Uncovered Innerspring Units From the People's Republic of China: Initiation of Anticircumvention Inquiry on Antidumping Duty Order, 78792-78795 [2014-30658]

Download as PDF mstockstill on DSK4VPTVN1PROD with NOTICES 78792 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices 64. Tax Refunds for Enterprises Located in the ZHTDZ 65. Provision of Electricity for LTAR to FIEs Located in the Nanhai District of Foshan City 66. Nanhai District Grants to HNTEs 67. Government Provision of Land-Use Rights to Enterprises Located in the Yongji Circular Economic Park for LTAR 68. Support for Disabled Persons 69. Awards of Nanning Municipality for Advancement of Science and Technology 70. Award of Nanning Municipality for Industrial Enterprises Completing Energy Saving Tasks 71. Membership Fee Refunds for Members of Rescue Sub-team of Guangxi Emergency and Rescue Association for Production Safety 72. Funds for Demonstration Bases of Introducing Foreign Intellectual Property 73. Funds of Nanning Municipality for Project Preliminary Works 74. Special Funds of Nanning Municipality for Key Planning Project of Professionals Cultivation 75. Funds of Guangxi Autonomous Region for Energy Saving and Emission Reduction 76. Awards of Nanning High-tech Zone for Annual top Tax Payers of Industrial Enterprises 77. Awarding Funds of Guangxi Autonomous Region for Renovation of Energy-Saving Technologies 78. National Special Funds for Emission of Main Pollutants (Assistance for Construction of Automatic Surveillance of Key Pollutant Sources) 79. Support for the Tax Refund Difference Program 80. Export Credit Subsidy Program: Export Seller’s Credits 81. Export Credit Subsidy Program: Export Buyer’s Credits 82. Government Purchase of Aluminum Extrusions for More Than Adequate Remuneration 83. 2009 Special Fund 84. Special Fund Subsidy for ExportOriented Economy 85. Bonus for 2009 Excellent Sewage Treatment Management Companies 86. Special Fund Subsidy for Industrial Development 87. Special Fund for 2010 Provincial-Level Foreign Economy and Foreign Trade Development 88. Special Fund for Environment Protection 89. Special Guiding Fund 90. Special Fund for Foreign Trade 91. Special Fund for Industrial Development 92. Special Guiding Fund for Key Industries 93. Social Insurance Subsidy 94. Migrant Workers Training Subsidy 95. Technical Reform Subsidy for Changzhou City 96. Income Tax Rewards for Key Enterprises 97. Returns for Land-Transferring Fee 98. State Key Technology Renovation Project Fund VerDate Sep<11>2014 22:02 Dec 30, 2014 Jkt 235001 99. Supporting Funds for Trade with the Minority Nationalities and Production of Goods Specially Needs by Minority Nationalities 100. Provision of Steam Coal for LTAR G. Ad Valorem Rate For Non-Selected Companies Under Review H. Ad Valorem Rate For Non-Cooperative Companies Under Review J. Conclusion I. Analysis Of Comments [A–570–928] General Subsidy Issues Uncovered Innerspring Units From the People’s Republic of China: Initiation of Anticircumvention Inquiry on Antidumping Duty Order Comment 1: Application of the CVD Law to the PRC Comment 2: Countervailing Subsidies Received Prior to January 1, 2005 Program-Specific Issues Comment 3: Whether There Is a Link Between Policy Lending and Respondents’ Bank Loans Comment 4: Whether PRC Commercial Banks Are Government Authorities Comment 5: Computation of Benchmark Loan Interest Rate Comment 6 Whether State Ownership Makes an Entity a Government Authority Comment 7: Whether Chinese Communist Party (CCP) Affiliations/Activities by Company Officials Makes the Company a Government Authority Comment 8: Whether the GOC Responded to the Best of Its Ability Regarding Ownership and CCP Affiliation for Primary Aluminum Producers and Provided Sufficient Evidence to Find that Some Producers Were Not Government Authorities Comment 9: Benchmark Price for Primary Aluminum Comment 10: Prices Must Be Properly Weight-averaged Comment 11: Whether the Provision of Primary Aluminum Is Specific Comment 12: Use of a Tier-One Price for the Provision of Primary Aluminum Comment 13: Whether Certain Programs Were Limited to an Enterprise or Industry Comment 14: Whether the Department’s Investigation of Uninitiated Programs is Unlawful Company-Specific Issues Comment 15: Attribution of Subsides Received by the Alnan Companies Comment 16: Allocation of Grant Program for Alnan Aluminum Comment 17: Benefits Received by Alnan Aluminum Prior to 2012 Comment 18: Whether Alnan Foil Is an Input Producer and Subsidies Received by Alnan Foil Should Be Attributed to Alnan Aluminum Comment 19: Whether Grants Received by Shanglin Industry Should be Attributed to Alnan Aluminum Comment 20: Errors in Alnan Aluminum’s Trade Financing Calculation Other Issues Comment 21: Whether to Collect Duties or to Lift Any Suspension and Liquidate Without Regard to Duties for Permasteelisa, Jangho, and Streamlight Comment 22: Correct Spelling of Company Name PO 00000 Frm 00014 Fmt 4703 Sfmt 4703 [FR Doc. 2014–30659 Filed 12–30–14; 8:45 am] BILLING CODE 3510–DS–P DEPARTMENT OF COMMERCE International Trade Administration Enforcement and Compliance, International Trade Administration, Department of Commerce. SUMMARY: In response to a request from Leggett & Platt Incorporated (‘‘Petitioner’’), the Department of Commerce (‘‘the Department’’) is initiating an anticircumvention inquiry pursuant to section 781(b) of the Tariff Act of 1930, as amended (‘‘the Act’’), to determine whether certain imports are circumventing the antidumping duty order on uncovered innerspring units (‘‘innerspring units’’) from the People’s Republic of China (‘‘PRC’’).1 DATES: Effective Date: December 31, 2014. FOR FURTHER INFORMATION CONTACT: Steven Hampton, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–0116. SUPPLEMENTARY INFORMATION: AGENCY: Background On December 31, 2007, Petitioner filed a petition seeking imposition of antidumping duties on imports of uncovered innerspring units from, among other countries, the PRC.2 Following completion of an investigation by the Department and the U.S. International Trade Commission (‘‘the Commission’’), the Department imposed an antidumping duty order on subject merchandise.3 In the fourth administrative review of the Order,4 Petitioner requested that the 1 See Uncovered Innerspring Units from the People’s Republic of China: Notice of Antidumping Duty Order, 74 FR 7661 (February 19, 2009) (‘‘Order’’). 2 The petition also included imports of uncovered innerspring units from South Africa and the Socialist Republic of Vietnam. See Uncovered Innerspring Units from the People’s Republic of China, South Africa, and the Socialist Republic of Vietnam: Initiation of Antidumping Duty Investigations, 73 FR 4817 (January 28, 2008). 3 Order, 74 FR at 7662. 4 The fourth administrative review covered the period of review (‘‘POR’’) February 1, 2012, through E:\FR\FM\31DEN1.SGM 31DEN1 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices Department review Goldon Bedding Manufacturing (M) Sdn. Bhd (‘‘Goldon’’).5 The Department initiated the review on March 29, 2013 6 and sent questionnaires to the named respondents, including Goldon. On August 19, 2013, in response to the Department’s supplemental questionnaire, Goldon acknowledged that it imports innerspring unit components from the PRC for use in the production of innerspring units in Malaysia.7 On September 19, 2014, the Department applied adverse facts available to all of Goldon’s PRC-origin subject merchandise upon determining that Goldon did not cooperate to the best of its ability in the review.8 On November 7, 2014, pursuant to section 781(b) of the Act and section 351.225(h) of the Department’s regulations, Petitioner submitted a request for the Department to initiate an anticircumvention inquiry of Goldon to determine whether Goldon’s innerspring units completed and assembled in Malaysia from PRC-origin components constitute circumvention of the Order.9 In its request, Petitioner contends that Goldon, by its own admission, imports innerspring unit components from the PRC to Malaysia, further assembles these components into uncovered innerspring units, and exports the assembled innerspring units to the United States in the form of subject merchandise.10 Petitioner argues that Goldon’s operations constitute minor further assembly in a third country, i.e., Malaysia. mstockstill on DSK4VPTVN1PROD with NOTICES Scope of the Order The merchandise subject to the order is uncovered innerspring units composed of a series of individual metal springs joined together in sizes corresponding to the sizes of adult January 31, 2013. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 78 FR 19197 (March 29, 2013) (‘‘Initiation Notice’’). 5 The Department notes that Petitioner requested an administrative review and anticircumvention inquiry of ‘‘Goldon Bedding Manufacturing Sdn Bhd.’’ However, during the 2012–2013 administrative review, Goldon provided its business license which indicated that the company’s official name is ‘‘Goldon Bedding Manufacturing (M) Sdn Bhd.’’ See Uncovered Innerspring Units from the People’s Republic of China: Final Results of Antidumping Duty Administrative Review; 2012–2013, 79 FR 56338, 56339 (September 19, 2014) and accompanying Issues and Decision Memorandum (‘‘Final Results’’), at 1. 6 See Initiation Notice, 78 FR at 19208. 7 See Uncovered Innerspring Units from China: Request for a Circumvention Inquiry, dated November 7, 2014, at 3 (‘‘Circumvention Request’’). 8 See Final Results, 79 FR at 56339. 9 See generally Circumvention Request. 10 Id., at 3. VerDate Sep<11>2014 22:02 Dec 30, 2014 Jkt 235001 mattresses (e.g., twin, twin long, full, full long, queen, California king, and king) and units used in smaller constructions, such as crib and youth mattresses. All uncovered innerspring units are included in the scope regardless of width and length. Included within this definition are innersprings typically ranging from 30.5 inches to 76 inches in width and 68 inches to 84 inches in length. Innersprings for crib mattresses typically range from 25 inches to 27 inches in width and 50 inches to 52 inches in length. Uncovered innerspring units are suitable for use as the innerspring component in the manufacture of innerspring mattresses, including mattresses that incorporate a foam encasement around the innerspring. Pocketed and non-pocketed innerspring units are included in this definition. Non-pocketed innersprings are typically joined together with helical wire and border rods. Non-pocketed innersprings are included in this definition regardless of whether they have border rods attached to the perimeter of the innerspring. Pocketed innersprings are individual coils covered by a ‘‘pocket’’ or ‘‘sock’’ of a nonwoven synthetic material or woven material and then glued together in a linear fashion. Uncovered innersprings are classified under subheading 9404.29.9010 and have also been classified under subheadings 9404.10.0000, 7326.20.0070, 7320.20.5010, or 7320.90.5010 of the Harmonized Tariff Schedule of the United States (‘‘HTSUS’’). The HTSUS subheadings are provided for convenience and customs purposes only; the written description of the scope of the order is dispositive. Initiation of Circumvention Proceeding Section 781(b)(1) of the Act provides that the Department may find circumvention of an antidumping duty order when merchandise of the same class or kind subject to the order is completed or assembled in a foreign country other than the country to which the order applies. In conducting circumvention inquiries, under section 781(b)(1) of the Act, the Department will also evaluate whether: (1) The process of assembly or completion in the other foreign country is minor or insignificant; (2) 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 (3) action is appropriate to prevent evasion of such an order or finding. As discussed below, Petitioner has PO 00000 Frm 00015 Fmt 4703 Sfmt 4703 78793 provided evidence with respect to these criteria. A. Merchandise of the Same Class or Kind Petitioner argues that the innerspring units that Goldon completes or assembles in Malaysia and subsequently ships to the United States are of the same class or kind as that subject to the Order. Petitioner contends that there is no question that the uncovered innerspring units that Goldon exports to the United States meet the physical characteristics that define the scope of the order.11 Goldon acknowledged this fact in the fourth administrative review when it stated: ‘‘{y}es, merchandise as stated in the database are the subject merchandise that {sic} comprised from locally source {sic} material and imported material from PRC.’’ 12 B. Completion of Merchandise in a Foreign Country Petitioner observes that the Order clearly indicates that innerspring units are assembled from three key components: Steel wire coils, helical wires, and in certain cases border rods.13 Petitioner argues that Goldon admitted that it imports the key inputs used in the production of innerspring units and provided invoices describing the components as ‘‘spring mattress coils,’’ ‘‘wire,’’ ‘‘steel frame,’’ and ‘‘steel strips.’’ 14 Furthermore, Petitioner contends that Goldon indicated that 70 percent of its materials used in the production of innerspring units are sourced from the PRC, the country with respect to which the Order applies, and that it ‘‘shipped the completed merchandise into the U.S.’’ 15 C. Minor or Insignificant Process Under section 781(b)(2) of the Act, the Department is required to consider five factors to determine whether the process of assembly or completion of 11 Id., at 7–8. at 8; and Exhibit 1, at 2. 13 See Circumvention Request at 8. The Commission also noted that innerspring coils and border rods are major components of an innerspring unit. See Uncovered Innerspring Units from South Africa and Vietnam, USITC Pub. 4051, Inv. Nos. 731–TA–1141–1142 at I–11 (December 2008) (hereinafter, ‘‘USITC Uncovered Innersprings Report’’). In its final determination regarding imports of uncovered innersprings from the PRC, the Commission adopted the findings and analyses in its determinations and views regarding subject imports from South Africa and Vietnam with respect to the domestic like product, the domestic industry, cumulation, and material injury. Uncovered Innerspring Units from China, USITC Pub. 4061, Inv. No. 731–TA–1140 at 3 and I–1 (February 2009). 14 See Circumvention Request, at 9; and Exhibit 2, at Attachment 2. 15 Id., at 9, 15 and Exhibit 2, at Attachment 2. 12 Id., E:\FR\FM\31DEN1.SGM 31DEN1 78794 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices merchandise in a foreign country is minor or insignificant. Petitioner believes that an examination of these factors indicates that Goldon’s process of assembly and completion of innerspring units in Malaysia is not significant. (1) Level of Investment Petitioner states that the process employed to assemble innerspring components into innerspring units is relatively simple and requires only limited investment and labor, and that the start-up investment costs and the barriers to entry into this type of assembly operation (i.e., manual or semi-automated) are low.16 Petitioner asserts that in the most basic, fullymanual operation, coils are assembled manually using a wooden or steel jig in which the coils (continuous or bonnell) 17 are hand-loaded, then handlaced with helical wire and finished by clipping the border rods to the unit.18 Petitioner posits that the cost of a new wooden (or steel) jig is approximately $200–$400.19 Petitioner argues that the level of investment would also be low if Goldon relies on a semi-automated assembly operation where a machine is used to assemble the rows of coils.20 (2) Level of Research and Development Petitioner is not aware that Goldon performs any research and development related to the assembly and/or production of innerspring units.21 Moreover, Petitioner states that it would not expect Goldon to incur any research and development expenses related to its innerspring assembly operations.22 (3) Nature of the Production Process According to Petitioner, the manufacturing process for assembling innerspring units from imported components is relatively simple and does not require significant start-up costs, sophisticated machinery and Circumvention Request, at 10. coils, the most commonly used type of coils in innerspring units, have an hour-glass shape which tapers inward from top to center and then outward from the center to bottom. Bonnell coils are generally the lowest priced units and the type of coil generally used in imported innerspring units. Continuous coils have entire rows of continuous coils formed from a single piece of wire. For a more detailed description of the types of innerspring coils, see USITC Uncovered Innersprings Report at I–8 to I–10. 18 See Circumvention Request, at 10. A somewhat more advanced assembly operation may involve manual assembly using a wooden or steel jig in which the coils are hand-set, and a lacing machine is used to feed the helical to join the rows, and then the borders are manually clipped to the unit. Id. 19 Id. 20 Id. 21 Id., at 11. 22 Id. inputs, or substantial labor.23 This process, as described by Goldon, is very similar to the process found to be insignificant by the Department in the prior circumvention inquiry on this Order. 24 (4) Extent of Production in the Malaysia Petitioner states that Goldon only has one facility for the production of innerspring units.25 Goldon indicated that six to seven workers are involved in the assembly of innerspring units, with another one or two workers devoted to packing.26 Petitioner contends that this indicates that the portion of Goldon’s production facility attributable to assembly operations is small.27 (5) Value of Processing in Malaysia as Compared to Uncovered Innerspring Units Imported Into the United States Petitioner asserts that the value of assembly processing performed in Malaysia represents a small portion of the total value of the innerspring units imported into the United States.28 Petitioner believes Goldon’s assembly operations likely rely on relatively unskilled, low wage employees.29 Thus, these assembly operations involve minimal additional labor costs.30 Petitioner asserts that, by any standard, the assembly operations represent an insignificant portion of the total value.31 D. Value of Merchandise Produced in PRC Petitioner argues that the value of the components that Goldon imports from the PRC for further assembly in Malaysia into subject merchandise is a significant portion of the total value of the innerspring units exported to the United States.32 As Petitioner noted previously, innerspring coils, helical wires, and border rods are the key components of an innerspring unit. Petitioner explains that they also constitute a significant portion of the 16 See mstockstill on DSK4VPTVN1PROD with NOTICES 17 Bonnell VerDate Sep<11>2014 22:02 Dec 30, 2014 Jkt 235001 overall costs of an innerspring unit.33 Petitioner does not have access to other PRC innerspring unit producer/exporter costs. Therefore, it conducted an analysis related to the production costs of various innerspring unit models at its own facility in Guangzhou, PRC. Petitioner believes that its operation (and costs) in the PRC are representative of the operations (and costs) of other PRC innerspring unit producers/ exporters, as it is the largest producer of innersprings in the PRC.34 According to Petitioner’s analysis of its own production costs in the PRC, the total value of these innerspring components compose a significant portion of the total value of an innerspring unit.35 E. Additional Factors for Consideration Section 781(b)(3) of the Act directs the Department to consider additional factors in determining whether to include merchandise assembled or completed in a foreign country within the scope of the Order. Petitioner believes that an examination of these factors supports finding that Goldon’s Malaysian exports of innerspring units should be within the scope of the Order.36 (1) Pattern of Trade Goldon has stated that while it was originally set up to supply the domestic market, in 2011 it changed its business strategy to serve the United States.37 As described by Goldon, this strategy consists of assembling innersprings from 70 percent PRC-origin components and 30 percent Malaysian components, and exporting the assembled innerspring units to the United States.38 Based on official U.S. import data, Petitioner contends that imports of uncovered innerspring units from Malaysia have increased dramatically since the Order was imposed.39 Petitioner provided a chart that illustrated the U.S. annual imports from 33 Id. 23 Id. 34 Id. 24 See 35 Id., Circumvention Request, at 11; see also Uncovered Innerspring Units from the People’s Republic of China: Affirmative Final Determination of Circumvention of the Antidumping Duty Order, 79 FR 3345 (January 21, 2014) (‘‘Reztec Final Determination’’). 25 See Circumvention Inquiry, at 12. 26 Id. 27 Id. 28 Id., at 13. 29 Id. 30 Id. There are virtually no additional energy costs given that the machines, if utilized, are quite basic. The only additional material inputs (besides the coils, which represent the single largest cost of an innerspring unit) are steel wire for lacing and border clips. Id. 31 Id. 32 Id., at 14. PO 00000 Frm 00016 Fmt 4703 Sfmt 4703 at 14–15. did not analyze or submit evidence concerning affiliation under section 781(b)(3)(B) of the Act. 37 Id., at 15. 38 Id. 39 See Circumvention Inquiry, at 15–16. Petitioner states that until 2011, U.S. imports of uncovered innerspring units were properly classified and entered the United States under harmonized tariff schedule (‘‘HTS’’) 9404.29.9010 (‘‘uncovered innerspring units’’). In 2011, the HTS classification for uncovered innerspring units was refined and further broken out to provide a separate ten-digit classification for innerspring units used in cribs and toddler beds. Thus, HTS 9409.29.9010 was eliminated and replaced with 9404.29.9005 (Uncovered innerspring units: For use in a crib or toddler bed) and 9404.29.9011 (Uncovered innerspring units: Other). 36 Petitioner E:\FR\FM\31DEN1.SGM 31DEN1 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices Malaysia under the relevant HTSUS subheadings.40 Petitioner states that prior to 2009, there were virtually no imports of uncovered innerspring units from Malaysia to the United States.41 However, according to the chart, subject imports from Malaysia to the United States have steadily increased: 185,917 pieces were imported in 2009; 312,317 pieces were imported in 2010; 344,388 pieces were imported in 2011; 132,017 pieces were imported in 2012; and 52,051 pieces were imported in 2013.42 Petitioner claims that the lower overall entry quantities over the last two years are due to the previous anticircumvention inquiry filed by Petitioner in 2012.43 Petitioner notes that quantities of imports after 2012, while not as high as the immediately preceding years, are still significant compared to before the Order was in place.44 Furthermore, Petitioner contends that Malaysia’s official import statistics indicated that imports from the PRC of one of the key components in innerspring units (i.e., coils) have increased substantially since the Order was imposed.45 Petitioner provided a chart of import data related to Malaysia’s imports of coils from the PRC over the last several years, as well as the current year under HTS 7320.99.000 (other springs and leaves for springs, of iron/steel, kilograms (‘‘kgs’’)). This chart shows an increase of imported coils from 2,995,519 kgs in 2007 to 11,972,478 kgs in 2011, and a gradual decrease to 5,218,789 kgs for the current year.46 Again, Petitioner notes that imports have somewhat declined starting in 2012, which may be due to the Department’s determination in the previous anticircumvention inquiry filed by Petitioner.47 Nevertheless, Petitioner contends that imports of coils from the PRC remain higher than before the Order was in place.48 (2) Increase of Subject Imports From the PRC to Malaysia After the Investigation Initiation Petitioner did not provide any evidence regarding an increase in subject imports (i.e., completed 40 Id., at 17. at 16. 42 Id., at 17. 43 Id. 44 Id. 45 Id. 46 Id. Petitioner also provided a description of Malaysia’s relevant HTS numbers. Id., at Exhibit 7. 47 Id.; see also Reztec Final Determination, 79 FR 3345 and accompanying Issues and Decision Memorandum. Petitioner did not submit any Malaysian import statistics regarding imports of helical wires and border rods from the PRC. 48 Id. mstockstill on DSK4VPTVN1PROD with NOTICES 41 Id., VerDate Sep<11>2014 22:02 Dec 30, 2014 Jkt 235001 78795 uncovered innerspring units) from the PRC to Malaysia after the initiation of the investigation. However, as noted above, Petitioner provided information that imports of one of the key components of innerspring units from PRC to Malaysia increased significantly during this time. Dated: December 22, 2014. Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations. F. Whether Action Is Appropriate To Prevent Evasion of the Order DEPARTMENT OF COMMERCE Based on the information provided by Petitioner, and for the reasons provided in the analysis below, the Department determines that initiating an anticircumvention inquiry is appropriate to identify any potential evasion of the Order. [A–570–827] Analysis of the Request PO 00000 at 7–17. Frm 00017 Fmt 4703 Sfmt 4703 BILLING CODE 3510–DS–P International Trade Administration Certain Cased Pencils From the People’s Republic of China: Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission; 2012–2013 Enforcement and Compliance, International Trade Administration, Department of Commerce. SUMMARY: The Department of Commerce (Department) is conducting an administrative review of the antidumping duty order on certain cased pencils (pencils) from the People’s Republic of China (PRC).1 The period of review (POR) is December 1, 2012, through November 30, 2013. This review covers two exporters of subject merchandise, Shandong Rongxin Import & Export Co., Ltd. (Rongxin) and Shanghai Foreign Trade Co., Ltd. (SFTC). We preliminarily determine that Rongxin is not eligible for a separate rate, and, thus, remains part of the PRCwide entity. In addition, we are rescinding the review with respect to SFTC. If these preliminary results are adopted in our final results of review, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on all appropriate entries of subject merchandise during the POR. Interested parties are invited to comment on these preliminary results. DATES: Effective Date: December 31, 2014. AGENCY: Based on our analysis of Petitioner’s circumvention inquiry request, the Department determines that Petitioner has satisfied the criteria under section 781(b)(1) of the Act to warrant an initiation of a formal circumvention inquiry.49 In accordance with section 351.225(e) of the Department’s regulations, the Department finds that the issue of whether a product is included within the scope of an order cannot be determined based solely upon the application and the descriptions of the merchandise. Accordingly, the Department will notify by mail all parties on the Department’s scope service list of the initiation of a circumvention inquiry. In accordance with section 351.225(l)(2) of the Department’s regulations, if the Department issues a preliminary affirmative determination, we will then instruct U.S. Customs and Border Protection to suspend liquidation and require a cash deposit of estimated duties on the merchandise. This circumvention inquiry covers Goldon. If, within sufficient time, the Department receives a formal request from an interested party regarding potential circumvention of the Order by other Malaysian companies, we will consider conducting additional inquiries concurrently. The Department will establish a schedule for questionnaires and comments on the issues. In accordance with section 351.225(f)(5) of the Department’s regulations, the Department intends to issue its final determination within 300 days of the date of publication of this initiation, in accordance with section 781(f) of the Act. This notice is published in accordance with section 351.225(f) of the Department’s regulations. 49 Id., [FR Doc. 2014–30658 Filed 12–30–14; 8:45 am] FOR FURTHER INFORMATION CONTACT: Mary Kolberg, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–1785. SUPPLEMENTARY INFORMATION: Scope of the Order The merchandise subject to the order includes certain cased pencils from the PRC. The subject merchandise is 1 See Antidumping Duty Order: Certain Cased Pencils From the People’s Republic of China, 59 FR 66909 (December 28, 1994). E:\FR\FM\31DEN1.SGM 31DEN1

Agencies

[Federal Register Volume 79, Number 250 (Wednesday, December 31, 2014)]
[Notices]
[Pages 78792-78795]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30658]


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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-928]


Uncovered Innerspring Units From the People's Republic of China: 
Initiation of Anticircumvention Inquiry on Antidumping Duty Order

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.

SUMMARY: In response to a request from Leggett & Platt Incorporated 
(``Petitioner''), the Department of Commerce (``the Department'') is 
initiating an anticircumvention inquiry pursuant to section 781(b) of 
the Tariff Act of 1930, as amended (``the Act''), to determine whether 
certain imports are circumventing the antidumping duty order on 
uncovered innerspring units (``innerspring units'') from the People's 
Republic of China (``PRC'').\1\
---------------------------------------------------------------------------

    \1\ See Uncovered Innerspring Units from the People's Republic 
of China: Notice of Antidumping Duty Order, 74 FR 7661 (February 19, 
2009) (``Order'').

---------------------------------------------------------------------------
DATES: Effective Date: December 31, 2014.

FOR FURTHER INFORMATION CONTACT: Steven Hampton, AD/CVD Operations, 
Office V, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
0116.

SUPPLEMENTARY INFORMATION:

Background

    On December 31, 2007, Petitioner filed a petition seeking 
imposition of antidumping duties on imports of uncovered innerspring 
units from, among other countries, the PRC.\2\ Following completion of 
an investigation by the Department and the U.S. International Trade 
Commission (``the Commission''), the Department imposed an antidumping 
duty order on subject merchandise.\3\
---------------------------------------------------------------------------

    \2\ The petition also included imports of uncovered innerspring 
units from South Africa and the Socialist Republic of Vietnam. See 
Uncovered Innerspring Units from the People's Republic of China, 
South Africa, and the Socialist Republic of Vietnam: Initiation of 
Antidumping Duty Investigations, 73 FR 4817 (January 28, 2008).
    \3\ Order, 74 FR at 7662.
---------------------------------------------------------------------------

    In the fourth administrative review of the Order,\4\ Petitioner 
requested that the

[[Page 78793]]

Department review Goldon Bedding Manufacturing (M) Sdn. Bhd 
(``Goldon'').\5\ The Department initiated the review on March 29, 2013 
\6\ and sent questionnaires to the named respondents, including Goldon. 
On August 19, 2013, in response to the Department's supplemental 
questionnaire, Goldon acknowledged that it imports innerspring unit 
components from the PRC for use in the production of innerspring units 
in Malaysia.\7\ On September 19, 2014, the Department applied adverse 
facts available to all of Goldon's PRC-origin subject merchandise upon 
determining that Goldon did not cooperate to the best of its ability in 
the review.\8\
---------------------------------------------------------------------------

    \4\ The fourth administrative review covered the period of 
review (``POR'') February 1, 2012, through January 31, 2013. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Request for Revocation in Part, 78 FR 19197 (March 29, 
2013) (``Initiation Notice'').
    \5\ The Department notes that Petitioner requested an 
administrative review and anticircumvention inquiry of ``Goldon 
Bedding Manufacturing Sdn Bhd.'' However, during the 2012-2013 
administrative review, Goldon provided its business license which 
indicated that the company's official name is ``Goldon Bedding 
Manufacturing (M) Sdn Bhd.'' See Uncovered Innerspring Units from 
the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review; 2012-2013, 79 FR 56338, 56339 (September 19, 
2014) and accompanying Issues and Decision Memorandum (``Final 
Results''), at 1.
    \6\ See Initiation Notice, 78 FR at 19208.
    \7\ See Uncovered Innerspring Units from China: Request for a 
Circumvention Inquiry, dated November 7, 2014, at 3 (``Circumvention 
Request'').
    \8\ See Final Results, 79 FR at 56339.
---------------------------------------------------------------------------

    On November 7, 2014, pursuant to section 781(b) of the Act and 
section 351.225(h) of the Department's regulations, Petitioner 
submitted a request for the Department to initiate an anticircumvention 
inquiry of Goldon to determine whether Goldon's innerspring units 
completed and assembled in Malaysia from PRC-origin components 
constitute circumvention of the Order.\9\ In its request, Petitioner 
contends that Goldon, by its own admission, imports innerspring unit 
components from the PRC to Malaysia, further assembles these components 
into uncovered innerspring units, and exports the assembled innerspring 
units to the United States in the form of subject merchandise.\10\ 
Petitioner argues that Goldon's operations constitute minor further 
assembly in a third country, i.e., Malaysia.
---------------------------------------------------------------------------

    \9\ See generally Circumvention Request.
    \10\ Id., at 3.
---------------------------------------------------------------------------

Scope of the Order

    The merchandise subject to the order is uncovered innerspring units 
composed of a series of individual metal springs joined together in 
sizes corresponding to the sizes of adult mattresses (e.g., twin, twin 
long, full, full long, queen, California king, and king) and units used 
in smaller constructions, such as crib and youth mattresses. All 
uncovered innerspring units are included in the scope regardless of 
width and length. Included within this definition are innersprings 
typically ranging from 30.5 inches to 76 inches in width and 68 inches 
to 84 inches in length. Innersprings for crib mattresses typically 
range from 25 inches to 27 inches in width and 50 inches to 52 inches 
in length.
    Uncovered innerspring units are suitable for use as the innerspring 
component in the manufacture of innerspring mattresses, including 
mattresses that incorporate a foam encasement around the innerspring. 
Pocketed and non-pocketed innerspring units are included in this 
definition. Non-pocketed innersprings are typically joined together 
with helical wire and border rods. Non-pocketed innersprings are 
included in this definition regardless of whether they have border rods 
attached to the perimeter of the innerspring. Pocketed innersprings are 
individual coils covered by a ``pocket'' or ``sock'' of a nonwoven 
synthetic material or woven material and then glued together in a 
linear fashion.
    Uncovered innersprings are classified under subheading 9404.29.9010 
and have also been classified under subheadings 9404.10.0000, 
7326.20.0070, 7320.20.5010, or 7320.90.5010 of the Harmonized Tariff 
Schedule of the United States (``HTSUS''). The HTSUS subheadings are 
provided for convenience and customs purposes only; the written 
description of the scope of the order is dispositive.

Initiation of Circumvention Proceeding

    Section 781(b)(1) of the Act provides that the Department may find 
circumvention of an antidumping duty order when merchandise of the same 
class or kind subject to the order is completed or assembled in a 
foreign country other than the country to which the order applies. In 
conducting circumvention inquiries, under section 781(b)(1) of the Act, 
the Department will also evaluate whether: (1) The process of assembly 
or completion in the other foreign country is minor or insignificant; 
(2) 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 
(3) action is appropriate to prevent evasion of such an order or 
finding. As discussed below, Petitioner has provided evidence with 
respect to these criteria.

A. Merchandise of the Same Class or Kind

    Petitioner argues that the innerspring units that Goldon completes 
or assembles in Malaysia and subsequently ships to the United States 
are of the same class or kind as that subject to the Order. Petitioner 
contends that there is no question that the uncovered innerspring units 
that Goldon exports to the United States meet the physical 
characteristics that define the scope of the order.\11\ Goldon 
acknowledged this fact in the fourth administrative review when it 
stated: ``{y{time} es, merchandise as stated in the database are the 
subject merchandise that {sic{time}  comprised from locally source 
{sic{time}  material and imported material from PRC.'' \12\
---------------------------------------------------------------------------

    \11\ Id., at 7-8.
    \12\ Id., at 8; and Exhibit 1, at 2.
---------------------------------------------------------------------------

B. Completion of Merchandise in a Foreign Country

    Petitioner observes that the Order clearly indicates that 
innerspring units are assembled from three key components: Steel wire 
coils, helical wires, and in certain cases border rods.\13\ Petitioner 
argues that Goldon admitted that it imports the key inputs used in the 
production of innerspring units and provided invoices describing the 
components as ``spring mattress coils,'' ``wire,'' ``steel frame,'' and 
``steel strips.'' \14\ Furthermore, Petitioner contends that Goldon 
indicated that 70 percent of its materials used in the production of 
innerspring units are sourced from the PRC, the country with respect to 
which the Order applies, and that it ``shipped the completed 
merchandise into the U.S.'' \15\
---------------------------------------------------------------------------

    \13\ See Circumvention Request at 8. The Commission also noted 
that innerspring coils and border rods are major components of an 
innerspring unit. See Uncovered Innerspring Units from South Africa 
and Vietnam, USITC Pub. 4051, Inv. Nos. 731-TA-1141-1142 at I-11 
(December 2008) (hereinafter, ``USITC Uncovered Innersprings 
Report''). In its final determination regarding imports of uncovered 
innersprings from the PRC, the Commission adopted the findings and 
analyses in its determinations and views regarding subject imports 
from South Africa and Vietnam with respect to the domestic like 
product, the domestic industry, cumulation, and material injury. 
Uncovered Innerspring Units from China, USITC Pub. 4061, Inv. No. 
731-TA-1140 at 3 and I-1 (February 2009).
    \14\ See Circumvention Request, at 9; and Exhibit 2, at 
Attachment 2.
    \15\ Id., at 9, 15 and Exhibit 2, at Attachment 2.
---------------------------------------------------------------------------

C. Minor or Insignificant Process

    Under section 781(b)(2) of the Act, the Department is required to 
consider five factors to determine whether the process of assembly or 
completion of

[[Page 78794]]

merchandise in a foreign country is minor or insignificant. Petitioner 
believes that an examination of these factors indicates that Goldon's 
process of assembly and completion of innerspring units in Malaysia is 
not significant.
(1) Level of Investment
    Petitioner states that the process employed to assemble innerspring 
components into innerspring units is relatively simple and requires 
only limited investment and labor, and that the start-up investment 
costs and the barriers to entry into this type of assembly operation 
(i.e., manual or semi-automated) are low.\16\ Petitioner asserts that 
in the most basic, fully-manual operation, coils are assembled manually 
using a wooden or steel jig in which the coils (continuous or bonnell) 
\17\ are hand-loaded, then hand-laced with helical wire and finished by 
clipping the border rods to the unit.\18\ Petitioner posits that the 
cost of a new wooden (or steel) jig is approximately $200-$400.\19\ 
Petitioner argues that the level of investment would also be low if 
Goldon relies on a semi-automated assembly operation where a machine is 
used to assemble the rows of coils.\20\
---------------------------------------------------------------------------

    \16\ See Circumvention Request, at 10.
    \17\ Bonnell coils, the most commonly used type of coils in 
innerspring units, have an hour-glass shape which tapers inward from 
top to center and then outward from the center to bottom. Bonnell 
coils are generally the lowest priced units and the type of coil 
generally used in imported innerspring units. Continuous coils have 
entire rows of continuous coils formed from a single piece of wire. 
For a more detailed description of the types of innerspring coils, 
see USITC Uncovered Innersprings Report at I-8 to I-10.
    \18\ See Circumvention Request, at 10. A somewhat more advanced 
assembly operation may involve manual assembly using a wooden or 
steel jig in which the coils are hand-set, and a lacing machine is 
used to feed the helical to join the rows, and then the borders are 
manually clipped to the unit. Id.
    \19\ Id.
    \20\ Id.
---------------------------------------------------------------------------

(2) Level of Research and Development
    Petitioner is not aware that Goldon performs any research and 
development related to the assembly and/or production of innerspring 
units.\21\ Moreover, Petitioner states that it would not expect Goldon 
to incur any research and development expenses related to its 
innerspring assembly operations.\22\
---------------------------------------------------------------------------

    \21\ Id., at 11.
    \22\ Id.
---------------------------------------------------------------------------

(3) Nature of the Production Process
    According to Petitioner, the manufacturing process for assembling 
innerspring units from imported components is relatively simple and 
does not require significant start-up costs, sophisticated machinery 
and inputs, or substantial labor.\23\ This process, as described by 
Goldon, is very similar to the process found to be insignificant by the 
Department in the prior circumvention inquiry on this Order. \24\
---------------------------------------------------------------------------

    \23\ Id.
    \24\ See Circumvention Request, at 11; see also Uncovered 
Innerspring Units from the People's Republic of China: Affirmative 
Final Determination of Circumvention of the Antidumping Duty Order, 
79 FR 3345 (January 21, 2014) (``Reztec Final Determination'').
---------------------------------------------------------------------------

(4) Extent of Production in the Malaysia
    Petitioner states that Goldon only has one facility for the 
production of innerspring units.\25\ Goldon indicated that six to seven 
workers are involved in the assembly of innerspring units, with another 
one or two workers devoted to packing.\26\ Petitioner contends that 
this indicates that the portion of Goldon's production facility 
attributable to assembly operations is small.\27\
---------------------------------------------------------------------------

    \25\ See Circumvention Inquiry, at 12.
    \26\ Id.
    \27\ Id.
---------------------------------------------------------------------------

(5) Value of Processing in Malaysia as Compared to Uncovered 
Innerspring Units Imported Into the United States
    Petitioner asserts that the value of assembly processing performed 
in Malaysia represents a small portion of the total value of the 
innerspring units imported into the United States.\28\ Petitioner 
believes Goldon's assembly operations likely rely on relatively 
unskilled, low wage employees.\29\ Thus, these assembly operations 
involve minimal additional labor costs.\30\ Petitioner asserts that, by 
any standard, the assembly operations represent an insignificant 
portion of the total value.\31\
---------------------------------------------------------------------------

    \28\ Id., at 13.
    \29\ Id.
    \30\ Id. There are virtually no additional energy costs given 
that the machines, if utilized, are quite basic. The only additional 
material inputs (besides the coils, which represent the single 
largest cost of an innerspring unit) are steel wire for lacing and 
border clips. Id.
    \31\ Id.
---------------------------------------------------------------------------

D. Value of Merchandise Produced in PRC

    Petitioner argues that the value of the components that Goldon 
imports from the PRC for further assembly in Malaysia into subject 
merchandise is a significant portion of the total value of the 
innerspring units exported to the United States.\32\ As Petitioner 
noted previously, innerspring coils, helical wires, and border rods are 
the key components of an innerspring unit. Petitioner explains that 
they also constitute a significant portion of the overall costs of an 
innerspring unit.\33\ Petitioner does not have access to other PRC 
innerspring unit producer/exporter costs. Therefore, it conducted an 
analysis related to the production costs of various innerspring unit 
models at its own facility in Guangzhou, PRC. Petitioner believes that 
its operation (and costs) in the PRC are representative of the 
operations (and costs) of other PRC innerspring unit producers/
exporters, as it is the largest producer of innersprings in the 
PRC.\34\ According to Petitioner's analysis of its own production costs 
in the PRC, the total value of these innerspring components compose a 
significant portion of the total value of an innerspring unit.\35\
---------------------------------------------------------------------------

    \32\ Id., at 14.
    \33\ Id.
    \34\ Id.
    \35\ Id., at 14-15.
---------------------------------------------------------------------------

E. Additional Factors for Consideration

    Section 781(b)(3) of the Act directs the Department to consider 
additional factors in determining whether to include merchandise 
assembled or completed in a foreign country within the scope of the 
Order. Petitioner believes that an examination of these factors 
supports finding that Goldon's Malaysian exports of innerspring units 
should be within the scope of the Order.\36\
---------------------------------------------------------------------------

    \36\ Petitioner did not analyze or submit evidence concerning 
affiliation under section 781(b)(3)(B) of the Act.
---------------------------------------------------------------------------

(1) Pattern of Trade
    Goldon has stated that while it was originally set up to supply the 
domestic market, in 2011 it changed its business strategy to serve the 
United States.\37\ As described by Goldon, this strategy consists of 
assembling innersprings from 70 percent PRC-origin components and 30 
percent Malaysian components, and exporting the assembled innerspring 
units to the United States.\38\
---------------------------------------------------------------------------

    \37\ Id., at 15.
    \38\ Id.
---------------------------------------------------------------------------

    Based on official U.S. import data, Petitioner contends that 
imports of uncovered innerspring units from Malaysia have increased 
dramatically since the Order was imposed.\39\ Petitioner provided a 
chart that illustrated the U.S. annual imports from

[[Page 78795]]

Malaysia under the relevant HTSUS subheadings.\40\ Petitioner states 
that prior to 2009, there were virtually no imports of uncovered 
innerspring units from Malaysia to the United States.\41\ However, 
according to the chart, subject imports from Malaysia to the United 
States have steadily increased: 185,917 pieces were imported in 2009; 
312,317 pieces were imported in 2010; 344,388 pieces were imported in 
2011; 132,017 pieces were imported in 2012; and 52,051 pieces were 
imported in 2013.\42\ Petitioner claims that the lower overall entry 
quantities over the last two years are due to the previous 
anticircumvention inquiry filed by Petitioner in 2012.\43\ Petitioner 
notes that quantities of imports after 2012, while not as high as the 
immediately preceding years, are still significant compared to before 
the Order was in place.\44\
---------------------------------------------------------------------------

    \39\ See Circumvention Inquiry, at 15-16. Petitioner states that 
until 2011, U.S. imports of uncovered innerspring units were 
properly classified and entered the United States under harmonized 
tariff schedule (``HTS'') 9404.29.9010 (``uncovered innerspring 
units''). In 2011, the HTS classification for uncovered innerspring 
units was refined and further broken out to provide a separate ten-
digit classification for innerspring units used in cribs and toddler 
beds. Thus, HTS 9409.29.9010 was eliminated and replaced with 
9404.29.9005 (Uncovered innerspring units: For use in a crib or 
toddler bed) and 9404.29.9011 (Uncovered innerspring units: Other).
    \40\ Id., at 17.
    \41\ Id., at 16.
    \42\ Id., at 17.
    \43\ Id.
    \44\ Id.
---------------------------------------------------------------------------

    Furthermore, Petitioner contends that Malaysia's official import 
statistics indicated that imports from the PRC of one of the key 
components in innerspring units (i.e., coils) have increased 
substantially since the Order was imposed.\45\ Petitioner provided a 
chart of import data related to Malaysia's imports of coils from the 
PRC over the last several years, as well as the current year under HTS 
7320.99.000 (other springs and leaves for springs, of iron/steel, 
kilograms (``kgs'')). This chart shows an increase of imported coils 
from 2,995,519 kgs in 2007 to 11,972,478 kgs in 2011, and a gradual 
decrease to 5,218,789 kgs for the current year.\46\ Again, Petitioner 
notes that imports have somewhat declined starting in 2012, which may 
be due to the Department's determination in the previous 
anticircumvention inquiry filed by Petitioner.\47\ Nevertheless, 
Petitioner contends that imports of coils from the PRC remain higher 
than before the Order was in place.\48\
---------------------------------------------------------------------------

    \45\ Id.
    \46\ Id. Petitioner also provided a description of Malaysia's 
relevant HTS numbers. Id., at Exhibit 7.
    \47\ Id.; see also Reztec Final Determination, 79 FR 3345 and 
accompanying Issues and Decision Memorandum. Petitioner did not 
submit any Malaysian import statistics regarding imports of helical 
wires and border rods from the PRC.
    \48\ Id.
---------------------------------------------------------------------------

(2) Increase of Subject Imports From the PRC to Malaysia After the 
Investigation Initiation
    Petitioner did not provide any evidence regarding an increase in 
subject imports (i.e., completed uncovered innerspring units) from the 
PRC to Malaysia after the initiation of the investigation. However, as 
noted above, Petitioner provided information that imports of one of the 
key components of innerspring units from PRC to Malaysia increased 
significantly during this time.

F. Whether Action Is Appropriate To Prevent Evasion of the Order

    Based on the information provided by Petitioner, and for the 
reasons provided in the analysis below, the Department determines that 
initiating an anticircumvention inquiry is appropriate to identify any 
potential evasion of the Order.
Analysis of the Request
    Based on our analysis of Petitioner's circumvention inquiry 
request, the Department determines that Petitioner has satisfied the 
criteria under section 781(b)(1) of the Act to warrant an initiation of 
a formal circumvention inquiry.\49\ In accordance with section 
351.225(e) of the Department's regulations, the Department finds that 
the issue of whether a product is included within the scope of an order 
cannot be determined based solely upon the application and the 
descriptions of the merchandise. Accordingly, the Department will 
notify by mail all parties on the Department's scope service list of 
the initiation of a circumvention inquiry.
---------------------------------------------------------------------------

    \49\ Id., at 7-17.
---------------------------------------------------------------------------

    In accordance with section 351.225(l)(2) of the Department's 
regulations, if the Department issues a preliminary affirmative 
determination, we will then instruct U.S. Customs and Border Protection 
to suspend liquidation and require a cash deposit of estimated duties 
on the merchandise. This circumvention inquiry covers Goldon. If, 
within sufficient time, the Department receives a formal request from 
an interested party regarding potential circumvention of the Order by 
other Malaysian companies, we will consider conducting additional 
inquiries concurrently.
    The Department will establish a schedule for questionnaires and 
comments on the issues. In accordance with section 351.225(f)(5) of the 
Department's regulations, the Department intends to issue its final 
determination within 300 days of the date of publication of this 
initiation, in accordance with section 781(f) of the Act. This notice 
is published in accordance with section 351.225(f) of the Department's 
regulations.

    Dated: December 22, 2014.
Christian Marsh,
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations.
[FR Doc. 2014-30658 Filed 12-30-14; 8:45 am]
BILLING CODE 3510-DS-P