Carbon Steel Butt-Weld Pipe Fittings From the People's Republic of China: Initiation of Anti-Circumvention Inquiry on the Antidumping Duty Order, 40556-40560 [2017-18046]
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Federal Register / Vol. 82, No. 164 / Friday, August 25, 2017 / Notices
shall remain in effect until further
notice.
Administrative Protective Order
This notice also serves as a reminder
to parties subject to administrative
protective orders (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/destruction of
APO materials, or conversion to judicial
protective order, is hereby requested.
Failure to comply with the regulations
and the terms of an APO is a
sanctionable violation.
Disclosure
We will disclose the calculations
performed for these amended final
results to interested parties within five
business days of the date of the
publication of this notice in accordance
with 19 CFR 351.224(b).
We are issuing and publishing these
results in accordance with sections
751(h) and 777(i)(1) of the Act, and 19
CFR 351.224(e).
Dated: August 21, 2017.
Gary Taverman,
Deputy Assistant Secretary for Antidumping
and Countervailing Duty Operations,
performing the non-exclusive functions and
duties of the Assistant Secretary for
Enforcement and Compliance.
[FR Doc. 2017–18045 Filed 8–24–17; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
International Trade Administration
[A–570–814]
Carbon Steel Butt-Weld Pipe Fittings
From the People’s Republic of China:
Initiation of Anti-Circumvention Inquiry
on the Antidumping Duty Order
Enforcement and Compliance,
International Trade Administration,
Department of Commerce.
SUMMARY: In response to requests from
Tube Forgings of America, Inc. (TFA),
Mills Iron Works, Inc. (Mills), and
Hackney Ladish, Inc. (Hackney),
(collectively, the petitioners), the U.S.
Department of Commerce (the
Department) is initiating an anticircumvention inquiry. In this inquiry,
the Department will determine whether
certain imports of carbon steel butt-weld
pipe fittings (butt-weld pipe fittings)
into the United States, exported from
Malaysia, which were completed in
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AGENCY:
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17:40 Aug 24, 2017
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Malaysia using finished or unfinished
butt-weld pipe fittings sourced from the
People’s Republic of China (PRC), are
circumventing the antidumping duty
order on butt-weld pipe fittings from the
PRC.
DATES: Applicable August 25, 2017.
FOR FURTHER INFORMATION CONTACT: Julia
Hancock at (202) 482–1394, AD/CVD
Operations, Enforcement and
Compliance, U.S. Department of
Commerce, 1401 Constitution Avenue
NW., Washington, DC 20230.
SUPPLEMENTARY INFORMATION: On July 6,
1992, the Department issued the Order
on imports of butt-weld pipe fittings
from the PRC.1 Additionally, on March
31, 1994, the Department issued the
affirmative final determination finding
that imports into the United States of
pipe fittings that were finished in
Thailand from unfinished pipe fittings
produced in the PRC constituted
circumvention of the Order within the
meaning of section 781(b) of the Tariff
Act of 1930, as amended (the Act).2 The
Department applied this finding of
circumvention to all imports of buttweld pipe fittings from Thailand,
regardless of manufacturer/producer,
unless accompanied by a certification
stating that such pipe fittings have not
been produced from unfinished PRC
pipe fittings.3
On May 22, 2017, the petitioners,
pursuant to section 781(b) of the Act
and 19 CFR 351.225(h), submitted a
properly filed request for the
Department to initiate an anticircumvention inquiry to determine
whether certain imports of butt-weld
pipe fittings which were completed in
Malaysia using finished or unfinished
butt-weld pipe fittings sourced from the
PRC are circumventing the Order.4
Specifically, the petitioners allege that
certain imports of butt-weld pipe
fittings sourced from unfinished or
finished butt-weld pipe fittings from the
PRC have undergone minor finishing
processes, or were simply marked with
‘‘Malaysia’’ as the country of origin, in
Malaysia, before export to the United
1 See Antidumping Duty Order and Amendment
to the Final Determination of Sales at Less Than
Fair Value; Certain Carbon Steel Butt-Weld Pipe
Fittings from the People’s Republic of China, 57 FR
29702 (July 6, 1992) (Order).
2 See Certain Carbon Steel Butt-Weld Pipe Fittings
from the People’s Republic of China; Affirmative
Final Determination of Circumvention of
Antidumping Duty Order, 59 FR 15155 (March 31,
1994) (Final Determination of Circumvention 1994).
3 Id., at 15158, 15159.
4 See Letter from the petitioners to the Secretary
of Commerce, ‘‘Carbon Steel Butt-Weld Pipe
Fittings from the People’s Republic of China;
Request for Circumvention Ruling to Section 781(b)
of the Tariff Act of 1930,’’ dated May 22, 2017 (the
petitioners’ Request).
PO 00000
Frm 00019
Fmt 4703
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States. The petitioners request that the
Department treat all butt-weld pipe
fittings imported from Malaysia,
regardless of producer or exporter, as
subject merchandise under the scope of
the Order and impose cash deposit
requirements for estimated antidumping
duties on all imports of butt-weld pipe
fittings from Malaysia.5 In the
alternative to an anti-circumvention
inquiry, the petitioners requested that
we initiate and issue a preliminary
scope ruling that certain imports of buttweld pipe fittings which were
completed in Malaysia using finished or
unfinished butt-weld pipe fittings
sourced from the PRC are covered by the
scope of the Order, pursuant to 19 CFR
351.225(k).6
On May 26, 2017, we received
comments objecting to the allegations
made by the petitioners from Pantech
Steel Industries SDN Ph.D. (Pantech).7
Also, on June 14, 2017, we received
comments objecting to the allegations
made by the petitioners from Solidbend
Fittings & Flanges Sdn. Bhd.
(Solidbend).8 On June 22, 2017, we
received rebuttal comments from the
petitioners regarding Solidbend’s
comments.9 Additionally, on July 21,
2017, we received comments objecting
to the allegations made by the
petitioners from Arah Dagang Sdn Bhd
(Arah Dagang).10
On August 8, 2017, we requested a list
of all known producers and exporters of
butt-weld pipe fittings in Malaysia from
the petitioners, and on August 10, 2017,
the petitioners submitted their
response.11 Additionally, on August 14,
5 See
the petitioners’ Request at 26–30.
at 28–9.
7 See Letter from Pantech to the Secretary of
Commerce, ‘‘Carbon Steel Butt-Weld Pipe Fittings
from the People’s Republic of China: Response to
Request for Anti-Circumvention Inquiry,’’ dated
May 26, 2017).
8 See Letter from Solidbend, ‘‘Carbon Steel ButtWeld Pipe Fittings from the People’s Republic of
China Anti-Circumvention Inquiry (Third-Country
Assembly Malaysia),’’ dated June 14, 2017.
9 See Letter from the petitioners to the Secretary
of Commerce, ‘‘Carbon Steel Butt-Weld Pipe
Fittings from the People’s Republic of China; AntiCircumvention Inquiry (Third Country Assembly,
Malaysia); Petitioners’ Response to Objections of
Solidbend Fittings & Flanges,’’ dated June 22, 2017
(the petitioners’’ Objection Comments).
10 See Letter from Arah Dagang to the Secretary
of Commerce, ‘‘Carbon Steel Butt-Weld Pipe
Fittings from China: Response to Request for AntiCircumvention Inquiry,’’ dated July 21, 2017.
11 See Letter from Paul Walker, Program Manager,
to Tube Forgings of America, Mills Iron Works, Inc.,
and Hackney Ladish, Inc, ‘‘Request for Producers
and Exporters from Malaysia: Carbon Steel ButtWeld Pipe Fittings from the People’s Republic of
China,’’ dated August 8, 2017; and Letter from the
petitioners to Secretary of Commerce, ‘‘Carbon Steel
Butt-Weld Pipe Fittings from The People’s Republic
of China; A–570–814; Anticircumvention Inquiry
(Third Country Assembly, Malaysia); Petitioners’
6 Id.,
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2017, and August 18, 2017, we received
additional comments from Solidbend
and Pantech, respectively, opposing the
initiation of an anti-circumvention
inquiry based on the petitioners’
circumvention allegation.12 13
Scope of the Order
The merchandise covered by the order
consists of certain carbon steel buttweld pipe fittings, having an inside
diameter of less than 14 inches,
imported in either finished or
unfinished form. These formed or forged
pipe fittings are used to join sections in
piping systems where conditions
require permanent, welded connections,
as distinguished from fittings based on
other fastening methods (e.g., threaded,
grooved, or bolted fittings).14 Carbon
steel butt-weld pipe fittings are
currently classified under subheading
7307.93.30 of the HTSUS. The HTSUS
subheading is provided for convenience
and customs purposes. The written
product description remains dispositive.
sradovich on DSK3GMQ082PROD with NOTICES
Determination To Not Initiate a Scope
Proceeding
As noted above, the petitioners have
requested the Department initiate either
a scope proceeding to clarify whether
the scope of the Order on butt-weld pipe
fittings includes the merchandise in
question pursuant to 19 CFR 351.225(k)
or an anti-circumvention proceeding
pursuant to section 781(b) of the Act
and 19 CFR 351.225(h). In the instant
case, although the petitioners have
provided substantial record evidence
which may support the initiation of
either type of inquiry, the Department
has concluded that the issues raised by
the parties are better addressed in the
context of an anti-circumvention
proceeding pursuant to section 781(b) of
the Act and 19 CFR 351.225(h).15 As a
Response to the Department’s August 8, 2017
Letter,’’ dated August 10, 2017.
12 See Letter from Solidbend, ‘‘Carbon Steel ButtWeld Pipe Fittings from the People’s Republic of
China Anti-Circumvention Inquiry (Third-Country
Assembly Malaysia),’’ dated August 14, 2017; and
Letter from Pantech to the Secretary of Commerce,
‘‘Carbon Steel Butt-Weld Pipe Fittings from the
People’s Republic of China: Response to Petitioners’
August 10, 2017, Letter Identify,’’ dated August 16,
2017.
13 After consideration of the comments filed by
interested parties in opposition to the initiation of
the petitioners’ circumvention allegation, the
Department will address the arguments and factual
information presented in the comments during the
course of this anti-circumvention inquiry.
14 See Order.
15 As such, the remainder of this notice will focus
on the statutory criteria for the initiation of an anticircumvention inquiry, as defined in section 781(b)
of the Act. See also the Analysis section of this
notice, below, for the full discussion of the
Department’s determination to initiate an anticircumvention inquiry pursuant to section 781(b) of
the Act and 19 CFR 351.225(h).
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result of this determination, the
Department will not initiate a scope
proceeding pursuant to 19 CFR
351.225(k) at this time.
Merchandise Subject to the AntiCircumvention Inquiry
This anti-circumvention inquiry
covers imports of butt-weld pipe fittings
sourced from unfinished or finished
butt-weld pipe fittings from the PRC
that have undergone minor finishing
processes, or were simply marked with
‘‘Malaysia’’ as the country of origin, in
Malaysia, before export to the United
States.
Initiation of Anti-Circumvention
Inquiry
Section 781(b)(1) of the Act provides
that the Department may find
circumvention of an antidumping or
countervailing 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 an anticircumvention inquiry, under section
781(b)(1) of the Act, the Department will
rely on the following criteria: (A) The
merchandise imported into the United
States is of the same class or kind as any
merchandise produced in a foreign
country that is the subject of an
antidumping or countervailing duty
order or finding; (B) before importation
into the United States, such imported
merchandise is completed or assembled
in another foreign country from
merchandise which is subject to the
order or merchandise which is
produced in the foreign country that is
subject to the order; (C) the process of
assembly or completion in the foreign
country referred to in section (B) is
minor or insignificant; (D) the value of
the merchandise produced in the
foreign country to which the
antidumping or countervailing duty
order applies is a significant portion of
the total value of the merchandise
exported to the United States; and (E)
the administering authority determines
that action is appropriate to prevent
evasion of such order or finding. As
discussed below, the petitioners
provided evidence with respect to these
criteria.
A. Merchandise of the Same Class or
Kind
The petitioners state that the buttweld pipe fittings exported to the
United States from Malaysia are the
same class or kind as the butt-weld pipe
fittings covered by the Order.16 The
petitioners assert that merchandise
subject to the Order is comprised of
butt-weld pipe fittings ‘‘{i}mported in
either finished or unfinished form.’’ 17
According to the petitioners, the
language of the scope establishes that,
once the fitting has been formed, either
in finished or unfinished form,
regardless of any finishing process
occurring in Malaysia, such
merchandise is subject to the Order.18
Additionally, the petitioners also
provided affidavits, as well as an email
from a Malaysian manufacturer, Globefit
Manufacturing (Globefit), indicating that
Malaysian exporters and producers are
exporting merchandise identical to that
which is subject to the Order.19 Since
the merchandise being imported into
the United States from Malaysia is
physically identical to the subject
merchandise from the PRC, pursuant to
section 781(b)(1)(A) of the Act, the
petitioners state that the butt-weld pipe
fittings are of the same class or kind of
merchandise as the butt-weld pipe
fittings subject to the Order.
B. Completion of Merchandise in a
Foreign Country
Section 781(b)(1)(B)(ii) of the Act
requires the Department to determine
whether, ‘‘before importation into the
United States, such imported
merchandise is completed or assembled
in another foreign country from
merchandise which is produced in the
foreign country with respect to which
such order or finding applies.’’ The
petitioners presented evidence
demonstrating how butt-weld pipe
fittings are completed in Malaysia
through finishing or simply marking
with ‘‘Malaysia’’ as the country-oforigin, from finished or unfinished buttweld pipe fittings manufactured and
imported from the PRC.20 Additionally,
the petitioners provided evidence that
there is very little production of buttweld pipe fittings in Malaysia and that
most Malaysian producers have
converted their manufacturing
operations to trading warehouses
focusing on exports to the United States
by sourcing butt-weld pipe fittings from
the PRC, Taiwan, and South Korea.21
The petitioners submitted evidence that
the capacity to produce butt-weld pipe
fittings significantly decreased and,
thus, the few remaining Malaysian
manufacturers must use imported
finished or unfinished butt-weld pipe
17 Id.,
at 9.
at 10; Order.
19 Id., at 10 and Attachments 1 and 2.
20 Id., at 11, 12, and 15 and Attachments 1 and
18 Id.,
2.
16 See
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21 Id.
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Federal Register / Vol. 82, No. 164 / Friday, August 25, 2017 / Notices
fittings from the PRC, which then
undergo only minor finishing or are
simply stamped with ‘‘Malaysia’’ as the
country-of-origin.22 As support, the
petitioners provided an affidavit and
email documenting that a Malaysian
manufacturer, Globefit, had
arrangements to purchase unfinished
fittings with a PRC butt-weld pipe
fitting manufacturer and finish the
fittings, which would be stamped with
‘‘Malaysia’’ as the country-of-origin
along with a certificate, for export to the
United States with the purpose of
evading the Order.23
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 is minor or
insignificant. The petitioners allege that
the production of butt-weld pipe fittings
in the PRC, which subsequently
undergoes only minor finishing
processes, or are simply marked with
‘‘Malaysia’’ as the country-of-origin,
comprises most the value associated
with the merchandise imported from
Malaysia into the United States, and
that the processing occurring in
Malaysia adds relatively little to the
overall value of the finished butt-weld
pipe fittings.24
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(1) Level of Investment
The petitioners do not have access to
the actual level of investment for
manufacturing butt-weld pipe fittings in
Malaysia.25 Accordingly, the petitioners
provided an affidavit indicating that
Malaysian manufacturers of butt-weld
pipe fittings have switched their
operations from manufacturing to
import/export trading and, thus, the
level of investment to manufacture buttweld pipe fittings in Malaysia declined
and is minimal.26 In support of their
argument that the level of investment in
Malaysia is minimal, the petitioners
provided an affidavit from TFA
asserting that the cost in equipment to
cut, heat, and form seamless pipe into
rough fittings is substantially higher
than the cost in equipment necessary to
only perform the finishing steps for the
finished butt-weld pipe fittings, which
comprises approximately less than
twenty percent of the total cost.27
Moreover, the petitioners submitted
evidence that the level of investment to
merely stamp the butt-weld pipe fittings
22 Id.
23 Id.
24 Id.,
at 17.
25 Id.
26 Id.,
27 Id.,
at 17 and Attachment 2.
at 18 and Attachment 3.
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with ‘‘Malaysia’’ as the country-of-origin
accounts for relatively little of the total
cost of equipment needed to complete
the full integrated production of a
finished butt-weld pipe fitting.28 While
the investment costs of a U.S. producer
are not identical to those of a PRC or
Malaysian producer, the petitioners
argue, based on their own experience,
that the investment costs of equipment
for each production step would be the
same relative to the total equipment cost
regardless of the location of the
producer.29
fitting, which is performed in Malaysia,
only involves the third-step of the
production process for butt-weld pipe
fittings.35 As a consequence, because the
production process is so minimal in
Malaysia and unfinished fittings are of
the same class or kind of merchandise
as the finished butt-weld pipe fittings,
the petitioners maintain that the
finished butt-weld pipe fittings
produced in Malaysia from finished or
unfinished butt-weld pipe fittings
exported from the PRC are subject to the
Order.
(2) Level of Research and Development
The petitioners assert that butt-weld
pipe fittings are a technologically
mature product and that there has been
no significant advancement in the
product or its production for decades.30
As such, the level of research and
development to produce butt-weld pipe
fittings is minimal to non-existent.31
(4) Extent of Production in Malaysia
The petitioners argue that production
facilities in Malaysia are more limited
compared to facilities in the PRC.36 This
is because Malaysian manufacturers
primarily have shifted their business
model from manufacturing to trading
and, thus, the production capacity in
Malaysia is significantly smaller than it
may have been in prior years, as
identified in the petitioners’ submitted
affidavit.37 Moreover, the petitioners
cite information indicating that the
production facilities in Malaysia for
butt-weld pipe fittings are limited to
finishing operations, and, in some
instances, limited to only stamping buttweld pipe fittings with a ‘‘Malaysia’’
country-of-origin mark.38
(3) Nature of Production Process in
Malaysia
According to the petitioners, the
additional processing undertaken by
Malaysian producers of butt-weld pipe
fittings is minimal.32 Regardless of
whether butt-weld pipe fittings exported
from the PRC to Malaysia are in finished
or unfinished forms, the production
steps performed are minor, according to
the petitioners.33 Conversely, the
manufacturing process to produce buttweld pipe fittings in the PRC from the
beginning of the production process is
much more complex. Specifically, the
manufacturing process for butt-weld
pipe fittings consists of three production
phases: (1) The seamless carbon steel
pipe is transformed into a rough shape
of an elbow, tee, etc., through a cold- or
hot-forming process that produces the
rough pipe fitting; (2) then, the rough
pipe fitting goes through a reforming or
sizing process to ensure that the fitting
will match the pipe to which it is to be
welded; and (3) the final stage that
produces the finished butt-weld pipe
fitting includes shot blasting or
cleaning, machine beveling of the
fitting, boring and tapering its interior,
grinding, die stamping, and painting.34
In contrast, the processing of unfinished
forms into a finished butt-weld pipe
28 Id.
29 Id.
30 Id., at 19 (citing to Carbon Steel Butt-Weld Pipe
Fittings from Brazil, China, Japan, Taiwan, and
Thailand, Inv. Nos. 731–TA–308–310 and 520–521,
USITC Pub. 4628 (August 2016) (Fourth Sunset
Review) at I–3).
31 Id.
32 Id., at 19.
33 Id.
34 Id., at 16 (citing to Fourth Sunset Review at I–
3 and I–6).
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(5) Value of Processing in Malaysia
The petitioners assert that the
production of butt-weld pipe fittings in
the PRC accounts for a large percentage
of the total value of the finished buttweld pipe fittings that are produced in
Malaysia.39 Using information provided
in an affidavit from TFA, the petitioners
posit that the price of unfinished or
finished butt-weld pipe fittings is
between approximately 80 percent to
100 percent of the price of finished buttweld pipe fittings.40 Thus, the valueadded in Malaysia by either just
finishing the unfinished butt-weld pipe
fittings or merely adding the ‘‘Malaysia’’
country-of-origin marking ranges from
an estimated 15 percent to a
considerably lesser value added. Thus,
the petitioners maintain that the
completion activities in Malaysia add
very little to the finished butt-weld pipe
fittings exported to the United States
from butt-weld pipe fittings sourced
from the PRC.41 This conclusion is
comparable to the little amount of value
added by finishing operations
35 Id.,
at 19 and Attachment 2.
at 20.
37 Id., at 20 and Attachment 2.
38 Id.
39 Id., at 21 and Attachment 3.
40 Id.
41 Id.
36 Id.
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performed in Thailand on butt-weld
pipe fittings sourced from the PRC in
the Final Determination of
Circumvention 1994.42
D. Value of Merchandise Produced in
the PRC
The petitioners argue that the
evidence, as noted above, in their anticircumvention request clearly supports
their position that the value of
unfinished and finished butt-weld pipe
fittings produced in the PRC, and then
finished or marked with a Malaysian
country-origin mark, represents a
significant portion of the total value of
the merchandise exported to the United
States, as measured by a percentage of
the total cost of manufacture.43
E. Additional Factors To Consider in
Determining Whether Inquiry in
Warranted
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, such as ‘‘(A) the
pattern of trade, including sourcing
patterns, (B) whether the manufacturer
or exporter of the merchandise . . . is
affiliated with the person who uses the
merchandise . . . to assemble or
complete in the foreign country the
merchandise that is subsequently
imported in the United States, and (C)
whether imports into the foreign
country of the merchandise . . . have
increased after initiation of the
investigation which resulted in the
issuance of such order or finding.’’
(1) Pattern of Trade
The petitioners state that the record
evidence demonstrates that, since the
imposition of the Order, a pattern of
trade illustrates circumvention between
the levels of imports for butt-weld pipe
fittings between the PRC, Malaysia, and
the United States.44 Publicly-available
import data show that PRC-origin
imports of butt-weld pipe fittings into
Malaysia increased significantly in
recent years, and a steady increase in
exports from Malaysia to the United
States since the imposition of the
Order.45 Also, between 2010 and 2015,
42 Id.
(2) Affiliation
The petitioners provided no
information regarding the affiliation
between PRC producers of unfinished
and finished butt-weld pipe fittings, and
Malaysian producers of butt-weld pipe
fittings that undergo only minor
finishing processes, or are simply
marked with ‘‘Malaysia’’ as the countryof-origin.
(3) Subsequent Import Volume
The petitioners presented evidence
indicating that shipments of butt-weld
pipe fittings from the PRC to Malaysia
steadily increased since imposition of
the Order, whereas shipments of buttweld pipe fittings from the PRC to the
United States steadily declined.48 No
other factual information contradicts
this claim.
Analysis of the Allegation
Based on our analysis of the
petitioners’ anti-circumvention inquiry
allegation, the Department determines
that the petitioners have satisfied the
criteria under section 781(b)(1) of the
Act to warrant the initiation of an anticircumvention inquiry of the Order on
butt-weld pipe fittings from the PRC.
With regard to whether the
merchandise from Malaysia is of the
same class or kind as the merchandise
produced in the PRC, the petitioners
presented information to the
Department indicating that, pursuant to
section 781(b)(1)(A) of the Act, the
merchandise being produced in and/or
exported from Malaysia may be of the
same class or kind as butt-weld pipe
fittings produced in the PRC, which is
subject to the Order.49 Consequently,
the Department finds that the
43 Id.,
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at 22.
at 23.
45 Id., at 23 and Attachment 4. The petitioners
stated that all imports of butt-weld pipe fittings
from the PRC into Malaysia, the PRC into the
United States, and Malaysia into the United States
declined in 2016, but this was due to the substantial
decline in oil prices globally and this decline is not
an indication that circumvention of the Order
through Malaysia ceased, which is further
supported by the Fourth Sunset Review. Id., at 24–
publicly-available import data show a
marked increase of PRC-origin butt-weld
pipe fittings into Malaysia coincides
with a decline in volume of exports
from the PRC to the United States.46
Additionally, the petitioners submit that
the record evidence shows that, while
butt-weld pipe fittings exported from
the PRC to the United States declined
between 2010 and 2015, butt-weld pipe
fittings exported from Malaysia to the
United States increased steadily at the
same time.47 No other factual
information on the record contradicts
this claim.
44 Id.
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25 at footnote 59; Carbon Steel Butt-Weld Pipe
Fittings from Brazil, China, Japan, Taiwan, and
Thailand, Inv. Nos. 731–TA–308–310 and 520–21,
USITC Pub. 4628 (August 2016) (Fourth Sunset
Review) at 6 and I–6.
46 See the petitioners’ Request at 24–25 and
Attachment 4.
47 Id.
48 Id., at 25–6 and Attachment 4.
49 Id. at 9–10.
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40559
petitioners provided sufficient
information in their request regarding
the class or kind of merchandise to
support the initiation of this anticircumvention inquiry.
With regard to completion or
assembly of merchandise in a foreign
country, pursuant to section 781(b)(1)(B)
of the Act, the petitioners also presented
information to the Department
indicating that the butt-weld pipe
fittings exported from Malaysia to the
United States are produced in Malaysia
using butt-weld pipe fittings from the
PRC, which account for a significant
portion of the total costs related to the
production of butt-weld pipe fittings.50
We find that the information presented
by the petitioners regarding this
criterion supports their request to
initiate this anti-circumvention inquiry.
The Department finds that the
petitioners sufficiently addressed the
factors described in section 781(b)(1)(C)
and 781(b)(2) of the Act regarding
whether the assembly or completion of
butt-weld pipe fittings in Malaysia is
minor or insignificant. In particular, the
petitioners’ submission asserts that: (1)
The level of investment of butt-weld
pipe fittings is minimal in Malaysia; (2)
research and development is not taking
place in Malaysia; (3) the production
process involves only finishing or
simply stamping with a Malaysian
country-of-origin mark on butt-weld
pipe fittings from a country subject to
the Order; (4) the production facilities
in Malaysia are more limited compared
to facilities in the PRC; and (5) the value
of the processing performed in Malaysia
is minimal, as the production of buttweld pipe fittings in the PRC accounts
for approximately 80 percent to 100
percent of the value of finished buttweld pipe fittings.51
With respect to the value of the
merchandise produced in the PRC,
pursuant to section 78l(b)(l)(D) of the
Act, the petitioners relied on one of
their member’s information and
arguments in the ‘‘minor or insignificant
process’’ portion of their anticircumvention allegation to indicate
that the value of the unfinished or
finished butt-weld pipe fittings,
produced in the PRC, may be significant
relative to the total value of the finished
butt-weld pipe fittings exported from
Malaysia to the United States.52 We find
that this information adequately meets
the requirements of this factor, as
discussed above, for the purposes of
50 Id.,
at 21–2 and Attachment 3.
discussion of these five factors above.
52 See the petitioners’ Request at 10–23 and
Attachments 1, 2, and 3.
51 See
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initiating this anticircumvention
inquiry.
With respect to the additional factors
listed under section 781(b)(3) of the Act,
we find that the petitioners presented
evidence indicating that shipments of
butt-weld pipe fittings from Malaysia to
the United States increased since the
imposition of the Order and that
shipments of butt-weld pipe fittings
from the PRC to Malaysia also increased
since the Order took effect, further
supporting initiation of this anticircumvention inquiry.53
Accordingly, we are initiating a
formal anti-circumvention inquiry
concerning the Order on butt-weld pipe
fittings from the PRC, pursuant to
section 781(b) of the Act.
In connection with this anticircumvention inquiry, in order to
determine: (1) The extent to which PRCsourced unfinished or finished buttweld pipe fittings is further processed
into butt-weld pipe fittings in Malaysia
before shipment to the United States; (2)
the extent to which a country-wide
finding applicable to all exports might
be warranted, as alleged by the
petitioners; and (3) whether the process
of turning PRC-sourced unfinished or
finished butt-weld pipe fittings into
finished butt-weld pipe fittings
processed in Malaysia is minor or
insignificant, the Department will issue
questionnaires to Malaysian producers
and exporters of butt-weld pipe fittings
to the United States. The Department
will issue questionnaires to solicit
information from the Malaysian
producers and exporters concerning
their shipments of butt-weld pipe
fittings to the United States and the
origin of the imported unfinished or
finished butt-weld pipe fittings being
processed into butt-weld pipe fittings.
Companies failing to respond
completely and timely to the
Department’s questionnaire may be
deemed uncooperative and an adverse
inference may be applied in
determining whether such companies
are circumventing the Order. See
section 776 of the Act.
Finally, while we believe sufficient
factual information has been submitted
by the petitioners supporting their
request for an inquiry, we do not find
that the record supports the
simultaneous issuance of a preliminary
ruling. Such inquiries are by their
nature complicated and require
additional information regarding
production in both the country subject
to the order and the third-country
completing the product. As noted above,
53 See the petitioners’ Request at 23–5 and
Attachment 4.
VerDate Sep<11>2014
17:40 Aug 24, 2017
Jkt 241001
the Department intends to request
additional information regarding the
statutory criteria to determine whether
shipments of butt-weld pipe fittings
from Malaysia are circumventing the
Order on butt-weld pipe fittings from
the PRC. Thus, further development of
the record is required before a
preliminary ruling can be issued.
Notification to Interested Parties
In accordance with 19 CFR
351.225(e), the Department finds that
the issue of whether a product is
included within the scope of any 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 anticircumvention inquiries. Additionally,
in accordance with 19 CFR
351.225(f)(1)(i) and (ii), in this notice of
initiation issued under 19 CFR
351.225(e), we included a description of
the product that is the subject of this
anti-circumvention inquiry (i.e., buttweld pipe fittings that contain the
characteristics as provided in the scope
of the Order), and an explanation of the
reasons for the Department’s decision to
initiate this anti-circumvention inquiry,
as provided above.
In accordance with 19 CFR
351.225(1)(2), if the Department issues
an affirmative preliminary
determination, we will then instruct
U.S. Customs and Border Protection to
suspend liquidation and require cash
deposits of estimated antidumping
duties, at the applicable rates, for each
unliquidated entry of the merchandise
at issue, entered or withdrawn from
warehouse for consumption on or after
the date of initiation of the inquiry. The
Department will establish a schedule for
questionnaires and comments for this
inquiry. In accordance with section
781(f) of the Act and 19 CFR
351.225(f)(5), the Department intends to
issue its final determination within 300
days of the date of publication of this
notice.
This notice is published in
accordance with 19 CFR 351.225(f).
Dated: August 21, 2017.
Gary Taverman,
Deputy Assistant Secretary for Antidumping
and Countervailing Duty Operations,
performing the non-exclusive functions and
duties of the Assistant Secretary for
Enforcement and Compliance.
[FR Doc. 2017–18046 Filed 8–24–17; 8:45 am]
BILLING CODE 3510–DS–P
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Frm 00023
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DEPARTMENT OF COMMERCE
International Trade Administration
[A–570–979]
Crystalline Silicon Photovoltaic Cells,
Whether or Not Assembled Into
Modules, from the People’s Republic
of China: Amended Final Results of
Antidumping Duty Administrative
Review; 2014–2015
Enforcement and Compliance,
International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce
(the Department) is amending its final
results of the third administrative
review of the antidumping duty (AD)
order on crystalline silicon photovoltaic
cells, whether or not assembled into
modules (solar cells), from the People’s
Republic of China (PRC). The period of
review (POR) is December 1, 2014,
through November 30, 2015. The
amended final weighted-average
dumping margins are listed below in the
section entitled, ‘‘Amended Final
Results.’’
DATES: Applicable August 25, 2017.
FOR FURTHER INFORMATION CONTACT:
Krisha Hill, AD/CVD Operations, Office
IV, Enforcement & Compliance,
International Trade Administration,
Department of Commerce, 1401
Constitution Avenue NW, Washington,
DC 20230; telephone: (202) 482–4037.
SUPPLEMENTARY INFORMATION:
AGENCY:
Background
On June 27, 2017, the Department
published the final results of the 2014–
2015 administrative review of the AD
order on solar cells from the PRC in the
Federal Register.1 In addition, on June
27, 2017, the Department disclosed to
interested parties its calculations for the
final results.2 On June 30, 2017, the
Department received a timely filed
ministerial error allegation from
SolarWorld Americas, Inc. (the
petitioner) regarding the Department’s
calculation of the dumping margin for
Trina,3 one of the mandatory
1 See Crystalline Silicon Photovoltaic Cells,
Whether or Not Assembled Into Modules, from the
People’s Republic of China: Final Results of
Antidumping Duty Administrative Review and
Final Determination of No Shipments; 2014–2015,
82 FR 29033 (June 27, 2017) (Final Results) and
accompanying Issues and Decision Memorandum
(IDM).
2 See Department Letter, re: Antidumping Duty
Administrative Review of Crystalline Silicon
Photovoltaic Cells, Whether or Not Assembled Into
Modules, from the People’s Republic of China:
Ministerial Error Comments,’’ dated June 29, 2017.
3 The Department treated the following six
companies as a single entity: Changzhou Trina
Solar Energy Co., Ltd./Trina Solar (Changzhou)
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[Federal Register Volume 82, Number 164 (Friday, August 25, 2017)]
[Notices]
[Pages 40556-40560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18046]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-814]
Carbon Steel Butt-Weld Pipe Fittings From the People's Republic
of China: Initiation of Anti-Circumvention Inquiry on the Antidumping
Duty Order
AGENCY: Enforcement and Compliance, International Trade Administration,
Department of Commerce.
SUMMARY: In response to requests from Tube Forgings of America, Inc.
(TFA), Mills Iron Works, Inc. (Mills), and Hackney Ladish, Inc.
(Hackney), (collectively, the petitioners), the U.S. Department of
Commerce (the Department) is initiating an anti-circumvention inquiry.
In this inquiry, the Department will determine whether certain imports
of carbon steel butt-weld pipe fittings (butt-weld pipe fittings) into
the United States, exported from Malaysia, which were completed in
Malaysia using finished or unfinished butt-weld pipe fittings sourced
from the People's Republic of China (PRC), are circumventing the
antidumping duty order on butt-weld pipe fittings from the PRC.
DATES: Applicable August 25, 2017.
FOR FURTHER INFORMATION CONTACT: Julia Hancock at (202) 482-1394, AD/
CVD Operations, Enforcement and Compliance, U.S. Department of
Commerce, 1401 Constitution Avenue NW., Washington, DC 20230.
SUPPLEMENTARY INFORMATION: On July 6, 1992, the Department issued the
Order on imports of butt-weld pipe fittings from the PRC.\1\
Additionally, on March 31, 1994, the Department issued the affirmative
final determination finding that imports into the United States of pipe
fittings that were finished in Thailand from unfinished pipe fittings
produced in the PRC constituted circumvention of the Order within the
meaning of section 781(b) of the Tariff Act of 1930, as amended (the
Act).\2\ The Department applied this finding of circumvention to all
imports of butt-weld pipe fittings from Thailand, regardless of
manufacturer/producer, unless accompanied by a certification stating
that such pipe fittings have not been produced from unfinished PRC pipe
fittings.\3\
---------------------------------------------------------------------------
\1\ See Antidumping Duty Order and Amendment to the Final
Determination of Sales at Less Than Fair Value; Certain Carbon Steel
Butt-Weld Pipe Fittings from the People's Republic of China, 57 FR
29702 (July 6, 1992) (Order).
\2\ See Certain Carbon Steel Butt-Weld Pipe Fittings from the
People's Republic of China; Affirmative Final Determination of
Circumvention of Antidumping Duty Order, 59 FR 15155 (March 31,
1994) (Final Determination of Circumvention 1994).
\3\ Id., at 15158, 15159.
---------------------------------------------------------------------------
On May 22, 2017, the petitioners, pursuant to section 781(b) of the
Act and 19 CFR 351.225(h), submitted a properly filed request for the
Department to initiate an anti-circumvention inquiry to determine
whether certain imports of butt-weld pipe fittings which were completed
in Malaysia using finished or unfinished butt-weld pipe fittings
sourced from the PRC are circumventing the Order.\4\ Specifically, the
petitioners allege that certain imports of butt-weld pipe fittings
sourced from unfinished or finished butt-weld pipe fittings from the
PRC have undergone minor finishing processes, or were simply marked
with ``Malaysia'' as the country of origin, in Malaysia, before export
to the United States. The petitioners request that the Department treat
all butt-weld pipe fittings imported from Malaysia, regardless of
producer or exporter, as subject merchandise under the scope of the
Order and impose cash deposit requirements for estimated antidumping
duties on all imports of butt-weld pipe fittings from Malaysia.\5\ In
the alternative to an anti-circumvention inquiry, the petitioners
requested that we initiate and issue a preliminary scope ruling that
certain imports of butt-weld pipe fittings which were completed in
Malaysia using finished or unfinished butt-weld pipe fittings sourced
from the PRC are covered by the scope of the Order, pursuant to 19 CFR
351.225(k).\6\
---------------------------------------------------------------------------
\4\ See Letter from the petitioners to the Secretary of
Commerce, ``Carbon Steel Butt-Weld Pipe Fittings from the People's
Republic of China; Request for Circumvention Ruling to Section
781(b) of the Tariff Act of 1930,'' dated May 22, 2017 (the
petitioners' Request).
\5\ See the petitioners' Request at 26-30.
\6\ Id., at 28-9.
---------------------------------------------------------------------------
On May 26, 2017, we received comments objecting to the allegations
made by the petitioners from Pantech Steel Industries SDN Ph.D.
(Pantech).\7\ Also, on June 14, 2017, we received comments objecting to
the allegations made by the petitioners from Solidbend Fittings &
Flanges Sdn. Bhd. (Solidbend).\8\ On June 22, 2017, we received
rebuttal comments from the petitioners regarding Solidbend's
comments.\9\ Additionally, on July 21, 2017, we received comments
objecting to the allegations made by the petitioners from Arah Dagang
Sdn Bhd (Arah Dagang).\10\
---------------------------------------------------------------------------
\7\ See Letter from Pantech to the Secretary of Commerce,
``Carbon Steel Butt-Weld Pipe Fittings from the People's Republic of
China: Response to Request for Anti-Circumvention Inquiry,'' dated
May 26, 2017).
\8\ See Letter from Solidbend, ``Carbon Steel Butt-Weld Pipe
Fittings from the People's Republic of China Anti-Circumvention
Inquiry (Third-Country Assembly Malaysia),'' dated June 14, 2017.
\9\ See Letter from the petitioners to the Secretary of
Commerce, ``Carbon Steel Butt-Weld Pipe Fittings from the People's
Republic of China; Anti-Circumvention Inquiry (Third Country
Assembly, Malaysia); Petitioners' Response to Objections of
Solidbend Fittings & Flanges,'' dated June 22, 2017 (the
petitioners'' Objection Comments).
\10\ See Letter from Arah Dagang to the Secretary of Commerce,
``Carbon Steel Butt-Weld Pipe Fittings from China: Response to
Request for Anti-Circumvention Inquiry,'' dated July 21, 2017.
---------------------------------------------------------------------------
On August 8, 2017, we requested a list of all known producers and
exporters of butt-weld pipe fittings in Malaysia from the petitioners,
and on August 10, 2017, the petitioners submitted their response.\11\
Additionally, on August 14,
[[Page 40557]]
2017, and August 18, 2017, we received additional comments from
Solidbend and Pantech, respectively, opposing the initiation of an
anti-circumvention inquiry based on the petitioners' circumvention
allegation.12 13
---------------------------------------------------------------------------
\11\ See Letter from Paul Walker, Program Manager, to Tube
Forgings of America, Mills Iron Works, Inc., and Hackney Ladish,
Inc, ``Request for Producers and Exporters from Malaysia: Carbon
Steel Butt-Weld Pipe Fittings from the People's Republic of China,''
dated August 8, 2017; and Letter from the petitioners to Secretary
of Commerce, ``Carbon Steel Butt-Weld Pipe Fittings from The
People's Republic of China; A-570-814; Anticircumvention Inquiry
(Third Country Assembly, Malaysia); Petitioners' Response to the
Department's August 8, 2017 Letter,'' dated August 10, 2017.
\12\ See Letter from Solidbend, ``Carbon Steel Butt-Weld Pipe
Fittings from the People's Republic of China Anti-Circumvention
Inquiry (Third-Country Assembly Malaysia),'' dated August 14, 2017;
and Letter from Pantech to the Secretary of Commerce, ``Carbon Steel
Butt-Weld Pipe Fittings from the People's Republic of China:
Response to Petitioners' August 10, 2017, Letter Identify,'' dated
August 16, 2017.
\13\ After consideration of the comments filed by interested
parties in opposition to the initiation of the petitioners'
circumvention allegation, the Department will address the arguments
and factual information presented in the comments during the course
of this anti-circumvention inquiry.
---------------------------------------------------------------------------
Scope of the Order
The merchandise covered by the order consists of certain carbon
steel butt-weld pipe fittings, having an inside diameter of less than
14 inches, imported in either finished or unfinished form. These formed
or forged pipe fittings are used to join sections in piping systems
where conditions require permanent, welded connections, as
distinguished from fittings based on other fastening methods (e.g.,
threaded, grooved, or bolted fittings).\14\ Carbon steel butt-weld pipe
fittings are currently classified under subheading 7307.93.30 of the
HTSUS. The HTSUS subheading is provided for convenience and customs
purposes. The written product description remains dispositive.
---------------------------------------------------------------------------
\14\ See Order.
---------------------------------------------------------------------------
Determination To Not Initiate a Scope Proceeding
As noted above, the petitioners have requested the Department
initiate either a scope proceeding to clarify whether the scope of the
Order on butt-weld pipe fittings includes the merchandise in question
pursuant to 19 CFR 351.225(k) or an anti-circumvention proceeding
pursuant to section 781(b) of the Act and 19 CFR 351.225(h). In the
instant case, although the petitioners have provided substantial record
evidence which may support the initiation of either type of inquiry,
the Department has concluded that the issues raised by the parties are
better addressed in the context of an anti-circumvention proceeding
pursuant to section 781(b) of the Act and 19 CFR 351.225(h).\15\ As a
result of this determination, the Department will not initiate a scope
proceeding pursuant to 19 CFR 351.225(k) at this time.
---------------------------------------------------------------------------
\15\ As such, the remainder of this notice will focus on the
statutory criteria for the initiation of an anti-circumvention
inquiry, as defined in section 781(b) of the Act. See also the
Analysis section of this notice, below, for the full discussion of
the Department's determination to initiate an anti-circumvention
inquiry pursuant to section 781(b) of the Act and 19 CFR 351.225(h).
---------------------------------------------------------------------------
Merchandise Subject to the Anti-Circumvention Inquiry
This anti-circumvention inquiry covers imports of butt-weld pipe
fittings sourced from unfinished or finished butt-weld pipe fittings
from the PRC that have undergone minor finishing processes, or were
simply marked with ``Malaysia'' as the country of origin, in Malaysia,
before export to the United States.
Initiation of Anti-Circumvention Inquiry
Section 781(b)(1) of the Act provides that the Department may find
circumvention of an antidumping or countervailing 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 an anti-circumvention inquiry, under
section 781(b)(1) of the Act, the Department will rely on the following
criteria: (A) The merchandise imported into the United States is of the
same class or kind as any merchandise produced in a foreign country
that is the subject of an antidumping or countervailing duty order or
finding; (B) before importation into the United States, such imported
merchandise is completed or assembled in another foreign country from
merchandise which is subject to the order or merchandise which is
produced in the foreign country that is subject to the order; (C) the
process of assembly or completion in the foreign country referred to in
section (B) is minor or insignificant; (D) the value of the merchandise
produced in the foreign country to which the antidumping or
countervailing duty order applies is a significant portion of the total
value of the merchandise exported to the United States; and (E) the
administering authority determines that action is appropriate to
prevent evasion of such order or finding. As discussed below, the
petitioners provided evidence with respect to these criteria.
A. Merchandise of the Same Class or Kind
The petitioners state that the butt-weld pipe fittings exported to
the United States from Malaysia are the same class or kind as the butt-
weld pipe fittings covered by the Order.\16\ The petitioners assert
that merchandise subject to the Order is comprised of butt-weld pipe
fittings ``{i{time} mported in either finished or unfinished form.''
\17\ According to the petitioners, the language of the scope
establishes that, once the fitting has been formed, either in finished
or unfinished form, regardless of any finishing process occurring in
Malaysia, such merchandise is subject to the Order.\18\ Additionally,
the petitioners also provided affidavits, as well as an email from a
Malaysian manufacturer, Globefit Manufacturing (Globefit), indicating
that Malaysian exporters and producers are exporting merchandise
identical to that which is subject to the Order.\19\ Since the
merchandise being imported into the United States from Malaysia is
physically identical to the subject merchandise from the PRC, pursuant
to section 781(b)(1)(A) of the Act, the petitioners state that the
butt-weld pipe fittings are of the same class or kind of merchandise as
the butt-weld pipe fittings subject to the Order.
---------------------------------------------------------------------------
\16\ See the petitioners' Request at 9-10.
\17\ Id., at 9.
\18\ Id., at 10; Order.
\19\ Id., at 10 and Attachments 1 and 2.
---------------------------------------------------------------------------
B. Completion of Merchandise in a Foreign Country
Section 781(b)(1)(B)(ii) of the Act requires the Department to
determine whether, ``before importation into the United States, such
imported merchandise is completed or assembled in another foreign
country from merchandise which is produced in the foreign country with
respect to which such order or finding applies.'' The petitioners
presented evidence demonstrating how butt-weld pipe fittings are
completed in Malaysia through finishing or simply marking with
``Malaysia'' as the country-of-origin, from finished or unfinished
butt-weld pipe fittings manufactured and imported from the PRC.\20\
Additionally, the petitioners provided evidence that there is very
little production of butt-weld pipe fittings in Malaysia and that most
Malaysian producers have converted their manufacturing operations to
trading warehouses focusing on exports to the United States by sourcing
butt-weld pipe fittings from the PRC, Taiwan, and South Korea.\21\ The
petitioners submitted evidence that the capacity to produce butt-weld
pipe fittings significantly decreased and, thus, the few remaining
Malaysian manufacturers must use imported finished or unfinished butt-
weld pipe
[[Page 40558]]
fittings from the PRC, which then undergo only minor finishing or are
simply stamped with ``Malaysia'' as the country-of-origin.\22\ As
support, the petitioners provided an affidavit and email documenting
that a Malaysian manufacturer, Globefit, had arrangements to purchase
unfinished fittings with a PRC butt-weld pipe fitting manufacturer and
finish the fittings, which would be stamped with ``Malaysia'' as the
country-of-origin along with a certificate, for export to the United
States with the purpose of evading the Order.\23\
---------------------------------------------------------------------------
\20\ Id., at 11, 12, and 15 and Attachments 1 and 2.
\21\ Id.
\22\ Id.
\23\ Id.
---------------------------------------------------------------------------
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 is minor or insignificant. The petitioners allege that the
production of butt-weld pipe fittings in the PRC, which subsequently
undergoes only minor finishing processes, or are simply marked with
``Malaysia'' as the country-of-origin, comprises most the value
associated with the merchandise imported from Malaysia into the United
States, and that the processing occurring in Malaysia adds relatively
little to the overall value of the finished butt-weld pipe
fittings.\24\
---------------------------------------------------------------------------
\24\ Id., at 17.
---------------------------------------------------------------------------
(1) Level of Investment
The petitioners do not have access to the actual level of
investment for manufacturing butt-weld pipe fittings in Malaysia.\25\
Accordingly, the petitioners provided an affidavit indicating that
Malaysian manufacturers of butt-weld pipe fittings have switched their
operations from manufacturing to import/export trading and, thus, the
level of investment to manufacture butt-weld pipe fittings in Malaysia
declined and is minimal.\26\ In support of their argument that the
level of investment in Malaysia is minimal, the petitioners provided an
affidavit from TFA asserting that the cost in equipment to cut, heat,
and form seamless pipe into rough fittings is substantially higher than
the cost in equipment necessary to only perform the finishing steps for
the finished butt-weld pipe fittings, which comprises approximately
less than twenty percent of the total cost.\27\ Moreover, the
petitioners submitted evidence that the level of investment to merely
stamp the butt-weld pipe fittings with ``Malaysia'' as the country-of-
origin accounts for relatively little of the total cost of equipment
needed to complete the full integrated production of a finished butt-
weld pipe fitting.\28\ While the investment costs of a U.S. producer
are not identical to those of a PRC or Malaysian producer, the
petitioners argue, based on their own experience, that the investment
costs of equipment for each production step would be the same relative
to the total equipment cost regardless of the location of the
producer.\29\
---------------------------------------------------------------------------
\25\ Id.
\26\ Id., at 17 and Attachment 2.
\27\ Id., at 18 and Attachment 3.
\28\ Id.
\29\ Id.
---------------------------------------------------------------------------
(2) Level of Research and Development
The petitioners assert that butt-weld pipe fittings are a
technologically mature product and that there has been no significant
advancement in the product or its production for decades.\30\ As such,
the level of research and development to produce butt-weld pipe
fittings is minimal to non-existent.\31\
---------------------------------------------------------------------------
\30\ Id., at 19 (citing to Carbon Steel Butt-Weld Pipe Fittings
from Brazil, China, Japan, Taiwan, and Thailand, Inv. Nos. 731-TA-
308-310 and 520-521, USITC Pub. 4628 (August 2016) (Fourth Sunset
Review) at I-3).
\31\ Id.
---------------------------------------------------------------------------
(3) Nature of Production Process in Malaysia
According to the petitioners, the additional processing undertaken
by Malaysian producers of butt-weld pipe fittings is minimal.\32\
Regardless of whether butt-weld pipe fittings exported from the PRC to
Malaysia are in finished or unfinished forms, the production steps
performed are minor, according to the petitioners.\33\ Conversely, the
manufacturing process to produce butt-weld pipe fittings in the PRC
from the beginning of the production process is much more complex.
Specifically, the manufacturing process for butt-weld pipe fittings
consists of three production phases: (1) The seamless carbon steel pipe
is transformed into a rough shape of an elbow, tee, etc., through a
cold- or hot-forming process that produces the rough pipe fitting; (2)
then, the rough pipe fitting goes through a reforming or sizing process
to ensure that the fitting will match the pipe to which it is to be
welded; and (3) the final stage that produces the finished butt-weld
pipe fitting includes shot blasting or cleaning, machine beveling of
the fitting, boring and tapering its interior, grinding, die stamping,
and painting.\34\ In contrast, the processing of unfinished forms into
a finished butt-weld pipe fitting, which is performed in Malaysia, only
involves the third-step of the production process for butt-weld pipe
fittings.\35\ As a consequence, because the production process is so
minimal in Malaysia and unfinished fittings are of the same class or
kind of merchandise as the finished butt-weld pipe fittings, the
petitioners maintain that the finished butt-weld pipe fittings produced
in Malaysia from finished or unfinished butt-weld pipe fittings
exported from the PRC are subject to the Order.
---------------------------------------------------------------------------
\32\ Id., at 19.
\33\ Id.
\34\ Id., at 16 (citing to Fourth Sunset Review at I-3 and I-6).
\35\ Id., at 19 and Attachment 2.
---------------------------------------------------------------------------
(4) Extent of Production in Malaysia
The petitioners argue that production facilities in Malaysia are
more limited compared to facilities in the PRC.\36\ This is because
Malaysian manufacturers primarily have shifted their business model
from manufacturing to trading and, thus, the production capacity in
Malaysia is significantly smaller than it may have been in prior years,
as identified in the petitioners' submitted affidavit.\37\ Moreover,
the petitioners cite information indicating that the production
facilities in Malaysia for butt-weld pipe fittings are limited to
finishing operations, and, in some instances, limited to only stamping
butt-weld pipe fittings with a ``Malaysia'' country-of-origin mark.\38\
---------------------------------------------------------------------------
\36\ Id. at 20.
\37\ Id., at 20 and Attachment 2.
\38\ Id.
---------------------------------------------------------------------------
(5) Value of Processing in Malaysia
The petitioners assert that the production of butt-weld pipe
fittings in the PRC accounts for a large percentage of the total value
of the finished butt-weld pipe fittings that are produced in
Malaysia.\39\ Using information provided in an affidavit from TFA, the
petitioners posit that the price of unfinished or finished butt-weld
pipe fittings is between approximately 80 percent to 100 percent of the
price of finished butt-weld pipe fittings.\40\ Thus, the value-added in
Malaysia by either just finishing the unfinished butt-weld pipe
fittings or merely adding the ``Malaysia'' country-of-origin marking
ranges from an estimated 15 percent to a considerably lesser value
added. Thus, the petitioners maintain that the completion activities in
Malaysia add very little to the finished butt-weld pipe fittings
exported to the United States from butt-weld pipe fittings sourced from
the PRC.\41\ This conclusion is comparable to the little amount of
value added by finishing operations
[[Page 40559]]
performed in Thailand on butt-weld pipe fittings sourced from the PRC
in the Final Determination of Circumvention 1994.\42\
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\39\ Id., at 21 and Attachment 3.
\40\ Id.
\41\ Id.
\42\ Id.
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D. Value of Merchandise Produced in the PRC
The petitioners argue that the evidence, as noted above, in their
anti-circumvention request clearly supports their position that the
value of unfinished and finished butt-weld pipe fittings produced in
the PRC, and then finished or marked with a Malaysian country-origin
mark, represents a significant portion of the total value of the
merchandise exported to the United States, as measured by a percentage
of the total cost of manufacture.\43\
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\43\ Id., at 22.
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E. Additional Factors To Consider in Determining Whether Inquiry in
Warranted
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, such as ``(A) the pattern of trade, including sourcing patterns,
(B) whether the manufacturer or exporter of the merchandise . . . is
affiliated with the person who uses the merchandise . . . to assemble
or complete in the foreign country the merchandise that is subsequently
imported in the United States, and (C) whether imports into the foreign
country of the merchandise . . . have increased after initiation of the
investigation which resulted in the issuance of such order or
finding.''
(1) Pattern of Trade
The petitioners state that the record evidence demonstrates that,
since the imposition of the Order, a pattern of trade illustrates
circumvention between the levels of imports for butt-weld pipe fittings
between the PRC, Malaysia, and the United States.\44\ Publicly-
available import data show that PRC-origin imports of butt-weld pipe
fittings into Malaysia increased significantly in recent years, and a
steady increase in exports from Malaysia to the United States since the
imposition of the Order.\45\ Also, between 2010 and 2015, publicly-
available import data show a marked increase of PRC-origin butt-weld
pipe fittings into Malaysia coincides with a decline in volume of
exports from the PRC to the United States.\46\ Additionally, the
petitioners submit that the record evidence shows that, while butt-weld
pipe fittings exported from the PRC to the United States declined
between 2010 and 2015, butt-weld pipe fittings exported from Malaysia
to the United States increased steadily at the same time.\47\ No other
factual information on the record contradicts this claim.
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\44\ Id. at 23.
\45\ Id., at 23 and Attachment 4. The petitioners stated that
all imports of butt-weld pipe fittings from the PRC into Malaysia,
the PRC into the United States, and Malaysia into the United States
declined in 2016, but this was due to the substantial decline in oil
prices globally and this decline is not an indication that
circumvention of the Order through Malaysia ceased, which is further
supported by the Fourth Sunset Review. Id., at 24-25 at footnote 59;
Carbon Steel Butt-Weld Pipe Fittings from Brazil, China, Japan,
Taiwan, and Thailand, Inv. Nos. 731-TA-308-310 and 520-21, USITC
Pub. 4628 (August 2016) (Fourth Sunset Review) at 6 and I-6.
\46\ See the petitioners' Request at 24-25 and Attachment 4.
\47\ Id.
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(2) Affiliation
The petitioners provided no information regarding the affiliation
between PRC producers of unfinished and finished butt-weld pipe
fittings, and Malaysian producers of butt-weld pipe fittings that
undergo only minor finishing processes, or are simply marked with
``Malaysia'' as the country-of-origin.
(3) Subsequent Import Volume
The petitioners presented evidence indicating that shipments of
butt-weld pipe fittings from the PRC to Malaysia steadily increased
since imposition of the Order, whereas shipments of butt-weld pipe
fittings from the PRC to the United States steadily declined.\48\ No
other factual information contradicts this claim.
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\48\ Id., at 25-6 and Attachment 4.
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Analysis of the Allegation
Based on our analysis of the petitioners' anti-circumvention
inquiry allegation, the Department determines that the petitioners have
satisfied the criteria under section 781(b)(1) of the Act to warrant
the initiation of an anti-circumvention inquiry of the Order on butt-
weld pipe fittings from the PRC.
With regard to whether the merchandise from Malaysia is of the same
class or kind as the merchandise produced in the PRC, the petitioners
presented information to the Department indicating that, pursuant to
section 781(b)(1)(A) of the Act, the merchandise being produced in and/
or exported from Malaysia may be of the same class or kind as butt-weld
pipe fittings produced in the PRC, which is subject to the Order.\49\
Consequently, the Department finds that the petitioners provided
sufficient information in their request regarding the class or kind of
merchandise to support the initiation of this anti-circumvention
inquiry.
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\49\ Id. at 9-10.
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With regard to completion or assembly of merchandise in a foreign
country, pursuant to section 781(b)(1)(B) of the Act, the petitioners
also presented information to the Department indicating that the butt-
weld pipe fittings exported from Malaysia to the United States are
produced in Malaysia using butt-weld pipe fittings from the PRC, which
account for a significant portion of the total costs related to the
production of butt-weld pipe fittings.\50\ We find that the information
presented by the petitioners regarding this criterion supports their
request to initiate this anti-circumvention inquiry.
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\50\ Id., at 21-2 and Attachment 3.
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The Department finds that the petitioners sufficiently addressed
the factors described in section 781(b)(1)(C) and 781(b)(2) of the Act
regarding whether the assembly or completion of butt-weld pipe fittings
in Malaysia is minor or insignificant. In particular, the petitioners'
submission asserts that: (1) The level of investment of butt-weld pipe
fittings is minimal in Malaysia; (2) research and development is not
taking place in Malaysia; (3) the production process involves only
finishing or simply stamping with a Malaysian country-of-origin mark on
butt-weld pipe fittings from a country subject to the Order; (4) the
production facilities in Malaysia are more limited compared to
facilities in the PRC; and (5) the value of the processing performed in
Malaysia is minimal, as the production of butt-weld pipe fittings in
the PRC accounts for approximately 80 percent to 100 percent of the
value of finished butt-weld pipe fittings.\51\
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\51\ See discussion of these five factors above.
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With respect to the value of the merchandise produced in the PRC,
pursuant to section 78l(b)(l)(D) of the Act, the petitioners relied on
one of their member's information and arguments in the ``minor or
insignificant process'' portion of their anti-circumvention allegation
to indicate that the value of the unfinished or finished butt-weld pipe
fittings, produced in the PRC, may be significant relative to the total
value of the finished butt-weld pipe fittings exported from Malaysia to
the United States.\52\ We find that this information adequately meets
the requirements of this factor, as discussed above, for the purposes
of
[[Page 40560]]
initiating this anticircumvention inquiry.
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\52\ See the petitioners' Request at 10-23 and Attachments 1, 2,
and 3.
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With respect to the additional factors listed under section
781(b)(3) of the Act, we find that the petitioners presented evidence
indicating that shipments of butt-weld pipe fittings from Malaysia to
the United States increased since the imposition of the Order and that
shipments of butt-weld pipe fittings from the PRC to Malaysia also
increased since the Order took effect, further supporting initiation of
this anti-circumvention inquiry.\53\
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\53\ See the petitioners' Request at 23-5 and Attachment 4.
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Accordingly, we are initiating a formal anti-circumvention inquiry
concerning the Order on butt-weld pipe fittings from the PRC, pursuant
to section 781(b) of the Act.
In connection with this anti-circumvention inquiry, in order to
determine: (1) The extent to which PRC-sourced unfinished or finished
butt-weld pipe fittings is further processed into butt-weld pipe
fittings in Malaysia before shipment to the United States; (2) the
extent to which a country-wide finding applicable to all exports might
be warranted, as alleged by the petitioners; and (3) whether the
process of turning PRC-sourced unfinished or finished butt-weld pipe
fittings into finished butt-weld pipe fittings processed in Malaysia is
minor or insignificant, the Department will issue questionnaires to
Malaysian producers and exporters of butt-weld pipe fittings to the
United States. The Department will issue questionnaires to solicit
information from the Malaysian producers and exporters concerning their
shipments of butt-weld pipe fittings to the United States and the
origin of the imported unfinished or finished butt-weld pipe fittings
being processed into butt-weld pipe fittings. Companies failing to
respond completely and timely to the Department's questionnaire may be
deemed uncooperative and an adverse inference may be applied in
determining whether such companies are circumventing the Order. See
section 776 of the Act.
Finally, while we believe sufficient factual information has been
submitted by the petitioners supporting their request for an inquiry,
we do not find that the record supports the simultaneous issuance of a
preliminary ruling. Such inquiries are by their nature complicated and
require additional information regarding production in both the country
subject to the order and the third-country completing the product. As
noted above, the Department intends to request additional information
regarding the statutory criteria to determine whether shipments of
butt-weld pipe fittings from Malaysia are circumventing the Order on
butt-weld pipe fittings from the PRC. Thus, further development of the
record is required before a preliminary ruling can be issued.
Notification to Interested Parties
In accordance with 19 CFR 351.225(e), the Department finds that the
issue of whether a product is included within the scope of any 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 anti-circumvention inquiries. Additionally, in
accordance with 19 CFR 351.225(f)(1)(i) and (ii), in this notice of
initiation issued under 19 CFR 351.225(e), we included a description of
the product that is the subject of this anti-circumvention inquiry
(i.e., butt-weld pipe fittings that contain the characteristics as
provided in the scope of the Order), and an explanation of the reasons
for the Department's decision to initiate this anti-circumvention
inquiry, as provided above.
In accordance with 19 CFR 351.225(1)(2), if the Department issues
an affirmative preliminary determination, we will then instruct U.S.
Customs and Border Protection to suspend liquidation and require cash
deposits of estimated antidumping duties, at the applicable rates, for
each unliquidated entry of the merchandise at issue, entered or
withdrawn from warehouse for consumption on or after the date of
initiation of the inquiry. The Department will establish a schedule for
questionnaires and comments for this inquiry. In accordance with
section 781(f) of the Act and 19 CFR 351.225(f)(5), the Department
intends to issue its final determination within 300 days of the date of
publication of this notice.
This notice is published in accordance with 19 CFR 351.225(f).
Dated: August 21, 2017.
Gary Taverman,
Deputy Assistant Secretary for Antidumping and Countervailing Duty
Operations, performing the non-exclusive functions and duties of the
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2017-18046 Filed 8-24-17; 8:45 am]
BILLING CODE 3510-DS-P
