes From the People's
Republic of China: Initiation of Antidumping Duty Investigation, 73
FR 8287 (February 13, 2008).
\29\ Petitioners note that the preliminary margins ranged from
132.80 to 159.34, indicating that significant dumping margins might
be levied against SDGE from the PRC in the final determination.
\30\ See Initiation Request at 35-37.
---------------------------------------------------------------------------
2. Affiliation
Though Petitioners do not claim that UKCG is affiliated with any of
the PRC producers from which it sourced the merchandise in question,
they cite to UKCG's existing business relationship with PRC producers
of merchandise subject to the SDGE Order.\31\
---------------------------------------------------------------------------
\31\ See Initiation Request at 38.
---------------------------------------------------------------------------
3. Import Volume Subsequent to the Investigation and Order
As noted above, Petitioners identify the following trends since the
filing of the antidumping petition and issuance of the preliminary
determination of the initial LTFV investigation in August 2008: UKCG
has shipped Chinese-sourced subject merchandise to the United States in
significant and increasing quantities; UKCG exports of SDGE represent
the vast majority of the total SDGE exports from the United Kingdom to
the United States; and customs data from the PRC and United States show
a significant increase in PRC exports of SDGE to the United Kingdom and
U.K exports to the United States.\32\
---------------------------------------------------------------------------
\32\ See id.
---------------------------------------------------------------------------
Comments Received Subsequent to the Initiation Request
A. UKCG's Rebuttal Comments
On October 29, 2010, the Department received a letter on behalf
UKCG in rebuttal to Petitioners' October 12, 2010, requests for a scope
and/or anti-circumvention ruling. In this submission, UKCG asserts that
there is no need for the Department to undertake a full scope or anti-
circumvention inquiry, arguing that the unfinished SDGE component
inputs in question have already been excluded from the scope of the
SDGE Order, the finished SDGE exports are of U.K. origin, and that
Petitioners' October 12, 2010, submission merely reiterates old
allegations which have been previously rebutted based on record
evidence.\33\ UKCG presents the following arguments in support of its
position:
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\33\ See UKCG's Initiation Rebuttal Comments at 1-2.
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Legal Standards: UKCG argues that the scope of the SDGE Order,
which was drafted by Petitioners, explicitly excludes the unfinished
material in question. Citing to Hylsa, S.A. de C.V. v. United States,
22 C.I.T. 44, 49 (1998), UKCG asserts that it is legally impermissible
to bring such excluded merchandise back into the case, either as part
of a scope or anti-circumvention proceeding.\34\
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\34\ See UKCG's Initiation Rebuttal Comments at 3.
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Artificial Graphite Is Not Covered by the SDGE Order: UKCG argues
that the addition of the term ``unfinished'' to the scope of the SDGE
Order is a lawyer-created term with no meaning in the industry and, as
such, the term ``unfinished'' electrode could be applied to even the
raw materials used to create SDGE. UKCG claims that the items imported
into the United Kingdom are not ``unfinished'' SDGE but, rather,
artificial graphite rods. UKCG cites to separate customs rulings from
the United States and the United Kingdom/European Union (``E.U.'') that
it purports define the product in question as artificial graphite and
not unfinished SDGE.\35\
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\35\ See UKCG's Initiation Rebuttal Comments at 3-4.
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Petitioners Did Not Include Artificial Graphite Rods in the Scope
of the Order: UKCG notes that SGL Carbon, a Petitioner, and Graftech, a
producer of electrodes who supported Petitioners in their filing of the
initial Petition, have themselves imported items classified as
artificial graphite rods under the 3801 tariff classification used by
UKCG in its classification of the unfinished materials in question. As
such, UKCG asserts that Petitioners knew of such materials and their
classification under HTS subheading 3801, but expressly did not include
them within the scope of the SDGE Order, either in the dispositive
scope narrative or in the HTS classification listed in the narrative.
Therefore, UKCG concludes that, because Petitioners were aware of the
use of separate terminology and HTS classification for artificial
graphite products and finished graphite electrode products, considering
the fact that they refrained from including the former within the scope
of the SDGE Order, their request to include such products in the order
is inappropriate at this stage of the proceeding.\36\
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\36\ See UKCG's Initiation Rebuttal Comments at 4-6.
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Petitioners' Country of Origin Citation Is Without Factual Basis:
UKCG avers that Petitioners have provided no factual basis for their
assertion that the ITC Final Determination holds that the
graphitization process confers the final country of origin status for
the purposes of the SDGE Order, and that any offhanded remark on this
issue in the ITC Final Determination is without authority and
contradicted by customs rulings from both the United Kingdom and the
United States.\37\
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\37\ See UKCG's Initiation Rebuttal Comments at 6.
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A U.K. BOI Ruling Found That Artificial Graphite Rods Are Not
Electrodes, and Petitioners Misstate the Effect of This BOI Ruling:
UKCG argues that U.K. authorities examined the issue at hand and
determined that the unfinished SDGE components in question were
properly classified as ``Artificial Graphite'' under HTS subcategory
3801.10, rather than as ``Carbon Electrodes'' under HTS subcategory
8548.11. UKCG asserts that Petitioners have misunderstood the impact of
this BOI, because the submission of any untrue information on an E.U.
export declaration is considered an illegal act.\38\
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\38\ See UKCG's Initiation Rebuttal Comments at 6-8. This BOI
ruling is provided in UKCG's Initiation Rebuttal Comments at Exhibit
2.
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A U.S. CBP Ruling Also Found That Artificial Graphite Rods Are Not
Electrodes: UKCG notes that a February 23, 2009, ruling by U.S. Customs
and Border Protection (``CBP'') found that semi-manufactures of
artificial graphite rods are expressly included in the explanatory note
of HTSUS 3801. UKCG points out the CPB ruling states that ``artificial
graphite rods in their imported condition will consist of un-machined
semi-manufactures that must be cut, machined to fine tolerances and
surface finished before they can be considered finished articles in
{HTSUS{time}
[[Page 14915]]
heading 8545,'' and ultimately determines that unfinished artificial
graphite electrode rods identical to the product at issue in the
instant case should be classified under HTSUS 3801.10.5000. UKCG
asserts that, in this ruling, CBP specifically declares that the items
in question are a form of artificial graphite rods, which are semi-
manufactured inputs that have not yet taken on the nature of an
electrode.\39\
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\39\ See UKCG's Initiation Rebuttal Comments at 8-9.
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B. Petitioners' Response to UKCG's Rebuttal
On November 12, 2010, Petitioners submitted a response to UKCG's
Rebuttal Comments. Petitioners first note their disagreement with
UKCG's categorization of the unfinished SDGE components in question as
artificial graphite rods not subject to the SDGE Order, and reiterate
their contention that the scope of the SDGE Order clearly includes such
merchandise.\40\ Petitioners then present specific rebuttals to certain
arguments forwarded by UKCG, summarized below:
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\40\ See Petitioners' Response to UKCG's Initiation Rebuttal
Comments at 1-4.
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``Unfinished'' SDGE Are Clearly Defined: Petitioners argue that,
despite UKCG's assertion that the term ``unfinished'' is a term without
meaning and that Petitioners' conclusion that graphitization confers
country of origin to the SDGE in question is unfounded, the Petition
and Final ITC Determination clearly define ``unfinished SDGE'' as SDGE
that have been graphitized but not further machined or finished.
Furthermore, Petitioners argue that whether or not the term
``unfinished'' has a specific meaning in the trade is irrelevant for
antidumping purposes.\41\
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\41\ See Petitioners' Response to UKCG's Initiation Rebuttal
Comments at 4-5.
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UKCG's Argument That Artificial Graphite Was Expressly Excluded
From the Scope Is Flawed: Petitioners argue that, because the
``unfinished'' SDGE language was included within the scope of the SDGE
Order (which, according to Petitioners, includes the unfinished SDGE
components in question), there was no need to consider the
classification of artificial graphite rods. Furthermore, Petitioners
note that the scope clearly indicates that the HTSUS number provided is
for convenience and customs purposes, but should not be considered
dispositive.\42\
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\42\ See Petitioners' Response to UKCG's Initiation Rebuttal
Comments at 6.
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The BOI Ruling Is Not Relevant to This Proceeding: Petitioners
contend that the BOI Ruling cited to by UKCG as evidence that the
merchandise in question is of U.K. origin is not relevant for
antidumping purposes because: (a) It speaks to HTS classifications,
which are not dispositive to the scope of the SDGE Order; (b) the BOI
does not address the specific issue relevant in the instant proceeding
(i.e., whether artificial graphite rods are unfinished SDGE); (c) the
BOI is a ruling applicable to trade within the European Community and
has no application for exports to other countries, including the United
States; and (d) no customs ruling, whether United Kingdom or United
States in origin, can bind or limit the scope of a U.S. antidumping
duty order.\43\
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\43\ See Petitioners' Response to UKCG's Initiation Rebuttal
Comments at 6-7. Citing to Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, From the People's Republic of
China: Final Results of Antidumping Duty Administrative Review, 74
FR 3987 (January 22, 2009), and accompanying Issues and Decisions
Memorandum (``Tapered Roller Bearings'') at Comment 1, Petitioners
assert that only the Department has the authority to define what
products are within or outside the scope of an order.
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Commerce Should Request Immediate Suspension of Liquidation:
Petitioners argue that because UKCG has incorrectly reported the
country of origin in its entry documents (i.e., listing the United
Kingdom rather than the PRC) and, in so doing, has avoided suspension
of liquidation and antidumping duty deposits that are required under
the SDGE Order, the Department should immediately request that CBP
reverse the liquidation of such entries in order to properly suspend
liquidation and collect the appropriate antidumping duty deposits.\44\
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\44\ See Petitioners' Response to UKCG's Initiation Rebuttal
Comments at 7-8.
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Responses to the Department's Request for Supplemental Information
On November 24, 2010, the Department requested that Petitioners
supplement their scope request with certain additional information to
aide in the Department's decision to initiate a formal scope or anti-
circumvention inquiry.\45\ In this questionnaire, the Department
requested that Petitioners provide further information regarding both
the pattern of trade for imports of ``unfinished SDGE'' into the United
Kingdom from the PRC and domestic U.K. production of ``unfinished
SDGE'' during the relevant time period. On November 30, 2010, we
received Petitioners' response to the Department's pre-initiation
questionnaire.\46\ On December 14, 2010, we received a rebuttal from
UKCG in response to Petitioners' submission.\47\
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\45\ See Pre-Initiation Supplemental Questionnaire.
\46\ See Petitioners' SQR.
\47\ See UKCG's SQR Rebuttal.
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A. Petitioners' Supplemental Questionnaire Response
In their November 30, 2010, response, Petitioners submitted
information onto the record regarding U.K. imports under HTS 3801.10.00
\48\ from the PRC (i.e., the HTS subcategory most specific to
unfinished SDGE components in question) for the years 2008-2010.\49\
Petitioners assert that these data show a direct correlation between
the antidumping investigation on SDGE and imports of the unfinished
merchandise in question into the United Kingdom from the PRC, noting
that:
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\48\ ``Artificial Graphite; Colloidal or Semi-Colloidal
Graphite; Preparations Based on Graphite or Other Carbon in the Form
of Pastes, Blocks, Plates or Other Semi-Finished Goods.''
\49\ See Petitioners' SQR at Attachment 1. These data were
obtained from HM Revenue and Customs' UK Overseas Trade Statistics
and Regional Trade Statistics Web site, available at https://www.hmrc.gov.uk/stats/trade-statistics.htm.
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The monthly average volume of imports of merchandise
classified under HTS 3801.10.00 from January through August 2008 was
66,208 kg, but in September 2008, the month following the preliminary
determination, imports increased to a monthly average of 603,944
kg.\50\
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\50\ See Petitioners' SQR at 1.
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In the four months between the announcement of the
preliminary determination and the final determination, September
through December 2008, the average monthly imports were 574,162 kg, but
the volume of imports rose to 815,061 kg in January 2009, the month
corresponding to the announcement of the final determination.\51\
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\51\ See Petitioners' SQR at 1-2.
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The volume of imports, by year, has increased dramatically
since the filing of the initial antidumping duty petition, with
2,152,370 kg (averaging 180,198 kg per month) imported in 2008,
3,097,554 kg (averaging 258,130 per month) in 2009, and 8,751,286 kg
(annualized, averaging 729,273 kg per month) in 2010.\52\
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\52\ See Petitioners' SQR at 2.
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Petitioners argue that these data demonstrate that the antidumping
duty investigation resulted in a significant increase of imports of
``unfinished SDGE'' into the United Kingdom from the PRC, and allege
that this increase is attributable to a scheme undertaken by PRC
producers to unlawfully avoid U.S. antidumping duties.\53\ Finally,
Petitioners maintain that they do not know of any SDGE manufacturing
operations in the United Kingdom during the relevant time period, other
[[Page 14916]]
than the finishing operations performed by UKCG.\54\
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\53\ See Petitioners' SQR at 2-3.
\54\ See Petitioners' SQR at 3.
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B. UKCG's Rebuttal to Petitioners' Supplemental Questionnaire Response
In rebuttal, UKCG asserts that the information submitted by
Petitioners in both their Initiation Request and SQR is misleading
because it: (a) Misstates the amounts of SDGE exported by UKCG to the
United States, (b) misinterprets the significance of UKCG's increase of
business with the United States as an attempt to circumvent the Order
when it is only a result of increased global marketing on behalf of the
company, and (c) draws incorrect conclusions regarding circumvention
due to a reliance on publicly available information for HTS subcategory
3801, which is a basket category containing items much more broad than
just artificial graphite rods.\55\
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\55\ See UKCG's SQR Rebuttal at 2.
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UKCG argues that the CBP data used by Petitioners in the Initiation
Request to demonstrate the amount of SDGE exported to the United States
by UKCG during the relevant time period do not accurately reflect the
volume of exports. UKCG also disputes Petitioners' assertion from the
Initiation Request that UKCG did not export SDGE to the United States
until November 2008 (two months after the Department's announcement of
the preliminary determination), and demonstrates that the company had
certain exports of SDGE produced in the same manner as the merchandise
in question prior to that date.\56\
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\56\ See UKCG's SQR Rebuttal at 2-4.
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Furthermore, UKCG attributes its increase in U.S. business to
certain factors unrelated to the LTFV investigation and subsequent SDGE
Order, including:
The actual significance of any U.S. sales being
overstated, because the low base of existing sales volume would yield
any increase (or decrease) to appear significant in percentage terms,
even though the actual change in sales volume was considerably less
meaningful.\57\
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\57\ See UKCG's SQR Rebuttal at 4.
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Internal efforts to obtain a larger global market share,
which predate the SDGE Order.\58\
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\58\ See UKCG's SQR Rebuttal at 4-5.
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The increase in demand due to the shortage of electrodes
in the United States, created by high antidumping duties imposed on PRC
SDGE.\59\
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\59\ See UKCG's SQR Rebuttal at 4.
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Finally, UKCG argues that it is misleading for Petitioners to point
to a swing in the import figures for a broad-basket 3801.10.00
``artificial graphite'' HTS subcategory, such as the large increase in
January 2009, and attribute such an increase to UKCG's sales of
finished SDGE to the United States, since the total amount UKCG sales
of finished SDGE to the United States during that year was lower than
the imports of unfinished artificial graphite imported into the country
in that single month. UKCG also points out that, though Petitioners
submitted import data extracted from the uktradeinfo.com website in the
November 30, 2010 SQR, they did not provide other information available
at the same Web site, which shows that over 40 U.K. companies imported
products under HTS 3801.10.00 in 2008. UKCG asserts that this
information undermines Petitioners' arguments regarding circumvention,
and shows the import data for HTS 3801.10.00 to be overstated and
unreliable.\60\
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\60\ See UKCG's SQR Rebuttal 5-6.
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Analysis
Based on our analysis of Petitioners' anti-circumvention inquiry
request, summarized above, the Department determines that Petitioners
have satisfied the criteria to warrant an initiation of a formal anti-
circumvention inquiry pursuant to section 781(b)(1) of the Act and 19
CFR 351.225(h). In accordance with 19 CFR 351.225(e), if the Department
finds that the issue of whether a product is included within the scope
of an order cannot be determined based solely upon the application and
the descriptions of the merchandise, the Department will notify by mail
all parties on the Department's scope service list of the initiation of
a scope inquiry, including an anti-circumvention inquiry. In addition,
in accordance with 19 CFR 351.225(f)(1)(ii), a notice of the initiation
of an anti-circumvention inquiry issued under paragraph (e) of this
section will include a description of the product that is the subject
of the anti-circumvention inquiry, i.e., SDGE, as provided in the scope
of the SDGE Order, produced from unfinished artificial graphite rod
components from the PRC that are further machined and finished in the
United Kingdom for exportation to the United States. Furthermore, in
accordance with 19 CFR 351.225(f)(1)(ii), the Department will explain
the reasoning for its decision to initiate an anti-circumvention
inquiry, which is provided below.
With regard to whether the merchandise exported to the United
States is of the same class or kind as subject merchandise produced in
the PRC, Petitioners have presented information to the Department
indicating that, pursuant to section 781(b)(1)(A) of the Act, the
merchandise being exported from the United Kingdom by UKCG may be of
the same class or kind as SDGE produced in the PRC, which are subject
to the SDGE Order. While UKCG contends that its finished SDGE exports
to the United States are of U.K. origin, UKCG has not presented
evidence demonstrating that the merchandise exported to the United
States is not of the same class or kind as merchandise subject to the
SDGE Order. Consequently, the Department finds that Petitioners have
provided sufficient information in their requests regarding the class
or kind of merchandise to warrant initiation of an anti-circumvention
inquiry.
With regard to completion or assembly of merchandise in a foreign
country, pursuant to section 781(b)(1)(B) of the Act, Petitioners have
also presented information to the Department indicating that the SDGE
exported from the United Kingdom are being processed by UKCG from
unfinished components which are produced in the PRC (i.e., the country
subject to the SDGE Order) and which might be, themselves, ``unfinished
SDGE'' subject to the SDGE Order. While UKCG argues that such inputs
are not subject to the SDGE Order, it does not provide evidence to
contradict Petitioners' claim that the finished SDGE exported to the
United States by UKCG are produced from inputs sourced from the PRC.
Therefore, we find that the information presented by Petitioners
regarding this criterion supports their request to initiate an anti-
circumvention inquiry.
Further, we find that Petitioners have provided sufficient evidence
to demonstrate that the processing performed in the United Kingdom may
be minor or insignificant, as described by sections 781(b)(1)(C) and
781(b)(2) of the Act. In particular, we find that Petitioners'
submissions suggest that the level of overall investment, R&D,
sophistication of production processes (and the degree to which they
alter the fundamental characteristics of the merchandise), and
production facilities needed for UKCG to machine and finish the
components in question into finished SDGE for exportation to the United
States may be insignificant, especially when compared to the level of
investment, facilities, R&D, and processes required by SDGE producers
in the PRC to manufacture said components. We find that Petitioners
[[Page 14917]]
have also provided evidence to demonstrate that finishing processes in
the United Kingdom may add little value to the merchandise imported
into the United Kingdom, as exported to the United States. Though UKCG
provides rebuttal evidence to demonstrate that the processes performed
in the United Kingdom are, indeed, sophisticated and contend that
Petitioners' arguments are based on the incorrect conclusion that the
SDGE component inputs sourced from the PRC are in-scope (citing to the
U.K. Customs and CBP rulings noted above), we do not find that their
arguments are sufficient to deter the Department from initiating an
anti-circumvention inquiry to attain more information regarding the
concerns raised by Petitioners. As a result, our subsequent analysis
will focus on UKCG's machining and finishing operations in the United
Kingdom (in addition to information regarding pattern of trade, as
discussed below) and we will closely examine the nature of the
materials sourced from the PRC and whether those materials are subject
to the scope of the SDGE Order.
With respect to the value of the merchandise produced in the PRC
pursuant to section 781(b)(1)(D) of the Act, Petitioners rely on their
``minor or insignificant processing'' arguments summarized above, as
well as certain proprietary cost information provided in the initial
Petition, to indicate that the value of the unfinished SDGE components
may be significant relative to the total value of a the finished SDGE
exported to the United States. We find that the information, as
discussed above, adequately meets the requirements for initiation
pursuant to section 781(b)(1)(D) of the Act.
Regarding whether action is needed to prevent evasion of the SDGE
Order, pursuant to section 781(b)(1)(E) of the Act, Petitioners do not
address this issue directly, instead addressing this criterion in their
arguments regarding ``pattern of trade'' pursuant to section 781(b)(3)
of the Act. Specifically, they rebut UKCG's reliance on the BOI ruling
and the CBP ruling as support for either the appropriateness of the HTS
3801 sub-classification for the unfinished components or confirmation
of U.K. origin of the finished merchandise in question. Petitioners
conclude that neither ruling is relevant for the purposes of the issues
present in the instant proceeding. Conversely, UKCG emphasizes the
weight of these determinations and implores the Department to consider
them in its analysis on the issue of proper classification of the
unfinished SDGE components for the purposes of this initiation
determination. We will seek more information regarding the proper
country of origin classification for the finished SDGE imported into
the United States; however, we note that Petitioners are correct to
point out that neither the BOI nor the CBP ruling are legally binding
for the purposes of antidumping proceedings in the United States.\61\
While we will give each document due consideration for the purposes of
our ultimate anti-circumvention determination, we do not find the
content of either document sufficient to compel the Department to
decline to initiate such a proceeding.
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\61\ See, e.g., Tapered Roller Bearings at Comment 1.
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Finally, we find that Petitioners have provided sufficient
evidence, in both their Initiation Request and SQR, to fulfill the
additional initiation criteria specified in section 781(b)(3) of the
Act. Though Petitioners do not show that UKCG is affiliated with any
PRC producer of subject merchandise, they demonstrate that the company
has a business relationship with PRC producers of subject merchandise.
Furthermore, information provided by Petitioners regarding imports and
exports under HTS 3801 and 8545, suggests that (a) U.K. importers are
sourcing PRC-produced unfinished SDGE components in increasing
quantities, and (b) exports of finished SDGE from the United Kingdom
have increased since the beginning of the initial SDGE investigation.
Although UKCG provides evidence to demonstrate that Petitioners'
information may be distorted or misstated due to certain factors, the
Department intends to seek further information on this pattern of trade
issue during the course of this inquiry, and will request greater
detail as to the nature of UKCG's relationship with PRC producers of
subject merchandise and timing of sales and sourcing. As such, though
we recognize UKCG's concerns regarding the conclusions reached by
Petitioners in their analysis of the pattern of trade data placed on
the record, we do not agree with UKCG that the Department should
conclude that such concerns are sufficient to refrain from further
inquiry.
Therefore, for the reasons stated above, we have determined that
Petitioners have provided sufficient basis for the Department to
initiate a formal anti-circumvention inquiry concerning the SDGE Order,
pursuant to section 781(b) of the Act. In accordance with 19 CFR
351.225(l)(2), if the Department issues a preliminary affirmative
determination, we will then instruct CBP to suspend liquidation and
require a cash deposit of estimated duties on the merchandise.
This anti-circumvention inquiry covers UKCG only. If, within
sufficient time, the Department receives a formal request from an
interested party regarding potential circumvention of the SDGE Order by
other companies in the United Kingdom, we will consider conducting
additional inquiries concurrently.
The Department will, following consultation with interested
parties, establish a schedule for questionnaires and comments on the
issues. The Department intends to issue its final determination within
300 days of the date of publication of this initiation pursuant to
section 781(f) of the Act. This notice is published in accordance with
19 CFR 351.225(f).
Dated: February 17, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2011-6451 Filed 3-17-11; 8:45 am]
BILLING CODE P
