Initiation of Antidumping Duty Investigations: Certain Aperture Masks From Japan and South Korea

[Federal Register Volume 64, Number 54 (Monday, March 22, 1999)]
[Notices]
[Pages 13768-13771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6934]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-848, A-580-838]


Initiation of Antidumping Duty Investigations: Certain Aperture 
Masks From Japan and South Korea

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: March 22, 1999.

FOR FURTHER INFORMATION CONTACT: Mark Ross, at (202) 482-4794, or 
Thomas Schauer, at (202) 482-4852; Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230.

Initiation of Investigations

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930, as amended 
(``the Act'') by the Uruguay Round Agreements Act (``URAA''). In 
addition, unless otherwise indicated, all citations to Department of 
Commerce (``Department'') regulations refer to the regulations codified 
at 19 CFR Part 351 (1998).

The Petitions

    On February 24, 1999, the Department received petitions filed in 
proper form by BMC Industries, Inc. (``BMC,'' referred to hereafter as 
``the petitioner''). The petitioner filed supplemental information to 
the petitions on March 8, 12, and 16, 1999.
    The petitioner alleges that imports of certain aperture masks from 
Japan and South Korea are being, or are likely to be, sold in the 
United States at less than fair value within the meaning of section 731 
of the Act and that such imports are materially injuring, or 
threatening material injury to, a U.S. industry.
    The Department finds that the petitioner has standing to file the 
petitions because it is an interested party as defined in section 
771(9)(C) of the Act and it has demonstrated sufficient industry 
support with respect to the antidumping investigations it is requesting 
the Department to initiate. See ``Determination of Industry Support for 
the Petitions'' below.

Scope of Investigations

    For purposes of these investigations, the products covered consist 
of all aperture masks (also known as ``shadow

[[Page 13769]]

masks'') made from aluminum-killed, open-coil annealed steel 
(decarburized) (known generally as ``AK steel'') for color picture 
tubes (``CPTs'') used in television sets. AK steel includes the 
following types of steel: low carbon, AF (annealing-free) steel, AK 
type A steel (commonly referred to as AKM steel), AK type B steel, and 
general AK steel. The aperture masks covered by the scope generally 
have a vertical pitch (distance between the centers of two apertures) 
of greater than .28mm. Specifically excluded from the scope are the 
following products: (1) aperture masks made from FeNi 36 alloy (whether 
sold under the brand names Invar, Inovar or LLTE); (2) aperture masks 
that have a vertical pitch of less than .28 mm that are generally used 
for color display tubes (``CDTs'') used in computer monitors; and (3) 
grille masks (a grille mask replaces the slots in an aperture mask with 
an array of finely tensioned vertical wires).
    The merchandise subject to these investigations is classifiable 
under 8540.91.50 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the HTSUS subheading is provided for convenience 
and customs purposes, the written description of the merchandise is 
dispositive.
    During our review of the petitions, we discussed the scope with the 
petitioner to ensure that the scope accurately reflects the merchandise 
for which the domestic industry is seeking relief. Moreover, as we 
discussed in the preamble to the Department's regulations (62 FR at 
27323), we are setting aside a period for parties to raise issues 
regarding product coverage. The Department encourages all parties to 
submit such comments by April 5, 1999. Comments should be addressed to 
Import Administration's Central Records Unit at Room 1870, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230. The period of scope consultations is intended 
to provide the Department with ample opportunity to consider all 
comments and consult with parties prior to the issuance of the 
preliminary determinations.

Determination of Industry Support for the Petitions

    Section 732(c)(4)(A) of the Act requires that the Department 
determine, prior to the initiation of an investigation, that a minimum 
percentage of the domestic industry supports an antidumping petition. A 
petition meets this minimum requirement if the domestic producers or 
workers who support the petition account for: (1) at least 25 percent 
of the total production of the domestic like product, and (2) more than 
50 percent of the production of the domestic like product produced by 
that portion of the industry expressing support for, or opposition to, 
the petition. Under section 732(c)(4)(D) of the Act, if the 
petitioner(s) account for more than 50 percent of the total production 
of the domestic like product, the Department is not required to poll 
the industry to determine the extent of industry support.
    To determine whether a petition has the requisite industry support, 
the statute directs the Department to look to producers and workers who 
account for production of the domestic like product. The ITC, which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes a domestic like product 
in order to define the industry. However, while both the Department and 
the ITC must apply the same statutory definition of domestic like 
product, they do so for different purposes and pursuant to separate and 
distinct authority. In addition, the Department's determination is 
subject to limitations of time and information. Although this may 
result in different definitions of the like product, such differences 
do not render the decision of either agency contrary to the 
law.1
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    \1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefor from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the like-
product analysis begins is ``the article subject to an investigation,'' 
i.e., the class or kind of merchandise to be investigated, which 
normally will be the scope as defined in the petition.
    The domestic like product referred to in the petitions, and as 
clarified by the March 8 and 12, 1999, supplements to the petitions, is 
the single product defined in the ``Scope of Investigation'' section, 
above. No party has commented on the petitions'' definition of domestic 
like product, and there is nothing on the record to indicate that this 
definition is inaccurate. The Department, therefore, has adopted this 
definition of the domestic like product.
    With respect to the above-cited industry-support requirements, the 
Department has determined that the petitions and supplemental 
information contained adequate evidence of sufficient industry support. 
See Initiation Checklist, dated March 16, 1999 (public document on file 
in the Central Records Unit of the Department of Commerce, Room B-099). 
Additionally, no person who would qualify as an interested party 
pursuant to sections 771(A), (C), (D), (E), or (F) of the Act has 
expressed on the record opposition to the petitions. Information 
currently on the record indicates that the producer who supports the 
petitions accounts for 100 percent of the production of the domestic 
like product. Accordingly, the Department determines that these 
petitions are filed on behalf of the domestic industry within the 
meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

    The petitioner identified three Japanese producers and one South 
Korean producer in its less-than-fair-value allegations. The Japanese 
producers are Dai Nippon Printing Co., Ltd. (``DNP''), Dainippon Screen 
Manufacturing Company, Ltd. (``DNS''), and Toppan Printing Co., Ltd. 
(``Toppan''). The South Korean producer is LG Micron Ltd. (``LGM''). 
The petitioner determined export prices for each of these producers 
based on price quotes obtained by the petitioner's sales personnel in 
the ordinary course of business. These price quotes are for various 
sizes of the aperture masks covered by the scope of the petitions. The 
petitioner provided trip reports and an affidavit from a BMC sales 
representative to support the validity of the price quotes. All U.S. 
price quotes were denominated in U.S. dollars and, where appropriate, 
the petitioner made adjustments for movement expenses. Our review of 
the petitioner's calculation of export prices did not indicate the need 
to make changes to those prices.
    With respect to normal value for Japan, the petitioner could not 
find data regarding Japanese home market prices. Moreover, the 
petitioner alleges that the volume of Japanese domestic sales of in-
scope merchandise is insufficient to form a basis for normal value. In 
support of its claims that pricing information is unavailable and that 
the Japanese domestic market is not viable, the petitioner provided an 
affidavit from a responsible BMC sales representative. The affidavit 
documents the employee's efforts to uncover pricing information and 
indicates that most of the aperture

[[Page 13770]]

masks sold in Japan are types specifically excluded from the scope of 
the petitions (e.g., aperture masks made from Invar). Lacking pricing 
information for sales of the foreign like product in the Japanese 
market, the petitioner turned to third-country sales as the basis for 
normal value in accordance with section 773(a)(1)(C) of the Act. 
However, as described in more detail below, the petitioner provided 
information in the petitions demonstrating reasonable grounds to 
believe or suspect that sales of certain aperture masks from Japan to 
third-country markets were made at prices below the cost of production 
(i.e., the sum of the cost of materials and fabrication (i.e., COM), 
selling, general and administrative (``SG&A'') expenses, and packing), 
within the meaning of section 773(b) of the Act. The petitioner 
therefore concluded that sales from Japan to third countries cannot 
serve as the basis for normal value. Furthermore, the petitioner 
requested that the Department conduct a countrywide investigation of 
sales below cost for third-country market sales from Japan.
    With respect to normal value for South Korea, the petitioner stated 
that it believes that the volume of South Korean home market sales is 
sufficient to form a basis for normal value. The petitioner also 
provided information in the petitions demonstrating reasonable grounds 
to believe or suspect that sales of certain aperture masks in South 
Korea were made at prices below the cost of production, within the 
meaning of section 773(b) of the Act. The petitioner therefore 
concluded that sales in the South Korean home market cannot serve as 
the basis for normal value. Furthermore, the petitioner requested that 
the Department conduct a countrywide investigation of sales below cost 
for home market sales in South Korea.
    To support its allegations that prices from Japan to third-country 
markets and prices in the South Korean home market are below the cost 
of production, the petitioner compared price quotes for each of the 
identified producers to each company's cost of production. The 
petitioner calculated the COM and packing components of the cost of 
production based on its own production experience with adjustments for 
known differences in costs incurred in the United States and costs 
incurred in Japan and South Korea. It derived company-specific SG&A 
expenses for the Japanese producers using each company's financial 
statements. For LGM, the South Korean producer of certain aperture 
masks, the petitioner said it was not able to obtain a financial 
statement for the calculation of SG&A expenses. However, since the 
petitioner could obtain the financial statements of LGM's parent 
company, LG Electronics, it calculated SG&A based on the financial 
statements of LG Electronics. We reviewed the cost-of-production 
calculations and accepted the underlying cost data contained in the 
petitions, as revised and/or supplemented by the March 8, 12, and 16, 
1999, submissions.
    We compared the cost-of-production data supplied in the petitions 
to the corresponding Japanese producers' third-country prices and the 
South Korean producer's home market prices. We found that the prices in 
every instance were below the cost of production. Thus, for both Japan 
and South Korea, these findings constitute ``reasonable grounds to 
believe or suspect'' that sales of the foreign like product were made 
below their respective cost of production within the meaning of section 
773(b)(2)(A)(i) of the Act. See ``Initiation of Cost Investigation,'' 
below.
    Since the petitioner found that the third-country prices of the 
Japanese producers and the home market prices of the South Korean 
producer were below the cost of production, the petitioner based normal 
value on constructed value. The petitioner calculated constructed value 
by adding profit to the figures that it used to compute the cost of 
production. It based profit on the same financial statements it used 
for the calculation of SG&A expenses. We reviewed the calculation of 
constructed value and accepted the underlying cost data contained in 
the petitions, as revised and/or supplemented by the March 8, 12, and 
16, 1999, submissions.

Fair Value Comparison

    Based on the data provided by the petitioner, we find that there is 
reason to believe that imports of certain aperture masks from Japan and 
South Korea are being, or are likely to be, sold at less than fair 
value.
    The margin calculations in the petitions, as revised in the March 
16, 1999, supplement to the petitions, indicate dumping margins ranging 
from 3.77 to 85.34 percent for certain aperture masks from Japan and a 
dumping margin of 10.61 percent for certain aperture masks from South 
Korea.
    If it becomes necessary at a later date to consider the petitions 
as a source of facts available under section 776 of the Act, we may 
review and, if necessary, revise the margin calculations.

Allegations and Evidence of Material Injury and Causation

    The petitions allege that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of imports of the subject merchandise sold 
at less than normal value. The petitioner explained that the industry's 
injured condition is evident in declining trends in capacity 
utilization, income growth, and profits. The allegations of injury and 
causation are supported by relevant evidence including lost sales and 
pricing information. The Department assessed the allegations and 
supporting evidence regarding material injury and causation and 
determined that these allegations are sufficiently supported by 
accurate and adequate evidence and they meet the statutory requirements 
for initiation. See Initiation Checklist, dated March 16, 1999.

Initiation of Antidumping Investigations

    We have examined the petitions on certain aperture masks from Japan 
and South Korea and have found that they meet the requirements of 
section 732 of the Act. Therefore, we are initiating antidumping duty 
investigations to determine whether imports of certain aperture masks 
from Japan and South Korea are being, or are likely to be, sold in the 
United States at less than fair value.
    Our preliminary determinations will be issued by August 3, 1999, 
unless the deadline for the determinations is extended.

Initiation of Cost Investigation

    As explained above, the Department has found that there are 
``reasonable grounds to believe or suspect'' that sales of certain 
aperture masks in the comparison markets for Japan and South Korea were 
made below their respective cost of production within the meaning of 
section 773(b)(2)(A)(i) of the Act. Therefore, we are initiating 
countrywide sales-below-cost investigations with respect to certain 
aperture masks from Japan and South Korea.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, copies of 
public versions of the petitions have been provided to the 
representatives of the Governments of Japan and South Korea.

International Trade Commission Notification

    We have notified the ITC of our initiation of these investigations, 
as required by section 732(d) of the Act.

[[Page 13771]]

Preliminary Determination by the ITC

    The ITC will determine by April 12, 1999, whether there is a 
reasonable indication that imports of certain aperture masks from Japan 
and South Korea are causing material injury, or threatening to cause 
material injury, to a U.S. industry. A negative ITC determination will 
result in termination of the investigations; otherwise, the 
investigations will proceed according to statutory and regulatory time 
limits.
    This notice is published in accordance with section 777(i) of the 
Act.

    Dated: March 16, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-6934 Filed 3-19-99; 8:45 am]
BILLING CODE 3510-DS-P