Steel Wire Garment Hangers From the People's Republic of China: Affirmative Preliminary Determination of Circumvention of the Antidumping Duty Order and Extension of Final Determination, 27007-27016 [2011-11394]
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Federal Register / Vol. 76, No. 90 / Tuesday, May 10, 2011 / Notices
DEPARTMENT OF COMMERCE
International Trade Administration
[A–570–918]
Steel Wire Garment Hangers From the
People’s Republic of China:
Affirmative Preliminary Determination
of Circumvention of the Antidumping
Duty Order and Extension of Final
Determination
Import Administration,
International Trade Administration,
Department of Commerce.
AGENCY:
Preliminary Determination
We preliminarily determine that steel
wire garment hangers (‘‘garment
hangers’’) exported by Angang Clothes
Rack Manufacture Co., Ltd. (‘‘Angang’’)
and Quyky Yanglei International Co.,
Ltd. (‘‘Quyky’’) are circumventing the
antidumping duty order on garment
hangers from the People’s Republic of
China (‘‘PRC’’), as provided in section
781(b) of the Tariff Act of 1930, as
amended (‘‘the Act’’). See Notice of
Antidumping Duty Order: Steel Wire
Garment Hangers from the People’s
Republic of China, 73 FR 58111
(October 6, 2008) (‘‘Order’’).
DATES: Effective Date: May 10, 2011.
FOR FURTHER INFORMATION CONTACT:
Irene Gorelik or Jamie Blair-Walker,
Office 9, Import Administration,
International Trade Administration,
U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202)
482–6905 or (202) 482–2615,
respectively.
SUPPLEMENTARY INFORMATION:
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Background
On May 5, 2010, M&B Metal Products
Co., (‘‘Petitioner’’) requested that the
Department of Commerce (‘‘the
Department’’) initiate an anticircumvention inquiry pursuant to
section 781(b) of the Act, and 19 CFR
351.225(h), to determine whether U.S.
imports of garment hangers shipped
from Vietnam by Angang and Quyky,
and made from PRC-origin, semifinished garment hangers 1 are
circumventing the Order. In its request,
Petitioner alleged that PRC
manufacturers of subject merchandise
have been circumventing the Order by
using two Vietnamese companies to
1 See Petitioner’s Requests for Circumvention
Inquiries dated May 5, 2010. In this proceeding,
semi-finished steel wire garment hangers (‘‘semifinished hangers’’) refer to both shirt hangers and
strut hangers that have not been ‘‘finished’’ with
coating powder or paint and paper capes or paper
tubes.
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export their hangers.2 Specifically,
Petitioner indicated that it had evidence
that: (1) Angang is exporting hangers
from Vietnam made from components
manufactured and supplied by its
alleged Chinese owner, Shaoxing
Gangyuan Metal Manufactured Co., Ltd.
(‘‘Gangyuan’’) 3; (2) Quyky is exporting
hangers from Vietnam made from
components manufactured and supplied
by a Chinese company, Shanghai
Ruishan Metal Products Co., Ltd.
(‘‘Ruishan’’); and (3) the evidence
obtained by Petitioner supported a
finding that these parties were
circumventing the Order pursuant to
section 781(b) of the Act.4
On May 20, 2010, the Department
issued a letter to Petitioner with
supplemental questions concerning both
Angang and Quyky and Petitioner
responded to this request on May 25,
2010. After reviewing Petitioner’s
submissions, on July 16, 2010, the
Department initiated an anticircumvention inquiry on imports of
garment hangers from Vietnam exported
by Angang and Quyky.5 In the Initiation
Notice, the Department stated that it
would focus its analysis on the
significance of the production process
in Vietnam by Angang and Quyky.6
The Department issued questionnaires
to Quyky and Angang on July 23, 2010.
The Department has, to date, not
received any responses to our requests
for information from Quyky. The
Department also issued multiple
supplemental questionnaires to Angang
between August 2010 and March 2011.
On December 22, 2010, Angang
requested that the Department
preliminarily rule that it was not
circumventing the Order and submitted
arguments regarding its hanger
production facilities and exports as they
relate to the statutory criteria for anticircumvention proceedings. Angang has
2 See Petitioner’s Requests for Circumvention
Inquiries dated May 5, 2010.
3 The names of Angang’s actual parent company
in the PRC and another affiliated company,
(hereinafter referred to as ‘‘Company X’’) are
business proprietary information. For further
details, see ‘‘Memorandum to the File through
Catherine Bertrand, Program Manager, Office 9 from
Irene Gorelik, Senior Analyst, re; Circumvention
Inquiry on Steel Wire Garment Hangers from the
People’s Republic of China: Proprietary Analysis of
Certain Statutory Factors for Angang Clothes Rack
Manufacture Co., Ltd. for the Preliminary
Determination,’’ (‘‘Angang Prelim Analysis Memo’’),
dated concurrently with this Federal Register
notice.
4 See id.
5 See Steel Wire Garment Hangers From the
People’s Republic of China: Initiation of AntiCircumvention Inquiry, 75 FR 42685 (July 22, 2010)
(‘‘Initiation Notice’’).
6 See id. at 42689.
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stated on the record that its affiliates 7 in
the PRC were the sole suppliers 8 of the
PRC-origin semi-finished garment
hangers 9, to which Angang added either
PRC-origin powder coating or paint and
paper attachments such as tubes and
then exported 10 this merchandise to the
United States.
Scope of the Antidumping Duty Order
The merchandise that is subject to the
order is steel wire garment hangers,
fabricated from carbon steel wire,
whether or not galvanized or painted,
whether or not coated with latex or
epoxy or similar gripping materials,
and/or whether or not fashioned with
paper covers or capes (with or without
printing) and/or nonslip features such
as saddles or tubes. These products may
also be referred to by a commercial
designation, such as shirt, suit, strut,
caped, or latex (industrial) hangers.
Specifically excluded from the scope of
the order are wooden, plastic, and other
garment hangers that are not made of
steel wire. Also excluded from the scope
of the order are chrome-plated steel wire
garment hangers with a diameter of 3.4
mm or greater. The products subject to
the order are currently classified under
Harmonized Tariff Schedule of the
United States (‘‘HTSUS’’) subheadings
7326.20.0020, 7323.99.9060 and
7323.99.9080.
Although the HTSUS subheadings are
provided for convenience and customs
purposes, the written description of the
merchandise is dispositive.
Scope of the Anti-Circumvention
Inquiry
The products covered by this inquiry
are hangers, as described in the ‘‘Scope
of the Antidumping Duty Order’’ section
above, that are exported from Vietnam,
but manufactured from PRC-origin,
semi-finished garment hangers and
completed in Vietnam with PRC-origin,
paper attachments and other direct
materials such as latex or glue. While
we acknowledge that Angang has
repeatedly stated on the record that it
also self-produces garment hangers from
7 Angang has stated on the record that it is
affiliated with Company X. See Angang’s
Questionnaire Response dated September 17, 2010
at 2–3 and Exhibit 3. The name of this affiliated
company is business proprietary information.
8 See Angang’s Questionnaire Response dated
November 19, 2010, at 27–28.
9 For the purposes of these circumvention
inquiries, we refer to the PRC-origin uncoated,
paper-less hanger-shaped steel wire as ‘‘semi
finished’’ steel wire hangers.
10 See, e.g., Angang’s Questionnaire Response
dated October 8, 2010 at Exhibit 1; Angang’s
Questionnaire Response dated November 19, 2010,
at 13.
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For the reasons described below, we
preliminarily determine that, pursuant
to section 781(b) of the Act,
circumvention of the Order is occurring
by reason of exports of semi-finished
garment hangers from the PRC imported
by, or sold to, Angang and Quyky, and
which subsequently undergo further
assembly in Vietnam before exportation
to the United States.
value investigation, any previous
administrative review, or any other
information placed on the record.
At no point during this entire
proceeding, did Quyky notify the
Department that it was unable to
comply with our requests. Quyky’s
refusal to respond to our questionnaire
precludes the Department from making
an informed determination based on
record evidence as to whether it is (or
is not) circumventing the Order. In
addition, because Quyky failed to
provide the Department with any
information at all, we are also unable to
distinguish between its imports or
purchase of semi-finished garment
hangers from the PRC for purposes other
than assembly into merchandise
covered by the Order. Consequently,
because Quyky refused to comply with
the Department’s request for
information, we find that it failed to
cooperate to the best of its ability, and
therefore, that an adverse inference is
warranted pursuant to section 776(b) of
the Act. Accordingly, as an adverse
inference, the Department preliminarily
finds that all of the hangers produced
and/or exported by Quyky to the United
States are circumventing the Order.
Quyky
Angang
Facts Available
Applicable Statute
Section 776(a) of the Act requires the
Department to rely on facts otherwise
available if necessary information is not
available on the record or an interested
party or any other person: (A)
Withholds information requested by the
Department; (B) fails to provide
requested information by the deadlines
for submission of the information or in
the form and manner requested, subject
to subsections (c)(1) and (e) of section
782 of the Act; (C) significantly impedes
a proceeding; or (D) provides requested
information, but the information cannot
be verified as provided in section 782(i)
of the Act. One of the Vietnamese
companies subject to this anticircumvention inquiry, Quyky, failed to
respond to any of the Department’s
requests for information. Therefore, we
preliminarily find that, pursuant to
sections 776(a)(2)(A) and (B) of the Act,
it is appropriate to apply facts available
to Quyky. In addition, section 776(b) of
the Act permits the Department to use
an inference that is adverse to the
interests of an interested party if that
party fails to cooperate by not acting to
the best of its ability to comply with a
request for information. Such an adverse
inference may include reliance on
information derived from the petition, a
final determination in the less-than-fair-
Section 781 of the Act addresses
circumvention of antidumping or
countervailing duty orders. With respect
to merchandise assembled or completed
in a third country, section 781(b)(1) of
the Act provides that if: (A) The
merchandise imported into the United
States is of the same class or kind as any
merchandise produced in a foreign
country that is the subject of an
antidumping duty order; (B) before
importation into the United States, such
imported merchandise is completed or
assembled in a third country from
merchandise which is subject to such an
order or is produced in the foreign
country with respect to which such
order applies; (C) the process of
assembly or completion in a third
country is minor or insignificant; (D) the
value of the merchandise produced in
the foreign country to which the
antidumping duty order applies is a
significant portion of the total value of
the merchandise exported to the United
States; and (E) the Department
determines that action is appropriate to
prevent evasion of an order. The
Department, after taking into account
any advice provided by the United
States International Trade Commission
(‘‘ITC’’), under section 781(e) of the Act,
may include such imported
12, 2011, the Department solicited
comments from interested parties
regarding the selection of a surrogate
country and of surrogate factor
valuations. On February 11, 2011,
Petitioner submitted comments on the
selection of a surrogate country. No
other interested party commented on
the selection of a surrogate country. On
February 18, 2011, Petitioner submitted
surrogate factor valuation comments. No
other interested party submitted
surrogate factor valuation comments.
Surrogate Country and Factor
Valuation Comments
In this case, both the country that
produced the semi-finished garment
hangers and the country that produced
the steel wire hangers from the semifinished garment hangers are considered
to be non-market economy (‘‘NME’’)
countries by the Department. In
accordance with section 771(18)(C)(i) of
the Act, any determination that a foreign
country is an NME country shall remain
in effect until revoked by the
administering authority.13 No party has
challenged the designation of the PRC or
Vietnam as an NME country in this anticircumvention inquiry. Therefore, we
continue to treat the PRC and Vietnam
as NME countries for purposes of the
preliminary determination of this anticircumvention inquiry.
On January 7, 2011, the Department
determined that India, the Philippines,
Indonesia, Thailand, Ukraine, and Peru
are countries comparable to the PRC and
also determined that Bangladesh,
Pakistan, India, Sri Lanka, the
Philippines, and Indonesia are countries
comparable to Vietnam in terms of
economic development.14 On January
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steel wire rod 11, the focus and intent of
this proceeding is to determine whether
the semi-finished garment hangers: (1)
Manufactured in the PRC; (2) exported
to Angang’s facility in Vietnam for
completion (by adding PRC-origin paper
attachments, such as tubes, PRC-origin
latex or glue) 12; and (3) then exported
by Angang to the United States as
Vietnamese-origin steel wire garment
hangers constitutes circumvention of
the Order under section 781(b) of the
Act.
Extension of Determination Deadline
11 See, e.g., Angang’s Questionnaire Response
dated January 19, 2011 at 5; Angang’s Questionnaire
Response dated February 1, 2011 at Exhibit 9; and
Angang’s Comments dated December 22, 2010 at 2–
5.
12 Angang has reported that the direct materials
applied to the PRC-origin, semi-finished hangers are
also manufactured in, and supplied from, the PRC.
See, e.g., Angang’s Questionnaire Response dated
November 19, at Exhibit 5; Angang’s Questionnaire
Response dated March 21, 2011 at 4.
13 See, e.g., Preliminary Determination of Sales at
Less Than Fair Value and Postponement of Final
Determination: Coated Free Sheet Paper from the
People’s Republic of China, 72 FR 30758, 30760
(June 4, 2007), unchanged in Final Determination
of Sales at Less Than Fair Value: Coated Free Sheet
Paper from the People’s Republic of China, 72 FR
60632 (October 25, 2007); Certain Frozen Fish
Fillets from the Socialist Republic of Vietnam: Final
Results of the Second Administrative, 72 FR 13242
(March 21, 2007) (‘‘Fish Fillets Anticircumvention’’).
14 See ‘‘Memorandum from Carole Showers,
Director, Office of Policy, to Catherine Bertrand,
Program Manager, China/NME Group, Office 9;
Anti-Circumvention Inquiry of the Antidumping
Duty Order of Steel Wire Garment Hangers from the
People’s Republic of China (‘‘PRC’’): Request for a
List of Surrogate Countries,’’ dated January 7, 2011
(‘‘Surrogate Country List’’).
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On February 28, 2011, the Department
extended the final determination
deadline of this anti-circumvention
inquiry to November 1, 2011.
Affirmative Preliminary Determination
of Circumvention
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merchandise within the scope of an
order at any time an order is in effect.
In determining whether the process of
assembly or completion in a third
country is minor or insignificant under
section 781(b)(1)(C) of the Act, section
781(b)(2) of the Act directs the
Department to consider: (A) The level of
investment in the third country; (B) the
level of research and development in
the third country; (C) the nature of the
production process in the third country;
(D) the extent of production facilities in
the third country; and (E) whether the
value of processing performed in the
third country represents a small
proportion of the value of the
merchandise imported into the United
States. However, none of these five
factors, by itself, is controlling on the
Department’s determination of whether
the process of assembly or completion
in a third country is minor or
insignificant.15 Accordingly, it is the
Department’s practice to evaluate each
of these factors as they exist in the third
country depending on the particular
anti-circumvention inquiry.16 Further,
section 781(b)(3) of the Act sets forth the
factors to consider in determining
whether to include merchandise
assembled or completed in a third
country in an antidumping duty order.
Specifically, the Department shall take
into account such factors as: (A) The
pattern of trade, including sourcing
patterns; (B) whether the manufacturer
or exporter of the merchandise is
affiliated with the person who, in the
third country, uses the merchandise to
complete or assemble in the
merchandise which is subsequently
imported into the United States; and (C)
whether imports into the third country
of the merchandise have increased after
the initiation of the investigation which
resulted in the issuance of an order.
Statutory Analysis
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(A) Whether Merchandise Imported Into
the United States Is of the Same Class
or Kind as Other Merchandise That is
Subject to the Order
The Order covers garment hangers
produced from carbon steel wire,
whether or not galvanized or painted,
whether or not coated with latex or
epoxy or similar gripping materials,
and/or whether or not fashioned with
paper covers or capes (with or without
printing) and/or nonslip features such
15 See
SAA at 893.
Certain Tissue Paper Products from the
People’s Republic of China: Affirmative Final
Determination of Circumvention of the
Antidumping Duty Order, 73 FR 57591, 57592
(October 3, 2008) (‘‘Tissue Paper AntiCircumvention 2008 Final’’).
16 See
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as saddles or tubes. These products may
also be referred to by a commercial
designation, such as shirt, suit, strut,
caped, or latex (industrial) hangers. The
merchandise subject to this inquiry is
garment hangers exported to the United
States by Angang produced from PRCorigin, semi-finished garment hangers.
The Department has reviewed the
information provided by Angang in its
questionnaire responses and finds that
this evidence indicates that Angang’s
garment hangers, produced from PRCorigin, semi-finished garment hangers
and exported to the United States meet
the written description of the products
subject to the Order.17 Specifically,
Angang submitted a product list
showing that all the garment hanger
types it produced and exported to the
United States, which fit the description
of the merchandise subject to the
Order.18 Further, we preliminarily find
that the products identified and
described in the product list are no
different than those identified in the
scope of the Order.19 Angang also
indicated that 100 percent of its
production is steel wire garment
hangers, that 100 percent of its
production is for export to the United
States, and provided sample invoices
and packing lists which show the
description of the exported
merchandise, which we find also
matches the descriptions in the scope of
the Order.20 Finally, we note that
Angang itself admitted that, from
September 2008 through August 2010, it
sold steel wire hangers that meet the
scope of the Order.21 Accordingly, we
find that the merchandise subject to this
inquiry is the same class or kind of
merchandise as that subject to the
Order.
(B) Whether, Before Importation Into the
United States, Such Imported
Merchandise Is Completed or
Assembled in A Third Country From
Merchandise Which Is Subject to the
Order or Produced in the Foreign
Country That Is Subject to the Order
As noted above, the merchandise
subject to this proceeding are garment
hangers exported to the United States
that are finished or processed in
Vietnam from PRC-origin, semi-finished
garment hangers. As stated above,
17 See
Angang’s Questionnaire Response dated
September 7, 2010 at 6–11.
18 See id.
19 As the product descriptions in the product list
are business proprietary information, see Angang
Prelim Analysis Memo for further detail.
20 See Angang’s Questionnaire Response dated
October 12, 2010 at 3 and Exhibit 3.
21 See Angang’s Questionnaire Response dated
November 22, 2010 at 5.
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although Angang has repeatedly noted
on the record that it also self-produces
garment hangers from steel wire rod,22
we find the fact that Angang selfproduces garment hangers from wire rod
is irrelevant here. As stated above, the
merchandise subject to this proceeding
are Angang’s exported garment hangers
that were further processed from semifinished garment hangers obtained from
the PRC. Angang has also plainly stated
on the record that between April 2009
and August 2010, it purchased semifinished garment hangers from the PRC
as a main input and further processed
these semi-finished garment hangers by
applying either PRC-origin paint or
powder coating and paper attachments,
which were then packaged as
Vietnamese-origin and exported to the
United States.23 Accordingly, we find
that the merchandise subject to this
anti-circumvention inquiry was
completed or assembled in Vietnam
from PRC-origin merchandise which is
subject to the Order.
Whether the Process of Assembly or
Completion in the Third Country is
Minor or Insignificant
Under section 781(b)(1)(C) of the Act,
section 781(b)(2) of the Act provides the
criteria for determining whether the
process of assembly or completion is
minor or insignificant. These criteria
are:
(A) The level of investment in the
third country;
(B) The level of research and
development in the third country;
(C) The nature of the production
process in the third country;
(D) The extent of the production
facilities in the third country; and
(E) Whether the value of the
processing performed in the third
country represents a small proportion of
the value of the merchandise imported
into the United States.
The SAA at 893 explains that no
single factor listed in section 781(b)(2)
of the Act will be controlling.
Accordingly, it is the Department’s
practice to evaluate each of the factors
as they exist in the United States or
foreign country depending on the
22 See e.g., Angang’s Comments dated December
22, 2010, at 2–5. The Department notes that the fact
that Angang also produces hangers from wire rod
is irrelevant here because the products subject to
this proceeding are Angang’s exported garment
hangers that were further processed from semifinished hangers obtained from the PRC.
23 See Angang’s Questionnaire Response dated
October 8, 2010, at Exhibit 1; Angang’s
Questionnaire Response dated November 19, 2010,
at 10; Angang’s Questionnaire Response dated
October 1, 2010, at Exhibit 1.
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particular anti-circumvention inquiry.24
In this anti-circumvention inquiry,
based on the record, we have considered
and evaluated each statutory criterion
and all factors in determining whether
the process of converting the PRCorigin, semi-finished garment hangers in
Vietnam were minor or insignificant, in
accordance with section 781(b)(2) of the
Act, consistent with our analysis in
prior anti-circumvention inquiries.25
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781(b)(2)(A): The Level of Investment in
Vietnam
For purposes of this anticircumvention inquiry, we analyzed the
level of investment in Angang by its
Chinese parent company that is
associated with converting the PRCorigin, semi-finished garment hangers
into finished garment hangers for export
to the United States. Specifically, we
reviewed the level of investment in
Angang for the conversion process by
Angang’s Chinese parent company and
the parent company’s Chinese affiliate,
Company X, and Angang’s investment
on its own behalf. Angang reported that
its operations in Vietnam for converting
PRC-origin, semi-finished garment
hangers into garment hangers are
comprised of capital investment and
equipment sourced in two ways: (1)
Equipment and machinery that Angang
purchased from its Chinese parent
company; and (2) equipment that
Angang purchased from other PRC
companies.26 Angang stated that its total
investment from the Chinese parent
company included capital investment
and equipment investment.27 Angang
also stated that it made its own
24 See Tissue Paper Anti-Circumvention 2008
Final.
25 See, e.g., Anti-Circumvention Inquiry of the
Antidumping and Countervailing Duty Orders on
Certain Pasta From Italy: Affirmative Preliminary
Determinations of Circumvention of Antidumping
and Countervailing Duty Orders, 68 FR 46571
(August 6, 2003) (‘‘Pasta Circumvention Prelim’’)
(unchanged in Anti-Circumvention Inquiry of the
Antidumping and Countervailing Duty Orders on
Certain Pasta From Italy: Affirmative Final
Determinations of Circumvention of Antidumping
and Countervailing Duty Orders, 68 FR 54888
(September 19, 2003) (Pasta Circumvention Final’’);
and Hot-Rolled Lead and Bismuth Carbon Steel
Products From Germany and the United Kingdom;
Negative Final Determination of Circumvention of
Antidumping and Countervailing Duty Orders, 64
FR 40336, 40347–48 (July 26, 1999) (explaining that
Congress has directed the Department to focus more
on the nature of the production process and less on
the difference in value between the subject
merchandise and the parts and the imported parts
or components and that any attempt to establish a
numerical standard would be contrary to the intent
of Congress).
26 See, e.g., Angang’s Questionnaire Response
dated September 17, 2010, at 10–12, and Exhibits
10–12; Angang’s Questionnaire Response dated
November 19, 2010, at 23–24.
27 See Angang’s Questionnaire Response dated
September 17, 2010, at 7.
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equipment investment in October
2008.28 However, we note that Angang
also clearly states that ‘‘all of these
investments were made by its (Chinese)
parent company.’’ 29 Additionally,
Angang identified the types of
equipment and where that equipment
was used in the production of finished
garment hangers, (i.e., Angang identified
what type of equipment, such as powder
coating, painting, paper tube and paper
cape attaching, were used in the
processing workshop where the PRCorigin, semi-finished garment hangers
were converted to finished garment
hangers).30
With respect to the equipment
investment, Angang stated that ‘‘all
equipment was fully invested by’’ its
Chinese parent company and that ‘‘all
equipment is brand-new and made by’’
its parent company.31 However, while
Angang provided a listing of
machinery 32 obtained for its facility,
there were no equipment purchase
invoices or receipts provided to the
Department, except for one oven and
other non-hanger specific machines
purchased by Angang.33 Thus, we find
that there is no information on the
record of this proceeding to support
Angang’s claim that the hanger-making
machinery supplied by its Chinese
parent company was ‘‘brand new.’’ The
only information placed on the record
with respect to Angang obtaining
machines specific to garment hanger
production is limited to a Vietnamese
customs declaration, which: (1) Does
not indicate an invoice value; (2) if the
machines were even purchased; or (3)
whether the machines are brand new or
previously used by a PRC company.34
Thus, without any other information on
the record to substantiate its claim that
the machinery supplied by the parent
company, apart from one oven and a
few non-hanger specific machines,35
was brand new, we find that the totality
of the record does not support Angang’s
claim that the Chinese parent
28 See
id.
id.
30 See id., at 14–21.
31 See id., at 12.
32 See id., at Exhibit 10.
33 See Angang’s Questionnaire Response dated
November 19, 2010 at Exhibit 10.
34 See Angang’s Questionnaire Response dated
September 17, 2010, at Exhibit 11.
35 See Angang’s Questionnaire Response dated
November 19, 2010, at Exhibit 10, for the valueadded tax (‘‘VAT’’) invoice of the fuel oven first
reported on page 11 of the September 17, 2010,
questionnaire response. Angang also provided
several VAT invoices for machines that were not
previously noted in the September 17, 2010,
response, as equipment investments. There is no
indication on the record that these machines are
used solely for garment hanger production. See
Angang Prelim Analysis Memo.
29 See
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company’s investment in Angang’s
production equipment was new
investment.36
Moreover, Angang has stated that all
the direct materials required to
complete the PRC-origin, semi-finished
garment hangers were supplied by the
Chinese parent company or affiliated
Company X.37 Accordingly, based on
the totality of the record evidence, we
find that the level of investment by
Angang for equipment and direct
materials used in converting the semifinished garment hangers to finished
garment hangers is minor or
insignificant compared to the level of
investment provided by the Chinese
parent company and its affiliated
Chinese Company X.
781(b)(2)(B): The Level of Research and
Development (‘‘R&D’’) in Vietnam
We find that the record evidence for
this anti-circumvention inquiry
demonstrates that Angang has not
undertaken a significant level of R&D in
order to process finished garment
hangers. In describing the level of R&D
in the garment hanger industry in
Vietnam, Angang reported that R&D
efforts are focused on quality control,
work efficiency, and other efforts that
were not substantiated by any
supporting documentation.38 However,
according to Angang, its production of
garment hangers began within two
months of the set-up of the operations
and management teams,39 which we
find is not indicative of a young
industry that requires significant time
for R&D prior to initial production.
Furthermore, Angang reported that its
Chairman, General Manager, and
Production Manager are all previously
employed by either the Chinese parent
company or its affiliated Chinese
Company X.40 Accordingly, based on
the facts on the record of this anticircumvention inquiry, we find that the
level of R&D in Vietnam was low
because Angang employs senior
individuals previously employed by its
Chinese parent or affiliated producer of
garment hangers and because there is no
record evidence otherwise
demonstrating that the level of R&D in
Vietnam was high.
36 See Angang Prelim Analysis Memo at
Attachment I.
37 See Angang’s Questionnaire Response dated
November 19, 2010, at Exhibit 5.
38 See Angang’s Questionnaire Response dated
September 17, 2010, at 13.
39 See id., at 10.
40 See Angang’s Questionnaire Response dated
September 3, 2010, at 1–2; see also Angang’s
Questionnaire Response dated September 17, 2010,
at 2.
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781(b)(2)(C): The Nature of the
Production Process in Vietnam
As discussed above, the element of
Angang’s garment hanger production
process in Vietnam that we are
reviewing is the conversion of the PRCorigin, semi-finished garment hangers to
finished garment hangers. According to
Angang, the entire process to produce
such garment hangers from steel wire
rod occurs in twelve stages.41 Angang
has reported that the process to produce
semi-finished garment hangers
comprises the first two steps of the
twelve-step process and that these two
steps are performed in the PRC, while
the processes performed in Vietnam to
produce ‘‘finished’’ garment hangers
comprise the latter ten steps reported.42
Angang also provides a very detailed
description of each stage of garment
hanger production.43
First, the Department notes that
Angang’s description of the Chinese
production processes for the first two
steps (wire drawing stage and wire
shaping forming stage) appear to be
understated in its response compared to
information we are placing on the
record.44 According to Angang, the
equipment and labor involved in the
wire drawing, cutting, and shaping
stages of the production process (which
occur in the PRC) are limited, simple,
and fully automated.45 However, the
information we are placing on the
record in conjunction with these
preliminary results regarding certain
garment hanger production processes,
indicates that drawing wire rod into
wire, cutting wire into pre-determined
sizes, and shaping/forming the cut wire
into semi-finished garment hangers are
more material-labor-energy intensive
than intimated by Angang in its
responses.46
Moreover, Angang’s narrative
describing these two stages shows an
apparent de-emphasis of the importance
of these stages. Unlike the other stages
(performed in Vietnam), such as paint
dipping and glue application, which,
41 See id., at 14. Although Angang reported all
twelve stages of production, the first two stages,
described as steel wire drawing and molding, were
performed in the PRC by Company X.
42 See id.
43 See id., at 14–21.
44 See Angang Prelim Analysis Memo at
Attachment I.
45 See Angang’s Questionnaire Response dated
September 17, 2010, at 14–15 (where Angang stated
that ‘‘the process of wire drawing is technically
simple and fully automatic’’ * * * and ‘‘the process
of molding is technically simple and fully
automatic.’’)
46 See id. The information we compared shows
that the production of the same products in the PRC
requires a fraction of the steps identified by
Angang.
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according to Angang, are ‘‘technically
critical’’ and require ‘‘experienced’’
workers,47 Angang provides scant
description of the requirements for the
Chinese wire drawing, cutting, and
shaping stages. However, the
Department notes that, based on
information we are placing on the
record, gauge and length of the drawn
wire are directly and crucially
associated with the product code (and
the Department’s CONNUM), which are
determined in the wire drawing, cutting,
and shaping/forming processes.48
Accordingly, we find that the
production processes in Vietnam
conducted by Angang in converting the
PRC-origin, semi-finished garment
hangers to finished garment hangers are
minor when compared to the Chinese
production process of the steel wire
drawing, cutting, and shaping process,
which result in the semi-finished
garment hanger, the main input to
Angang’s processing of PRC-origin semifinished garment hangers.
781(b)(2)(D): The Extent of Production
Facilities in Vietnam
In analyzing the extent of Angang’s
production facilities, we have
considered the capital equipment used
in the production process, the types of
employees, and whether the facilities
used by Angang in the conversion
process were permanent facilities.
Angang states that when it first rented
the space in 2007 for a five-year lease
term,49 the facility had a workshop used
to convert PRC-origin, semi-finished
garment hangers into finished garment
hangers.50 A review of the record of the
equipment at Angang’s rented facility
shows that the capital equipment used
to convert PRC-origin, semi-finished
garment hangers to finished garment
hangers only consisted of: (1) Fuel
ovens used to dry the powder coating
applied to the semi-finished garment
hangers; (2) paint vats into which the
semi-finished garment hangers are
manually dipped while suspended from
a metal rod, then dried and ‘‘baked’’; (3)
machines to coat paper tubes with glue,
then dried; and (4) machines to attach
the paper tubes; (5) and manual paper
cape attachment to shirt garment
hangers.51 Packing labor, packing
materials, and ‘‘warehouse management’’
were also alleged by Angang to be
‘‘crucial’’ steps in the production
47 See
id.
Angang Prelim Analysis Memo at
Attachment II.
49 See Angang’s Questionnaire Response dated
September 17, 2010, at 10.
50 See id., at 10–11.
51 See Angang’s Questionnaire Response dated
November 19, 2010, at 7–9.
48 See
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process.52 However, the Department
finds that Angang has overstated the
importance of these steps vis-a-vis the
steps relating to wire drawing, wire
cutting, and wire shaping/forming,
which Angang significantly
understated 53 when reviewing these
same steps in the information we are
placing on the record.
Second, the Department is not
persuaded by Angang’s emphasis on the
production steps performed in Vietnam,
as several of the steps identified by
Angang actually occur within a single
step. For example, while Angang
identifies stage 3 of the process alone as
‘‘Dipping painting and blowing dry,’’ 54
Angang’s detailed description of stage 3
shows ‘‘Stage 3 of the process (including
stage 5 and stage 7): Dipping painting
and blowing dry (including baking at
high temperature and low temperature)
* * *.’’ 55 Angang reported several steps
of the production process in this
overlapping manner, such that, we find
the actual stages of converting semifinished garment hangers to finished
garment hangers to be actually less than
the twelve individual stages reported by
Angang. Another example of Angang’s
emphasis of the Vietnam production
process is Angang’s inclusion of Stage 9:
‘‘paper wrapping and packing,’’ as a
production stage, which, while may be
relevant to Angang’s self-produced
garment hangers, is not relevant to
Angang’s completion of PRC-origin,
semi-finished garment hangers.56
Moreover, Angang included stages of
production that are typically not
comprised of workers that fit in the
‘‘direct labor’’ category, such as
Warehouse Management, Packing, and
Loading/Shipping.57 We find that
Angang’s inclusion of these ‘‘stages’’ as
actual production stages indicates that
Angang has attempted to overstate the
nature of the Vietnamese production
process for completing PRC-origin,
semi-finished garment hangers, which is
further contradicted by the information
we are placing on the record.58
Based on the above descriptions and
information we placed on the record, we
find that, in contrast to Angang’s
52 See Angang’s Questionnaire Response dated
September 17, 2010, at 15–17.
53 See id., at 14–15.
54 See id., at 14.
55 See Angang’s Questionnaire Response dated
September 17, 2010, at 15.
56 See, e.g., Angang’s Questionnaire Response
dated March 21, 2011, at Exhibit 13.
57 See Angang’s Questionnaire Response dated
September 17, 2010, at 14, 17. See also the
Department’s supplemental questionnaire dated
December 22, 2010, where we individually defined
direct labor, indirect labor and packing labor.
58 See Angang Prelim Analysis Memo at
Attachment I, II, and III.
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description of the first two Chinese
stages (wire drawing, wire cutting, and
wire molding) of the overall production
process, the first two Chinese stages
require significant equipment and the
largest direct material input involved in
the process, the remaining Vietnamese
stages of the overall production process
(conversion of PRC-origin, semi-finished
garment hangers using materials that are
also produced in the PRC) are limited to
painting and drying the semi-finished
garment hangers or coating and drying
the semi-finished garment hangers, and
attaching tubes (affixed with glue and
dried) to semi-finished garment hangers.
Angang further stated that intensive
training was provided to unskilled
workers 59 in Vietnam before they
engaged in processing the semi-finished
garment hangers into finished garment
hangers.60 With regard to the level of
employees involved in the conversion of
PRC-origin, semi-finished garment
hangers to finished garment hangers,
Angang reported that experienced,
skilled, and responsible workers are
necessary for jobs such as ‘‘Stage 11:
warehouse management’’ or, ‘‘Stage 12:
loading and shipping.’’ 61 However,
Angang’s narrative describing the stages
for drawing wire into wire rod, cutting
the drawn wire, and shaping the wire
into hanger forms does not discuss the
same requirement for ‘‘skilled,’’
‘‘responsible,’’ or ‘‘experienced’’ workers,
despite, as we stated above, these stages
being crucial to the finished product
with respect to wire gauge and length.62
Further, we find that Angang overemphasizes the skill level of its
Vietnamese workers, who, according to
Angang were trained to be
‘‘experienced’’ and ‘‘skilled’’ with the
ability to perform crucial production
functions, considering that Angang
trained these workers within the
reported two-month time period of
operations/management set-up (May
2008) and the start of production (July
2008).63 Thus, based on Angang’s
submissions and the information we are
placing on the record, the Department
finds that the cost and labor involved in
the stages for the production of the
semi-finished garment hangers, as
59 See Angang’s Questionnaire Response dated
November 19, 2010, at 29, where Angang stated that
the unskilled Vietnamese workers it hired ‘‘knew
nothing about the production of wire hangers, and
they did not understand the function of the
equipment and their operation.’’ Angang further
stated that the intensive training they provided to
the unskilled workers took from 15 to 30 days
depending on an individual’s learning capabilities.
60 See Angang’s Questionnaire Response dated
September 17, 2010, at 12.
61 See id., at 15–17.
62 See id., at 14–15
63 See id., at 10.
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performed in the PRC in this case,
requires as much, if not more, skill than
attributed to these stages by Angang,
especially when compared to the
production stages performed in
Vietnam, such as dip-painting or coating
paper tubes with latex or glue.64
The totality of the information
reported by Angang, when compared
with the information we are placing on
the record, indicates that Angang’s
stages of the production process for
completing PRC-origin, semi-finished
garment hangers are overstated to
emphasize the Vietnamese production
process versus that of Company X in the
PRC, the sole producer of Angang’s
imported, semi-finished garment
hangers.
781(b)(2)(E): Whether the Value of the
Processing Performed in Vietnam
Represents a Small Portion of the Value
of the Merchandise Imported Into the
United States
In prior anti-circumvention inquiries,
the Department has explained that
Congress directed the agency to focus
more on the nature of the production
process and less on the difference in
value between the subject merchandise
and the parts and components imported
into the processing country.65
Additionally, the Department has
explained that, following the Uruguay
Round Agreements Act, Congress
redirected the agency’s focus away from
a rigid numerical calculation of valueadded toward a more qualitative focus
on the nature of the production
process.66 In this anti-circumvention
inquiry, we note that semi-finished
garment hangers as well as certain paper
attachments and the other direct
material inputs added to the semifinished garment hangers in Vietnam
were manufactured and supplied by
Company X in the PRC.67 Petitioner’s
request for an anti-circumvention
inquiry contains clear evidence that the
production process of garment hangers
64 See id., at 15–17; see also Angang Prelim
Analysis Memo at Attachment II.
65 See, e.g., Pasta Circumvention Prelim, 68 FR at
46575 (unchanged in Pasta Circumvention Final, 68
FR 54888); and Lead and Bismuth from Germany
and the UK, 64 FR at 40347. We note that, although
these cases involved assembly or processing in the
United States under section 781(a) of the Act, the
language regarding the value of processing or
assembly is essentially the same under both
sections 781(a)(2)(E) and (b)(2)(E) of the Act.
Accordingly, we find that our prior rationale is
equally applicable to value of assembly or
processing in a third-country under section
781(b)(2)(E) of the Act.
66 See Pasta Circumvention Prelim, 68 FR at
46575; and Lead and Bismuth from Germany and
the UK, 64 FR at 40348.
67 See, e.g., Angang’s Questionnaire Response
dated November 19, at Exhibit 5; Angang’s
Questionnaire Response dated March 21, 2011 at 4.
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rests mainly with the production of the
main (and largest) direct material input:
steel wire.68 The data therein shows that
consumption of steel wire far outweighs
the relative consumption of all other
inputs.69 Thus, because the production
process of the semi-finished garment
hangers, which involves production of
the main input, as well as the source of
all the other direct materials, are of PRCorigin, we preliminarily find that the
total value of processing performed in
the PRC is significant compared to the
assembly or completion performed in
Vietnam. Therefore, because the entirety
of production of the semi-finished
garment hangers and the other direct
materials applied to those semi-finished
garment hangers are of PRC-origin and
are supplied by Company X using the
main direct material input and
significant labor, energy, and
equipment,70 we find that the
processing performed in Vietnam
represents a small portion of the total
manufacture of the merchandise sold in
the United States.
Summary of Analysis of Whether the
Process of Assembly or Completion in
Vietnam is Minor or Insignificant
(Sections 781(b)(1)(C) and 781(b)(2) of
the Act)
In sum, pursuant to section
781(b)(1)(C) of the Act, we preliminarily
conclude that the record evidence of
this anti-circumvention inquiry
supports a finding that the process or
completion of the PRC-origin, semifinished garment hangers to finished
garment hangers in Vietnam is minor or
insignificant. Pursuant to section
781(b)(2)(A) of the Act, we find that the
level of investment in Vietnam by
Angang in the equipment used to
complete the PRC-origin, semi-finished
garment hangers is minor compared to
the level of investment, both capital and
equipment, in the PRC provided by the
parent company and its affiliate,
Company X. Pursuant to section
781(b)(2)(B) of the Act, we find that the
lack of evidence of R&D initiatives by
Angang in the production of garment
hangers shows that R&D is not a
significant factor in Angang’s
completion of PRC-origin, semi-finished
garment hangers. Pursuant to section
781(b)(2)(C) of the Act, we find that the
portion of the overall production
process of garment hangers conducted
by Angang in assembling or completing
68 See Petitioner’s May 5, 2010, request for an
circumvention inquiry at Exhibit 5.
69 See id.
70 See Angang Prelim Analysis Memo at
Attachment III, page 8, where information we
placed on the record indicates that wire rod is the
major cost factor of a finished garment hanger.
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the PRC-origin, semi-finished garment
hangers into finished garment hangers is
limited and minor compared to the
Chinese parent company’s and Chinese
affiliate Company X’s share of the
overall production process in the
production of the semi-finished garment
hangers and the other direct materials
they supply to Angang to finish the
semi-finished garment hangers in
Vietnam. Pursuant to section
781(b)(2)(D) of the Act, we find that the
extent of Angang’s production facilities
is minor with respect to completing
PRC-origin, semi-finished garment
hangers to finished garment hangers
because the energy, labor, and capital
equipment used by Angang in
converting the PRC-origin, semifinished garment hangers into finished
garment hangers is not substantial in
comparison to the materials, labor,
energy, and capital equipment used by
Company X to produce the semifinished garment hangers. Despite
Angang’s contention that its labor force
is composed of skilled labor, we note
that Angang hired primarily unskilled
workers,71 and Angang’s facilities were
leased, not permanent. Finally, pursuant
to section 781(b)(2)(E) of the Act, we
find that the value of the processing
performed by Angang to convert the
PRC-origin, semi-finished garment
hangers into finished garment hangers
represents a small proportion of the
value of the finished merchandise
imported into the United States.
Therefore, we preliminarily find that,
pursuant to sections 781(b)(2)(A)–(E) of
the Act, Angang’s processing operation
to convert PRC-origin, semi-finished
garment hangers into finished garment
hangers in Vietnam is minor or
insignificant. We have based our
decision as to whether the processing
operation to convert PRC-origin, semifinished garment hangers into finished
garment hangers is minor or
insignificant based on the totality of the
record evidence of this anticircumvention inquiry and have
compared the relative information
regarding the production processes for
Angang and Company X. Specifically,
the legislative history to section 781(b)
indicates that Congress intended the
Department to make determinations
regarding circumvention on a case-bycase basis in recognition that the facts
of individual cases and the nature of
specific industries vary widely.72
71 See Angang’s Questionnaire Response dated
November 19, 2010, at 29.
72 See S. Rep. No. 103–412 (1994), at 81–82.
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(C) Whether the Value of the
Merchandise Produced in the Foreign
Country to Which the Order Applies Is
a Significant Portion of the Total Value
of the Merchandise Exported to the
United States
Under section 781(b)(1)(D) of the Act,
the value of the merchandise produced
in the foreign country to which an
antidumping duty order applies must be
a significant portion of the total value of
the merchandise exported to the United
States in order to find circumvention.
The major parts and components that
consist of the total value of the finished
garment hangers exported to the United
States are: Semi-Finished garment
hangers, coating powder or paint, paper
attachments such as tubes, and
packaging materials. As discussed in the
section ‘‘Whether Merchandise Sold in
the United States Is Completed or
Assembled in Another Foreign Country
from Merchandise Which is Subject to
the Order or Produced In The Foreign
Country That is Subject to the Order,’’ in
all instances the semi-finished garment
hangers, the coating powder and paint,
and paper attachments such as tubes,
and glue are all supplied to Angang by
either the parent company or the
affiliate, Company X, both located in the
PRC. Additionally, with the production
of these direct materials occurring in the
PRC, the remaining production
processes to complete or assemble a
garment hanger are limited to the
application of these imported materials
to the PRC-origin, semi-finished hanger,
using only some machinery and manual
labor. As discussed above, we find that
the nature of the production process in
the PRC to manufacture the main inputs
and the fact that all the direct materials
are sourced from the PRC, in addition to
the limited production process in
Vietnam, shows that a great majority of
the value of the finished merchandise is
based on the PRC-production of the
semi-finished garment hangers and the
other direct materials which are applied
to those PRC-origin, semi-finished
hangers in Vietnam. Based on our
analysis and record evidence, we find
that the value of the PRC-origin, semifinished garment hangers taken as a
whole constitutes a significant portion
of the value of the finished product
ultimately exported to the United States.
affiliation exists between the
manufacturer or exporter of the
merchandise in the country subject to
the order and the person who uses the
merchandise to assemble or complete in
the third country the merchandise that
is exported to the United States; and (C)
whether imports into the third country
of the merchandise described in section
781(b)(1)(B) have increased since the
initiation of the original investigation.
Each of these factors is examined below.
Other Factors To Consider
In making a determination whether to
include merchandise assembled or
completed in a foreign country within
an order, section 781(b)(3) of the Act
instructs us to take into account such
factors as: (A) The pattern of trade,
including sourcing patterns; (B) whether
73 See, e.g., Angang’s Questionnaire Response
dated October 1, 2010, at Exhibit 1.
74 See Angang’s Questionnaire Response dated
November 19, 2010, at 27–28.
75 See Steel Wire Garment Hangers From the
People’s Republic of China: Amended Final
Determination of Sales at Less Than Fair Value, 73
FR 53188 (September 15, 2008).
76 See, e.g., Angang’s Questionnaire Response
dated October 8, 2010, at Exhibit 1a.
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(A) Pattern of Trade and Sourcing
The first factor to consider under
section 781(b)(3) is changes in the
pattern of trade, including changes in
the sourcing patterns. To evaluate the
pattern of trade in this case, we
examined the method in which Angang
obtained the semi-finished garment
hangers. According to Angang, it started
sourcing PRC-origin, semi-finished
garment hangers from its Chinese parent
company and affiliate Company X in
April 2009, to produce garment hangers
that Angang exported to the United
States.73 Additionally, Angang has
stated on the record that it did not
purchase PRC-origin, semi-finished
garment hangers from any other
supplier.74 Based on the facts on the
record, we find that the fact that Angang
sourced all of the semi-finished garment
hangers that it purchased from a PRC
supplier to produce finished garment
hangers that were exported to the
United States, supports a finding that
circumvention was occurring during
this period.
We also examined the timing and
quantities of Angang’s exports to the
United States of garment hangers that
were produced from PRC-origin, semifinished garment hangers since the
initiation of the LTFV investigation in
September 2007. We note that, based on
Angang’s reported export data, Angang
did not export any garment hangers to
the United States until the amended
final determination 75 of the LTFV
investigation which determined the
dumping rates assigned to the PRC
producers/exporters subject to the LTFV
investigation.76 Further, a review of
Angang’s quarterly exports shows that
from September 2008 to August 2010,
Angang’s exports of garment hangers
significantly increased with the
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additional purchases of PRC-origin,
semi-finished garment hangers
completed in Vietnam prior to
exportation to the United States.77
These data indicate that the quarterly
volume of Angang’s exports of garment
hangers produced from PRC-origin,
semi-finished garment hangers to the
United States was significant
subsequent to the initiation of the LTFV
investigation. Additionally, we
examined import data obtained from the
Global Trade Atlas (‘‘GTA’’) noting the
timing and quantities of exports of
garment hangers from the PRC to the
United States between 2008 and 2009,
and exports of garment hangers from
Vietnam to the United States between
2008 and 2009, using only HTSUS
7326.20.0020: Garment Wire Hangers Of
Iron Or Steel.78 A review of the data
shows that PRC exports of garment
hangers to the United States under this
HTSUS category, which is specific to
the subject merchandise, decreased by
89 percent between 2008 and 2010,
whereas imports to the United States
from Vietnam under the identical
HTSUS category increased by 777
percent between 2008 and 2010, while
there were zero imports from Vietnam
under this HTSUS category in 2007.79
Accordingly, we find that the data show
that PRC exports have decreased
significantly whereas Vietnamese
exports have increased exponentially
since the initiation of the LTFV
investigation. Therefore, based on the
facts on the record, we find that the
pattern of trade has changed since the
initiation of the LTFV investigation and
the imposition of the Order and thus,
supports a finding that circumvention
has occurred.
(B) Affiliation
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The second factor to consider under
section 781(b)(3) of the Act is whether
the manufacturer or exporter of the
semi-finished garment hangers in the
country subject to the order is affiliated
with the entity that assembles or
completes the merchandise exported to
the United States. Generally, we
consider circumvention to be more
likely to occur when the manufacturer
of the covered merchandise is related to
the third country assembler and is a
critical element in our evaluation of
77 See Angang’s Questionnaire Response dated
October 8, 2010 at Exhibit 1a; Angang’s
Questionnaire Response dated October 1, 2010 at
Exhibit 1.
78 See Angang Prelim Analysis Memo at
Attachment IV. We used a 2008 to 2010 comparison
because there was no import data from Vietnam for
this HTSUS category in 2007.
79 See id.
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circumvention.80 The record evidence
of this anti-circumvention inquiry
clearly shows that, Angang, a
Vietnamese entity, that converted the
PRC-origin, semi-finished garment
hangers into finished garment hangers,
is a wholly-owned subsidiary of a PRC
company,81 which in turn, is affiliated
with Company X.82 Accordingly,
because Angang is wholly owned by the
Chinese parent company, we find that
Angang, the Chinese parent company,
and Company X are affiliated, pursuant
to section 771(33) of the Act.
Additionally, the record evidence shows
that the Chinese parent company and
Company X were Angang’s sole
suppliers of PRC-origin, semi-finished
garment hangers, which were produced
by Company X in its production
facility.83 Further, Company X also
produced some of the paper
attachments, and both the Chinese
parent company and Company X
supplied all of the direct materials to
Angang, which were used to complete
the semi-finished garment hangers in
Vietnam.84 In sum, we find that the
record evidence demonstrates that the
relationship between Angang, its
Chinese parent company and Company
X supports a finding that circumvention
of the Order may have occurred. For a
detailed affiliation analysis, see Angang
Prelim Analysis Memo.
(C) Whether Imports Have Increased
The third factor to consider under
section 781(b)(3) is whether imports
into the third country of the
merchandise described in section
781(b)(1)(B) have increased since the
initiation of the LTFV investigation.
Generally, we consider circumvention
to be more likely when imports of semifinished garment hangers, the
merchandise imported from the PRC,
80 See, e.g., Certain Tissue Paper Products From
the People’s Republic of China: Affirmative
Preliminary Determination of Circumvention of the
Antidumping Duty Order and Extension of Final
Determination, 73 FR 21580, 21586 (April 22, 2008)
(‘‘Tissue Paper Anti-Circumvention 2008 Prelim’’)
unchanged in Tissue Paper Anti-Circumvention
2008 Final; Color Picture Tubes from Canada,
Japan, Republic of Korea & Singapore: Negative
Final Determinations of Circumvention of
Antidumping Duty Orders, 56 FR 9667 (March 7,
1991) and accompanying Issues and Decision
Memorandum at Comment 8.
81 The names of the Chinese parent company and
affiliated Company X in the PRC are business
proprietary information. For a detailed affiliation
analysis, see Angang Prelim Analysis Memo.
82 For a detailed affiliation analysis, see Angang
Prelim Analysis Memo.
83 See Angang’s Questionnaire Response dated
September 17, 2010, at 8.
84 See Angang’s Questionnaire Response dated
March 21, 2011, at 4.
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Sfmt 4703
have increased into Vietnam.85 Because
Angang began importing semi-finished
garment hangers from the PRC in April
2009, which is six months after the
issuance of the Order, under a basket
category in the PRC’s Harmonized Tariff
Schedule (‘‘HTSCN’’): HTSCN
8308.90.9000: ‘‘Claps, Buckles & Like,
Beads & Spangles of Base Metal,’’ we
reviewed Angang’s imports of PRCorigin, semi-finished garment hangers,
which shows a steady increase in PRC
exports to Vietnam since 2007.86 The
Department finds that Angang’s imports
of PRC-origin, semi-finished garment
hangers, under the HTSCN number
reported by Angang, were at their
highest levels in the months after the
issuance of the Order in 2008 through
2010.87 Although HTSCN 8308.90.9000
does not necessarily provide PRC export
data specific to semi-finished garment
hangers, we find that Angang’s
description of the imported PRC-origin,
semi-finished garment hangers
accompanied by sample invoices from
affiliated Company X to Angang were
sufficient for us to determine that there
were exports from the PRC to Vietnam
of merchandise that fits the description
of the scope of the Order.
In any case, upon review of PRC
exports of HTSCN 8308.90.9000
between 2007 and 2010, the Department
finds that PRC exports to Vietnam have
steadily increased since the initiation of
the LTFV investigation. Specifically, the
Department finds that the PRC total
exports of HTSCN 8308.90.9000 to
Vietnam increased by 28.77 percent
between 2007 and 2009, and a 15.31
percent increase between 2008 and
2010. This increase corresponds with
the initiation of the LTFV investigation
and issuance of the Order. Accordingly,
we find that both the increase in
Angang’s imports of PRC-origin, semifinished garment hangers and the
increase in PRC exports to Vietnam
since the initiation of the LTFV
investigation supports a finding that
circumvention may have occurred.
Summary of Analysis
As discussed above, in order to make
an affirmative determination of
85 See, e.g., Tissue Paper Anti-Circumvention
2008 Prelim unchanged in Tissue Paper AntiCircumvention 2008 Final.
86 See Angang Prelim Analysis Memo at
Attachment IV. We acknowledge that the HTS
number provided by Angang for its imports of PRCorigin, semi-finished hangers is a basket category;
nevertheless, the import quantities still show a
steady increase from 2007 through 2010. This is
also consistent with the import quantities of
HTSCN 7236.20.90: ‘‘Articles Of Iron/Steel Wire,
Nes, Not For Technical Use,’’ which is similar to the
‘‘clean’’ HTSUS that is part of the scope of the
Order.
87 See id.
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circumvention, all the elements under
sections 781(b)(1) of the Act must be
satisfied, taking into account the factors
under section 781(b)(2). In addition,
section 781(b)(3) of the Act instructs the
Department to consider, in determining
whether to include merchandise
assembled or completed in a foreign
country within the scope of an order,
such factors as: pattern of trade,
affiliation, and whether imports into the
foreign country of the merchandise
described in section 781(b)(1)(B) have
increased after the initiation of the
investigation.
With respect to Quyky, we
preliminarily find that Quyky has
circumvented the Order because it
failed to provide the Department with
any information at all, thus we are
unable to distinguish between its
imports or purchase of semi-finished
garment hangers from the PRC for
purposes other than assembly into
merchandise covered by the Order.
Consequently, because Quyky refused to
comply with the Department’s request
for information, we find that it failed to
cooperate to the best of its ability, and,
therefore, that an adverse inference is
warranted pursuant to section 776(b) of
the Act. Accordingly, as stated above, as
an adverse inference the Department
preliminarily finds that all of the
garment hangers produced and/or
exported by Quyky to the United States
are circumventing the Order. Therefore,
in light of our preliminary
determination, the Department will
instruct U.S. Customs and Border
Protection (‘‘CBP’’) to suspend
liquidation on all entries of garment
hangers produced and/or exported by
Quyky that were entered, or withdrawn
from warehouse, for consumption on or
after the date of initiation of the anticircumvention inquiry.
Further, with respect to Angang, we
preliminarily find that Angang has
circumvented the Order in accordance
with section 781(b)(1) and (2) of the Act.
Pursuant to section 781(b)(1) of the Act,
we find that the merchandise sold in the
United States is within the same class
or kind of merchandise that is subject to
the Order and was completed or
assembled in a third country.
Additionally, pursuant to section
781(b)(2), we find that the process or
assembly of the PRC-origin semifinished garment hangers into finished
garment hangers by Angang is minor
and insignificant. Furthermore, in
accordance with section 781(b)(1)(D) of
the Act, we find that the value of the
merchandise produced in the PRC is a
significant portion of the total value of
the merchandise exported to the United
States. While Angang did provide
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18:02 May 09, 2011
Jkt 223001
documentation showing quantity and
value for PRC-origin, semi-finished
garment hangers and the garment
hangers it self-produces in Vietnam,88
Angang has also reported that it ‘‘cannot
further differentiate the source of each
final product because the pre-formed
steel wire that Angang procures from
the PRC are stored in the same
warehouse as the hanger forms that
Angang itself fashions from purchased
steel wire rod.’’ 89 Therefore, because it
appears from the record that Angang’s
garment hangers are commingled prior
to exportation to the United States, we
preliminarily determine that Angang
has not demonstrated on the record that
there is a way for CBP to distinguish
between the garment hangers which we
preliminarily find to be circumventing
the Order and the garment hangers
which are self-produced by Angang.
Furthermore, the Department has an
obligation to administer the law in a
manner that prevents evasion of the
Order.90 Section 781(b)(1)(E) of the Act
directs the Department to take necessary
action to ‘‘prevent evasion’’ of
antidumping and countervailing duty
orders when it concludes that
‘‘merchandise has been completed or
assembled in other foreign countries’’
and is circumventing an order,
therefore, we find that action is
appropriate to prevent evasion of the
Order.
Thus, we find affirmative evidence of
circumvention in accordance with
section 781(b)(1) and (2) of the Act.
Moreover, we find the factors required
by section 781(b)(3) of the Act indicate
that there is circumvention of the Order.
Consequently, our statutory analysis
leads us to find that during the period
of time examined there was
circumvention of the Order as a result
of Angang’s assembly of the PRC-origin,
semi-finished garment hangers into
finished garment hangers in Vietnam for
export to the United States, as discussed
above. Therefore, in light of our
preliminary determination, the
Department will instruct CBP to
suspend liquidation on all entries of
garment hangers produced and/or
exported by Angang that were entered,
or withdrawn from warehouse, for
consumption on or after the date of
initiation of the anti-circumvention
inquiry.
88 See Angang’s Questionnaire Response dated
October 8, 2010, at Exhibit 1.
89 See Angang’s Questionnaire Response dated
November 19, 2011, at 12–13
90 See, e.g., Tung Mung Development v. United
States, 219 F. Supp. 2d 1333, 1343 (CIT 2002),
affirmed 354 F.3d 1371 (January 15, 2004) (finding
that the Department has a responsibility to prevent
the evasion of payment of antidumping duties).
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Fmt 4703
Sfmt 4703
27015
Should the Department conduct an
administrative review of the Order in
the future, both Quyky and Angang will
have the opportunity to provide
information related to their use of PRCorigin or self-produced garment hangers
so that the appropriate assessment rate
can be determined.
Suspension of Liquidation
As stated above, the Department has
made a preliminary affirmative finding
of circumvention of the Order by both
Quyky and Angang. In accordance with
section 733(d) of the Act, the
Department will direct CBP to suspend
liquidation and to require a cash deposit
of estimated duties, at the PRC-wide rate
of 187.25 percent, on all unliquidated
entries of garment hangers produced
and/or exported by Angang and Quyky
that were entered, or withdrawn from
warehouse, for consumption on or after
July 16, 2010, the date of initiation of
the anti-circumvention inquiry.
Notification to the International Trade
Commission
The Department, consistent with
section 781(e) of the Act, has notified
the ITC of this preliminary
determination to include the
merchandise subject to this anticircumvention inquiry within the
antidumping duty order on garment
hangers from the PRC. Pursuant to
section 781(e) of the Act, the ITC may
request consultations concerning the
Department’s proposed inclusion of the
subject merchandise. If, after
consultations, the ITC believes that a
significant injury issue is presented by
the proposed inclusion, it will have 15
days to provide written advice to the
Department.
Public Comment
Because the Department may seek
additional information, the Department
will establish the case and rebuttal brief
schedule at a later time, and will notify
parties of the schedule in accordance
with 19 CFR 351.309.
Interested parties, who wish to
request a hearing, or to participate if one
is requested, must submit a written
request to the Assistant Secretary for
Import Administration within 30 days
after the date of publication of this
notice, pursuant to 19 CFR 351.310.
Requests should contain the party’s
name, address, and telephone number,
the number of participants, and a list of
the issues to be discussed. At the
hearing, each party may make an
affirmative presentation only on issues
raised in that party’s case brief and may
make rebuttal presentations only on
arguments included in that party’s
E:\FR\FM\10MYN1.SGM
10MYN1
27016
Federal Register / Vol. 76, No. 90 / Tuesday, May 10, 2011 / Notices
rebuttal brief. If a hearing is requested,
we will notify those parties that
requested a hearing of a hearing date
and time.
Final Determination
The final determination with respect
to this anti-circumvention inquiry will
be issued no later than November 1,
2011, including the results of the
Department’s analysis of any written
comments. This preliminary affirmative
circumvention determination is
published in accordance with section
781(b) of the Act and 19 CFR 351.225.
Dated: May 3, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import
Administration.
[FR Doc. 2011–11394 Filed 5–9–11; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
National Institute of Standards and
Technology
[Docket No. 110425262–1258–02]
Evaluating Test Procedures for Voting
Systems
National Institute of Standards
and Technology, Commerce.
ACTION: Notice.
AGENCY:
NIST is soliciting interest in
supplying voting equipment used in an
election in 2008 or later and/or certified
(or submitted for certification) by the
Election Assistance Commission for use
by NIST in research to develop and
assess NIST’s test procedures for voting
equipment. Manufacturers interested in
participating in this research will be
asked to execute a Letter of
Understanding. Interested parties are
invited to contact NIST for information
regarding participation, Letters of
Understanding and shipping.
DATES: Manufacturers who wish to
participate in the program must submit
a request and an executed Letter of
Understanding by 5 p.m. Eastern
Standard Time on July 11, 2011.
ADDRESSES: Letters of Understanding
may be obtained from and should be
submitted to Benjamin Long, National
Institute of Standards and Technology,
Software and Systems Division,
Building 222, Room B306, 100 Bureau
Drive, Mail Stop 8970, Gaithersburg,
MD 20899–8970. Letters of
Understanding may be faxed to:
Benjamin Long at (301) 975–6097.
FOR FURTHER INFORMATION CONTACT: For
shipping and further information, you
jlentini on DSKJ8SOYB1PROD with NOTICES
SUMMARY:
VerDate Mar<15>2010
18:02 May 09, 2011
Jkt 223001
may telephone Benjamin Long at (301)
975–2816, or e-mail: blong@nist.gov.
SUPPLEMENTARY INFORMATION: In
accordance with the provisions of the
Help America Vote Act (Pub. L. 107–
252), the National Institute of Standards
and Technology (NIST) will be
conducting research on voting
equipment used in an election in 2008
or later and/or certified (or submitted
for certification) by the Election
Assistance Commission to develop and
assess NIST test protocols for voting
equipment. NIST research is designed
to: (1) Develop advanced test protocols,
(2) validate test protocols, and (3)
support additional research and test
protocol development for next
generation voluntary voting system
guidelines. NIST may also examine
relevant instructions, documentation,
and error messages, without doing any
direct studies thereon.
NIST is soliciting interest in
supplying voting equipment used in an
election in 2008 or later and/or certified
(or submitted for certification) by the
Election Assistance Commission for use
by NIST in research to develop and
assess NIST’s test procedures for voting
equipment. Interested manufacturers
should contact NIST at the address
given above. NIST will supply a Letter
of Understanding, which the
manufacturer must execute and send
back to NIST. The Letters of
Understanding will be entered into
pursuant to the authorities granted NIST
under 15 U.S.C. 3710a. NIST will then
provide the manufacturer with shipping
instructions for the manufacturer’s
equipment. NIST anticipates that it will
take approximately two years to conduct
all necessary experiments to the
equipment. No modification to the
equipment is permitted during the
testing process beyond that which is
necessary and sufficient for performing
test method validation activities.
Manufacturers should be aware that
some of the testing could damage or
destroy the equipment, although NIST
expects only normal wear and tear.
NIST may transport equipment to
locations off site from NIST’s main
campus as required for the purpose of
conducting usability tests. NIST will
ensure that all off site benchmark testing
locations have the same or higher level
of security and equipment protection
procedures as the on-site NIST labs
located in the Voting System Laboratory
in Gaithersburg, MD. At the conclusion
of the experiments, the equipment will
be returned to the manufacturer in its
post-testing condition. NIST, the
Election Assistance Commission, and/or
the Technical Guidelines Development
PO 00000
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Fmt 4703
Sfmt 4703
Committee, will not be responsible for
the condition of the equipment when
returned to the manufacturer. As a
condition for participating in this
program, each manufacturer must agree
in advance to hold harmless all of these
parties for the condition of the
equipment.
Information acquired during the tests
regarding potential problems will be
reported to the respective manufacturer.
Testing results for identifiable vendor
equipment will not be released subject
to the terms and conditions in the
Letters of Understanding. Comparative
information (e.g., testing results from
unidentified machine A, B, and C) may
be released in a blind manner.
Performance standards, benchmarks and
conformance test procedures will be
made publicly available.
Participating manufacturers should
include or provide a technical tutorial
on the setup and deployment of the
equipment. NIST will pay all shipping
costs except those not permitted by law
(such as shipping insurance, which, if
desired, must be purchased by the
manufacturer). Unless the manufacturer
desires to pay such shipping insurance
costs, there is no other cost to the
manufacturer for the testing.
Voting equipment used in an election
in 2008 or later and/or certified (or
submitted for certification) by the
Election Assistance Commission that
will be accepted for the experiments
may include direct record electronic
systems, optical scan systems,
accessible voting systems, tabulation
and reporting systems, ballot-ondemand, or electronic poll book systems
as well as software used for ballot
design and creation.
Dated: May 4, 2011.
Charles H. Romine,
Acting Associate Director for Laboratory
Programs.
[FR Doc. 2011–11443 Filed 5–9–11; 8:45 am]
BILLING CODE 3510–13–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
RIN 0648–XA420
Endangered and Threatened Species;
Take of Anadromous Fish
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Applications for two new
scientific research permits.
AGENCY:
E:\FR\FM\10MYN1.SGM
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]]>Agencies
[Federal Register Volume 76, Number 90 (Tuesday, May 10, 2011)]
[Notices]
[Pages 27007-27016]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-11394]
[[Page 27007]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-918]
Steel Wire Garment Hangers From the People's Republic of China:
Affirmative Preliminary Determination of Circumvention of the
Antidumping Duty Order and Extension of Final Determination
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
Preliminary Determination
We preliminarily determine that steel wire garment hangers
(``garment hangers'') exported by Angang Clothes Rack Manufacture Co.,
Ltd. (``Angang'') and Quyky Yanglei International Co., Ltd. (``Quyky'')
are circumventing the antidumping duty order on garment hangers from
the People's Republic of China (``PRC''), as provided in section 781(b)
of the Tariff Act of 1930, as amended (``the Act''). See Notice of
Antidumping Duty Order: Steel Wire Garment Hangers from the People's
Republic of China, 73 FR 58111 (October 6, 2008) (``Order'').
DATES: Effective Date: May 10, 2011.
FOR FURTHER INFORMATION CONTACT: Irene Gorelik or Jamie Blair-Walker,
Office 9, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-6905 or (202) 482-2615,
respectively.
SUPPLEMENTARY INFORMATION:
Background
On May 5, 2010, M&B Metal Products Co., (``Petitioner'') requested
that the Department of Commerce (``the Department'') initiate an anti-
circumvention inquiry pursuant to section 781(b) of the Act, and 19 CFR
351.225(h), to determine whether U.S. imports of garment hangers
shipped from Vietnam by Angang and Quyky, and made from PRC-origin,
semi-finished garment hangers \1\ are circumventing the Order. In its
request, Petitioner alleged that PRC manufacturers of subject
merchandise have been circumventing the Order by using two Vietnamese
companies to export their hangers.\2\ Specifically, Petitioner
indicated that it had evidence that: (1) Angang is exporting hangers
from Vietnam made from components manufactured and supplied by its
alleged Chinese owner, Shaoxing Gangyuan Metal Manufactured Co., Ltd.
(``Gangyuan'') \3\; (2) Quyky is exporting hangers from Vietnam made
from components manufactured and supplied by a Chinese company,
Shanghai Ruishan Metal Products Co., Ltd. (``Ruishan''); and (3) the
evidence obtained by Petitioner supported a finding that these parties
were circumventing the Order pursuant to section 781(b) of the Act.\4\
---------------------------------------------------------------------------
\1\ See Petitioner's Requests for Circumvention Inquiries dated
May 5, 2010. In this proceeding, semi-finished steel wire garment
hangers (``semi-finished hangers'') refer to both shirt hangers and
strut hangers that have not been ``finished'' with coating powder or
paint and paper capes or paper tubes.
\2\ See Petitioner's Requests for Circumvention Inquiries dated
May 5, 2010.
\3\ The names of Angang's actual parent company in the PRC and
another affiliated company, (hereinafter referred to as ``Company
X'') are business proprietary information. For further details, see
``Memorandum to the File through Catherine Bertrand, Program
Manager, Office 9 from Irene Gorelik, Senior Analyst, re;
Circumvention Inquiry on Steel Wire Garment Hangers from the
People's Republic of China: Proprietary Analysis of Certain
Statutory Factors for Angang Clothes Rack Manufacture Co., Ltd. for
the Preliminary Determination,'' (``Angang Prelim Analysis Memo''),
dated concurrently with this Federal Register notice.
\4\ See id.
---------------------------------------------------------------------------
On May 20, 2010, the Department issued a letter to Petitioner with
supplemental questions concerning both Angang and Quyky and Petitioner
responded to this request on May 25, 2010. After reviewing Petitioner's
submissions, on July 16, 2010, the Department initiated an anti-
circumvention inquiry on imports of garment hangers from Vietnam
exported by Angang and Quyky.\5\ In the Initiation Notice, the
Department stated that it would focus its analysis on the significance
of the production process in Vietnam by Angang and Quyky.\6\
---------------------------------------------------------------------------
\5\ See Steel Wire Garment Hangers From the People's Republic of
China: Initiation of Anti-Circumvention Inquiry, 75 FR 42685 (July
22, 2010) (``Initiation Notice'').
\6\ See id. at 42689.
---------------------------------------------------------------------------
The Department issued questionnaires to Quyky and Angang on July
23, 2010. The Department has, to date, not received any responses to
our requests for information from Quyky. The Department also issued
multiple supplemental questionnaires to Angang between August 2010 and
March 2011. On December 22, 2010, Angang requested that the Department
preliminarily rule that it was not circumventing the Order and
submitted arguments regarding its hanger production facilities and
exports as they relate to the statutory criteria for anti-circumvention
proceedings. Angang has stated on the record that its affiliates \7\ in
the PRC were the sole suppliers \8\ of the PRC-origin semi-finished
garment hangers \9\, to which Angang added either PRC-origin powder
coating or paint and paper attachments such as tubes and then exported
\10\ this merchandise to the United States.
---------------------------------------------------------------------------
\7\ Angang has stated on the record that it is affiliated with
Company X. See Angang's Questionnaire Response dated September 17,
2010 at 2-3 and Exhibit 3. The name of this affiliated company is
business proprietary information.
\8\ See Angang's Questionnaire Response dated November 19, 2010,
at 27-28.
\9\ For the purposes of these circumvention inquiries, we refer
to the PRC-origin uncoated, paper-less hanger-shaped steel wire as
``semi finished'' steel wire hangers.
\10\ See, e.g., Angang's Questionnaire Response dated October 8,
2010 at Exhibit 1; Angang's Questionnaire Response dated November
19, 2010, at 13.
---------------------------------------------------------------------------
Scope of the Antidumping Duty Order
The merchandise that is subject to the order is steel wire garment
hangers, fabricated from carbon steel wire, whether or not galvanized
or painted, whether or not coated with latex or epoxy or similar
gripping materials, and/or whether or not fashioned with paper covers
or capes (with or without printing) and/or nonslip features such as
saddles or tubes. These products may also be referred to by a
commercial designation, such as shirt, suit, strut, caped, or latex
(industrial) hangers. Specifically excluded from the scope of the order
are wooden, plastic, and other garment hangers that are not made of
steel wire. Also excluded from the scope of the order are chrome-plated
steel wire garment hangers with a diameter of 3.4 mm or greater. The
products subject to the order are currently classified under Harmonized
Tariff Schedule of the United States (``HTSUS'') subheadings
7326.20.0020, 7323.99.9060 and 7323.99.9080.
Although the HTSUS subheadings are provided for convenience and
customs purposes, the written description of the merchandise is
dispositive.
Scope of the Anti-Circumvention Inquiry
The products covered by this inquiry are hangers, as described in
the ``Scope of the Antidumping Duty Order'' section above, that are
exported from Vietnam, but manufactured from PRC-origin, semi-finished
garment hangers and completed in Vietnam with PRC-origin, paper
attachments and other direct materials such as latex or glue. While we
acknowledge that Angang has repeatedly stated on the record that it
also self-produces garment hangers from
[[Page 27008]]
steel wire rod \11\, the focus and intent of this proceeding is to
determine whether the semi-finished garment hangers: (1) Manufactured
in the PRC; (2) exported to Angang's facility in Vietnam for completion
(by adding PRC-origin paper attachments, such as tubes, PRC-origin
latex or glue) \12\; and (3) then exported by Angang to the United
States as Vietnamese-origin steel wire garment hangers constitutes
circumvention of the Order under section 781(b) of the Act.
---------------------------------------------------------------------------
\11\ See, e.g., Angang's Questionnaire Response dated January
19, 2011 at 5; Angang's Questionnaire Response dated February 1,
2011 at Exhibit 9; and Angang's Comments dated December 22, 2010 at
2-5.
\12\ Angang has reported that the direct materials applied to
the PRC-origin, semi-finished hangers are also manufactured in, and
supplied from, the PRC. See, e.g., Angang's Questionnaire Response
dated November 19, at Exhibit 5; Angang's Questionnaire Response
dated March 21, 2011 at 4.
---------------------------------------------------------------------------
Surrogate Country and Factor Valuation Comments
In this case, both the country that produced the semi-finished
garment hangers and the country that produced the steel wire hangers
from the semi-finished garment hangers are considered to be non-market
economy (``NME'') countries by the Department. In accordance with
section 771(18)(C)(i) of the Act, any determination that a foreign
country is an NME country shall remain in effect until revoked by the
administering authority.\13\ No party has challenged the designation of
the PRC or Vietnam as an NME country in this anti-circumvention
inquiry. Therefore, we continue to treat the PRC and Vietnam as NME
countries for purposes of the preliminary determination of this anti-
circumvention inquiry.
---------------------------------------------------------------------------
\13\ See, e.g., Preliminary Determination of Sales at Less Than
Fair Value and Postponement of Final Determination: Coated Free
Sheet Paper from the People's Republic of China, 72 FR 30758, 30760
(June 4, 2007), unchanged in Final Determination of Sales at Less
Than Fair Value: Coated Free Sheet Paper from the People's Republic
of China, 72 FR 60632 (October 25, 2007); Certain Frozen Fish
Fillets from the Socialist Republic of Vietnam: Final Results of the
Second Administrative, 72 FR 13242 (March 21, 2007) (``Fish Fillets
Anticircumvention'').
---------------------------------------------------------------------------
On January 7, 2011, the Department determined that India, the
Philippines, Indonesia, Thailand, Ukraine, and Peru are countries
comparable to the PRC and also determined that Bangladesh, Pakistan,
India, Sri Lanka, the Philippines, and Indonesia are countries
comparable to Vietnam in terms of economic development.\14\ On January
12, 2011, the Department solicited comments from interested parties
regarding the selection of a surrogate country and of surrogate factor
valuations. On February 11, 2011, Petitioner submitted comments on the
selection of a surrogate country. No other interested party commented
on the selection of a surrogate country. On February 18, 2011,
Petitioner submitted surrogate factor valuation comments. No other
interested party submitted surrogate factor valuation comments.
---------------------------------------------------------------------------
\14\ See ``Memorandum from Carole Showers, Director, Office of
Policy, to Catherine Bertrand, Program Manager, China/NME Group,
Office 9; Anti-Circumvention Inquiry of the Antidumping Duty Order
of Steel Wire Garment Hangers from the People's Republic of China
(``PRC''): Request for a List of Surrogate Countries,'' dated
January 7, 2011 (``Surrogate Country List'').
---------------------------------------------------------------------------
Extension of Determination Deadline
On February 28, 2011, the Department extended the final
determination deadline of this anti-circumvention inquiry to November
1, 2011.
Affirmative Preliminary Determination of Circumvention
For the reasons described below, we preliminarily determine that,
pursuant to section 781(b) of the Act, circumvention of the Order is
occurring by reason of exports of semi-finished garment hangers from
the PRC imported by, or sold to, Angang and Quyky, and which
subsequently undergo further assembly in Vietnam before exportation to
the United States.
Quyky
Facts Available
Section 776(a) of the Act requires the Department to rely on facts
otherwise available if necessary information is not available on the
record or an interested party or any other person: (A) Withholds
information requested by the Department; (B) fails to provide requested
information by the deadlines for submission of the information or in
the form and manner requested, subject to subsections (c)(1) and (e) of
section 782 of the Act; (C) significantly impedes a proceeding; or (D)
provides requested information, but the information cannot be verified
as provided in section 782(i) of the Act. One of the Vietnamese
companies subject to this anti-circumvention inquiry, Quyky, failed to
respond to any of the Department's requests for information. Therefore,
we preliminarily find that, pursuant to sections 776(a)(2)(A) and (B)
of the Act, it is appropriate to apply facts available to Quyky. In
addition, section 776(b) of the Act permits the Department to use an
inference that is adverse to the interests of an interested party if
that party fails to cooperate by not acting to the best of its ability
to comply with a request for information. Such an adverse inference may
include reliance on information derived from the petition, a final
determination in the less-than-fair-value investigation, any previous
administrative review, or any other information placed on the record.
At no point during this entire proceeding, did Quyky notify the
Department that it was unable to comply with our requests. Quyky's
refusal to respond to our questionnaire precludes the Department from
making an informed determination based on record evidence as to whether
it is (or is not) circumventing the Order. In addition, because Quyky
failed to provide the Department with any information at all, we are
also unable to distinguish between its imports or purchase of semi-
finished garment hangers from the PRC for purposes other than assembly
into merchandise covered by the Order. Consequently, because Quyky
refused to comply with the Department's request for information, we
find that it failed to cooperate to the best of its ability, and
therefore, that an adverse inference is warranted pursuant to section
776(b) of the Act. Accordingly, as an adverse inference, the Department
preliminarily finds that all of the hangers produced and/or exported by
Quyky to the United States are circumventing the Order.
Angang
Applicable Statute
Section 781 of the Act addresses circumvention of antidumping or
countervailing duty orders. With respect to merchandise assembled or
completed in a third country, section 781(b)(1) of the Act provides
that if: (A) The merchandise imported into the United States is of the
same class or kind as any merchandise produced in a foreign country
that is the subject of an antidumping duty order; (B) before
importation into the United States, such imported merchandise is
completed or assembled in a third country from merchandise which is
subject to such an order or is produced in the foreign country with
respect to which such order applies; (C) the process of assembly or
completion in a third country is minor or insignificant; (D) the value
of the merchandise produced in the foreign country to which the
antidumping duty order applies is a significant portion of the total
value of the merchandise exported to the United States; and (E) the
Department determines that action is appropriate to prevent evasion of
an order. The Department, after taking into account any advice provided
by the United States International Trade Commission (``ITC''), under
section 781(e) of the Act, may include such imported
[[Page 27009]]
merchandise within the scope of an order at any time an order is in
effect.
In determining whether the process of assembly or completion in a
third country is minor or insignificant under section 781(b)(1)(C) of
the Act, section 781(b)(2) of the Act directs the Department to
consider: (A) The level of investment in the third country; (B) the
level of research and development in the third country; (C) the nature
of the production process in the third country; (D) the extent of
production facilities in the third country; and (E) whether the value
of processing performed in the third country represents a small
proportion of the value of the merchandise imported into the United
States. However, none of these five factors, by itself, is controlling
on the Department's determination of whether the process of assembly or
completion in a third country is minor or insignificant.\15\
Accordingly, it is the Department's practice to evaluate each of these
factors as they exist in the third country depending on the particular
anti-circumvention inquiry.\16\ Further, section 781(b)(3) of the Act
sets forth the factors to consider in determining whether to include
merchandise assembled or completed in a third country in an antidumping
duty order. Specifically, the Department shall take into account such
factors as: (A) The pattern of trade, including sourcing patterns; (B)
whether the manufacturer or exporter of the merchandise is affiliated
with the person who, in the third country, uses the merchandise to
complete or assemble in the merchandise which is subsequently imported
into the United States; and (C) whether imports into the third country
of the merchandise have increased after the initiation of the
investigation which resulted in the issuance of an order.
---------------------------------------------------------------------------
\15\ See SAA at 893.
\16\ See Certain Tissue Paper Products from the People's
Republic of China: Affirmative Final Determination of Circumvention
of the Antidumping Duty Order, 73 FR 57591, 57592 (October 3, 2008)
(``Tissue Paper Anti-Circumvention 2008 Final'').
---------------------------------------------------------------------------
Statutory Analysis
(A) Whether Merchandise Imported Into the United States Is of the Same
Class or Kind as Other Merchandise That is Subject to the Order
The Order covers garment hangers produced from carbon steel wire,
whether or not galvanized or painted, whether or not coated with latex
or epoxy or similar gripping materials, and/or whether or not fashioned
with paper covers or capes (with or without printing) and/or nonslip
features such as saddles or tubes. These products may also be referred
to by a commercial designation, such as shirt, suit, strut, caped, or
latex (industrial) hangers. The merchandise subject to this inquiry is
garment hangers exported to the United States by Angang produced from
PRC-origin, semi-finished garment hangers.
The Department has reviewed the information provided by Angang in
its questionnaire responses and finds that this evidence indicates that
Angang's garment hangers, produced from PRC-origin, semi-finished
garment hangers and exported to the United States meet the written
description of the products subject to the Order.\17\ Specifically,
Angang submitted a product list showing that all the garment hanger
types it produced and exported to the United States, which fit the
description of the merchandise subject to the Order.\18\ Further, we
preliminarily find that the products identified and described in the
product list are no different than those identified in the scope of the
Order.\19\ Angang also indicated that 100 percent of its production is
steel wire garment hangers, that 100 percent of its production is for
export to the United States, and provided sample invoices and packing
lists which show the description of the exported merchandise, which we
find also matches the descriptions in the scope of the Order.\20\
Finally, we note that Angang itself admitted that, from September 2008
through August 2010, it sold steel wire hangers that meet the scope of
the Order.\21\ Accordingly, we find that the merchandise subject to
this inquiry is the same class or kind of merchandise as that subject
to the Order.
---------------------------------------------------------------------------
\17\ See Angang's Questionnaire Response dated September 7, 2010
at 6-11.
\18\ See id.
\19\ As the product descriptions in the product list are
business proprietary information, see Angang Prelim Analysis Memo
for further detail.
\20\ See Angang's Questionnaire Response dated October 12, 2010
at 3 and Exhibit 3.
\21\ See Angang's Questionnaire Response dated November 22, 2010
at 5.
---------------------------------------------------------------------------
(B) Whether, Before Importation Into the United States, Such Imported
Merchandise Is Completed or Assembled in A Third Country From
Merchandise Which Is Subject to the Order or Produced in the Foreign
Country That Is Subject to the Order
As noted above, the merchandise subject to this proceeding are
garment hangers exported to the United States that are finished or
processed in Vietnam from PRC-origin, semi-finished garment hangers. As
stated above, although Angang has repeatedly noted on the record that
it also self-produces garment hangers from steel wire rod,\22\ we find
the fact that Angang self-produces garment hangers from wire rod is
irrelevant here. As stated above, the merchandise subject to this
proceeding are Angang's exported garment hangers that were further
processed from semi-finished garment hangers obtained from the PRC.
Angang has also plainly stated on the record that between April 2009
and August 2010, it purchased semi-finished garment hangers from the
PRC as a main input and further processed these semi-finished garment
hangers by applying either PRC-origin paint or powder coating and paper
attachments, which were then packaged as Vietnamese-origin and exported
to the United States.\23\ Accordingly, we find that the merchandise
subject to this anti-circumvention inquiry was completed or assembled
in Vietnam from PRC-origin merchandise which is subject to the Order.
---------------------------------------------------------------------------
\22\ See e.g., Angang's Comments dated December 22, 2010, at 2-
5. The Department notes that the fact that Angang also produces
hangers from wire rod is irrelevant here because the products
subject to this proceeding are Angang's exported garment hangers
that were further processed from semi-finished hangers obtained from
the PRC.
\23\ See Angang's Questionnaire Response dated October 8, 2010,
at Exhibit 1; Angang's Questionnaire Response dated November 19,
2010, at 10; Angang's Questionnaire Response dated October 1, 2010,
at Exhibit 1.
---------------------------------------------------------------------------
Whether the Process of Assembly or Completion in the Third Country is
Minor or Insignificant
Under section 781(b)(1)(C) of the Act, section 781(b)(2) of the Act
provides the criteria for determining whether the process of assembly
or completion is minor or insignificant. These criteria are:
(A) The level of investment in the third country;
(B) The level of research and development in the third country;
(C) The nature of the production process in the third country;
(D) The extent of the production facilities in the third country;
and
(E) Whether the value of the processing performed in the third
country represents a small proportion of the value of the merchandise
imported into the United States.
The SAA at 893 explains that no single factor listed in section
781(b)(2) of the Act will be controlling. Accordingly, it is the
Department's practice to evaluate each of the factors as they exist in
the United States or foreign country depending on the
[[Page 27010]]
particular anti-circumvention inquiry.\24\ In this anti-circumvention
inquiry, based on the record, we have considered and evaluated each
statutory criterion and all factors in determining whether the process
of converting the PRC-origin, semi-finished garment hangers in Vietnam
were minor or insignificant, in accordance with section 781(b)(2) of
the Act, consistent with our analysis in prior anti-circumvention
inquiries.\25\
---------------------------------------------------------------------------
\24\ See Tissue Paper Anti-Circumvention 2008 Final.
\25\ See, e.g., Anti-Circumvention Inquiry of the Antidumping
and Countervailing Duty Orders on Certain Pasta From Italy:
Affirmative Preliminary Determinations of Circumvention of
Antidumping and Countervailing Duty Orders, 68 FR 46571 (August 6,
2003) (``Pasta Circumvention Prelim'') (unchanged in Anti-
Circumvention Inquiry of the Antidumping and Countervailing Duty
Orders on Certain Pasta From Italy: Affirmative Final Determinations
of Circumvention of Antidumping and Countervailing Duty Orders, 68
FR 54888 (September 19, 2003) (Pasta Circumvention Final''); and
Hot-Rolled Lead and Bismuth Carbon Steel Products From Germany and
the United Kingdom; Negative Final Determination of Circumvention of
Antidumping and Countervailing Duty Orders, 64 FR 40336, 40347-48
(July 26, 1999) (explaining that Congress has directed the
Department to focus more on the nature of the production process and
less on the difference in value between the subject merchandise and
the parts and the imported parts or components and that any attempt
to establish a numerical standard would be contrary to the intent of
Congress).
---------------------------------------------------------------------------
781(b)(2)(A): The Level of Investment in Vietnam
For purposes of this anti-circumvention inquiry, we analyzed the
level of investment in Angang by its Chinese parent company that is
associated with converting the PRC-origin, semi-finished garment
hangers into finished garment hangers for export to the United States.
Specifically, we reviewed the level of investment in Angang for the
conversion process by Angang's Chinese parent company and the parent
company's Chinese affiliate, Company X, and Angang's investment on its
own behalf. Angang reported that its operations in Vietnam for
converting PRC-origin, semi-finished garment hangers into garment
hangers are comprised of capital investment and equipment sourced in
two ways: (1) Equipment and machinery that Angang purchased from its
Chinese parent company; and (2) equipment that Angang purchased from
other PRC companies.\26\ Angang stated that its total investment from
the Chinese parent company included capital investment and equipment
investment.\27\ Angang also stated that it made its own equipment
investment in October 2008.\28\ However, we note that Angang also
clearly states that ``all of these investments were made by its
(Chinese) parent company.'' \29\ Additionally, Angang identified the
types of equipment and where that equipment was used in the production
of finished garment hangers, (i.e., Angang identified what type of
equipment, such as powder coating, painting, paper tube and paper cape
attaching, were used in the processing workshop where the PRC-origin,
semi-finished garment hangers were converted to finished garment
hangers).\30\
---------------------------------------------------------------------------
\26\ See, e.g., Angang's Questionnaire Response dated September
17, 2010, at 10-12, and Exhibits 10-12; Angang's Questionnaire
Response dated November 19, 2010, at 23-24.
\27\ See Angang's Questionnaire Response dated September 17,
2010, at 7.
\28\ See id.
\29\ See id.
\30\ See id., at 14-21.
---------------------------------------------------------------------------
With respect to the equipment investment, Angang stated that ``all
equipment was fully invested by'' its Chinese parent company and that
``all equipment is brand-new and made by'' its parent company.\31\
However, while Angang provided a listing of machinery \32\ obtained for
its facility, there were no equipment purchase invoices or receipts
provided to the Department, except for one oven and other non-hanger
specific machines purchased by Angang.\33\ Thus, we find that there is
no information on the record of this proceeding to support Angang's
claim that the hanger-making machinery supplied by its Chinese parent
company was ``brand new.'' The only information placed on the record
with respect to Angang obtaining machines specific to garment hanger
production is limited to a Vietnamese customs declaration, which: (1)
Does not indicate an invoice value; (2) if the machines were even
purchased; or (3) whether the machines are brand new or previously used
by a PRC company.\34\ Thus, without any other information on the record
to substantiate its claim that the machinery supplied by the parent
company, apart from one oven and a few non-hanger specific
machines,\35\ was brand new, we find that the totality of the record
does not support Angang's claim that the Chinese parent company's
investment in Angang's production equipment was new investment.\36\
---------------------------------------------------------------------------
\31\ See id., at 12.
\32\ See id., at Exhibit 10.
\33\ See Angang's Questionnaire Response dated November 19, 2010
at Exhibit 10.
\34\ See Angang's Questionnaire Response dated September 17,
2010, at Exhibit 11.
\35\ See Angang's Questionnaire Response dated November 19,
2010, at Exhibit 10, for the value-added tax (``VAT'') invoice of
the fuel oven first reported on page 11 of the September 17, 2010,
questionnaire response. Angang also provided several VAT invoices
for machines that were not previously noted in the September 17,
2010, response, as equipment investments. There is no indication on
the record that these machines are used solely for garment hanger
production. See Angang Prelim Analysis Memo.
\36\ See Angang Prelim Analysis Memo at Attachment I.
---------------------------------------------------------------------------
Moreover, Angang has stated that all the direct materials required
to complete the PRC-origin, semi-finished garment hangers were supplied
by the Chinese parent company or affiliated Company X.\37\ Accordingly,
based on the totality of the record evidence, we find that the level of
investment by Angang for equipment and direct materials used in
converting the semi-finished garment hangers to finished garment
hangers is minor or insignificant compared to the level of investment
provided by the Chinese parent company and its affiliated Chinese
Company X.
---------------------------------------------------------------------------
\37\ See Angang's Questionnaire Response dated November 19,
2010, at Exhibit 5.
---------------------------------------------------------------------------
781(b)(2)(B): The Level of Research and Development (``R&D'') in
Vietnam
We find that the record evidence for this anti-circumvention
inquiry demonstrates that Angang has not undertaken a significant level
of R&D in order to process finished garment hangers. In describing the
level of R&D in the garment hanger industry in Vietnam, Angang reported
that R&D efforts are focused on quality control, work efficiency, and
other efforts that were not substantiated by any supporting
documentation.\38\ However, according to Angang, its production of
garment hangers began within two months of the set-up of the operations
and management teams,\39\ which we find is not indicative of a young
industry that requires significant time for R&D prior to initial
production. Furthermore, Angang reported that its Chairman, General
Manager, and Production Manager are all previously employed by either
the Chinese parent company or its affiliated Chinese Company X.\40\
Accordingly, based on the facts on the record of this anti-
circumvention inquiry, we find that the level of R&D in Vietnam was low
because Angang employs senior individuals previously employed by its
Chinese parent or affiliated producer of garment hangers and because
there is no record evidence otherwise demonstrating that the level of
R&D in Vietnam was high.
---------------------------------------------------------------------------
\38\ See Angang's Questionnaire Response dated September 17,
2010, at 13.
\39\ See id., at 10.
\40\ See Angang's Questionnaire Response dated September 3,
2010, at 1-2; see also Angang's Questionnaire Response dated
September 17, 2010, at 2.
---------------------------------------------------------------------------
[[Page 27011]]
781(b)(2)(C): The Nature of the Production Process in Vietnam
As discussed above, the element of Angang's garment hanger
production process in Vietnam that we are reviewing is the conversion
of the PRC-origin, semi-finished garment hangers to finished garment
hangers. According to Angang, the entire process to produce such
garment hangers from steel wire rod occurs in twelve stages.\41\ Angang
has reported that the process to produce semi-finished garment hangers
comprises the first two steps of the twelve-step process and that these
two steps are performed in the PRC, while the processes performed in
Vietnam to produce ``finished'' garment hangers comprise the latter ten
steps reported.\42\ Angang also provides a very detailed description of
each stage of garment hanger production.\43\
---------------------------------------------------------------------------
\41\ See id., at 14. Although Angang reported all twelve stages
of production, the first two stages, described as steel wire drawing
and molding, were performed in the PRC by Company X.
\42\ See id.
\43\ See id., at 14-21.
---------------------------------------------------------------------------
First, the Department notes that Angang's description of the
Chinese production processes for the first two steps (wire drawing
stage and wire shaping forming stage) appear to be understated in its
response compared to information we are placing on the record.\44\
According to Angang, the equipment and labor involved in the wire
drawing, cutting, and shaping stages of the production process (which
occur in the PRC) are limited, simple, and fully automated.\45\
However, the information we are placing on the record in conjunction
with these preliminary results regarding certain garment hanger
production processes, indicates that drawing wire rod into wire,
cutting wire into pre-determined sizes, and shaping/forming the cut
wire into semi-finished garment hangers are more material-labor-energy
intensive than intimated by Angang in its responses.\46\
---------------------------------------------------------------------------
\44\ See Angang Prelim Analysis Memo at Attachment I.
\45\ See Angang's Questionnaire Response dated September 17,
2010, at 14-15 (where Angang stated that ``the process of wire
drawing is technically simple and fully automatic'' * * * and ``the
process of molding is technically simple and fully automatic.'')
\46\ See id. The information we compared shows that the
production of the same products in the PRC requires a fraction of
the steps identified by Angang.
---------------------------------------------------------------------------
Moreover, Angang's narrative describing these two stages shows an
apparent de-emphasis of the importance of these stages. Unlike the
other stages (performed in Vietnam), such as paint dipping and glue
application, which, according to Angang, are ``technically critical''
and require ``experienced'' workers,\47\ Angang provides scant
description of the requirements for the Chinese wire drawing, cutting,
and shaping stages. However, the Department notes that, based on
information we are placing on the record, gauge and length of the drawn
wire are directly and crucially associated with the product code (and
the Department's CONNUM), which are determined in the wire drawing,
cutting, and shaping/forming processes.\48\ Accordingly, we find that
the production processes in Vietnam conducted by Angang in converting
the PRC-origin, semi-finished garment hangers to finished garment
hangers are minor when compared to the Chinese production process of
the steel wire drawing, cutting, and shaping process, which result in
the semi-finished garment hanger, the main input to Angang's processing
of PRC-origin semi-finished garment hangers.
---------------------------------------------------------------------------
\47\ See id.
\48\ See Angang Prelim Analysis Memo at Attachment II.
---------------------------------------------------------------------------
781(b)(2)(D): The Extent of Production Facilities in Vietnam
In analyzing the extent of Angang's production facilities, we have
considered the capital equipment used in the production process, the
types of employees, and whether the facilities used by Angang in the
conversion process were permanent facilities. Angang states that when
it first rented the space in 2007 for a five-year lease term,\49\ the
facility had a workshop used to convert PRC-origin, semi-finished
garment hangers into finished garment hangers.\50\ A review of the
record of the equipment at Angang's rented facility shows that the
capital equipment used to convert PRC-origin, semi-finished garment
hangers to finished garment hangers only consisted of: (1) Fuel ovens
used to dry the powder coating applied to the semi-finished garment
hangers; (2) paint vats into which the semi-finished garment hangers
are manually dipped while suspended from a metal rod, then dried and
``baked''; (3) machines to coat paper tubes with glue, then dried; and
(4) machines to attach the paper tubes; (5) and manual paper cape
attachment to shirt garment hangers.\51\ Packing labor, packing
materials, and ``warehouse management'' were also alleged by Angang to
be ``crucial'' steps in the production process.\52\ However, the
Department finds that Angang has overstated the importance of these
steps vis-a-vis the steps relating to wire drawing, wire cutting, and
wire shaping/forming, which Angang significantly understated \53\ when
reviewing these same steps in the information we are placing on the
record.
---------------------------------------------------------------------------
\49\ See Angang's Questionnaire Response dated September 17,
2010, at 10.
\50\ See id., at 10-11.
\51\ See Angang's Questionnaire Response dated November 19,
2010, at 7-9.
\52\ See Angang's Questionnaire Response dated September 17,
2010, at 15-17.
\53\ See id., at 14-15.
---------------------------------------------------------------------------
Second, the Department is not persuaded by Angang's emphasis on the
production steps performed in Vietnam, as several of the steps
identified by Angang actually occur within a single step. For example,
while Angang identifies stage 3 of the process alone as ``Dipping
painting and blowing dry,'' \54\ Angang's detailed description of stage
3 shows ``Stage 3 of the process (including stage 5 and stage 7):
Dipping painting and blowing dry (including baking at high temperature
and low temperature) * * *.'' \55\ Angang reported several steps of the
production process in this overlapping manner, such that, we find the
actual stages of converting semi-finished garment hangers to finished
garment hangers to be actually less than the twelve individual stages
reported by Angang. Another example of Angang's emphasis of the Vietnam
production process is Angang's inclusion of Stage 9: ``paper wrapping
and packing,'' as a production stage, which, while may be relevant to
Angang's self-produced garment hangers, is not relevant to Angang's
completion of PRC-origin, semi-finished garment hangers.\56\ Moreover,
Angang included stages of production that are typically not comprised
of workers that fit in the ``direct labor'' category, such as Warehouse
Management, Packing, and Loading/Shipping.\57\ We find that Angang's
inclusion of these ``stages'' as actual production stages indicates
that Angang has attempted to overstate the nature of the Vietnamese
production process for completing PRC-origin, semi-finished garment
hangers, which is further contradicted by the information we are
placing on the record.\58\
---------------------------------------------------------------------------
\54\ See id., at 14.
\55\ See Angang's Questionnaire Response dated September 17,
2010, at 15.
\56\ See, e.g., Angang's Questionnaire Response dated March 21,
2011, at Exhibit 13.
\57\ See Angang's Questionnaire Response dated September 17,
2010, at 14, 17. See also the Department's supplemental
questionnaire dated December 22, 2010, where we individually defined
direct labor, indirect labor and packing labor.
\58\ See Angang Prelim Analysis Memo at Attachment I, II, and
III.
---------------------------------------------------------------------------
Based on the above descriptions and information we placed on the
record, we find that, in contrast to Angang's
[[Page 27012]]
description of the first two Chinese stages (wire drawing, wire
cutting, and wire molding) of the overall production process, the first
two Chinese stages require significant equipment and the largest direct
material input involved in the process, the remaining Vietnamese stages
of the overall production process (conversion of PRC-origin, semi-
finished garment hangers using materials that are also produced in the
PRC) are limited to painting and drying the semi-finished garment
hangers or coating and drying the semi-finished garment hangers, and
attaching tubes (affixed with glue and dried) to semi-finished garment
hangers.
Angang further stated that intensive training was provided to
unskilled workers \59\ in Vietnam before they engaged in processing the
semi-finished garment hangers into finished garment hangers.\60\ With
regard to the level of employees involved in the conversion of PRC-
origin, semi-finished garment hangers to finished garment hangers,
Angang reported that experienced, skilled, and responsible workers are
necessary for jobs such as ``Stage 11: warehouse management'' or,
``Stage 12: loading and shipping.'' \61\ However, Angang's narrative
describing the stages for drawing wire into wire rod, cutting the drawn
wire, and shaping the wire into hanger forms does not discuss the same
requirement for ``skilled,'' ``responsible,'' or ``experienced''
workers, despite, as we stated above, these stages being crucial to the
finished product with respect to wire gauge and length.\62\
---------------------------------------------------------------------------
\59\ See Angang's Questionnaire Response dated November 19,
2010, at 29, where Angang stated that the unskilled Vietnamese
workers it hired ``knew nothing about the production of wire
hangers, and they did not understand the function of the equipment
and their operation.'' Angang further stated that the intensive
training they provided to the unskilled workers took from 15 to 30
days depending on an individual's learning capabilities.
\60\ See Angang's Questionnaire Response dated September 17,
2010, at 12.
\61\ See id., at 15-17.
\62\ See id., at 14-15
---------------------------------------------------------------------------
Further, we find that Angang over-emphasizes the skill level of its
Vietnamese workers, who, according to Angang were trained to be
``experienced'' and ``skilled'' with the ability to perform crucial
production functions, considering that Angang trained these workers
within the reported two-month time period of operations/management set-
up (May 2008) and the start of production (July 2008).\63\ Thus, based
on Angang's submissions and the information we are placing on the
record, the Department finds that the cost and labor involved in the
stages for the production of the semi-finished garment hangers, as
performed in the PRC in this case, requires as much, if not more, skill
than attributed to these stages by Angang, especially when compared to
the production stages performed in Vietnam, such as dip-painting or
coating paper tubes with latex or glue.\64\
---------------------------------------------------------------------------
\63\ See id., at 10.
\64\ See id., at 15-17; see also Angang Prelim Analysis Memo at
Attachment II.
---------------------------------------------------------------------------
The totality of the information reported by Angang, when compared
with the information we are placing on the record, indicates that
Angang's stages of the production process for completing PRC-origin,
semi-finished garment hangers are overstated to emphasize the
Vietnamese production process versus that of Company X in the PRC, the
sole producer of Angang's imported, semi-finished garment hangers.
781(b)(2)(E): Whether the Value of the Processing Performed in Vietnam
Represents a Small Portion of the Value of the Merchandise Imported
Into the United States
In prior anti-circumvention inquiries, the Department has explained
that Congress directed the agency to focus more on the nature of the
production process and less on the difference in value between the
subject merchandise and the parts and components imported into the
processing country.\65\ Additionally, the Department has explained
that, following the Uruguay Round Agreements Act, Congress redirected
the agency's focus away from a rigid numerical calculation of value-
added toward a more qualitative focus on the nature of the production
process.\66\ In this anti-circumvention inquiry, we note that semi-
finished garment hangers as well as certain paper attachments and the
other direct material inputs added to the semi-finished garment hangers
in Vietnam were manufactured and supplied by Company X in the PRC.\67\
Petitioner's request for an anti-circumvention inquiry contains clear
evidence that the production process of garment hangers rests mainly
with the production of the main (and largest) direct material input:
steel wire.\68\ The data therein shows that consumption of steel wire
far outweighs the relative consumption of all other inputs.\69\ Thus,
because the production process of the semi-finished garment hangers,
which involves production of the main input, as well as the source of
all the other direct materials, are of PRC-origin, we preliminarily
find that the total value of processing performed in the PRC is
significant compared to the assembly or completion performed in
Vietnam. Therefore, because the entirety of production of the semi-
finished garment hangers and the other direct materials applied to
those semi-finished garment hangers are of PRC-origin and are supplied
by Company X using the main direct material input and significant
labor, energy, and equipment,\70\ we find that the processing performed
in Vietnam represents a small portion of the total manufacture of the
merchandise sold in the United States.
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\65\ See, e.g., Pasta Circumvention Prelim, 68 FR at 46575
(unchanged in Pasta Circumvention Final, 68 FR 54888); and Lead and
Bismuth from Germany and the UK, 64 FR at 40347. We note that,
although these cases involved assembly or processing in the United
States under section 781(a) of the Act, the language regarding the
value of processing or assembly is essentially the same under both
sections 781(a)(2)(E) and (b)(2)(E) of the Act. Accordingly, we find
that our prior rationale is equally applicable to value of assembly
or processing in a third-country under section 781(b)(2)(E) of the
Act.
\66\ See Pasta Circumvention Prelim, 68 FR at 46575; and Lead
and Bismuth from Germany and the UK, 64 FR at 40348.
\67\ See, e.g., Angang's Questionnaire Response dated November
19, at Exhibit 5; Angang's Questionnaire Response dated March 21,
2011 at 4.
\68\ See Petitioner's May 5, 2010, request for an circumvention
inquiry at Exhibit 5.
\69\ See id.
\70\ See Angang Prelim Analysis Memo at Attachment III, page 8,
where information we placed on the record indicates that wire rod is
the major cost factor of a finished garment hanger.
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Summary of Analysis of Whether the Process of Assembly or Completion in
Vietnam is Minor or Insignificant (Sections 781(b)(1)(C) and 781(b)(2)
of the Act)
In sum, pursuant to section 781(b)(1)(C) of the Act, we
preliminarily conclude that the record evidence of this anti-
circumvention inquiry supports a finding that the process or completion
of the PRC-origin, semi-finished garment hangers to finished garment
hangers in Vietnam is minor or insignificant. Pursuant to section
781(b)(2)(A) of the Act, we find that the level of investment in
Vietnam by Angang in the equipment used to complete the PRC-origin,
semi-finished garment hangers is minor compared to the level of
investment, both capital and equipment, in the PRC provided by the
parent company and its affiliate, Company X. Pursuant to section
781(b)(2)(B) of the Act, we find that the lack of evidence of R&D
initiatives by Angang in the production of garment hangers shows that
R&D is not a significant factor in Angang's completion of PRC-origin,
semi-finished garment hangers. Pursuant to section 781(b)(2)(C) of the
Act, we find that the portion of the overall production process of
garment hangers conducted by Angang in assembling or completing
[[Page 27013]]
the PRC-origin, semi-finished garment hangers into finished garment
hangers is limited and minor compared to the Chinese parent company's
and Chinese affiliate Company X's share of the overall production
process in the production of the semi-finished garment hangers and the
other direct materials they supply to Angang to finish the semi-
finished garment hangers in Vietnam. Pursuant to section 781(b)(2)(D)
of the Act, we find that the extent of Angang's production facilities
is minor with respect to completing PRC-origin, semi-finished garment
hangers to finished garment hangers because the energy, labor, and
capital equipment used by Angang in converting the PRC-origin, semi-
finished garment hangers into finished garment hangers is not
substantial in comparison to the materials, labor, energy, and capital
equipment used by Company X to produce the semi-finished garment
hangers. Despite Angang's contention that its labor force is composed
of skilled labor, we note that Angang hired primarily unskilled
workers,\71\ and Angang's facilities were leased, not permanent.
Finally, pursuant to section 781(b)(2)(E) of the Act, we find that the
value of the processing performed by Angang to convert the PRC-origin,
semi-finished garment hangers into finished garment hangers represents
a small proportion of the value of the finished merchandise imported
into the United States.
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\71\ See Angang's Questionnaire Response dated November 19,
2010, at 29.
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Therefore, we preliminarily find that, pursuant to sections
781(b)(2)(A)-(E) of the Act, Angang's processing operation to convert
PRC-origin, semi-finished garment hangers into finished garment hangers
in Vietnam is minor or insignificant. We have based our decision as to
whether the processing operation to convert PRC-origin, semi-finished
garment hangers into finished garment hangers is minor or insignificant
based on the totality of the record evidence of this anti-circumvention
inquiry and have compared the relative information regarding the
production processes for Angang and Company X. Specifically, the
legislative history to section 781(b) indicates that Congress intended
the Department to make determinations regarding circumvention on a
case-by-case basis in recognition that the facts of individual cases
and the nature of specific industries vary widely.\72\
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\72\ See S. Rep. No. 103-412 (1994), at 81-82.
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(C) Whether the Value of the Merchandise Produced in the Foreign
Country to Which the Order Applies Is a Significant Portion of the
Total Value of the Merchandise Exported to the United States
Under section 781(b)(1)(D) of the Act, the value of the merchandise
produced in the foreign country to which an antidumping duty order
applies must be a significant portion of the total value of the
merchandise exported to the United States in order to find
circumvention. The major parts and components that consist of the total
value of the finished garment hangers exported to the United States
are: Semi-Finished garment hangers, coating powder or paint, paper
attachments such as tubes, and packaging materials. As discussed in the
section ``Whether Merchandise Sold in the United States Is Completed or
Assembled in Another Foreign Country from Merchandise Which is Subject
to the Order or Produced In The Foreign Country That is Subject to the
Order,'' in all instances the semi-finished garment hangers, the
coating powder and paint, and paper attachments such as tubes, and glue
are all supplied to Angang by either the parent company or the
affiliate, Company X, both located in the PRC. Additionally, with the
production of these direct materials occurring in the PRC, the
remaining production processes to complete or assemble a garment hanger
are limited to the application of these imported materials to the PRC-
origin, semi-finished hanger, using only some machinery and manual
labor. As discussed above, we find that the nature of the production
process in the PRC to manufacture the main inputs and the fact that all
the direct materials are sourced from the PRC, in addition to the
limited production process in Vietnam, shows that a great majority of
the value of the finished merchandise is based on the PRC-production of
the semi-finished garment hangers and the other direct materials which
are applied to those PRC-origin, semi-finished hangers in Vietnam.
Based on our analysis and record evidence, we find that the value of
the PRC-origin, semi-finished garment hangers taken as a whole
constitutes a significant portion of the value of the finished product
ultimately exported to the United States.
Other Factors To Consider
In making a determination whether to include merchandise assembled
or completed in a foreign country within an order, section 781(b)(3) of
the Act instructs us to take into account such factors as: (A) The
pattern of trade, including sourcing patterns; (B) whether affiliation
exists between the manufacturer or exporter of the merchandise in the
country subject to the order and the person who uses the merchandise to
assemble or complete in the third country the merchandise that is
exported to the United States; and (C) whether imports into the third
country of the merchandise described in section 781(b)(1)(B) have
increased since the initiation of the original investigation. Each of
these factors is examined below.
(A) Pattern of Trade and Sourcing
The first factor to consider under section 781(b)(3) is changes in
the pattern of trade, including changes in the sourcing patterns. To
evaluate the pattern of trade in this case, we examined the method in
which Angang obtained the semi-finished garment hangers. According to
Angang, it started sourcing PRC-origin, semi-finished garment hangers
from its Chinese parent company and affiliate Company X in April 2009,
to produce garment hangers that Angang exported to the United
States.\73\ Additionally, Angang has stated on the record that it did
not purchase PRC-origin, semi-finished garment hangers from any other
supplier.\74\ Based on the facts on the record, we find that the fact
that Angang sourced all of the semi-finished garment hangers that it
purchased from a PRC supplier to produce finished garment hangers that
were exported to the United States, supports a finding that
circumvention was occurring during this period.
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\73\ See, e.g., Angang's Questionnaire Response dated October 1,
2010, at Exhibit 1.
\74\ See Angang's Questionnaire Response dated November 19,
2010, at 27-28.
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We also examined the timing and quantities of Angang's exports to
the United States of garment hangers that were produced from PRC-
origin, semi-finished garment hangers since the initiation of the LTFV
investigation in September 2007. We note that, based on Angang's
reported export data, Angang did not export any garment hangers to the
United States until the amended final determination \75\ of the LTFV
investigation which determined the dumping rates assigned to the PRC
producers/exporters subject to the LTFV investigation.\76\ Further, a
review of Angang's quarterly exports shows that from September 2008 to
August 2010, Angang's exports of garment hangers significantly
increased with the
[[Page 27014]]
additional purchases of PRC-origin, semi-finished garment hangers
completed in Vietnam prior to exportation to the United States.\77\
These data indicate that the quarterly volume of Angang's exports of
garment hangers produced from PRC-origin, semi-finished garment hangers
to the United States was significant subsequent to the initiation of
the LTFV investigation. Additionally, we examined import data obtained
from the Global Trade Atlas (``GTA'') noting the timing and quantities
of exports of garment hangers from the PRC to the United States between
2008 and 2009, and exports of garment hangers from Vietnam to the
United States between 2008 and 2009, using only HTSUS 7326.20.0020:
Garment Wire Hangers Of Iron Or Steel.\78\ A review of the data shows
that PRC exports of garment hangers to the United States under this
HTSUS category, which is specific to the subject merchandise, decreased
by 89 percent between 2008 and 2010, whereas imports to the United
States from Vietnam under the identical HTSUS category increased by 777
percent between 2008 and 2010, while there were zero imports from
Vietnam under this HTSUS category in 2007.\79\ Accordingly, we find
that the data show that PRC exports have decreased significantly
whereas Vietnamese exports have increased exponentially since the
initiation of the LTFV investigation. Therefore, based on the facts on
the record, we find that the pattern of trade has changed since the
initiation of the LTFV investigation and the imposition of the Order
and thus, supports a finding that circumvention has occurred.
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\75\ See Steel Wire Garment Hangers From the People's Republic
of China: Amended Final Determination of Sales at Less Than Fair
Value, 73 FR 53188 (September 15, 2008).
\76\ See, e.g., Angang's Questionnaire Response dated October 8,
2010, at Exhibit 1a.
\77\ See Angang's Questionnaire Response dated October 8, 2010
at Exhibit 1a; Angang's Questionnaire Response dated October 1, 2010
at Exhibit 1.
\78\ See Angang Prelim Analysis Memo at Attachment IV. We used a
2008 to 2010 comparison because there was no import data from
Vietnam for this HTSUS category in 2007.
\79\ See id.
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(B) Affiliation
The second factor to consider under section 781(b)(3) of the Act is
whether the manufacturer or exporter of the semi-finished garment
hangers in the country subject to the order is affiliated with the
entity that assembles or completes the merchandise exported to the
United States. Generally, we consider circumvention to be more likely
to occur when the manufacturer of the covered merchandise is related to
the third country assembler and is a critical element in our evaluation
of circumvention.\80\ The record evidence of this anti-circumvention
inquiry clearly shows that, Angang, a Vietnamese entity, that converted
the PRC-origin, semi-finished garment hangers into finished garment
hangers, is a wholly-owned subsidiary of a PRC company,\81\ which in
turn, is affiliated with Company X.\82\ Accordingly, because Angang is
wholly owned by the Chinese parent company, we find that Angang, the
Chinese parent company, and Company X are affiliated, pursuant to
section 771(33) of the Act. Additionally, the record evidence shows
that the Chinese parent company and Company X were Angang's sole
suppliers of PRC-origin, semi-finished garment hangers, which were
produced by Company X in its production facility.\83\ Further, Company
X also produced some of the paper attachments, and both the Chinese
parent company and Company X supplied all of the direct materials to
Angang, which were used to complete the semi-finished garment hangers
in Vietnam.\84\ In sum, we find that the record evidence demonstrates
that the relationship between Angang, its Chinese parent company and
Company X supports a finding that circumvention of the Order may have
occurred. For a detailed affiliation analysis, see Angang Prelim
Analysis Memo.
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\80\ See, e.g., Certain Tissue Paper Products From the People's
Republic of China: Affirmative Preliminary Determination of
Circumvention of the Antidumping Duty Order and Extension of Final
Determination, 73 FR 21580, 21586 (April 22, 2008) (``Tissue Paper
Anti-Circumvention 2008 Prelim'') unchanged in Tissue Paper Anti-
Circumvention 2008 Final; Color Picture Tubes from Canada, Japan,
Republic of Korea & Singapore: Negative Final Determinations of
Circumvention of Antidumping Duty Orders, 56 FR 9667 (March 7, 1991)
and accompanying Issues and Decision Memorandum at Comment 8.
\81\ The names of the Chinese parent company and affiliated
Company X in the PRC are business proprietary information. For a
detailed affiliation analysis, see Angang Prelim Analysis Memo.
\82\ For a detailed affiliation analysis, see Angang Prelim
Analysis Memo.
\83\ See Angang's Questionnaire Response dated September 17,
2010, at 8.
\84\ See Angang's Questionnaire Response dated March 21, 2011,
at 4.
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(C) Whether Imports Have Increased
The third factor to consider under section 781(b)(3) is whether
imports into the third country of the merchandise described in section
781(b)(1)(B) have increased since the initiation of the LTFV
investigation. Generally, we consider circumvention to be more likely
when imports of semi-finished garment hangers, the merchandise imported
from the PRC, have increased into Vietnam.\85\ Because Angang began
importing semi-finished garment hangers from the PRC in April 2009,
which is six months after the issuance of the Order, under a basket
category in the PRC's Harmonized Tariff Schedule (``HTSCN''): HTSCN
8308.90.9000: ``Claps, Buckles & Like, Beads & Spangles of Base
Metal,'' we reviewed Angang's imports of PRC-origin, semi-finished
garment hangers, which shows a steady increase in PRC exports to
Vietnam since 2007.\86\ The Department finds that Angang's imports of
PRC-origin, semi-finished garment hangers, under the HTSCN number
reported by Angang, were at their highest levels in the months after
the issuance of the Order in 2008 through 2010.\87\ Although HTSCN
8308.90.9000 does not necessarily provide PRC export data specific to
semi-finished garment hangers, we find that Angang's description of the
imported PRC-origin, semi-finished garment hangers accompanied by
sample invoices from affiliated Company X to Angang were sufficient for
us to determine that there were exports from the PRC to Vietnam of
merchandise that fits the description of the scope of the Order.
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\85\ See, e.g., Tissu
