Uncovered Innerspring Units From the People's Republic of China: Initiation of Anticircumvention Inquiry on Antidumping Duty Order, 83801-83804 [2016-28087]

Download as PDF Federal Register / Vol. 81, No. 225 / Tuesday, November 22, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES Assessment Rates Pursuant to section 751(a)(2)(A) of the Tariff Act of 1930, as amended (the ‘‘Act’’), and 19 CFR 351.212(b), the Department has determined, and U.S. Customs and Border Protection (‘‘CBP’’) shall assess, antidumping duties on all appropriate entries of subject merchandise in accordance with the final results of this review. The Department intends to issue appropriate assessment instructions directly to CBP 15 days after publication of the final results of this administrative review. Where the respondent reported reliable entered values, we calculated importer (or customer)-specific ad valorem rates by aggregating the dumping margins calculated for all U.S. sales to each importer (or customer) and dividing this amount by the total entered value of the sales to each importer (or customer).4 Where the Department calculated a weightedaverage dumping margin by dividing the total amount of dumping for reviewed sales to that party by the total sales quantity associated with those transactions, the Department will direct CBP to assess importer-specific assessment rates based on the resulting per-unit rates.5 Where an importer- (or customer-) specific ad valorem or perunit rate is greater than de minimis, the Department will instruct CBP to collect the appropriate duties at the time of liquidation.6 Where an importer- (or customer-) specific ad valorem or perunit rate is zero or de minimis, the Department will instruct CBP to liquidate appropriate entries without regard to antidumping duties.7 Pursuant to the Department’s assessment practice, for entries that were not reported in the U.S. sales databases submitted by companies individually examined during this review, the Department will instruct CBP to liquidate such entries at the PRC-wide entity rate. Additionally, if the Department determines that an exporter had no shipments of the subject merchandise, any suspended entries that entered under that exporter’s case number (i.e., at that exporter’s rate) will be liquidated at the PRC-wide entity rate.8 Cash Deposit Requirements The following cash deposit requirements will be effective upon 4 See 19 CFR 351.212(b)(1). 5 Id. 6 Id. 7 See 19 CFR 351.106(c)(2). Non-Market Economy Antidumping Proceedings: Assessment of Antidumping Duties, 76 FR 65694 (October 24, 2011). 8 See VerDate Sep<11>2014 16:52 Nov 21, 2016 Jkt 241001 publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(2)(C) of the Act: (1) For the exporters listed above, the cash deposit rate will be the rate established in the final results of review (except, if the rate is zero or de minimis, i.e., less than 0.5 percent, a zero cash deposit rate will be required for that company); (2) for previously investigated or reviewed PRC and non-PRC exporters not listed above that have separate rates, the cash deposit rate will continue to be the exporter-specific rate published for the most recent period; (3) for all PRC exporters of subject merchandise which have not been found to be entitled to a separate rate, the cash deposit rate will be the PRC-Wide rate of 206 percent; and (4) for all non-PRC exporters of subject merchandise which have not received their own rate, the cash deposit rate will be the rate applicable to the PRC exporters that supplied that nonPRC exporter. The deposit requirements shall remain in effect until further notice. 83801 regulations and terms of an APO is a violation which is subject to sanction. We are issuing and publishing these final results of administrative review in accordance with sections 751(a)(1) and 777(i) of the Act. Dated: November 14, 2016. Paul Piquado, Assistant Secretary for Enforcement and Compliance. Appendix I—Issues and Decision Memorandum I. Summary II. Scope III. Background IV. Discussion of the Issues Comment 1: Selection of Surrogate Country Comment 2: Bulgarian Financial Ratios Comment 3: Treatment of Irrecoverable VAT Comment 4: Proposed Changes to the Calculation Methodology for New Oriental’s CIF Sales VI. Conclusion [FR Doc. 2016–28109 Filed 11–21–16; 8:45 am] BILLING CODE 3510–DS–P DEPARTMENT OF COMMERCE International Trade Administration Disclosure We will disclose the calculations performed within five days of the date of publication of this notice to parties in this proceeding in accordance with 19 CFR 351.224(b). [A–570–928] Notification to Importers This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in the Department’s presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties. AGENCY: Administrative Protective Orders This notice also serves as a reminder to parties subject to administrative protective order (‘‘APO’’) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the PO 00000 Frm 00005 Fmt 4703 Sfmt 4703 Uncovered Innerspring Units From the People’s Republic of China: Initiation of Anticircumvention Inquiry on Antidumping Duty Order Enforcement and Compliance, International Trade Administration, Department of Commerce. SUMMARY: Based on available information, the Department of Commerce (Department) is selfinitiating an anticircumvention inquiry 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). Effective November 22, 2016. FOR FURTHER INFORMATION CONTACT: Matthew Renkey, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–2312. SUPPLEMENTARY INFORMATION: DATES: Background On December 31, 2007, Petitioner 1 filed a petition seeking imposition of antidumping duties on imports of uncovered innerspring units from, 1 Leggett E:\FR\FM\22NON1.SGM and Platt, Incorporated. 22NON1 83802 Federal Register / Vol. 81, No. 225 / Tuesday, November 22, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES among other countries, the PRC.2 Following the completion of investigations by the Department and the U.S. International Trade Commission, the Department imposed an antidumping duty order on subject merchandise.3 In the sixth administrative review of the Order,4 Petitioner requested that the Department review Macao Commercial and Industrial Spring Mattress Manufacturer (Macao Commercial) and East Grace Corporation. The Department initiated the review on April 3, 2015,5 and sent questionnaires to the named respondents, including Macao Commercial. During the course of the sixth administrative review, and in response to the Department’s original and supplemental questionnaires, Macao Commercial acknowledged that it imports innerspring unit components from the PRC for use in the production of innerspring units in Macau.6 In the final results, the Department found that Macao Commercial failed to demonstrate that it had no shipments of PRC-origin innersprings, and assigned a rate to Macao Commercial using adverse facts available. The Department stated that this determination applied only with respect to Macao Commercial’s PRC-origin subject merchandise, but explained that it intended to evaluate whether self-initiation of a circumvention inquiry would be warranted based upon information submitted during the review and in light of the Department’s prior circumvention findings in this proceeding.7 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 See Uncovered Innerspring Units From the People’s Republic of China: Notice of Antidumping Duty Order, 74 FR 7661 (February 19, 2009) (‘‘Order’’). 4 The sixth administrative review covered the period of review (‘‘POR’’) February 1, 2014, through January 31, 2015. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 80 FR 18202 (April 3, 2015). 5 Id. 6 See, e.g., Memorandum to the File ‘‘Factual Information from the Sixth Administrative Review,’’ dated concurrently with this initiation notice (AR6 Factual Information Memo), at Attachment 1. In the AR6 Final Results, we found that ‘‘Macao Commercial submitted this inventory report in two different exhibits within its July 21, 2016 QR response and that within Exhibit 5 is an invoice for not just raw materials but PRC-origin innerspring components from Company X.’’ See Uncovered Innerspring Units From the People’s Republic of China: Final Results of Antidumping Duty Administrative Review; 2014–2015, 81 FR 62729 (September 12, 2016) (AR6 Final Results) and accompanying Issues and Decision Memorandum at Comment 1. 7 See AR6 Final Results. VerDate Sep<11>2014 16:52 Nov 21, 2016 Jkt 241001 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 Tariff Act of 1930, as amended (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 anticircumvention 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 PO 00000 Frm 00006 Fmt 4703 Sfmt 4703 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. A. Merchandise of the Same Class or Kind Available information shows that the innerspring units that Macao Commercial completes or assembles in Macau and subsequently ships to the United States are of the same class or kind as that subject to the Order.8 Macao Commercial acknowledged this fact in the sixth administrative review when it stated: ‘‘With respect to the Department’s request for documentation demonstrating ‘the production process of Macao Commercial and all affiliates in Macao that manufactured subject merchandise that was shipped to the United States during the POR,’ as previously advised, Macao Commercial is the only entity which manufactures innersprings sold and shipped to the U.S.’’ 9 B. Completion of Merchandise in a Foreign Country The Order indicates that innerspring units are assembled from three key components: Steel wire coils, helical wires, and in certain cases border rods.10 Information from the sixth administrative review indicates that Macao Commercial sources components used in the production of innerspring units from the PRC, the country with respect to which the Order applies, and that Macao Commercial then sells innerspring units to the United States.11 C. Minor or Insignificant Process Under section 781(b)(2) of the Act, the Department will take into account five 8 See AR6 Factual Information Memo at Attachment 2, page 6. 9 Id. 10 The United States International Trade 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). 11 See AR6 Factual Information Memo at Attachment 2, pages 6–8 and Exhibit 1, and Attachment 1, at page 10; see also AR6 Final Results, and accompanying Issues and Decision Memorandum at 6–9. E:\FR\FM\22NON1.SGM 22NON1 Federal Register / Vol. 81, No. 225 / Tuesday, November 22, 2016 / Notices factors to determine whether the process of assembly or completion of merchandise in a foreign country is minor or insignificant. An examination of these factors indicates that Macao Commercial’s process of assembly and completion of innerspring units in Macau is likely not significant. (1) Level of Investment in Macau sradovich on DSK3GMQ082PROD with NOTICES The level of investment to assemble innerspring components into innerspring units appears to be limited. In initiating a prior circumvention inquiry under the Order, we cited evidence that the process employed to assemble innerspring components into innerspring units is relatively simple and requires only limited investment and labor. Petitioner explained that the start-up investment costs and the barriers to entry into manual and semiautomatic assembly operation are low.12 In particular, Petitioner provided evidence that in the most basic, fullymanual operation, coils are assembled manually using a wooden or steel jig in which the coils (continuous or bonnell) 13 are hand-loaded, then handlaced with helical wire and finished by clipping the border rods to the unit.14 Petitioner estimated that the cost of a new wooden (or steel) jig is approximately $200–$400.15 The information provided by Petitioner in that inquiry indicated that the level of investment would also be low for companies that rely on a semiautomated assembly operation where a machine is used to assemble the rows of coils. Macao Commercial’s production process does not appear to be markedly 12 See Uncovered Innerspring Units From the People’s Republic of China: Initiation of Anticircumvention Inquiry on Antidumping Duty Order, 79 FR 78792 (December 31, 2014) (Goldon Initiation) and Memorandum to the File ‘‘Factual Information from the Goldon Circumvention Inquiry,’’ dated concurrently with this initiation notice (Goldon Factual Information Memo), at Attachment at page 10. 13 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. 14 See Goldon Factual Information Memo at Attachment at pages 10–11. 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. 15 Id. VerDate Sep<11>2014 16:52 Nov 21, 2016 Jkt 241001 different than the assembly operations described above.16 (2) Level of Research and Development in Macau In the sixth administrative review, there was no evidence of Macao Commercial performing any research and development related to the assembly and/or production of innerspring units. Moreover, we would not expect Macao Commercial to incur significant (if any) research and development expenses related to its innerspring assembly operations, given that in a prior circumvention inquiry, the respondent affirmatively stated that innerspring units are a ‘‘mature’’ product and that its research and development activities were limited to ‘‘trial and error’’ type manufacturing improvements.17 The Department found this level of research and development to be minor, and did not change this finding in the final determination.18 (3) Nature of the Production Process in Macau In the sixth administrative review, Macao Commercial indicated that its manufacturing process for assembling innerspring units from imported components appears to be relatively simple and does not require significant start-up costs, sophisticated machinery and inputs, or substantial labor.19 This process, as described by Macao Commercial, is similar to the process found to be insignificant by the Department in a prior circumvention inquiry under this Order.20 (4) Extent of Production Facilities in Macau In initiating a prior circumvention inquiry under this Order, we relied upon evidence that the company in question had one production facility with only six to seven workers involved in assembly of innersprings units, with 16 See AR6 Factual Information Memo at Attachment 2, Exhibit 1. 17 See Uncovered Innerspring Units From the People’s Republic of China: Affirmative Preliminary Determination of Circumvention of the Antidumping Duty Order, 78 FR 41784 (July 11, 2013), and accompanying Preliminary Decision Memorandum at 6. 18 See 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), and accompanying Issues and Decision Memorandum (Reztec Final Determination). 19 See AR6 Factual Information Memo at Attachment 2, Exhibit 1. 20 See Uncovered Innerspring Units From the People’s Republic of China: Affirmative Preliminary Determination of Circumvention of the Antidumping Duty Order, 78 FR 41784 (Goldon Prelim), and accompanying Preliminary Decision Memorandum (unchanged in final). PO 00000 Frm 00007 Fmt 4703 Sfmt 4703 83803 another one or two workers devoted to packing.21 Macao Commercial’s information from the sixth administrative review shows that its production facilities are similarly limited in nature. It has one modestlysized facility devoted to the assembly and packing of innersprings, the production machinery required is not extensive,22 and the amount of labor involved appears minimal.23 (5) Value of Processing in Macau as Compared to Uncovered Innerspring Units Imported Into the United States We do not have information showing whether the value of assembling the innerspring components into finished units by Macao Commercial represents a small portion of the total value of the unit imported into the United States. Nonetheless, in initiating a prior circumvention inquiry under this Order, we cited evidence provided by the Petitioner that the value of assembly processing performed in another third country (Malaysia) likely represented a small portion of the total value of the innerspring units imported into the United States.24 We find that this information is relevant here. This information indicates that similar assembly operations in Macau would likely represent an insignificant portion of the total value. D. Value of Merchandise Produced in the PRC In initiating a prior circumvention inquiry under this Order, we cited evidence that the value of the components that the respondent imported from the PRC for further assembly in Malaysia into subject merchandise was a significant portion of the total value of the innerspring units exported to the United States.25 As noted previously, innerspring coils, helical wires, and border rods are key components of an innerspring unit. Petitioner explained that these components also constitute a significant portion of the overall costs of an innerspring unit.26 Because Petitioner did not have access to other PRC innerspring unit producer/exporter costs, it conducted an analysis related to the production costs of various 21 See Goldon Initiation. AR6 Factual Information Memo at Attachment 2, Exhibit 1. 23 See AR6 Factual Information Memo at Attachment 1, Exhibit 3 (Macao Commercial’s financial statement showing a minimal amount of direct labor expenses). 24 See Goldon Initiation and Goldon Factual Information Memo Attachment at pages 12–13. 25 Goldon Factual Information Memo Attachment at 14–15. 26 Id. 22 See E:\FR\FM\22NON1.SGM 22NON1 83804 Federal Register / Vol. 81, No. 225 / Tuesday, November 22, 2016 / Notices innerspring unit models at its own facility in Guangzhou, PRC. Petitioner believed 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.27 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.28 Similarly, based on the limited information available from the sixth administrative review, we find that the value of production in the PRC appears to comprise a significant portion of the value of Macao Commercial’s innersprings units.29 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. (1) Pattern of Trade Macao Commercial stated that it expressly set up the flow of trade of innerspring components from the PRC in order to make Macau the country of origin for shipment to countries with antidumping duty orders.30 Additionally, data from the United States International Trade Commission DataWeb show a significant increase of U.S. imports of innerspring units from Macau since the imposition of the Order.31 (2) Affiliation Macao Commercial is affiliated with a producer of subject merchandise in the PRC and is also affiliated with other Macanese companies involved in the innersprings industry.32 Generally, the Department considers circumvention to be more likely to occur when the manufacturer of the PRC-origin merchandise is related to the third country assembler and is a critical element in our evaluation of circumvention.33 27 Id. at 14–15 and Exhibit 6. 28 Id. sradovich on DSK3GMQ082PROD with NOTICES 29 See AR6 Factual Information Memo at Attachment 1, Exhibit 3. 30 See AR6 Factual Information Memo at Attachment 1, page 3. 31 See Memorandum to the File ‘‘Innerspring Units Import Data,’’ dated concurrently with this initiation notice. 32 See AR6 Factual Information Memo at Attachments 1 and 2. 33 See Goldon Prelim, and accompanying Preliminary Decision Memorandum at ‘‘Affiliation.’’ VerDate Sep<11>2014 16:52 Nov 21, 2016 Jkt 241001 (3) Increase of Subject Imports From the PRC to Macau After the Investigation Initiation We did not examine any evidence regarding an increase in subject imports (i.e., completed uncovered innerspring units) from the PRC to Macau after the initiation of the investigation. Further, Macao Commercial stated in the sixth administrative review that it does not transship PRC-origin innerspring units to the United States.34 Nonetheless, this factor does not appear particularly relevant in a completion/assembly in a third country circumvention inquiry because the issue is not subject imports from the PRC to Macau, but rather parts for assembly.35 F. Whether Action Is Appropriate To Prevent Evasion of the Order Based on the factual information placed on the record concurrently with this initiation, and for the reasons provided in the analysis above, pursuant to section 781(b)(1)(E) of the Act, 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 the record information from prior segments placed on the record concurrently with this initiation, and our prior circumvention findings under this Order, the Department determines that this selfinitiation of an anticircumvention inquiry is warranted. Pursuant to 19 CFR 351.225(b), the Department will notify by mail all parties on the Department’s scope service list of the initiation of an anticircumvention inquiry. In accordance with 19 CFR 351.225(l)(2), 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 Macao Commercial. If, within sufficient time, the Department receives a formal request from an interested party regarding potential circumvention of the Order by other Macanese companies, or if the Department determines from available information that an inquiry is warranted with respect to other Macanese companies, we will consider conducting additional inquiries concurrently. 34 See AR6 Factual Information Memo at Attachment 3, page 2. 35 See, e.g., Goldon Initiation. PO 00000 Frm 00008 Fmt 4703 Sfmt 4703 The Department will establish a schedule for questionnaires and comments on the issues. In accordance with 19 CFR 351.225(f)(5) and section 781(f) of the Act, unless extended, the Department intends to issue its final determination within 300 days of the date of publication of this initiation. This notice is published in accordance 19 CFR 351.225(f). Dated: November 16, 2014. Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations. [FR Doc. 2016–28087 Filed 11–21–16; 8:45 am] BILLING CODE 3510–DS–P DEPARTMENT OF COMMERCE International Trade Administration [A–570–008] Calcium Hypochlorite From the People’s Republic of China: Final Decision To Rescind the New Shipper Review of Haixing Jingmei Chemical Products Sales Co., Ltd. Enforcement and Compliance, International Trade Administration, Department of Commerce. SUMMARY: On June 27, 2016, the Department of Commerce (the ‘‘Department’’) published its Preliminary Rescission for the new shipper review (‘‘NSR’’) of the antidumping duty order on calcium hypochlorite from the People’s Republic of China (‘‘PRC’’). The period of review is July 25, 2014 through June 30, 2015. As discussed below, we preliminarily determined to rescind this review because we requested but were not provided sufficient information to conduct a bona fide analysis as required by the statute, and accordingly cannot determine whether the new shipper sales of Haixing Jingmei Chemical Products Sales Co., Ltd. (‘‘Jingmei’’) are bona fide. Based on our analysis of the comments received, we make no changes to the Preliminary Rescission. Accordingly, we have determined to rescind this NSR with respect to Jingmei. AGENCY: DATES: Effective November 22, 2016. FOR FURTHER INFORMATION CONTACT: Kabir Archuletta or Amanda Brings, 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) 482–2593 or (202) 482–3927, respectively. E:\FR\FM\22NON1.SGM 22NON1

Agencies

[Federal Register Volume 81, Number 225 (Tuesday, November 22, 2016)]
[Notices]
[Pages 83801-83804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28087]


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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: Based on available information, the Department of Commerce 
(Department) is self-initiating an anticircumvention inquiry 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).

DATES: Effective November 22, 2016.

FOR FURTHER INFORMATION CONTACT: Matthew Renkey, AD/CVD Operations, 
Office V, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW., Washington, DC 20230; telephone: (202) 482-2312.

SUPPLEMENTARY INFORMATION: 

Background

    On December 31, 2007, Petitioner \1\ filed a petition seeking 
imposition of antidumping duties on imports of uncovered innerspring 
units from,

[[Page 83802]]

among other countries, the PRC.\2\ Following the completion of 
investigations by the Department and the U.S. International Trade 
Commission, the Department imposed an antidumping duty order on subject 
merchandise.\3\
---------------------------------------------------------------------------

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

    In the sixth administrative review of the Order,\4\ Petitioner 
requested that the Department review Macao Commercial and Industrial 
Spring Mattress Manufacturer (Macao Commercial) and East Grace 
Corporation. The Department initiated the review on April 3, 2015,\5\ 
and sent questionnaires to the named respondents, including Macao 
Commercial. During the course of the sixth administrative review, and 
in response to the Department's original and supplemental 
questionnaires, Macao Commercial acknowledged that it imports 
innerspring unit components from the PRC for use in the production of 
innerspring units in Macau.\6\ In the final results, the Department 
found that Macao Commercial failed to demonstrate that it had no 
shipments of PRC-origin innersprings, and assigned a rate to Macao 
Commercial using adverse facts available. The Department stated that 
this determination applied only with respect to Macao Commercial's PRC-
origin subject merchandise, but explained that it intended to evaluate 
whether self-initiation of a circumvention inquiry would be warranted 
based upon information submitted during the review and in light of the 
Department's prior circumvention findings in this proceeding.\7\
---------------------------------------------------------------------------

    \4\ The sixth administrative review covered the period of review 
(``POR'') February 1, 2014, through January 31, 2015. See Initiation 
of Antidumping and Countervailing Duty Administrative Reviews, 80 FR 
18202 (April 3, 2015).
    \5\ Id.
    \6\ See, e.g., Memorandum to the File ``Factual Information from 
the Sixth Administrative Review,'' dated concurrently with this 
initiation notice (AR6 Factual Information Memo), at Attachment 1. 
In the AR6 Final Results, we found that ``Macao Commercial submitted 
this inventory report in two different exhibits within its July 21, 
2016 QR response and that within Exhibit 5 is an invoice for not 
just raw materials but PRC-origin innerspring components from 
Company X.'' See Uncovered Innerspring Units From the People's 
Republic of China: Final Results of Antidumping Duty Administrative 
Review; 2014-2015, 81 FR 62729 (September 12, 2016) (AR6 Final 
Results) and accompanying Issues and Decision Memorandum at Comment 
1.
    \7\ See AR6 Final Results.
---------------------------------------------------------------------------

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 Tariff Act of 1930, as amended (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 anticircumvention 
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.

A. Merchandise of the Same Class or Kind

    Available information shows that the innerspring units that Macao 
Commercial completes or assembles in Macau and subsequently ships to 
the United States are of the same class or kind as that subject to the 
Order.\8\ Macao Commercial acknowledged this fact in the sixth 
administrative review when it stated: ``With respect to the 
Department's request for documentation demonstrating `the production 
process of Macao Commercial and all affiliates in Macao that 
manufactured subject merchandise that was shipped to the United States 
during the POR,' as previously advised, Macao Commercial is the only 
entity which manufactures innersprings sold and shipped to the U.S.'' 
\9\
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    \8\ See AR6 Factual Information Memo at Attachment 2, page 6.
    \9\ Id.
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B. Completion of Merchandise in a Foreign Country

    The Order indicates that innerspring units are assembled from three 
key components: Steel wire coils, helical wires, and in certain cases 
border rods.\10\ Information from the sixth administrative review 
indicates that Macao Commercial sources components used in the 
production of innerspring units from the PRC, the country with respect 
to which the Order applies, and that Macao Commercial then sells 
innerspring units to the United States.\11\
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    \10\ The United States International Trade 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).
    \11\ See AR6 Factual Information Memo at Attachment 2, pages 6-8 
and Exhibit 1, and Attachment 1, at page 10; see also AR6 Final 
Results, and accompanying Issues and Decision Memorandum at 6-9.
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C. Minor or Insignificant Process

    Under section 781(b)(2) of the Act, the Department will take into 
account five

[[Page 83803]]

factors to determine whether the process of assembly or completion of 
merchandise in a foreign country is minor or insignificant. An 
examination of these factors indicates that Macao Commercial's process 
of assembly and completion of innerspring units in Macau is likely not 
significant.
(1) Level of Investment in Macau
    The level of investment to assemble innerspring components into 
innerspring units appears to be limited. In initiating a prior 
circumvention inquiry under the Order, we cited evidence that the 
process employed to assemble innerspring components into innerspring 
units is relatively simple and requires only limited investment and 
labor. Petitioner explained that the start-up investment costs and the 
barriers to entry into manual and semi-automatic assembly operation are 
low.\12\ In particular, Petitioner provided evidence 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) \13\ are 
hand-loaded, then hand-laced with helical wire and finished by clipping 
the border rods to the unit.\14\ Petitioner estimated that the cost of 
a new wooden (or steel) jig is approximately $200-$400.\15\ The 
information provided by Petitioner in that inquiry indicated that the 
level of investment would also be low for companies that rely on a 
semi-automated assembly operation where a machine is used to assemble 
the rows of coils. Macao Commercial's production process does not 
appear to be markedly different than the assembly operations described 
above.\16\
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    \12\ See Uncovered Innerspring Units From the People's Republic 
of China: Initiation of Anticircumvention Inquiry on Antidumping 
Duty Order, 79 FR 78792 (December 31, 2014) (Goldon Initiation) and 
Memorandum to the File ``Factual Information from the Goldon 
Circumvention Inquiry,'' dated concurrently with this initiation 
notice (Goldon Factual Information Memo), at Attachment at page 10.
    \13\ 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.
    \14\ See Goldon Factual Information Memo at Attachment at pages 
10-11. 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.
    \15\ Id.
    \16\ See AR6 Factual Information Memo at Attachment 2, Exhibit 
1.
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(2) Level of Research and Development in Macau
    In the sixth administrative review, there was no evidence of Macao 
Commercial performing any research and development related to the 
assembly and/or production of innerspring units. Moreover, we would not 
expect Macao Commercial to incur significant (if any) research and 
development expenses related to its innerspring assembly operations, 
given that in a prior circumvention inquiry, the respondent 
affirmatively stated that innerspring units are a ``mature'' product 
and that its research and development activities were limited to 
``trial and error'' type manufacturing improvements.\17\ The Department 
found this level of research and development to be minor, and did not 
change this finding in the final determination.\18\
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    \17\ See Uncovered Innerspring Units From the People's Republic 
of China: Affirmative Preliminary Determination of Circumvention of 
the Antidumping Duty Order, 78 FR 41784 (July 11, 2013), and 
accompanying Preliminary Decision Memorandum at 6.
    \18\ See 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), and 
accompanying Issues and Decision Memorandum (Reztec Final 
Determination).
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(3) Nature of the Production Process in Macau
    In the sixth administrative review, Macao Commercial indicated that 
its manufacturing process for assembling innerspring units from 
imported components appears to be relatively simple and does not 
require significant start-up costs, sophisticated machinery and inputs, 
or substantial labor.\19\ This process, as described by Macao 
Commercial, is similar to the process found to be insignificant by the 
Department in a prior circumvention inquiry under this Order.\20\
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    \19\ See AR6 Factual Information Memo at Attachment 2, Exhibit 
1.
    \20\ See Uncovered Innerspring Units From the People's Republic 
of China: Affirmative Preliminary Determination of Circumvention of 
the Antidumping Duty Order, 78 FR 41784 (Goldon Prelim), and 
accompanying Preliminary Decision Memorandum (unchanged in final).
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(4) Extent of Production Facilities in Macau
    In initiating a prior circumvention inquiry under this Order, we 
relied upon evidence that the company in question had one production 
facility with only six to seven workers involved in assembly of 
innersprings units, with another one or two workers devoted to 
packing.\21\ Macao Commercial's information from the sixth 
administrative review shows that its production facilities are 
similarly limited in nature. It has one modestly-sized facility devoted 
to the assembly and packing of innersprings, the production machinery 
required is not extensive,\22\ and the amount of labor involved appears 
minimal.\23\
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    \21\ See Goldon Initiation.
    \22\ See AR6 Factual Information Memo at Attachment 2, Exhibit 
1.
    \23\ See AR6 Factual Information Memo at Attachment 1, Exhibit 3 
(Macao Commercial's financial statement showing a minimal amount of 
direct labor expenses).
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(5) Value of Processing in Macau as Compared to Uncovered Innerspring 
Units Imported Into the United States
    We do not have information showing whether the value of assembling 
the innerspring components into finished units by Macao Commercial 
represents a small portion of the total value of the unit imported into 
the United States. Nonetheless, in initiating a prior circumvention 
inquiry under this Order, we cited evidence provided by the Petitioner 
that the value of assembly processing performed in another third 
country (Malaysia) likely represented a small portion of the total 
value of the innerspring units imported into the United States.\24\ We 
find that this information is relevant here. This information indicates 
that similar assembly operations in Macau would likely represent an 
insignificant portion of the total value.
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    \24\ See Goldon Initiation and Goldon Factual Information Memo 
Attachment at pages 12-13.
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D. Value of Merchandise Produced in the PRC

    In initiating a prior circumvention inquiry under this Order, we 
cited evidence that the value of the components that the respondent 
imported from the PRC for further assembly in Malaysia into subject 
merchandise was a significant portion of the total value of the 
innerspring units exported to the United States.\25\ As noted 
previously, innerspring coils, helical wires, and border rods are key 
components of an innerspring unit. Petitioner explained that these 
components also constitute a significant portion of the overall costs 
of an innerspring unit.\26\ Because Petitioner did not have access to 
other PRC innerspring unit producer/exporter costs, it conducted an 
analysis related to the production costs of various

[[Page 83804]]

innerspring unit models at its own facility in Guangzhou, PRC. 
Petitioner believed 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.\27\ 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.\28\ Similarly, based on the limited information 
available from the sixth administrative review, we find that the value 
of production in the PRC appears to comprise a significant portion of 
the value of Macao Commercial's innersprings units.\29\
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    \25\ Goldon Factual Information Memo Attachment at 14-15.
    \26\ Id.
    \27\ Id. at 14-15 and Exhibit 6.
    \28\ Id.
    \29\ See AR6 Factual Information Memo at Attachment 1, Exhibit 
3.
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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.
(1) Pattern of Trade
    Macao Commercial stated that it expressly set up the flow of trade 
of innerspring components from the PRC in order to make Macau the 
country of origin for shipment to countries with antidumping duty 
orders.\30\ Additionally, data from the United States International 
Trade Commission DataWeb show a significant increase of U.S. imports of 
innerspring units from Macau since the imposition of the Order.\31\
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    \30\ See AR6 Factual Information Memo at Attachment 1, page 3.
    \31\ See Memorandum to the File ``Innerspring Units Import 
Data,'' dated concurrently with this initiation notice.
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(2) Affiliation
    Macao Commercial is affiliated with a producer of subject 
merchandise in the PRC and is also affiliated with other Macanese 
companies involved in the innersprings industry.\32\ Generally, the 
Department considers circumvention to be more likely to occur when the 
manufacturer of the PRC-origin merchandise is related to the third 
country assembler and is a critical element in our evaluation of 
circumvention.\33\
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    \32\ See AR6 Factual Information Memo at Attachments 1 and 2.
    \33\ See Goldon Prelim, and accompanying Preliminary Decision 
Memorandum at ``Affiliation.''
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(3) Increase of Subject Imports From the PRC to Macau After the 
Investigation Initiation
    We did not examine any evidence regarding an increase in subject 
imports (i.e., completed uncovered innerspring units) from the PRC to 
Macau after the initiation of the investigation. Further, Macao 
Commercial stated in the sixth administrative review that it does not 
transship PRC-origin innerspring units to the United States.\34\ 
Nonetheless, this factor does not appear particularly relevant in a 
completion/assembly in a third country circumvention inquiry because 
the issue is not subject imports from the PRC to Macau, but rather 
parts for assembly.\35\
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    \34\ See AR6 Factual Information Memo at Attachment 3, page 2.
    \35\ See, e.g., Goldon Initiation.
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F. Whether Action Is Appropriate To Prevent Evasion of the Order

    Based on the factual information placed on the record concurrently 
with this initiation, and for the reasons provided in the analysis 
above, pursuant to section 781(b)(1)(E) of the Act, 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 the record information from prior segments 
placed on the record concurrently with this initiation, and our prior 
circumvention findings under this Order, the Department determines that 
this self-initiation of an anticircumvention inquiry is warranted. 
Pursuant to 19 CFR 351.225(b), the Department will notify by mail all 
parties on the Department's scope service list of the initiation of an 
anticircumvention inquiry.
    In accordance with 19 CFR 351.225(l)(2), 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 Macao Commercial. If, within sufficient time, the 
Department receives a formal request from an interested party regarding 
potential circumvention of the Order by other Macanese companies, or if 
the Department determines from available information that an inquiry is 
warranted with respect to other Macanese companies, we will consider 
conducting additional inquiries concurrently.
    The Department will establish a schedule for questionnaires and 
comments on the issues. In accordance with 19 CFR 351.225(f)(5) and 
section 781(f) of the Act, unless extended, the Department intends to 
issue its final determination within 300 days of the date of 
publication of this initiation. This notice is published in accordance 
19 CFR 351.225(f).

    Dated: November 16, 2014.
Christian Marsh,
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations.
[FR Doc. 2016-28087 Filed 11-21-16; 8:45 am]
 BILLING CODE 3510-DS-P