Diamond Sawblades and Parts Thereof From the People's Republic of China: Initiation of Anti-Circumvention Inquiry, 19043-19046 [2019-09066]

Download as PDF Federal Register / Vol. 84, No. 86 / Friday, May 3, 2019 / Notices method, texturing method, or packing method (such as spindles, tubes, or beams). Excluded from the scope of the investigation is bulk continuous filament yarn that: (a) Is polyester synthetic multifilament yarn; (b) has denier size ranges of 900 and above; (c) has turns per meter of 40 and above; and (d) has a maximum shrinkage of 2.5 percent. The merchandise subject to this investigation is properly classified under subheadings 5402.33.3000 and 5402.33.6000 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise is dispositive. Appendix II List of Topics Discussed in the Preliminary Decision Memorandum I. Summary II. Background III. Preliminary Determination of Critical Circumstances IV. Injury Test V. Application of the CVD Law to Imports From China VI. Diversification of China’s Economy VII. Use of Facts Otherwise Available and Adverse Inferences VIII. Subsidies Valuation IX. Benchmarks and Interest Rates X. Analysis of Programs XI. Conclusion [FR Doc. 2019–09065 Filed 5–2–19; 8:45 am] BILLING CODE 3510–DS–P DEPARTMENT OF COMMERCE International Trade Administration [A–570–900] Diamond Sawblades and Parts Thereof From the People’s Republic of China: Initiation of Anti-Circumvention Inquiry Enforcement and Compliance, International Trade Administration, Department of Commerce. SUMMARY: In response to a request from Diamond Sawblades Manufacturers’ Coalition (the petitioner), the Department of Commerce (Commerce) is initiating an anti-circumvention inquiry to determine whether certain imports of diamond sawblades and parts thereof (diamond sawblades) comprised of cores and segments produced in the People’s Republic of China (China) and joined into finished diamond sawblades in, and exported from, Canada are circumventing the antidumping duty order on diamond sawblades from China. DATES: Effective May 3, 2019. FOR FURTHER INFORMATION CONTACT: Yang Jin Chun, AD/CVD Operations Office I, Enforcement and Compliance, International Trade Administration, amozie on DSK9F9SC42PROD with NOTICES AGENCY: VerDate Sep<11>2014 16:41 May 02, 2019 Jkt 247001 U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482–5760. SUPPLEMENTAL INFORMATION: Background On November 4, 2009, Commerce published the antidumping duty order on diamond sawblades from China.1 On December 20, 2018, the petitioner filed a request for a circumvention ruling, requesting that Commerce issue a determination of circumvention and suspend liquidation of certain diamond sawblades exported from third countries.2 Specifically, the petitioner claims that a Canadian company, Protech Diamond Tools Inc. (Protech), is circumventing the antidumping duty order. Scope of the Order The products covered by the order are all finished circular sawblades, whether slotted or not, with a working part that is comprised of a diamond segment or segments, and parts thereof, regardless of specification or size, except as specifically excluded below. Within the scope of the order are semi-finished diamond sawblades, including diamond sawblade cores and diamond sawblade segments. Diamond sawblade cores are circular steel plates, whether or not attached to non-steel plates, with slots. Diamond sawblade cores are manufactured principally, but not exclusively, from alloy steel. A diamond sawblade segment consists of a mixture of diamonds (whether natural or synthetic, and regardless of the quantity of diamonds) and metal powders (including, but not limited to, iron, cobalt, nickel, tungsten carbide) that are formed together into a solid shape (from generally, but not limited to, a heating and pressing process). Sawblades with diamonds directly attached to the core with a resin or electroplated bond, which thereby do not contain a diamond segment, are not included within the scope of the order. Diamond sawblades and/or sawblade cores with a thickness of less than 0.025 inches, or with a thickness greater than 1.1 inches, are excluded from the scope of the order. Circular steel plates that have a cutting edge of non-diamond material, such as external teeth that protrude from the outer diameter of the plate, whether or not finished, are 1 See Diamond Sawblades and Parts Thereof from the People’s Republic of China and the Republic of Korea: Antidumping Duty Orders, 74 FR 57145 (November 4, 2009). The effective date of this antidumping duty order was January 23, 2009. 2 See the petitioner’s circumvention ruling request dated December 20, 2018 (the petitioner’s circumvention ruling request). PO 00000 Frm 00014 Fmt 4703 Sfmt 4703 19043 excluded from the scope of the order. Diamond sawblade cores with a Rockwell C hardness of less than 25 are excluded from the scope of the order. Diamond sawblades and/or diamond segment(s) with diamonds that predominantly have a mesh size number greater than 240 (such as 250 or 260) are excluded from the scope of the order. Merchandise subject to the order is typically imported under heading 8202.39.00.00 of the Harmonized Tariff Schedule of the United States (HTSUS). When packaged together as a set for retail sale with an item that is separately classified under headings 8202 to 8205 of the HTSUS, diamond sawblades or parts thereof may be imported under heading 8206.00.00.00 of the HTSUS. On October 11, 2011, Commerce included the 6804.21.00.00 HTSUS classification number to the customs case reference file, pursuant to a request by U.S. Customs and Border Protection.3 Pursuant to requests by CBP, Commerce included to the customs case reference file the following HTSUS classification numbers: 8202.39.0040 and 8202.39.0070 on January 22, 2015, and 6804.21.0010 and 6804.21.0080 on January 26, 2015.4 The tariff classification is provided for convenience and customs purposes; however, the written description of the scope of the order is dispositive. Merchandise Subject to the AntiCircumvention Inquiry This anti-circumvention inquiry covers diamond sawblades produced in Canada using cores and segments of Chinese origin and exported from Canada to the United States by Protech. If we receive additional evidence regarding potential circumvention of the order on diamond sawblades from China by other companies in Canada, we will consider expanding the scope of this inquiry at that time. Initiation of Anti-Circumvention Inquiry Section 781(b)(1) of the Tariff Act of 1930, as amended (the Act), provides that Commerce may find circumvention of an antidumping or countervailing duty order if: (A) Merchandise imported into the United States is of the same class or kind as any merchandise produced in a foreign country that is the 3 See Diamond Sawblades and Parts Thereof from the Republic of Korea: Preliminary Results of Antidumping Duty Administrative Review, 76 FR 76128 (December 6, 2011). 4 See Diamond Sawblades and Parts Thereof from the People’s Republic of China: Final Results of Antidumping Duty Administrative Review; 2016– 2017, 83 FR 64331 (December 14, 2018) and accompanying Issues and Decision Memorandum (IDM) at 3. E:\FR\FM\03MYN1.SGM 03MYN1 19044 Federal Register / Vol. 84, No. 86 / Friday, May 3, 2019 / Notices 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 AD or CVD 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 petitioner provided information available to them with respect to these criteria.5 A. Merchandise of the Same Class or Kind The petitioner claims that, in accordance with section 781(b)(1)(A)(i) of the Act, diamond sawblades exported from Canada to the United States are identical to diamond sawblades exported from China to the United Sates subject to the antidumping duty order. The petitioner contends that, because cores, segments, and diamond sawblades are all one class or kind of subject merchandise, a process that simply transforms one of these items to another should not serve as an avenue for Chinese producers to evade the antidumping duty order.6 B. Completion of Merchandise in a Third Country Before Importation Into the United States The petitioner contends that, in Canada, cores made in China are being joined to segments made in China and undergo a minor welding operation and minor processing before they are imported into the United States.7 amozie on DSK9F9SC42PROD with NOTICES C. Minor or Insignificant Process The petitioner explains that, in accordance with section 781(b)(1)(C) of the Act, Commerce considers whether the assembly or completion that occurs in the other foreign country is minor or insignificant. The petitioner states that, under sections 781(b)(2)(A)–(E) of the Act, Commerce considers five factors to determine whether the process of assembly or completion is minor or 5 See section 781(b)(1) of the Act. the petitioner’s circumvention ruling request at 13–14 and Exhibit 6. 7 Id. at 14–17 and Exhibits 5, 7–15. 6 See VerDate Sep<11>2014 16:41 May 02, 2019 Jkt 247001 insignificant. The petitioner alleges that, based on these factors, the completion of the merchandise in Canada is minor and insignificant.8 1. Level of Investment in Canada The petitioner argues that there is little evidence of any significant level of investment in Canada for production activities beyond joining cores and segments and laser welding.9 In other words, according to the petitioner, diamond sawblades production facilities in Canada are not sophisticated enough to produce segments. The petitioner explains that the production of segments is a complex process that requires detailed expertise in metallurgy and technical experience in the bonding of diamond powders and metal powders in the production process and the performance of diamond sawblades for particular applications. The petitioner claims that only highly skilled technicians can perform such production processes, while laserwelding is a highly-automated process that essentially only requires a person who can operate a keyboard.10 The petitioner claims further that other methods of joining cores and segments, e.g., silver soldering or sintering, are even less sophisticated than laserwelding.11 The petitioner distinguishes the level of capital investment between segment production and laser-welding. The petitioner explains that segment production requires significant capital investment for equipment such as weighing scales, mixing equipment, granulating equipment, cold pressing equipment, sintering presses, inspecting equipment, and radius grinding equipment. The petitioner claims that, in particular, the induction and resistance presses used in segment production represent a substantial capital investment. The petitioner contends that the capital investment required for joining cores and segments is essentially limited to a piece of laserwelding equipment.12 The petitioner distinguishes the level of costs between segment production and joining cores and segments. According to the petitioner, the production cost for finished diamond sawblades segments may represent a 8 Id. at 17–18. at 18–19 and Exhibits 8–10, and 13. 10 Id. at 16–17. 11 Commerce considers that this portion of the petitioner’s circumvention ruling request is relevant to the consideration contained in section 781(b)(2)(C) of the Act (‘‘the nature of the production process in the foreign country’’). 12 See the petitioner’s circumvention ruling request at 19. 9 Id. PO 00000 Frm 00015 Fmt 4703 Sfmt 4703 certain percentage of the cost of producing a finished diamond sawblade, whereas joining cores and segments typically accounts for a much smaller percentage of the cost of production.13 The petitioner also asserts that the capital investment required for joining is essentially limited to a piece of laser-welding equipment.14 The petitioner argues that, for these reasons, the joining operations require very minimal investment.15 2. Level of Research and Development The petitioner argues that, because laser-welding is a highly-automated process and other methods of joining cores and segments are less sophisticated than laser-welding, entities joining China cores and segments in Canada do not, and do not need to, invest in research and development in Canada.16 3. Nature of Production Process The petitioner states that there is very minimal additional processing done to diamond sawblades exported from China to Canada that are re-exported to the United States. The petitioner reiterates that joining cores and segments is a highly automated process and, compared to segment production, welding of cores and segments is a minimal step in the overall production process.17 4. Extent of Production Facilities in Canada The petitioner identifies three Canadian production facilities, of which the petitioner claims two production facilities appear to have only laserwelding operations.18 The petitioner claims that Protech’s Canadian facilities were established to re-export Chinese diamond sawblades to the United States and that the investment to Protech’s Canadian facilities is very limited for production of cores and segments. Similarly, according to the petitioner, Diamond Tools Technology Canada, Inc. appears to have insignificant production facilities in Canada and appears to be established to evade the antidumping 13 Id. Commerce considers that this portion of the petitioner’s circumvention ruling request is relevant to the consideration contained in section 781(b)(1)(D) of the Act (‘‘the value of the merchandise produced in the foreign country to which the antidumping order applies is a significant portion of the total value of the merchandise exported to the United States’’). 14 Id. 15 Id. 16 Id. at 20 and Exhibit 10. 17 Id. 18 Id. at 20–21. E:\FR\FM\03MYN1.SGM 03MYN1 Federal Register / Vol. 84, No. 86 / Friday, May 3, 2019 / Notices duty order on diamond sawblades from China.19 5. Value of Processing in Canada The petitioner cites the Thailand Preliminary Determination to support its claim that the joining of cores and segments constitutes a minor portion of the cost and represents the smallest portion of the production costs of diamond sawblades imported into the United States.20 The petitioner argues that, consistent with the Thailand Preliminary Determination, the value of processing in Canada represents a minor portion of the imported diamond sawblade’s value.21 D. Value of Merchandise Produced in China Is a Significant Portion of the Total Value of the Merchandise Exported to the United States The petitioner cites the Thailand Preliminary Determination to emphasize that the values of the segments and cores produced in China represent the vast majority of the value of the products exported to the United States.22 The petitioner quotes the Thailand Preliminary Determination to argue that the value of the Chinese cores and Chinese segments, either combined or individually, represent ‘‘a significant portion of the total value of the merchandise exported to the United States.’’ 23 E. Additional Factors To Consider in Determining Whether Action Is Necessary Section 781(b)(3) of the Act directs Commerce 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 into the United States, and (C) whether imports into the foreign country of the merchandise . . . have increased after the initiation of the investigation which resulted in the issuance of such order or finding.’’ The petitioner claims an increase of the amozie on DSK9F9SC42PROD with NOTICES 19 Id. 20 Id. at 21–22, citing Diamond Sawblades and Parts Thereof from the People’s Republic of China: Preliminary Affirmative Determination of Circumvention, 83 FR 57425 (November 15, 2018) (Thailand Preliminary Determination). 21 Id. at 21–22. 22 Id. at 22–23. 23 Id. at 23, quoting Thailand Preliminary Determination and accompanying Preliminary Determination Memorandum at 13. VerDate Sep<11>2014 16:41 May 02, 2019 Jkt 247001 imports of diamond sawblades from Canada from $246,758 for January through October 2017 to $776,328 for January through October 2018 represents a noticeable shift in patterns of trade.24 The petitioner asserts that Protech has been, and may be currently, transshipping Chinese diamond sawblades into the United States.25 The petitioner believes that Protech is likely to have evaded antidumping duties on Chinese diamond sawblades for several years.26 The petitioner argues that there is evidence of affiliation between Chinese producers and their Canadian counterparts that are engaged in circumvention of the antidumping duty order. For example, the petitioner claims that Protech appears to be affiliated with two Chinese producers: Guangzhou Pro Tech Diamond Tools Inc. and Protec Tools Co., Ltd. The petitioner argues that Protech has entered into exclusive agreements with Chinese producers and factories to sell diamond sawblades to Canada and the United States. The petitioner also argues that Diamond Tools Technology Canada, Inc. appears to be affiliated with a Chinese producer that Commerce determined in the Thailand Preliminary Determination to have circumvented the antidumping duty order by using minor assembly processes in Thailand.27 The petitioner explains that Chinese cores and Chinese segments are in-scope merchandise and the mere joining of these two parts, which represent the smallest cost in the production of diamond sawblades, should not be permitted as an avenue to circumvent the antidumping duty order on diamond sawblades from China. Analysis of the Allegation Based on our analysis of the petitioner’s anti-circumvention allegation and the information provided therein, we find that an anticircumvention inquiry of the antidumping duty order on diamond sawblades from China is warranted with respect to diamond sawblades made in Canada with Chinese cores and Chinese segments and exported to the United States. With regard to whether the merchandise from Canada is of the same class or kind as the merchandise produced in China, the petitioner presented information to Commerce indicating that, in accordance with section 781(b)(1)(A) of the Act, the merchandise being produced in and/or exported from Canada is of the same class or kind as diamond sawblades produced in China, which is subject to the antidumping duty order.28 Consequently, we find that the petitioner provided sufficient information in its request regarding the class or kind of merchandise to support the initiation of this anti-circumvention inquiry. With regard to completion or assembly of merchandise in a foreign country, in accordance with section 781(b)(1)(B) of the Act, the petitioner also presented to us four affidavits indicating that diamond sawblades exported from Canada to the United States by Protech are produced in Canada using cores and segments produced and exported from China.29 We find that the information presented by the petitioner regarding this criterion supports its request to initiate this anticircumvention inquiry at this time with respect to diamond sawblades made in Canada with Chinese cores and Chinese segments and exported to the United States. Commerce finds that the petitioner sufficiently addressed the factors described in section 781(b)(1)(C) and (2) of the Act regarding whether the process of assembly or completion of finished diamond sawblades in Canada is minor or insignificant with respect to Protech. In particular, the petitioner provided information indicating that: (1) The level of investment in the production facilities is minimal, when compared with the level of investment for the facilities used in the production of segments; 30 (2) there is little or no research and development taking place in Canada; 31 (3) the joining process involves the highly automated laserwelding, or other simpler joining methods, of cores and segments produced in China and subject to the antidumping duty order; 32 (4) the production facilities in Canada are more limited than facilities in China; 33 and (5) the value of the processing performed in Canada is a small proportion of the value of the diamond sawblades imported into the United States.34 With respect to the value of the merchandise produced in China, pursuant to section 781(b)(1)(D) of the 28 Id. 24 Id. at 23 and Exhibit 6. The petitioner also claims that the imports of diamond sawblades from Canada was $293,369 for the entire 2017. Id. 25 Id. at 24 and Exhibit 12. 26 Id. at 24. 27 Id. PO 00000 Frm 00016 Fmt 4703 Sfmt 4703 19045 29 Id. at 13–14 and Exhibit 6. at 18–19 and Exhibits 8–10, and 13. 30 Id. 31 Id. at 20 and Exhibit 10. at 18, 20. 33 Id. at 21 and Exhibits 8 and 12. 34 Id. at 21–22. 32 Id. E:\FR\FM\03MYN1.SGM 03MYN1 19046 Federal Register / Vol. 84, No. 86 / Friday, May 3, 2019 / Notices Act, the petitioner provided information indicating that the value of cores and segments produced in China represents the vast majority of the value of the products exported to the United States.35 We find that the evidence presented by the petitioner address the requirements of this factor, as discussed above, for the purposes of initiating this anti-circumvention inquiry. In the final determinations of the antidumping duty investigations of diamond sawblades from China and the Republic of Korea (Korea), we determined that the country in which cores and segments are joined is the country of origin of the finished diamond sawblades based on our factual findings that ‘‘the attachment process imparts the essential quality of the diamond sawblade, coupled with the substantial capital investment and technical expertise that is required for the attachment process.’’ 36 In making these factual findings, we relied on specific information provided by respondents in the investigations.37 The CIT upheld our decisions with respect to the country of origin.38 However, we do not have sufficient information on the record indicating whether substantial investments have been made to the Canadian companies in question for the joining process in Canada. Also, we do not have sufficient information on the record about the technical expertise required for the joining process in Canada.39 Moreover, our findings in the Final Determinations were made in the context of a countryof-origin determination, whereas we are 35 Id. at 22–23. Final Determination of Sales at Less Than Fair Value and Final Partial Affirmative Determination of Critical Circumstances: Diamond Sawblades and Parts Thereof from the People’s Republic of China, 71 FR 29303 (May 22, 2006) (Final Determinations—China) and accompanying IDM at Comment 4; see also Notice of Final Determination of Sales at Less Than Fair Value and Final Determination of Critical Circumstances: Diamond Sawblades and Parts Thereof from the Republic of Korea, 71 FR 29310 (May 22, 2006) (Final Determination—Korea) and accompanying IDM at Comment 3 (collectively, Final Determinations). 37 Id. 38 See Advanced Tech. & Materials Co. v. United States, Court No. 09–00511, slip op. 11–122, at 7– 10 (Ct. Int’l Trade Oct. 12, 2011) (upholding Final Determinations—China); see also Diamond Sawblades Manufacturers Coalition v. United States, 06–00248, slip op. 13–130, at 23–25 (Ct. Intl Trade Oct. 24, 2013) (upholding Final Determinations—Korea). 39 See Clearon Corp. v. United States, No. 13– 00073, slip op. 14–88, at 33 (Ct. Int’l Trade July 24, 2014) (‘‘Although Commerce can and does take into consideration its policies and methodologies as expressed in different administrative case precedent when making its determination, it cannot take the factual information underlying those decisions into consideration unless those facts are properly on the record of the proceeding before it.’’). amozie on DSK9F9SC42PROD with NOTICES 36 See VerDate Sep<11>2014 16:41 May 02, 2019 Jkt 247001 considering the petitioner’s request under the anti-circumvention provisions of the statute contained in section 781(b) of the Act. Therefore, we do not find the Final Determinations foreclose initiation of an anti-circumvention inquiry in this instance. Finally, with respect to the additional factors listed under section 781(b)(3) of the Act, we find that the petitioner presented evidence indicating that shipments of finished diamond sawblades from Canada to the United States increased since the imposition of the antidumping duty order, further supporting initiation of this anticircumvention inquiry.40 Therefore, in accordance with section 781(b) of the Act, we are initiating a formal anticircumvention inquiry concerning the antidumping duty order on diamond sawblades from China with respect to diamond sawblades made in Canada with Chinese cores and Chinese segments and exported to the United States. In connection with this anticircumvention inquiry, in order to determine, among other things: (1) The extent to which China-sourced cores and segments are further processed into finished diamond sawblades in Canada by Protech before the finished diamond sawblades are exported to the United States; and (2) whether the process of turning China-sourced cores and segments into finished diamond sawblades is minor or insignificant, Commerce intends to issue questionnaires to solicit information from Protech related to these factors. Commerce also intends to issue questionnaires to solicit information from Protech concerning its shipments of finished diamond sawblades to the United States and the origin of the imported cores and segments being joined into finished diamond sawblades. Failure to respond completely to Commerce’s requests for information may result in the application of partial or total facts available pursuant to section 776(a) of the Act, which may include adverse inferences pursuant to section 776(b) of the Act. Based on these allegations, we are initiating an anti-circumvention inquiry concerning the antidumping duty order on diamond sawblades from China, pursuant to section 781(b) of the Act and 19 CFR 351.225(h), with respect to such merchandise from Canada as described above. Because we are initiating this anti-circumvention inquiry, we are not initiating a changedcircumstances review at this time. An anti-circumvention inquiry is typically complicated by its nature and can require information regarding production in both the country subject to the order and the third country in which the production of finished merchandise is completed. As we explained above, Commerce intends to request additional information regarding the statutory criteria to determine whether shipments of finished diamond sawblades from Canada are circumventing the antidumping duty order on diamond sawblades from China. Thus, with further development of the record required before a preliminary ruling can be issued, Commerce does not find it appropriate to issue a preliminary ruling at this time. If Commerce issues a preliminary affirmative determination under section 781(b) of the Act, we intend to notify the International Trade Commission in accordance with section 781(e)(1)(B) of the Act and 19 CFR 351.225(f)(7)(i)(B). In accordance with 19 CFR 351.225(l)(2), if Commerce issues a preliminary affirmative determination, we will then instruct CBP to suspend liquidation and require a cash deposit of estimated antidumping duties at the applicable rate 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. This notice serves as an invitation to interested parties to participate in this anti-circumvention inquiry. Commerce will establish a schedule for questionnaires and comments on the issues. In accordance with section 781(f) of the Act and 19 CFR 351.225(f)(5), Commerce intends to issue its final determination within 300 days of the date of publication of this initiation. This notice is published in accordance with section 781(b) of the Act and 19 CFR 351.225(h). Dated: April 29, 2019. Jeffrey I. Kessler, Assistant Secretary for Enforcement and Compliance. [FR Doc. 2019–09066 Filed 5–2–19; 8:45 am] BILLING CODE 3510–DS–P 40 See the petitioner’s circumvention ruling request at Exhibit 6. PO 00000 Frm 00017 Fmt 4703 Sfmt 9990 E:\FR\FM\03MYN1.SGM 03MYN1

Agencies

[Federal Register Volume 84, Number 86 (Friday, May 3, 2019)]
[Notices]
[Pages 19043-19046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09066]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-900]


Diamond Sawblades and Parts Thereof From the People's Republic of 
China: Initiation of Anti-Circumvention Inquiry

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

SUMMARY: In response to a request from Diamond Sawblades Manufacturers' 
Coalition (the petitioner), the Department of Commerce (Commerce) is 
initiating an anti-circumvention inquiry to determine whether certain 
imports of diamond sawblades and parts thereof (diamond sawblades) 
comprised of cores and segments produced in the People's Republic of 
China (China) and joined into finished diamond sawblades in, and 
exported from, Canada are circumventing the antidumping duty order on 
diamond sawblades from China.

DATES: Effective May 3, 2019.

FOR FURTHER INFORMATION CONTACT: Yang Jin Chun, AD/CVD Operations 
Office I, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW, Washington, DC 20230; telephone: (202) 482-5760.

SUPPLEMENTAL INFORMATION:

Background

    On November 4, 2009, Commerce published the antidumping duty order 
on diamond sawblades from China.\1\ On December 20, 2018, the 
petitioner filed a request for a circumvention ruling, requesting that 
Commerce issue a determination of circumvention and suspend liquidation 
of certain diamond sawblades exported from third countries.\2\ 
Specifically, the petitioner claims that a Canadian company, Protech 
Diamond Tools Inc. (Protech), is circumventing the antidumping duty 
order.
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    \1\ See Diamond Sawblades and Parts Thereof from the People's 
Republic of China and the Republic of Korea: Antidumping Duty 
Orders, 74 FR 57145 (November 4, 2009). The effective date of this 
antidumping duty order was January 23, 2009.
    \2\ See the petitioner's circumvention ruling request dated 
December 20, 2018 (the petitioner's circumvention ruling request).
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Scope of the Order

    The products covered by the order are all finished circular 
sawblades, whether slotted or not, with a working part that is 
comprised of a diamond segment or segments, and parts thereof, 
regardless of specification or size, except as specifically excluded 
below. Within the scope of the order are semi-finished diamond 
sawblades, including diamond sawblade cores and diamond sawblade 
segments. Diamond sawblade cores are circular steel plates, whether or 
not attached to non-steel plates, with slots. Diamond sawblade cores 
are manufactured principally, but not exclusively, from alloy steel. A 
diamond sawblade segment consists of a mixture of diamonds (whether 
natural or synthetic, and regardless of the quantity of diamonds) and 
metal powders (including, but not limited to, iron, cobalt, nickel, 
tungsten carbide) that are formed together into a solid shape (from 
generally, but not limited to, a heating and pressing process).
    Sawblades with diamonds directly attached to the core with a resin 
or electroplated bond, which thereby do not contain a diamond segment, 
are not included within the scope of the order. Diamond sawblades and/
or sawblade cores with a thickness of less than 0.025 inches, or with a 
thickness greater than 1.1 inches, are excluded from the scope of the 
order. Circular steel plates that have a cutting edge of non-diamond 
material, such as external teeth that protrude from the outer diameter 
of the plate, whether or not finished, are excluded from the scope of 
the order. Diamond sawblade cores with a Rockwell C hardness of less 
than 25 are excluded from the scope of the order. Diamond sawblades 
and/or diamond segment(s) with diamonds that predominantly have a mesh 
size number greater than 240 (such as 250 or 260) are excluded from the 
scope of the order.
    Merchandise subject to the order is typically imported under 
heading 8202.39.00.00 of the Harmonized Tariff Schedule of the United 
States (HTSUS). When packaged together as a set for retail sale with an 
item that is separately classified under headings 8202 to 8205 of the 
HTSUS, diamond sawblades or parts thereof may be imported under heading 
8206.00.00.00 of the HTSUS. On October 11, 2011, Commerce included the 
6804.21.00.00 HTSUS classification number to the customs case reference 
file, pursuant to a request by U.S. Customs and Border Protection.\3\ 
Pursuant to requests by CBP, Commerce included to the customs case 
reference file the following HTSUS classification numbers: 8202.39.0040 
and 8202.39.0070 on January 22, 2015, and 6804.21.0010 and 6804.21.0080 
on January 26, 2015.\4\
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    \3\ See Diamond Sawblades and Parts Thereof from the Republic of 
Korea: Preliminary Results of Antidumping Duty Administrative 
Review, 76 FR 76128 (December 6, 2011).
    \4\ See Diamond Sawblades and Parts Thereof from the People's 
Republic of China: Final Results of Antidumping Duty Administrative 
Review; 2016-2017, 83 FR 64331 (December 14, 2018) and accompanying 
Issues and Decision Memorandum (IDM) at 3.
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    The tariff classification is provided for convenience and customs 
purposes; however, the written description of the scope of the order is 
dispositive.

Merchandise Subject to the Anti-Circumvention Inquiry

    This anti-circumvention inquiry covers diamond sawblades produced 
in Canada using cores and segments of Chinese origin and exported from 
Canada to the United States by Protech. If we receive additional 
evidence regarding potential circumvention of the order on diamond 
sawblades from China by other companies in Canada, we will consider 
expanding the scope of this inquiry at that time.

Initiation of Anti-Circumvention Inquiry

    Section 781(b)(1) of the Tariff Act of 1930, as amended (the Act), 
provides that Commerce may find circumvention of an antidumping or 
countervailing duty order if: (A) Merchandise imported into the United 
States is of the same class or kind as any merchandise produced in a 
foreign country that is the

[[Page 19044]]

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 AD or CVD 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 petitioner provided information available to them 
with respect to these criteria.\5\
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    \5\ See section 781(b)(1) of the Act.
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A. Merchandise of the Same Class or Kind

    The petitioner claims that, in accordance with section 
781(b)(1)(A)(i) of the Act, diamond sawblades exported from Canada to 
the United States are identical to diamond sawblades exported from 
China to the United Sates subject to the antidumping duty order. The 
petitioner contends that, because cores, segments, and diamond 
sawblades are all one class or kind of subject merchandise, a process 
that simply transforms one of these items to another should not serve 
as an avenue for Chinese producers to evade the antidumping duty 
order.\6\
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    \6\ See the petitioner's circumvention ruling request at 13-14 
and Exhibit 6.
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B. Completion of Merchandise in a Third Country Before Importation Into 
the United States

    The petitioner contends that, in Canada, cores made in China are 
being joined to segments made in China and undergo a minor welding 
operation and minor processing before they are imported into the United 
States.\7\
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    \7\ Id. at 14-17 and Exhibits 5, 7-15.
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C. Minor or Insignificant Process

    The petitioner explains that, in accordance with section 
781(b)(1)(C) of the Act, Commerce considers whether the assembly or 
completion that occurs in the other foreign country is minor or 
insignificant. The petitioner states that, under sections 781(b)(2)(A)-
(E) of the Act, Commerce considers five factors to determine whether 
the process of assembly or completion is minor or insignificant. The 
petitioner alleges that, based on these factors, the completion of the 
merchandise in Canada is minor and insignificant.\8\
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    \8\ Id. at 17-18.
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1. Level of Investment in Canada
    The petitioner argues that there is little evidence of any 
significant level of investment in Canada for production activities 
beyond joining cores and segments and laser welding.\9\ In other words, 
according to the petitioner, diamond sawblades production facilities in 
Canada are not sophisticated enough to produce segments. The petitioner 
explains that the production of segments is a complex process that 
requires detailed expertise in metallurgy and technical experience in 
the bonding of diamond powders and metal powders in the production 
process and the performance of diamond sawblades for particular 
applications. The petitioner claims that only highly skilled 
technicians can perform such production processes, while laser-welding 
is a highly-automated process that essentially only requires a person 
who can operate a keyboard.\10\ The petitioner claims further that 
other methods of joining cores and segments, e.g., silver soldering or 
sintering, are even less sophisticated than laser-welding.\11\
---------------------------------------------------------------------------

    \9\ Id. at 18-19 and Exhibits 8-10, and 13.
    \10\ Id. at 16-17.
    \11\ Commerce considers that this portion of the petitioner's 
circumvention ruling request is relevant to the consideration 
contained in section 781(b)(2)(C) of the Act (``the nature of the 
production process in the foreign country'').
---------------------------------------------------------------------------

    The petitioner distinguishes the level of capital investment 
between segment production and laser-welding. The petitioner explains 
that segment production requires significant capital investment for 
equipment such as weighing scales, mixing equipment, granulating 
equipment, cold pressing equipment, sintering presses, inspecting 
equipment, and radius grinding equipment. The petitioner claims that, 
in particular, the induction and resistance presses used in segment 
production represent a substantial capital investment. The petitioner 
contends that the capital investment required for joining cores and 
segments is essentially limited to a piece of laser-welding 
equipment.\12\
---------------------------------------------------------------------------

    \12\ See the petitioner's circumvention ruling request at 19.
---------------------------------------------------------------------------

    The petitioner distinguishes the level of costs between segment 
production and joining cores and segments. According to the petitioner, 
the production cost for finished diamond sawblades segments may 
represent a certain percentage of the cost of producing a finished 
diamond sawblade, whereas joining cores and segments typically accounts 
for a much smaller percentage of the cost of production.\13\ The 
petitioner also asserts that the capital investment required for 
joining is essentially limited to a piece of laser-welding 
equipment.\14\ The petitioner argues that, for these reasons, the 
joining operations require very minimal investment.\15\
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    \13\ Id. Commerce considers that this portion of the 
petitioner's circumvention ruling request is relevant to the 
consideration contained in section 781(b)(1)(D) of the Act (``the 
value of the merchandise produced in the foreign country to which 
the antidumping order applies is a significant portion of the total 
value of the merchandise exported to the United States'').
    \14\ Id.
    \15\ Id.
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2. Level of Research and Development
    The petitioner argues that, because laser-welding is a highly-
automated process and other methods of joining cores and segments are 
less sophisticated than laser-welding, entities joining China cores and 
segments in Canada do not, and do not need to, invest in research and 
development in Canada.\16\
---------------------------------------------------------------------------

    \16\ Id. at 20 and Exhibit 10.
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3. Nature of Production Process
    The petitioner states that there is very minimal additional 
processing done to diamond sawblades exported from China to Canada that 
are re-exported to the United States. The petitioner reiterates that 
joining cores and segments is a highly automated process and, compared 
to segment production, welding of cores and segments is a minimal step 
in the overall production process.\17\
---------------------------------------------------------------------------

    \17\ Id.
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4. Extent of Production Facilities in Canada
    The petitioner identifies three Canadian production facilities, of 
which the petitioner claims two production facilities appear to have 
only laser-welding operations.\18\ The petitioner claims that Protech's 
Canadian facilities were established to re-export Chinese diamond 
sawblades to the United States and that the investment to Protech's 
Canadian facilities is very limited for production of cores and 
segments. Similarly, according to the petitioner, Diamond Tools 
Technology Canada, Inc. appears to have insignificant production 
facilities in Canada and appears to be established to evade the 
antidumping

[[Page 19045]]

duty order on diamond sawblades from China.\19\
---------------------------------------------------------------------------

    \18\ Id. at 20-21.
    \19\ Id.
---------------------------------------------------------------------------

5. Value of Processing in Canada
    The petitioner cites the Thailand Preliminary Determination to 
support its claim that the joining of cores and segments constitutes a 
minor portion of the cost and represents the smallest portion of the 
production costs of diamond sawblades imported into the United 
States.\20\ The petitioner argues that, consistent with the Thailand 
Preliminary Determination, the value of processing in Canada represents 
a minor portion of the imported diamond sawblade's value.\21\
---------------------------------------------------------------------------

    \20\ Id. at 21-22, citing Diamond Sawblades and Parts Thereof 
from the People's Republic of China: Preliminary Affirmative 
Determination of Circumvention, 83 FR 57425 (November 15, 2018) 
(Thailand Preliminary Determination).
    \21\ Id. at 21-22.
---------------------------------------------------------------------------

D. Value of Merchandise Produced in China Is a Significant Portion of 
the Total Value of the Merchandise Exported to the United States

    The petitioner cites the Thailand Preliminary Determination to 
emphasize that the values of the segments and cores produced in China 
represent the vast majority of the value of the products exported to 
the United States.\22\ The petitioner quotes the Thailand Preliminary 
Determination to argue that the value of the Chinese cores and Chinese 
segments, either combined or individually, represent ``a significant 
portion of the total value of the merchandise exported to the United 
States.'' \23\
---------------------------------------------------------------------------

    \22\ Id. at 22-23.
    \23\ Id. at 23, quoting Thailand Preliminary Determination and 
accompanying Preliminary Determination Memorandum at 13.
---------------------------------------------------------------------------

E. Additional Factors To Consider in Determining Whether Action Is 
Necessary

    Section 781(b)(3) of the Act directs Commerce 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 into the United States, and (C) whether imports 
into the foreign country of the merchandise . . . have increased after 
the initiation of the investigation which resulted in the issuance of 
such order or finding.'' The petitioner claims an increase of the 
imports of diamond sawblades from Canada from $246,758 for January 
through October 2017 to $776,328 for January through October 2018 
represents a noticeable shift in patterns of trade.\24\ The petitioner 
asserts that Protech has been, and may be currently, transshipping 
Chinese diamond sawblades into the United States.\25\ The petitioner 
believes that Protech is likely to have evaded antidumping duties on 
Chinese diamond sawblades for several years.\26\
---------------------------------------------------------------------------

    \24\ Id. at 23 and Exhibit 6. The petitioner also claims that 
the imports of diamond sawblades from Canada was $293,369 for the 
entire 2017. Id.
    \25\ Id. at 24 and Exhibit 12.
    \26\ Id. at 24.
---------------------------------------------------------------------------

    The petitioner argues that there is evidence of affiliation between 
Chinese producers and their Canadian counterparts that are engaged in 
circumvention of the antidumping duty order. For example, the 
petitioner claims that Protech appears to be affiliated with two 
Chinese producers: Guangzhou Pro Tech Diamond Tools Inc. and Protec 
Tools Co., Ltd. The petitioner argues that Protech has entered into 
exclusive agreements with Chinese producers and factories to sell 
diamond sawblades to Canada and the United States. The petitioner also 
argues that Diamond Tools Technology Canada, Inc. appears to be 
affiliated with a Chinese producer that Commerce determined in the 
Thailand Preliminary Determination to have circumvented the antidumping 
duty order by using minor assembly processes in Thailand.\27\
---------------------------------------------------------------------------

    \27\ Id.
---------------------------------------------------------------------------

    The petitioner explains that Chinese cores and Chinese segments are 
in-scope merchandise and the mere joining of these two parts, which 
represent the smallest cost in the production of diamond sawblades, 
should not be permitted as an avenue to circumvent the antidumping duty 
order on diamond sawblades from China.

Analysis of the Allegation

    Based on our analysis of the petitioner's anti-circumvention 
allegation and the information provided therein, we find that an anti-
circumvention inquiry of the antidumping duty order on diamond 
sawblades from China is warranted with respect to diamond sawblades 
made in Canada with Chinese cores and Chinese segments and exported to 
the United States.
    With regard to whether the merchandise from Canada is of the same 
class or kind as the merchandise produced in China, the petitioner 
presented information to Commerce indicating that, in accordance with 
section 781(b)(1)(A) of the Act, the merchandise being produced in and/
or exported from Canada is of the same class or kind as diamond 
sawblades produced in China, which is subject to the antidumping duty 
order.\28\ Consequently, we find that the petitioner provided 
sufficient information in its request regarding the class or kind of 
merchandise to support the initiation of this anti-circumvention 
inquiry.
---------------------------------------------------------------------------

    \28\ Id. at 13-14 and Exhibit 6.
---------------------------------------------------------------------------

    With regard to completion or assembly of merchandise in a foreign 
country, in accordance with section 781(b)(1)(B) of the Act, the 
petitioner also presented to us four affidavits indicating that diamond 
sawblades exported from Canada to the United States by Protech are 
produced in Canada using cores and segments produced and exported from 
China.\29\ We find that the information presented by the petitioner 
regarding this criterion supports its request to initiate this anti-
circumvention inquiry at this time with respect to diamond sawblades 
made in Canada with Chinese cores and Chinese segments and exported to 
the United States.
---------------------------------------------------------------------------

    \29\ Id. at 18-19 and Exhibits 8-10, and 13.
---------------------------------------------------------------------------

    Commerce finds that the petitioner sufficiently addressed the 
factors described in section 781(b)(1)(C) and (2) of the Act regarding 
whether the process of assembly or completion of finished diamond 
sawblades in Canada is minor or insignificant with respect to Protech. 
In particular, the petitioner provided information indicating that: (1) 
The level of investment in the production facilities is minimal, when 
compared with the level of investment for the facilities used in the 
production of segments; \30\ (2) there is little or no research and 
development taking place in Canada; \31\ (3) the joining process 
involves the highly automated laser-welding, or other simpler joining 
methods, of cores and segments produced in China and subject to the 
antidumping duty order; \32\ (4) the production facilities in Canada 
are more limited than facilities in China; \33\ and (5) the value of 
the processing performed in Canada is a small proportion of the value 
of the diamond sawblades imported into the United States.\34\
---------------------------------------------------------------------------

    \30\ Id.
    \31\ Id. at 20 and Exhibit 10.
    \32\ Id. at 18, 20.
    \33\ Id. at 21 and Exhibits 8 and 12.
    \34\ Id. at 21-22.
---------------------------------------------------------------------------

    With respect to the value of the merchandise produced in China, 
pursuant to section 781(b)(1)(D) of the

[[Page 19046]]

Act, the petitioner provided information indicating that the value of 
cores and segments produced in China represents the vast majority of 
the value of the products exported to the United States.\35\ We find 
that the evidence presented by the petitioner address the requirements 
of this factor, as discussed above, for the purposes of initiating this 
anti-circumvention inquiry.
---------------------------------------------------------------------------

    \35\ Id. at 22-23.
---------------------------------------------------------------------------

    In the final determinations of the antidumping duty investigations 
of diamond sawblades from China and the Republic of Korea (Korea), we 
determined that the country in which cores and segments are joined is 
the country of origin of the finished diamond sawblades based on our 
factual findings that ``the attachment process imparts the essential 
quality of the diamond sawblade, coupled with the substantial capital 
investment and technical expertise that is required for the attachment 
process.'' \36\ In making these factual findings, we relied on specific 
information provided by respondents in the investigations.\37\ The CIT 
upheld our decisions with respect to the country of origin.\38\ 
However, we do not have sufficient information on the record indicating 
whether substantial investments have been made to the Canadian 
companies in question for the joining process in Canada. Also, we do 
not have sufficient information on the record about the technical 
expertise required for the joining process in Canada.\39\ Moreover, our 
findings in the Final Determinations were made in the context of a 
country-of-origin determination, whereas we are considering the 
petitioner's request under the anti-circumvention provisions of the 
statute contained in section 781(b) of the Act. Therefore, we do not 
find the Final Determinations foreclose initiation of an anti-
circumvention inquiry in this instance.
---------------------------------------------------------------------------

    \36\ See Final Determination of Sales at Less Than Fair Value 
and Final Partial Affirmative Determination of Critical 
Circumstances: Diamond Sawblades and Parts Thereof from the People's 
Republic of China, 71 FR 29303 (May 22, 2006) (Final 
Determinations--China) and accompanying IDM at Comment 4; see also 
Notice of Final Determination of Sales at Less Than Fair Value and 
Final Determination of Critical Circumstances: Diamond Sawblades and 
Parts Thereof from the Republic of Korea, 71 FR 29310 (May 22, 2006) 
(Final Determination--Korea) and accompanying IDM at Comment 3 
(collectively, Final Determinations).
    \37\ Id.
    \38\ See Advanced Tech. & Materials Co. v. United States, Court 
No. 09-00511, slip op. 11-122, at 7-10 (Ct. Int'l Trade Oct. 12, 
2011) (upholding Final Determinations--China); see also Diamond 
Sawblades Manufacturers Coalition v. United States, 06-00248, slip 
op. 13-130, at 23-25 (Ct. Intl Trade Oct. 24, 2013) (upholding Final 
Determinations--Korea).
    \39\ See Clearon Corp. v. United States, No. 13-00073, slip op. 
14-88, at 33 (Ct. Int'l Trade July 24, 2014) (``Although Commerce 
can and does take into consideration its policies and methodologies 
as expressed in different administrative case precedent when making 
its determination, it cannot take the factual information underlying 
those decisions into consideration unless those facts are properly 
on the record of the proceeding before it.'').
---------------------------------------------------------------------------

    Finally, with respect to the additional factors listed under 
section 781(b)(3) of the Act, we find that the petitioner presented 
evidence indicating that shipments of finished diamond sawblades from 
Canada to the United States increased since the imposition of the 
antidumping duty order, further supporting initiation of this anti-
circumvention inquiry.\40\ Therefore, in accordance with section 781(b) 
of the Act, we are initiating a formal anti-circumvention inquiry 
concerning the antidumping duty order on diamond sawblades from China 
with respect to diamond sawblades made in Canada with Chinese cores and 
Chinese segments and exported to the United States.
---------------------------------------------------------------------------

    \40\ See the petitioner's circumvention ruling request at 
Exhibit 6.
---------------------------------------------------------------------------

    In connection with this anti-circumvention inquiry, in order to 
determine, among other things: (1) The extent to which China-sourced 
cores and segments are further processed into finished diamond 
sawblades in Canada by Protech before the finished diamond sawblades 
are exported to the United States; and (2) whether the process of 
turning China-sourced cores and segments into finished diamond 
sawblades is minor or insignificant, Commerce intends to issue 
questionnaires to solicit information from Protech related to these 
factors. Commerce also intends to issue questionnaires to solicit 
information from Protech concerning its shipments of finished diamond 
sawblades to the United States and the origin of the imported cores and 
segments being joined into finished diamond sawblades. Failure to 
respond completely to Commerce's requests for information may result in 
the application of partial or total facts available pursuant to section 
776(a) of the Act, which may include adverse inferences pursuant to 
section 776(b) of the Act.
    Based on these allegations, we are initiating an anti-circumvention 
inquiry concerning the antidumping duty order on diamond sawblades from 
China, pursuant to section 781(b) of the Act and 19 CFR 351.225(h), 
with respect to such merchandise from Canada as described above. 
Because we are initiating this anti-circumvention inquiry, we are not 
initiating a changed-circumstances review at this time.
    An anti-circumvention inquiry is typically complicated by its 
nature and can require information regarding production in both the 
country subject to the order and the third country in which the 
production of finished merchandise is completed. As we explained above, 
Commerce intends to request additional information regarding the 
statutory criteria to determine whether shipments of finished diamond 
sawblades from Canada are circumventing the antidumping duty order on 
diamond sawblades from China. Thus, with further development of the 
record required before a preliminary ruling can be issued, Commerce 
does not find it appropriate to issue a preliminary ruling at this 
time. If Commerce issues a preliminary affirmative determination under 
section 781(b) of the Act, we intend to notify the International Trade 
Commission in accordance with section 781(e)(1)(B) of the Act and 19 
CFR 351.225(f)(7)(i)(B).
    In accordance with 19 CFR 351.225(l)(2), if Commerce issues a 
preliminary affirmative determination, we will then instruct CBP to 
suspend liquidation and require a cash deposit of estimated antidumping 
duties at the applicable rate 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.
    This notice serves as an invitation to interested parties to 
participate in this anti-circumvention inquiry. Commerce will establish 
a schedule for questionnaires and comments on the issues. In accordance 
with section 781(f) of the Act and 19 CFR 351.225(f)(5), Commerce 
intends to issue its final determination within 300 days of the date of 
publication of this initiation.
    This notice is published in accordance with section 781(b) of the 
Act and 19 CFR 351.225(h).

    Dated: April 29, 2019.
Jeffrey I. Kessler,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2019-09066 Filed 5-2-19; 8:45 am]
 BILLING CODE 3510-DS-P