67 FR 37388, May 29, 2002

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-877]

Notice of Initiation of Antidumping Duty Investigation: Lawn and 
Garden Steel Fence Posts From the People's Republic of China

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

ACTION: Initiation of an antidumping duty investigation.

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EFFECTIVE DATE: May 29, 2002.

FOR FURTHER INFORMATION CONTACT: David Salkeld at (202) 482-1168; AD/
CVD Enforcement, Office VI, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230.

Initiation of Investigation

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, (``the Act''), 
by the Uruguay Round Agreements Act (``URAA''). In addition, unless 
otherwise indicated, all citations to the Department of Commerce's 
(``the Department's'') regulations are references to the provisions 
codified at 19 CFR Part 351 (2001).

The Petition

    On May 1, 2002, the Department received a petition filed in proper 
form by Steel City Corporation (``the petitioner''). On May 9, 2002, we 
sent the petitioner a letter with questions regarding the petition. The 
Department received information supplementing the petition on May 14, 
2002 and May 21, 2002.
    In accordance with section 732(b) of the Act, the petitioner 
alleges that imports of lawn and garden steel fence posts (``steel 
fence posts'') from the People's Republic of China (``PRC'') 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 are threatening to materially injure, an 
industry in the United States.
    The Department finds that the petitioner filed this petition on 
behalf of the domestic industry because it is an interested party, as 
defined in section 771(9)(C) of the Act and has demonstrated sufficient 
industry support with respect to the antidumping investigation that it 
is requesting the Department to initiate. (See the Determination of 
Industry Support for the Petition section below.)

Scope of Investigation

    The scope of the investigation includes all lawn and garden steel 
fence posts, in whatever form, shape, or size, that are produced in the 
PRC. The fence posts included within the scope of this investigation 
weigh up to 1 pound per foot and are made of steel and/or any other 
metal. Imports of these products are classified under the following 
categories: fence posts, studded with corrugations, knobs, studs, 
notches or similar protrusions with or without anchor posts. These 
posts are normally ``U'' shaped or ``hat'' shaped or any other similar 
shape excluding round or square tubing or pipes.
    These posts are normally made in two different classes, light and 
heavy duty. Light duty lawn and garden posts are normally made of 14 
gauge steel (0.068 inches-0.082 inches thick), 1.75 inches wide, in 3, 
4, 5, or 6 foot lengths. These posts normally weigh approximately 0.45 
pounds per foot and are packaged in mini-bundles of 10 posts and master 
bundles of 400 posts. Heavy duty lawn and garden fence posts are 
normally made of 13 gauge steel (0.082 inches-0.095 inches thick), 3 
inches wide, in 5, 6, 7, and 8 foot lengths. Heavy duty posts normally 
weigh approximately 0.90 pounds per foot and are packaged in mini-
bundles of 5 and master bundles of 200. Both light duty and heavy duty 
posts are included within the scope of the investigation.
    Imports of these products are classified under the following 
Harmonized Tariff Schedules of the United States (HTSUS) subheading: 
7326.90.85.35. Fence posts classified under subheading 7308.90 are also 
included within the scope of the investigation if the fence posts are 
made of steel and/or metal.
    Specifically excluded from the scope are ``tee'' posts, farm posts, 
and sign posts, provided that the posts weigh over 1 pound per foot.\1\ 
Although the HTSUS subheadings are provided for convenience and U.S. 
Customs Service (``Customs'') purposes, the written description of the 
merchandise under investigation is dispositive.
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    \1\ Tee posts are made by rolling red hot steel into a ``T'' 
shape. These posts do not have tabs or holes to help secure fencing 
to them and have primarily farm and industrial uses.
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    During our review of the petition, we discussed the scope with the 
petitioner

[[Page 37389]]

to ensure that the scope in the petition accurately reflects the 
product for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the Department's regulations (Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 
1997)), we are setting aside a period for parties to raise issues 
regarding product coverage. The Department encourages all parties to 
submit such comments within 20 days of publication of this notice. 
Comments should be addressed to Import Administration's Central Records 
Unit at Room 1870, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230. The period for scope 
comments is intended to provide the Department with ample opportunity 
to consider all comments and consult with parties prior to the issuance 
of the preliminary determination.

Determination of Industry Support for the Petition

    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, when determining 
the degree of industry support, the statute directs the Department to 
look to producers and workers who produce the domestic like product. 
The International Trade Commission (``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. While both the Department and the ITC must apply 
the same statutory definition regarding the domestic like product 
(section 771(10) of the Act), 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.\2\
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    \2\ 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 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 the domestic like product as ``a 
product which 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 domestic 
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. Moreover, the petitioner does not offer a definition of 
domestic like product distinct from the scope of the investigation.
    The petition covers lawn and garden steel fence posts as defined in 
the Scope of Investigation section, above, a single class or kind of 
merchandise. The Department has no basis on the record to find the 
petitioner's definition of the domestic like product to be inaccurate. 
The Department, therefore, has adopted the domestic like product 
definition set forth in the petition. However, the Department will take 
into account any comments submitted by parties in connection with this 
issue during the course of the proceeding, and revisit the issue, if 
appropriate. In order to estimate production for the domestic industry 
as defined for purposes of this case, the Department has relied on the 
petition. The petition contained the most recent production and 
shipment data (by volume) of petitioner available, covering the period 
February 1, 2001 to January 31, 2002, which is petitioner's fiscal 
year. See Initiation Checklist.
    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this 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.
    We examined the accuracy of information contained in the petition, 
in accordance with section 732(c)(1) of the Act, by gathering 
information through Department research. For example, we procured a 
list of potential domestic producers of steel fence posts from the 
International Trade Commission and contacted those companies to check 
petitioner's claim that it was the sole producer of subject merchandise 
in the United States. We found no information that called into question 
the accuracy of information contained in the petition.
    Information contained in the petition and its supplements 
demonstrate that the domestic producers or workers who support the 
petition account for over 50 percent of total production of the 
domestic like product. Therefore, the domestic producers or workers who 
support the petition account for at least 25 percent of the total 
production of the domestic like product, and the requirements of 
section 732(c)(4)(A)(i) are met. See Initiation Checklist at Attachment 
I. Furthermore, because the Department received no domestic opposition 
to the petition, the domestic producers or workers who support the 
petition account for 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. See Initiation 
Checklist. Thus, the requirement of section 732(c)(4)(A)(ii) is met.
    Accordingly, the Department determines that the petition was filed 
on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act.

Period of Investigation

    The anticipated period of investigation is October 1, 2001, through 
March 31, 2002.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which the Department has based its decision to 
initiate this investigation. The sources of data for the deductions and 
adjustments relating to home market and U.S. price are detailed in the 
Initiation Checklist.
    The Department has analyzed the information in the petition and 
considers the country-wide import statistics for the anticipated POI 
and pricing information used to calculate the estimated margin to be 
sufficient for purposes of initiation. Based on the information 
submitted in the petition, adjusted where appropriate, we are 
initiating this investigation, as discussed below and in the Initiation 
Checklist. Should the need arise to use any of this information as 
facts available under section 776 of the Act in our preliminary or 
final determination, we will re-examine the information and may revise 
the margin calculation, if appropriate.

Export Price

    The petitioner based export prices on actual prices of the product 
offered by a U.S. importer and/or distributor. The petition 
demonstrates that these prices are on a packed and delivered basis. 
Petitioner calculated a net price by deducting from the price movement 
expenses and a U.S. distributor markup. Movement expenses include costs 
for duties and fees, unloading and handling fees, foreign brokerage and 
handling, foreign inland freight, repacking costs, U.S. inland freight 
and ocean freight. To derive the movement expenses, petitioner used the 
lowest of numerous

[[Page 37390]]

price quotes from several freight companies for the costs to deliver a 
40-foot container of fence posts from Youngstown, Ohio to China on 
March 20, 2002. See Initiation Checklist.

Normal Value

    The petitioner asserted that the PRC is a nonmarket economy country 
(``NME'') within the meaning of section 771(18) of the Act. In previous 
investigations, the Department has determined that the PRC is an NME. 
See, e.g., Certain Hot-Rolled Carbon Steel Flat Products from the 
People's Republic of China; Notice of Preliminary Results of 
Antidumping Duty Administrative Review, 66 FR 22183 (May 31, 2001); 
Steel Wire Rope from the People's Republic of China; Notice of Final 
Determination of Sales at Less Than Fair Value, 66 FR 12759 (February 
28, 2001). In accordance with section 771(18)(C)(i) of the Act, the 
presumption of NME status remains in effect until revoked by the 
Department. The presumption of NME status for the PRC has not been 
revoked by the Department and, therefore, remains in effect for 
purposes of the initiation of this investigation. Accordingly, the 
normal value of the product appropriately is based on the producer's 
factors of production valued in a surrogate market economy country in 
accordance with section 773(c) of the Act.
    In the course of this investigation, all parties will have the 
opportunity to provide relevant information related to the issues of 
the PRC's NME status and the granting of separate rates to individual 
exporters. See, e.g., Final Determination of Sales at Less Than Fair 
Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 
(May 2, 1994).
    For the normal value calculation, the petitioner based the factors 
of production, as defined by section 773(c)(3) of the Act, on the 
quantities of inputs it used to produce steel fence posts during 
calendar year (``CY'') 2001. The petitioner used the actual usage rates 
of a U.S. production facility in accordance with 19 CFR 
351.202(b)(7)(B) because information on actual usage rates of 
representative Chinese steel fence posts producers is not reasonably 
available to the petitioner. The petitioner used its own data because 
it claimed it is the only steel fence posts manufacturer in the United 
States.
    The petitioner asserted that India is the most appropriate 
surrogate country for the PRC, claiming that India is: (1) A market 
economy; (2) a significant producer of comparable merchandise; and (3) 
at a level of economic development comparable to the PRC in terms of 
per capita gross national product. Based on the information provided by 
the petitioner, we believe that the petitioner's use of India as a 
surrogate country is appropriate for purposes of initiating this 
investigation.
    In accordance with section 773(c)(4) of the Act, the petitioner 
valued factors of production, where possible, on reasonably available, 
public surrogate country data. Specifically, the factor cost for steel 
was based on the public version of an Indian price quote from a market 
research report attached to the September 28, 2001, Petition for the 
Imposition of Antidumping Duties: Certain Cold-Rolled Carbon Steel Flat 
Products from India. See the Initiation Checklist.
    Unit energy costs were obtained for India from public data from the 
Energy Information Administration, National Energy Information Center, 
Electricity Prices for Industry, 1994-1999 for electricity and natural 
gas as this was the best reasonably available public data the 
petitioner could find. The cost of paint was based on petitioner's own 
costs because the petitioner was unable to find publically available 
Indian data for this factor of production. Labor was valued using the 
regression-based wage rate for China provided by the Department, in 
accordance with 19 CFR 351.408(c)(3).
    The factory overhead rate, selling, general & administrative 
expenses (``SG&A'') rate, and profit rate, were based on the average 
respective rates derived from a sample of 1,914 public limited 
companies in India that were reported in the June 2001 Reserve Bank of 
India Bulletin. The petitioner included packing costs based on its own 
costs in its normal value calculation as best information available.
    Based on the information provided by the petitioner, we believe 
that the petitioner's factors of production methodology represents 
information reasonably available to the petitioner and is appropriate 
for purposes of initiating this investigation.
    The estimated dumping margins, based on a comparison between export 
price and normal value, range from 51 to 89 percent. See Initiation 
Checklist.

Fair Value Comparisons

    The Department has examined the adequacy and accuracy of the 
information the petitioner used in its calculations of export prices 
and normal value and has found that it represents information 
reasonably available to the petitioner supporting the allegation of 
dumping. Based on the data provided by the petitioner, there is reason 
to believe that imports of lawn and garden steel fence posts from the 
PRC are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

    The petitioner alleges that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the imports of the subject 
merchandise sold at less than normal value. The petitioner contends 
that the industry's injured condition is evident in the decline of U.S. 
producers' output, sales, capacity, profits, productivity, and capacity 
utilization, as well as negative effects on cash flow, inventories, 
employment, wages, and growth. We have examined the accuracy and 
adequacy of the evidence provided in the petition and have determined 
that the allegations of injury and causation are supported by relevant 
evidence including U.S. Customs import data, and lost sales, and 
pricing information, and that the petition contains information 
reasonably available to the petitioner (see Initiation Checklist at 
Attachment II).

Initiation of Antidumping Investigation

    Based upon our examination of the petition on lawn and garden steel 
fence posts from the PRC and the petitioner's responses to our 
supplemental questionnaire clarifying the petition, we have found that 
the petition meets the requirements of section 732 of the Act. See 
Initiation Checklist. Therefore, we are initiating an antidumping duty 
investigation to determine whether imports of lawn and garden steel 
fence posts from the PRC are being, or are likely to be, sold in the 
United States at less than fair value. Unless this deadline is 
postponed, we will make our preliminary determination no later than 140 
days after the date of this initiation. See ``Case Calendar'' section 
of the Initiation Checklist.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the representatives 
of the government of the PRC. We will attempt to provide a copy of the 
public version of the petition to each exporter named in the petition, 
as appropriate.

International Trade Commission Notification

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

[[Page 37391]]

Preliminary Determination by the ITC

    The ITC will determine, no later than June 17, 2002, whether there 
is a reasonable indication that imports of steel fence posts from the 
PRC are causing material injury, or threatening to cause material 
injury, to a U.S. industry. A negative ITC determination will result in 
the investigation being terminated; otherwise, this investigation will 
proceed according to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: May 21, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-13392 Filed 5-28-02; 8:45 am]
BILLING CODE 3510-DS-P