Hydrofluorocarbon Blends From the People's Republic of China: Initiation of Anti-Circumvention Inquiry of Antidumping Duty Order; Components, 28273-28276 [2019-12849]

Download as PDF Federal Register / Vol. 84, No. 117 / Tuesday, June 18, 2019 / Notices determination be accompanied by a request for extension of provisional measures from a four-month period to a period not more than six months in duration. On April 12, 2019, pursuant to 19 CFR 351.210(e), Habich requested that Commerce postpone the final determination and that provisional measures be extended to a period not to Amended Preliminary Determination exceed six months.7 In accordance with Commerce preliminarily determines section 735(a)(2)(A) of the Act and 19 that the following amended weightedCFR 351.210(b)(2)(ii), because (1) the average dumping margins exist for the preliminary determination, as amended, period July 1, 2017 through June 30, is affirmative; (2) the requesting 2018: exporter accounts for a significant proportion of exports of the subject Estimated merchandise; and (3) no compelling weightedreasons for denial exist, Commerce is average Exporter/producer postponing the final determination and dumping extending the provisional measures margin (percent) from a four-month period to a period not greater than six months. Habich GmbH ....................... 2.50 Accordingly, Commerce will make its All Others .............................. 2.50 final determination no later than 135 days after the date of publication of the Amended Cash Deposits and Preliminary Determination.8 Suspension of Liquidation International Trade Commission The collection of cash deposits and Notification suspension of liquidation will be In accordance with section 733(f) of revised according to the rates calculated the Act, we will notify the International in this amended preliminary Trade Commission of our amended determination, in accordance with preliminary determination. sections 733(d) and (f) of the Act, and 19 CFR 351.224. Because the rates are Notification to Interested Parties increasing from the Preliminary This amended preliminary Determination, the amended cash determination is issued and published deposit rates will be effective on the in accordance with sections 733(f) and date of publication of this notice in the Federal Register. Parties will be notified 777(i)(1) of the Act and 19 CFR 351.224(e). of this determination, in accordance with sections 733(d) and (f) of the Act. Dated: June 12, 2019. the only individually calculated dumping margin is not zero, de minimis, or based entirely on facts otherwise available, the estimated weighted-average dumping margin calculated for Habich is the margin assigned to all other producers and exporters, pursuant to section 735(c)(5)(A) of the Act. jbell on DSK3GLQ082PROD with NOTICES Disclosure We intend to disclose the calculations performed to parties in this proceeding within five days after public announcement of the amended preliminary determination, in accordance with 19 CFR 351.224. Postponement of Final Determination and Extension of Provisional Measures Section 735(a)(2) of the Act provides that a final determination may be postponed until not later than 135 days after the date of the publication of the preliminary determination if, in the event of an affirmative preliminary determination, a request for such postponement is made by exporters who account for a significant proportion of exports of the subject merchandise, or in the event of a negative preliminary determination, a request for such postponement is made by the petitioner. Section 351.210(e)(2) of Commerce’s regulations requires that a request by exporters for postponement of the final VerDate Sep<11>2014 18:40 Jun 17, 2019 Jkt 247001 Jeffrey I. Kessler, Assistant Secretary for Enforcement and Compliance. Appendix Scope of the Investigation The merchandise covered by these investigations is strontium chromate, regardless of form (including but not limited to, powder (sometimes known as granular), dispersions (sometimes known as paste), or in any solution). The chemical formula for strontium chromate is SrCrO4 and the Chemical Abstracts Service (CAS) registry number is 7789–06–2. Strontium chromate that has been blended with another product or products is included in the scope if the resulting mix contains 15 percent or more of strontium chromate by total formula weight. Products with which 7 See Habich’s letter, ‘‘Strontium Chromate from Austria; Habich GmbH’s Request to Extend the Final Determination,’’ dated April 12, 2019. 8 See Preliminary Determination. PO 00000 Frm 00008 Fmt 4703 Sfmt 4703 28273 strontium chromate may be blended include, but are not limited to, water and solvents such as Aromatic 100 Methyl Amyl Ketone (MAK)/2Heptanone, Acetone, Glycol Ether EB, Naphtha Leicht, and Xylene. Subject merchandise includes strontium chromate that has been processed in a third country into a product that otherwise would be within the scope of these investigations if processed in the country of manufacture of the in-scope strontium chromate. The merchandise subject to these investigations is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 2841.50.9100. Subject merchandise may also enter under HTSUS subheading 3212.90.0050. While the HTSUS subheadings and CAS registry number are provided for convenience and customs purposes, the written description of the scope is dispositive. [FR Doc. 2019–12840 Filed 6–17–19; 8:45 am] BILLING CODE 3510–DS–P DEPARTMENT OF COMMERCE International Trade Administration [A–570–028] Hydrofluorocarbon Blends From the People’s Republic of China: Initiation of Anti-Circumvention Inquiry of Antidumping Duty Order; Components Enforcement and Compliance, International Trade Administration, Department of Commerce. SUMMARY: In response to allegations of circumvention from the American HFC Coalition (the petitioners), the Department of Commerce (Commerce) is initiating an anti-circumvention inquiry to determine whether imports of hydrofluorocarbon (HFC) components R–32, R–125, and R–143a from the People’s Republic of China (China) that are further processed into HFC blends in the United States are circumventing the antidumping duty (AD) order on HFC blends from China. AGENCY: DATES: Applicable June 18, 2019. FOR FURTHER INFORMATION CONTACT: Andrew Medley or Manuel Rey, AD/ CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482–4987 and (202) 482–5518, respectively. SUPPLEMENTARY INFORMATION: E:\FR\FM\18JNN1.SGM 18JNN1 28274 Federal Register / Vol. 84, No. 117 / Tuesday, June 18, 2019 / Notices Background On April 4, 2019, the petitioners filed a request that, pursuant to section 781(a) of the Tariff Act of 1930, as amended (the Act), Commerce initiate an anticircumvention inquiry regarding imports of HFC components R–32, R– 125, and R–143a from China that are further processed into HFC blends in the United States, which the petitioners allege are circumventing the Order.1 On April 26, 2019, National Refrigerants, Inc. (National Refrigerants) filed comments objecting to the petitioners’ request to initiate an anti-circumvention inquiry regarding HFC components imported from China.2 On May 13, 2019, the petitioners filed a response to National Refrigerants’ comments.3 On May 14, 2018, Zhejiang Quzhou Lianzhou Refrigerants Co., Ltd. (Lianzhou) also filed comments objecting to the petitioners’ request to initiate an anti-circumvention inquiry regarding HFC components imported from China.4 jbell on DSK3GLQ082PROD with NOTICES Scope of the Order The products subject to the Order are HFC blends. HFC blends covered by the scope are R–404A, a zeotropic mixture consisting of 52 percent 1,1,1 Trifluoroethane, 44 percent Pentafluoroethane, and 4 percent 1,1,1,2-Tetrafluoroethane; R–407A, a zeotropic mixture of 20 percent Difluoromethane, 40 percent Pentafluoroethane, and 40 percent 1,1,1,2-Tetrafluoroethane; R–407C, a zeotropic mixture of 23 percent Difluoromethane, 25 percent Pentafluoroethane, and 52 percent 1,1,1,2-Tetrafluoroethane; R–410A, a zeotropic mixture of 50 percent Difluoromethane and 50 percent Pentafluoroethane; and R–507A, an azeotropic mixture of 50 percent 1 See Petitioners’ Letter, ‘‘Hydrofluorocarbon Blends from the People’s Republic of China: Request to Initiate Anti-Circumvention Inquiry Pursuant to Section 781(a) of the Act,’’ dated April 4, 2019 (Initiation Request); see also Hydrofluorocarbon Blends from the People’s Republic of China: Antidumping Duty Order, 81 FR 55436 (August 19, 2016) (Order). 2 See National Refrigerants’ Letter, ‘‘Hydrofluorocarbon Blends from the People’s Republic of China: Objection to Petitioners’ Request for a § 781(a) Anti-Circumvention Inquiry and Request for a Meeting,’’ dated April 26, 2019. 3 See Petitioners’ Letter, ‘‘Hydrofluorocarbon Blends from the People’s Republic of China; Request for Section 781(a) Investigation Regarding Certain Imported HFC Components: Response to National Refrigerants, Inc.,’’ dated May 13, 2019. 4 See Lianzhou’s Letter, ‘‘Zhejiang Quzhou Lianzhou Refrigerants Co., Ltd.’s Response to American HFC Coalition’s Request for a § 781(a) Anti-Circumvention Inquiry and Request for Meeting, Antidumping Duty Order on Hydrofluorocarbon Blends from the People’s Republic of China,’’ dated May 14, 2019. VerDate Sep<11>2014 17:23 Jun 17, 2019 Jkt 247001 Pentafluoroethane and 50 percent 1,1,1Trifluoroethane also known as R–507. The foregoing percentages are nominal percentages by weight. Actual percentages of single component refrigerants by weight may vary by plus or minus two percent points from the nominal percentage identified above.5 Any blend that includes an HFC component other than R–32, R–125, R– 143a, or R–134a is excluded from the scope of the Order. Excluded from the Order are blends of refrigerant chemicals that include products other than HFCs, such as blends including chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), hydrocarbons (HCs), or hydrofluoroolefins (HFOs). Also excluded from the Order are patented HFC blends, including, but not limited to, ISCEON® blends, including MO99TM (R–438A), MO79 (R–422A), MO59 (R–417A), MO49PlusTM (R–437A) and MO29TM (R–4 22D), Genetron® PerformaxTM LT (R–407F), Choice® R– 421A, and Choice® R–421B. HFC blends covered by the scope of the Order are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings 3824.78.0020 and 3824.78.0050. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.6 Merchandise Subject to the AntiCircumvention Inquiry This anti-circumvention inquiry covers imports of the HFC components R–32, R–125, and R–143a from China that are further processed in the United States to create an HFC blend that would be subject to the Order. Initiation of Anti-Circumvention Proceeding Section 781(a) of the Act and 19 CFR 351.225(g) provide that Commerce may find circumvention of an AD order 5 R–404A is sold under various trade names, including Forane® 404A, Genetron® 404A, Solkane® 404A, Klea® 404A, and Suva®404A. R– 407A is sold under various trade names, including Forane® 407A, Solkane® 407A, Klea®407A, and Suva®407A. R–407C is sold under various trade names, including Forane® 407C, Genetron® 407C, Solkane® 407C, Klea® 407C and Suva® 407C. R– 410A is sold under various trade names, including EcoFluor R410, Forane® 410A, Genetron® R410A and AZ–20, Solkane® 410A, Klea® 410A, Suva® 410A, and Puron®. R–507A is sold under various trade names, including Forane® 507, Solkane® 507, Klea®507, Genetron®AZ–50, and Suva®507. R–32 is sold under various trade names, including Solkane®32, Forane®32, and Klea®32. R–125 is sold under various trade names, including Solkane®125, Klea®125, Genetron®125, and Forane®125. R–143a is sold under various trade names, including Solkane®143a, Genetron®143a, and Forane®125. 6 See Order. PO 00000 Frm 00009 Fmt 4703 Sfmt 4703 when merchandise of the same class or kind as merchandise that is subject to the order is completed or assembled in the United States. In conducting anticircumvention inquiries under section 781(a)(1) of the Act, Commerce relies upon the following criteria: (A) Merchandise sold in the United States is of the same class or kind as other merchandise that is subject to an AD order; (B) such merchandise sold in the United States is completed or assembled in the United States from parts or components produced in the foreign country with respect to which the AD order applies; (C) the process of assembly or completion in the United States is minor or insignificant; and (D) the value of the parts or components is a significant portion of the total value of the merchandise. A. Merchandise of the Same Class or Kind The petitioners provide evidence to demonstrate that various companies subject to the Order are importing R–32, R–125, or R–143a components from China to be blended into HFC blends covered by the Order, and, therefore, the requirements of section 781(a)(1)(A)(i) of the Act are satisfied.7 Specifically, the petitioners provide evidence showing that since the establishment of the Order, Chinese companies have begun selling Chinese components to U.S. companies, which are blended in the United States to make the same merchandise covered by the scope of the Order.8 B. Completion of Merchandise in the United States The petitioners provide evidence to demonstrate that certain U.S. companies are importing Chinese-made HFC components to be further blended into HFC blends covered by the Order, and, therefore, the requirements of section 781(a)(1)(B) of the Act are satisfied.9 The petitioners point to evidence to demonstrate that patterns of trade have shifted from the investigation and show that Chinese companies are now exporting components, instead of in7 See Initiation Request at 6–9, Exhibit 1 (iGas products website), Exhibit 2 (proprietary information), Exhibit 3 (iGas and BMP website), Exhibit 4 (proprietary information), Exhibit 5 (Florida Division of Corporations—Xianbin Meng Results), Exhibit 6 (proprietary information), and Exhibit 7 (Memorandum, ‘‘Respondent Selection for the Antidumping Duty Investigation of Hydrofluorocarbon Blends and Components Thereof from the People’s Republic of China,’’ dated August 17, 2015 (Respondent Selection Memo)). 8 Id. 9 Id. at 9–12, Exhibit 2 (proprietary information), Exhibit 7 (Respondent Selection Memo), Exhibit 8 (Census Data), Exhibit 9 (proprietary information). E:\FR\FM\18JNN1.SGM 18JNN1 Federal Register / Vol. 84, No. 117 / Tuesday, June 18, 2019 / Notices scope HFC blends, and U.S. companies which previously had imported blends are now importing these components for the purpose of blending them in the United States into covered HFC blends.10 C. Minor or Insignificant Process Under sections 781(a)(1)(C) and 781(a)(2) of the Act, Commerce will take into account five factors to determine whether the process of assembly or completion of merchandise in the United States is minor or insignificant. Specifically, Commerce will consider: (A) The level of investment in the United States; (B) the level of research and development in the United States; (C) the nature of the production process in the United States; (D) the extent of production facilities in the United States; and (E) whether the value of processing performed in the United States represents a small proportion of the value of the merchandise sold in the United States. (1) Level of Investment in the United States The petitioners provide evidence, including information presented to the International Trade Commission (ITC) during its investigation, to demonstrate that blending is a simple and straightforward process that requires relatively small investment (less than one million dollars), as compared to an order of magnitude of 25 to one, or even 50 to one, larger investment for the manufacture of HFC components.11 (2) Level of Research and Development in the United States The petitioners provide evidence to demonstrate that blending operations do not require significant research and development.12 jbell on DSK3GLQ082PROD with NOTICES (3) Nature of the Production Process in the United States The petitioners provide evidence to demonstrate that the blending production process in the United States is a relatively simple process which only requires a holding tank for the finished HFC blend, some pipes, and a valve.13 Further, the petitioners contend that there is no chemical reaction and no temperature change involved in blending HFC components, and simply involves combining the components in accordance with the blending recipe, then packaging the blend into various containers.14 (4) Extent of Production Facilities in the United States The petitioners provide record evidence to demonstrate that blending is a simple operation that requires minimal personnel and very basic production facilities.15 The petitioners assert that the blending process simply combines the components together according to the recipe, and then packages the finished blend into containers.16 (5) Value of Processing Performed in the United States The petitioners provide an analysis based on proprietary information to demonstrate that the blending process represents a very small percent of the total value of the imported components from China.17 Thus, the petitioners contend that such a small percentage of value-added represents a very small proportion of the value of the merchandise sold in the United States. D. Value of Merchandise Produced in the Foreign Country Is a Significant Portion of the Value of the Merchandise The petitioners provide record evidence to demonstrate that the components sourced from China are the primary inputs in the finished HFC blends and account for a significant portion of the total value of the merchandise, in accordance with section 781(a)(1)(D) of the Act.18 For example, the petitioners point to evidence that the average unit value of R–32, R–125, and R–143a was $4.90 perkilogram (kg) in 2018, while the average unit value of the in-scope HFC blends was $6.71 per-kg.19 E. Factors To Consider in Determining Whether Action Is Necessary Section 781(a)(3) of the Act identifies additional factors that Commerce shall consider in determining whether to include parts or components in an AD order as part of an anti-circumvention inquiry, such as patterns of trade, including sourcing patterns, and affiliations. The petitioners contend that based on the proprietary information and other evidence on the record, certain imports of components used to 14 Id. 15 Id. 10 Id. produce blends subject to the Order represent a change in the pattern of trade.20 In particular, the petitioners contend that there has been a surge of Chinese HFC components from various companies since the issuance of the Order, and this surge occurred at the same time HFC blends imported from China dramatically decreased from these same companies.21 Further, given the large disparity between the production facilities, investment, and amount of production-related workers needed to produce HFC components as compared to blending such components, there is a significant incentive for companies to evade application of AD duties upon importation by shifting their blending operations to the United States.22 The petitioners contend that this evidence points to a pattern of trade intended to be addressed by section 781(a) of the Act, which, if allowed to continue, will negate the effectiveness of the Order. Conclusion Based on the information provided by the petitioners, we determine that there is sufficient information to warrant an initiation of an anti-circumvention inquiry, pursuant to section 781(a) of the Act and 19 CFR 351.225(g). Commerce will determine whether the merchandise subject to the inquiry (as described in the ‘‘Merchandise Subject to the Anti-Circumvention Inquiry’’ section above) is circumventing the Order such that it should be included within the scope of the Order. In accordance with 19 CFR 351.225(l)(2), if Commerce issues a preliminary affirmative determination, we will then instruct U.S. Customs and Border Protection to suspend liquidation and require a cash deposit of estimated duties, 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. Following consultation with interested parties, Commerce will establish a schedule for questionnaires and comments on the issues related to the inquiry. Before issuance of any affirmative determination, Commerce intends to notify the ITC of any proposed inclusion of the inquiry merchandise under the Order in accordance with section 781(e)(1)(A) of the Act. Pursuant to section 781(f) of the 16 Id. 11 Id. at 13–14, Exhibit 10 (ITC Staff Conference transcript), and Exhibit 11 (ITC Hearing transcript). 12 Id. 13 Id. at 14–15, Exhibit 11 (ITC Hearing transcript), Exhibit 12 (TTI Response to Section D QR), and Exhibit 13 (BMP Parking Lot Picture). VerDate Sep<11>2014 28275 17:23 Jun 17, 2019 Jkt 247001 17 Id. at 15, Exhibit 8 (Census Data), Exhibit 14 (proprietary declaration), Exhibit 15 (proprietary information), and Exhibit 16 (proprietary information). 18 Id. at 15–16 and Exhibit 8 (Census Data). 19 Id. PO 00000 Frm 00010 Fmt 4703 Sfmt 4703 20 Id. at 16–19, Exhibit 2 (proprietary information), Exhibit 8 (Census Data), Exhibit 13 (BMP Parking Lot Picture), and Exhibit 17 (BMP Employees). 21 Id. 22 Id. E:\FR\FM\18JNN1.SGM 18JNN1 28276 Federal Register / Vol. 84, No. 117 / Tuesday, June 18, 2019 / Notices 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. Notification to Interested Parties This notice is published in accordance with section 781(a) of the Act and 19 CFR 351.225(g). Dated: June 12, 2019. Jeffrey I. Kessler, Assistant Secretary for Enforcement and Compliance. [FR Doc. 2019–12849 Filed 6–17–19; 8:45 am] BILLING CODE 3510–DS–P DEPARTMENT OF COMMERCE International Trade Administration [A–570–028] Hydrofluorocarbon Blends From the People’s Republic of China: Initiation of Anti-Circumvention Inquiry of Antidumping Duty Order; Unfinished Blends Enforcement and Compliance, International Trade Administration, Department of Commerce. AGENCY: SUMMARY: In response to information from U.S. Customs and Border Protection (CBP) and allegations of circumvention from the American HFC Coalition (the petitioners), the Department of Commerce (Commerce) is initiating an anti-circumvention inquiry to determine whether imports of unfinished blends of hydrofluorocarbon (HFC) components R–32 and R–125 from the People’s Republic of China (China) that are further processed into finished HFC blends in the United States are circumventing the antidumping duty (AD) order on HFC blends from China. DATES: Applicable June 18, 2019. FOR FURTHER INFORMATION CONTACT: Andrew Medley or Manuel Rey, AD/ CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482–4987 and (202) 482–5518, respectively. jbell on DSK3GLQ082PROD with NOTICES SUPPLEMENTARY INFORMATION: Background Commerce received information from CBP relating to the Order on HFC blends from China regarding certain blends comprised of HFC components R–32 and R–125, which closely resemble VerDate Sep<11>2014 17:23 Jun 17, 2019 Jkt 247001 subject HFC blends from China.1 On April 2, 2018, Commerce published a notice that it was opening a scope segment of the proceeding and provided an opportunity for interested parties to comment.2 On June 12, 2018, the petitioners filed comments on the CBP entry packages; 3 on June 18, 2018, Weitron, Inc. and Weitron International Refrigeration Equipment (Kunshan) Co., Ltd. (collectively, Weitron) filed rebuttal comments.4 On August 14, 2018, the petitioners filed a request that, pursuant to section 781(a) of the Tariff Act of 1930, as amended (the Act), Commerce initiate an anti-circumvention inquiry regarding imports of unfinished blends of HFC components R–32 and R–125 from China that are further processed into finished HFC blends in the United States, which the petitioners allege are circumventing the Order.5 On August 23, 2018, Weitron submitted rebuttal comments.6 Scope of the Order The products subject to the Order are HFC blends. HFC blends covered by the scope are R–404A, a zeotropic mixture consisting of 52 percent 1,1,1 Trifluoroethane, 44 percent Pentafluoroethane, and 4 percent 1,1,1,2-Tetrafluoroethane; R–407A, a zeotropic mixture of 20 percent Difluoromethane, 40 percent Pentafluoroethane, and 40 percent 1,1,1,2-Tetrafluoroethane; R–407C, a zeotropic mixture of 23 percent 1 See Hydrofluorocarbon Blends from the People’s Republic of China: Antidumping Duty Order, 81 FR 55436 (August 19, 2016) (Order). 2 See 1-Hydroxyethylidene-1, 1-Diphosphonic Acid from the People’s Republic of China; ColdRolled Steel Flat Products from Japan; Hydrofluorocarbon Blends from the People’s Republic of China; Light-Walled Rectangular Pipe and Tube from the People’s Republic of China: Opening of Scope Segments and Opportunity to Comment, 83 FR 13952 (April 2, 2018) (Opening of Scope Segments). 3 See Petitioners’ Letter, ‘‘Hydrofluorocarbon Blends from the People’s Republic of China: Comments on Scope Segment for Certain R–32/R– 125 Blends,’’ dated June 12, 2018. 4 See Petitioners’ Letter, ‘‘Weitron’s Response to American HFC Coalition’s Comments on Scope Segment, Antidumping Duty Order on Hydrofluorocarbon Blends from the People’s Republic of China,’’ dated June 18, 2018. 5 See Petitioners’ Letter, ‘‘Hydrofluorocarbon Blends from the People’s Republic of China: Scope Investigation Regarding Certain R–32/R–125 Blends: Request to Apply Section 781(a) to Prevent Circumvention,’’ dated August 14, 2018 (Initiation Request). 6 See Weitron’s Letter, ‘‘Weitron’s Response to Anti-Circumvention Allegation; Request to Reject, or Alternatively, Request for Extension of Time to Reply: Antidumping Duty Order on Hydrofluorocarbon Blends from the People’s Republic of China,’’ dated August 23, 2018 (Weitron’s August 23, 2018 Response to AntiCircumvention Allegation). PO 00000 Frm 00011 Fmt 4703 Sfmt 4703 Difluoromethane, 25 percent Pentafluoroethane, and 52 percent 1,1,1,2-Tetrafluoroethane; R–410A, a zeotropic mixture of 50 percent Difluoromethane and 50 percent Pentafluoroethane; and R–507A, an azeotropic mixture of 50 percent Pentafluoroethane and 50 percent 1,1,1Trifluoroethane also known as R–507. The foregoing percentages are nominal percentages by weight. Actual percentages of single component refrigerants by weight may vary by plus or minus two percent points from the nominal percentage identified above.7 Any blend that includes an HFC component other than R–32, R–125, R– 143a, or R–134a is excluded from the scope of the Order. Excluded from the Order are blends of refrigerant chemicals that include products other than HFCs, such as blends including chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), hydrocarbons (HCs), or hydrofluoroolefins (HFOs). Also excluded from the Order are patented HFC blends, including, but not limited to, ISCEON® blends, including MO99TM (R–438A), MO79 (R–422A), MO59 (R–417A), MO49PlusTM (R–437A) and MO29TM (R–4 22D), Genetron® PerformaxTM LT (R–407F), Choice® R– 421A, and Choice® R–421B. HFC blends covered by the scope of the Order are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings 3824.78.0020 and 3824.78.0050. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.8 Merchandise Subject to the AntiCircumvention Inquiry This anti-circumvention inquiry covers imports of partially finished blends of HFC components R–32 and R– 125 from China that are further processed in the United States to create 7 R–404A is sold under various trade names, including Forane® 404A, Genetron® 404A, Solkane® 404A, Klea® 404A, and Suva®404A. R– 407A is sold under various trade names, including Forane® 407A, Solkane® 407A, Klea®407A, and Suva®407A. R–407C is sold under various trade names, including Forane® 407C, Genetron® 407C, Solkane® 407C, Klea® 407C and Suva® 407C. R– 410A is sold under various trade names, including EcoFluor R410, Forane® 410A, Genetron® R410A and AZ–20, Solkane® 410A, Klea® 410A, Suva® 410A, and Puron®. R–507A is sold under various trade names, including Forane® 507, Solkane® 507, Klea®507, Genetron®AZ–50, and Suva®507. R–32 is sold under various trade names, including Solkane®32, Forane®32, and Klea®32. R–125 is sold under various trade names, including Solkane®125, Klea®125, Genetron®125, and Forane®125. R–143a is sold under various trade names, including Solkane®143a, Genetron®143a, and Forane®125. 8 See Order. E:\FR\FM\18JNN1.SGM 18JNN1

Agencies

[Federal Register Volume 84, Number 117 (Tuesday, June 18, 2019)]
[Notices]
[Pages 28273-28276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12849]


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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-028]


Hydrofluorocarbon Blends From the People's Republic of China: 
Initiation of Anti-Circumvention Inquiry of Antidumping Duty Order; 
Components

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to allegations of circumvention from the American 
HFC Coalition (the petitioners), the Department of Commerce (Commerce) 
is initiating an anti-circumvention inquiry to determine whether 
imports of hydrofluorocarbon (HFC) components R-32, R-125, and R-143a 
from the People's Republic of China (China) that are further processed 
into HFC blends in the United States are circumventing the antidumping 
duty (AD) order on HFC blends from China.

DATES: Applicable June 18, 2019.

FOR FURTHER INFORMATION CONTACT: Andrew Medley or Manuel Rey, AD/CVD 
Operations, Office II, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW, Washington, DC 20230; telephone: (202) 482-4987 and (202) 482-5518, 
respectively.

SUPPLEMENTARY INFORMATION:

[[Page 28274]]

Background

    On April 4, 2019, the petitioners filed a request that, pursuant to 
section 781(a) of the Tariff Act of 1930, as amended (the Act), 
Commerce initiate an anti-circumvention inquiry regarding imports of 
HFC components R-32, R-125, and R-143a from China that are further 
processed into HFC blends in the United States, which the petitioners 
allege are circumventing the Order.\1\ On April 26, 2019, National 
Refrigerants, Inc. (National Refrigerants) filed comments objecting to 
the petitioners' request to initiate an anti-circumvention inquiry 
regarding HFC components imported from China.\2\ On May 13, 2019, the 
petitioners filed a response to National Refrigerants' comments.\3\ On 
May 14, 2018, Zhejiang Quzhou Lianzhou Refrigerants Co., Ltd. 
(Lianzhou) also filed comments objecting to the petitioners' request to 
initiate an anti-circumvention inquiry regarding HFC components 
imported from China.\4\
---------------------------------------------------------------------------

    \1\ See Petitioners' Letter, ``Hydrofluorocarbon Blends from the 
People's Republic of China: Request to Initiate Anti-Circumvention 
Inquiry Pursuant to Section 781(a) of the Act,'' dated April 4, 2019 
(Initiation Request); see also Hydrofluorocarbon Blends from the 
People's Republic of China: Antidumping Duty Order, 81 FR 55436 
(August 19, 2016) (Order).
    \2\ See National Refrigerants' Letter, ``Hydrofluorocarbon 
Blends from the People's Republic of China: Objection to 
Petitioners' Request for a Sec.  781(a) Anti-Circumvention Inquiry 
and Request for a Meeting,'' dated April 26, 2019.
    \3\ See Petitioners' Letter, ``Hydrofluorocarbon Blends from the 
People's Republic of China; Request for Section 781(a) Investigation 
Regarding Certain Imported HFC Components: Response to National 
Refrigerants, Inc.,'' dated May 13, 2019.
    \4\ See Lianzhou's Letter, ``Zhejiang Quzhou Lianzhou 
Refrigerants Co., Ltd.'s Response to American HFC Coalition's 
Request for a Sec.  781(a) Anti-Circumvention Inquiry and Request 
for Meeting, Antidumping Duty Order on Hydrofluorocarbon Blends from 
the People's Republic of China,'' dated May 14, 2019.
---------------------------------------------------------------------------

Scope of the Order

    The products subject to the Order are HFC blends. HFC blends 
covered by the scope are R-404A, a zeotropic mixture consisting of 52 
percent 1,1,1 Trifluoroethane, 44 percent Pentafluoroethane, and 4 
percent 1,1,1,2-Tetrafluoroethane; R-407A, a zeotropic mixture of 20 
percent Difluoromethane, 40 percent Pentafluoroethane, and 40 percent 
1,1,1,2-Tetrafluoroethane; R-407C, a zeotropic mixture of 23 percent 
Difluoromethane, 25 percent Pentafluoroethane, and 52 percent 1,1,1,2-
Tetrafluoroethane; R-410A, a zeotropic mixture of 50 percent 
Difluoromethane and 50 percent Pentafluoroethane; and R-507A, an 
azeotropic mixture of 50 percent Pentafluoroethane and 50 percent 
1,1,1-Trifluoroethane also known as R-507. The foregoing percentages 
are nominal percentages by weight. Actual percentages of single 
component refrigerants by weight may vary by plus or minus two percent 
points from the nominal percentage identified above.\5\
---------------------------------------------------------------------------

    \5\ R-404A is sold under various trade names, including 
Forane[supreg] 404A, Genetron[supreg] 404A, Solkane[supreg] 404A, 
Klea[supreg] 404A, and Suva[supreg]404A. R-407A is sold under 
various trade names, including Forane[supreg] 407A, Solkane[supreg] 
407A, Klea[supreg]407A, and Suva[supreg]407A. R-407C is sold under 
various trade names, including Forane[supreg] 407C, Genetron[supreg] 
407C, Solkane[supreg] 407C, Klea[supreg] 407C and Suva[supreg] 407C. 
R-410A is sold under various trade names, including EcoFluor R410, 
Forane[supreg] 410A, Genetron[supreg] R410A and AZ-20, 
Solkane[supreg] 410A, Klea[supreg] 410A, Suva[supreg] 410A, and 
Puron[supreg]. R-507A is sold under various trade names, including 
Forane[supreg] 507, Solkane[supreg] 507, Klea[supreg]507, 
Genetron[supreg]AZ-50, and Suva[supreg]507. R-32 is sold under 
various trade names, including Solkane[supreg]32, Forane[supreg]32, 
and Klea[supreg]32. R-125 is sold under various trade names, 
including Solkane[supreg]125, Klea[supreg]125, Genetron[supreg]125, 
and Forane[supreg]125. R-143a is sold under various trade names, 
including Solkane[supreg]143a, Genetron[supreg]143a, and 
Forane[supreg]125.
---------------------------------------------------------------------------

    Any blend that includes an HFC component other than R-32, R-125, R-
143a, or R-134a is excluded from the scope of the Order.
    Excluded from the Order are blends of refrigerant chemicals that 
include products other than HFCs, such as blends including 
chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), 
hydrocarbons (HCs), or hydrofluoroolefins (HFOs).
    Also excluded from the Order are patented HFC blends, including, 
but not limited to, ISCEON[supreg] blends, including MO99TM 
(R-438A), MO79 (R-422A), MO59 (R-417A), MO49PlusTM (R-437A) 
and MO29TM (R-4 22D), Genetron[supreg] 
PerformaxTM LT (R-407F), Choice[supreg] R-421A, and 
Choice[supreg] R-421B.
    HFC blends covered by the scope of the Order are currently 
classified in the Harmonized Tariff Schedule of the United States 
(HTSUS) at subheadings 3824.78.0020 and 3824.78.0050. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope is dispositive.\6\
---------------------------------------------------------------------------

    \6\ See Order.
---------------------------------------------------------------------------

Merchandise Subject to the Anti-Circumvention Inquiry

    This anti-circumvention inquiry covers imports of the HFC 
components R-32, R-125, and R-143a from China that are further 
processed in the United States to create an HFC blend that would be 
subject to the Order.

Initiation of Anti-Circumvention Proceeding

    Section 781(a) of the Act and 19 CFR 351.225(g) provide that 
Commerce may find circumvention of an AD order when merchandise of the 
same class or kind as merchandise that is subject to the order is 
completed or assembled in the United States. In conducting anti-
circumvention inquiries under section 781(a)(1) of the Act, Commerce 
relies upon the following criteria: (A) Merchandise sold in the United 
States is of the same class or kind as other merchandise that is 
subject to an AD order; (B) such merchandise sold in the United States 
is completed or assembled in the United States from parts or components 
produced in the foreign country with respect to which the AD order 
applies; (C) the process of assembly or completion in the United States 
is minor or insignificant; and (D) the value of the parts or components 
is a significant portion of the total value of the merchandise.

A. Merchandise of the Same Class or Kind

    The petitioners provide evidence to demonstrate that various 
companies subject to the Order are importing R-32, R-125, or R-143a 
components from China to be blended into HFC blends covered by the 
Order, and, therefore, the requirements of section 781(a)(1)(A)(i) of 
the Act are satisfied.\7\ Specifically, the petitioners provide 
evidence showing that since the establishment of the Order, Chinese 
companies have begun selling Chinese components to U.S. companies, 
which are blended in the United States to make the same merchandise 
covered by the scope of the Order.\8\
---------------------------------------------------------------------------

    \7\ See Initiation Request at 6-9, Exhibit 1 (iGas products 
website), Exhibit 2 (proprietary information), Exhibit 3 (iGas and 
BMP website), Exhibit 4 (proprietary information), Exhibit 5 
(Florida Division of Corporations--Xianbin Meng Results), Exhibit 6 
(proprietary information), and Exhibit 7 (Memorandum, ``Respondent 
Selection for the Antidumping Duty Investigation of 
Hydrofluorocarbon Blends and Components Thereof from the People's 
Republic of China,'' dated August 17, 2015 (Respondent Selection 
Memo)).
    \8\ Id.
---------------------------------------------------------------------------

B. Completion of Merchandise in the United States

    The petitioners provide evidence to demonstrate that certain U.S. 
companies are importing Chinese-made HFC components to be further 
blended into HFC blends covered by the Order, and, therefore, the 
requirements of section 781(a)(1)(B) of the Act are satisfied.\9\ The 
petitioners point to evidence to demonstrate that patterns of trade 
have shifted from the investigation and show that Chinese companies are 
now exporting components, instead of in-

[[Page 28275]]

scope HFC blends, and U.S. companies which previously had imported 
blends are now importing these components for the purpose of blending 
them in the United States into covered HFC blends.\10\
---------------------------------------------------------------------------

    \9\ Id. at 9-12, Exhibit 2 (proprietary information), Exhibit 7 
(Respondent Selection Memo), Exhibit 8 (Census Data), Exhibit 9 
(proprietary information).
    \10\ Id.
---------------------------------------------------------------------------

C. Minor or Insignificant Process

    Under sections 781(a)(1)(C) and 781(a)(2) of the Act, Commerce will 
take into account five factors to determine whether the process of 
assembly or completion of merchandise in the United States is minor or 
insignificant. Specifically, Commerce will consider: (A) The level of 
investment in the United States; (B) the level of research and 
development in the United States; (C) the nature of the production 
process in the United States; (D) the extent of production facilities 
in the United States; and (E) whether the value of processing performed 
in the United States represents a small proportion of the value of the 
merchandise sold in the United States.
(1) Level of Investment in the United States
    The petitioners provide evidence, including information presented 
to the International Trade Commission (ITC) during its investigation, 
to demonstrate that blending is a simple and straightforward process 
that requires relatively small investment (less than one million 
dollars), as compared to an order of magnitude of 25 to one, or even 50 
to one, larger investment for the manufacture of HFC components.\11\
---------------------------------------------------------------------------

    \11\ Id. at 13-14, Exhibit 10 (ITC Staff Conference transcript), 
and Exhibit 11 (ITC Hearing transcript).
---------------------------------------------------------------------------

(2) Level of Research and Development in the United States
    The petitioners provide evidence to demonstrate that blending 
operations do not require significant research and development.\12\
---------------------------------------------------------------------------

    \12\ Id.
---------------------------------------------------------------------------

(3) Nature of the Production Process in the United States
    The petitioners provide evidence to demonstrate that the blending 
production process in the United States is a relatively simple process 
which only requires a holding tank for the finished HFC blend, some 
pipes, and a valve.\13\ Further, the petitioners contend that there is 
no chemical reaction and no temperature change involved in blending HFC 
components, and simply involves combining the components in accordance 
with the blending recipe, then packaging the blend into various 
containers.\14\
---------------------------------------------------------------------------

    \13\ Id. at 14-15, Exhibit 11 (ITC Hearing transcript), Exhibit 
12 (TTI Response to Section D QR), and Exhibit 13 (BMP Parking Lot 
Picture).
    \14\ Id.
---------------------------------------------------------------------------

(4) Extent of Production Facilities in the United States
    The petitioners provide record evidence to demonstrate that 
blending is a simple operation that requires minimal personnel and very 
basic production facilities.\15\ The petitioners assert that the 
blending process simply combines the components together according to 
the recipe, and then packages the finished blend into containers.\16\
---------------------------------------------------------------------------

    \15\ Id.
    \16\ Id.
---------------------------------------------------------------------------

(5) Value of Processing Performed in the United States
    The petitioners provide an analysis based on proprietary 
information to demonstrate that the blending process represents a very 
small percent of the total value of the imported components from 
China.\17\ Thus, the petitioners contend that such a small percentage 
of value-added represents a very small proportion of the value of the 
merchandise sold in the United States.
---------------------------------------------------------------------------

    \17\ Id. at 15, Exhibit 8 (Census Data), Exhibit 14 (proprietary 
declaration), Exhibit 15 (proprietary information), and Exhibit 16 
(proprietary information).
---------------------------------------------------------------------------

D. Value of Merchandise Produced in the Foreign Country Is a 
Significant Portion of the Value of the Merchandise

    The petitioners provide record evidence to demonstrate that the 
components sourced from China are the primary inputs in the finished 
HFC blends and account for a significant portion of the total value of 
the merchandise, in accordance with section 781(a)(1)(D) of the 
Act.\18\ For example, the petitioners point to evidence that the 
average unit value of R-32, R-125, and R-143a was $4.90 per-kilogram 
(kg) in 2018, while the average unit value of the in-scope HFC blends 
was $6.71 per-kg.\19\
---------------------------------------------------------------------------

    \18\ Id. at 15-16 and Exhibit 8 (Census Data).
    \19\ Id.
---------------------------------------------------------------------------

E. Factors To Consider in Determining Whether Action Is Necessary

    Section 781(a)(3) of the Act identifies additional factors that 
Commerce shall consider in determining whether to include parts or 
components in an AD order as part of an anti-circumvention inquiry, 
such as patterns of trade, including sourcing patterns, and 
affiliations. The petitioners contend that based on the proprietary 
information and other evidence on the record, certain imports of 
components used to produce blends subject to the Order represent a 
change in the pattern of trade.\20\ In particular, the petitioners 
contend that there has been a surge of Chinese HFC components from 
various companies since the issuance of the Order, and this surge 
occurred at the same time HFC blends imported from China dramatically 
decreased from these same companies.\21\ Further, given the large 
disparity between the production facilities, investment, and amount of 
production-related workers needed to produce HFC components as compared 
to blending such components, there is a significant incentive for 
companies to evade application of AD duties upon importation by 
shifting their blending operations to the United States.\22\ The 
petitioners contend that this evidence points to a pattern of trade 
intended to be addressed by section 781(a) of the Act, which, if 
allowed to continue, will negate the effectiveness of the Order.
---------------------------------------------------------------------------

    \20\ Id. at 16-19, Exhibit 2 (proprietary information), Exhibit 
8 (Census Data), Exhibit 13 (BMP Parking Lot Picture), and Exhibit 
17 (BMP Employees).
    \21\ Id.
    \22\ Id.
---------------------------------------------------------------------------

Conclusion

    Based on the information provided by the petitioners, we determine 
that there is sufficient information to warrant an initiation of an 
anti-circumvention inquiry, pursuant to section 781(a) of the Act and 
19 CFR 351.225(g). Commerce will determine whether the merchandise 
subject to the inquiry (as described in the ``Merchandise Subject to 
the Anti-Circumvention Inquiry'' section above) is circumventing the 
Order such that it should be included within the scope of the Order.
    In accordance with 19 CFR 351.225(l)(2), if Commerce issues a 
preliminary affirmative determination, we will then instruct U.S. 
Customs and Border Protection to suspend liquidation and require a cash 
deposit of estimated duties, 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.
    Following consultation with interested parties, Commerce will 
establish a schedule for questionnaires and comments on the issues 
related to the inquiry. Before issuance of any affirmative 
determination, Commerce intends to notify the ITC of any proposed 
inclusion of the inquiry merchandise under the Order in accordance with 
section 781(e)(1)(A) of the Act. Pursuant to section 781(f) of the

[[Page 28276]]

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.

Notification to Interested Parties

    This notice is published in accordance with section 781(a) of the 
Act and 19 CFR 351.225(g).

    Dated: June 12, 2019.
Jeffrey I. Kessler,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2019-12849 Filed 6-17-19; 8:45 am]
 BILLING CODE 3510-DS-P