[Federal Register Volume 75, Number 208 (Thursday, October 28, 2010)]
[Notices]
[Pages 66352-66356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27294]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-836]
Glycine From the People's Republic of China: Initiation of
Antidumping Anti-circumvention Inquiry
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from GEO Specialty Chemicals, Inc.
and Chattem Chemicals, Inc., domestic interested parties in the above-
referenced proceeding (``domestic interested parties''), the Department
of Commerce (``the Department'') is initiating an antidumping anti-
circumvention inquiry pursuant to section 781(b) of the Tariff Act of
1930, as amended (``the Act''). This inquiry will examine whether the
activities of three Indian companies, Salvi Chemical Industries
(allegedly affiliated with Nutracare International) (collectively,
``Salvi''), Paras Intermediates Pvt. Ltd. (``Paras''), and AICO
Laboratories India Ltd. (``AICO'') are circumventing the antidumping
duty order on glycine from the People's Republic of China (PRC). See
Antidumping Duty Order: Glycine from People's Republic of China, 60 FR
16116 (March 29, 1995) (``PRC Glycine Order '').
DATES: Effective Date: October 28, 2010.
FOR FURTHER INFORMATION CONTACT: David Cordell or Olga Carter, AD/CVD
Operations, Office 7, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
0408 or (202) 482-8221, respectively.
SUPPLEMENTARY INFORMATION:
Background
On December 18, 2009, the domestic interested parties filed a
request for initiation of an anti-circumvention inquiry, alleging two
companies (AICO and Paras) were circumventing the order covering
glycine from the PRC under section 781(b) of the Act and 19 CFR
[[Page 66353]]
351.225(h), through completion and assembly in India of the same class
or kind of merchandise that is subject to the PRC Glycine Order and by
labeling the merchandise as Indian origin. See domestic interested
parties request ``Antidumping Duty Order on Glycine from the People's
Republic of China--Circumvention of Antidumping Duty Order,'' dated
December 18, 2009 (``Circumvention Allegation'').
On January 15, 2010, the Department requested that domestic
interested parties resubmit legible copies of AICO financial statements
and of the Port Import Export Reporting Service (``PIERS'') report
regarding AICO's shipments to the United States, provided in their
original Circumvention Allegation, at Exhibits B and A, respectively.
The legible copies of the requested documents were submitted by the
domestic interested parties on January 22, 2010. See letter from the
domestic interested parties to the Department, dated January 22, 2010.
On February 18, 2010, the domestic interested parties met with the
Department to discuss their December 18, 2009, and January 22, 2010,
submissions, in which they requested the Department initiate an anti-
circumvention inquiry for glycine from the PRC. See Memorandum to the
File, from Olga Carter, analyst, titled ``Scope Determination Request
Based on Circumvention Inquiry: Meeting with Counsel and Executive Vice
President and CFO of Domestic Interested Party GEO Specialty Chemicals,
Inc.,'' dated February 22, 2010. On February 22, 2010, the Department
requested additional information from the domestic interested parties
in the form of a supplemental questionnaire.
In response to a request from the domestic interested parties, on
July 29, 2010, the Department held a meeting to further discuss the
December 18, 2009, and January 22, 2010, submissions, as well as the
Department's February 22, 2010, deficiency questionnaire. See
Memorandum to the File, titled ``Scope Determination Request Based on
Circumvention Inquiry: Meeting with Counsel of Domestic Interested
Party GEO Specialty Chemicals, Inc.,'' dated August 2, 2010.
On August 19, 2010, the domestic interested parties filed
additional information and data, supplementing their Circumvention
Allegation, titled ``Antidumping Duty Order on Glycine from the
People's Republic of China--Circumvention of Antidumping Duty Order''
(``August 19, 2010 submission''), in which the domestic interested
parties also included an anti-circumvention allegation against a third
company, Salvi, and its export arm, Nutracare International. In their
Circumvention Allegation, as supplemented, the domestic interested
parties allege that all three Indian companies are importing technical-
grade glycine from companies in the PRC, processing \1\ and/or
repackaging the PRC-origin glycine, then exporting the finished product
to the United States, marked as Indian-origin glycine.
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\1\ The domestic interested parties used a variety of terms
(e.g. refining, purifying, processing, sieving) in their submissions
to describe the processing activities that are allegedly taking
place in India. We have used the term ``processing'' to encompass
all of them for purposes of this initiation notice.
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On August 31, 2010, the Department requested the domestic
interested parties to provide additional information to justify their
claim that there is a clear and compelling need to withhold certain
double bracketed information in their August 19, 2010, submission from
disclosure under an administrative protective order (``APO''). On
September 7, 2010, the domestic interested parties provided such
justification in a response to the Department's request, thus
satisfying the basic requirements for filing a request for an anti-
circumvention inquiry. See Letter from the Domestic Interested Parties
to the Department, entitled ``Antidumping Duty Order on Glycine from
the People's Republic of China (``PRC'') Scope Determination Request
Based on Circumvention Inquiry: Response of Domestic Glycine Industry
to Department's August 31, 2010 Letter.'' In response to this
submission, on September 8, 2010, the Department established an APO and
a Public Service List for this segment of the proceeding. See the
Memorandum to the File ``Scope Request Based on Circumvention Inquiry:
Glycine from the PRC,'' dated September 8, 2010.
On September 23, 2010, the Department conducted a telephone
interview with the foreign market researcher to corroborate the
information in the market report that the domestic interested parties
filed on the record as support for their allegations and to clarify the
details of the research process. See the Memorandum to the File
entitled ``Antidumping Circumvention Inquiry: Telephone Interview with
the Foreign Market Researcher,'' dated October 5, 2010 (``Telephone
Interview Memo'').
On October 6, 2010, the domestic interested parties amended their
request for the initiation of an anti-circumvention inquiry with
respect to AICO, citing to the Telephone Interview Memo. See domestic
interested parties' submission, titled ``Antidumping Duty Order on
Glycine from the People's Republic of China (PRC): Antidumping
Circumvention Inquiry--Amendment to Domestic Industry's Circumvention
Allegation based on Department's Memorandum to File'' (``Amendment
Letter''), dated October 6, 2010, at 2. Therein, the domestic
interested parties allege that, based on the telephone interview, AICO
is both repackaging and refining the glycine. Id.
Scope of Order
The product covered by this order is glycine, which is a free-
flowing crystalline material, like salt or sugar. Glycine is produced
at varying levels of purity and is used as a sweetener/taste enhancer,
a buffering agent, re-absorbable amino acid, chemical intermediate, and
a metal complexing agent. Glycine is currently classified under
subheading 2922.49.4020 of the Harmonized Tariff Schedule of the United
States (``HTSUS''). The scope of this order includes glycine of all
purity levels. Although the HTSUS subheadings are provided for
convenience and customs purposes, our written description of the scope
of this proceeding is dispositive.
Initiation of Antidumping Anti-Circumvention Inquiry
Section 781(b)(1) of the Act provides that the Department may find
circumvention of an antidumping duty order when merchandise of the same
class or kind subject to the order is completed or assembled in a
foreign country other than the country to which the order applies. In
conducting anti-circumvention inquiries, under section 781(b)(1) of the
Act, the Department will also evaluate whether: (1) The process of
assembly or completion in the other foreign country is minor or
insignificant; (2) the value of the merchandise produced in the foreign
country to which the antidumping duty order applies is a significant
portion of the total value of the merchandise exported to the United
States; and (3) action is appropriate to prevent evasion of such an
order or finding. As discussed below, the domestic interested parties
supported their claims with information available to them with respect
to these criteria.
A. Merchandise of the Same Class or Kind
Domestic interested parties state that the PRC Glycine Order covers
all grades and purity levels of glycine and that both the Department
and U.S. Customs and Border Protection (``CBP'') have determined that
purifying or refining
[[Page 66354]]
glycine does not result in a substantial transformation necessary to
change its country of origin. See Circumvention Allegation at 5.
Therefore, the domestic interested parties argue that the merchandise
being imported into the United States from India from Salvi, Paras and
Aico is of the same class or kind as that subject to the PRC Glycine
Order, pursuant to section 781(b)(1)(A)(i) of the Act. To further
support this allegation, domestic interested parties cite to the
investigation of glycine from India,\2\ where Paras stated that it was
further processing PRC-origin glycine into higher grades and the
Department found that ``the further processing incurred in India with
respect to imported technical grade glycine is not substantial enough
to change the country of origin.'' \3\ Therefore, domestic interested
parties contend that the PRC-origin glycine processed by Paras, Salvi,
and AICO in India continues to be PRC glycine, and therefore is the
merchandise of the same class or kind as that subject to the PRC
Glycine Order.
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\2\ See Notice of Final Determination of Sales at Less Than Fair
Value: Glycine From India, 73 FR 16640 (March 28, 2008) (Indian
Glycine), and the accompanying Issues and Decision Memorandum at
Comment 5 (Issues and Decision Memorandum).
\3\ Id.
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B. Completion of Merchandise in a Foreign Country
Domestic interested parties allege that, based on the face-to-face
interviews with the market researchers, in the case of Paras, Salvi and
AICO, all three companies acknowledge that they have imported
technical-grade PRC glycine into India, refined it and shipped it to
the United States. See August 19, 2010, submission at 4, footnote 7. In
addition, the domestic interested parties again cite to Indian Glycine,
in which Paras acknowledged it had further-processed PRC glycine in
India. See August 19, 2010, submission at 4. With respect to Salvi, the
domestic interested parties cite to the foreign market research report,
titled ``Market Survey to Assess the Dynamics of the Glycine Market in
India'' (Market Research Report), which identifies Salvi as an exporter
of PRC glycine to the United States, which it allegedly refined in
India,. See August 19, 2010, submission at Exhibit 12. With respect to
AICO, the domestic interested parties contend that AICO both repackages
and refines glycine originating in the PRC. See Amendment Letter at 3.
C. Minor or Insignificant Process
Domestic interested parties allege that for the purposes of section
781(b)(1)(C) of the Act, the process of refining or purifying
technical-grade PRC glycine into purified glycine is ``minor or
insignificant,'' as defined by the Act. To demonstrate that the
processing is ``minor or insignificant,'' the domestic interested
parties calculate a cost to process the PRC glycine that is imported
into India, and allegedly performed by Paras and Salvi, based on the
domestic industry's cost of production. See August 19, 2010, submission
at Exhibit 2. They allege that the refining of lower-grade glycine in
India does not include ``the reactor, washing and centrifuge steps,''
which are critical to the production process. Id. Domestic interested
parties conclude that refinement costs that do not include production-
related processes (i.e., the reactor, washing and centrifuge steps) are
insignificant or minor when measured against the value of glycine
exported to the United States. Further, the domestic interested parties
argue that based on their own estimates, the cost to refine PRC glycine
ranges from 2.28 percent for AICO to 2.85 percent for Paras and Salvi
of the average value of Indian glycine imported into the United States
during the period from April 1, 2008, through March 31, 2009. See
August 19, 2010, submission at 5 and 6.
D. Value of Merchandise Produced in the PRC is a Significant Portion of
the Total Value of the Merchandise Exported to the United States
Domestic interested parties allege that the production process for
glycine that takes place in the PRC prior to processing in India and
subsequent shipment to the United States accounts for the significant
portion of the total value of the final product. See August 19, 2010,
submission at 5 and 6.
Domestic interested parties argue that an analysis of the relevant
statutory factors of section 781(b)(2) of the Act further supports the
conclusion that the Indian processing is ``minor or insignificant.''
These factors include: (1) Level of investment in the foreign country;
(2) level of research and development in the foreign country; (3)
nature of the production process in the foreign country; (4) extent of
production facilities in the foreign country; and (5) whether the value
of the processing performed in the foreign country represents a small
proportion of the value of the merchandise imported into the United
States. The domestic interested parties' analysis of these factors,
including citations as appropriate, is as follows.
(1) Level of Investment
Domestic interested parties state that manufacturing of glycine
requires a significant level of investment. See August 19, 2010,
submission at 8. Domestic interested parties further contend that
unlike the manufacturing of glycine, the processing of a lower-grade,
PRC-origin glycine into a more refined grade does not require a
significant level of investment, since Indian companies are allegedly
re-processing the PRC-origin glycine by refining it, and then
repackaging the PRC-origin glycine. See August 19, 2010, submission at
6 through 8 and 19.
(2) Level of Research and Development
Domestic interested parties state that the purification, refining,
and repackaging of glycine are technically mature processes and,
therefore, believe no research and development is required to refine,
purify and repackage PRC-origin glycine as performed by Paras, Salvi,
and AICO. See August 19, 2010, submission at 9.
(3) Nature of the Production Process
Domestic interested parties state that they were not able to
acquire definitive information regarding the production processes used
by Paras, Salvi, and AICO. See August 19, 2010 submission at 9.
However, the domestic interested parties describe a possible scenario
where Paras and Salvi refine PRC glycine by placing it in a sieve and
then repackage the processed PRC-origin glycine for export as Indian
glycine. Id at 9-10. Further, the domestic interested parties state
that the Department has previously determined that Paras' further
processing of imported glycine into higher-purity grades was not
significant enough to substantially transform the glycine into Indian-
origin glycine. See August 19, 2010, submission at 4, citing to Indian
Glycine and the accompanying Issues and Decision Memorandum at Comment
5. Domestic interested parties' allegations that AICO's production
process involves processing in addition to repackaging PRC-origin
glycine, are based on the Market Research Report and foreign market
researcher's statement during the telephone interview with the
Department. See Market Research Report at 25; see also Amendment Letter
at 2. Thus, the domestic interested parties claim that the production
processes of the named Indian companies are limited to refining and
repackaging of technical-grade PRC glycine. See August 19, 2010,
submission at 5.
[[Page 66355]]
(4) Extent of Production Facilities
The domestic interested parties allege that AICO does not
manufacture glycine. See August 19, 2010, submission at 6. Further, the
domestic interested parties allege that the extent of AICO's production
facilities is limited to the facilities required for processing and
repackaging. See Telephone Interview Memo at 4. See also August 19,
2010, submission at 6.
With respect to Paras, the domestic interested parties described
Paras's production facilities, as it pertained to the processing of
PRC-origin glycine, as consisting of a refining line, in which PRC
glycine bypasses the reactor, washing and centrifuge steps. See August
19, 2009, submission at 4.
With respect to Salvi, the domestic interested parties claim that
Salvi's operation is similar to Paras's operation. See August 19, 2010,
submission at 2.
(5) Value of Processing Performed in India Represents a Small
Proportion of the Value of the Merchandise Imported into the United
States
Domestic interested parties allege that the production process for
glycine that takes place in the PRC prior to refining in India and
subsequent shipment to the United States accounts for the vast majority
of the total value of the final product. See August 19, 2010,
submission, Exhibits 2 and 3. See also Market Research Report at 25.
Domestic interested parties claim that the value of processing
performed in India represents a small portion of the value, compared to
either the cost of production or import value. See August 19, 2010,
submission at 5 and at Exhibit 2. In support of their claim, domestic
interested parties submit the domestic industry's estimated cost of
Paras's and Salvi's processing of PRC glycine. According to their
calculations, both companies' estimated cost of processing (i.e.,
``repackaging and refining cost'') amounts to $0.0784 per pound,
representing 2.85 percent of the average value of Indian glycine
imported into the United States. Id. In addition, based on the analysis
of AICO's financial statements, the domestic interested parties contend
that AICO's purchases of imported goods were the dominant components of
its 2007 and 2009 costs of goods sold. See August 19, 2010, submission
at 18. According to the domestic interested parties' calculations of
AICO's estimated processing cost of PRC glycine, its value amounts to
$0.0628 per pound, or 2.28 percent of the average value of Indian
glycine imported to the United States. See August 19, 2010, submission
at 6 and at Exhibit 3. Therefore, the domestic interested parties
contend that the value of glycine processing that is performed in India
represents a small portion of the value of the glycine imported to the
United States. Id.
Factors to Consider in Determining Whether Action is Necessary
Domestic interested parties argue that the additional factors
contained in section 781(b)(3) of the Act must also be considered in
the Department's decision whether to issue a finding of anti-
circumvention regarding importation of Indian glycine.
Pattern of Trade
Domestic interested parties state that section 781(b)(3)(C) of the
Act directs the Department to take into account the pattern of trade,
including sourcing patterns, when making a decision whether to include
merchandise assembled or completed in India within the scope of the PRC
Glycine Order. Domestic interested parties allege that from 2008 to
2009, glycine imports from the PRC to the United States decreased by
96.5 percent and imports of glycine from India rose by 13.8 percent and
India's share of the U.S. glycine imports rose from 27 percent to 50
percent over the same time period. See August 19, 2010, submission at
12 and at Exhibit 5. Domestic interested parties also point out that
the market share of total U.S. imports of glycine from the PRC dropped
from 38 percent to 2 percent over the same time period. Id.
Affiliation
None of the companies alleged to be circumventing the order are
alleged to be affiliated with PRC producers. However, the domestic
interested parties claim a buyer/seller relationship exists between
AICO and Chiyuen International Trading Ltd., a manufacturer in the PRC
of amino acetic acid (i.e., glycine). See August 19, 2010, submission
at 18.
Subsequent Import Volume
Domestic interested parties cite to section 781(b)(3)(C) of the
Act, which directs the Department to take into account whether imports
of the merchandise into the foreign country have increased after the
initiation of the investigation which resulted in the issuance of such
an order or finding when making a decision on anti-circumvention
rulings. Domestic interested parties allege that from 2003-2004 to
2008-2009, imports into India of PRC glycine rose more than 246
percent. See August 19, 2010, submission at 13.
Analysis
Based on our analysis of the domestic interested parties' anti-
circumvention inquiry request, as supplemented, and our September 23,
2010, phone call with the foreign market researcher, the Department
determines that the domestic interested parties have satisfied the
criteria under section 781(b)(1) of the Act to warrant the Department's
initiation of an anti-circumvention inquiry. In accordance with 19 CFR
351.225(e), if the Department finds that the issue of whether a product
is included within the scope of an order cannot be determined based
solely upon the application and the descriptions of the merchandise
contained in the petition, the investigation and other determinations,
the Department will notify by mail all parties on the Department's
scope service list of the initiation of a scope inquiry, including an
anti-circumvention inquiry. In addition, in accordance with 19 CFR
351.225(f)(1)(ii), a notice of the initiation of an anti-circumvention
inquiry issued under paragraph (e) of this section will include a
description of the product that is the subject of the anti-
circumvention inquiry, i.e., glycine from the PRC that is processed
and/or repackaged in India, as provided in the scope of the PRC Glycine
Order, and an explanation of the reasons for the Department's decision
to initiate the anti-circumvention inquiry, as provided below.
With regard to whether the merchandise from India is of the same
class or kind as the merchandise produced in the PRC, the domestic
interested parties have presented information to the Department which
appears to indicate that, pursuant to section 781(b)(1)(A) of the Act,
the merchandise being produced in and/or exported from India by AICO,
Paras and Salvi may be of the same class or kind as glycine produced in
the PRC and subject to the PRC Glycine Order. Consequently, the
Department finds that the domestic interested parties provided
sufficient information in its request, as supplemented regarding the
class or kind of merchandise to warrant initiation of an anti-
circumvention inquiry.
With regard to completion or assembly of merchandise in a foreign
country, pursuant to section 781(b)(1)(B) of the Act, the domestic
interested parties have also presented information to the Department
which appears to indicate that certain glycine exported from India to
the United States is being further processed by AICO, Paras and
[[Page 66356]]
Salvi using glycine imported into India from the PRC. We find that the
information presented by the domestic interested parties regarding this
criterion supports their request to initiate an anti-circumvention
inquiry.
The Department believes that the domestic interested parties
sufficiently addressed the factors described by sections 781(b)(1)(C)
and 781(b)(2) of the Act regarding whether the processing of glycine in
India is minor or insignificant. Specifically, in support of its
argument, the domestic interested parties relied on information from
Indian Glycine, on the domestic interested parties' calculations based
on their estimated cost of production and cost of processing and
repackaging of PRC-origin glycine, allegedly performed by Paras, Salvi,
and AICO, and information in the Market Research Report as described
above. Thus, we find that the information presented by the domestic
interested parties supports their request, as supplemented, to initiate
an anti-circumvention inquiry. In particular, for the purposes of
initiation, we find that the domestic interested parties have
sufficiently supported their allegations that: (1) Little investment
has been made by either Paras, Salvi, or AICO in their respective
processing of PRC glycine; (2) Paras, Salvi, and AICO perform
processing and repackaging of the lower-grade PRC glycine, which are
technologically mature processes that do not require research and
development by these companies; (3) the mere processing of the lower-
grade glycine through refinement, purification, and repackaging does
not alter the fundamental characteristics of the glycine, or whether it
is subject to the scope of the PRC Glycine Order; (4) Paras's, Salvi's,
and AICO's facilities for processing and repackaging PRC glycine do not
require the typically capital-intensive production facilities needed to
manufacture glycine; and (5) refining and repackaging of PRC glycine
represents a small proportion of the value of the merchandise exported
to the United States.
Our analysis will focus on Paras's, Salvi's, and AICO's processing
operations in India and, in the context of this proceeding, we will
closely examine the extent of processing done in India, as well as
Paras's, Salvi's, and AICO's relationships with glycine suppliers in
the PRC. With respect to the value of the merchandise produced in the
PRC, pursuant to section 781(b)(1)(D) of the Act, the domestic
interested parties relied on their information and arguments presented
in the ``minor or insignificant'' portion of their anti-circumvention
request, as supplemented, to indicate that the value of PRC glycine may
be significant relative to the total value of the glycine processed and
repackaged in India and then exported to the United States. We find
that the information provided adequately addresses this factor, as
discussed above, for the purposes of initiating an anti-circumvention
inquiry.
Finally, the domestic interested parties argue that, pursuant to
section 781(b)(3) of the Act, the Department should also consider the
pattern of trade, affiliation, and subsequent import volumes as factors
in determining whether to initiate an anti-circumvention inquiry. The
export and import data submitted by the domestic interested parties
suggests that imports of glycine from the PRC into India rose
significantly in recent years. Accordingly, based on the domestic
interested parties' allegations, as supplemented, we have determined
that domestic interested parties have provided a sufficient basis to
initiate an anti-circumvention inquiry concerning the PRC Glycine
Order, pursuant to section 781(b) of the Act. These anti-circumvention
inquiries pertain solely to Paras, Salvi, and AICO.
If, within sufficient time, the Department receives a formal
request from an interested party regarding potential anti-circumvention
of the PRC Glycine Order by other Indian companies, we will consider
conducting additional inquiries concurrently.
In accordance with 19 CFR 351.225(l)(2), if the Department issues a
preliminary affirmative determination, we will then instruct CBP to
suspend liquidation and require a cash deposit of estimated duties on
the merchandise.
The Department will, following consultation with interested
parties, establish a schedule for questionnaires and comments on the
issues. The Department intends to issue its final determination within
300 days of the date of publication of this initiation. See section
781(f) of the Act.
This notice is published in accordance with section 777(i)(1) of
the Act.
Dated: October 22, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-27294 Filed 10-27-10; 8:45 am]
BILLING CODE 3510-DS-P