U.S. International Trade Commission

Publication 4072 April 2009

Washington, DC 20436

1-Hydroxyethylidene-1, 1-Diphosphonic 

Acid (HEDP) from 

China and India

Investigation Nos. 731-TA-1146-1147 (Final)
U.S. International Trade Commission

COMMISSIONERS 

 

Shara L. Aranoff, Chairman 

Daniel R. Pearson, Vice Chairman 

Deanna Tanner Okun 

Charlotte R. Lane 

Irving A. Williamson 

Dean A. Pinkert

Staff assigned

Address all communications to 

Secretary to the Commission 

United States International Trade Commission 

Washington, DC 20436

Robert A. Rogowsky

Director of Operations

Nathanael Comly, Investigator 

Stephen Wanser, Industry Analyst 

James Fetzer, Economist 

David Boyland, Accountant 

Karl von Schriltz, Attorney 

Mara Alexander, Statistical Specialist 

Douglas Corkran, Supervisory Investigator
U.S. International Trade Commission

Washington, DC 20436 

www.usitc.gov

Publication 4072 April 2009

1-Hydroxyethylidene-1, 1-Diphosphonic 

Acid (HEDP) from 

China and India

Investigation Nos. 731-TA-1146-1147 (Final)
 
 

i

C O N T E N T S

Page

Determination .................................................................. 1

Views of the Commission ......................................................... 3

Separate views of Commissioner Charlotte R. Lane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Part I: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Statutory criteria and organization of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Statutory criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Organization of report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

U.S. market summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

Summary data and data sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Previous and related investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Nature and extent of alleged sales at LTFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

The subject merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Commerce’s scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

The domestic like product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Description and applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

Manufacturing processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8

Part II: Conditions of competition in the U.S. market ................................ II-1

U.S. market characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Supply and demand considerations ................................................ II-2

U.S. supply ............................................................... II-2

U.S. demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4

Substitutability issues .......................................................... II-6

Factors affecting purchasing decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-6

Comparisons of domestic products and subject imports ............................. II-9

Comparisons of domestic products and nonsubject imports .......................... II-10

Comparisons of subject imports and nonsubject imports ............................ II-11

Comparisons of subject products from the subject countries ......................... II-11

Elasticity estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-13

U.S. supply elasticity ........................................................ II-13

U.S. demand elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14

Substitution elasticity ....................................................... II-14

Part III: U.S. producers’ production, shipments, and employment ...................... III-1

U.S. producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

Phosphonates .............................................................. III-1

HEDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

U.S. capacity, production, and capacity utilization ................................... III-2

U.S. producers’ shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3

U.S. producers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-5

U.S. producers’ imports and purchases ............................................. III-5

U.S. employment, wages, and productivity ......................................... III-6
 

ii

C O N T E N T S

Page

Part IV: U.S. imports, apparent consumption, and market shares . . . . . . . . . . . . . . . . . . . . . . IV-1

U.S. importers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

U.S. imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2

The question of negligible imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3

Cumulation considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3

Apparent U.S. consumption and market shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-4

Ratio of imports to U.S. production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-5

Comparisons of U.S. shipments of the domestically produced and imported HEDP . . . . . . . . . . IV-5

Part V: Pricing and related information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Factors affecting prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Raw material costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Transportation costs to the U.S. market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

U.S. inland transportation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Pricing practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Pricing methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Sales terms and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4

Price trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Price comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-6

Lost sales and lost revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-6

Part VI: Financial experience of the U.S. producer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Operations on HEDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Capital expenditures, research and development expenses, assets, and return on investment . . . VI-5

Capital and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-5

Actual negative effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-5

Anticipated negative effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-5

Part VII: Threat considerations and information on nonsubject countries ............... VII-1

The industry in China .......................................................... VII-2

The industry in India ........................................................... VII-4

U.S. imports subsequent to September 30, 2008 ..................................... VII-5

 U.S. importers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-5

Information of nonsubject sources and the global market .............................. VII-6

Nonsubject source information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-6

China (nonsubject) .......................................................... VII-7

The industry in the United Kingdom ............................................ VII-7
 

iii

C O N T E N T S

Page

Appendixes

A. Federal Register notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

B. Hearing witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

C. Summary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

D. Additional source-specific trade and price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

Note.--Information that would reveal confidential operations of individual concerns may not be published

and therefore has been identified with asterisks ( *** ) in this report.

 1

 The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure (19 CFR § 207.2(f)).

 2

 Commissioner Charlotte R. Lane determines that an industry in the United States is materially injured by reason

of such imports.

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigation Nos. 731-TA-1146-1147 (Final)

1-HYDROXYETHYLIDENE-1,1-DIPHOSPHONIC ACID (HEDP) FROM CHINA AND INDIA

DETERMINATION

On the basis of the record1

 developed in the subject investigations, the United States International

Trade Commission (Commission) determines, pursuant to section 735(b) of the Tariff Act of 1930 (19

U.S.C. § 1673d(b)) (the Act), that an industry in the United States is threatened with material injury by

reason of imports from China and India of 1-Hydroxyethylidene-1,1-Diphosphonic acid (HEDP),

provided for in statistical reporting number 2931.00.9043 of the Harmonized Tariff Schedule of the

United States, that have been found by the United States Department of Commerce (Commerce) to be

sold in the United States at less than fair value (LTFV).2

 In addition, the Commission determines that it

would not have found material injury but for the suspension of liquidation.

BACKGROUND

The Commission instituted these investigations effective March 19, 2008, following receipt of a

petition filed with the Commission and Commerce by Compass Chemical International, LLC, Huntsville,

TX. The final phase of these investigations was scheduled by the Commission following notification of a

preliminary determination by Commerce that imports of HEDP from China and India were being sold at

LTFV within the meaning of section 733(b) of the Act (19 U.S.C. § 1673b(b)). Notice of the scheduling

of the final phase of the Commission’s investigations and of a public hearing to be held in connection

therewith was given by posting copies of the notice in the Office of the Secretary, U.S. International

Trade Commission, Washington, DC, and by publishing the notice in the Federal Register of

November 14, 2008 (73 FR 67545) (subsequently revised in a notice published on January 30, 2009

(74 FR 5677)). The hearing was held in Washington, DC, on March 3, 2009, and all persons who

requested the opportunity were permitted to appear in person or by counsel.

 1

 Commissioner Charlotte R. Lane determines that an industry in the United States is materially injured by reason

of HEDP imported from China and India that Commerce has found are sold at LTFV. See Separate Views of

Commissioner Charlotte R. Lane. She joins sections I, II, III.A. and B., IV, and V.A.1., as well as the portions of

sections V.B. and C. that address present material injury, except as noted in those sections.

 2

 We have disregarded new factual information on page 6 and in Attachment A of the Final Comments filed by

petitioner, pursuant to the statute and our regulations. 19 U.S.C. § 1677m(g); 19 C.F.R. § 207.30(b).

 3

 19 U.S.C. § 1677(4)(A).

 4

 19 U.S.C. § 1677(4)(A).

 5

 19 U.S.C. § 1677(10).

3

VIEWS OF THE COMMISSION

Based on the record in these investigations, we determine that an industry in the United States is

threatened with material injury by reason of imports of 1-Hydroxyethylidene-1, 1-Diphosphonic Acid

(“HEDP”) from China and India that the Department of Commerce (“Commerce”) has found are sold in

the United States at less than fair value (“LTFV”).1 2

 In addition, we determine that we would not have

found material injury but for the suspension of liquidation.

I. BACKGROUND

 The petitions in these investigations were filed on March 19, 2008 by Compass Chemical

International, LLC (“Compass” or “petitioner”). Respondents opposing the imposition of antidumping

duties are the Ad Hoc Water Treatment Chemical Producers Committee and its constituent members

Jiangsu Jianghai Chemical Group Co. Ltd., Wujin Fine Chemical Factory Co. Ltd. (“Wujin Fine

Chemical”), and the Nanjing University of Chemical Technology Changzhou Wujin Water Quality

Stabilizer Factory (“Wujin Water”), which are all Chinese producers of HEDP. No producer or importer

of subject HEDP from India has made an appearance or provided any argument in the final phase of these

investigations.

II. DOMESTIC LIKE PRODUCT AND DOMESTIC INDUSTRY

A. In General

In determining whether an industry in the United States is materially injured or threatened with

material injury by reason of imports of the subject merchandise, the Commission first defines the

“domestic like product” and the “industry.”3

 Section 771(4)(A) of the Tariff Act of 1930, as amended

(“the Tariff Act”), defines the relevant domestic industry as the “producers as a {w}hole of a domestic

like product, or those producers whose collective output of a domestic like product constitutes a major

proportion of the total domestic production of the product.”4

 In turn, the Tariff Act defines “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 ... .”5

The decision regarding the appropriate domestic like product or products in an investigation is a

factual determination, and the Commission has applied the statutory standard of “like” or “most similar in
 6

 See, e.g., Cleo, Inc. v. United States, 501 F.3d 1291, 1299 (Fed. Cir. 2007); NEC Corp. v. Department of

Commerce, 36 F. Supp.2d 380, 383 (Ct. Int’l Trade 1998); Nippon Steel Corp. v. United States, 19 CIT 450, 455

(1995); Torrington Co. v. United States, 747 F. Supp. 744, 749 n.3 (Ct. Int’l Trade 1990), aff’d, 938 F.2d 1278 (Fed.

Cir. 1991) (“every like product determination ‘must be made on the particular record at issue’ and the ‘unique facts

of each case’”). The Commission generally considers a number of factors including the following: (1) physical

characteristics and uses; (2) interchangeability; (3) channels of distribution; (4) customer and producer perceptions

of the products; (5) common manufacturing facilities, production processes, and production employees; and, where

appropriate, (6) price. See Nippon, 19 CIT at 455 n.4; Timken Co. v. United States, 913 F. Supp. 580, 584 (Ct. Int’l

Trade 1996).

 7

 See, e.g., S. Rep. No. 96-249 at 90-91 (1979).

 8

 Nippon, 19 CIT at 455; Torrington, 747 F. Supp. at 748-49; see also S. Rep. No. 96-249 at 90-91 (1979)

(Congress has indicated that the like product standard should not be interpreted in “such a narrow fashion as to

permit minor differences in physical characteristics or uses to lead to the conclusion that the product and article are

not ‘like’ each other, nor should the definition of ‘like product’ be interpreted in such a fashion as to prevent

consideration of an industry adversely affected by the imports under consideration.”).

 9

 See, e.g., USEC, Inc. v. United States, 34 Fed. Appx. 725, 730 (Fed. Cir. 2002) (“The ITC may not modify the

class or kind of imported merchandise examined by Commerce.”); Algoma Steel Corp. v. United States, 688 F.

Supp. 639, 644 (Ct. Int’l Trade 1988), aff’d, 865 F.3d 240 (Fed. Cir.), cert. denied, 492 U.S. 919 (1989).

 10 Hosiden Corp. v. Advanced Display Mfrs., 85 F.3d 1561, 1568 (Fed. Cir. 1996) (Commission may find a

single like product corresponding to several different classes or kinds defined by Commerce); Cleo, 501 F.3d at 1298

n.1 (“Commerce’s {scope} finding does not control the Commission’s {like product} determination.”); Torrington,

747 F. Supp. at 748-52 (affirming Commission determination of six like products in investigations where Commerce

found five classes or kinds).

 11 C2H8O7P2 or C(CH3)(OH)(PO3H2))2.

4

characteristics and uses” on a case-by-case basis.6

 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.7

 The 

Commission looks for clear dividing lines among possible like products and disregards minor variations.8

Although the Commission must accept Commerce’s determination as to the scope of the imported

merchandise subsidized or sold at LTFV,9

 the Commission determines what domestic product is like the

imported articles Commerce has identified.10

B. Product Description

In its notice of final determination of sales at LTFV, Commerce defined the imported

merchandise within the scope of the investigations as follows:

[A]ll grades of aqueous, acidic (non-neutralized) concentrations of 1- hydroxyethylidene1, 1-diphosphonic acid,11 also referred to as hydroxethlylidenediphosphonic acid,

hydroxyethanediphosphonic acid, acetodiphosphonic acid, and etidronic acid. The CAS

(Chemical Abstract Service) registry number for HEDP is 2809-21-4. The merchandise

subject to this investigation is currently classified in the Harmonized Tariff Schedule of

the United States (HTSUS) at subheading 2931.00.9043. It may also enter under HTSUS 
 12 HEDP from India: Notice of Final Determination of Sales at Less than Fair Value, 74 Fed. Reg. 10543, 10544

(Mar. 11, 2009); HEDP from the People’s Republic of China: Final Determination of Sales at Less than Fair Value,

74 Fed. Reg. 10545, 10545-46 (Mar. 11, 2009); Confidential Staff Report (“CR”) at I-6.

 13 CR at I-7, 9; Public Staff Report (“PR”) at I-5, 7.

 14 Petition at 5; CR at I-3, 7; PR at I-2, 5.

 15 Petition at 5-6; CR at I-7-8, 10; PR at I-5-6, 8. 

 16 Confidential Views, HEDP from China and India, Inv. Nos. 731-TA-1146-1147 (Preliminary) (“Preliminary

Views”), at 6.

 17 See Petitioner’s Prehearing Brief at 4; Hearing Transcript at 123 (Craven).

 18 CR at III-2; PR at III-1; CR/PR at Table III-1.

5

subheading 2811.19.6090. While HTSUS subheadings are provided for convenience and

customs purposes only, the written description of the scope of this investigation is

dispositive.12

HEDP is an odorless, colorless or yellowish liquid that belongs to a class of chemicals known as

phosphonates.13 As a “chelating agent” added to water to increase the solubility of certain ions and to

inhibit the precipitation of certain mineral compounds,14 HEDP is principally used in the following

applications: industrial water treatment, such as cooling and boiler water treatment to prevent the

formation of scales that can reduce the efficiency of heat transfer surfaces; in municipal water systems, to

prevent the precipitation of iron and manganese oxides from turning the water red or black; in the

conversion of seawater and brackish water to fresh water for industrial use or drinking through

desalination; in swimming pool applications, for stain and scale control; in industrial, institutional, and

personal cleansing products; and for peroxide bleach stabilization.15

C. Domestic Like Product

In the preliminary phase of these investigations, the Commission considered whether to expand

the domestic like product to include chemical products similar to HEDP, but ultimately defined the

domestic like product as all HEDP, coextensive with the scope of the investigations defined by

Commerce.16 

In the final phase of these investigations, no new information has been developed to suggest that

a different like product definition would be warranted. Moreover, petitioner and respondents agree that

the Commission should define a single like product comprising all HEDP.17 Accordingly, for the reasons

discussed in the preliminary phase of these investigations, we define a single domestic like product

consisting of all HEDP, coextensive with the scope of the investigations.

D. Domestic Industry 

Based on our finding that the domestic like product is HEDP, we find that the domestic industry

consists of Compass, the only known domestic producer of HEDP.18

1. Related Party

We must determine whether any producer of the domestic like product should be excluded from

the domestic industry as a related party pursuant to 19 U.S.C. § 1677(4)(B). Subsection 1677(4)(B)

allows the Commission, if appropriate circumstances exist, to exclude from the domestic industry
 19 19 U.S.C. § 1677(4)(B). 

 20 The primary factors the Commission has examined in deciding whether appropriate circumstances

exist to exclude a related party include the following: (1) the percentage of domestic production

attributable to the importing producer; (2) the reason the U.S. producer has decided to import the product

subject to investigation, i.e., whether the firm benefits from the LTFV sales or subsidies or whether the

firm must import in order to enable it to continue production and compete in the U.S. market, and (3) the

position of the related producer vis-a-vis the rest of the industry, i.e., whether inclusion or exclusion of

the related party will skew the data for the rest of the industry. See, e.g., Torrington Co. v. United States,

790 F. Supp. 1161 (Ct. Int’l Trade 1992), aff’d without opinion, 991 F.2d 809 (Fed. Cir. 1993). The

Commission has also considered the ratio of import shipments to U.S. production for related producers

and whether the primary interest of the related producer lies in domestic production or importation. 

These latter two considerations were cited as appropriate factors in Allied Mineral Products, Inc. v.

United States, 28 CIT 1861, 1865 (2004) (“The most significant factor considered by the Commission in

making the ‘appropriate circumstances’ determination is whether the domestic producer accrued a

substantial benefit from its importation of the subject merchandise.”); USEC, Inc. v. United States, 132 F.

Supp. 2d 1, 12 (Ct. Int’l Trade 2001) (“the provision’s purpose is to exclude from the industry headcount

domestic producers substantially benefitting from their relationships with foreign exporters.”), aff’d, 34

Fed. Appx. 725 (Fed. Cir. 2002); S. Rep. No. 249, 96th Cong. 1st Sess. at 83 (1979) (“where a U.S.

producer is related to a foreign exporter and the foreign exporter directs his exports to the United States

so as not to compete with his related U.S. producer, this should be a case where the ITC would not

consider the related U.S. producer to be a part of the domestic industry”).

 21 Preliminary Views at 11-13.

 22 CR/PR at Table III-5. 

 23 CR/PR at Table III-1 n. 1.

 24 See Preliminary Views at 13. See also Tetrahydrofurfuryl Alcohol from China, Inv. No. 731-TA-1046

(Preliminary), USITC Pub. 3620 (August 2003) at n. 20; Industrial Nitrocellulose from Brazil, China, France,

Germany, Japan, Korea, the United Kingdom, and Yugoslavia, Inv. Nos. 731-TA-96 and 439-445 (Review), USITC

Pub. 3342 (August 2000) at 8; Drafting Machines from Japan, Inv. No. 731-TA-432 (Review), USITC Pub. 3252

(November 1999) at 5.

 25 CR/PR at Table III-5.

6

producers that are related to an exporter or importer of subject merchandise or which are themselves

importers.19 Exclusion of such a producer is within the Commission’s discretion based upon the facts

presented in each investigation.20 

In the preliminary phase of these investigations, the Commission found that Compass qualified as

a related party, but that circumstances did not warrant its exclusion from the domestic industry.21 

In the final phase of these investigations, we again find that Compass qualifies as a related party

because it imported a substantial quantity of HEDP from China over the 2005-2007 period.22 In addition,

Compass is ***, and ***.23

Because there is no new information on the record of the final phase of these investigations that

would alter our analysis of Compass as a related party, we again find that circumstances do not warrant its

exclusion from the domestic industry. We also note that, where the sole domestic producer is also a

related party, as Compass is here, the Commission previously has found that appropriate circumstances do

not exist to exclude the producer under the related party provision.24

Moreover, Compass transformed itself from an importer of subject HEDP from China into a

domestic producer during the period of investigation. Compass began the period of investigation as

purely an importer of HEDP from China, importing *** pounds of subject HEDP from China in 2005.25
 26 CR/PR at Table III-5.

 27 CR/PR at Table III-5.

 28 CR at III-5 n. 9, VI-7-8; PR at III-3 n.9, VI-3-4; Hearing Tr. at 56-57 (McCaul); see also CR/PR at Table VI-3.

 29 We recognize that there is evidence that Compass may have benefitted financially from dumped imports of

HEDP from China. In the preliminary phase of these investigations, Compass reported that it continued to import

HEDP from China after acquiring the Smyrna facility because the ***. Compass’s Importers’ Questionnaire

Response at Question II-4. Nevertheless, Compass emphasized that it purchased the Smyrna facility with the

intention of becoming a domestic producer of HEDP, and anticipated that it could do so profitably by adopting a

lower-cost method of producing HEDP. See Hearing Tr. at 12-13 (McCaul); Compass’s Responses to

Commissioner Questions at 1-2; Conference Tr. at 21.

 30 Chairman Aranoff and Commissioner Pinkert do not join the prior footnote as it does not in any way mitigate

their reasons for not excluding Compass, as a related party, from these investigations.

 31 Negligibility is not an issue in these investigations. Based on importers’ questionnaire data, subject imports

from China accounted for *** percent of all imports of HEDP and subject imports from India accounted for ***

percent of all imports of HEDP during the most recent 12-month period preceding the filing of the petition for which

data is available. CR at IV-10; PR at IV-3; CR/PR at Table IV-2.

 32 19 U.S.C. § 1677(7)(G)(i).

 33 CR at I-1; PR at I-1. We note that none of the statutory exceptions to cumulation is applicable.

7

After acquiring a phosphonates production facility in Smyrna, GA in July 2006, however, Compass

reduced its imports of subject HEDP from *** pounds in 2006 to *** pounds in 2007, as it increased its

domestic production of the product from *** pounds in 2006 to *** pounds in 2007, and ceased

importing altogether after the fourth quarter of 2007.26 Accordingly, the ratio of Compass’s subject

imports to its domestic production declined from *** percent in 2006 to *** percent in 2007, and it was

*** percent in interim 2007 compared with *** in interim 2008.27 As a further indication of its

commitment to domestic production, Compass reportedly invested more than $2 million in the Smyrna

facility during the period of investigation to improve the plant’s operations.28 Thus, by the end of the

period, Compass’s primary interest was in domestic production.29 30 

We therefore find that circumstances do not warrant the exclusion of Compass from the domestic

industry as a related party. 

III. CUMULATION31

A. Background

For purposes of evaluating the volume and price effects for a determination of material injury by

reason of the subject imports, section 771(7)(G)(i) of the Tariff Act requires the Commission to cumulate

subject imports from all countries as to which petitions were filed and/or investigations self-initiated by

Commerce on the same day, if such imports compete with each other and with domestic like products in

the U.S. market and no statutory exceptions apply.32 The statutory threshold for cumulation is satisfied in

these investigations because the petitions with respect to China and India were filed on the same day,

March 19, 2008.33 

In assessing whether subject imports compete with each other and with the domestic like product,

the Commission has generally considered four factors:
 34 See Certain Cast-Iron Pipe Fittings from Brazil, the Republic of Korea, and Taiwan, Inv. Nos. 731-TA-278-

280 (Final), USITC Pub. 1845 (May 1986), aff'd, Fundicao Tupy, S.A. v. United States, 678 F. Supp. 898 (Ct. Int'l

Trade), aff'd, 859 F.2d 915 (Fed. Cir. 1988).

 35 Commissioner Lane notes with respect to the first factor that her analysis does not require such similarity of

products that a perfectly symmetrical fungibility is required. See Separate Views of Commissioner Charlotte R.

Lane, Certain Lightweight Thermal Paper from China, Germany, and Korea, Inv. Nos. 701-TA-451 and 731-TA1126-1128 (Preliminary), USITC Pub. 3964 (Nov. 2007).

 36 See, e.g., Wieland Werke, AG v. United States, 718 F. Supp. 50 (Ct. Int'l Trade 1989).

 37 The Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103-316, Vol. 1 at

848 (1994) (“SAA”) expressly states that “the new section will not affect current Commission practice under which

the statutory requirement is satisfied if there is a reasonable overlap of competition.” SAA at 848 (citing Fundicao

Tupy, S.A. v. United States, 678 F. Supp. 898, 902 (Ct. Int'l Trade 1988)), aff’d, 859 F.2d 915 (Fed. Cir. 1988). See

Goss Graphic Sys., Inc. v. United States, 33 F. Supp. 2d 1082,1087 (Ct. Int’l Trade 1998) (“cumulation does not

require two products to be highly fungible”); Wieland Werke, AG, 718 F. Supp. at 52 (“Completely overlapping

markets are not required.”).

 38 Preliminary Views at 19.

 39 See Compass’s Prehearing Brief at 9-15.

 40 See Hearing Tr. at 136 (Craven) (“We have no position on [cumulation]”), 142 (Craven) (“We think the

competition between the products, all of the factors that you examine looking at cumulation suggest that cumulation

is appropriate and we can’t really come up with a discretionary reason why you shouldn’t cumulate.”).

8

(1) the degree of fungibility between the subject imports from different countries and

between imports and the domestic like product, including consideration of specific

customer requirements and other quality related questions;

(2) the presence of sales or offers to sell in the same geographic markets of subject

imports from different countries and the domestic like product;

(3) the existence of common or similar channels of distribution for subject imports

from different countries and the domestic like product; and

(4) whether the subject imports are simultaneously present in the market.34 35

While no single factor is necessarily determinative, and the list of factors is not exclusive, these factors

are intended to provide the Commission with a framework for determining whether the subject imports

compete with each other and with the domestic like product.36 Only a “reasonable overlap” of

competition is required.37

In the preliminary phase of these investigations, the Commission found a reasonable overlap of

competition between and among subject imports from China and India and the domestic like product and

thus analyzed subject imports on a cumulated basis.38

In the final phase of these investigations, petitioner argues that the Commission should again

consider subject imports from China and India on a cumulated basis because, in its view, there is a

reasonable overlap of competition between subject imports from both countries and the domestic like

product based on the four factors the Commission considers in analyzing the issue.39 Respondents,

though taking no position on the issue, have expressed the view that cumulation is probably appropriate.40

B. Analysis

Based on the record of these investigations, we find a reasonable overlap of competition between

subject imports from China and India and between subject imports from each source and the domestic like

product. With respect to fungibility, the record indicates that there is a high degree of substitutability
 41 CR at II-10; PR at II-6. Petitioner and at least half of responding importers and purchasers reported that

subject imports from China and India and the domestic like product are “always” used interchangeably. CR at II-15;

PR at II-9; CR/PR at Table II-4. At least three-quarters of responding importers and purchasers reported that subject

imports from China and India and the domestic like product are “always” or “frequently” used interchangeably. Id.

Petitioner, three of seven responding importers, and seven of sixteen responding purchasers indicated that subject

imports from China and India are “always” used interchangeably.” CR at II-19; PR at II-11; CR/PR at Table II-4. 

When asked whether differences other than price are ever significant to purchasers, petitioner responded

“sometimes,” and two-thirds of importers of HEDP from China reported “sometimes” or “never,” though five of

eight importers of HEDP from India reported “always” or “frequently.” CR/PR at Table II-5. Half or more of

responding purchasers reported that the domestic like product was comparable to subject imports from China with

respect to 14 of 16 characteristics, but inferior with respect to price. CR at II-16; PR at II-9; CR/PR at Table II-6. 

Half or more of responding purchasers reported that the domestic like product was comparable to subject imports

from India with respect to 14 of 16 characteristics, including lowest price, but superior with respect to delivery time. 

Id. 

 42 See, e.g., Hearing Tr. at 24 (Failon) (“HEDP from the U.S., U.K., India, and China is completely

interchangeable, period.”), 33 (Levin) (“As we reviewed HEDP is a commodity product, and subject imports are

highly interchangeable with domestically produced HEDP.”), 142 (Craven) (noting “competition between the

products” and that “the factors . . . suggest that cumulation is appropriate

 . . . .”).

 43 Of Compass’s HEDP shipments in 2007, *** percent were to the Midwest region, *** percent were to the

Northeast region, and *** percent were to the Southeast region. CR at II-3; PR at II-1. Similarly, in 2007, ***

percent of subject HEDP imported from China and *** percent of HEDP imported from India went to customers in

the Midwest, *** percent of subject HEDP imported from China and *** percent of HEDP imported from India

went to customers in the Northeast, and *** percent of subject HEDP imported from China and *** percent of

HEDP imported from India went to customers in the Southeast. Id. 

 44 CR at II-3; PR at II-1.

 45 During the period examined, *** to *** percent of subject imports from China, *** to *** percent of subject

imports from India, and *** to *** percent of domestically produced HEDP was sold to compounders. CR/PR at

Table II-1. The next most important channel of distribution for HEDP from all three sources was sales to

distributors, which accounted for *** to *** percent of shipments of subject imports from China, *** to *** percent

of shipments of subject imports from India, and *** to *** percent of domestic producers’ HEDP shipments. Id.

 46 CR/PR at Table II-1.

9

between subject imports from China and India and between subject imports from each source and the

domestic like product.41 Witnesses for both petitioner and respondents testified at the hearing that the

domestic like product and subject imports from China and India are interchangeable.42

With respect to geographic overlap, HEDP from all three sources generally served the same

geographic markets during the period of investigation. Most shipments of subject imports from China

and India and the domestic like product went to customers in the Midwest, Northeast, and Southeast

regions.43 Although *** of subject imports went to customers in regions of the country that received ***

of Compass’s HEDP shipments,44 there was still a significant overlap of competition in all regions of the

country.

Subject imports from China and India and the domestic like product also shared the same general

channels of distribution. The *** majority of HEDP from all three sources was sold to compounders

during the period of investigation, and the next most important channel of distribution was sales to

distributors.45 The balance of shipments, accounting for a small share of subject import and domestic like

product shipments, went to end users.46
 47 CR at IV-11; PR at IV-4; CR/PR at Table IV-4.

 48 19 U.S.C. § 1677(7)(H).

 49 In determining for purposes of a threat analysis whether to exercise his discretion to cumulate subject imports

for which there is a reasonable overlap of competition, Commissioner Pinkert places primary weight on volume and

price trends.

 50 CR/PR at Table IV-2.

 51 CR/PR at Table IV-2.

 52 CR/PR at Table IV-5.

 53 CR/PR at Table V-6.

 54 CR/PR at Table V-6.

10

Finally, HEDP from all three sources was simultaneously present in the U.S. market, with

shipments of subject imports from China and India and the domestic like product occurring in each year

of the period and in both interim periods.47 

Based on the record, we conclude that there is a reasonable overlap of competition between and

among subject imports and the domestic like product, and, therefore, cumulate subject imports from

China and India for our analysis of material injury by reason of subject imports.

C. Cumulation for Threat Analysis

Because our determinations address the issue of threat of material injury by reason of subject

imports, we must also consider whether to cumulate subject imports from China and India for purposes of

a threat analysis. In contrast to cumulation for material injury, cumulation for a threat analysis is

discretionary. Under section 771(7)(H) of the Tariff Act, the Commission may “to the extent practicable”

cumulatively assess the volume and price effects of subject imports from all countries as to which

petitions were filed on the same day if the requirements for cumulation in the material injury context are

satisfied.48

In the preceding section, we found that the requirements for cumulating subject imports for

purposes of our material injury analysis are satisfied. We further find that subject imports from China and

India are likely to compete under similar conditions of competition in the U.S. market in the imminent

future, based on the following considerations.49 

First, subject imports from China and India increased at a similar rate over the period of

investigation and held similar shares of the U.S. market at the end of the period. Between 2005 and 2007,

subject imports by volume from China increased *** percent, and subject imports from India increased

*** percent.50 Although subject imports from India were *** percent higher in interim 2008 than in

interim 2007, and subject imports from China were *** percent lower, the absolute volumes of subject

imports from China and India were similar in interim 2008, at *** pounds and *** pounds, respectively.51

Accordingly, subject imports from China and India held similar shares of apparent U.S. consumption in

interim 2008, at *** percent and *** percent, respectively.52 

Subject imports from China and India also undersold the domestic like product with similar

frequency and at similar margins. Subject imports from China undersold the domestic like product in 31

of 47 quarterly comparisons, or 66.0 percent of the time, at margins ranging from 1.1 percent to 61.7

percent and averaging 20.4 percent.53 Subject imports from India undersold the domestic like product in

11 of 15 quarterly comparisons, or 73.3 percent of the time, at margins ranging from 0.6 percent to 55.2

percent and averaging 23.8 percent.54 We conclude that subject imports from China and India exhibited

similar trends with respect to volume and underselling. 
 55 Subject producers in China reported that exports accounted for between *** percent and *** percent of their

shipments during the period of investigation, with exports to the United States accounting for between *** percent

and *** percent of their shipments during the period. CR/PR at Table VII-2. Subject producers in India reported

that exports accounted for between *** percent and *** percent of their shipments during the same period, with

exports to the United States accounting for between *** percent and *** percent of their shipments. Id. at Table

VII-3. 

 56 Subject Chinese producers project that exports as a percentage of shipments will be *** percent in 2008 and

*** percent in 2009, with exports to the United States as a percentage of shipments at *** percent in 2008 and ***

percent in 2009. CR/PR at Table VII-2. Similarly, subject Indian producers project that exports as a percentage of

shipments will be *** percent in 2008 and *** percent in 2009, with exports to the United States as a percentage of

shipments at *** percent in 2008 and *** percent in 2009. Id. at Table VII-3. 

 57 The reported capacity utilization rate of subject Indian producers *** that of subject Chinese producers ***. 

Specifically, subject producers in China reported a capacity utilization rate of *** percent in 2005, *** percent in

2006, and *** percent in 2007, with a capacity utilization rate of *** percent in interim 2007 and *** percent in

interim 2008. CR/PR at Table VII-2. Subject producers in India reported a capacity utilization rate of *** percent

in 2005, *** percent in 2006, *** percent in 2007, with a capacity utilization rate of *** percent in interim 2007 and

*** percent in interim 2008. Id. at Table VII-3. 

 58 Subject producers in China project a capacity utilization rate of *** percent in 2008 and *** percent in 2009. 

CR/PR at Table VII-2. Subject producers in India project a capacity utilization rate of *** percent in 2008 and ***

percent in 2009. Id. at Table VII-3.

 59 CR/PR at Table IV-4.

 60 CR/PR at Table IV-4.

11

Finally, subject foreign producers in China and India reported a similar degree of export

orientation during the period of investigation and *** in 2008 and 2009. Subject producers in both

countries reportedly exported *** of their shipments during the period examined, with *** of their

shipments destined for the United States,55 and projected a similar degree of export orientation in 2008

and 2009.56 Although subject producers in India generally operated at *** capacity utilization than

subject producers in China during the period of investigation,57 subject producers in both countries

projected *** capacity utilization in 2008 and 2009.58 These data indicate that subject producers in China

and India will have similar capabilities and incentives to increase their exports to the United States in the

imminent future.

Based on the foregoing analysis, we have exercised our discretion to cumulate subject imports

from China and India for our analysis of threat of material injury by reason of subject imports. 

IV. CONDITIONS OF COMPETITION

We find the following conditions of competition pertinent to our analysis of whether the domestic

industry is materially injured by reason of subject HEDP imports from China and India.

A. Demand Conditions

HEDP demand grew *** between 2005 and 2006, but declined thereafter. Apparent U.S.

consumption of HEDP increased *** percent between 2005 and 2006, from *** pounds to *** pounds,

but declined *** percent in 2007 to *** pounds, a level still *** percent higher than in 2005.59 Apparent

U.S. consumption was *** percent lower in January-September 2008, at *** pounds, as compared with

January-September 2007, when it was *** pounds.60
 61 Hearing Tr. at 67 (Failon) (“But, again, the fact that we have so many different industries and applications

does recession proof the product to a degree. . . .”).

 62 Hearing Tr. at 66 (Failon), 139-40 (Collias); CR at I-7-8, 10; PR at I-5-6, 8.

 63 Hearing Tr. at 28 (Failon).

 64 Hearing Tr. at 67 (Failon).

 65 Hearing Tr. at 28, 66-67 (Failon).

 66 Hearing Tr. at 139-40 (Collias); CR at I-7-8, 10; PR at I-5-6, 8.

 67 Hearing Tr. at 27-28, 67 (Failon), 139-41 (Collias).

 68 See Hearing Tr. at 27-28, 67 (Failon), 139-41 (Collias).

 69 Hearing Tr. at 28 (Failon), 67 (Failon), 92 (McCaul), 139-40 (Failon).

 70 CR at III-5-6; PR at III-3.

 71 CR at III-6; PR at III-3. Compass and Rhodia provided partial data on Lynx’s HEDP operations. CR at III-2;

PR at III-1.

 72 CR at III-5-6; PR at III-3.

 73 CR at IV-1-2; PR at IV-1; CR/PR at Table IV-1.

12

Although the recent decline in HEDP demand has coincided with a deterioration of the general

economy, HEDP’s diverse applications tend to insulate HEDP demand from general economic conditions

to a certain extent.61 The largest source of demand for HEDP is in so-called “process cooling”

applications, whereby water used to cool hot machinery and products such as steel is treated with

compounds including HEDP.62 These applications appear to be the most exposed to general economic

conditions, declining with the economic slowdown and the migration of textile production abroad, as

industrial plants have closed or curtailed their production.63 Similarly, falling oil prices have reduced the

oil rig count and hence HEDP demand from oil producers.64 Partially offsetting these declining uses for

HEDP is HEDP’s growing use in reverse osmosis (i.e., desalination) applications.65 

Demand for HEDP used in so-called “comfort cooling” applications, whereby water used in the

cooling towers of large buildings is treated with compounds including HEDP, appears to be less subject to

the economic cycle and more influenced by weather conditions.66 Warm weather increases HEDP

consumption in these applications due to the increased use of air conditioning.67 Warm weather also

increases HEDP consumption in swimming pools.68 Overall, demand for HEDP is projected to decline

somewhat in 2009 due to recessionary conditions.69

B. Supply Conditions

1. Changes to the Domestic Industry

The domestic industry underwent significant changes during the period of investigation. From

the beginning of the period of investigation through June 2006, Lynx Chemical Group LLC (“Lynx”) was

the only domestic producer of HEDP, which it produced with other phosphonates at its facility in Smyrna,

GA.70 Lynx’s phosphonates production, including HEDP, was ***.71 After *** June 2006, Lynx sold the

Smyrna facility to Compass in July 2006 and exited the HEDP market.72 Rhodia remains active in the

U.S. HEDP market as an importer and marketer of nonsubject HEDP imported from the United

Kingdom.73

Compass began the period of investigation as purely an importer of subject HEDP from China, as

addressed in section II.D.1. above. Compass decided to purchase the Smyrna facility from Lynx in July

2006 and phase out its imports because doing so appeared to be economically advantageous based on
 74 Hearing Tr. at 12 (McCaul) (“So in 2006 Compass decided, okay we’re going to acquire this manufacturing

plant, and believed as I believe that we could be competitive, we could be successful in the business, especially by

importing the competitively priced raw material from China, phosphorus acid, and using that to produce

phosphonates rather than the method that had been used up to that point, which was using PCL-3 [sic].”).

 75 Compass’s Prehearing Br. at 23-24; Responses to Commissioner Questions at 1-2; Hearing Tr. at 12-13

(McCaul), 23 (Failon) (“Compass switched to scheme 2 [using phosphorus acid crystal of PAC to product HEDP] in

order to take advantage of our favorable cost position on PAC. The company has been a leading importer and

marketer of phosphorus acid since our inception in 1999, so we were no stranger to phosphorus acid. And based on

our costs of both phosphorus acid crystal and our PCL-3 [sic] cost in late 2006 we anticipated more than a 25 percent

reduction in our total raw material cost.”), 49 (Failon) (“we were convinced that we could be competitive by

changing the operation and by using this different technology to make the product”), 116 (McCaul) (“The big change

then was from phosphorus trichloride or PCL-3 [sic] to using phosphorus acid. We knew that going in, that we

needed to make that change. It would reduce our costs considerably, and that was part of the whole economics of

looking at the acquisition.”).

 76 Compass’s Prehearing Br. at 23-24; Responses to Commissioner Questions at 1-2; Hearing Tr. at 116-17

(McCaul) (“[W]hen Compass acquired this manufacturing facility, this plant that was producing and selling, albeit

through another company, a large volume of phosphonates, Compass assumed that it would immediately have a

sudden increase in total sales of phosphonates, because now it would have the product that had been importing

previously, it kept those customers. And because we were manufacturing from that plant, that we would

immediately have a large increase – maybe not one and one making two; but one and one making, you know, 1.8 or

something like that. That was a big part of the whole economics.”).

 77 CR at III-5 n. 9, VI-7-8; PR at III-3 n.9, VI-3-4; CR/PR at Table VI-1; Hearing Tr. at 56-57 (McCaul).

 78 CR at IV-3 nn. 6-7; PR at IV-2 nn. 6-7; CR/PR at Table IV-2.

 79 CR/PR at Table IV-2. 

 80 CR/PR at Tables IV-4-5.

13

several assumptions that it deemed reasonable at the time.74 Most importantly, Compass assumed that it

would be able to reduce its HEDP production costs about 25 percent, *** by producing HEDP from

lower-cost phosphorus acid crystal instead of from higher-cost phosphorus trichloride (“PCL3”), as Lynx

had done.75 Compass also assumed that *** and that it would retain its existing customers while adding

customers from Rhodia that were accustomed to purchasing HEDP produced at the Smyrna facility.76

Based on these assumptions, Compass reportedly invested more than $2 million in the Smyrna facility

during the period of investigation and succeeded in realizing significant cost reductions, as well as yield

and cycle time improvements.77

2. Nonsubject Imports

The United Kingdom was the principal source of nonsubject imports during the period of

investigation, with Chinese producer Wujin Water, for which Commerce calculated a dumping margin of

zero, accounting for a much smaller share.78 The volume of nonsubject imports from all sources

fluctuated between years but increased overall by *** percent from 2005 to 2007.79 U.S. shipments of

nonsubject imports followed similar trends and accounted for a substantial share of apparent U.S.

consumption during the period examined, ranging from a low of *** percent to a high of *** percent.80 

3. Raw Material Supply Disruptions in 2008

Events in China significantly disrupted the HEDP market in 2008. China accounts for 70 to 80

percent of global capacity to convert phosphorus ore into elemental phosphorus, which is used in the
 81 CR at I-10 n.32; PR at I-8 n.32; Hearing Tr. at 55 (McCaul), 71 (Failon).

 82 See Compass Prehearing Br. at 20 n. 57; Respondents’ Prehearing Br. at 12; Hearing Tr. at 15-16 (McCaul),

72 (Failon), 73 (McCaul), 126-27, 138 (Collias).

 83 Hearing Tr. at 53 (McCaul), 143 (Collias), 161 (Craven), 162 (Collias).

 84 Hearing Tr. at 51-53 (McCaul),

 85 Compass’s Prehearing Br. at 20 n. 57; Hearing Tr. at 15, 110-11 (McCaul) (“But there were times during that

period where we might have had some raw material and could make some product and, you know, were better

positioned to negotiate better prices, yes. I don’t think there’s much doubt about that.”).

 86 Hearing Tr. at 38-39 (McCaul) (“The situation is right now, pricing as I mentioned is falling dramatically, and

it’s appropriate that pricing should come down because costs have come down. And we’ve been doing it of course,

moving pricing down because the raw material cost from China had escalated so steeply in 2008. So it is appropriate

that prices should be coming down . . . .”), 138 (Collias) (“To the best of our knowledge, at this time there is not the

degree of competition for the phosphorus derived chemicals by the agricultural chemical industry. So we believe

that the supply of these phosphorus derived chemicals such as PCL3 [sic] is much better for the availability to make

and supply HEDP and other phosphonates as required by the industries.”), 138 (Craven) (“These were temporary

restrictions for the most part.”); see also Compass’s Prehearing Br. at 20 n. 57, 31; Compass’s Posthearing Br. at 14-

15.

 87 See footnote 40, supra. 

 88 See, e.g., footnotes 40 and 42, supra. In addition, respondents implied that subject imports from China and

India and the domestic like product are substitutable in arguing that most purchasers engage in dual sourcing,

purchasing some combination of subject imports, nonsubject imports, and domestically produced HEDP. 

Respondents’ Prehearing Br. at 14; Hearing Tr. at 121 (Craven), 153-54 (Collias); Respondents’ Responses to

Commissioner Questions at 5. Their argument that purchasers would likely increase purchases of the domestic like

product rather than nonsubject imports if subject imports were to exit the U.S. market also presumes that subject

imports are substitutable with the domestic like product. Respondents’ Responses to Commissioner Questions at 2.

14

production of both phosphonates such as HEDP and certain pesticides and fertilizers.81 In 2008, natural

disasters, including winter storms, flooding, and earthquakes, as well as the Beijing Olympics, resulted in

electricity rationing and the curtailment of energy-intensive phosphorus mining and production in

China.82 At the same time, global phosphorus demand for agricultural applications reportedly surged as

high oil prices created strong demand for corn-based ethanol, and the Chinese government imposed a

100-120 percent export tax on phosphorus exports in an effort to reduce the price of phosphorus-derived

products for Chinese farmers.83 Consequently, HEDP producers worldwide experienced both shortages of

raw materials and a spike in raw material prices, from approximately $1,000-2,000 per ton to $9,000-

10,000 per ton.84 As subject and non-subject foreign HEDP producers were forced to reduce production

and increase prices, Compass reportedly was able to pass its higher raw material costs on to customers,

due in part to its favorable access to phosphorus acid crystal supplies from China.85 Petitioner and

respondents indicated that most of the factors that caused the market disruptions in 2008 were temporary

and have since been resolved.86

4. Substitutability

The record indicates that there is a high degree of substitutability between subject imports from

China and India, and subject imports from each source and the domestic like product.87 Witnesses for

both petitioner and respondents testified at the hearing that the domestic like product and subject imports

from China and India are interchangeable.88 Though not all subject Chinese and Indian producers are
 89 CR at II-13; PR at II-7. NSF certification is used to ensure the quality of the HEDP used in applications such

as drinking water production, swimming pools, and spas. See Conference Tr. at 86 (Mangwani), 97 (Collias). 

Companies reportedly undergo a rigorous, fully documented process to achieve NSF certification, and a list of NSFcertified phosphonate suppliers is available on the NSF website. Id. at 97 (Collias). 

 90 As of January 28, 2009, subject Indian producer Aquapharm and subject Chinese producer Wujin Fine

Chemical were NSF certified. CR at II-13; PR at II-7. Only nine of 44 responding purchasers reported that they

require their suppliers to be NSF certified for at least some of their purchases. Id.

 91 19 U.S.C. §§ 1671d(b), 1673d(b).

 92 19 U.S.C. § 1677(7)(B)( i). The Commission “may consider such other economic factors as are relevant to the

determination” but shall “identify each [such] factor . . . [a]nd explain in full its relevance to the determination.” 19

U.S.C. § 1677(7)(B). 

 93 19 U.S.C. § 1677(7)(A).

 94 19 U.S.C. § 1677(7)(C)(iii).

 95 19 U.S.C. § 1677(7)(C)(iii).

 96 19 U.S.C. §§ 1671d(b)(1), 1673d(b)(1).

 97 Angus Chemical Co. v. United States, 140 F.3d 1478, 1484-85 (Fed. Cir. 1998) (“{T}he statute does not

‘compel the commissioners’ to employ {a particular methodology}.”), aff’g 944 F. Supp. 943, 951 (Ct. Int’l Trade

1996).

15

certified like Compass with respect to National Sanitation Foundation (“NSF”) standard 60,89 NSF

certification would not significantly reduce the interchangeability of subject imports from China and

India, or between subject imports from each country and the domestic like product, because major HEDP

producers in both China and India are NSF certified, and most HEDP applications do not require NSF

certification.90

V. MATERIAL INJURY AND THREAT OF MATERIAL INJURY BY REASON OF

SUBJECT IMPORTS

A. Legal Standards

1. In General

In the final phase of antidumping or countervailing duty investigations, the Commission

determines whether an industry in the United States is materially injured or threatened with material

injury by reason of the imports under investigation.91 In making this determination, the Commission must

consider the volume of subject imports, their effect on prices for the domestic like product, and their

impact on domestic producers of the like product, but only in the context of U.S. production operations.92

The statute defines “material injury” as “harm which is not inconsequential, immaterial, or

unimportant.”93 In assessing whether the domestic industry is materially injured by reason of subject

imports, we consider all relevant economic factors that bear on the state of the industry in the United

States.94 No single factor is dispositive, and all relevant factors are considered “within the context of the

business cycle and conditions of competition that are distinctive to the affected industry.”95

Although the statute requires the Commission to determine whether the domestic industry is

“materially injured by reason of” or threatened with material injury by reason of unfairly traded imports,96

it does not define the phrase “by reason of,” indicating that this aspect of the injury analysis is left to the

Commission’s reasonable exercise of its discretion.97 In identifying a causal link, if any, between subject

imports and material injury to the domestic industry, the Commission examines the facts of record that
 98 The Federal Circuit, in addressing the causation standard of the statute, observed that “{a}s long as its effects

are not merely incidental, tangential, or trivial, the foreign product sold at less than fair value meets the causation

requirement.” Nippon Steel Corp. v. USITC, 345 F.3d 1379, 1384 (Fed. Cir. 2003). This was further ratified in

Mittal Steel Point Lisas Ltd. v. United States, 542 F.3d 867, 873 (Fed. Cir. 2008), where the Federal Circuit, quoting

Gerald Metals, Inc. v. United States, 132 F.3d 716, 722 (Fed. Cir. 1997), stated that “this court requires evidence in

the record ‘to show that the harm occurred “by reason of” the LTFV imports, not by reason of a minimal or

tangential contribution to material harm caused by LTFV goods.’” See also Nippon Steel Corp. v. United States, 458

F.3d 1345, 1357 (Fed. Cir. 2006); Taiwan Semiconductor Industry Ass’n v. USITC, 266 F.3d 1339, 1345 (Fed. Cir.

2001).

 99 SAA at 851-52 (“{T}he Commission must examine other factors to ensure that it is not attributing injury from

other sources to the subject imports.”); S. Rep. 96-249 at 75 (1979) (the Commission “will consider information

which indicates that harm is caused by factors other than less-than-fair-value imports.”); H.R. Rep. 96-317 at 47

(1979) (“in examining the overall injury being experienced by a domestic industry, the ITC will take into account

evidence presented to it which demonstrates that the harm attributed by the petitioner to the subsidized or dumped

imports is attributable to such other factors;” those factors include “the volume and prices of nonsubsidized imports

or imports sold at fair value, contraction in demand or changes in patterns of consumption, trade restrictive practices

of and competition between the foreign and domestic producers, developments in technology and the export

performance and productivity of the domestic industry”); accord Mittal Steel, 542 F.3d at 877.

 100 SAA at 851-52 (“{T}he Commission need not isolate the injury caused by other factors from injury caused by

unfair imports.”); Taiwan Semiconductor Industry Ass’n v. USITC, 266 F.3d 1339, 1345 (Fed. Cir. 2001) (“{T}he

Commission need not isolate the injury caused by other factors from injury caused by unfair imports ... . Rather, the

Commission must examine other factors to ensure that it is not attributing injury from other sources to the subject

imports.” (emphasis in original)); Asociacion de Productores de Salmon y Trucha de Chile AG v. United States, 180

F. Supp. 2d 1360, 1375 (Ct. Int’l Trade 2002) (“{t}he Commission is not required to isolate the effects of subject

imports from other factors contributing to injury” or make “bright-line distinctions” between the effects of subject

imports and other causes.); see also Softwood Lumber from Canada, Inv. Nos. 701-TA-414 and 731-TA-928

(Remand), USITC Pub. 3658 at 100-01 (Dec. 2003) (Commission recognized that “{i}f an alleged other factor is

found not to have or threaten to have injurious effects to the domestic industry, i.e., it is not an ‘other causal factor,’

then there is nothing to further examine regarding attribution to injury”), citing Gerald Metals, Inc. v. United States,

132 F.3d 716, 722 (Fed. Cir. 1997) (the statute “does not suggest that an importer of LTFV goods can escape

countervailing duties by finding some tangential or minor cause unrelated to the LTFV goods that contributed to the

harmful effects on domestic market prices.”). 

16

relate to the significance of the volume and price effects of the subject imports and any impact of those

imports on the condition of the domestic industry. This evaluation under the “by reason of” standard

must ensure that subject imports are more than a minimal or tangential cause of injury and that there is a

sufficient causal, not merely a temporal, nexus between subject imports and material injury.98

In many investigations, there are other economic factors at work, some or all of which may also

be having adverse effects on the domestic industry. Such economic factors might include nonsubject

imports; changes in technology, demand, or consumer tastes; competition among domestic producers; or

management decisions by domestic producers. The legislative history explains that the Commission must

examine factors other than subject imports to ensure that it is not attributing injury from other factors to

the subject imports, thereby inflating an otherwise tangential cause of injury into one that satisfies the

statutory material injury threshold.99 In performing its examination, however, the Commission need not

isolate the injury caused by other factors from injury caused by unfairly traded imports.100 Nor does the

“by reason of” standard require that unfairly traded imports be the “principal” cause of injury or

contemplate that injury from unfairly traded imports be weighed against other factors, such as nonsubject
 101 S. Rep. 96-249 at 74-75; H.R. Rep. 96-317 at 47.

 102 See Nippon Steel Corp., 345 F.3d at 1381 (“an affirmative material-injury [sic] determination under the

statute requires no more than a substantial-factor showing. That is, the ‘dumping’ need not be the sole or principal

cause of injury.”).

 103 Mittal Steel, 542 F.3d at 877-78; see also id. at 873 (“While the Commission may not enter an affirmative

determination unless it finds that a domestic industry is materially injured ‘by reason of’ subject imports, the

Commission is not required to follow a single methodology for making that determination ... . {and has} broad

discretion with respect to its choice of methodology.”) citing United States Steel Group v. United States, 96 F.3d

1352, 1362 (Fed. Cir. 1996) and S. Rep. 96-249 at 75.

 104 Commissioner Pinkert does not join this paragraph or the following four paragraphs. He points out that the

Federal Circuit, in Bratsk, 444 F.3d 1369, and Mittal, held that the Commission is required, in certain circumstances,

to undertake a particular kind of analysis of non-subject imports. Mittal explains as follows:

What Bratsk held is that “where commodity products are at issue and fairly traded, price-competitive, nonsubject imports are in the market,” the Commission would not fulfill its obligation to consider an important

aspect of the problem if it failed to consider whether non-subject or non-LTFV imports would have

replaced LTFV subject imports during the period of investigation without a continuing benefit to the

domestic industry. 444 F.3d at 1369. Under those circumstances, Bratsk requires the Commission to

consider whether replacement of the LTFV subject imports might have occurred during the period of

investigation, and it requires the Commission to provide an explanation of its conclusion with respect to

that factor.

542 F.3d at 878.

 105 Nucor Corp. v. United States, 414 F.3d 1331, 1336, 1341 (Fed. Cir. 2005); see also Mittal Steel, 542 F.3d at

879 (“Bratsk did not read into the antidumping statute a Procrustean formula for determining whether a domestic

injury was ‘by reason’ of subject imports.”).

 106 Mittal Steel, 542 F.3d at 875-79.

17

imports, which may be contributing to overall injury to an industry.101 It is clear that the existence of

injury caused by other factors does not compel a negative determination.102

Assessment of whether material injury to the domestic industry is “by reason of” subject imports

“does not require the Commission to address the causation issue in any particular way” as long as “the

injury to the domestic industry can reasonably be attributed to the subject imports” and the Commission

“ensure{s} that it is not attributing injury from other sources to the subject imports.”103 104 Indeed, the

Federal Circuit has examined and affirmed various Commission methodologies and has disavowed “rigid

adherence to a specific formula.”105

The Federal Circuit’s decisions in Gerald Metals, Bratsk, and Mittal Steel all involved cases

where the relevant “other factor” was the presence in the market of significant volumes of pricecompetitive nonsubject imports. The Commission interpreted the Federal Circuit’s guidance in Bratsk as

requiring it to apply a particular additional methodology following its finding of material injury in cases

involving commodity products and a significant market presence of price-competitive nonsubject

imports.106 The additional “replacement/benefit” test looked at whether nonsubject imports might have

replaced subject imports without any benefit to the U.S. industry. The Commission applied that specific

additional test in subsequent cases, including the Carbon and Certain Alloy Steel Wire Rod from Trinidad

and Tobago determination that underlies the Mittal Steel litigation.

Mittal Steel clarifies that the Commission’s interpretation of Bratsk was too rigid and makes clear

that the Federal Circuit does not require the Commission to apply an additional test nor any one specific

methodology; instead, the Court requires the Commission to have “evidence in the record ‘to show that

the harm occurred ‘by reason of’ the LTFV imports,’” and requires that the Commission not attribute
 107 Mittal Steel, 542 F.3d at 873 (quoting from Gerald Metals, 132 F.3d at 722), 875-79 & n.2 (recognizing the

Commission’s alternative interpretation of Bratsk as a reminder to conduct a non-attribution analysis).

 108 Commissioner Lane also refers to her dissenting views in Polyethylene Terephthalate Film, Sheet, and Strip

from Brazil, China, Thailand, and the United Arab Emirates, Inv. Nos. 731-TA-1131-1134 (Final), USITC Pub.

4040 (Oct. 2008), for further discussion of Mittal Steel.

 109 To that end, after the Federal Circuit issued its decision in Bratsk, the Commission began to present published

information or send out information requests in final phase investigations to producers in non-subject countries that

accounted for substantial shares of U.S. imports of subject merchandise (if, in fact, there were large non-subject

import suppliers). In order to provide a more complete record for the Commission’s causation analysis, these

requests typically seek information on capacity, production, and shipments of the product under investigation in the

major source countries that export to the United States. The Commission plans to continue utilizing published or

requested information in final phase investigations in which there are substantial levels of non-subject imports.

 110 Mittal Steel, 542 F.3d at 873; Nippon Steel Corp., 458 F.3d at 1350, citing U.S. Steel Group, 96 F.3d at 1357;

S. Rep. 96-249 at 75 (“The determination of the ITC with respect to causation is ... complex and difficult, and is a

matter for the judgment of the ITC.”).

 111 We provide in the discussion of impact in section V.D. below a full analysis of other factors alleged to have

caused any material injury experienced by the domestic industry. 

 112 19 U.S.C. § 1677(7)(C)(i).

 113 19 U.S.C. § 1677(7)(C)(ii).

18

injury from nonsubject imports or other factors to subject imports.107 Accordingly, we do not consider

ourselves required to apply the replacement/benefit test that was included in Commission opinions

subsequent to Bratsk.

The progression of Gerald Metals, Bratsk, and Mittal Steel clarifies that, in cases involving

commodity products where price-competitive nonsubject imports are a significant factor in the U.S.

market, the Court will require the Commission to give full consideration, with adequate explanation, to

non-attribution issues when it performs its causation analysis.108 109

The question of whether the material injury threshold for subject imports is satisfied

notwithstanding any injury from other factors is factual, subject to review under the substantial evidence

standard. Congress has delegated this factual finding to the Commission because of the agency’s

institutional expertise in resolving injury issues.110 111

2. Material Injury by Reason of Subject Imports

In evaluating the volume of subject imports, section 771(7)(C)(i) of the Tariff Act provides that

the “Commission shall consider whether the volume of imports of the merchandise, or any increase in that

volume, either in absolute terms or relative to production or consumption in the United States, is

significant.”112

In evaluating the price effects of the subject imports, section 771(7)(C)(ii) of the Tariff Act

provides that the Commission shall consider whether –

 (I) there has been significant price underselling by the imported merchandise as

compared with the price of domestic like products of the United States, and

 (II) the effect of imports of such merchandise otherwise depresses prices to a significant

degree or prevents price increases, which otherwise would have occurred, to a significant

degree.113
 114 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851 and 885 (“In material injury determinations, the Commission

considers, in addition to imports, other factors that may be contributing to overall injury. While these factors, in

some cases, may account for the injury to the domestic industry, they also may demonstrate that an industry is facing

difficulties from a variety of sources and is vulnerable to dumped or subsidized imports.”). The statute additionally

instructs the Commission to consider the “magnitude of the dumping margin” in an antidumping investigation as part

of its consideration of the impact of imports. 19 U.S.C. § 1677(7)(C)(iii)(V).

 115 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851, 885; Live Cattle from Canada and Mexico, Inv. Nos. 701-

TA-386, 731-TA-812-813 (Preliminary), USITC Pub. 3155 at 25 n.148 (Feb. 1999).

 116 19 U.S.C. § 1677(7)(F)(ii).

 117 19 U.S.C. § 1677(7)(F)(ii).

 118 These factors are as follows:

(I) if a countervailable subsidy is involved, such information as may be presented to it by the administering

authority as to the nature of the subsidy (particularly as to whether the countervailable subsidy is a subsidy

described in Article 3 or 6.1 of the Subsidies Agreement) and whether imports of the subject merchandise

are likely to increase,

(II) any existing unused production capacity or imminent, substantial increase in production capacity in the

exporting country indicating the likelihood of substantially increased imports of the subject merchandise

into the United States, taking into account the availability of other export markets to absorb any additional

exports,

(III) a significant rate of increase of the volume or market penetration of imports of the subject merchandise

indicating the likelihood of substantially increased imports,

(IV) whether imports of the subject merchandise are entering at prices that are likely to have a significant

depressing or suppressing effect on domestic prices and are likely to increase demand for further imports,

(V) inventories of the subject merchandise,

(VI) the potential for product-shifting if production facilities in the foreign country, which can be used to

19

In examining the impact of subject imports, section 771(7)(C)(iii) of the Tariff Act provides that

the Commission “shall evaluate all relevant economic factors which have a bearing on the state of the

industry.”114 These factors include output, sales, inventories, ability to raise capital, research and

development, and factors affecting domestic prices. No single factor is dispositive and all relevant factors

are considered “within the context of the business cycle and conditions of competition that are distinctive

to the affected industry.”115

3. Threat of Material Injury by Reason of Subject Imports

Section 771(7)(F) of the Tariff Act directs the Commission to determine whether the U.S.

industry is threatened with material injury by reason of the subject imports by analyzing whether “further

dumped or subsidized imports are imminent and whether material injury by reason of imports would

occur unless an order is issued or a suspension agreement is accepted.”116 The Commission may not make

such a determination “on the basis of mere conjecture or supposition,” and considers the threat factors “as

a whole” in making its determination whether dumped or subsidized imports are imminent and whether

material injury by reason of subject imports would occur unless an order is issued.117 In making our

determination, we consider all statutory threat factors that are relevant to these investigations.118
produce the subject merchandise, are currently being used to produce other products.

. . .

(IX) any other demonstrable adverse trends that indicate the probability that there is likely to be material

injury by reason of imports (or sale for importation) of the subject merchandise (whether or not it is actually

being imported at the time).

19 U.S.C. § 1677(7)(F)(i). To organize our analysis, we discuss the applicable statutory threat factors using the

same volume/price/impact framework that applies to our material injury analysis. Statutory threat factor (I) is

inapplicable to these antidumping investigations. Statutory threat factors (II), (III), (V), and (VI) are discussed in the

analysis of subject import volume. Statutory threat factor (IV) is discussed in the price effects analysis, and statutory

threat factor (IX) is discussed in the impact analysis. Statutory threat factor (VII) is inapplicable, as no imports of

agricultural products are involved in these investigations. No argument was made that the domestic industry is

currently engaging or will imminently engage in any efforts to develop a derivative or more advanced version of the

domestic like product, which would implicate statutory threat factor (VIII).

 119 CR/PR at Table IV-2.

 120 CR/PR at Table IV-2.

 121 CR/PR at Table IV-4.

 122 CR/PR at Table IV-4.

 123 CR/PR at Table IV-4.

 124 CR/PR at Table IV-5.

 125 CR/PR at Table IV-6.

 126 CR/PR at Table IV-6.

20

B. Volume of Subject Imports

Cumulated subject import volume increased significantly during the period of investigation in

absolute terms and as a share of both apparent U.S. consumption and domestic production. Subject

import volume increased *** percent between 2005 and 2006, from *** pounds to *** pounds, and

another *** percent between 2006 and 2007, to *** pounds, representing a *** percent increase from

2005 to 2007.119 Subject import volume was *** pounds in January-September 2008, a level *** percent

higher than that in January-September 2007, when subject import volume was *** pounds.120 

Cumulated subject import shipments in the U.S. market increased *** percent between 2005 and

2006, from *** pounds to *** pounds, but declined *** percent between 2006 and 2007, to *** pounds,

a level still *** percent higher than in 2005.121 Subject import shipments were *** percent higher in

January-September 2008, at *** pounds, than in January-September 2007, when they were *** pounds.122

That subject import shipments were *** percent higher in interim 2008 than in interim 2007 is

particularly notable given that apparent U.S. consumption was *** percent lower in interim 2008 than in

2007.123 

Cumulated subject import shipments as a share of apparent U.S. consumption quantity increased

from *** percent in 2005 to *** percent in 2006 and *** percent in 2007, and was *** percent in

January-September 2008, compared with *** percent in January-September 2007.124 The ratio of subject

imports to domestic production increased from *** percent in 2005 to *** percent in 2006, as Compass’s

acquisition of the Smyrna plant disrupted production at the facility, before declining to *** percent in

2007, a level still *** percentage points higher than in 2005.125 The ratio of subject imports to domestic

production was *** percent in January-September 2008, compared with *** percent in JanuarySeptember 2007. 126 
 127 Respondents argue that the Commission should disregard Lynx’s HEDP shipment data and find that subject

import volume was not significant because Compass’s sales of HEDP, including both subject imports and the

domestic like product, increased significantly during the period of investigation and at a greater rate than the volume

of subject imports from China. Respondents’ Prehearing Br. at 3-4. In analyzing the volume of subject imports, we

have considered all domestic industry shipments, including Lynx’s shipments, and all subject imports, including

subject HEDP imported by Compass, in accordance with the statute. See 19 U.S.C. §§ 1677(4), (7)(B). As

respondents acknowledge, we are not permitted under the statute to disregard the shipments of any domestic

producer or count subject imports imported by a domestic producer toward domestic industry shipments. See

Respondents’ Responses to Commissioner Questions at 5. 

 128 CR/PR at Table III-5.

 129 Compare CR/PR at Table III-5 with id. at Table IV-2. 

 130 CR/PR at Table IV-2; CR at IV-7; PR at IV-2; Hearing Tr. at 180 (Collias) (“It takes time to establish a

reputation and for people to get to know you and maybe start trusting you. And of course during 2008, having

known a little bit more about us, we did get some more business because people were desperate to get some

chemical. So we had an opportunity to at least start supplying some companies in 2008 that we never supplied in

2007.”).

 131 Commissioner Lane agrees with this sentence and the following discussion regarding the potential for

increases in subject imports. However, she does not rely on the likelihood of substantially increased imports for

purposes of her determination of present material injury.

21

Although we recognize that Compass itself imported significant quantities of subject imports

from China between 2005 and 2007, this fact does not alter our analysis of the significance of the volume

of, and increases in, subject imports.127 After acquiring the Smyrna facility from Lynx, Compass’s

primary interest became the domestic production of HEDP, as detailed in Section II.D.1. above, and it

ceased importing HEDP altogether after the fourth quarter of 2007.128 Compass’s transition from

importer to domestic producer may have contributed to the *** decline in subject import volume from

China after 2006, given that its imports of subject HEDP declined by *** pounds or *** percent between

2006 and 2007 and went from *** pounds in interim 2007 to zero in interim 2008.129 We note, however,

that other importers rapidly increased their imports of subject HEDP to fill the vacuum left by Compass,

such that the volume of subject imports from China was only *** pounds lower in interim 2008 than it

had been in interim 2007, and cumulated subject import volume was *** percent higher in interim 2008

than in interim 2007 despite weakening HEDP demand.130

Thus, based on the preceding analysis, we find that cumulated subject import volume is

significant, both in absolute terms and relative to consumption and production in the United States, and

that the increase in subject import volume and market penetration also was significant.131 We also find

that this significant rate of increase in the volume and market penetration of cumulated subject imports

during the period of investigation indicates the likelihood of substantially increased imports in the

imminent future for the following reasons.

Subject foreign producers in both China and India increased their capacity *** during the period

examined and possessed *** excess capacity at the end of the period with which to continue increasing

their exports of HEDP to the U.S. market at a significant rate. We note at the outset that responding

subject Chinese producers reportedly represented *** of Chinese HEDP production and exports to the
 132 The four responding subject producers in China estimated that they accounted for *** percent of Chinese

production of HEDP and *** percent of Chinese HEDP exports to the United States. CR at VII-3; PR at VII-2. We

note that data for subject Chinese producers in the interim periods are further understated by ***. CR/PR at Table

VII-2 note.

 133 One of two responding Indian producers estimated that it accounted for *** percent of Indian production of

HEDP, and both responding Indian producers are believed to account for the vast majority of Indian HEDP exports

to the United States. CR at VII-6; PR at VII-4. 

 134 CR/PR at Table VII-2.

 135 CR/PR at Table VII-3.

 136 CR/PR at Tables VII-2-3. We note that responding Indian producers reported capacity utilization rates of ***

in 2006 and 2007. Id. at Table VII-3.

 137 CR/PR at Tables IV-4, VII-2-3.

 138 Responding Chinese producers project that their capacity utilization rate will be *** percent in 2008, yielding

*** pounds of excess capacity, and *** percent in 2009, yielding *** pounds of excess capacity. CR/PR at Table

VII-2. Responding Indian producers project that their capacity utilization rate will be *** percent in 2008, yielding

*** pounds of excess capacity, and *** percent in 2009, yielding *** pounds of excess capacity. Id. at Table VII-3. 

 139 CR/PR at Table VII-5.

 140 CR/PR at Table VII-2-3.

 141 Respondents’ Responses to Commissioner Questions at 4. Responding Indian producers reported that ***. 

Foreign Producers’ Questionnaires of *** and *** at Question II-4.

22

United States,132 and coverage of the Indian HEDP industry is unclear.133 Responding subject Chinese

producers reported a *** percent increase in their capacity between 2005 and 2007, from *** pounds to

*** pounds, and their *** pound capacity in January-September 2008 was *** percent higher than their

*** pound capacity in January-September 2007.134 Responding subject Indian producers reported a ***

percent increase in their capacity between 2005 and 2007, from *** pounds to *** pounds, and a capacity

of *** pounds in January-September 2008, which was *** percent higher than their capacity of ***

pounds in January-September 2007.135 

A substantial proportion of the increased Chinese and Indian capacity *** at the end of the period

of investigation. In January-September 2008, responding subject Chinese producers reported a capacity

utilization rate of only *** percent, yielding excess capacity of *** pounds, while responding subject

Indian producers reported a capacity utilization rate of *** percent, yielding excess capacity of ***

pounds.136 Responding Chinese and Indian producers alone possessed cumulative excess capacity of ***

pounds in January-September 2008, equivalent to *** percent of apparent U.S. consumption during the

period.137 Responding Chinese and Indian producers project that they will continue to possess excess

capacity of a similar magnitude in full year 2008 and 2009, and actual excess capacity in China, if not

India, is likely to be even higher.138

Subject foreign producers in China and India could also increase their exports to the United States

in the imminent future by drawing from substantial end-of-period inventories held in the United States

and in their respective countries. Subject import inventories in the United States were *** pounds in

January-September 2008, equivalent to *** percent of U.S. shipments of subject imports during the

period.139 The end-of-period inventories held by responding Chinese and Indian producers in JanuarySeptember 2008 were *** pounds and *** pounds, respectively.140 In addition, Chinese respondents have

indicated that “[n]othing limits the ability of the [Chinese] producers to make rapid shifts to and from

HEDP from other phosphonates,” which would enable them to increase their exports to the United States

still further.141
 142 Respondents’ Responses to Commissioner Questions at 1.

 143 Respondents’ Responses to Commissioner Questions at 4; see also CR at III-11 n. 21; PR at III-4 n.21 (noting

that the Chinese government levied an export tariff of 120 percent on yellow phosphorus as of May 1, 2008).

 144 CR/PR at Table II-2.

 145 CR/PR at Table II-3; CR at II-10-11.

 146 See CR at V-6; PR at V-4. 

 147 CR at V-6; PR at V-4.

 148 CR/PR at Table V-6.

23

Subject Chinese and Indian HEDP producers not only possess the ability to increase exports to

the United States significantly in the imminent future, but also the incentive to do so given their

dependence on exports, including exports to the United States, during the period of investigation. As

detailed in Section III.C. above, subject producers in both countries reportedly exported *** of their

shipments during the period examined, with *** of their shipments exported to the United States, and

project a similar degree of export orientation in 2008 and 2009. Indeed, Chinese respondents conceded

that subject imports will continue to grow as they capture more of the U.S. market.142 They also have

acknowledged that the export tax levied on phosphorus by the Chinese government will likely encourage

increased Chinese exports of HEDP to the United States by reducing the cost of producing HEDP in

China and raising the cost of producing HEDP in the United States, enabling Chinese producers to “sell

product in the U.S. market below the cost of production of the domestic product.”143

Consequently, we conclude that the cumulated volume of subject imports, which was significant

during the period of investigation, is likely to increase substantially in the imminent future.

C. Price Effects of the Subject Imports

The record indicates that there is a high degree of interchangeability between subject imports and

the domestic like product, as detailed in section III.B. above, and also that price is a significant factor in

purchasing decisions. When asked to rank a number of factors that go into their purchasing decisions, 26

of 43 purchasers ranked price as either their number one or number two factor.144 Moreover, 35 of 43

purchasers reported that price is “very important” to their purchasing decisions, and 28 of 44 purchasers

reported that the lowest priced HEDP supplier “always” or “usually” wins the sale.145

The Commission collected quarterly pricing data on four HEDP products consisting of identical

HEDP distinguished according to delivery method (i.e., truckload, bulk tanktruck, or LTL drums) and

type of purchaser (i.e., distributors or compounders).146 Usable pricing data were reported by Compass,

accounting for *** percent of domestic U.S. commercial shipments in 2007; ten importers of HEDP from

China, accounting for *** percent of Chinese subject import U.S. commercial shipments in 2007; three

importers of HEDP from India, accounting for *** percent of Indian subject import U.S. commercial

shipments in 2007; and six importers of nonsubject HEDP, accounting for *** percent of nonsubject

import U.S. commercial shipments in 2007.147 These data indicate that subject imports generally

undersold the domestic like product throughout the period of investigation, and particularly towards the

end of the period.

Overall, subject imports undersold the domestic like product in 42 of 62 quarterly comparisons,

or 67.7 percent of the time, at margins ranging from 0.6 percent to 61.7 percent and averaging 21.3

percent.148 During the first three quarters of 2008, subject imports undersold the domestic like product

with even greater frequency, in 9 of 10 quarterly comparisons, at margins ranging from 0.7 percent to
 149 See CR/PR at Tables V-1-4.

 150 CR/PR at Table V-2.

 151 CR at V-19; PR at V-6; CR/PR at Table V-7.

 152 See CR at V-19-21; PR at V-6; CR/PR at Table V-7. 

 153 Commissioner Lane does not join in the next two paragraphs. She finds that the evidence that subject imports

suppressed domestic prices during the period of investigation is clear, and that there were significant adverse price

effects by reason of subject imports during the period of investigation. She agrees with the discussion about the

likelihood of significant price depression and suppression in the imminent future. However, she does not rely on the

likelihood of significant prices depressing or suppressing effects in the imminent future for purposes of her present

material injury determination because she found significant adverse price effects during the period of investigation. 

See Separate Views of Commissioner Charlotte R. Lane.

 154 Based upon weight-averaged quarterly pricing data, the domestic price of product 1 declined from $*** per

pound in 2005 to $*** per pound in 2006. CR/PR at Table V-1. *** Id. The weighted average domestic price of

product 2 declined from $*** per pound in 2005 to $*** per pound in 2006 and $*** per pound in 2007. Id. at

Table V-2. The weighted average domestic price of product 3 declined from $*** per pound in 2005 to $*** per

pound in 2006 but increased *** to $*** per pound in 2007. Id. at Table V-3. The weighted average domestic price

of product 4 declined from $*** per pound in 2005 to $*** per pound in 2006 and $*** per pound in 2007. Id. at

Table V-4. We note that the volume of subject import commercial shipments of product 4 was the ***. See Id. at

Tables V-1-4.

Average unit value (“AUV”) data on the domestic industry’s U.S. shipments reflect the same declining

trend as pricing product data, though we note that AUVs may present product mix issues in that values may reflect

different methods of delivery or channels of distribution rather than differences in price. The AUV of the domestic

industry’s U.S. shipments declined from $*** per pound in 2006 to $*** per pound and increased to $*** per pound

in 2007, a level *** percent lower than in 2005. Id. at Table IV-7. As with pricing product data, the AUV of the

domestic industry’s U.S. shipments was significantly higher in interim 2008, at $*** per pound, than in interim

2007, at $*** per pound. Id. 

 155 See CR/PR at Table V-5; CR at V-1, VI-6 & n. 15; PR at V-1, VI-3 & n.15; see also Section IV.B.3., supra.

24

32.9 percent and averaging 13.3 percent.149 We recognize that the pricing product representing the largest

proportion of domestic sales volume, ***, also had the lowest proportion of subject import underselling. 

Although subject imports undersold the domestic like product in *** quarterly comparisons of ***,

***.150 

We find additional evidence of significant underselling in light of the significant volume of

confirmed lost sales in 2007. *** confirmed that it purchased *** pounds of HEDP from subject Chinese

producers instead of Compass *** due to the lower price of subject imports, ***.151 This lost sale alone,

which is equivalent to *** percent of the domestic industry’s U.S. shipments in 2007, was significant. 

Moreover, three purchasers that denied Compass’s lost sales or revenue allegations, *** nevertheless

acknowledged that Compass had lost sales or revenues to subject imports for price reasons.152 Given the

frequency of underselling, the margins at which underselling occurred, and that underselling resulted in

significant sales and revenues lost by the domestic industry, we find subject import underselling to be

significant.153

Despite some evidence that subject imports depressed and suppressed domestic prices, we are

unable to draw any conclusion with respect to significant price depression or suppression due to the

unusual market conditions in 2008 and the discontinuity in ownership of the Smyrna, GA facility. Pricing

data indicate that domestic prices generally declined between 2005 and 2007, particularly with respect to

products 3 and 4.154 Domestic prices for products 2, 3, and 4 increased *** in the first three quarters of

2008, however, as events in China drove up raw material costs for HEDP producers worldwide.155
 156 See Hearing Tr. at 49 (McCaul) (“[T]he company that owned the plant just before Compass owned it was

having financial difficulties and was unable to spend the money on the plant that was needed for maintenance and

for capital replacements to make the plant operate as well as it could.”), 115 (Commissioner Lane: “I’d like for you

to discuss the production process and the differences between raw material inputs that were used in the Smyrna

facility when [Lynx] was operating [it], and the raw material inputs used by Compass . . . .“ Mr. Failon: “. . . [W]e

anticipated and then realized a greater than 25 percent reduction in the total raw material cost by switching from

[PCL3] to phosphorus acid crystal.”).

 157 See CR at III-3 & n. 7; PR at III-2 & n.7; CR/PR at Tables III-2 (domestic HEDP production declined from

*** pounds in 2005 to *** pounds in 2006 before rebounding to *** pounds in 2007).

 158 Hearing Tr. at 38-39 (McCaul), 138 (Collias) (“To the best of our knowledge, at this time there is not the

degree of competition for the phosphorus derived chemicals by the agricultural chemical industry. So we believe

that the supply of these phosphorus derived chemicals such as PCL3 [sic] is much better for the availability to make

and supply HEDP and other phosphonates as required by the industries.”), 138 (Craven) (“These were temporary

restrictions for the most part.”); see also Compass’s Prehearing Br. at 20 n. 57, 31; Compass’s Posthearing Br. at 14-

15.

 159 Compass’s Prehearing Br. at 20 n. 57; Hearing Tr. at 15 (McCaul) (“It drove up the cost of phosphorus

derivatives, and drove up the cost of everything else that had a phosphorus element in it. And so our costs went up

but pricing went up also, and it was an unusual situation.”), 38-39 (McCaul), 110-11 (McCaul) (“But there were

times during that period where we might have had some raw material and could make some product and, you know,

were better positioned to negotiate better prices, yes. I don’t think there’s much doubt about that.”).

 160 Hearing Tr. at 15 (McCaul) (“I would say this to you, that since that period of time elapsed, and I would say

in the last three to four months, the prices have plummeted again, and the Chinese and Indians are offering product at

incredibly low prices again.”), 38-39 (McCaul) (“The situation is right now, pricing as I mentioned is falling

dramatically, and it’s appropriate that pricing should come down because costs have come down . . . but the extent to

which they’re coming down and the pricing that’s being offered in the market today from China and India is just

25

Although the domestic industry’s ratio of unit cost of goods sold (“COGS”) to net sales remained

*** percent between 2005 and 2007, our assessment of petitioner’s claim that subject imports suppressed

domestic prices during the period is complicated by the significant change in the cost structure of the

domestic industry that occurred after Compass acquired the Smyrna facility from Lynx in July 2006. 

Lynx operated the Smyrna facility through June 2006 with a relatively high cost structure.156 After

Compass acquired the facility in July 2006, it restored HEDP production very gradually after a period of

evaluation, which significantly disrupted domestic HEDP production, affecting the ratio of unit COGS to

net sales.157 Only in 2007 and January-September 2008 did Compass produce HEDP on a normal basis, at

that time with a significantly lower cost structure than Lynx due to the replacement of PCL3 with

phosphorus acid crystal in the production process. Thus, we are unable to draw any conclusions with

respect to price suppression.

We find that subject imports are entering at prices that are likely to have a significant depressing

or suppressing effect on domestic prices, and are likely to increase demand for further imports, in the

imminent future. As detailed above, HEDP produced in China, India, and the United States is highly

substitutable, and price is an important factor to purchasers choosing among different sources of HEDP. 

Accordingly, the increased frequency of subject import underselling toward the end of the period of

investigation, coupled with the likelihood of significantly increased subject import volume, makes it

likely that subject imports will depress and suppress domestic prices in the imminent future. 

We find further support for this finding in the apparent resolution of the unusual conditions in

China that disrupted raw material supplies for HEDP producers worldwide during the first three quarters

of 2008,158 which had reportedly enabled Compass to increase its HEDP prices in tandem with its

increased costs.159 Petitioner witnesses testified at the hearing that HEDP prices have since declined

significantly,160 and Compass reported that its price for HEDP declined from $*** per pound in
incredible.”).

 161 Compass’s Posthearing Brief at 14-15.

 162 Compass’s Posthearing Brief at 14-15, Exhibit 5; Purchasers’ Questionnaire Response of *** at Question II-2.

 163 Respondents’ Posthearing Br. at 1-2. 

 164 In its final determination with respect to India, Commerce found a weighted-average dumping margin of 3.10

percent for Aquapharm Chemicals Private Limited and 3.10 percent for all others. HEDP from India: Notice of

Final Determination of Sales at Less than Fair Value, 74 Fed. Reg. 10543, 10544 (Mar. 11, 2009). In its final

determination with respect to China, Commerce found a weighted-average dumping margin of 36.21 percent for

Changzhou Wujin Fine Chemical Factory Co., Ltd. and Jiangsu Jianghai Chemical Group Co., Ltd., and a PRC-wide

rate of 72.42 percent. HEDP from the People’s Republic of China: Final Determination of Sales at Less than Fair

Value, 74 Fed. Reg. 10545, 10547 (Mar. 11, 2009). Commerce calculated a zero dumping margin with respect to

Wujin Water. Id. Respondents argue that the Commission should focus on Wujin Water’s zero margin as evidence

that subject import underselling margins resulted from “fair price competition.” Respondents’ Prehearing Br. at 5-6. 

We note that imports of HEDP from Wujin Water are nonsubject imports for purposes of the final phase of these

investigations and were therefore not considered in our analysis of subject import underselling. 

 165 CR/PR at Table III-2. 

 166 CR/PR at Table III-2.

 167 CR/PR at Table III-2.

 168 CR/PR at Table III-2.

 169 CR/PR at Table III-7. Hours worked increased from *** hours in 2005 to *** hours in 2007, but were lower

in interim 2008, at ***, than in interim 2007, at ***. Id. Wages paid showed a similar trend, increasing from $***

in 2005 to $*** in 2007, but were lower in interim 2008, at $***, than in interim 2007, at $***. Id. Productivity

generally declined during the period of investigation, increasing from *** pounds per hour in 2005 to *** pounds

per hour in 2006 before declining to *** pounds per hour in 2007. Id. Productivity was *** pounds per hour in

interim 2008, compared with *** pounds per hour in interim 2007. Id. 

26

September 2008 to $*** per pound in February 2009.161 Compass also submitted ***.162 Chinese

respondents themselves argued that “[c]ustomers need access to low cost HEDP” from China and India,

implying that subject imports will continue to undersell the domestic like product.163 

Thus, we conclude that subject import underselling will likely continue, creating further demand

for subject imports in the U.S. market and likely depressing and suppressing domestic prices to a

significant degree.

D. Impact of the Subject Imports on the Domestic Industry164

The domestic industry performed poorly during the period of investigation according to several

key measures. The domestic industry’s rate of capacity utilization remained low throughout the period, at

*** percent in 2005, *** percent in 2006, *** percent in 2007, *** percent in January-September 2007,

and *** percent in January-September 2008.165 Since the domestic industry’s annual production capacity

was a constant *** pounds throughout the period, the industry’s capacity utilization rate varied in

accordance with production.166 Domestic industry production declined from *** pounds in 2005 to ***

pounds in 2006, but increased to *** pounds in 2007.167 Domestic industry production was *** pounds

in interim 2008, compared with *** pounds in interim 2007.168 The number of production related

workers declined from *** in 2005 to *** in 2007 and the interim periods.169 The industry lost money on

an operating basis throughout the period examined, albeit at a declining rate ***, with operating losses of

$*** in 2005, or *** percent of net sales, $*** in 2006, or *** percent of net sales, $*** in 2007, or ***

percent of net sales, $*** in January-September 2007, or *** percent of net sales, and $*** in January-
 170 CR/PR at Table VI-1.

 171 CR/PR at Table VI-3 (R&D expenditures declined from $*** in 2005 to $*** in 2006 and $*** in 2007, and

were $*** in interim 2007 and $*** in interim 2008). ***. Id. at Table VI-3 n. 1.

 172 CR/PR at Table VI-1.

 173 CR/PR at Table VI-1.

 174 CR/PR at Tables IV-4-5.

 175 CR/PR at Tables IV-4-5.

 176 Commissioner Lane does not agree. She finds that the domestic industry did suffer material injury during the

period of investigation and does not join in the remainder of these views. See Separate Views of Commissioner

Charlotte R. Lane.

 177 Commissioner Pinkert does not join in this paragraph. Rather, he concludes based on the causation analysis

required by the Federal Circuit in Bratsk that the domestic industry is not suffering present material injury by reason

of subject imports. As a threshold matter, the record shows that the Bratsk “triggering” factors are satisfied. HEDP

is a commodity product for these purposes, as it is highly substitutable regardless of the source. CR at II-15-19; PR

at II-9-10; CR/PR at Table II-4; Hearing Tr. at 24 (Failon). In addition, price-competitive nonsubject imports are a

significant factor in the U.S. market. Nonsubject imports from China and the United Kingdom accounted for

virtually all nonsubject imports during the period of investigation and maintained a significant presence in the U.S.

market throughout the period. U.S. shipments of nonsubject imports increased from *** pounds in 2005 to ***

pounds in 2006, then declined to *** pounds in 2007, which nevertheless was higher than in 2005. Although they

declined further in interim 2008 as compared to interim 2007, from *** pounds to *** pounds, they continued to be

significant. CR/PR at Table IV-4. Nonsubject imports accounted for *** percent of U.S. consumption in 2005, ***

percent in 2006, *** percent in 2007, *** percent in interim 2007, and *** percent in interim 2008. Id. This

significant volume of nonsubject imports was sold in the U.S. market at competitive prices, underselling the

domestic like product in 26 of 46 comparisons, or 56.5 percent of the time. Id. at Tables V-1-4. 

Having found that the threshold criteria for a Bratsk causation analysis are met, Commissioner Pinkert

further finds that, had subject imports exited the U.S. market during the period examined in this investigation,

nonsubject imports would have replaced them without the domestic industry benefitting from the absence of the

subject imports. The great majority of nonsubject imports during the period of investigation were from the United

27

September 2008, or *** percent of net sales.170 R&D spending declined throughout the period, and

Compass’s return on equity was *** percent in 2006 and *** percent in 2007.171

Other indices of domestic industry performance improved over the period, however. The 

domestic industry’s net sales quantity increased from *** pounds in 2005 to *** pounds in 2006 and ***

pounds in 2007, although the industry’s net sales value lagged, declining *** from $*** in 2005 to $***

in 2006 before increasing to $*** in 2007, about *** as in 2005.172 Although the domestic industry’s net

sales quantity was *** lower in interim 2008, at *** pounds, than in interim 2007, at *** pounds, the

industry’s net sales value was a much higher $*** in interim 2008, compared with $*** in interim

2007.173

The domestic industry also increased its U.S. shipments over the period, although its share of

apparent U.S. consumption declined *** between 2005 and 2007. The domestic industry’s U.S.

shipments increased from *** pounds in 2005, or *** percent of apparent U.S. consumption, to ***

pounds in 2006, or *** percent of apparent U.S. consumption, to *** pounds in 2007, or *** percent of

apparent U.S. consumption.174 Its U.S. shipments were *** pounds in interim 2008, or *** percent of

apparent U.S. consumption, compared with *** pounds in interim 2007, or *** percent of apparent U.S.

consumption.175

We are unable to conclude that the domestic industry is suffering present material injury by

reason of subject imports based on the domestic industry performance data available on the record of

these investigations.176 177 Much of these data suggest that the domestic industry’s condition, although 
Kingdom, and UK producers had limited excess production capacity during the period of investigation, operating at

capacity utilization rates exceeding *** percent in every portion of the period except interim 2008, in which they had

a capacity utilization of *** percent. Id. at Table VII-7. Their ability to increase production in interim 2008,

however, would likely have been constrained by the raw material supply disruptions affecting all HEDP producers at

that time. Because of these capacity limits, imports from the United Kingdom would have been unable to replace

subject imports even if all excess UK capacity had been devoted to doing so. The nonsubject Chinese producer,

Wujin Water, however, had *** to replace *** subject imports during the period of investigation. Wujin Water

reported a capacity utilization rate that never exceeded *** percent during the period and fell to *** percent in

interim 2008. Its available capacity was *** pounds in 2005, *** pounds in 2006, *** pounds in 2007, *** pounds

in interim 2007, and *** pounds in interim 2008. Id. at Table VII-6. This excess capacity *** subject imports from

China, which peaked at *** pounds in 2006, throughout the period. Id. at Table IV-2. Given that nonsubject

imports from China gained an increasing (although relatively small) share of the U.S. market during the period

despite the presence of subject imports, there is every reason to believe that, in the absence of subject imports, they

would have increased to fully replace the volume and market share of subject imports. The likelihood of such

replacement is increased by the fact that nonsubject imports from China, unlike those from the United Kingdom,

were sold in similar channels of distribution as subject imports. Id. at Table II-1. 

The replacement of subject imports with nonsubject imports during the period would likely have erased any

benefit to the domestic industry. Although nonsubject imports from China generally oversold subject imports from

China and India with respect to *** and oversold subject imports from China with respect to ***, they were priced

comparably to subject imports from China with respect to ***. Id. at Tables V-1-4, D-1-4. Thus, the quarterly

pricing data demonstrate that the nonsubject imports generally were competitive in terms of price with the subject

imports. Moreover, because HEDP is an interchangeable product regardless of source and price is a significant

factor in customers’ sourcing decisions, suppliers of nonsubject imports, particularly from China, would be

motivated to sell in the United States at whatever price would be necessary to gain market share. 

 178 See Section IV.B.1., supra. We are unable to quantify the reduction in Compass’s unit raw material costs

relative to Lynx’s unit raw material costs due to differences in the reporting format used by Rhodia and Compass. 

CR at VI-4 n. 7; PR at VI-2 n.7. Compass reported that it reduced its HEDP production costs by 25 percent, *** by

producing HEDP from low-cost phosphorus acid crystal instead of from high-cost PCL3. See Hearing Tr. at 23, 115

(Failon); Compass’s Responses to Commissioner Questions at 2. 

 179 Hearing Tr. at 6, 8 (Levin), 11, 16 (McCaul). Petitioner also claimed that Compass’s operating income

throughout the period of investigation (which was negative) was well below the “reinvestment level profit”

necessary for Compass to maintain HEDP production in the United States, which it estimates to be an operating

28

precarious, improved somewhat toward the end of the period of investigation, with increasing U.S.

shipments and market share and narrowing operating losses. Moreover, we are wary of comparing

domestic industry performance between 2005 and June 2006, when Lynx owned the Smyrna facility, with

domestic industry performance from July 2006 through the interim periods, when Compass owned the

facility, given the substantial cost reductions that Compass realized through producing HEDP using

phosphorus acid crystal instead of PCL3.

178 These cost reductions, as well as the unusual market

conditions in 2008, make it difficult to discern the nature and extent of the impact of subject imports on

the domestic industry during this period. We can therefore draw no definitive conclusion as to whether

subject imports had a significant adverse impact on the domestic industry during the period examined.

We do find that the domestic industry is threatened with imminent material injury by reason of

cumulated subject imports. The factors that contributed to the domestic industry’s improved performance

toward the end of the period of investigation – namely, the unusual market conditions of 2008 and

Compass’s cost reductions – have reportedly run their course. Compass’s inability to realize additional

significant cost reductions, and its significant and continuing operating losses during the period of

investigation, make it vulnerable to material injury by reason of subject imports. Indeed, Compass

officials testified at the hearing that Compass may have to reconsider its decision to produce HEDP

domestically if current trends continue.179
profit of $*** per year or a *** percent return on capital invested. Compass’s Responses to Commissioner

Questions at 3-4.

 180 Commissioner Pinkert does not join in the discussion of nonsubject imports except in regard to likely future

nonsubject import volumes. See footnote 176, supra.

 181 Compass and a majority of purchasers and importers reported that subject imports are “always” or

“frequently” used interchangeably with nonsubject imports. See CR at II-18; PR at II-11; CR/PR at Table II-4; see

also Hearing Tr. at 24 (Failon). Compass reported that differences other than price are “sometimes” significant to

purchasers choosing among nonsubject imports, the domestic like product, and subject imports, while importers were

generally evenly divided on the issue, with half reporting that such differences are “frequently” or “always”

significant and half reporting that such differences are “sometimes” or “never” significant. See CR/PR at Table II-5. 

At least half of responding purchasers reported that the domestic like product was comparable to nonsubject imports

with respect to all characteristics listed. Id. at Table II-6. We note, however, that the nonsubject imports considered

by questionnaire respondents did not include nonsubject imports from China. 

 182 See Section IV.B.2., supra. U.S. shipments of nonsubject imports from both China and the United Kingdom

increased from *** pounds in 2005, or *** percent of apparent U.S. consumption, to *** pounds in 2006, or ***

percent of apparent U.S. consumption, but declined to *** pounds, or *** percent of apparent U.S. consumption, in

2007. CR/PR at Tables IV-4-5. 

 183 CR/PR at Tables IV-4-5.

 184 CR/PR at Table VII-4.

29

As addressed above, we find it likely that current trends will continue. During the period of

investigation, cumulated subject import volume increased significantly in absolute terms and relative to

apparent U.S. consumption and domestic production. Subject import underselling was pervasive, and

there was some evidence of price depression and suppression. In the imminent future, the subject foreign

producers’ substantial excess capacity and export orientation as discussed above in sections III.C. and

V.B. make it likely that subject import volume and market share will continue to increase at a significant

rate. The increased frequency of subject import underselling toward the end of the period of

investigation, coupled with the high degree of substitutability of HEDP from different sources and the

price sensitivity of the HEDP market, make it likely that significant subject import underselling will

continue, increasing demand for subject imports and depressing and suppressing domestic prices. Given

Compass’s likely inability to realize additional substantial cost reductions, its operating losses are likely

to grow significantly, imperiling the economic viability of its HEDP operations. In sum, we find that the

domestic industry is threatened with imminent material injury by reason of subject imports.

We have considered the role of nonsubject imports in the U.S. market and concluded that they do

not break the causal link between subject imports and the threat of imminent material injury to the

domestic industry.180 As an initial matter, the record indicates that there is a high degree of

substitutability between subject imports and the domestic like product, on the one hand, and nonsubject

imports, on the other.181 Nonsubject imports also maintained a significant presence in the U.S. market

throughout the period of investigation, satisfying *** of apparent U.S. consumption during the period.182 

Unlike subject import volume and market share, which were higher in interim 2008 than in

interim 2007 despite weakening demand, nonsubject import volume and market share were significantly

lower in interim 2008, at *** pounds or *** percent of apparent U.S. consumption, than in JanuarySeptember 2007, at *** pounds or *** percent of apparent U.S. consumption.183 Subject and nonsubject

import volumes are likely to continue trending in opposite directions given that U.S. importers reportedly

arranged for the importation of *** pounds of subject imports, but only *** pounds of nonsubject

imports, for delivery subsequent to September 30, 2008.184 

Nonsubject imports also were generally priced higher than subject imports and did not undersell

the domestic like product to the same extent. Nonsubject imports were priced higher than subject imports
 185 See CR/PR at Tables V-1-4. Although the AUV of nonsubject import U.S. shipments was *** lower than that

of subject import U.S. shipments in 2005 and equal to that of subject import U.S. shipments in 2006, the AUV of

nonsubject import U.S. shipments was higher than that of subject import U.S. shipments in 2007 and interim 2007,

and *** higher than that of subject import U.S. shipments in interim 2008. Id. at Table IV-7 (the AUV of nonsubject

import U.S. shipments was $*** in 2005, $*** in 2006, $*** in 2007, $*** in interim 2007 and $*** in interim

2008, while the AUV of subject import U.S. shipments was $*** in 2005, $*** in 2006, $*** in 2007, $*** in

interim 2007, and $*** in interim 2008). We again note that AUV comparisons may be influenced by product mix

issues. 

 186 Compare CR/PR at Tables V-1-4 with id. at Table V-6. 

 187 See CR/PR at Tables V-1-4.

 188 CR/PR at Table VII-7.

 189 CR/PR at Table IV-2 (nonsubject imports from all other sources, primarily the United Kingdom, declined ***

percent between 2006 and 2007, from *** pounds to *** pounds, and were *** percent lower in interim 2008, at

*** pounds, than in interim 2007, at *** pounds); Hearing Tr. at 61-62 (Failon) (“[W]e have not seen [nonsubject

UK producers] R[h]odia or Thermphos initiate the down[ward] spiral in pricing . . . we feel that it’s a pretty level

playing field between us and the UK producers.”). 

 190 CR/PR at Table VII-7.

 191 CR/PR at Table VII-4.

 192 Wujin Water projects that it will possess excess capacity of *** pounds in 2008 and *** pounds in 2009. 

CR/PR at Table VII-6. The ratio of Wujin Water’s exports to shipments increased from *** percent in 2005 to ***

percent in 2007, and was *** percent in interim 2008, down from *** percent in interim 2007. Id.

 193 Wujin Water possessed excess capacity of *** pounds in 2005, *** pounds in 2006, *** pounds in 2007, ***

pounds in interim 2007, and *** pounds in interim 2008. CR/PR at Table VII-6.

30

in 42 of 81 comparisons, or 51.9 percent of the time, were priced the same as subject imports in 17 of 81

comparisons, or 25.9 percent of the time, and were priced lower than subject imports in only 22 of 81

comparisons, or 27.2 percent of the time.185 Nonsubject imports were priced lower than the domestic like

product in 26 of 46 comparisons, or 56.5 percent of the time, whereas subject imports undersold the

domestic like product in 42 of 62 comparisons, or 67.7 percent of the time.186 These data exaggerate the

significance of nonsubject import underselling given that *** percent of nonsubject import shipments

covered by the pricing data, and *** percent in the first three quarters of 2008, consisted of ***.187

We have considered nonsubject producers’ excess capacity and export orientation as well, and

find that these data do not suggest an imminent significant increase in nonsubject imports. Nonsubject

producers in the United Kingdom exported *** percent to *** percent of their production during the

period of investigation, ***, and possessed significant excess capacity in 2007 and interim 2008.188

Notwithstanding this excess capacity, however, nonsubject imports from the United Kingdom were ***

lower in 2007 than in 2006 and lower in interim 2008 than in interim 2007, and there is nothing on the

record to suggest that producers in the United Kingdom will market their HEDP in the United States any

more aggressively in the imminent future.189 Moreover, producers in the United Kingdom project excess

capacity of only *** pounds in 2009, which would limit their ability to increase their exports to the

United States.190 Consistent with the preceding analysis, importers reportedly ordered only *** pounds of

HEDP from the United Kingdom for delivery after September 30, 2008.191

Although nonsubject Chinese producer Wujin Water is projected to possess *** excess capacity

in 2008 and 2009 and is *** export oriented, we find that Wujin Water is unlikely to increase its exports

of HEDP to the United States significantly in the imminent future.192 Even as Wujin Water’s excess

capacity increased *** towards the end of the period of investigation,193 nonsubject imports from China,
 194 Nonsubject imports from China declined *** percent between 2006 and 2007, from *** pounds to ***

pounds, and were *** percent lower in interim 2008, at *** pounds, than in interim 2007, at *** pounds. CR/PR at

Table IV-2. By comparison, subject imports increased *** percent between 2006 and 2007, from *** pounds to ***

pounds, and were *** percent higher in interim 2008, at *** pounds, than in interim 2007, at *** pounds. Id.

 195 Specifically, there were *** nonsubject Chinese import shipments of product 2 during the first three quarters

of 2008, although product 2 accounted for *** percent of domestic pricing product shipments during the period. See

CR/PR at Tables D-1-4. Conversely, product 4 accounted for only *** percent of domestic pricing product

shipments during the first three quarters of 2008, but *** percent, of nonsubject Chinese import pricing product

shipments during the period. Id.

 196 In interim 2008, the ratio of nonsubject import end-of-period inventories to nonsubject import volume was

only *** percent, while the ratio of subject import end-of-period inventories to subject import volume was ***

percent. CR/PR at Tables IV-2 (nonsubject import volume was *** pounds in interim 2008), VII-5 (nonsubject

import end-of-period inventories were *** pounds in interim 2008). During the same period, end-of-period

inventories held by nonsubject HEDP producers in China and the United Kingdom, totaling *** pounds, were *** of

the level of end-of-period inventories held by subject HEDP producers in China and India, which totaled ***

pounds. Compare CR/PR at Tables VII-6-7 with id. at Tables VII-2-3.

 197 CR/PR at Table IV-4; Hearing Tr. at 67 (Failon), 92 (McCaul). 

 198 CR at II-8; PR at II-5. 

 199 CR at II-8; PR at II-5.

 200 See Compass’s Responses to Commissioner Questions at 11-12; Hearing Tr. at 23 (Failon), 94 (McCaul).

31

unlike subject imports, declined ***.194 And as with nonsubject imports from the United Kingdom, there

is no information on the record to suggest that Wujin Water will market its HEDP in the United States

any more aggressively in the imminent future. In addition, pricing product data indicate that competition

between nonsubject imports from China and the domestic like product was attenuated to a certain degree

toward the end of the period of investigation, in that most nonsubject imports from China ***, while most

domestic HEDP *** during the first three quarters of 2008.195 Finally, inventories of nonsubject imported

HEDP in the United States, as well as inventories of HEDP in China and the United Kingdom, were ***

lower than inventories of subject imports in interim 2008.196 

Thus, any injury we have found from cumulated subject imports cannot be attributed to

nonsubject imports.

We have also considered whether there are other factors that might threaten the domestic industry

with injury in the imminent future. As addressed in section IV.A. above, apparent U.S. consumption

declined *** percent between 2006 and 2007, was *** percent lower in interim 2008 as compared to

interim 2007, and may decline further in 2009.197 Apparent U.S. consumption was still *** percent

higher in 2007 than in 2005, however, and Compass, three of 12 responding importers, and eight of 17

responding purchasers indicated that HEDP demand increased during the period of investigation.198 By

contrast, only one responding importer and one responding purchaser indicated that HEDP demand had

declined.199 Given the significant increase in HEDP demand during the period of investigation and the

fact that many HEDP applications are relatively insulated from the current economic downturn, we find it

unlikely that HEDP demand will weaken significantly relative to 2005 levels in the imminent future. We

also have considered the conditions in the market for acetic acid, the only byproduct of domestic HEDP

production, and found that acetic acid prices and demand were stable at the end of the period of

investigation and were expected to remain so.200 

In sum, the record indicates that there is a causal nexus between subject imports and the threat of

material injury to the domestic industry. We conclude that the likely significant increase in subject

import volume and market share, and their likely significant adverse price effects, will imminently cause

material injury on the domestic industry absent antidumping duty orders. Accordingly, we determine that
 201 No party argued that the Commission should discount post-petition data because they were influenced by the

filing of the antidumping petitions. See Hearing Tr. at 100 (Levin) (“So, no, I wouldn’t attribute too much, if any, of

the improvement in the domestic industry’s performance in 2008 as being a function of filing the petition.”), 145

(Commissioner Pinkert: “There was also testimony about what happened after the petition was filed . . . I wanted to

give you an opportunity to comment on that as well as what possible explanation there might be for that.” Mr.

Craven: “As the domestic industry was somewhat puzzled, I’m somewhat puzzled by those numbers as well.”).

 202 Commissioner Pinkert notes that the Bratsk causation analysis he performed was not materially affected by

the pendency of these investigations.

32

the domestic industry is threatened with material injury by reason of cumulated subject imports from

China and India.

We further determine, pursuant to 19 U.S.C. §§ 1671d(b)(4)(B) and 1673d(b)(4)(B), that we

would not have made material injury determinations but for Commerce’s suspension of liquidation of

subject imports in October 2008. Since our interim January-September 2008 data predate the suspension

of liquidation, and there is no evidence that the pendency of these investigations significantly influenced 

subject import trends, the suspension of liquidation did not materially affect our material injury

analysis.201 202

CONCLUSION

For the foregoing reasons, we determine that the domestic industry producing HEDP is threatened

with material injury by reason of dumped imports from China and India.
 1 Confidential Staff Report (“CR”)/Public Staff Report (“PR”) at Table C-1.

 2 Id.

 3 Id.

33

SEPARATE VIEWS

OF COMMISSIONER CHARLOTTE R. LANE

Based on the record in these investigations, I determine that an industry in the United States is

materially injured by reason of subject imports of 1-Hydroxyethylidene-1, 1-Diphosphonic acid

(“HEDP”) from China and India that have been found by the Department of Commerce (“Commerce”) to

be sold in the United States at less than fair value.

 I join the views of the Commission majority with respect to the legal standards in antidumping

duty original investigations, domestic like product, domestic industry, cumulation, and conditions of

competition. I also join portions of the views of the Commission majority with respect to the volume of

subject imports and the price effects of subject imports. I write separately to discuss my conclusions

regarding price effects of subject imports during the period of investigation and my reasons for finding

that the domestic industry was materially injured by reason of subject imports during the period of

investigation.

MATERIAL INJURY BY REASON OF SUBJECT IMPORTS

As expressed in the views of the majority in which I join, the record shows that the cumulated

subject import volume is significant, both in absolute terms and relative to consumption and production in

the United States, and that the increase in subject import volume and market penetration has been

significant. Likewise, the record shows that subject imports entered the market at prices that significantly

undersold domestic shipments by significant margins and that underselling resulted in significant

domestic industry lost sales and revenues.

I find that the domestic industry experienced some degree of price depression during the period of

investigation and, more importantly, its prices were significantly suppressed. There was a degree of

variability in some of the pricing products, including changes in volumes delivered each quarter that

might have impacted the average per unit price of individual pricing products. However, the pricing

product data reported to the Commission showed a slight downward trend in most pricing products until

the fourth quarter of 2007. This downward trend is confirmed by the average unit value (“AUV”) of all

domestic deliveries. The AUV of domestic deliveries was *** per pound in 2005. This average dropped

to *** per pound in 2006 and then increased to *** per pound in 2007. Overall, the AUV of domestic

deliveries was *** percent lower in 2007 than in 2005.1

 

In a relatively strong market, the domestic price was suppressed in that the domestic industry was

unable to price HEDP at levels sufficient to generate a gross profit in any full year examined. Operating

revenue less cost of goods sold resulted in gross losses of $*** from 2005 through 2007.2

 The ratio of

cost of goods sold to sales was *** from 2005 through 2007. The domestic industry was clearly

experiencing a cost/price squeeze from 2005 through 2007, even though it was able to somewhat reduce

its ratio of cost of goods sold to sales in 2007.

The improvement in the ratio of cost of goods sold to sales in 2007 was only marginally

attributable to beneficial movement in the unit value of net sales, which increased only *** per pound

from 2006 to 2007. The improvement was much more attributable to a significant drop in the average

cost of goods sold, which dropped from *** per pound in 2006 to *** per pound in 2007.3

 This drop

coincided with a full year of operations by Compass after it had upgraded the Smyrna production
 4 See CR/PR at III-5, note 10, quoting from Compass Business Plan Related to the Purchase of the Smyrna, GA

facility. ( “***”).

 5 Petitioner’s Post-hearing Brief at Exhibit 3, Answers to Commissioners’ Questions at 1.

 6 Id.

 7 *** had the highest volume of sales in terms of quantity during the period of investigation for the domestic

industry. 

 8 Id.

 9 CR/PR at Table C-1.

34

facilities and switched its process to incorporate a different, lower cost, raw material input in the

production of HEDP. Compass had planned on reducing its cost of production through upgrades and

input shifts at the plant, and as part of its planning process, anticipated capital investment at the facility.4

As opposed to the operating profit that Compass thought could be achieved with reduced production

costs, Compass’s investment, upgrades, and reduction in operating costs were “rewarded” with a gross

operating loss of $*** during the first full year that it operated the facilities. Compass officials testified,

and Compass argues, that it did not plan on lower prices in 2006 and 2007, as compared to market prices

in 2005, when it decided to go into the HEDP production business.5

 Compass acquired the Smyrna, GA

plant in the middle of 2006 with the expectation of receiving $*** per pound for domestically produced

HEDP and future increases in price.6

 This price expectation was based on Compass's second-quarter of

2006 average sales price of imported HEDP. However, from the time that Compass acquired the Smyrna

facility through the fourth-quarter of 2007, prices for its *** HEDP product, by volume, did not reach its

target price in any quarter.7

 At the same time, subject imports of the same product, which were, on

average, being sold above $*** per pound prior to Compass's acquisition of the Smyrna facility, dropped

noticeably below that price level from the third-quarter of 2006 to the end of the period of investigation.8

The price suppression during the period of investigation was also manifest in the net operating

losses experienced by the domestic industry. In addition to negative gross margins, indicating an inability

to recover just the cost of goods sold, net operating income was negative throughout the period of

investigation, including interim 2008.

For all of the reasons discussed above, I find that the record clearly indicates significant

suppression of domestic prices during the period of investigation. 

The record shows that the industry exhibited significant indicia of material injury during the

period of investigation. The operating and financial data for the domestic industry throughout the period

of investigation point to marginally stagnant performance, at best, in some areas, and to a much more

dismal picture of performance in many important indices. 

The U.S. industry’s production, capacity, and capacity utilization remained relatively steady

during the period of investigation and did not improve or was slightly lower in interim 2008 as compared

to interim 2007. Production of HEDP increased only *** percent between 2005 and 2007 and was ***

percent lower in interim 2008 as compared to interim 2007.9

 Domestic capacity did not change during the

period of investigation, remaining at *** pounds for the full years during the period of investigation and

*** pounds for the interim period. Capacity utilization, which was at a high of only *** percent during

the period of investigation, increased only *** percentage points from 2005 to 2007, and was ***

percentage points lower in interim 2008 as compared to interim 2007. Although deliveries of U.S.

production increased by *** pounds between 2005 and 2007, U.S. producer market share declined

slightly, going from *** percent in 2005 to *** percent in 2007. These data indicate that the domestic

industry was not sharing in the increase in domestic consumption that took place between 2005 and 2007. 

During that period, domestic consumption increased by *** pounds, or *** percent, from 2005 to 2007,
 10 Id.

 11 Id. 

 12 Id.

 13 CR/PR at Table VI-3.

 14 CR/PR at Table VI-1.

 15 CR/PR at Table VI-3.

35

including a *** percent increase between 2005 and 2006 before dropping back only *** percent from

2006 to 2007.10 In contrast to the inability of the domestic industry to even maintain market share within

this increasing market, subject imports total market share increased from *** percent in 2005 to ***

percent in 2007. The market share captured by subject imports continued to increase in interim 2008,

going to *** percent. 

U.S. shipments by the domestic industry increased both in terms of quantity and value during the

period of investigation. However, the quantity of U.S. shipments of domestic production increased by

*** percent with value increasing only *** percent.11 During this period, domestic consumption

increased *** percent in quantity and *** percent in value and subject imports increased *** percent in

terms of quantity and *** percent in terms of value.

The number of HEDP production related workers declined during the period of investigation

from *** to *** and productivity decreased by *** percent during the period of investigation.12 

Compass expended $*** in 2006 and $*** in 2007 for capital improvements at the Smyrna production

plant. It made further capital improvements in interim 2008, expending *** during the first nine months

of 2008.13 It had decreasing research and development expenses from 2006 to 2007 ($*** to $***). 

Other important financial indices reflect a domestic industry that was performing poorly

throughout the period of investigation, even taking into consideration some improvement in interim 2008. 

The domestic industry operated at a loss during the entire period of investigation. It is noted that the

magnitude of the operating loss declined from 2006 to 2007, and was lower in interim 2008 as compared

to interim 2007. However, this was after a significant increase in the operating loss in 2006. During the

full years of the period of investigation, the domestic industry was able to cut its operating losses by ***,

from an operating loss of $*** in 2005 to a *** operating loss of $*** in 2007. 

The operating losses experienced by the domestic industry translated to *** cash flows from

operation in 2005, 2006 and 2007 and a relatively *** cash flow in interim 2008.14 Although the

magnitude of the *** cash flows declined and became *** in interim 2008, they indicate a poor financial

picture, particularly when considered along with the significant capital expenditures made by Compass.

*** of the capital expenditures in 2006 or 2007 could be funded from internal cash flow from operations

and in interim 2008 only *** percent of Compass’s capital expenditures could be funded from internal

cash flow from operations. 

Due to its extensive operating losses, Compass’s return on investment was a negative *** percent

in 2006 and negative *** percent in 2007.15 Even with improvements in interim 2008, the domestic

industry continued to operate at a loss. 

The data indicates that the domestic industry was injured during the period of investigation. This

injury is neither unclear nor confused by the fact that there were changes in the domestic industry during

the period of investigation. The data covering the period of investigation represented one domestic

producer, Lynx, from 2005 to June of 2006, and a new domestic producer, Compass, from July of 2006

through interim 2008; certain anomalous market conditions in 2008; and an improving financial condition

of the domestic industry towards the end of the period of investigation. However, these facts do not

contradict a clear picture of poor financial and operating performance showing that the domestic industry
 16 CR/PR at Table C-1.

 17 Id.

 18 Id.

36

was materially injured during the period of investigation. If anything, the facts that Lynx ceased

operations during the period of investigation, and Compass continued to struggle after acquiring the Lynx

facility and upgrading and improving the production facilities, are factors that demonstrate the difficulty

facing the domestic industry during the period of investigation. One domestic producer was not able to

continue operations and a new domestic producer, while showing improvement in its financial condition

after making significant capital expenditures and operational changes, still operated at a loss during the

period of investigation. 

For all these reasons, I find that the domestic industry suffered material injury during the period

of investigation. Having made this finding, it is necessary to determine the extent to which the injury is

attributable to subject imports. 

In order to determine whether more than an incidental portion of the material injury experienced

by the domestic industry is attributable to subject imports I analyze the likely effects on the domestic

industry if subject imports had been fairly traded in the U.S. market. In order to determine the likely

effect on the domestic industry I review the conditions of competition as they relate to the ability of the

U.S. industry to beneficially increase gross revenue, net operating income and employment, through some

combination of increased sales volumes or prices, if subject imports had been traded at fair value in the

U.S. market. 

Supply conditions provide an indication of how producers can respond to an increase in demand

for their product. Supply conditions also affect the extent to which increases in demand may allow

producers to increases prices. How producers can respond to increased demand depends on their existing

excess capacity which is available to increase output, their ability to divert product that they have been

selling into export markets back into the domestic market, the magnitude of inventory levels which are

available for sale in the domestic market, and their ability to divert production from other product(s) to

HEDP. 

The domestic industry's rate of capacity utilization was low throughout the period of

investigation. Capacity utilization ranged from a low of *** percent to a high of *** percent.16 The

lowest level of capacity utilization did occur during 2006, which was the year of change in ownership and

upgrade of the Smyrna production plant; however, capacity utilization was relatively low both before and

after the changes at the production plant. The unused capacity that the domestic industry had available to

increase production in response to favorable market conditions was *** pounds in 2005 and *** pounds

in 2007.17 These levels of unused capacity equaled *** percent of total subject imports in 2005 and ***

percent of total subject imports in 2007.18 Unused capacity equaled *** percent and *** percent of the

domestic industry's total U.S. shipments in 2005 and 2007, respectively. These data indicate that the

domestic industry had significant amounts of unused capacity with which it could increase production in

the event of favorable market conditions.

 The domestic industry had relatively low levels of exports and inventories during the period of

investigation. These relatively low levels indicate that the domestic HEDP producers had limited ability

to shift shipments from export markets to the U.S. market or to increase domestic shipments out of

inventory in response to favorable prices in the U.S. market.

The domestic industry does have some capability to shift production from other products to

HEDP. Equipment is generally dedicated to the manufacture of HEDP, although HEDP and ATMP can

be manufactured simultaneously in adjacent units. Compass uses the same production employees to make

both HEDP and ATMP so there is a capability to shift employees from ATMP to HEDP production. 
 19 See Hearing Transcript at 84 (McCaul) (“ATMP is manufactured in equipment that looks similar to the

equipment that’s used for HEDP and it is similar in many regards. . . .[I]f the demand for HEDP was large enough,

you know, if the business was better, we could make more HEDP by converting some of the equipment that we

currently use for amino phosphonates to make more HEDP.”).

 20 CR at II-19; PR at II-13.

 21 CR at II-20; PR at II-14.

 22 CR/PR at Table II-2.

 23 Id. at Table II-3.

37

Compass has indicated that it possesses the ability to shift production from HEDP to other

phosphonates.19 Therefore, Compass does have some capability to increase its HEDP capacity by shifting

from other products to HEDP.

My analysis of the domestic supply factors indicate that the elasticity of domestic supply of

HEDP is relatively high, due mostly to high levels of unused capacity and, to a lesser degree, due to the

capability to shift from other products to HEDP. This finding is consistent with the Commission Staff's

Final Report which suggests a domestic supply elasticity in the range of 3 to 6.20

An analysis of demand conditions looks at options that are available to purchasers and how they

are likely to respond to changes in market conditions, such as increased prices. The price that purchasers

are willing or able to pay for HEDP will depend on a number of factors including the cost of the HEDP

relative to the value of the products or processes that use HEDP, substitution alternatives, including

purchasers' ability to switch to HEDP imports or alternate products in lieu of paying higher domestic

prices, and purchasers' collective market power to resist price increases.

It is likely that changes in the price level of HEDP will result in a small change in the quantity of

HEDP demanded. The main factors contributing to the small degree of responsiveness of demand to

changes in the price of HEDP are the limited substitutability of other products for HEDP and the low cost

share of HEDP in most of its end uses. Thus, the record shows that the demand elasticity is likely to be

low. This is consistent with the Commission Staff's Final Report which suggests a demand elasticity in

the range of -0.25 to -0.5.21

An important substitution factor unrelated to the ability of purchasers to substitute alternate

products for HEDP is the ability of purchasers to substitute imported HEDP for domestic HEDP. If

purchasers place a premium on price, a high elasticity of substitution for all imported product would

indicate that purchasers would be likely to move to lower priced imports in response to increases in

domestic price. This factor is important in two respects. One, to determine whether any imports,

including subject imports, would be an important factor in holding down domestic price increases, and

two, to determine whether increases in prices of subject imports would result in shifts to domestic HEDP,

non-subject HEDP imports, or both. 

In response to Commission questionnaires, price was reported by 40 out of 43 responding

purchasers as being either the first, second, or third most important factor affecting purchasing

decisions.22 This price sensitivity is important because it indicates that although there is a very low price

elasticity of demand for this product, purchasers are likely to seek out the lowest price.

Purchasers also place a premium on product availability, quality, consistency, and reliability. 

These factors were identified as “very important” the greatest number of times by purchasers.23 A

comparison of U.S. to subject HEDP in categories other than price indicated that the vast majority of 

purchasers generally considered all subject product to be at least comparable to the U.S. product in most

cases. Likewise, most purchasers generally considered non-subject imports as being at least comparable

to U.S. product in these categories. The record indicates that there is a relatively high degree of

substitutability between domestic HEDP, subject imports and non-subject imports. This is consistent with
 24 CR at II-21; PR at II-14.

 25 My analysis and conclusion is consistent with and supported by the comments of the Ad Hoc Water Treatment

Chemical Producers Committee (“AWTCP”). In its post-hearing brief, the AWTCP noted that in the absence of the

low priced subject imports, the U.S. market demand would likely continue at levels comparable to the domestic

consumption during the period of investigation and, in the absence of alternative low cost supplies, prices would

increase. “If the subject imports were cut off from the market, the only alternatives would either be the U.S. industry

or the [high priced] producers in the rest of the world. As HEDP normally makes up only a small part of any

formulation used by the ultimate consumer, it would [not be economically practical] for U.S. formulators to [shift

their production of the formulations to off-shore]. Rather, these U.S. formulators would have no option except to

purchase either the U.S. produced product or the [high cost] non-subject imports.” AWTCP Post-Hearing Brief at 2. 

 26 Compass estimated that its revenue in 2007 would have increased by as much as $*** if subject imports had

been fairly traded. This would have resulted in a gross profit in lieu of the experienced gross loss. Compass further

estimated that: “Even if the price of unfairly traded subject imports increased by only half the amount necessary to

bring the U.S. price up to a fair value, Compass would be looking at a vastly improved financial position.” See

Petitioner’s Post-Hearing Brief at 12. I perform my analysis of the data based on the supply and demand conditions

of competition, elasticity of supply, price elasticity of demand and availability of supply alternatives, including nonsubject imports. My analysis is not based on Compass’s estimates of the beneficial impacts on its operations if

subject imports had been fairly traded. I note, however, that the conclusions that I reach are consistent with

Compass’s estimates.

38

the Commission Staff's Final Report which suggests a substitution elasticity in the range of 3 to 5 between

all supply sources, domestic, subject and non-subject.24

 Overall, the record indicates that lower priced subject imports were being substituted for higher

priced domestic HEDP from 2005 through 2007. The record further indicates that non-subject imports

were a significant factor in the market, but at prices that were generally in excess of subject import prices. 

Thus, if subject import prices had increased to levels where they would have been considered to be fairly

traded, the response would have been higher prices for all suppliers in the U.S. market.25 

Given the range of domestic supply elasticity, price elasticity, and substitution elasticities, along

with the importance of price in purchasing decisions, the data supports a finding that the shift in demand

away from subject imports that would have occurred if subject imports had been fairly traded would have

resulted in reduced market share for the subject imports and an increase in market share for both nonsubject imports and domestic HEDP. Moreover, the domestic industry would have benefitted from the

ability to increase prices if subject imports had been fairly traded even if it captured only a portion, or

even none, of the shift in market share away from subject imports.26 

CONCLUSION 

Based on the record in these final phase investigations, I conclude that subject imports had an

adverse impact on the condition of the domestic industry during the period of investigation. In particular,

I find that the absolute and relative volumes of subject imports, and the increase in those volumes, were

significant and that subject imports undersold the domestic product. The magnitude of volume captured

by unfairly traded imports and price effects of those imports, which depressed and suppressed domestic

prices, has resulted in poor financial performance of the domestic industry over the period of

investigation. I find that the record indicates that prices in the U.S. market would have been higher for all

fairly traded HEDP in the absence of unfairly traded subject imports. The data also confirms that a shift

in demand away from subject imports would have occurred if those imports had been fairly traded and the

demand served by subject imports would have shifted to both non-subject imports and domestically

produced HEDP. Thus, if subject imports had been fairly traded there would have been a beneficial
39

impact on the domestic industry, either in price increases, volume increases, or both. For these reasons, I

find that the domestic industry producing HEDP is materially injured by reason of cumulated subject

imports from China and India that are sold in the United States at less than fair value. 

 1

 A complete description of the imported product subject to these investigations is presented in The Subject

Merchandise section located in Part I of this report.

 2 Federal Register notices cited after Commerce’s preliminary determinations in the tabulation are presented in

app. A.

I-1

PART I: INTRODUCTION

BACKGROUND

These investigations result from a petition filed on March 19, 2008, by Compass Chemical

International, LLC (“Compass”), alleging that an industry in the United States is materially injured or is

threatened with material injury by reason of imports from China and India of 1-Hydroxyethylidene-1,

1-diphosphonic acid (“HEDP”)1

 that are allegedly sold in the United States at less-than-fair-value

(“LTFV”). Information relating to the background of these investigations is provided below.2

Effective date Action

March 19, 2008 Petition filed with Commerce and the Commission; Commission institutes

investigations (73 FR 16058, March 26, 2008)

April 14, 2008 Commerce’s notice of initiation (73 FR 20023, April 14, 2008)

May 5, 2008 Commission's preliminary determinations (73 FR 28507, May 16, 2008) 

October 21, 2008

Commerce’s preliminary determination on China (73 FR 62470) and on

India (73 FR 62465); scheduling of final phase of Commission

investigations (73 FR 67545, November 14, 2008)

January 15, 2009 Revised scheduling of final phase of Commission investigations (74 FR

5677, January 30, 2009)

March 3, 2009 Commission’s hearing1

March 11, 2009 Commerce's final determination on China (74 FR 10545) and on India

(74 FR 10543)2

April 3, 2009 Commission’s vote

April 17, 2009 Commission determinations transmitted to Commerce

 1 App. B presents a list of witnesses appearing at the hearing.

 2

 Commerce made affirmative final determinations regarding imports of HEDP from China and India. 

Commerce calculated a dumping margin of 0.00 percent for Nanjing University of Chemical Technology

Changzhou Wujin Water Quality Stabilizer Factory Ltd. (“Wujin Water”), however; accordingly, HEDP

manufactured and export by Wujin Water is treated as nonsubject merchandise in this report. 

STATUTORY CRITERIA AND ORGANIZATION OF THE REPORT

Statutory Criteria

Section 771(7)(B) of the Tariff Act of 1930 (the “Act”) (19 U.S.C. § 1677(7)(B)) provides that in

making its determinations of injury to an industry in the United States, the Commission--

shall consider (I) the volume of imports of the subject merchandise, (II) the effect of

imports of that merchandise on prices in the United States for domestic like products,

and (III) the impact of imports of such merchandise on domestic producers of

domestic like products, but only in the context of production operations within the
I-2

United States; and. . . may consider such other economic factors as are relevant to

the determination regarding whether there is material injury by reason of imports.

Section 771(7)(C) of the Act (19 U.S.C. § 1677(7)(C)) further provides that--

In evaluating the volume of imports of merchandise, the Commission shall consider

whether the volume of imports of the merchandise, or any increase in that volume,

either in absolute terms or relative to production or consumption in the United

States is significant.

. . . 

In evaluating the effect of imports of such merchandise on prices, the Commission

shall consider whether . . . (I) there has been significant price underselling by the

imported merchandise as compared with the price of domestic like products of the

United States, and (II) the effect of imports of such merchandise otherwise depresses

prices to a significant degree or prevents price increases, which otherwise would

have occurred, to a significant degree.

. . .

In examining the impact required to be considered under subparagraph (B)(i)(III),

the Commission shall evaluate (within the context of the business cycle and

conditions of competition that are distinctive to the affected industry) all relevant

economic factors which have a bearing on the state of the industry in the United

States, including, but not limited to

. . . 

(I) actual and potential declines in output, sales, market share, profits, productivity,

return on investments, and utilization of capacity, (II) factors affecting domestic

prices, (III) actual and potential negative effects on cash flow, inventories,

employment, wages, growth, ability to raise capital, and investment, (IV) actual and

potential negative effects on the existing development and production efforts of the

domestic industry, including efforts to develop a derivative or more advanced

version of the domestic like product, and (V) in {an antidumping investigation}, the

magnitude of the margin of dumping.

Organization of Report

Information on the subject merchandise, margins of dumping, and domestic like product is

presented in Part I. Information on conditions of competition and other relevant economic factors is

presented in Part II. Part III presents information on the condition of the U.S. industry, including data on

capacity, production, shipments, inventories, and employment. The volume and pricing of imports of the

subject merchandise are presented in Parts IV and V, respectively. Part VI presents information on the

financial experience of U.S. producers. Part VII presents the statutory requirements and information

obtained for use in the Commission’s consideration of the question of threat of material injury as well as

available information regarding nonsubject countries.

U.S. MARKET SUMMARY

HEDP is generally added to water to increase solubility of certain ions and to inhibit the

precipitation of certain mineral compounds. The U.S. market for HEDP totaled approximately $*** and

*** pounds in 2007. Currently, one firm, Compass, produces HEDP in the United States; Compass

accounted for all U.S. production of HEDP in 2007. At least 18 firms have reported imports of HEDP

from China, India, or other sources, essentially the United Kingdom since 2005. During 2007, Compass
 3

 These imports included *** pounds ($***) from the United Kingdom and *** pounds ($***) from China

(nonsubject).

 4 Notice of institution of antidumping duty investigations and scheduling of preliminary phase investigations: 

Aminotrimethylenephosphonic Acid (ATMP) and 1-Hydroxyethylidene-1,1- Diphosphonic Acid (HEDP) From China

and India, 73 FR 1366, January 8, 2008.

 5 Notice of withdrawal of petition in antidumping investigations: Aminotrimethylenephosphonic Acid (ATMP)

and 1-Hydroxyethylidene-1,1- Diphosphonic Acid (HEDP) From China and India, 73 FR 5211, January 29, 2008.

 6 1–Hydroxyethylidene–1, 1– Diphosphonic Acid from India: Notice of final determination of sales at less than

fair value; 74 FR 10543, March 11, 2009. 1–Hydroxyethylidene–1, 1– Diphosphonic Acid from China: Final

determination of sales at less than fair value; 74 FR 10545, March 11, 2009.

I-3

accounted for *** percent of the total quantity of subject imports of HEDP from China, although this

share declined to 0 percent in January-September 2008. Aquapharm was the leading importer of Indian

HEDP and accounted for *** of the imports of HEDP from India during 2007, and throughout the period

for which data were collected.

U.S. shipments of domestically produced HEDP by Compass totaled *** pounds valued at $***

in 2007, and accounted for *** percent of apparent U.S. consumption by quantity (*** percent by value). 

U.S. shipments of subject imports from China totaled *** pounds ($***) in 2007, and accounted for ***

percent of apparent U.S. consumption by quantity (*** percent by value), while U.S. shipments of

imports from India totaled *** pounds ($***), and accounted for *** percent of apparent U.S.

consumption by quantity (*** percent by value). U.S. shipments of imported HEDP from nonsubject

sources totaled *** pounds ($***), and accounted for *** percent of apparent U.S. consumption by

quantity (*** percent by value).3

SUMMARY DATA AND DATA SOURCES

A summary of data collected in these investigations is presented in appendix C. Except as noted,

U.S. industry data are based on questionnaire responses of the two current or former U.S. producers that

accounted for all known U.S. production of HEDP during 2005-08. U.S. import and foreign industry data

are based on responses to the Commission’s U.S. importers’ and foreign producers’ questionnaires, as

entries of HEDP are properly covered by a statistical reporting number that is broader than the subject

merchandise.

PREVIOUS AND RELATED INVESTIGATIONS

HEDP has been the subject of one prior antidumping duty investigation in the United States. On

December 31, 2007, Compass filed a petition alleging that an industry in the United States was materially

injured or threatened with material injury by reason of imports from China and India of HEDP and

Aminotrimethylenephosphonic Acid (“ATMP”). The Commission subsequently instituted preliminary

phase antidumping duty investigations Nos. 731–TA–1138 and 1139.4

 On January 17, 2008, before

Commerce had initiated its investigations, Commerce and the Commission received a letter from

Compass withdrawing its petition. Subsequently, the Commission discontinued its antidumping

investigations concerning HEDP and ATMP from China and India.5

NATURE AND EXTENT OF SALES AT LTFV

On March 11, 2009, Commerce published a notice in the Federal Register of its final

determinations of sales at LTFV with respect to imports of HEDP from China and India.6

 Table I-1

presents Commerce’s final margins of sales at LTFV with respect to such imports.
 7

 C2H8O7P2 or C(CH3)(OH)(PO3H2)2

 8 1–Hydroxyethylidene–1, 1– Diphosphonic Acid from India: Notice of final determination of sales at less than

fair value; 74 FR 10543, March 11, 2009. 1–Hydroxyethylidene–1, 1– Diphosphonic Acid from China: Final

determination of sales at less than fair value; 74 FR 10545, March 11, 2009.

 9

 *** also reported importing into the United States products covered and not covered by the scope of these

investigations under statistical reporting numbers 2931.00.9041 (covering organo-phosphorus compounds having a

particular structure) and 2931.00.9050 (the residual statistical reporting number for the subheading).

I-4

Table I-1

HEDP: Commerce's final weighted-average LTFV margins with respect to imports from China and

India

Country Manufacturer/exporter

Final weighted-average

margin (percent)

China

Nanjing University of Chemical Technology Changzhou

Wujin Water Quality Stabilizer Factory Ltd. 0.001

Changzhou Wujin Fine Chemical Factory Co., Ltd. 36.21

Jiangsu Jianghai Chemical Group Co., Ltd. 36.21

All others 72.42

India

Aquapharm Chemicals Pvt. Ltd. 3.10

All others 3.10

1

 With respect to Wujin Water, Commerce stated that it will instruct U.S. Customs and Border Protection

(“Customs”) not to suspend liquidation of any entries of such HEDP from China, and will not require a cash deposit

or the posting of a bond by importers when the subject merchandise is produced and exported by Wujin Water. 74

FR 10545, March 11, 2009.

Source: 1–Hydroxyethylidene–1, 1– Diphosphonic Acid from India: Notice of final determination of sales at less

than fair value; 74 FR 10543, March 11, 2009. 1–Hydroxyethylidene–1, 1– Diphosphonic Acid from China: Final

determination of sales at less than fair value; 74 FR 10545, March 11, 2009.

THE SUBJECT MERCHANDISE

Commerce’s Scope

Commerce has defined the scope of these investigations as follows:

All grades of aqueous, acidic (non–neutralized) concentrations of 1–hydroxyethylidene–

1, 1–diphosphonic acid,7

 also referred to as hydroxethlylidenendiphosphonic acid,

hydroxyethanediphosphonic acid, acetodiphosphonic acid, and etidronic acid. The CAS

(Chemical Abstract Service) registry number for HEDP is 2809–21–4.8

Tariff Treatment

HEDP is classifiable in the Harmonized Tariff Schedule of the United States (“HTS”) under

subheading 2931.00.90, and imports are reported under statistical reporting number 2931.00.9043.9

 This

subheading contains many other products besides HEDP. Table I-2 presents current tariff rates for

HEDP.
 10 1-Hydroxyethylidene-1, 1-Diphosphonic Acid (HEDP) from China and India, Inv. Nos. 731-TA-1146-1147

(Preliminary), USTIC Publication 3998, May 2008, p. 7.

 11 Hearing transcript, p. 29 (Levin).

 12 Conference transcript, p. 111 (Levinson) and hearing transcript, p. 123 (Craven).

 13 Letter from Jeffrey Levin, counsel to Compass, October 16, 2008. No other party provided comments on the

draft questionnaires in the final phase of the investigations. 

 14 Much of this background information comes from a “Technical Update on Chelation,” Monsanto Corp., August

1995, fax from ***, April 8, 2008.

 15 In aqueous solutions, positively charged metal ions (such as Ca+2, Fe+3, Cu+2) are surrounded by negatively

charged ions and water molecules. Metals can form a complex with the negatively charged molecules. When the

metal complexes with negatively charged molecules at two (or more) sites a ring structure is created. The reaction is

called chelation, the anionic ion is called a ligand or chelating agent, and resulting ring structure is called a complex

or chelate. 

I-5

Table I-2

HEDP: Tariff rates, 2009

HTS provision Article description

General1 Special Column 22

Rates (percent ad valorem)

2931.00

2931.00.90

2931.00.9043

Other organo-inorganic compounds:

 Other............................................................................

 Other......................................................................

 

3.7% Free (3

) 25%

 1

 Normal trade relations, formerly known as the most-favored-nation duty rate. 

 2

 Applies to imports from a small number of countries that do not enjoy normal trade relations duty status.

 3

 General note 3(c)(i) defines the special duty program symbols enumerated for this provision. Products of India, but not those

of China, may be afforded duty-free entry under the Generalized System of Preferences (see HTS general note 4).

Source: Harmonized Tariff Schedule of the United States (2009).

THE DOMESTIC LIKE PRODUCT 

The Commission’s decision regarding the appropriate domestic products that are “like” the

subject imported products is based on a number of factors including: (1) physical characteristics and

uses; (2) common manufacturing facilities and production employees; (3) interchangeability; (4) customer

and producer perceptions; (5) channels of distribution; and (6) price. Information regarding the physical

characteristics, uses, and the manufacturing process are discussed below. 

For the purposes of its determination in the preliminary phase of these investigations, the

Commission found “the domestic like product as coextensive with the scope and consisting of all

HEDP.”10 The petitioner contends that the Commission should find one domestic like product that is

coextensive with the scope of merchandise subject to the investigations.11 Both respondents noted that

they were not challenging the definition of the domestic like product.12 No party requested the collection

of additional information on domestic like product issues in the final phase of the investigations.13

Overview14

HEDP belongs to a class of chelating agents, known as organophosphonates or phosphonates,

used extensively in industrial water treatment (including swimming pools), in industrial and household

cleaning products, and personal care products.15 “Chelating agents (or chelants)” include a number of

compounds, all having the ability to coordinate (bond) with metal ions at a minimum of two sites. 
 16 SRI, Chemical Economics Handbook (“SRI CEH”): Chelating Agents, February 2007, p. 515.5001C.

 17 HEDP is made using phosphorus acid and acetic anhydride. Production of HEDP requires the use of anhydrous

phosphorus acid, while other phosphonates can be made using an aqueous phosphorus acid. 

 18 Petition, p. 4. In fact, the petition refers to generations of chelating agents, with each newer generation having

an improved degree of activity or efficiency. Polyphosphates (which are not phosphonates) were referred to as first

generation antiscalants/sequestrants, aminomethylene phosphonates were referred to as the second generation,

HEDP was referred to as the third generation, and PBTC was referred to as a newer, more specialized phosphonate.

 19 SRI CEH: Chelating Agents, February 2007, p. 515.500S.

 20 Phosphonates can remove soap scum with bar soap and eliminate graying with laundry soap. Metal ions such

as magnesium or calcium can react with soap to form insoluble salts. This can form “bath-tub rings” from bar soap,

or lead to graying or yellowing of fabrics in laundry soap. The addition of a chelating agent (e.g. phosphonate), will

solubilize the metal and prevent it from reacting with the soap or settling on the fabric. 

 21 In water supplies, the presence of iron or manganese will color the water; and although not dangerous it is not

aesthetically pleasing (and will generate customer complaints). Adding chelating agents can sequester the metal ions

and prevent them from coloring the water. 

 22 “Scale” build-up is a problem in industrial water supplies. Scale consists mainly of calcium, magnesium, and

iron salts. These products can build up on the walls of commercial water systems; but the condition can be

alleviated by adding a “crystal growth modifier” to the system. These products, at very small concentrations, appear

to distort and prevent crystal growth. The mechanism of prevention is different from sequestering, but phosphonates

(continued...)

I-6

Typically, this bidentate coordination (bond) solubilizes or otherwise inactivates these metals, reducing

any adverse effects these metals might have on the system on which they are used.”16 

Phosphonates are multifunctional acids, all containing the phosphonic acid group PO3H2, attached

to (slightly) different molecular structures.17 Phosphonates are a relatively new class of chelating agent

used for industrial water treatment. They may have certain properties in common with other classes of

chelating agents (particularly the polyphosphates).18 However, unlike other chelating agents,

phosphonates are structurally stable at very high temperature and in strong acids. In 2006, U.S.

phosphonate consumption accounted for approximately *** of the total U.S. consumption of the major

industrial chelating agents related to industrial water treatment.19

Phosphonates, acting as chelating agents, perform a variety of functions to improve the quality of 

water supplies. The chemical characteristics of chelating agents allow for a number of applications in

household cleaning supplies (soaps and detergents),20 in municipal water supplies,21 in industrial water

systems (heat exchangers, boilers, and cooling towers),22 and in stabilizing bleach.23 
 22 (...continued)

 are very effective crystal growth modifiers in boilers and heat exchangers, particularly since they are stable at high

temperatures over long periods of time. 

 23 An important application for phosphonates is preventing bleaches from decomposing in the presence of trace

amounts of metals such as iron, chromium, and nickel. Again, chelating agents can be introduced to sequester (tie

up) the offending ions.

 24 Patented by Proctor & Gamble, January 30, 1968, Patent No. 3,366,675. The chemistry is described in the

chemical literature, “Interaction of Acylating Agents and Phosphorus (III) Sources,” Journal of the American

Chemical Society, August 23, 1972, pp. 6119-6124. 

 25 HERA substance team, Human & Environmental Risk Assessment on Ingredients in European Household

Cleaning Products, June 9, 2004, p. 5.

I-7

A number of chemical classes of chelating agents used in water treatment, cleaning products, and

in a number of other diverse industrial uses, have been developed over the years. The choice of chelating

agent depends on a number of factors (including which metal ions are to be controlled, the pH of the

system, the temperature range of the system, the economics of the system, and more recently,

environmental issues). Table I-3 lists the five largest commercially available phosphonates, of which

HEDP and ATMP are the two largest selling products.

Table I-3

Phosphonates: Commercially available phosphonates

Abbreviation Chemical name CAS No.

HEDP (1-hydroxyethylidine) diphosphonic acid 2809-21-4

ATMP Amino tris(methylene phosphonic acid) 6419-19-4

DTPMP Diethylenetriamine penta(methylene phosphonic acid) 15827-60-8

PBTC 2-Phosphobutane-1,2,4-tricarboxylic acid 37971-36-1

BHMT Aminotri(methylenephosphonic acid) 35657-77-3

Source: ***.

Description and Applications 

HEDP is a well-defined,24 odorless, colorless to yellowish liquid. It is very water soluble, as

either the acid or the salt. The finished product is produced as a technical grade, and is not further

modified or purified to become food grade or U.S. Pharmacopoeia (USP) Grade. Once manufactured and

adjusted to the correct aqueous concentration, it needs no further modification before it can be used as a

chelating agent. The product has a long shelf life, and is often added to multi-purpose formulations,

which do not appear to affect the chelating properties. Compared to other chelating agents, the molecule

has multiple phosphonate (acid) groups and is very stable at high temperatures (greater then 1300

 F) and

acid levels; it resists oxidation by chlorine. The stability of the molecule is attributed to the C–P chemical 

bond in HEDP. Further, HEDP is considered safe. According to the Human & Environmental Risk

Assessment Substance team, “{T}he human health risk assessment has demonstrated that the use of

ATMP, HEDP, and DTPMP in household laundry and cleaning detergents is safe and does not cause

concern with regard to consumer use.”25
 26 Hearing transcript, p. 66 (Failon).

 27 Hearing transcript, p. 22 (Failon).

 28 HEDP can qualify for NSF/ANSI Standard 60 certification for drinking water chemicals. NSF Product and

Service listings,

“http://www.nsf.org/Certified/PwsChemicals/Listings.asp?CompanyName=&TradeName=&ChemicalName=Hydro

xyethylidene+Diphosphonic+Acid&ProductFunction=&PlantState=&PlantCountry=,” retrieved December 12, 2008.

 29 SRI CEH: Chelating Agents, February 2007, p. 515.5001J.

 30 Much of the technical background was presented by ***, in staff phone interviews, April 3, 2008 and April 14,

2008.

 31 Petition, p. 4. A third commercial method exists using PCL3 and glacial acetic acid, which is believed to be the

method used by the Chinese producers. Email from ***, March 11, 2009, and hearing transcript, pp. 22-23 (Failon).

 32 The major intermediate for HEDP is anhydrous phosphorus acid. Typically its precursor is phosphorus

trichloride. Other phosphonates have less stringent technical requirements for their inputs. Phosphorus trichloride is

a major phosphorus derivative, which is used in a number of different end-use products (other than water treatment

products) such as pesticides (glyphposte/Round up), flame retardants, and plastic additives. The raw material for

these products, elemental phosphorus (P4), is extracted from phosphorus ore. China has phosphate rock reserves

about 6.6 million metric tons, Morocco has 5.7 million metric tons, South Africa has 1.5 million metric tons, and the

United States has 1.2 million metric tons. USGS staff noted that China has 70-80 percent of the capacity to convert

the ore to elemental phosphorus, and that, furthermore, over 90 percent of phosphorous rock worldwide is converted

to fertilizer. http://minerals.usgs.gov/minerals/pubs/commodity/phosphate_rock/, retrieved March 12, 2009, and

staff telephone interview with Stephen Janinski, U.S. Geological Survey, March 9, 2009.

Compass noted that the *** phosphorus mining operation in the United States is owned by Monsanto and is

***, primarily in the production of the herbicide Roundup. *** and

https://www.monsanto.com/who_we_are/locations/unitedstates/idaho/sodasprings/default.asp, retrieved February 2,

2009.

 33 Compass reported that it used the second method, although it believes that both producers in China and India

currently use the first method. ***. Chinese producers reported ***, while Aquapharm reported *** and Excel

reported ***. Foreign producers’ questionnaire, question II-5.

I-8

HEDP is a chelating agent that can perform three functions as it treats commercial water, the

largest application for HEDP.26 HEDP is unique among phosphonates in that it is the only phosphonate

that combines these functional properties.27 First, it can sequester heavy metal ions that color water

supplies or heavy metals that interfere with the cleaning function of laundry soap or body soap.28 Second,

it can act as a scale inhibiting agent that prevents scale formation in commercial heating/cooling systems

such as boilers, air conditioners, and cooling towers. Third, it can prevent the breakdown of oxidizing

agents such as peroxide bleach.29

Manufacturing Processes30

There are two commercial methods for producing HEDP.31 One method is to react phosphorus

trichloride with acetic anhydride in water. The phosphorus trichloride (also know as PCl3) is converted to

phosphorus acid within the reaction vessel (in situ), and then reacts with the acetic anhydride.32 Two biproducts, hydrochloric acid (HCl) and acetic acid are produced, and can be sold on the merchant market. 

The balanced equation is:

(1) 2PCl3 + (CH3CO)2O + 6H2O —> C(CH3)(OH)(PO3H2)2 + CH3COOH +6HCl

The second method is a one-step version of the first process.33 The phosphorus acid is purchased

and then reacted directly with acetic anhydride. The phosphorus acid is anhydrous (devoid of water). As
 34 Conference transcript, pp. 63-65 (McCaul). Compass noted that it anticipated a reduction in raw material costs

of more than 25 percent when it switched from using phosphorus trichloride to phosphorus acid. Hearing transcript,

p. 23 (Failon).

 35 Compass noted that ***. ***.

 36 Compass reported that ***. ***.

 37 Compass noted that domestic and imported HEDP are produced on similar equipment and using the same

process. Conference transcript, p. 26 (Faillon).

 38 Compass noted that ***. ***.

 39 ***.

 40 Hearing transcript, p. 83 (Failon).

 41 Staff phone interviews with ***, April 3, 2008 and April 14, 2008.

I-9

with the reaction starting with PCl3, the reaction is performed at a high temperature and for at least 10 to

12 hours. The balanced equation is:

(2) 2H3PO3 + (CH3CO)2O —> C(CH3)(OH)(PO3H2)2 + CH3COOH 

The first reaction is potentially more cumbersome than the second, because the phosphorus

trichloride is very reactive and must be stored away from air and moisture in special containers. At the

end of the first step, the phosphorus acid must be anhydrous, because moisture will neutralize acetic

anhydride and lower the yield. On the other hand, anhydrous phosphorus acid is a solid at room

temperature, not violently reactive with air and water, and easier to handle. Nevertheless, the relative

price of the phosphorus acid and phosphorus trichloride can be an important issue in determining which

process a company will use.34

HEDP must be batch manufactured in *** vessels due to the corrosive nature of the materials.35 36

Figure I-1 presents Compass’s production flow.37 ***.38 ***.39

Figure I-1

HEDP: Compass’s production flow chart

* * * * * * *

Compass reported that at its manufacturing facility, the starting materials are checked for purity

and the finished product is subject to a quality control inspection, the results of which are kept on file. A

concern is the possibility for chloride contamination from HCl. The finished product is “Technical

Grade;” there is no Food Grade or U.S. Pharmacopeia (USP) grade. At the Compass manufacturing

facilities, the reaction vessels and storage tanks are dedicated to HEDP production. Other phosphonate

products are manufactured in the same facility, but on separate, dedicated equipment.40 ***.41

 1

 Petition, p. 25.

 2

 Petition, p. 25.

 3

 ***.

 4

 The end user data were provided by importer ***.

 5

 Petition, p. 29.

 6

 Petition, p. 29.

 7

 The regions were defined as follow: Northeast.-CT, ME, MA, NH, NJ, NY, PA, RI, and VT; Midwest.-IL, IN,

IA, KS, MI, MN, MO, NE, ND, OH, SD, and WI; Southeast.-AL, DE, DC, FL, GA, KY, MD, MS, NC, SC, TN,

VA, and WV; Central Southwest.-AR, LA, OK, and TX; Mountains.-AZ, CO, ID, MT, NV, NM, UT, and WY;

Pacific Coast.-CA, OR, and WA; Other.-All other markets in the United States not previously listed, including AK,

HI, PR, VI, among others.

II-1

PART II: CONDITIONS OF COMPETITION IN THE U.S. MARKET

U.S. MARKET CHARACTERISTICS

Petitioner Compass indicated that domestic and imported HEDP are sold into common channels

of distribution: distributors (resellers), compounders (formulators), and occasionally, to end-users.1

Compass reported that distributors typically sell to accounts that purchase quantities that are less than a

truckload (of drums) quantities while large compounders often buy in bulk tanktruck quantities, but also

in truckload drum quantities, and end-users generally buy from producers only when they have a bulk

requirement for HEDP.2

As shown in table II-1, in each period, over *** percent of shipments of U.S. product and imports

from subject Chinese producers and India were to compounders and the bulk of the remaining shipments

were made to distributors.3 Also, in each period, more than *** percent of shipments of imports from

nonsubject countries were to end users and the bulk of the remaining shipments were made to

distributors.4

Table II-1

HEDP: U.S. producers’ and importers’ channels of distribution, 2005-07, January-September 2007,

and January-September 2008

* * * * * * *

Compass indicated that imported product competes with the domestic like product in all

geographic markets in the United States and that imported product typically is stored and shipped from its

warehouse locations to all geographic areas.5

 Compass also noted that a large portion of the HEDP

market is supplied through national and regional distributors that reportedly obtain their product through

Chinese importers, Indian importers, and/or U.S. producers.6

Compass reported that in 2007, *** percent of its shipments of HEDP were to the Midwest

region, *** percent of its shipments were to the Northeast region, and *** percent of its shipments were

to the Southeast region. Responding importers reported that in 2007, *** percent of their shipments of

imports from subject Chinese producers were to the Midwest region, *** percent were to the Northeast

region, *** percent were to the Central Southwest, *** percent were to the Southeast region, and ***

percent were to the Pacific Coast. Responding importers also reported that in 2007, *** percent of their

shipments of imports from India were to the Northeast region, *** percent were to the Southeast region,

*** percent were to the Midwest region, and *** percent were to the Mountain region.7
 8

 In their prehearing brief, the Ad Hoc Water Treatment Chemical Producers (“AWTCP”) Committee indicated

that some major purchasers of HEDP may not have received a questionnaire from Commission. AWTCP Prehearing

brief, p. 14, fn. 4. The only purchaser identified by AWTCP was ***. In a staff interview on March 9, 2009, ***.

 9

 This includes two purchasers that reported being both compounder/formulators and distributors. The

distributors include two firms that indicated that they were “resellers” and one firm that indicated that it was an

alliance of multiple regional chemical distributors. The end users include one firm that indicated that it

manufactures water treatment chemicals that contain HEDP and one water treatment company.

II-2

Forty-four firms responded to the purchaser’s questionnaire and indicated that they have

purchased HEDP since 2005.8

 Nineteen reported being compounder/formulators, 19 reported being

distributors, and eight reported being end users.9

SUPPLY AND DEMAND CONSIDERATIONS

U.S. Supply

Domestic Production

Based on available information, the U.S. HEDP producer has the ability to respond to changes in

demand with moderate changes in the quantity of shipments of U.S.-produced HEDP supplied to the U.S.

market. The main factors contributing to the moderate degree of responsiveness of supply are the

availability of unused capacity and an ability to produce alternate products, constrained by a limited

ability to divert shipments from alternate markets and a limited ability to use inventories to increase

shipments to the U.S. market.

Industry capacity

The U.S. producer’s capacity utilization increased from *** percent in 2005 to *** percent in

2007. This level of capacity utilization indicates that the U.S. producer has unused capacity with which it

could increase production of HEDP in the event of a price change. 

Alternative markets

Exports by the U.S. producer, as a share of total shipments, decreased from *** percent in 2005

to *** percent in 2007. These data indicate that the U.S. producer has a limited ability to divert

shipments to or from alternative markets in response to changes in the price of HEDP. 

Inventory levels

The ratio of end-of-period inventories to total shipments for the U.S. producer decreased from

*** percent in 2005 to *** percent in 2007. These data indicate that the U.S. producer has a somewhat

limited ability to use inventories as a means of increasing shipments of HEDP to the U.S. market.
 10 Petition, p. 26.

 11 Petition, p. 26.

 12 AWTCP posthearing brief, Response of AWTCP to Commissioners’ questions, p. 4.

 13 Hearing transcript, pp. 126-127 (Collias).

 14 However, Aquapharm (***) has projected ***.

II-3

Production alternatives

According to Compass, equipment is generally dedicated to the manufacture of HEDP, although

HEDP and ATMP can be manufactured simultaneously in adjacent units.10 Compass indicated that

Compass relies on the same production employees to make both HEDP and ATMP, trained, for example,

as “Mayoquest®/phosphonate” operators.11 In its U.S. producer questionnaire response, ***. The

AWTCP indicates that nothing limits the ability of producers in any nation to shift between producing

HEDP and other phosphonates.12 Therefore, Compass is believed to have an ability to product alternative

products.

Subject Imports

Based on available information, Chinese producers have the ability to respond to changes in

demand with large changes in the quantity of shipments of HEDP to the U.S. market, while Indian

producers have the ability to respond with moderate changes in the quantity of shipments of HEDP to the

U.S. market. The main factors contributing to the high degree of responsiveness of supply for Chinese

producers are the availability of unused capacity, an ability to divert shipments from alternate markets,

and an ability to produce alternate products, constrained by a limited availability of inventories. The

main factors contributing to the moderate degree of responsiveness of supply for Indian producers are an

ability to divert shipments from alternate markets and an ability to produce alternate products, constrained

by a limited availability of inventories and the limited amount of excess capacity.

Importer *** indicated that in the second and third quarter of 2008, Chinese and Indian HEDP

imports temporarily declined due to shortages of phosphorus, earthquakes in China, and the Olympics,

but that by the fourth quarter of 2008, imports from China and India increased. Importer *** and

Uniphos’s hearing testimony indicated that Chinese supply of HEDP was affected by a historic snow

storm that shut down transportation routes, and caused a reduction in the availability of chemicals used to

make phosphonates.13 In addition, importer *** indicated the snow storm *** and also affected the

ability to load containers onto ships. This importer also indicated that phosphorus trichloride availability

was reduced in 2008 due to increased Chinese demand for agricultural products which increased demand

for herbicides using phosphorus trichloride. Purchaser *** indicated that it increased its inventory to

serve many customers during the Olympics. 

Industry capacity

During the period for which data were collected, the capacity utilization rate for Chinese

producers of HEDP decreased from *** percent in 2005 to *** percent in 2007. The capacity utilization

rate for the producer in India that provided complete data increased from *** percent in 2005 to ***

percent in 2007.14 These levels of capacity utilization indicate that Chinese producers have unused

capacity with which they could increase production of HEDP in the event of a price change, while Indian

producers have very limited capacity with which they could increase production of HEDP in the event of

a price change.
 15 Conference transcript, p. 138, (Mangwani).

 16 Petition, pp. 26-27.

 17 AWTCP posthearing brief, Response of AWTCP to Commissioners’ questions, p. 4.

II-4

Alternative markets

 Shipments of HEDP from China to markets other than the United States increased from

approximately *** percent of total shipments in 2005 to *** percent in 2007. Shipments of HEDP from

India to markets other than the United States increased from approximately *** percent of total shipments

in 2005 to *** percent in 2007. Available data indicate that subject producers in China and India have

the ability to divert shipments to or from their home markets and alternative markets in response to

changes in the price of HEDP. 

Inventory levels

Chinese producers’ inventories, as a share of their total shipments, increased from *** percent in

2005 to *** percent in 2007. Indian producer Aquapharm’s (the producer in India that provided complete

data) inventories of subject product in India, as a share of total shipments, decreased from *** percent in

2005 to *** percent in 2007. These data indicate that subject foreign producers, particularly those in

India, have a limited ability to use inventories as a means of increasing shipments of HEDP to the U.S.

market.

Production alternatives

All three responding subject Chinese producers and the only responding Indian producer

indicated that they do not produce products other than HEDP on the same equipment and machinery used

in the production of HEDP. Aquapharm indicated that it has equipment dedicated to the production of

HEDP and that other equipment is used to produce other phosphonates.15 Compass indicated that

domestic and imported HEDP are produced in similar manufacturing facilities, using similar production

processes.16 Also, as noted earlier, the AWTCP indicates that nothing limits the ability of producers in

any nation to shift between producing HEDP and other phosphonates.17 Accordingly, as with Compass’s

U.S. operations, subject producers are believed to have an ability to produce alternative products.

U.S. Demand

Based on the available information, it is likely that changes in the price level of HEDP will result

in a small change in the quantity of HEDP demanded. The main factors contributing to the small degree

of responsiveness of demand to changes in the price of HEDP are the limited substitutability of other

products for HEDP and the low cost share of HEDP in most of its end uses. 

Demand Characteristics

Compass indicated that HEDP is used in water treatment applications such as boiler water

treatment, municipal water treatment, desalination, and swimming pool applications; industrial and

institutional detergents and cleaners; peroxide bleach stabilization; and personal care products such as bar
 18 Petition, pp. 6-7, 24.

 19 Conference transcript, p. 53 (McCaul) and Hearing transcript, p. 66 (Failon).

 20 In this and subsequent sections, ***. 

 21 Petition, p. 26.

 22 Petition, p. 26.

 23 Petition, p. 24.

 24 Conference transcript, pp. 132-133 (Zibrida) and p. 133 (Collias).

 25 Ibid.

 26 In its response to the preliminary phase questionnaire, *** indicated that the “plethora” of PBTC imports has

depressed pricing for PBTC, making it more viable as an alternative to HEDP (and noted that this effect has no time

(continued...)

II-5

soaps and shampoos in which HEDP is used a preservative.18 Compass also indicated that the singlelargest application for HEDP is in industrial water treatment.19

The U.S. producer and three of 12 responding importers indicated that demand for HEDP in the

United States has increased due to growth in water treatment and other industries that use HEDP. The

U.S. producer also indicated that purchasers are increasingly favoring HEDP over ATMP. Five of 12

responding importers indicated that demand for HEDP has not changed, one responding importer

indicated that demand has decreased, and the three remaining responding importers indicated that demand

has fluctuated.20 

Eight of 17 responding purchasers indicated that demand for their final products incorporating

HEDP has increased since 2005. In addition, six purchasers indicated that demand for such products has

not changed, one purchaser indicated that demand for such products has increased by an “insignificant”

amount, one purchaser indicated that demand for their final products has fluctuated, and one purchaser

indicated that demand for such products has decreased.

The U.S. producer and two of seven responding importers indicated that demand for HEDP

outside the United States has increased since 2005. Two of seven responding importers indicated that

demand for HEDP outside the United States has not changed, one responding importer indicated that

demand has decreased, and the two remaining responding importers indicated that demand has fluctuated.

Substitute Products

Compass reported that customers and producers perceive HEDP as possessing distinct,

characteristic physical, chemical, and functional properties such that polyphosphates, EDTA, ATMP and

other AMPs (amino methyl phosphonates) are not viable substitutes.21 It also indicated that customers

select HEDP due to performance or cost-performance advantages over other phosphonates and

polyphosphates.22 According to Compass, there are several applications in which there is no real

substitute for HEDP, including municipal water treatment, swimming pool stain and scale control, and bar

soap preservative.23 Respondents indicated that there are substitutes for HEDP such as other

phosphonates, acrylic polymers, and glassy phosphates.24 They indicated that although substitution

typically would not occur instantaneously with a change in price, it could occur within a few months.25

The producer, seven responding importers, and 10 responding purchasers indicated that there

were at least some substitutes for HEDP. Substitutes named included ATMP, DETPMP, EDTA, PBTC,

polyacrylates, and other phosphonates. One importer and seven purchasers indicated that there were no

substitutes for HEDP and one responding importer indicated that it did not know of any substitutes for

HEDP.

The U.S. producer, all but one responding importer, and all but two responding purchasers

reported that the prices of substitute products have not affected the price of HEDP.26 *** indicated that
 26 (...continued)

lag). Response to ***. However, in its response to the final phase questionnaire, *** indicated that changes in the

price of PBTC have not affected prices of HEDP.

 27 Conference transcript, pp. 53-54 (McCaul).

 28 Conference transcript, pp. 115-116 (Collias).

II-6

substitute ATMP is a specialty product that has few producers and that all markets and pricing depends on

the cost raw materials (phosphorous acid/PCl3). In addition, onepurchaser (***) indicated that although

the price of substitutes has not affected prices of HEDP, the price of substitutes has affected which

product they chose to purchase.

Cost Share

The cost share of HEDP is reportedly low for most end uses. Compass indicated that HEDP costs

as share of total costs were about 20 to 25 percent for typical applications, but could range from less than

1 percent to 100 percent for certain applications.27 However, Uniphos indicated that the HEDP cost share

was less than 3 percent for water treatment chemicals that are used for cooling applications, process

cooling, or comfort cooling.28 Purchasers reported that cost share could range from 0.1 percent to 100

percent.

SUBSTITUTABILITY ISSUES

The degree of substitution between domestic and imported HEDP depends upon such factors as

relative prices, quality (e.g., grade standards, reliability of supply, defect rates, etc.), and conditions of

sale (e.g., price discounts/rebates, leadtimes between order and delivery dates, payment terms, product

services, etc.). Based on available data, staff believes that there is a high degree of substitutability

between domestically produced HEDP and HEDP imported from the subject countries.

Factors Affecting Purchasing Decisions

Purchasers report that they consider a variety of factors to be important when selecting among

competing HEDP suppliers including availability, price, and quality. As indicated in table II-2, price was

named by 12 of 43 responding purchasers as the number one factor generally considered in deciding from

whom to purchase HEDP, as the number two factor by 14 responding purchasers, and as the number three

factor by 14 other responding purchasers. Also, as indicated in table II-3, 35 of 43 responding purchasers

indicated that price was a “very important” factor in their purchase decisions for HEDP. Twenty-five of

44 responding purchasers indicated that the lowest-priced HEDP “usually” will win a sale, 12 reported

“sometimes,” three reported “always,” and four reported “never.”

Quality was named by 15 of 43 responding purchasers as the number one factor generally

considered in deciding from whom to purchase HEDP, the number two factor by nine purchasers, and the

number three factor by six other responding purchasers. Also, as indicated in table II-3, 39 of 43

responding purchasers indicated that quality meeting industry standards was a “very important” factor in

their purchase decisions for HEDP. However, only 11 of 43 responding purchasers indicated that quality

exceeding industry standards is a “very important” factor in their purchase decisions. Quality

characteristics that purchasers consider when determining the quality of HEDP include density, level of

impurities, work ability in product formulations, purity, concentration, color, chloride content, iron

content, pH, specific gravity, appearance, viscosity, phosphoric acid content, strength, packaging, scale

inhibition activity, contaminants, consistency in meeting specifications, active content as HEDP, total

acid number and titration curve (potentiometric), total inorganic PO4, and sequestration value.
 29 In addition, one purchaser (***) indicated that it requires suppliers to become certified or pre-qualified for at

least some of their purchases and that it required all of its purchasers to be become certified or pre-qualified in 2007.

 30 This includes two purchasers that reported being both compounder/formulators and distributors. 

II-7

Table II-2

HEDP: Ranking of factors used in purchasing decisions, as reported by unrelated U.S. purchasers

Factor

Number of firms reporting

Number one factor Number two factor Number three factor

Availability 9 12 9

Price 12 14 14

Quality 15 9 6

Lead time 0 3 3

Meets specifications 2 0 1

Reliability of supplier 0 1 3

Certification 1 0 1

Traditional supplier 1 1 0

Product consistency 0 0 1

Other1 33 5

 1 Other factors include “contract,” “extension of credit,” “delivery,” “performance,” “package size,” “product range,”

“relationship with vendor,” “service,” “supply agreement” and “supply and availability from a local warehouse.”

Source: Compiled from data submitted in response to Commission questionnaires.

Thirty of 44 responding purchasers reported that they require their suppliers to become certified

or pre-qualified for all of their purchases of HEDP.29 Three of 43 responding purchasers indicated that

since 2005, certain domestic or foreign producers failed in their attempts to certify or qualify their HEDP

or have lost their approved status. *** indicated that *** failed due to shifting sources, unreliable supply,

insufficient volumes, and changing qualities; *** went out of business; *** failed due to unreliable

supply and selling its plant; and *** failed due to shifting sources, and insufficient and unreliable supply. 

*** indicated that when *** refused to sell to the firm, it “moved on.” *** indicated that *** failed

because it did not attain analytical conformance to the specification.

Nine of 44 responding purchasers reported that they require their suppliers to become certified

with respect to National Sanitation Foundation (NSF) standard 60 for at least some of their purchases. 

The nine purchasers included six of the 19 compounder/formulators, four of the 14 distributors, and one

of the eight end users.30 Several of these nine purchasers indicated that they need NSF certification for

some of their customers, particularly when the HEDP is used in water or for other human consumption. 

Some of these purchasers indicated that they require all of the HEDP they purchase to be NSF certified

since it is impractical for them to segregate inventories, although two purchasers indicated that they

require NSF certification for only some of their purchases. One importer and purchaser *** indicated that

certification at the producer level is not always necessary if a purchaser is capable of certifying products

under its own name. Purchaser *** observed that NSF certification is just one of many quality control

systems available and believed it one of the least effective, behind ISO 9000, six sigma, or NACD, since

certification simply requires paying a fee. 
 31 Petition, p. 24.

 32 Conference transcript, p. 86 (Mangwani). However, Uniphos indicated that Wujin Fine Chemical Factory has

three of its phosphonates that are NSF certified. Conference transcript, p. 97 (Collias).

 33 U.S. producer Compass was also qualified for the NSF/ANSI Standard 60. NSF Product and Service listings,

“http://www.nsf.org/Certified/PwsChemicals/Listings.asp?CompanyName=&TradeName=&ChemicalName=Hydro

xyethylidene+Diphosphonic+Acid&ProductFunction=&PlantState=&PlantCountry=,” retrieved January 28, 2009.

II-8

Table II-3

HEDP: Importance of factors used in purchasing decisions, as reported by U.S. purchasers

Factor

Number of firms reporting

Very important Somewhat important Not important

Availability 40 3 0

Delivery terms 23 19 1

Delivery time 30 12 1

Discounts 11 25 7

Extension of credit 13 21 9

Price 35 8 0

Minimum quantity requirements 11 14 18

Packaging 16 16 11

Product consistency 38 4 1

Quality meets specifications 39 3 1

Quality exceeds specifications 11 19 13

NSF certification 4 14 24

Product range 12 15 15

Reliability of supply 36 5 2

Technical support 12 18 13

U.S. transportation costs 19 18 5

Source: Compiled from data submitted in response to Commission questionnaires.

According to Compass, imports of HEDP from China and imports of HEDP from India are

completely interchangeable with each other as long as the product meets specifications.31 However,

importer Aquapharm indicated that some HEDP from China does not have NSF certification.32 As of

January 28, 2009, the only foreign firms that had products that qualified for the NSF/ANSI Standard 60

for drinking water chemicals were Indian producer Aquapharm (Aquacid 105 NS and HEDP), UK

producer Rhodia (Briquest® ADPA-60A), and Chinese producer Wujin Fine Chemical (XF-334 (N)

HEDP).33

Forty of 43 responding purchasers indicated that availability was a “very important” factor in

their HEDP purchasing decisions. Nine of 43 responding purchasers reported that availability was the

most important factor in their purchasing decisions, 12 purchasers reported it was the number two factor,

and nine purchasers reported it was the number three factor. Reliability of supply was cited as a “very
 34 Conference transcript, pp. 43-44 (McCaul), pp. 93-94, 117-118 (Collias), p. 150 (Wang).

 35 Petition, p. 25.

 36 Petition, pp. 25-26.

II-9

important” factor by 36 of 43 responding purchasers and was cited as either the number two or number

three factor used in purchasing decisions by four purchasers. Thirty-eight of 43 responding purchasers

indicated that consistency was a “very important” factor in their purchasing decisions of HEDP, and one

purchaser reported it as its third most important factor used in purchasing decisions. Both Compass and

respondents indicated that purchasers typically rely on multiple suppliers.34

One importer (***) indicated that regardless of the countries compared, availability, customer

service, transportation network, a full product offering, technical service and brand recognition are always

factors affecting HEDP purchasing decisions in the water treatment industry. Importer (***) indicated

that it believes that price is the main factor, although there may be a few customers who prefer to buy

U.S. produced material due to patriotic reasons or due to the style of drum openings. An importer of ***

indicated that customers know and trust their sales and technical manager; trust that their product quality

will be acceptable and consistent because they identify the source and provide certificates of analysis

upon request; have an order-to-delivery response time of a few days; and offer an economical freight cost

for shipping HEDP from the warehouse. 

*** also indicated that his customers typically order other chemicals along with HEDP and in

some cases, customers have ordered from it because other suppliers do not have inventory available or

cannot deliver the product on the date needed. Several purchasers, including ***, indicated that they

have purchased HEDP from one source although a comparable product was available from another source

at a lower price because they were able to purchase other chemicals with their HEDP order.

Comparisons of Domestic Products and Subject Imports

As indicated in table II-4, the U.S. producer and at least one-half of responding importers and

purchasers indicated that HEDP produced in the United States and imported from China and India is

“always” used interchangeably. At least three-quarters of responding importers and purchasers indicated

that HEDP produced in the United States and imported from China and India is at least “frequently” used

interchangeably. One purchaser (***) indicated that the main factors that preclude interchangeable use

are the level and types of impurities HEDP from different suppliers and that suppliers in some regions

tend to have different standards for purity than suppliers in other regions. 

As indicated in table II-5, the U.S. producer indicated that differences other than price between

HEDP produced in the United States and imported from China and India were “sometimes” a significant

factor in its sales of the products. At least 80 percent of responding importers indicated that differences

other than price between HEDP produced in the United States and imported from China and India were at

least “sometimes” a significant factor in their firm’s sales of the products. 

Purchasers were also asked to compare HEDP produced in the United States and subject and

nonsubject countries on the basis of different purchasing factors (table II-6). The U.S. product was

ranked comparable with subject imports by at least half of responding purchasers for all characteristics

except for availability, delivery time, and price. Compass indicated that domestic and imported HEDP

generally are perceived as identical products by customers and producers alike.35 According to Compass,

customers routinely commingle imported and domestic material in their bulk storage tanks and assign the

same raw material codes to both. Compass also indicated that producers, both domestic and foreign,

occasionally swap product amongst themselves when it is convenient to do so.36 Respondents indicated

that the majority of the largest-volume users of HEDP do not store HEDP in bulk because they would not
 37 Conference transcript, p. 96 (Collias), p. 118 (Karve).

 38 No separate data are available for nonsubject Chinese HEDP manufactured and exported by Wujin Water.

II-10

Table II-4

HEDP: Perceived degree of interchangeability of product produced in the United States and in

other countries1

Country comparison

Number of U.S.

producers reporting

Number of U.S.

importers

reporting

Number of U.S.

purchasers

reporting

 A F S N A F SN A F S N

U.S. vs. China 1 0 0 0 7 4 2 0 16 7 6 0

U.S. vs. India 1 0 0 0 5 3 1 0 9 7 2 1

U.S. vs. United Kingdom 1 0 0 0 6 2 00 7 5 1 0

U.S. vs. other countries 0 0 0 0 3 1 00 4 1 1 0

China vs. India 1 0 0 0 3 2 2 0 7 5 4 1

China vs. United Kingdom 1 0 0 0 3 3 10 4 5 3 0

China vs. other countries 0 0 0 0 3 1 00 1 2 1 0

India vs. United Kingdom 1 0 0 0 5 2 00 4 5 1 1

India vs. other countries 0 0 0 0 3 1 00 1 2 1 0

 1 Producers and importers were asked if HEDP produced in the United States and in other countries is used

interchangeably.

Note.--“A” = Always, “F” = Frequently, “S” = Sometimes, “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

want to take the risk of commingling product from different sources so they can trace back to where the

product was sourced.37

Comparisons of Domestic Products and Nonsubject Imports38

As indicated in table II-4, the U.S. producer, at least 70 percent of responding importers, and at

least half of responding purchasers indicated that HEDP produced in the United States and imported from

the United Kingdom is “always” used interchangeably. As indicated in table II-5, the U.S. producer

indicated that differences other than price between HEDP produced in the United States and imported

from the United Kingdom were “sometimes” a significant factor in its firm’s sales of the products. 

Responding importers provided a variety of responses. Also, the U.S. product was ranked comparable

with nonsubject imports by at least one-half of responding purchasers for all characteristics (see table II6). 
II-11

Table II-5

HEDP: Differences other than price between products from different sources1

Country comparison

Number of U.S. producers

reporting

Number of U.S. importers

reporting

A F S N A F SN

U.S. vs. China 0 0 1 0 2 2 6 2

U.S. vs. India 0 0 1 0 2 3 3 0

U.S. vs. United Kingdom 0 0 1 0 2 2 0 4

U.S. vs. other countries 0 0 0 0 1 1 1 1

China vs. India 0 0 1 0 2 2 2 1

China vs. United Kingdom 0 0 1 0 2 2 2 1

China vs. other countries 0 0 0 0 1 1 1 1

India vs. United Kingdom 0 0 1 0 2 1 2 2

India vs. other countries 0 0 0 0 1 1 1 0

 1

 Producers and importers were asked if differences other than price between HEDP produced in the United

States and in other countries are a significant factor in their firms’ sales of HEDP.

Note.--“A” = Always, “F” = Frequently, “S” = Sometimes, “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

Comparisons of Subject Imports and Nonsubject Imports

As indicated in table II-4, the U.S. producer and at least 40 percent of responding importers

indicated that HEDP imported from China and India and imported from the United Kingdom is “always”

used interchangeably. At least two-thirds of responding importers and purchasers indicated that HEDP

imported from China and India and imported from the United Kingdom was at least “frequently” used

interchangeably. 

As indicated in table II-5, the U.S. producer indicated that differences other than price between

HEDP imported from China and India and imported from the United Kingdom were “sometimes” a

significant factor in its firm’s sales of the products and at least 70 percent of responding importers

indicated that differences other than price between HEDP imported from China and India and imported

from the United Kingdom were at least “sometimes” a significant factor.

Comparisons of Subject Products from the Subject Countries

As indicated in table II-4, the U.S. producer, three of seven responding importers, and seven of

sixteen responding purchasers indicated that HEDP imported from China and imported from India are

“always” used interchangeably.
II-12

Table II-6

HEDP: Purchasers’ comparisons of domestic and subject and nonsubject products

Factor

U.S. vs. China U.S. vs. India U.S. vs. UK

S C I S C I S C I 

 Availability 4 14 6 5 8 4 1 4 1

 Delivery terms 4 16 4 3 12 2 0 6 0

 Delivery time 10 8 5 10 4 2 2 3 1

 Discounts offered 1 15 7 0 15 2 0 6 0

 Extension of credit 3 19 2 2 14 1 0 6 0

 Lower price 1 7 16 0 10 7 1 3 1

 Lower transport costs 8 13 3 3 10 3 1 3 1

 Minimum quantity requirements 5 17 2 2 13 2 1 5 0

 NSF certification 4 13 1 3 10 1 0 3 0

 Packaging 6 18 0 3 13 0 2 4 0

 Product consistency 3 18 3 3 12 2 0 6 0

 Product range 2 17 2 0 15 1 0 4 1

 Quality exceeds industry standards 2 18 1 1 13 1 0 4 0

 Quality meets industry standards 3 20 1 2 15 0 0 6 0

 Reliability of supply 5 16 3 3 12 2 0 5 1

 Technical support 9 13 0 5 9 1 0 6 0

Note.–S = domestic product superior, C = domestic product comparable, I = domestic product inferior. 

Source: Compiled from data submitted in response to Commission questionnaires.

As indicated in table II-5, the U.S. producer and two of seven responding importers indicated that

differences other than price between HEDP imported from China and imported from India were

“sometimes” a significant factor in their firm’s sales of the products, two of seven responding importers

indicated that these factors were “frequently” a significant factor, two responding importers indicated that

they were “always” a significant factor, and the one remaining responding importer indicated that they

were “never” a significant factor. Also, the imports from China and India were ranked comparable with

each other by at least sixty percent of responding purchasers for all characteristics (see table II-7). 
 39 Parties were requested to comment on elasticities; these comments are addressed as appropriate.

 40 Domestic supply response is assumed to be symmetrical for both an increase and a decrease in demand for the

domestic product. Therefore, factors affecting increased quantity supplied to the U.S. market also affect decreased

(continued...)

II-13

Table II-7

HEDP: Purchasers’ comparisons of subject and nonsubject products

Factor

China vs. India China vs. UK India vs. UK

S C I S C I S C I 

 Availability 3 10 0 1 4 1 1 2 1

 Delivery terms 2 10 1 1 5 0 1 2 1

 Delivery time 3 8 2 1 5 0 1 2 1

 Discounts offered 1 12 0 1 4 1 1 3 0

 Extension of credit 0 13 0 0 5 1 0 4 0

 Lower price 4 9 0 3 0 1 1 2 0

 Lower transport costs 2 11 0 0 5 0 0 4 0

 Minimum quantity requirements 0 13 0 0 6 0 0 4 0

 NSF certification 0 9 2 0 2 1 0 3 0

 Packaging 0 12 1 0 6 0 1 3 0

 Product consistency 1 11 1 0 5 1 0 3 1

 Product range 1 10 1 0 5 0 0 4 0

 Quality exceeds industry standards 0 8 3 0 3 1 0 3 0

 Quality meets industry standards 0 12 1 0 6 0 0 3 1

 Reliability of supply 1 10 2 1 5 0 0 3 1

 Technical support 1 9 2 0 5 1 0 3 1

Note.–S = domestic product superior, C = domestic product comparable, I = domestic product inferior. 

Source: Compiled from data submitted in response to Commission questionnaires.

ELASTICITY ESTIMATES39

U.S. Supply Elasticity

The domestic supply elasticity for HEDP measures the sensitivity of the quantity supplied by

U.S. producers to a change in the U.S. market price of HEDP. The elasticity of domestic supply depends

on several factors, including the level of excess capacity, the ease with which producers can alter

capacity, producers’ ability to shift to the production of other products, the existence of inventories, and

the availability of alternative markets for U.S.-produced HEDP.40 Earlier analysis of these factors
 40 (...continued)

quantity supplied to the same extent.

 41 The substitution elasticity measures the responsiveness of the relative U.S. consumption levels of the subject

imports and U.S. domestic like products to changes in their relative prices. This reflects how easily purchasers

switch from the U.S. product to the subject product (or vice versa) when prices change.

 42 Petitioner’s prehearing brief, p. 13 fn. 37.

 43 Additionally, the elasticities of substitution between U.S.-produced HEDP and nonsubject imports and between

subject imports and nonsubject imports are likely to be in the same range.

II-14

indicated that the U.S. industry has a moderate ability to increase or decrease shipments to the U.S.

market given a change in price levels. Staff estimates that the supply elasticity is between 3 and 6 for

HEDP. 

U.S. Demand Elasticity

The U.S. demand elasticity for HEDP measures the sensitivity of the overall quantity demanded

to a change in the U.S. market price of HEDP. This estimate depends on factors discussed earlier such as

the existence, availability, and commercial viability of substitute products, as well as the component share

of HEDP in the production of downstream products. Based on available information, the demand

elasticity for HEDP is likely to be in the range of -0.25 to -0.50.

Substitution Elasticity

The elasticity of substitution depends upon the extent of product differentiation between the

domestic and imported products.41 Product differentiation, in turn, depends upon such factors as quality

(e.g., chemistry, surfaces, coil sizes) and conditions of sale (e.g., service, availability, delivery). Compass

indicated that it agrees that the elasticity of substitution should be at least in the range of 3 to 5, if not be

higher.42 Based on this and other available information, the elasticity of substitution between U.S.-

produced HEDP and subject imported HEDP is likely to be in the range of 3 to 5.43
 1

 www.Rhodia-novecare.com has a list of the company’s phosphonate products. Retrieved April 11, 2008.

 2

 SRI CEH: Chelating Agents, 2007, p. 515:5001R.

 3

 *** 2007 10K report.

 4

 Total U.S. production capacity for all forms of organophosphonates in 2006 was estimated to be ***. ***.

 5

 In the preliminary phase of the investigations, the Commission also sent producers’ questionnaires to the U.S.

firms that produce or are capable of producing other phosphonates. Four firms responded that they had not produced

HEDP since 2005. In the final phase of the investigations, *** reiterated that it has not been a producer of HEDP in

the United States since 2005, but that it ***.

 6

 ***. Petition, pp. 2-3.

III-1

PART III: U.S. PRODUCERS’ PRODUCTION, SHIPMENTS, AND

EMPLOYMENT

The Commission analyzes a number of factors in making injury determinations (see 19 U.S.C. §§

1677(7)(B) and 1677(7)(C)). Information on the final margins of sales at LTFV was presented earlier in

this report and information on the volume and pricing of imports of the subject merchandise is presented

in Parts IV and V. Information on the other factors specified is presented in this section and/or Part VI

and (except as noted) is based on the questionnaire responses of two firms that accounted for 100 percent

of U.S. production of HEDP during the period for which data were collected.

U.S. PRODUCERS

Phosphonates

There are currently eight U.S. producers of phosphonates. The U.S. producers of phosphonates

are either selling into the merchant market or are captive producers selling directly to related formulators,

most of whose products are destined for the oilfield market. The two leading U.S. manufacturers of

phosphonates are petitioner Compass and Rhodia (which markets the Briquest line of phosphonates).1

 In

addition, *** has the ability to manufacture phosphonates, in particular ***. Smaller producers with

captive markets include ***. The combined annual phosphonate production capacity of these companies

is estimated to be ***.2

 However, the smaller producers of phosphonates (primarily ***) typically are

medium to large multinational companies that are part of the industrial water treatment industry and that

produce a variety of water treatment chemicals for various industries, including industrial boilers and

petroleum industry applications. These companies typically blend phosphonates with other water

treatment products to deal with complex issues related to improving commercial water supplies. ***, the

largest company of the group dedicated to water treatment, had sales in 2007 of almost $4 billion.3 4

HEDP

The Commission sent producers’ questionnaires to firms believed to have been current or former

HEDP producers, including Compass and Rhodia (identified in the petition as U.S. producers of HEDP).5

Both firms submitted responses. The Commission also attempted to contact former producer

Lynx Chemical Group LLC (“Lynx”); however, the company no longer exists. Instead, partial data for

the former Lynx operation were provided by Compass and Rhodia.6

Table III-1 presents the list of reporting U.S. producers with each company’s U.S. production

location, share of U.S. HEDP production in 2007, and position on the petition.
 7

 Conference transcript, p. 22 (Failon). Compass also reported that it did not produce HEDP when Compass first

acquired the U.S. facility, but continued to import HEDP from China in the second half of 2006, and only started

producing HEDP after a period of evaluation. Conference transcript, p. 62 (McCaul).

III-2

Table III-1

HEDP: U.S. producers, positions on petition, plant locations, and shares of U.S. production in

2007

Firm name

Position on

petition Plant location Parent company

Share of

reported

2007 U.S.

production

(percent)

Compass Chemical

International LLC1

 Support

(petitioner) Smyrna, GA 100% Cathay Industries (USA) 100.0

Rhodia, North America /

Lynx2 ***

Charleston, SC3

/

Smyrna, GA 100% Rhodia Group (France) (3

)

1

 Compass reported a ***. Compass reported that ***, an affiliated company that *** during the period for which data were

collected, was integrated into Cathay Pigments (China), Ltd. *** was the broker Compass used for its HEDP imports from China. 

Compass also reported that ***, which operated independently, purchased HEDP predominately from Chinese producer ***. 

Petition, supplemental information, March 26, 2008, pp. 1-2. 2

 Rhodia reported that ***.

3

 ***. 

Source: Compiled from data submitted in response to Commission questionnaires, www.na.rhodia.com, and

www.compasschemical.com.

U.S. CAPACITY, PRODUCTION, AND CAPACITY UTILIZATION 

U.S. producers’ capacity, production, and capacity utilization data for HEDP are presented in

table III-2 and figure III-1. These data show that production capacity remained stable during 2005-07,

with average capacity utilization fluctuating based on production levels over the same period. Capacity

utilization was *** percent in 2005, then fell to *** percent in 2006, before returning to *** percent in

2007. The decline in 2006 was due to substantially lower production level in the second half of 2006, as

Compass acquired the Smyrna, GA, production facility in July and only gradually ramped up its

production.7

 Production levels were somewhat lower in January-September 2008 than in JanuarySeptember 2007, resulting in a capacity utilization of *** percent.

Table III-2

HEDP: U.S. producers’ capacity, production, and capacity utilization, 2005-07, January-September

2007, and January-September 2008

* * * * * * *

Figure III-1

HEDP: U.S. producers’ capacity, production, and capacity utilization, 2005-07, January-September

2007, and January-September 2008

* * * * * * *
 8

 Producers’ questionnaire, section II-2.

 9

 Conference transcript, pp. 11-12 (Failon). Compass reported that it has invested “in excess of $2 million of

capital” at the Smyrna facility. Conference transcript, pp. 21-22 (Failon).

 10 The Commission in its preliminary-phase determination stated that it would seek additional information on

Compass’s acquisition of the Smyrna facility, including its business plan associated with the purchase of the facility. 

1-Hydroxyethylidene-1, 1-diphosphonic acid from China and India, Inv. Nos. 731-TA-1146-1147 (Preliminary),

USITC Publication 3998, May 2008, p. 17, fn. 90. In response to this request, Compass reported that ***. Compass

noted that prior to its acquisition, Lynx manufactured HEDP at the facility in Smyrna, GA exclusively for Rhodia,

***. Compass stated it was aware and took into consideration *** that it would be necessary to make *** capital

investment in the facility to improve the plant’s operations and ***. In addition to ***, Compass believed it could

make the plant more competitive by utilizing lower cost raw materials imported from China (specifically

Phosphorous Acid Crystal instead of PCl3), as well as by ***. Moreover, Compass believed that it would have a

large increase in sales of phosponates from many of the existing Lynx’s and Rhodia’s customers supplied by the

Symrna manufacturing facility. Petitioner's postconference brief, exhibit 4; email from ***; and hearing transcript,

p. 12, pp. 48-49, and pp. 116-117 (McCaul). Compass noted that it did not have any immediate plans at the time of

acquisition, nor do they currently have plans, to expand capacity. Petitioner’s posthearing brief, p. 10, fn. 21.

 11 Conference transcript, p. 10 (Failon).

 12 Conference transcript, p. 11 (Failon).

 13 Hearing transcript, pp. 64-65 (McCaul), and Compass Chemical International LLC, “About us,” found at

http://www.compasschemical.com/about/index.htm, retrieved April 1, 2008.

 14 Under the agreement, ***. Email from ***.

 15 Rhodia’s response to the producers’ questionnaire, addendum.

 16 Producers’ questionnaire responses, section II-4.

 17 Compass reported that in 2007 it changed its raw material input from phosphorous trichloride (PCl3) to

phosphorous acid. Compass stated that it made this change in part due to the availability of PCl3, its higher cost, and

its hazardous nature. Lynx had obtained the PCl3 it used in the production of HEDP from Rhodia. In contrast,

Compass chose not to obtain PCl3 from Rhodia, with which it competes in downstream markets. Conference

transcript, pp. 64-66 (McCaul).

III-3

The Commission asked domestic producers to describe any plant openings, relocations,

expansions, acquisitions, consolidations, closures, and prolonged shutdowns.8

 Compass reported that it

acquired a phosphonate plant in Smyrna, GA, and a blending facility in Huntsville, TX, from Lynx in

July 2006.9 10 Prior to this, Compass was, since its establishment in August 1999, an import-based, hybrid

supplier of specialty chemicals, including HEDP,11 and used third party blending and warehousing service

providers.12 In January 2007, Compass merged with Cathay Pigments USA, Inc. to form Cathay

Industries (USA). Cathay Industries (USA) is a wholly owned subsidiary of Cathay Industries

International Ltd., which in turn is a wholly owned subsidiary of Cathay Pigments (Holdings) Ltd.13

Prior to its acquisition by Compass, the phosphonate plant in Smyrna, GA, was owned and

operated by Lynx from 2004 through June 2006. During this period Lynx ***.14 In turn, ***.15

The Commission asked domestic producers to describe the constraints that limit production

capacity.16 Compass responded that the *** limited its production capacity of HEDP.17

Compass, accounting for all the U.S. production of HEDP in 2007, reported that it *** produce

other products on the same machinery and equipment, but *** produce other products, namely ***, with

the workers used in the production of HEDP. *** reportedly accounted for ***, of its total production in

2007.

U.S. PRODUCERS’ SHIPMENTS

Table III-3 presents information on U.S. producers’ shipments of HEDP. U.S. producers’ U.S.

shipments, in terms of quantity, rose from 2005 to 2007 by *** percent, largely due to Compass ramping
 18 Conference transcript, p. 22 (Failon).

 19 Email from ***. Principal export markets reported by Compass include ***.

 20 Email from ***.

 21 In January 2005 the Chinese government eliminated the 8 percent export rebate for yellow phosphorus; on June

1, 2006, the government instituted a 20 percent export tariff; and by May 1, 2008, the Chinese government increased

the export tariff to 120 percent. This caused one market participant to state “This six-fold price increase directly

affects phosphorus prices globally, and forces us to adapt our prices in line with the amount of phosphorus used in

the respective applications.” LANXESS K.K., “Price increases for all LANXESS phosphorus chemicals,” news

release, May 26, 2008. Since then, the export tariffs have been reduced somewhat. However, “{b}y imposing

restraints on exports, China has driven the world market price to an unprecedented level. At the same time, because

the high tariffs discourage exports, the price of phosphorus inside China is relatively low. The difference in China

and world-market prices provides a huge benefit to China's domestic producers of phosphorus derivatives.” Richard

V. Kennedy, China’s Compliance with WTO Commitments, Before the Trade Policy Staff Committee, October 2,

2008, pp. 1-2. The difference in the landed price of U.S. PCl3 and Chinese phosphorus acid may have influenced the

Compass decision to switch to phosphorus acid. For further discussion, see conference transcript, pp. 62-66

(McCaul and Failon) and hearing transcript, pp. 51-54 (McCaul).

 22 ***.

 23 Conference transcript, pp. 18-19 (Failon), and producers’ questionnaire response, section II. Internal

consumption ***.

III-4

up its production after its July 2006 acquisition of the Smyrna, GA production facility.18 On a value

basis, U.S. producers’ U.S. shipments increased by only *** percent from 2005 to 2007, reflecting a

decline in the average unit value of U.S. shipments of *** percent, from $*** per pound in 2005 to $***

per pound in 2007. U.S. producers’ total shipments increased by *** percent during 2005-07, largely due

to an increase in U.S. shipments in 2007. As a share of total shipments, U.S. shipments increased

between 2005 and 2007, while export shipments declined. 

Table III-3

HEDP: U.S. producers’ shipments, by type and by company, 2005-07, January-September 2007,

and January-September 2008

* * * * * * *

Compass’s U.S. shipments were *** percent and *** percent higher, in terms of quantity and

value, respectively, in January-September 2008 compared with January-September 2007, while

Compass’s export shipments on a quantity and value basis were *** percent and *** percent lower. 

Compass reported that the decline in export shipments was a result of ***.19

While Compass’s U.S. shipments, on both a quantity and a value basis, were higher in JanuarySeptember 2008 compared with January-September 2007, the increase in value was greater, resulting

from an average unit value of $*** per pound, compared to $*** per pound in January-September 2007. 

Compass reported that this was due to ***.20 21

*** the U.S. producers reported transfers to related firms, while *** had export shipments.22

Rhodia/Lynx and Compass reported *** internal consumption. Compass reported that *** percent of its

internal consumption of HEDP was used to produce tetrasodium etidronate, a tetrasodium salt of HEDP.23

 *** percent of tetrasodium etidronate, in the form of ***, was processed into a downstream product, and

was reported to account for *** percent of the downstream product’s production cost. Tetrasodium

etidronate is used almost exclusively in the production of bar soap as a preservative, and also functions as

a water softener in soaps to prevent soap scum and bathtub rings by sequestering the calcium and
 24 Compass reported that this product can also be used in other applications where HEDP is used, particularly

where the alkaline pH is preferred so as to avoid an exothermal or heat buildup during blending. Competing

products include Thermphos’s Dequest 2016 and Rhodia’s Briquest ADPA 21SH. Conference transcript, p. 19

(Failon). Similarly, Indian producer Aquapharm reported that it produced and internally consumed tetrasodium salt,

but that it did not sell this salt in the United States. Conference transcript, pp. 138-139 (Mangwani).

 25 Email from ***.

 26 Email from ***.

 27 ***.

 28 Conference transcript, p. 23 (Failon), and hearing transcript, p. 33 (Levin).

III-5

magnesium in the water.24 Compass reported that the increase in internal consumption was a function of

***.25

U.S. PRODUCERS’ INVENTORIES

Data on U.S. producers’ end-of-period inventories of HEDP during the period for which data

were collected are presented in table III-4. Inventories declined between 2005 and 2006, as Compass

acquired the U.S. production facility in July 2006, but rose in 2007, ending the year *** percent below

2005 levels. Likewise, inventories as a ratio of production, U.S. shipments, and total shipments also

declined in 2006, then partially recovered in 2007. Inventories were *** percent higher in JanuarySeptember 2008 than in January-September 2007. Compass reported that ***.26

Table III-4

HEDP: U.S. producers’ end-of-period inventories, by company, 2005-07, January-September 2007,

and January-September 2008

* * * * * * *

U.S. PRODUCERS’ IMPORTS AND PURCHASES

During the period for which data were collected, both Compass and Rhodia reported imports of

HEDP, and *** reported purchases of imported HEDP from other sources.27 Compass reported that after

purchasing the U.S. production facility, it began to ramp up production and phase out imports, and ceased

importing HEDP in the fourth quarter of 2007.28 *** purchases of HEDP from other U.S. importers were

***. Table III-5 presents company-specific information on U.S. producer Compass’s U.S. production and

imports of HEDP, and ratios to U.S. production of HEDP. Figure III-2 presents Compass’s U.S.

production, imports, and purchases of HEDP. Table III-6 presents company-specific information on U.S.

producer Rhodia/Lynx’s U.S. production and imports of HEDP, and ratios to U.S. production of HEDP. 

Table III-5

HEDP: U.S. producer Compass’s U.S. production, imports, ratio to production, and U.S.

shipments, 2005-07, January-September 2007, and January-September 2008

* * * * * * *

Figure III-2

HEDP: U.S. producer Compass’s U.S. production, imports, and purchases, 2005-07,

January-September 2007, and January-September 2008

* * * * * * *
III-6

Table III-6

HEDP: U.S. producer Rhodia/Lynx’s U.S. production, imports, ratio to production, and U.S.

shipments, 2005-07, January-September 2007, and January-September 2008

* * * * * * *

As Compass’s U.S. production commenced in 2006, its subject imports increased by *** percent

between 2005 and 2006, but then declined by *** percent between 2006 and 2007, as production

increased by *** percent. Subject imports by Compass declined to *** in January-September 2008,

while production also declined, by *** percent in interim 2008 compared with interim 2007. Compass’s

U.S. shipments of U.S. production and subject imports followed a similar pattern, with U.S. shipments of

subject imports increasing by *** percent between 2005 and 2006, then declining by *** percent from

2006 to 2007, while U.S. shipments of domestically-produced HEDP, which commenced in 2006,

increased *** percent between 2006 and 2007. U.S. shipments of U.S. production by Compass was ***

percent higher in interim 2008 compared with interim 2007, while Compass’s U.S. shipments of subject

imports declined *** percent. Total U.S. shipments of HEDP by Compass increased between 2005 and

2007 by *** percent, an increase of *** percent between 2005 and 2006 and *** percent between 2006 to

2007.

U.S. EMPLOYMENT, WAGES, AND PRODUCTIVITY

Data provided by U.S. producers on the number of production and related workers (“PRWs”)

engaged in the production of HEDP, the total hours worked by such PRWs, and wages paid to such

PRWs during the period for which data were collected are presented in table III-7. PRWs producing

HEDP declined from *** to *** from 2005 to 2006, and rose in 2007 to ***, as Compass acquired the

production facility from Lynx and ramped up its production. Hours worked per PRW increased by ***

percent between 2005 and 2007, while productivity declined by *** percent and hourly wages increased

by *** percent. The number of PRWs was stable, but the hours worked by PRWs were *** percent lower

in January-September 2008 compared with January-September 2007, and the wages paid to PRWs

decreased *** percent. Productivity was *** percent lower in January-September 2008 than in

January-September 2007, while unit labor costs were *** percent lower.

Table III-7

HEDP: U.S. producers’ employment-related indicators, 2005-07, January-September 2007, and

January-September 2008

* * * * * * *
 1

 ***, ***, ***, and *** provided responses to the importers’ questionnaire, but reported that they were not the

importers of record, and as such are not included in the import data contained in this report. 

 2

 The Commission sent questionnaires to those firms identified in the petition, along with firms that, based on a

review of data provided by the U.S. Customs and Border Protection (“Customs”), may have imported HEDP since

2005. Twenty-three firms reported that they had not imported HEDP from any country since January 1, 2005.

 3

 One purchaser, ***, reported purchases of HEDP in interim 2008 originating from *** Germany, though such

purchases were small (*** pounds).

 4

 Solutia’s water treatment phosphate business, Dequest, was acquired by Thermphos on June 1, 2007, but Solutia

reported that ***. ***. 

 5

 Hearing transcript, p. 7 (Levin).

IV-1

PART IV: U.S. IMPORTS, APPARENT CONSUMPTION, AND

MARKET SHARES

U.S. IMPORTERS

The Commission sent importer questionnaires to all U.S. producers, as well as 43 firms believed

to be U.S. importers of HEDP. These companies represented approximately three-quarters of total

imports from China under HTS subheading 2931.00.9043, a multi-product statistical reporting number,1

almost all imports from India, and the vast majority of imports from all other sources, essentially the

United Kingdom, in the period for which data were collected.2 3

 Questionnaire responses containing

usable data were received from 18 firms. Compass accounted for *** percent of reported subject imports

of HEDP from China in 2007, and Aquapharm accounted for *** percent of reported imports of HEDP

from India in 2007. In the same year, *** and *** accounted for *** percent and *** percent of

nonsubject imports of HEDP from China (i.e. HEDP exported by Wujin Water), respectively. In 2007,

Solutia accounted for *** percent of nonsubject imports from the United Kingdom, the largest nonsubject

source.4

 During the period for which data were collected, U.S. producers Compass and Rhodia imported

HEDP from China and the United Kingdom, respectively. Through June 2006, Compass was solely an

importer of HEDP from China. In July 2006, Compass acquired a HEDP plant in Smyrna, GA, and

commenced U.S. shipments from this facility. Compass ceased importing HEDP from China in the fourth

quarter of 2007.5

 From 2005 to 2007, Compass accounted for ***, ***, and *** percent of the quantity

of reported subject HEDP imports from China, respectively, and then 0 percent in January-September

2008. During 2005-07, Rhodia accounted for *** percent, *** percent, and *** percent of imports of

HEDP from all nonsubject sources. ***. 

Table IV-1 lists all responding U.S. importers of HEDP and their quantities of imports, by source,

in 2007.

Table IV-1

HEDP: Reported U.S. imports, by importers and by sources of imports, 2007

* * * * * * *
 6

 Both Petitioners and Respondents reported that the United Kingdom was the only other major source of imports

of HEDP into the United States. Conference transcript, p. 31 (Failon) and pp. 98-99 (Mangwani).

 7

 Wujin Water was found by Commerce to have dumping margins of zero percent, and as such is treated as a

nonsubject source in this report. The U.S. nonsubject China import data provided by the *** does not ***. Wujin

Water reported exports to the United States of *** pounds for 2005-07, respectively, and *** pounds for JanuarySeptember 2007, and January-September 2008, respectively. ***, which was listed as a U.S. importer of HEDP by

Wujin Water, reported that it ***. Email from ***, March 16, 2009.

 8

 Data for January-September 2007 for nonsubject imports by Solutia were estimated using data for JulyDecember 2007 and calendar year 2007 from ***. ***. Email from ***, December 30, 2008. ***. 

 9

 ***.

 10 Conference transcript, p. 22 (Failon).

 11 Hearing transcript, p. 33 (Levin).

IV-2

U.S. IMPORTS

Table IV-2 presents data for U.S. imports of HEDP from China (subject), India, China

(nonsubject), and other nonsubject sources, essentially the United Kingdom.6 7

 Data on U.S. imports from

China and nonsubject sources are based on responses to the Commission's U.S. importers’ questionnaires,

as official statistics are from a statistical reporting number that is broader than the subject product.8

 Data

for imports from India are based primarily on responses to the Commission's U.S. importers’ and foreign

producers’ questionnaires from ***.9

Table IV-2

HEDP: U.S. imports, by sources, 2005-07, January-September 2007, and January-September 2008

* * * * * * *

The quantity of subject U.S. imports from China fluctuated over the period, increasing by ***

percent from 2005 to 2006, then declining by *** percent in 2007. The value of subject imports from

China rose between 2005 and 2006 by *** percent, and then by *** percent in 2007. Subject imports

from China were *** percent lower on a quantity basis in January-September 2008 than in JanuarySeptember 2007, and were *** percent higher on a value basis. The fluctuation in subject imports of

HEDP from China ***. Compass noted that in 2006 after it bought the U.S. HEDP production facility, it

had an increase in business and temporarily increased its imports of HEDP from China while it ramped up

its U.S. production.10 Compass argues that the decline in HEDP imports from China between 2006 and

2007 was due in large measure to a decline in imports from China by Compass itself, in order to ramp up

domestic production.11 

Offsetting *** in subject imports from China in 2007, other U.S. importers, which collectively

represented almost *** of total subject imports from China in 2007, reported increases in subject imports

from China. *** started importing in 2007, and importers *** increased their imports from China by ***. 

These importers also offset *** imports from China (subject) in 2008. *** reported that it increased

imports from China due to the ***, and *** reported that it added new customers as it continued to

penetrate the market, as well as due to supply shortages which caused some customers to seek other

sources of HEDP.

Between 2005 and 2007 imports of HEDP from India, in terms of quantity and value, increased

by *** percent and *** percent, respectively. Subject imports from India were *** percent higher in

terms of quantity, and *** percent higher in terms of value, in January-September 2008 compared with

January-September 2007. 
 12 ***.

 13 ***.

 14 *** reported importing HEDP under HTS numbers 2811.19, 2920.90, 3204.12, and 3923.90. 

 15 Hearing transcript, p. 23 (Failon).

IV-3

Nonsubject imports from China increased *** percent in terms of quantity, and *** percent in

terms of value, between 2005 and 2007. The quantity of imports of HEDP from the United Kingdom, the

only other substantial nonsubject source, rose by *** percent between 2005 and 2006, then fell ***

percent in 2007. The increase in U.K. imports from 2005 to 2006 can be largely attributed to ***. In

2007 *** imports from the United Kingdom declined *** percent from 2006 levels.12 The decline in

U.K. imports can also be attributed to ***.13 The shares of quantity and value of U.S. imports from China

and India increased from 2005 to 2007, while those of the United Kingdom declined.

The Commission asked importers if they imported HEDP under HTS statistical reporting

numbers other than 2931.00.9043. Four importers, ***, reported importing HEDP under HTS statistical

reporting numbers 2931.00.9041 or 2931.00.9050.14 This represented *** percent of total imports of

HEDP from China over the period for which data were collected and *** percent of total imports of

HEDP from India.

Table IV-3 presents data for U.S. imports of HEDP from China by source. The volume of subject

imports from China by Compass increased by *** percent between 2005 and 2006, but declined by ***

percent in 2007, while subject imports from China by all other importers declined by *** percent and

then increased *** percent over the same periods. While Compass did not import HEDP from China in

January-September 2008,15 subject imports from China by all other importers were *** percent higher

compared with January-September 2007. Unit values of subject imports by all other importers of HEDP

from China were lower than those of Compass in each period for which data were collected.

Table IV-3

HEDP: U.S. imports from China, by sources, 2005-07, January-September 2007, and JanuarySeptember 2008

* * * * * * *

THE QUESTION OF NEGLIGIBLE IMPORTS

The statute (section 771(24)(A)(i) of the Act) provides that imports from a subject country

corresponding to the domestic like product are negligible if such imports account for less than 3 percent

of the volume of all such merchandise imported into the United States in the most recent 12-month period

for which data are available that precedes the filing of the petition - in this case January 2007 through

December 2007. Based on questionnaire responses of importers of HEDP from China, India, and

nonsubject sources for that 12-month period, imports of HEDP from each of these sources exceeded the

statutory threshold, as indicated in the tabulation below:

* * * * * * *

CUMULATION CONSIDERATIONS

In assessing whether imports compete with each other and with the domestic like product, the

Commission has generally considered four factors: (1) fungibility, (2) presence of sales or offers to sell

in the same geographical market, (3) common or similar channels of distribution, and (4) simultaneous

presence in the market. Issues concerning fungibility, geographical markets, and channels of distribution
 16 Compass also argued that the other factors are also met, and thus the Commission should cumulate imports

from China and India. Hearing transcript, pp. 30-32 (Levin).

 17 AWTCP did not address any of the factors. AWTCP stated that it was not taking a position on cumulation, but

that comulation was probably warranted. Hearing transcript, p. 123, p. 136, and p. 142 (Craven).

IV-4

are addressed in Part II of this report. With regard to presence in the market, the petitioner argued that

imported HEDP from all subject countries has been simultaneously present in the U.S. market during the

period for which data were collected.16 Respondents did not address presence in the market.17 HEDP

produced in China and India was present in every year, interim period, and quarter for which data were

collected.

APPARENT U.S. CONSUMPTION AND MARKET SHARES

Data on apparent U.S. consumption of HEDP are presented in table IV-4 and figure IV-1. From

2005 to 2006, apparent U.S. consumption of HEDP increased by *** percent in terms of quantity, and by

*** percent in terms of value. From 2006 to 2007, the quantity of apparent U.S. consumption decreased

by *** percent and the value decreased by *** percent. In January-September 2008 compared with

January-September 2007, apparent U.S. consumption was *** percent lower in terms of quantity, but was

*** percent higher in terms of value.

Table IV-4

HEDP: U.S. shipments of domestic product, U.S. shipments of imports by sources, and apparent

U.S. consumption, 2005-07, January-September 2007, and January-September 2008

* * * * * * *

Figure IV-1

HEDP: Apparent U.S. consumption, by sources, 2005-07, January-September 2007, and JanuarySeptember 2008

* * * * * * *

Data on U.S. market shares for HEDP are presented in table IV-5. From 2005 to 2006, U.S.

producers lost *** percentage points of market share based on quantity and *** percentage points based

on value. Between 2006 and 2007, U.S. producers gained *** percentage points of U.S. market share

based on quantity and *** percentage points based on value. U.S. producers’ market share was ***

percentage points and *** percentage points higher by quantity and value, respectively, in JanuarySeptember 2008 compared with January-September 2007. Subject imports from China gained ***

percentage points of U.S. market share during 2005-06 based on quantity and *** percentage points

based on value. Between 2006 and 2007, subject imports from China gained *** percentage points and

*** percentage points, based on quantity and value, respectively. The U.S. market share of subject

imports from China was *** percentage points lower, in terms of quantity, and *** percentage points

lower, in terms of value, in January-September 2008 compared with January-September 2007. Subject

imports from India declined by *** and *** percentage points between 2005 and 2006 based on quantity

and value, respectively, but gained *** percentage points of U.S. market share in 2007. In JanuarySeptember 2008 compared with January-September 2007 imports from India were higher by ***

percentage points and *** percentage points, in terms of quantity and value, respectively. The market

share of nonsubject imports from China increased by *** percentage points based on quantity and ***

percentage point based on value during 2005-07. The market share of imports from other nonsubject
 18 *** reported that ***.

IV-5

countries declined by *** percentage points based on quantity and *** percentage point based on value

during 2005-07.18 In January-September 2008 compared with January-September 2007, the market share

of U.S. importers from other nonsubject countries was lower by *** percentage points and ***

percentage points on a quantity and value basis, respectively.

Table IV-5

HEDP: Apparent U.S. consumption and market shares, 2005-07, January-September 2007, and

January-September 2008

* * * * * * *

RATIO OF IMPORTS TO U.S. PRODUCTION

Data on the ratio of imports to U.S. production of HEDP are presented in table IV-6.

Table IV-6

HEDP: U.S. production, U.S. imports, and ratios of imports to production, 2005-07, JanuarySeptember 2007, and January-September 2008

* * * * * * *

COMPARISONS OF U.S. SHIPMENTS OF THE DOMESTICALLY PRODUCED

AND IMPORTED HEDP

Table IV-7 and figure IV-2 present average unit values for U.S. shipments of HEDP produced in

the United States, China, India, and all other countries. While the unit values of U.S. producers’ U.S.

shipments and U.S. shipments of subject imports from China and from India declined *** between 2005

and 2007, the unit values of U.S. shipments of nonsubject imports from China and all other sources

increased. The unit value of U.S. shipments from all sources were higher in January-September 2008

than in January-September 2007. Some importers, namely ***, attributed this increase to, among other

things, the disruption of supplies of HEDP from subject countries and raw materials from China, as well

as increased demand for raw materials used in the production of nonsubject merchandise.

Table IV-7

HEDP: Average unit values of U.S. shipments, by source, 2005-07, January-September 2007, and

January-September 2008

* * * * * * *

Figure IV-2

HEDP: Average unit values of U.S. shipments, by source, 2005-07, January-September 2007, and

January-September 2008

* * * * * * *

Pricing practices and prices reported for domestically produced and imported HEDP in response

to the Commission's questionnaires are presented in Part V of this report, Pricing and Related

Information.

 1

 Petition, p. 4.

 2

 Petition, pp. 29-30 and Exhibit AD-15. ***. 

 3

 One importer (***) reported transportation costs of 25 percent. 

V-1

PART V: PRICING AND RELATED INFORMATION

FACTORS AFFECTING PRICES

Raw Material Costs

The principal raw materials used for producing HEDP in the United States are acetic anhydride

and phosphorous acid.1

 Raw materials net of byproduct revenue accounted for *** percent of cost of

goods sold for the U.S. producer of HEDP over the period for which data were collected. Compass

indicated that annual average raw material costs for its Mayoquest® 1500 HEDP product increased by

*** percent between 2005 and 2007, increasing from *** cents per pound in 2005 to *** cents per pound

in 2006 to *** cents per pound in 2007.2

 See part VI for a further discussion on raw material costs,

including continuing increases in input prices in 2008.

Transportation Costs to the U.S. Market

Transportation costs for HEDP from China and India to the United States (excluding U.S. inland

costs) are estimated to be approximately 2.3 percent and 7.3 percent, respectively, of the total cost for

HEDP in 2008 and 3.2 percent and 4.4 percent during 2005 to 2008. These estimates are derived from

official import data and represent the transportation and other charges on imports valued on a c.i.f. basis,

as compared with customs value.

U.S. Inland Transportation Costs

Transportation costs for U.S. inland shipments of HEDP generally account for a small-tomoderate share of the delivered price of these products. The one U.S. producer, Compass, reported costs

of *** percent of the delivered price for HEDP. For all but one importer, the costs ranged from 1.5 to

15.0 percent of the delivered price for HEDP.3

Exchange Rates

Quarterly data reported by the International Monetary Fund indicate that the nominal value of the

Chinese currency appreciated 21.0 percent relative to the U.S. dollar from January-March 2005 to JulySeptember 2008 (figure V-1). The nominal value of the Indian currency depreciated 0.2 percent relative

to the U.S. dollar from January-March 2005 to July-September 2008 and the real value depreciated 3.9

percent. 
V-2

Figure V-1

Exchange rates: Indices of the nominal and real exchange rates between the currencies of China

and India and the U.S. dollar, by quarters, January-March 2005-July-September 2008

Source: International Monetary Fund, International Financial Statistics online, www.imfstatistics.org/imf/ retrieved

January 23, 2009.
 4

 In addition, ***.

 5

 In addition, six purchasers responded that there were no price leaders.

 6

 In addition one purchaser indicated simply that “Wujin” was a price leader.

V-3

PRICING PRACTICES

Pricing Methods

Eleven of 15 responding importers indicated that they determine the prices that they charge for at

least some of their sales of HEDP using transaction-by-transaction negotiations. Three of these eleven

importers (***) also reported using contracts for some of their sales. One importer (***) reported using

price lists while another importer (***) indicated that for its customer ***, it uses annual contracts and for

its customer *** it quotes prices which may be valid for 3-6 months. One importer (***) reported using

both contacts and price lists. U.S. producer Compass reported that it uses ***. U.S. producer Compass

reported that it quotes prices of HEDP on *** basis, and importers reported that they quote on a f.o.b.

basis, a delivered basis, or both.

One responding purchaser (***) reported participating in reverse internet auctions to purchase

HEDP. This purchaser indicated that ***. However, *** indicated that they did not determine prices by

reverse internet auction in their *** questionnaire responses. ***.4

 Also, one importer (***) reported

making *** percent of its sales through its e-commerce website.

The U.S. producer Compass reported that *** percent of its sales of HEDP were from inventory. 

Nine of sixteen responding importers reported that all of their sales are made from inventory and four

importers (***) reported making at least 50 percent of their sales from inventory. The remaining three

responding importers (***) reported making all of their sales to order.

The U.S. producer Compass reported lead times from inventory of *** days and lead times for

sales to order of *** days. Lead times for delivery of HEDP for all but one responding U.S. importer

ranged from one day to 30 days on sales from inventory and ranged from three days to 70 days on sales

produced to order. 

Twenty-five responding purchasers indicated that there are price leaders in the U.S. market for

HEDP.5

 Among the companies most mentioned was U.S. producer Compass, which was named by 16

purchasers; Brenntag and Rhodia were named by three purchasers; Buckman and Uniphos were named by

two purchasers; and Hydrite, Solutia, SDA, Jiangsu Jianghai Chemical Group, Premier Water, Shanghai

Kima Chemicals, HG Chem, Thermphos, Wujin Fine Chemicals, Wujin Water, Z&S, and Zibex were

each named by one purchaser.6

Sales Terms and Discounts

 U.S. producer Compass reported that *** percent of its sales are on a short-term contract basis

and *** percent were on a spot sales basis. Nine of 17 responding importers reported that they sell

exclusively on a spot sales basis, one importer reported making 90 percent of its sales on a spot basis, and

another reported making 80 percent of its sales on a spot basis. Six importers reported making at least 40

percent of their sales on a contract basis (***).

U.S. producer Compass indicated that its contracts are *** in duration, sometimes permit ***,

and sometimes contain ***. U.S. importers indicated that contracts are typically for periods from one

month up to one year. Five of eight responding importers reported that price can be renegotiated for their

contracts during the contract period. Five of eight responding importers indicated that contracts contain

meet-or-release provisions and four of seven responding importers indicated that both price and quantity

are fixed. The three remaining responding importers indicated that price was fixed.
 7

 Price data from the ***.

V-4

*** and six of 14 responding importers indicated that they do not have discount policies for their

sales of HEDP. Six responding importers reported the use of quantity discounts and four importers

reported providing annual volume discounts.

PRICE DATA

The Commission requested U.S. producers and importers of HEDP to provide quarterly data for

the total quantity and f.o.b. value of the following HEDP products shipped to unrelated customers in the

U.S. market during January-March 2005 to July-September 2008:

Product 1.-- 60 percent nominal aqueous solution HEDP, including, but not limited to, Dequest®

2010 (Thermphos/Solutia), Briquest® ADPA-60A (Rhodia), Mayoquest® 1500 (Compass),

Aquacid 105 EX (Aquapharm), XF-334 (Wujin Fine Chemical Factory), KW-100 (Kewei), and

ZF111SG (Wujin Water Stabilizer Factory), sold in truckload (or full container load) of drums (or

totes) to distributors (resellers).

Product 2.-- 60 percent nominal aqueous solution HEDP, including, but not limited to, Dequest®

2010 (Thermphos/Solutia), Briquest® ADPA-60A (Rhodia), Mayoquest® 1500 (Compass),

Aquacid 105 EX (Aquapharm), XF-334 (Wujin Fine Chemical Factory), KW-100 (Kewei), and

ZF111SG (Wujin Water Stabilizer Factory), sold in bulk tanktruck (or isocontainer) to

compounders (a.k.a. formulators).

Product 3.-- 60 percent nominal aqueous solution HEDP, including, but not limited to, Dequest®

2010 (Thermphos/Solutia), Briquest® ADPA-60A (Rhodia), Mayoquest® 1500 (Compass),

Aquacid 105 EX (Aquapharm), XF-334 (Wujin Fine Chemical Factory), KW-100 (Kewei), and

ZF111SG (Wujin Water Stabilizer Factory), sold in truckload (or full container load) of drums (or

totes) to compounders (a.k.a. formulators).

Product 4.-- 60 percent nominal aqueous solution HEDP, including, but not limited to, Dequest®

2010 (Thermphos/Solutia), Briquest® ADPA-60A (Rhodia), Mayoquest® 1500 (Compass),

Aquacid 105 EX (Aquapharm), XF-334 (Wujin Fine Chemical Factory), KW-100 (Kewei), and

ZF111SG (Wujin Water Stabilizer Factory), sold in LTL drums (or totes) to compounders (a.k.a.

formulators).

Two U.S. producers (***),7

 10 importers of HEDP from subject producers in China (***), three

importers of HEDP from India (***), and six importers of HEDP from nonsubject producers in the UK

and China (***) provided usable pricing data for sales of the requested products, although not all firms

reported pricing for all products for all quarters. Pricing data reported by these firms accounted for

approximately *** percent of U.S. producers’ commercial shipments of HEDP, about *** percent of U.S.

commercial shipments of subject imports from China, about *** percent of U.S. commercial shipments of

subject imports from India, and about *** percent of U.S. commercial shipments of imports from

nonsubject sources in 2007.
 8

 Conference transcript, p. 35 (Failon), pp. 102-103 (Collias). 

 9

 Conference transcript, p. 77 (Failon).

V-5

Price Trends

Weighted-average prices of HEDP are presented in tables V-1 through V-4 and figure V-2. 

According to both Compass and respondents, the HEDP market exhibits seasonality, increasing during

the second and third quarters due to increased air conditioning use and to a lesser extent due to increased

demand for industrial cooling.8

 Compass indicated that it makes no distinction between pricing of

imported material versus domestically produced material.9

 ***.

Weighted-average sales prices for most U.S.-produced and imported products generally

fluctuated between 2005 and 2007 and then increased in 2008 (see table V-5). 

Table V-1

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 1,1

 and

margins of (overselling)/underselling by quarters, January 2005-September 2008

* * * * * * *

Table V-2

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 2,1

 and

margins of (overselling)/underselling by quarters, January 2005-September 2008

* * * * * * *

Table V-3

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 3,1

 and

margins of (overselling)/underselling by quarters, January 2005-September 2008

* * * * * * *

Table V-4

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 4,1

 and

margins of (overselling)/underselling by quarters, January 2005-September 2008

* * * * * * *

Figure V-2

HEDP: Weighted-average f.o.b. prices of products 1-4, January 2005-September 2008

* * * * * * *

Table V-5

HEDP: Summary of weighted-average f.o.b. prices for products 1-4, by country, January 2005 to

September 2008

* * * * * * *
V-6

Price Comparisons

Overall, there were 62 instances where prices for domestic HEDP and subject imports of HEDP

could be compared. Of these 62 comparisons, there were 42 instances (68 percent) where the subject

imported product was priced below the domestic product (table V-6). Margins of underselling averaged

21.3 percent, ranging from 0.6 percent to 61.7 percent. In 20 instances, the subject imported product was

priced above the comparable domestic product. Margins of overselling averaged 20.0 percent, ranging

from 1.6 percent to 91.7 percent. 

Table V-6

HEDP: Instances of underselling/overselling and the range and average of margins for products 1-

4, January 2005 to September 2008

Country

Underselling Overselling

Number of

instances

Range

(percent)

Average

margin

(percent)

Number of

instances

Range

(percent)

Average

margin

(percent)

 China (subject) 31 1.1 to 61.7 20.4 16 1.6 to 23.2 10.7

 India 11 0.6 to 55.2 23.8 4 27.5 to 91.7 57.3

 Total1 42 0.6 to 61.7 21.3 20 1.6 to 91.7 20.0

 1

 Total number of instances for all cited products, range of margins for all cited products, and average

margin for all cited products. 

Source: Compiled from data submitted in response to Commission questionnaires.

LOST SALES AND LOST REVENUES

The Commission requested U.S. producers of HEDP to report any instances of lost sales or

revenues they experienced due to competition from imports of HEDP from China and India since 2005. 

In their petition, Compass reported *** lost sales allegations totaling $*** and involving *** pounds of

HEDP and *** totaling $*** and involving *** pounds of HEDP. Staff contacted the *** purchasers

cited in the allegations; *** responded. The results are summarized in tables V-7 and V-8 and are

discussed below. 

Table V-7

HEDP: U.S. producers’ lost sales allegations

* * * * * * *

Table V-8

HEDP: U.S. producers’ lost revenue allegations

* * * * * * *

***.

***.

***.

***.

***.
 10 Staff interview with ***, January 14, 2009.

V-7

*** disagreed with the lost sales allegation involving *** company. *** indicated that *** only

purchased HEDP from the United States in 2007. *** also indicated in its purchaser questionnaire

response that it only purchased U.S.-produced HEDP ***. However, the company also reported that it

purchased *** pounds of U.S.-produced HEDP at a unit value of $*** per pound and *** pounds of

Chinese imports of HEDP at a unit value of $*** per pound during ***. The company indicated that it

decreased purchases of U.S.-produced HEDP (purchased from ***) and increased purchases of Chinese

imports of HEDP (purchased from ***) because of the pricing of the Chinese imports was more

competitive.

*** disagreed with the lost sales allegation involving *** company. *** indicated that the

competing import price request was made to meet a competitive price from a domestic source.10 In its

purchaser questionnaire response, ***.

*** disagreed with the lost sales allegation involving *** company. *** indicated that pricing

was *** per pound delivered. *** indicated that ***.

*** disagreed with the lost sales allegation involving *** company. *** indicated that ***.

*** disagreed with ***. *** indicated that ***.

***. 

 1

 Addendum to Rhodia’s U.S. producer questionnaire (preliminary phase). Unless otherwise noted the

information provided by Rhodia is based on that company’s preliminary phase questionnaire response.

 2 Conference transcript, pp. 60-61 (McCaul).

 3 ***. Auditor final phase notes (prehearing). Verification report, p. 12. 

 4 In the preliminary phase staff report, HEDP financial results for the first and second half of 2006 were

presented separately. While the same underlying information is still reflected, the format for the final phase of these

investigations has been changed to present only full-year 2006 financial results.

 5 Conference transcript, p. 57 (McCaul). 

VI-1

PART VI: FINANCIAL EXPERIENCE OF THE U.S. PRODUCER

BACKGROUND

During the period for which data were collected, U.S. production of HEDP took place at a single

facility in Smyrna, GA, which was operated by Lynx and subsequently by Compass. Financial results

were reported on the basis of U.S. generally accepted accounting principles (“GAAP”). The U.S.

producer questionnaire response of Compass was verified on February 26 and 27, 2009. Changes

pursuant to verification are reflected in this and other affected sections of the staff report.

As described in Part III of this report, the character of U.S. HEDP operations changed during the

period. ***.1

 Subsequent to its acquisition of the Smyrna, GA plant in mid 2006, Compass assumed

responsibility for both manufacturing and marketing U.S.-produced HEDP along with the plant’s other

output.2

 Consistent with the preliminary phase of these investigations and for the reasons described in

footnote 3, HEDP financial results for 2005 and first half 2006 reflect the information reported by

Rhodia,3

 while HEDP financial results for second half 2006, full-year 2007, interim 2007, and interim

2008 represent the information reported by Compass.4

 

As described in Part III of this report, in early 2007 Compass became a subsidiary of Cathay

Industries USA with its ultimate parent company being Cathay Pigments (Holdings) Ltd. According to a

company official, there was no substantive change to Compass’s operations after it joined the Cathay

group.5

 

 OPERATIONS ON HEDP

Income-and-loss data for operations on HEDP are presented in table VI-1 and on an average unit

basis in table VI-2. Due to the comparability issues described below, a variance analysis is not presented.

Table VI-1

HEDP: Results of operations, 2005-07, January-September 2007, and January-September 2008

* * * * * * *

Table VI-2

HEDP: Results of operations (per pound), 2005-07, January-September 2007, and JanuarySeptember 2008

* * * * * * *
 6

 While remaining *** of Compass’s overall HEDP activity, internal consumption volume increased *** at the

end of the period. According to the company, ***. E-mail with attachment from ***, January 13, 2009. ***. Email with attachments from ***, January 20, 2009. 

 7 ***. Auditor preliminary phase notes. ***. Ibid. ***. Compass petition, pp. 4-5. 

 8 Petition, pp. 4-5.

 9 Conference transcript, pp. 62-64 (McCaul). ***. E-mail with attachment from ***, January 13, 2009. 

 10 Conference transcript, p. 62 (McCaul). Hearing transcript, p. 23 (McCaul). With regard to the switch in 2007

from PCl3 to PAC, it was also noted at the staff conference that Compass could no longer rely on Rhodia as a source

of PCl3 because Rhodia in effect became a competitor after the termination of the Lynx-Rhodia contract

manufacturing agreement. Conference transcript, p. 64 (McCaul). Additionally, the switch to PAC from PCl3,

formerly the single most hazardous material at the Smyrna, GA plant, also reportedly reduced the overall hazardous

material responsibilities of Compass. Conference transcript, p. 66 (Failon). 

 11 ***. E-mail with attachments from ***, April 8, 2008. ***:

Calendar year January-September

2007 2007 2008

Pro forma operating income (loss) (thousand dollars) *** *** ***

Pro forma operating income (loss) margin (percent of sales) *** *** ***

Based on e-mail with attachments from ***, January 20, 2009. Auditor final phase notes (posthearing). 

 12 A general shift to sourcing lower cost phosphorus-related inputs from China appears to have been ongoing

prior to the period for which data were collected in these investigations; e.g., a public source described the

importance of Chinese phosphorous and phosphorus-related inputs to Rhodia’s U.S. and European plants producing

phosphorus derivatives, as well as Rhodia’s 2002 investment in a Chinese phosphorus producer. China gets big in

some export markets, Chemical Week, August 27/September 3, 2003, p. 36. 

 13 E-mail with attachment from ***, January 26, 2009. Petitioner’s postconference brief, exhibit 1, pp. 1-2. 

 ***. E-mail with attachment from ***, January 26, 2009. Information in the petition indicates that the

blending of PAC to produce 70 percent aqueous phosphorous acid takes place at Compass’s plant in Huntsville,

Texas. Compass petition, p. 2.

VI-2

As shown in table VI-1, overall HEDP operations generated operating losses ***. The trend

reflected in table VI-2 indicates that average HEDP sales values declined in 2006 compared to 2005, then

increased *** in 2007, and were *** higher in interim 2008 than in interim 2007.6

With respect to the average cost information shown in table VI-2, period-to-period comparisons

prior to full-year 2007 are limited by changes in reporting entity, as well as the format in which HEDP

financial results were reported.7

 Comparability of period-to-period average raw material cost is further

limited by changes in the phosphorus input used to produce HEDP. As described in Part I of this report,

there are two HEDP production processes – both of which use acetic anhydride but which differ in terms

of phosphorous input: phosphorus trichloride (PCl3) or phosphorous acid crystal (PAC).8

 During 2005

and much of 2006, PCl3 was the primary phosphorous input used in the production of HEDP. According

to a Compass company official, the only significant operational change after the company’s acquisition of

the Smyrna, GA plant was the switch in 2007 from PCl3 to PAC.9

 With respect to the cost of raw

materials after acquisition, the company also noted generally that “. . . Compass was, because of its

situation, able to provide some raw materials at better costs than Lynx was able to, so there would have

been some improvement in that regard.”10 According to Compass’s U.S. producer questionnaire, ***.11 12

With respect to HEDP costs, Compass was asked to describe the expected impact of switching the

phosphorous input from PCl3 to PAC. In response, Compass indicated ***.13 
 14 As indicated above, the primary raw material inputs for full-year 2007, interim 2007, and interim 2008

consisted of PAC and acetic anhydride.

 15 E-mail with attachment from ***, January 13, 2009. According to a public source, the Chinese export tax on

phosphorous reportedly increased from 20 percent to 120 percent effective May 20, 2008. Price increases for all

LANXESS phosphorus chemicals, Chemical Business, June 2008, p. 79. In May 2008, earthquake damage also

reportedly impacted one of four primary phosphorus production centers in China – damaging phosphorus mines, as

well as phosphate processing facilities. Cost of China earthquake rises, Chemical & Engineering News, May 26,

2008, Vol. 86 Issue 21, p. 8. Testimony at the Commission’s hearing referenced problems related to a major

snowstorm in China which also generally impacted phosphorous supply. Hearing transcript, p. 126 (Collias). 

 16 Supplemental information provided by Compass indicates that for every ***. E-mail with attachments from

***, January 20, 2009. ***. Verification report, p. 9-10.

 17 Ibid.

 18 As with raw material, direct labor, and other factory costs, average byproduct revenue is directly comparable

only in full-year 2007, interim 2007, and interim 2008.

 19 E-mail with attachment from ***, January 13, 2009. ***. Verification report, pp. 9-10. Auditor final phase

notes (posthearing). ***. Field trip notes, Compass, p. 3. 

 20 In 2006, the Smyrna, GA facility reportedly continued to operate throughout the transition in ownership

between Lynx and Compass. According to a company official, however, there was a slowdown in second half 2006

production in part to work off some of Compass’s imported HEDP inventory. A relative decline in second-half 2006

HEDP sales volume also reflected the previous termination of the Lynx-Rhodia contract manufacturing agreement. 

Conference transcript, pp. 59-60 (McCaul). 

 21 E-mail with attachments from ***, April 8, 2008. Conference transcript, pp. 59-60 (McCaul). 

VI-3

As shown in table VI-2, there was a notable increase in average raw material costs in interim

2008 compared to interim 2007. 14 With regard to this increase, Compass stated that ***.15 

As noted in Part I of this report, the HEDP production process using phosphorus trichloride (used

by Lynx/Rhodia and Compass in 2005 and 2006, respectively) yields acetic acid and hydrochloric acid as

byproducts, while the process using PAC (used by Compass in 2007 and interim 2008) yields only acetic

acid.16 ***.17 

Table VI-2 indicates that the average byproduct value declined at the end of the period.18 In

conjunction with higher average raw material costs, lower overall byproduct revenue resulted in higher

net COGS in interim 2008 which in turn partially offset the higher average HEDP sales value. With

respect to this pattern, Compass stated that ***.19 

As shown in table VI-2, average direct labor cost and average other factory costs were relatively

stable in full-year 2007 and interim 2008. Similar to average raw material costs, prior to 2007 average

direct labor and other factory costs are less comparable due to differences in reporting format. 

Notwithstanding these differences, the substantial decline in average other factory costs in 2007 and

interim 2008, as compared to 2006, appears to be related primarily to higher overall capacity utilization

(see table III-2, Part III of this report).20 

While Compass reported that there were no significant non-recurring expenses due to the

transition in ownership, there was a general corporate restructuring of Compass to reflect its expansion

into manufacturing operations, as well as capital expenditures at the Smyrna, GA plant to get it “. . . into

an acceptable condition over the first twelve months of ownership.”21 As described by a Compass

company official, “{t}here was equipment that had to be replaced; there were upgrades that had to be

made. That was done by Compass, and that was a significant difference in the operation. The plant,
 22 Conference transcript, p. 61 (McCaul). Hearing transcript, p. 49 (McCaul).

 23 E-mail with attachment from ***, January 13, 2009.

 24 In response to staff requests, Compass provided financial results for Compass’s overall establishment

operations (2005, 2006, 2007), as well as plant-specific (Smyrna, GA) financial results (2006, 2007). Compass also

provided Lynx’s financial results broken out by plant (including Smyrna, GA) (2005, 2006).

 25 ***. Auditor preliminary notes. 

 26 As noted previously, the internal consumption reported in table VI-1 and table VI-2 represents HEDP used to

produce tetrasodium etidronate (tetrasodium HEDP).

 27 Conference transcript, pp. 62, 67 (McCaul). 

 28 Conference transcript, p. 68 (McCaul). 

 29 Conference transcript, p. 62 (McCaul). ***. Compass U.S. producer questionnaire, IV-14. 

VI-4

currently, is in much better shape than it's ever been and it's running very smoothly now.” According to

this company official, these investments were not made previously due to financial difficulties

experienced by Lynx.22 

As shown in table VI-1, Compass’s selling, general and administrative (“SG&A”) expenses

increased somewhat in interim 2008 compared to interim 2007. With respect to the G&A component, the

company stated that ***.23

Notwithstanding the increase in the absolute level of Compass’s SG&A expenses, the company’s

SG&A expense ratio declined during the period due to increased revenue. In contrast, on an average unit

basis interim 2008 SG&A expenses were ***.

With respect to Compass’s overall operations, HEDP ***. In 2007, U.S.-produced HEDP

represented *** percent of the Smyrna, GA plant’s total revenue and *** percent of Compass’s overall

establishment revenue.24 The corresponding 2007 *** for the Smyrna, GA plant and Compass’s overall

establishment operations were ***, respectively.25 

While HEDP is reportedly the largest volume phosphonate produced at the Smyrna, GA plant,

tetrasodium etidronate is the only downstream product which is directly dependent on HEDP

production.26 According to a company official, with the minor exception of tetrasodium etidronate, the

Smyrna, GA plant could operate without HEDP production. However, from the company’s perspective,

the inability to produce and sell profitably the largest volume product, HEDP, calls into question the

plant’s overall viability.27 The Compass company official also noted that large volume HEDP production

enhances the company’s supply relationships and infrastructure and that in this regard the elimination of

HEDP production would likely affect the viability of the plant’s other products.28 

Notwithstanding the contribution of HEDP production to the overall operations of the Smyrna,

GA plant, a company official indicated that it was not clear whether HEDP production would be

continued after Compass’s acquisition: “. . . our first decision was that we weren’t going to make any

HEDP. We continued importing product in the second half of 2006; and then we kept looking at it,

though, and thinking we ought to be able to try to compete here on making HEDP in the U.S. So we

changed our position on that and we started focusing on manufacturing HEDP.”29 
 30 ***.

 31 ***. Compass U.S. producer questionnaire, III-14. 

 32 E-mail with attachments from ***, April 8, 2008. 

VI-5

CAPITAL EXPENDITURES, RESEARCH AND DEVELOPMENT EXPENSES, 

ASSETS, AND RETURN ON INVESTMENT

Data on capital expenditures, research and development (“R&D”) expenses, assets, and return on

investment are presented in table VI-3. 

Table VI-3

HEDP: Capital expenditures, R&D expenses, assets, and return on investment related to HEDP

operations, 2005-07, January-September 2007, and January-September 2008

* * * * * * *

The capital expenditures for the period, including 2005, were reported by Compass.30 As noted

previously, the increases in capital expenditures during the period reportedly represented equipment

upgrades that had been delayed/postponed by the predecessor company, Lynx.31 R&D expenses, which

were also reported for the entire period by Compass, declined steadily. As described by Compass, ***.32 

CAPITAL AND INVESTMENT

The Commission requested the U.S. producer to describe any actual or anticipated negative

effects of imports of HEDP from China and/or India on its firms’ growth, investment, ability to raise

capital, existing development and production efforts (including efforts to develop a derivative or more

advanced version of the product), or the scale of capital investments. Their responses were as follows: 

Actual Negative Effects

Compass: ***. 

Rhodia: ***.

Anticipated Negative Effects

Compass: ***.

Rhodia: ***.

 1

 Section 771(7)(F)(ii) of the Act (19 U.S.C. § 1677(7)(F)(ii)) provides that “The Commission shall consider 

{these factors} . . . as a whole in making a determination of whether further dumped or subsidized imports are

imminent and whether material injury by reason of imports would occur unless an order is issued or a suspension

agreement is accepted under this title. The presence or absence of any factor which the Commission is required to

consider . . . shall not necessarily give decisive guidance with respect to the determination. Such a determination

may not be made on the basis of mere conjecture or supposition.”

VII-1

PART VII: THREAT CONSIDERATIONS AND INFORMATION ON

NONSUBJECT COUNTRIES

Section 771(7)(F)(i) of the Act (19 U.S.C. § 1677(7)(F)(i)) provides that--

In determining whether an industry in the United States is threatened

with material injury by reason of imports (or sales for importation) of the

subject merchandise, the Commission shall consider, among other

relevant economic factors1

--

(I) if a countervailable subsidy is involved, such information as may be

presented to it by the administering authority as to the nature of the

subsidy (particularly as to whether the countervailable subsidy is a

subsidy described in Article 3 or 6.1 of the Subsidies Agreement), and

whether imports of the subject merchandise are likely to increase,

(II) any existing unused production capacity or imminent, substantial

increase in production capacity in the exporting country indicating the

likelihood of substantially increased imports of the subject merchandise

into the United States, taking into account the availability of other export

markets to absorb any additional exports,

(III) a significant rate of increase of the volume or market penetration of

imports of the subject merchandise indicating the likelihood of

substantially increased imports,

(IV) whether imports of the subject merchandise are entering at prices

that are likely to have a significant depressing or suppressing effect on

domestic prices, and are likely to increase demand for further imports,

(V) inventories of the subject merchandise,

(VI) the potential for product-shifting if production facilities in the

foreign country, which can be used to produce the subject merchandise,

are currently being used to produce other products,

(VII) in any investigation under this title which involves imports of both

a raw agricultural product (within the meaning of paragraph (4)(E)(iv))

and any product processed from such raw agricultural product, the

likelihood that there will be increased imports, by reason of product

shifting, if there is an affirmative determination by the Commission

under section 705(b)(1) or 735(b)(1) with respect to either the raw

agricultural product or the processed agricultural product (but not both),
 2

 Section 771(7)(F)(iii) of the Act (19 U.S.C. § 1677(7)(F)(iii)) further provides that, in antidumping

investigations, “. . . the Commission shall consider whether dumping in the markets of foreign countries (as

evidenced by dumping findings or antidumping remedies in other WTO member markets against the same class or

kind of merchandise manufactured or exported by the same party as under investigation) suggests a threat of material

injury to the domestic industry.”

 3

 Petition, exh. AD-3.

 4

 Changzhou Kewei responded to the Commission’s questionnaire in the preliminary phase of these

investigations, but did not respond in the final phase despite attempts by the Commission’s staff to contact the

company or its counsel. Data for 2005-07 and 2008-09 are based on Changzhou Kewei’s response to the

Commission’s questionnaire in the preliminary phase.

 5

 *** reported that it did not produce HEDP in China. 

 6

 Wujin Water provided a response, but was found by Commerce to have a dumping margin of zero percent, and

as such is treated as a nonsubject source in this report.

VII-2

(VIII) the actual and potential negative effects on the existing

development and production efforts of the domestic industry, including

efforts to develop a derivative or more advanced version of the domestic

like product, and

(IX) any other demonstrable adverse trends that indicate the probability

that there is likely to be material injury by reason of imports (or sale for

importation) of the subject merchandise (whether or not it is actually

being imported at the time).2

Information on the volume and pricing of imports of the subject merchandise is presented in

Parts IV and V of this report; and information on the effects of imports of the subject merchandise on U.S.

producers’ existing development and production efforts is presented in Part VI. Information on

inventories of the subject merchandise; foreign producers’ operations, including the potential for

“product-shifting;” any other threat indicators, if applicable; and any dumping in third-country markets,

follows. Also presented in this section of the report is information obtained for consideration by the

Commission on nonsubject countries and the global market.

THE INDUSTRY IN CHINA

The Commission requested data from 27 firms which were listed in the petition and believed to

produce HEDP in China during the period for which data were collected.3

 The Commission received

responses from the following companies:

• Changzhou Kewei Fine Chemical Co., Ltd. (“Changzhou Kewei”);

• Jiangsu Jianghai Chemical Group Co., Ltd. (“Jiangsu Jianghai Chemical”);

• Nanjing University of Chemical Technology Changzhou Wujin Water Quality Stabilizer

Factory (“Wujin Water”); and

• Wujin Fine Chemical Factory (“Wujin Fine Chemical”)

These four firms claimed to account for approximately *** percent of total HEDP production in

China and *** percent of total exports to the United States.4 5 6

 The names of the foreign firms along with

shares of production and exports to the United States (by quantity) are presented in table VII-1.
 7

 AWTCP in the preliminary phase of the investigations also included Changzhou Kewei. This producer,

however, withdrew its participation in the final phase investigations. Hearing transcript, p. 160 (Craven).

 8

 AWTCP postconference brief, p. Q-2.

 9

 In the preliminary phase of these investigations, Chinese producer Changzhou Kewei listed *** as one of its

five largest U.S. importers. Because Changzhou Kewei did not provide a response in the final phase of these

investigations, the firm’s response in the preliminary phase was used for data for 2005-07 and projections for 2008-

09. Data for January-September 2007 and January-September 2008 do not include data for Changzhou Kewei.

 10 Chinese producer *** which reported *** percent capacity utilization in ***, reported a *** percent increase in

its production capacity in the following year resulting in a capacity utilization of *** percent in ***.

 11 Subject Chinese producers reported exports to ***.

VII-3

Table VII-1

HEDP: Manufacturers/exporters in China, and quantities and shares of reported production and

exports to the United States, 2007

* * * * * * *

The Commission asked responding foreign producers to estimate the shares of their firm’s total

sales that were represented by sales of HEDP in 2007; firms reported a simple average of 29.5 percent

(*** percent for the three subject producers), with sales of HEDP ranging from *** percent to

*** percent of total sales. *** Chinese producers reported plans to change production capacity or

production of HEDP in China. Chinese producers of HEDP reported that none of the HEDP that they

export was subject to antidumping findings or remedies in any WTO-member countries.

The AWTCP, a respondent coalition which consists of three Chinese producers,7

 contended in the

preliminary phase of these investigations that the demand for HEDP in China is at least 20,000 metric

tons or 44.1 million pounds. AWTCP also asserted that “***.”8

Table VII-2 presents production and shipments data for three reporting subject producers in

China, Changzhou Kewei, Jiangsu Jianghai Chemical Group, and Wujin Fine Chemical Factory.9

Chinese capacity increased by *** percent over the period 2005-07, with a commensurate increase in

production of *** percent. From 2005 to 2007, capacity utilization for subject producers in China

declined by *** percentage point from *** percent to *** percent. Individual Chinese producers’

average capacity utilization over the period 2005-07 ranged from *** percent to *** percent.10 Exports to

the United States increased by *** percent from 2005 to 2007, compared with an increase of *** percent

to all other markets. As a ratio of total shipments, exports to the United States increased from *** percent

to *** percent between 2005 and 2006, then fell to *** percent in 2007. Exports to all other markets as a

ratio of total shipments declined from *** percent in 2005 to *** percent in 2006, and rose to *** percent

in 2007.11 Ratios of inventories to production and to total shipments remained relatively steady, but both

were projected to increase *** percentage points in 2008 and *** percentage points in 2009.

Table VII-2

HEDP: China’s (subject) reported production capacity, production, shipments, and inventories,

2005-07, January-September 2007, January-September 2008, and projections for 2008 and 2009

* * * * * * *
 12 Petition, exh. AD-3. 

 13 Excel Industries provided a response to the foreign producers’ questionnaire containing limited trade data,

which were incomplete and inconsistent. In its response Excel reported exports to the United States ranging from a

*** to a low of ***. These exports accounted for ***. 

 14 In its preliminary phase response, Excel Industries reported that ***.

 15 E-mail from ***, April 5, 2008, and conference transcript, p. 100 (Mangwani). The petitioners also report that

these two producers are the largest producers and exporters to the United States of HEDP from India. Petition, p. 9

and Exh. AD-3. 

 16 There are two other producers of HEDP in India, Rencal Chemicals (India) Ltd. and United Phosphorus, Ltd.,

but they are reported to be relatively small. Conference transcript, p. 100 (Mangwani).

 17 Conference transcript, pp. 85-87 (Mangwani).

 18 Conference transcript, p. 110 (Mangwani).

 19 In its response to the foreign producer’s questionnaire in the preliminary phase of these investigations,

Aquapharm reported that it ***. Aquapharm reported in the final phase that ***. Aquapharm stated that ***. 

Email from ***, February 16, 2009.

VII-4

THE INDUSTRY IN INDIA

The Commission requested data from six firms which were listed in the petition and believed to

have produced HEDP in India during the period for which data were collected.12 The Commission

received responses from two firms, Aquapharm Chemicals Pvt. Ltd. (“Aquapharm”) and Excel Industries,

Ltd.13 14 Aquapharm and Excel Industries reported that *** percent and *** percent, respectively of their

total sales in the most recent fiscal year were sales of HEDP. Aquapharm, *** producer of HEDP in

India, claimed to account for approximately *** percent of Indian production of HEDP, and together with

Indian producer, Excel Industries, accounted for the vast majority of exports to the United States during

the period 2005-07.15 16

As shown in table VII-3, in 2007, *** percent of Aquapharm's total shipments of HEDP were

exported to the United States, *** percent of its shipments were to its home market, *** percent were

internal shipments, and *** percent were exported to other markets such as ***. Both Indian producers

of HEDP reported that none of the HEDP that they exported was subject to antidumping findings or

remedies in any WTO-member countries.

Table VII-3

HEDP: India’s reported production capacity, production, shipments, and inventories, 2005-07,

January-September 2007, January-September 2008, and projections for 2008 and 2009

* * * * * * *

Aquapharm reported that it only sells to two customers in the United States; *** percent of its

2007 exports to the United States were to formulator/compounder/distributor Buckman and *** percent

were to distributor Zibex. Aquapharm reported that it has a warehouse in Alabama, as well as an

independent agent, to provide service to Buckman.17 Aquapharm stated that it had increased its HEDP

production capacity in order to meet demand from the European Union.18 It also reported that it ***.19

Aquapharm reported that it anticipated growth in its sales in ***. Furthermore, Aquapharm stated that it

did not expect significant growth in ***.

Table VII-3 presents data for reported production and shipments of HEDP for India. Production

increased over the period 2005-07 and was projected to continue to increase in 2008 and 2009. Capacity

utilization fluctuated from ***. Home market sales increased over the period by *** percent between

2005 and 2007, but were projected to decline in 2008 and increase in 2009, ***. In contrast, exports rose
 20 Conference transcript, pp. 100-101 (Mangwani).

 21 One importer, Uniphos reported that it typically maintains two months of inventories in case of emergencies,

especially as it generally takes four to eight weeks to receive a shipment from China. Moreover, Uniphos stated that

almost all of its chemicals are generally sold out of inventory. Hearing transcript, p. 173 (Collias).

VII-5

by *** percent over the same period, with a *** percent increase in exports to the United States and a ***

percent increase in exports to all other markets. Exports were projected to increase although at a slower

pace, *** percent to the United States and *** percent to all other markets between 2007 and 2009. As a

share of total shipments, exports increased from *** percent in 2005 to *** percent in 2006 and ***

percent in 2007. This increase was largely attributable to exports to non-U.S. markets, which increased

from *** percent of total shipments in 2005 to *** percent in 2006 and *** percent in 2007. Exports to

the United States as a share of total shipments declined from *** percent in 2005 to *** percent in 2006

and *** percent in 2007.

In January-September 2008 compared with January-September 2007, capacity and production

were *** percent and *** percent higher, respectively, though capacity utilization was *** percentage

points lower. Internal consumption, home market shipments and exports to the United States and all other

markets were higher, by *** percent, *** percent, *** percent, and *** percent, respectively. As a

percent of total shipments, internal consumption and exports to the United States were higher, by *** and

*** percentage points, respectively, while home market shipment and exports to all other markets were

lower, by *** and *** percentage points respectively.

Aquapharm reported in the preliminary phase investigations that ***.

Aquapharm estimated that the demand for HEDP in India was approximately 7,000 to 8,000

metric tons (15.4 million to 17.6 million pounds), and was growing at a rate of about 14 to 15 percent per

year due to growth in infrastructure and increased use in water treatment.20

U.S. IMPORTS SUBSEQUENT TO SEPTEMBER 30, 2008

The Commission requested U.S. importers to indicate whether they imported or arranged for the

importation of HEDP after September 30, 2008. Six of the 18 reporting U.S. importers stated that they

had imported or arranged for importation since September 30, 2008, four from China (subject), one from

India, and two from nonsubject sources. Table VII-4 presents U.S. imports from China (subject), India,

and other nonsubect sources subsequent to September 30, 2008. 

Table VII-4

HEDP: U.S. importers’ orders of subject imports from China and India subsequent to September

30, 2008, by period

* * * * * * *

U.S. IMPORTERS’ INVENTORIES

Data collected in these investigations on U.S. importers’ end-of-period inventories of HEDP are

presented in table VII-5. U.S. importers’ reported inventories of subject HEDP from China increased by

*** percent from 2005 to 2006, and by *** percent from 2006 to 2007, and by *** percent from 2005 to

2007. These inventories from China, relative to subject imports from China, also increased from ***

percent in 2005, to *** percent in 2006, rising again in 2007 to *** percent.21 In 2006, Compass reported

that it had an increase in business, and temporarily increased its imports of HEDP from China after it
 22 Conference transcript, p. 22 (Failon). In addition, *** reported that they did not import HEDP from China in

2005, and therefore had no inventories prior to 2006.

 23 *** did not report inventories of HEDP from India for 2005.

 24 Email from ***.

 25 The petitioner contends that the nonsubject imports of HEDP from the United Kingdom are not price

competitive with subject imports. Petitioner's posthearing brief, p.8. In addition, the petitioner points out that

imports from the United Kingdom are predominately sold through a different channel of distribution than

domestically produced HEDP or HEDP imported from China and India. Ibid. The petitioner also contends that the

relationship between Rhodia in the United Kingdom and its importing company in the United States substantially

mitigates the significance of nonsubject imports in the U.S. market. Ibid.

The Chinese producers contend the nonsubject imports are from high cost producers and are sold at high prices,

and that if, as a result of an antidumping order on HEDP, imports of HEDP from India and China declined, “these

high priced sales would not replace sales of low priced subject imports, rather U.S. production would likely replace

the subject imports.” Respondent, AWTCP's posthearing brief, p. 2.

The Indian respondent, Aquapharm did not address the issue of imports from nonsubject sources. 

 26 SRI CEH: Chelating Agents, February. 2007, p. 515.5000K.

VII-6

bought the U.S. HEDP production facility.22 Inventories from India increased by *** percent, an increase

of *** percentage points relative to imports, between 2006 and 2007.23 

Table VII-5

HEDP: U.S. importers’ end-of-period inventories of imports, by source, 2005-07, JanuarySeptember 2007, and January-September 2008

* * * * * * *

Inventories of nonsubject imports from China increased by *** percent between 2005 and 2006

and *** percent between 2006 and 2007, resulting in an increase of *** and *** percentage points,

respectively, relative to imports. Inventories from all other sources fell by *** percent from 2006 to

2007. This decline was due to a decline in inventories of imports from the United Kingdom reported by

***, which reported that ***.24

INFORMATION ON NONSUBJECT SOURCES AND THE GLOBAL MARKET

In assessing whether the domestic industry is materially injured or threatened with material injury

“by reason of subject imports,” the legislative history states “that the Commission must examine all

relevant evidence, including any known factors, other than the dumped or subsidized imports, that may be

injuring the domestic industry, and that the Commission must examine those other factors (including

non-subject imports) ‘to ensure that it is not attributing injury from other sources to the subject imports.’”

Nonsubject Source Information25

In terms of percentage of world consumption of HEDP, the three largest regions are Western

Europe (with somewhat greater than *** percent), the United States (with somewhat less than ***

percent), and Japan (less than *** percent).26 Within the class of phosphonates, there is product

substitution over time as end-use formulations change, environmental regulations change, consumers

change their preferences, and price. Estimated total capacity in 2006 for Western Europe was about ***

metric tons (*** pounds). The two largest producers are Solutia and Rhodia. Each has an estimated ***

percent market share. The two commodity phosphonates are HEDP and AMTP; however, most other

phosphonates are manufactured in Western Europe. Production data for individual phosphonates are
 27 SRI CEH: Chelating Agents, February. 2007, p. 500.5003E. HEDP production was estimated to be between

10,000 and 50,000 metric tons per year during 1990-93. HERA substance team, Human & Environmental Risk

Assessment on Ingredients in European Household Cleaning Products, June 9, 2004, p. 13.

 28 Conference transcript, p. 31 (Failon), and pp. 99-100 (Mangwani). ***.

 29 Conference transcript, pp. 13-14 (Failon).

 30 Thermphos International press release, May 31, 2007.

 31 Rhodia 2004 annual report, p. 22.

VII-7

difficult to obtain, but the following tabulation lists the major Western European producers of

phosphonates:27

* * * * * * *

China (Nonsubject)

In addition to the nonsubject producers in western Europe, Chinese producer, Wujin Water was

found by Commerce to have a dumping margin of zero percent, and as such is treated in this report as

nonsubject. Wujin Water estimated that it accounted for *** percent of total exports to the United States

of HEDP from China in 2007. Other principal export markets reported by Wujin Water included ***.

Wujin Water reported that it *** produce other products other than HEDP on the same equipment

and machinery used in the production of HEDP. The company estimated that HEDP accounted for ***

percent of its total production in 2007, and *** percent of its total sales in its most recent fiscal year. 

Table VII-6 presents data for reported production and shipments of HEDP for the nonsubject China

producer.

Table VII-6

HEDP: China’s (nonsubject) reported production capacity, production, shipments, and inventories,

2005-07, January-September 2007, January-September 2008, and projections for 2008 and 2009

* * * * * * *

The Industry in the United Kingdom

During the period for which data were collected, two of the largest nonsubject producers of

HEDP, Thermphos International and Rhodia, were located in the United Kingdom.28 Rhodia, with

production manufacturing facilities in West Midlands, United Kingdom, buys elemental phosphorus from

Thermphos and makes phosphorus trichloride, which it uses to make phosphorus acid and other

intermediate products including HEDP. Rhodia makes phosphorus trichloride in Charleston, SC, but no

longer makes HEDP in the United States.29

Prior to June 1, 2007, Solutia produced HEDP in its facilities in the United Kingdom. 

Thermphos, a producer of phosphorus, phosphoric acid, phosphates, phosphonates and phosphorus

derivatives, acquired Solutia’s Dequest business, including HEDP, on June 1, 2007. Under the purchase

agreement Thermphos purchased Solutia’s assets, including the primary production location in Newport,

Wales, U.K.30 In June 2004, Thermphos purchased Rhodia’s European Specialty Phosphates business,

which included part of Rhodia’s HEDP production facilities in the United Kingdom.31 Thermphos

acquires phosphorus ore from Europe (***) and makes the elemental phosphorus, which it uses to make

phosphorus trichloride which it sells in the merchant market or uses to make further down-stream
 32 Staff telephone interview with ***, January 28, 2009.

VII-8

products including HEDP.32 Thermphos estimated that it accounts for *** percent of total production in

the United Kingdom. Table VII-7 presents data for reported production and shipments of HEDP for the

United Kingdom.

Table VII-7

HEDP: United Kingdom’s reported production capacity, production, shipments, and inventories,

2005-07, January-September 2007, January-September 2008, and projections for 2008 and 2009

* * * * * * *
 

A-1

APPENDIX A

FEDERAL REGISTER NOTICES

Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Notices 67545 

1HEDP is identified by CAS registry number 

2809–21–4. 

2For purposes of these investigations, the 

Department of Commerce has defined the subject 

merchandise as ‘‘all grades of aqueous, acidic (nonneutralized) concentrations of 1-hydroxyethylidene1, 1-diphosphonic acid, also referred to as 

hydroxethlylidenediphosphonic acid, 

hydroxyethanediphosphonic acid, 

acetodiphosphonic acid, and etidronic acid.’’ 

Authority: H–1790–1 National 

Environmental Policy Act Handbook— 

January 30, 2008. 

Vincent Galterio, 

Acting State Director. 

[FR Doc. E8–27026 Filed 11–13–08; 8:45 am] 

BILLING CODE 4310–JA–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation Nos. 731–TA–1146–1147 

(Final)] 

1-Hydroxyethylidene-1,1-Diphosphonic 

Acid (HEDP) from China and India 

AGENCY: United States International 

Trade Commission. 

ACTION: Scheduling of the final phase of 

antidumping duty investigations. 

SUMMARY: The Commission hereby gives 

notice of the scheduling of the final 

phase of antidumping duty investigation 

Nos. 731–TA–1146–1147 (Final) under 

section 735(b) of the Tariff Act of 1930 

(19 U.S.C. 1673d(b)) (the Act) to 

determine whether an industry in the 

United States is materially injured or 

threatened with material injury, or the 

establishment of an industry in the 

United States is materially retarded, by 

reason of less-than-fair-value imports 

from China and India of 1- 

Hydroxyethylidene-1,1-diphosphonic 

acid (HEDP),1 provided for in statistical 

reporting number 2931.00.9043 of the 

Harmonized Tariff Schedule of the 

United States.2

For further information concerning 

the conduct of this phase of the 

investigations, hearing procedures, and 

rules of general application, consult the 

Commission’s Rules of Practice and 

Procedure, part 201, subparts A through 

E (19 CFR part 201), and part 207, 

subparts A and C (19 CFR part 207). 

DATES: Effective Date: October 21, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Nathanael Comly (202–205–3174), 

Office of Investigations, U.S. 

International Trade Commission, 500 E 

Street, SW., Washington, DC 20436. 

Hearing-impaired persons can obtain 

information on this matter by contacting 

the Commission’s TDD terminal on 202– 

205–1810. Persons with mobility 

impairments who will need special 

assistance in gaining access to the 

Commission should contact the Office 

of the Secretary at 202–205–2000. 

General information concerning the 

Commission may also be obtained by 

accessing its Internet server (http:// 

www.usitc.gov). The public record for 

these investigations may be viewed on 

the Commission’s electronic docket 

(EDIS) at http://edis.usitc.gov. 

SUPPLEMENTARY INFORMATION: 

Background. The final phase of these 

investigations is being scheduled as a 

result of affirmative preliminary 

determinations by the Department of 

Commerce that imports of HEDP from 

China and India are being sold in the 

United States at less than fair value 

within the meaning of section 733 of the 

Act (19 U.S.C. 1673b). These 

investigations were requested in a 

petition filed on March 19, 2008, by 

Compass Chemical International LLC, 

Huntsville, TX. 

Participation in the investigations and 

public service list. Persons, including 

industrial users of the subject 

merchandise and, if the merchandise is 

sold at the retail level, representative 

consumer organizations, wishing to 

participate in the final phase of these 

investigations as parties must file an 

entry of appearance with the Secretary 

to the Commission, as provided in 

section 201.11 of the Commission’s 

rules, no later than 21 days prior to the 

hearing date specified in this notice. A 

party that filed a notice of appearance 

during the preliminary phase of the 

investigations need not file an 

additional notice of appearance during 

this final phase. The Secretary will 

maintain a public service list containing 

the names and addresses of all persons, 

or their representatives, who are parties 

to the investigations. 

Limited disclosure of business 

proprietary information (BPI) under an 

administrative protective order (APO) 

and BPI service list. Pursuant to section 

207.7(a) of the Commission’s rules, the 

Secretary will make BPI gathered in the 

final phase of these investigations 

available to authorized applicants under 

the APO issued in the investigations, 

provided that the application is made 

no later than 21 days prior to the 

hearing date specified in this notice. 

Authorized applicants must represent 

interested parties, as defined by 19 

U.S.C. 1677(9), who are parties to the 

investigations. A party granted access to 

BPI in the preliminary phase of the 

investigations need not reapply for such 

access. A separate service list will be 

maintained by the Secretary for those 

parties authorized to receive BPI under 

the APO. 

Staff report. The prehearing staff 

report in the final phase of these 

investigations will be placed in the 

nonpublic record on February 17, 2009, 

and a public version will be issued 

thereafter, pursuant to section 207.22 of 

the Commission’s rules. 

Hearing. The Commission will hold a 

hearing in connection with the final 

phase of these investigations beginning 

at 9:30 a.m. on March 3, 2009, at the 

U.S. International Trade Commission 

Building. Requests to appear at the 

hearing should be filed in writing with 

the Secretary to the Commission on or 

before February 24, 2009. A nonparty 

who has testimony that may aid the 

Commission’s deliberations may request 

permission to present a short statement 

at the hearing. All parties and 

nonparties desiring to appear at the 

hearing and make oral presentations 

should attend a prehearing conference 

to be held at 9:30 a.m. on February 26, 

2009, at the U.S. International Trade 

Commission Building. Oral testimony 

and written materials to be submitted at 

the public hearing are governed by 

sections 201.6(b)(2), 201.13(f), and 

207.24 of the Commission’s rules. 

Parties must submit any request to 

present a portion of their hearing 

testimony in camera no later than 7 

business days prior to the date of the 

hearing. 

Written submissions. Each party who 

is an interested party shall submit a 

prehearing brief to the Commission. 

Prehearing briefs must conform with the 

provisions of section 207.23 of the 

Commission’s rules; the deadline for 

filing is February 24, 2009. Parties may 

also file written testimony in connection 

with their presentation at the hearing, as 

provided in section 207.24 of the 

Commission’s rules, and posthearing 

briefs, which must conform with the 

provisions of section 207.25 of the 

Commission’s rules. The deadline for 

filing posthearing briefs is March 11, 

2009; witness testimony must be filed 

no later than three days before the 

hearing. In addition, any person who 

has not entered an appearance as a party 

to the investigations may submit a 

written statement of information 

pertinent to the subject of the 

investigations, including statements of 

support or opposition to the petition, on 

or before March 11, 2009. On March 31, 

2008, the Commission will make 

available to parties all information on 

which they have not had an opportunity 

to comment. Parties may submit final 

comments on this information on or 

before April 2, 2009, but such final 

comments must not contain new factual 

information and must otherwise comply 

with section 207.30 of the Commission’s 


jlentini on PROD1PC65 with NOTICES
67546 Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Notices 

rules. All written submissions must 

conform with the provisions of section 

201.8 of the Commission’s rules; any 

submissions that contain BPI must also 

conform with the requirements of 

sections 201.6, 207.3, and 207.7 of the 

Commission’s rules. The Commission’s 

rules do not authorize filing of 

submissions with the Secretary by 

facsimile or electronic means, except to 

the extent permitted by section 201.8 of 

the Commission’s rules, as amended, 67 

FR 68036 (November 8, 2002). Even 

where electronic filing of a document is 

permitted, certain documents must also 

be filed in paper form, as specified in II 

(C) of the Commission’s Handbook on 

Electronic Filing Procedures, 67 FR 

68168, 68173 (November 8, 2002). 

Additional written submissions to the 

Commission, including requests 

pursuant to section 201.12 of the 

Commission’s rules, shall not be 

accepted unless good cause is shown for 

accepting such submissions, or unless 

the submission is pursuant to a specific 

request by a Commissioner or 

Commission staff. 

In accordance with sections 201.16(c) 

and 207.3 of the Commission’s rules, 

each document filed by a party to the 

investigations must be served on all 

other parties to the investigations (as 

identified by either the public or BPI 

service list), and a certificate of service 

must be timely filed. The Secretary will 

not accept a document for filing without 

a certificate of service. 

Authority: These investigations are being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.21 of the 

Commission’s rules. 

Issued: November 7, 2008. 

By order of the Commission. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. E8–26975 Filed 11–13–08; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[USITC SE–08–032] 

Government in the Sunshine Act 

Meeting Notice 

AGENCY HOLDING THE MEETING: United 

States International Trade Commission. 

TIME AND DATE: November 21, 2008, at 10 

a.m. 

PLACE: Room 101, 500 E Street, SW., 

Washington, DC 20436, Telephone: 

(202) 205–2000. 

STATUS: Open to the public. 

MATTERS TO BE CONSIDERED: 1. Agenda 

for future meetings: none. 

2. Minutes. 

3. Ratification List. 

4. Inv. Nos. 731–TA–1141 and 1142 

(Final) (Uncovered Innerspring Units 

from South Africa and Vietnam)— 

briefing and vote. (The Commission is 

currently scheduled to transmit its 

determinations and Commissioners’ 

opinions to the Secretary of Commerce 

on or before December 4, 2008.) 

5. Outstanding action jackets: none. 

In accordance with Commission 

policy, subject matter listed above, not 

disposed of at the scheduled meeting, 

may be carried over to the agenda of the 

following meeting. 

Issued: November 7, 2008. 

By order of the Commission. 

William R. Bishop, 

Hearings and Meetings Coordinator. 

[FR Doc. E8–26967 Filed 11–13–08; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF LABOR 

Office of the Secretary 

Submission for OMB Review: 

Comment Request 

November 10, 2008. 

The Department of Labor (DOL) 

hereby announces the submission of the 

following public information collection 

request (ICR) to the Office of 

Management and Budget (OMB) for 

review and approval in accordance with 

the Paperwork Reduction Act of 1995 

(Pub. L. 104–13, 44 U.S.C. chapter 35). 

A copy of this ICR, with applicable 

supporting documentation; including 

among other things a description of the 

likely respondents, proposed frequency 

of response, and estimated total burden 

may be obtained from the RegInfo.gov 

Web site at http://www.reginfo.gov/ 

public/do/PRAMain or by contacting 

Amy Hobby on 202–693–4553 (this is 

not a toll-free number) / e-mail: 

DOL_PRA_PUBLIC@dol.gov. 

Interested parties are encouraged to 

send comments to the Office of 

Information and Regulatory Affairs, 

Attn: OMB Desk Officer for the 

Employment and Training 

Administration (ETA), Office of 

Management and Budget, Room 10235, 

Washington, DC 20503, Telephone: 

202–395–7316 / Fax: 202–395–6974 

(these are not toll-free numbers), E-mail: 

OIRA_submission@omb.eop.gov within 

30 days from the date of this publication 

in the Federal Register. In order to 

ensure the appropriate consideration, 

comments should reference the OMB 

Control Number (see below). 

The OMB is particularly interested in 

comments which: 

• Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; 

• Evaluate the accuracy of the 

agency’s estimate of the burden of the 

proposed collection of information, 

including the validity of the 

methodology and assumptions used; 

• Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

• Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

e.g., permitting electronic submission of 

responses. 

Agency: Employment and Training 

Administration. 

Type of Review: Extension without 

change of an existing OMB Control 

Number. 

Title of Collection: Trade Act 

Participant Report (TAPR). 

OMB Control Number: 1205–0392. 

Affected Public: State, Local, and 

Tribal Governments. 

Total Estimated Number of 

Respondents: 50. 

Total Estimated Annual Burden 

Hours: 9,500. 

Total Estimated Annual Costs Burden: 

$0. 

Description: The Trade Act 

Participant Report is a Government 

Performance Results Act-compliant data 

collection and reporting system that 

supplies critical information on the 

operation of the Trade Adjustment 

Assistance program and the outcomes 

for its participants. For additional 

information, see related notice 

published at 73 FR 45076 on August 1, 

2008. 

Darrin A. King, 

Departmental Clearance Officer. 

[FR Doc. E8–27090 Filed 11–13–08; 8:45 am] 

BILLING CODE 4510–FN–P 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

[Docket No. OSHA–2008–0041] 

OSHA Strategic Partnership Program 

for Worker Safety and Health (OSPP) 

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor. 

ACTION: Request for public comment. 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Notices 5677 

nomination to the World Heritage List. 

It is a list of candidate sites which a 

country intends to consider for 

nomination within a given time period. 

A country cannot nominate a property 

unless it has been on its Tentative List 

for a minimum of a year. Countries also 

are limited to nominating no more than 

two sites in any given year. 

The World Heritage Committee’s 

Operational Guidelines ask participating 

nations to provide Tentative Lists, 

which aid in evaluating properties for 

the World Heritage List on a 

comparative international basis and 

help the Committee to schedule its work 

over the long term. The Guidelines 

recommend that a nation review its 

Tentative List at least once every 

decade. 

Neither inclusion in the Tentative List 

nor inscription as a World Heritage Site 

imposes legal restrictions on owners or 

neighbors of sites, nor does it give the 

United Nations any management 

authority or ownership rights in U.S. 

World Heritage Sites, which continue to 

be subject only to U.S. and local laws. 

Inclusion in the Tentative List merely 

indicates that the property may be 

further examined for possible World 

Heritage nomination in the future. 

U.S. World Heritage Nominations: 2009 

Papahanaumokuakea Marine National 

Monument, Hawaii 

This 1,200-mile-long string of islands, 

atolls, coral reefs and adjacent waters, 

running northwest from the main 

Hawaiian islands and encompassing 

over 89 million acres, is one of the 

world’s largest and most significant 

marine protected areas. Scattered in the 

deep ocean are some 10 small islands 

along with extensive reefs and shoals. In 

this remote and still relatively pristine 

part of the Pacific, marine life 

flourishes, and the area is home to a 

large number of species found nowhere 

else in the world, including a wide array 

that are threatened and endangered. 

Large populations of seabirds nest on 

isolated sandy shores and the waters 

harbor impressive numbers of large 

predatory fish. The geology of the 

islands is also highly significant—the 

chain represents the longest, clearest, 

and oldest example of island formation 

and atoll evolution in the world. 

Native Hawaiians reached these 

islands at least 1,000 years before any 

other people and established 

settlements on some of them. The 

islands, along with their significant 

archeological sites, retain great cultural 

and spiritual significance to Native 

Hawaiians. 

Mount Vernon, Virginia 

George Washington’s long-time home, 

with its associated gardens and grounds, 

forms a remarkably well-preserved and 

extensively documented example of a 

plantation landscape of the 18th-century 

American South. It was based on 

English models but modified and 

adapted to its American context, which 

included slave labor as an economic 

basis. There is a core of 14 surviving 

18th-century structures set in a 

landscape of gardens, fences, lanes, 

walkways, and other features, situated 

along the Potomac River, that changed 

and developed over many years in 

Washington’s family. The Mount 

Vernon Ladies’ Association has owned 

and maintained the property for 150 

years. 

Authority: 16 U.S.C. 470a–1, a–2, d; 36 

CFR 73. 

Dated: January 16, 2009. 

Lyle Laverty, 

Assistant Secretary for Fish and Wildlife and 

Parks. 

[FR Doc. E9–2044 Filed 1–29–09; 8:45 am] 

BILLING CODE 4312–52–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation Nos. 731–TA–1146–1147 

(Final)] 

1–Hydroxyethylidene-1,1– 

Diphosphonic Acid (HEDP) From China 

and India 

AGENCY: United States International 

Trade Commission. 

ACTION: Revised schedule for the subject 

investigations. 

DATES: Effective Date: January 15, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Nathanael Comly (202–205–3174), 

Office of Investigations, U.S. 

International Trade Commission, 500 E 

Street, SW., Washington, DC 20436. 

Hearing-impaired persons can obtain 

information on this matter by contacting 

the Commission’s TDD terminal on 202– 

205–1810. Persons with mobility 

impairments who will need special 

assistance in gaining access to the 

Commission should contact the Office 

of the Secretary at 202–205–2000. 

General information concerning the 

Commission may also be obtained by 

accessing its internet server (http:// 

www.usitc.gov). The public record for 

these investigations may be viewed on 

the Commission’s electronic docket 

(EDIS) at http://edis.usitc.gov. 

SUPPLEMENTARY INFORMATION: Effective 

October 21, 2008, the Commission 

established a schedule for the conduct 

of the final phase of the subject 

investigations (73 FR 67545, November 

14, 2008). As a result of subsequent 

events, however, the Commission is 

revising its schedule. 

The Commission’s new schedule for 

the investigations is as follows: The 

Commission will make its final release 

of information on March 30, 2009; and 

final party comments are due on April 

1, 2009. 

For further information concerning 

these investigations see the 

Commission’s notice cited above and 

the Commission’s Rules of Practice and 

Procedure, part 201, subparts A through 

E (19 CFR part 201), and part 207, 

subparts A and C (19 CFR part 207). 

Authority: These investigations are being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.21 of the 

Commission’s rules. 

By order of the Commission. 

Issued: January 15, 2009. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. E9–1977 Filed 1–29–09; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Executive Office for Immigration 

Review 

[OMB Number 1125–0005] 

Agency Information Collection 

Activities: Proposed Collection; 

Comments Requested 

ACTION: 60-Day Notice of Information 

Collection Under Review: Notice of 

Entry of Appearance as Attorney or 

Representative Before the Board of 

Immigration Appeals (Form EOIR–27). 

The Department of Justice (DOJ), 

Executive Office for Immigration 

Review (EOIR) will be submitting the 

following information collection request 

to the Office of Management and Budget 

(OMB) for review and approval in 

accordance with the Paperwork 

Reduction Act of 1995. The proposed 

information collection is published to 

obtain comments from the public and 

affected agencies. Comments are 

encouraged and will be accepted for 

‘‘sixty days’’ until March 31, 2009. This 

process is conducted in accordance with 

5 CFR 1320.10. 

If you have comments especially on 

the estimated public burden or 

associated response time, suggestions, 

or need a copy of the proposed 

information collection instrument with 

mstockstill on PROD1PC66 with NOTICES


Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 10543 

audit findings have not been resolved or 

if directed by the United States. The 

Grantor and the Comptroller General of 

the United States, or any of their duly 

authorized representatives, shall have 

access to any books, documents, papers, 

and records of the Grantee which are 

pertinent to the grant for the purpose of 

making audits, examinations, excerpts, 

and transcripts. 

E. Procurement 

Grantee will comply with the 

applicable procurement requirements of 

7 CFR part 3015 regarding standards of 

conduct, open and free competition, 

access to contractor records, and equal 

employment opportunity requirements. 

F. Reporting 

1. Grantee will after grant approval 

through project completion: 

(i) Provide periodic reports as 

required by the Grantor. A financial 

status report and a project performance 

report will be required on a semiannual 

basis (due 30 working days after end of 

the semiannual period). For the 

purposes of this grant, semiannual 

periods end on June 30 and December 

31. The financial status report must 

show how grant funds and leveraged 

funds have been used to date and 

project the funds needed and their 

purposes for the next quarter. Grantees 

shall constantly monitor performance to 

ensure that time schedules are being 

met and projected goals by time periods 

are being accomplished. The project 

performance reports shall include the 

following: 

(A) Semiannual performance reports. 

Project performance reports shall 

include, but not be limited to, the 

following: 

(1) A comparison of actual 

accomplishments to the objectives 

established for that period (e.g., the 

number of audits performed, number of 

recipients of renewable energy 

development assistance); 

(2) Problems, delays, or adverse 

conditions, if any, which have affected 

or will affect attainment of overall 

project objectives, prevent meeting time 

schedules or objectives, or preclude the 

attainment of particular project work 

elements during established time 

periods. This disclosure shall be 

accompanied by a statement of the 

action taken or planned to resolve the 

situation; 

(3) Percent of financial resources 

expended on contractors; and 

(4) Objectives and timetable 

established for the next reporting 

period. 

(B) Final performance report. A final 

performance report will be required 

with the final Financial Status Report. 

(1) For energy audit projects, the final 

performance report must provide the 

information required in a semiannual 

performance report; complete 

information regarding the number of 

audits conducted; a list of recipients 

with their North American Industry 

Classification System code; the location 

of the recipient; the cost of each audit; 

the expected energy saved for each audit 

conducted if the audit is implemented; 

the number of jobs created and saved for 

an agricultural producer and rural small 

business, as applicable, as a result of the 

grant; and the percent of financial 

resources expended on contractors. 

(2) For renewable energy development 

assistance projects, the final 

performance report must provide the 

information required in a semiannual 

performance report; complete 

information regarding a list of recipients 

with their North American Industry 

Classification System code; the location 

of the recipient; the expected renewable 

energy that would be generated if the 

projects were implemented; and the 

percent of financial resources expended 

on contractors. 

(ii) For the year(s) in which grant 

funds are received, the Grantee will 

provide an annual financial statement to 

the Grantor. 

2. Grantee will, after project 

completion: 

(i) Allow Grantor access to the records 

and performance information obtained 

under the scope of the project; and 

(ii) One year after submittal of the 

final semiannual performance report, 

the Grantee will provide the Grantor a 

final status report on the number of 

projects that are proceeding with one or 

all of the Grantee’s recommendations, 

including the amount of energy saved 

and the amount of renewable energy 

generated, as applicable. 

G. Grant Disbursement 

Unless required by funding partners 

to be provided on a pro rata basis with 

other funding sources, grant funds will 

be disbursed after all other funding 

sources have been expended. 

1. Requests for reimbursement may be 

submitted monthly or more frequently if 

authorized to do so by the Grantor. 

Ordinarily, payment will be made 

within 30 days after receipt of a proper 

request for reimbursement. 

2. Grantee shall not request 

reimbursement for the Federal share of 

amounts withheld from contractors to 

ensure satisfactory completion of work 

until after it makes those payments. 

3. Payment shall be made by 

electronic funds transfer. 

4. Standard Form 270, ‘‘Request for 

Advance or Reimbursement,’’ or other 

format prescribed by Grantor shall be 

used to request Grant reimbursements. 

H. Use of Remaining Grant Funds 

Grant funds not expended within 24 

months from date of this agreement will 

be cancelled by the Agency. Prior to the 

actual cancellation, the Agency will 

notify, in writing, the grantee of the 

Agency’s intent to cancel the remaining 

funds. 

In witness whereof, Grantee has this 

day authorized and caused this 

Agreement to be signed in its name and 

its corporate seal to be hereunto affixed 

and attested by its duly authorized 

officer(s) thereunto, and the Grantor has 

caused this Agreement to be duly 

executed in its behalf by: 

GRANTOR: 

[ [SEAL] llllllllllllll

Name: 

lllllllllllllllllll

Date 

Title: 

UNITED STATES OF AMERICA 

DEPARTMENT OF AGRICULTURE 

RURAL DEVELOPMENT 

GRANTEE: 

[ [SEAL] llllllllllllll

Name: 

lllllllllllllllllll

Date 

Title: 

[FR Doc. E9–5154 Filed 3–10–09; 8:45 am] 

BILLING CODE 3410–XY–P 

DEPARTMENT OF COMMERCE 

International Trade Administration 

A–533–847 

1–Hydroxyethylidene–1, 1– 

Diphosphonic Acid from India: Notice 

of Final Determination of Sales at Less 

Than Fair Value 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: The U.S. Department of 

Commerce (the Department) has 

determined that 1–hydroxyethylidene– 

1, 1–diphosphonic acid (HEDP) from 

India is being, or is likely to be, sold in 

the United States at less–than-fair–value 

(LTFV), as provided in section 735 of 

the Tariff Act of 1930, as amended (the 

Act). The estimated margins of sales at 

LTFV are listed in the ‘‘Continuation of 

Suspension of Liquidation’’ section of 

this notice. 


rwilkins on PROD1PC63 with NOTICES
10544 Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 

1C2H8O7P2 or C(CH3)(OH)(PO3H2)2

EFFECTIVE DATE: March 11, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Brian Smith and Gemal Brangman, AD/ 

CVD Operations, Office 2, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC 20230; 

telephone (202) 482–1766 and (202) 

482–3773, respectively. 

SUPPLEMENTARY INFORMATION: 

Background 

On October 21, 2008, the Department 

published in the Federal Register its 

preliminary determination in the 

antidumping duty investigation of 

HEDP from India. See 1– 

Hydroxyethylidene–1, 1–Diphosphonic 

Acid from the Republic of India and the 

People’s Republic of China: Notice of 

Preliminary Determination of Sales at 

Less Than Fair Value and Postponement 

of Final Determination, 73 FR 62465 

(October 21, 2008) (Preliminary 

Determination). 

We conducted verification of the 

questionnaire responses submitted by 

Aquapharm Chemicals Private Limited 

(Aquapharm) in November 2008. See 

Memorandum to The File from Case 

Analysts entitled ‘‘Verification of the 

Questionnaire Responses of Aquapharm 

Chemicals Pvt. Ltd. (Aquapharm) in the 

Antidumping Duty Investigation of 1– 

Hydroxyethylidene–1, 1–Diphosphonic 

Acid (HEDP) from India,’’ dated January 

13, 2009 (Verification Report). The 

verification report is on file and 

available in the Central Records Unit 

(CRU), Room 1117 of the Department’s 

main building. 

On January 26, 2009, Aquapharm and 

the petitioner submitted case briefs. On 

February 2, 2009, Aquapharm and the 

petitioner submitted rebuttal briefs. As 

neither party requested a hearing, a 

hearing was not held in this case. 

Period of Investigation 

The period of investigation (POI) is 

January 1, 2007, to December 31, 2007. 

This period corresponds to the four 

most recent fiscal quarters prior to the 

month of the filing of the petition. 

Scope of Investigation 

The merchandise covered by this 

investigation includes all grades of 

aqueous, acidic (non–neutralized) 

concentrations of 1–hydroxyethylidene– 

1, 1–diphosphonic acid1, also referred 

to as hydroxethlylidenediphosphonic 

acid, hydroxyethanediphosphonic acid, 

acetodiphosphonic acid, and etidronic 

acid. The CAS (Chemical Abstract 

Service) registry number for HEDP is 

2809–21–4. The merchandise subject to 

this investigation is currently classified 

in the Harmonized Tariff Schedule of 

the United States (HTSUS) at 

subheading 2931.00.9043. It may also 

enter under HTSUS subheading 

2811.19.6090. While HTSUS 

subheadings are provided for 

convenience and customs purposes 

only, the written description of the 

scope of this investigation is dispositive. 

Analysis of Comments Received 

All issues raised in the case and 

rebuttal briefs by parties to this 

antidumping investigation are 

addressed in the ‘‘Issues and Decision 

Memorandum for the Final 

Determination in the Less–Than-Fair– 

Value Investigation of 1– 

Hydroxyethylidene–1, 1–Diphosphonic 

Acid from India’’ from John Andersen, 

Acting Deputy Assistant Secretary for 

Antidumping and Countervailing Duty 

Operations, to Ronald K. Lorentzen, 

Acting Assistant Secretary for Import 

Administration (Decision 

Memorandum), dated March 5, 2009, 

which is hereby adopted by this notice. 

A list of the issues which parties have 

raised and to which we have responded, 

all of which are in the Decision 

Memorandum, is attached to this notice 

as an appendix. Parties can find a 

complete discussion of all issues raised 

in this investigation and the 

corresponding recommendations in the 

Decision Memorandum, which is on file 

in the CRU. In addition, a complete 

version of the Decision Memorandum 

can be accessed directly on the Web at 

http://ia.ita.doc.gov/frn/. The paper 

copy and electronic version of the 

Decision Memorandum are identical in 

content. 

Verification 

As provided in section 782(i) of the 

Act, we verified the information 

submitted by Aquapharm for use in our 

final determination. We used standard 

verification procedures including an 

examination of relevant accounting and 

production records, and original source 

documents provided by Aquapharm. 

See Verification Report. 

Final Determination Margins 

Manufacturer/Exporter Weighted–Average 

Margin (percent) 

Aquapharm Chemicals 

Private Limited .......... 3.10 

All Others ...................... 3.10 

We determine that the following 

weighted–average dumping margins 

exist for the period January 1, 2007, to 

December 31, 2007: 

Disclosure 

We will disclose the calculations 

performed within five days of the date 

of publication of this notice to parties in 

this proceeding in accordance with 19 

CFR 351.224(b). 

Continuation of Suspension of 

Liquidation 

Pursuant to section 735(c)(1)(B) of the 

Act, we will instruct U.S. Customs and 

Border Protection (CBP) to continue to 

suspend liquidation of all entries of 

HEDP from India, entered, or withdrawn 

from warehouse, for consumption on or 

after October 21, 2008, the date of 

publication of the Preliminary 

Determination. We will instruct CBP to 

require a cash deposit or the posting of 

a bond equal to the weighted–average 

dumping margins, as indicated above 

and as follows: (1) the rate for 

Aquapharm will be 3.10 percent; (2) if 

the exporter is not a firm identified in 

this investigation, but the producer is, 

the rate will be the rate established for 

the producer of the subject 

merchandise; (3) the rate for all other 

producers or exporters will be 3.10 

percent. These suspension of 

liquidation instructions will remain in 

effect until further notice. 

International Trade Commission 

Notification 

In accordance with section 735(d) of 

the Act, we have notified the 

International Trade Commission (ITC) of 

our final determination. As our final 

determination is affirmative, in 

accordance with section 735(b)(2) of the 

Act, the ITC will determine, within 45 

days, whether the domestic industry in 

the United States is materially injured, 

or threatened with material injury, by 

reason of imports or sales (or the 

likelihood of sales) for importation of 

the subject merchandise. If the ITC 

determines that material injury or threat 

of material injury does not exist, the 

proceeding will be terminated and all 

securities posted will be refunded or 

canceled. See section 735(c)(2) of the 

Act. If the ITC determines that such 

injury does exist, the Department will 

issue an antidumping duty order 

directing CBP to assess antidumping 

duties on all imports of the subject 

merchandise entered, or withdrawn 

from warehouse, for consumption on or 

after the effective date of the suspension 

of liquidation. 

Notification Regarding APO 

This notice also serves as a reminder 

to parties subject to administrative 

protective order (APO) of their 

responsibility concerning the 

disposition of proprietary information 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 10545 

1Wujin Water, Wujin Fine Chemical, and Jiangsu 

Jianghai submitted case briefs and rebuttal briefs 

jointly. 2C2H8O7P2 or C(CH3)(OH)(PO3H2)2. 

disclosed under APO in accordance 

with 19 CFR 351.305. Timely 

notification of return/destruction of 

APO materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and the terms of an APO is a 

sanctionable violation. 

This determination is issued and 

published pursuant to sections 735(d) 

and 777(i)(1) of the Act. 

Dated: March 5, 2009. 

Ronald K. Lorentzen, 

Acting Assistant Secretary for Import 

Administration. 

Appendix Issues in Decision 

Memorandum 

1. U.S. Date of Sale 

2. U.S. Sales Type Designation 

3. Level of Trade 

4. U.S. Credit Expenses and Inventory 

Carrying Costs 

5. Verification Corrections 

[FR Doc. E9–5231 Filed 3–10–09; 8:45 am] 

BILLING CODE: 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–570–934] 

1–Hydroxyethylidene–1, 1– 

Diphosphonic Acid from the People’s 

Republic of China: Final Determination 

of Sales at Less Than Fair Value 

AGENCY: Import Administration, 

International Trade Administration, 

U.S. Department of Commerce. 

EFFECTIVE DATE: March 11, 2009. 

SUMMARY: The Department of Commerce 

(the ‘‘Department’’) has determined that 

1–hydroxyethylidene–1, 1– 

diphosphonic acid (‘‘HEDP’’) from the 

People’s Republic of China (‘‘PRC’’) is 

being, or is likely to be, sold in the 

United States at less than fair value 

(‘‘LTFV’’), as provided in section 733 of 

the Tariff Act of 1930, as amended (‘‘the 

Act’’). The final dumping margins for 

this investigation are listed in the ‘‘Final 

Determination Margins’’ section of this 

notice. 

FOR FURTHER INFORMATION CONTACT: 

Maisha Cryor or Shawn Higgins, AD/ 

CVD Operations, Office 4, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC 20230; 

telephone: (202) 482–5831 and (202) 

482–0679, respectively. 

SUPPLEMENTARY INFORMATION: 

Case History 

On October 21, 2008, the Department 

published its preliminary determination 

that HEDP from the PRC is being, or is 

likely to be, sold in the United States at 

LTFV, as provided in the Act. See 1– 

Hydroxyethylidene–1, 1–Diphosphonic 

Acid From the People’s Republic of 

China: Preliminary Determination of 

Sales at Less Than Fair Value and 

Postponement of Final Determination, 

73 FR 62470 (October 21, 2008) 

(‘‘Preliminary Determination’’). For the 

Preliminary Determination, the 

Department calculated a 24.30 percent 

dumping margin for Nanjing University 

of Chemical Technology Changzhou 

Wujin Water Quality Stabilizer Factory 

Ltd. (‘‘Wujin Water’’). The Department 

assigned a 72.42 percent dumping 

margin to the PRC–wide entity 

including Changzhou Kewei Fine 

Chemical Factory (‘‘Kewei’’) and a 24.30 

percent dumping margin to separate rate 

applicants Changzhou Wujin Fine 

Chemical Factory Co., Ltd. (‘‘Wujin Fine 

Chemical’’) and Jiangsu Jianghai 

Chemical Group Co., Ltd. (‘‘Jiangsu 

Jianghai’’). On December 3, 2008, Wujin 

Water provided the Department with its 

final submission of surrogate values. In 

December 2008, Compass Chemical 

International LLC (‘‘Petitioner’’), Wujin 

Water, Wujin Fine Chemical, and 

Jiangsu Jianghai submitted case briefs 

and rebuttal briefs.1 On January 14, 

2009, the Department held a public 

hearing. 

Analysis of Comments Received 

All issues raised in the case and 

rebuttal briefs by the parties to this 

investigation are addressed in the 

‘‘Issues and Decision Memorandum for 

the Final Determination in the Less– 

Than-Fair–Value Investigation of 1– 

Hydroxyethylidene–1, 1–Diphosphonic 

Acid from the People’s Republic of 

China’’ (‘‘Issues and Decision 

Memorandum’’), dated concurrently 

with this notice, which is hereby 

adopted by this notice in its entirety. A 

list of the issues which parties raised 

and to which we respond in the Issues 

and Decision Memorandum is attached 

to this notice as an Appendix. The 

Issues and Decision Memorandum is a 

public document and is on file in the 

Central Records Unit (‘‘CRU’’), Main 

Commerce Building, Room 1117, and is 

accessible on the internet at http:// 

www.trade.gov/ia. The paper copy and 

electronic version of the memorandum 

are identical in content. 

Verification 

As provided in section 782(i) of the 

Act, we verified the information 

submitted by Wujin Water for use in our 

final determination. We used standard 

verification procedures including 

examination of relevant accounting and 

production records, and original source 

documents provided by the respondent. 

Changes Since the Preliminary 

Determination 

Based on our analysis of comments 

received, we have made certain 

adjustments to the margin calculations 

used in the Preliminary Determination. 

These adjustments are discussed in 

detail in the Issues and Decision 

Memorandum and are listed below: 

1. We recalculated the financial ratios 

using the April 2005 through March 

2006 financial statement of Rencal 

Chemicals (India) Limited (‘‘Rencal 

Chemicals’’). 

2. We recalculated the surrogate value 

for phosphorus trichloride using the 

April 2004 through March 2005 and 

April 2005 through March 2006 

financial statements of Rencal 

Chemicals. 

3. We recalculated the surrogate value 

for steam using the April 2007 through 

March 2008 financial statement of 

Hindalco Industries Ltd. 

4. We revised the transportation 

distance of chemical drums. 

Period of Investigation 

The period of investigation (‘‘POI’’) is 

July 1, 2007, through December 31, 

2007. This period corresponds to the 

two most recent fiscal quarters prior to 

the month of the filing of the petition, 

i.e., March 2008. See 19 CFR 

351.204(b)(1). 

Scope of the Investigation 

The merchandise covered by this 

investigation includes all grades of 

aqueous, acidic (non–neutralized) 

concentrations of 1–hydroxyethylidene– 

1, 1–diphosphonic acid2, also referred 

to as hydroxethlylidenediphosphonic 

acid, hydroxyethanediphosphonic acid, 

acetodiphosphonic acid, and etidronic 

acid. The CAS (Chemical Abstract 

Service) registry number for HEDP is 

2809–21–4. The merchandise subject to 

this investigation is currently classified 

in the Harmonized Tariff Schedule of 

the United States (‘‘HTSUS’’) at 

subheading 2931.00.9043. It may also 

enter under HTSUS subheading 

2811.19.6090. While HTSUS 

subheadings are provided for 

convenience and customs purposes 


rwilkins on PROD1PC63 with NOTICES

Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 10545 

1Wujin Water, Wujin Fine Chemical, and Jiangsu 

Jianghai submitted case briefs and rebuttal briefs 

jointly. 2C2H8O7P2 or C(CH3)(OH)(PO3H2)2. 

disclosed under APO in accordance 

with 19 CFR 351.305. Timely 

notification of return/destruction of 

APO materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and the terms of an APO is a 

sanctionable violation. 

This determination is issued and 

published pursuant to sections 735(d) 

and 777(i)(1) of the Act. 

Dated: March 5, 2009. 

Ronald K. Lorentzen, 

Acting Assistant Secretary for Import 

Administration. 

Appendix Issues in Decision 

Memorandum 

1. U.S. Date of Sale 

2. U.S. Sales Type Designation 

3. Level of Trade 

4. U.S. Credit Expenses and Inventory 

Carrying Costs 

5. Verification Corrections 

[FR Doc. E9–5231 Filed 3–10–09; 8:45 am] 

BILLING CODE: 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–570–934] 

1–Hydroxyethylidene–1, 1– 

Diphosphonic Acid from the People’s 

Republic of China: Final Determination 

of Sales at Less Than Fair Value 

AGENCY: Import Administration, 

International Trade Administration, 

U.S. Department of Commerce. 

EFFECTIVE DATE: March 11, 2009. 

SUMMARY: The Department of Commerce 

(the ‘‘Department’’) has determined that 

1–hydroxyethylidene–1, 1– 

diphosphonic acid (‘‘HEDP’’) from the 

People’s Republic of China (‘‘PRC’’) is 

being, or is likely to be, sold in the 

United States at less than fair value 

(‘‘LTFV’’), as provided in section 733 of 

the Tariff Act of 1930, as amended (‘‘the 

Act’’). The final dumping margins for 

this investigation are listed in the ‘‘Final 

Determination Margins’’ section of this 

notice. 

FOR FURTHER INFORMATION CONTACT: 

Maisha Cryor or Shawn Higgins, AD/ 

CVD Operations, Office 4, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC 20230; 

telephone: (202) 482–5831 and (202) 

482–0679, respectively. 

SUPPLEMENTARY INFORMATION: 

Case History 

On October 21, 2008, the Department 

published its preliminary determination 

that HEDP from the PRC is being, or is 

likely to be, sold in the United States at 

LTFV, as provided in the Act. See 1– 

Hydroxyethylidene–1, 1–Diphosphonic 

Acid From the People’s Republic of 

China: Preliminary Determination of 

Sales at Less Than Fair Value and 

Postponement of Final Determination, 

73 FR 62470 (October 21, 2008) 

(‘‘Preliminary Determination’’). For the 

Preliminary Determination, the 

Department calculated a 24.30 percent 

dumping margin for Nanjing University 

of Chemical Technology Changzhou 

Wujin Water Quality Stabilizer Factory 

Ltd. (‘‘Wujin Water’’). The Department 

assigned a 72.42 percent dumping 

margin to the PRC–wide entity 

including Changzhou Kewei Fine 

Chemical Factory (‘‘Kewei’’) and a 24.30 

percent dumping margin to separate rate 

applicants Changzhou Wujin Fine 

Chemical Factory Co., Ltd. (‘‘Wujin Fine 

Chemical’’) and Jiangsu Jianghai 

Chemical Group Co., Ltd. (‘‘Jiangsu 

Jianghai’’). On December 3, 2008, Wujin 

Water provided the Department with its 

final submission of surrogate values. In 

December 2008, Compass Chemical 

International LLC (‘‘Petitioner’’), Wujin 

Water, Wujin Fine Chemical, and 

Jiangsu Jianghai submitted case briefs 

and rebuttal briefs.1 On January 14, 

2009, the Department held a public 

hearing. 

Analysis of Comments Received 

All issues raised in the case and 

rebuttal briefs by the parties to this 

investigation are addressed in the 

‘‘Issues and Decision Memorandum for 

the Final Determination in the Less– 

Than-Fair–Value Investigation of 1– 

Hydroxyethylidene–1, 1–Diphosphonic 

Acid from the People’s Republic of 

China’’ (‘‘Issues and Decision 

Memorandum’’), dated concurrently 

with this notice, which is hereby 

adopted by this notice in its entirety. A 

list of the issues which parties raised 

and to which we respond in the Issues 

and Decision Memorandum is attached 

to this notice as an Appendix. The 

Issues and Decision Memorandum is a 

public document and is on file in the 

Central Records Unit (‘‘CRU’’), Main 

Commerce Building, Room 1117, and is 

accessible on the internet at http:// 

www.trade.gov/ia. The paper copy and 

electronic version of the memorandum 

are identical in content. 

Verification 

As provided in section 782(i) of the 

Act, we verified the information 

submitted by Wujin Water for use in our 

final determination. We used standard 

verification procedures including 

examination of relevant accounting and 

production records, and original source 

documents provided by the respondent. 

Changes Since the Preliminary 

Determination 

Based on our analysis of comments 

received, we have made certain 

adjustments to the margin calculations 

used in the Preliminary Determination. 

These adjustments are discussed in 

detail in the Issues and Decision 

Memorandum and are listed below: 

1. We recalculated the financial ratios 

using the April 2005 through March 

2006 financial statement of Rencal 

Chemicals (India) Limited (‘‘Rencal 

Chemicals’’). 

2. We recalculated the surrogate value 

for phosphorus trichloride using the 

April 2004 through March 2005 and 

April 2005 through March 2006 

financial statements of Rencal 

Chemicals. 

3. We recalculated the surrogate value 

for steam using the April 2007 through 

March 2008 financial statement of 

Hindalco Industries Ltd. 

4. We revised the transportation 

distance of chemical drums. 

Period of Investigation 

The period of investigation (‘‘POI’’) is 

July 1, 2007, through December 31, 

2007. This period corresponds to the 

two most recent fiscal quarters prior to 

the month of the filing of the petition, 

i.e., March 2008. See 19 CFR 

351.204(b)(1). 

Scope of the Investigation 

The merchandise covered by this 

investigation includes all grades of 

aqueous, acidic (non–neutralized) 

concentrations of 1–hydroxyethylidene– 

1, 1–diphosphonic acid2, also referred 

to as hydroxethlylidenediphosphonic 

acid, hydroxyethanediphosphonic acid, 

acetodiphosphonic acid, and etidronic 

acid. The CAS (Chemical Abstract 

Service) registry number for HEDP is 

2809–21–4. The merchandise subject to 

this investigation is currently classified 

in the Harmonized Tariff Schedule of 

the United States (‘‘HTSUS’’) at 

subheading 2931.00.9043. It may also 

enter under HTSUS subheading 

2811.19.6090. While HTSUS 

subheadings are provided for 

convenience and customs purposes 


rwilkins on PROD1PC63 with NOTICES
10546 Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 

only, the written description of the 

scope of this investigation is dispositive. 

Scope Comments 

The Department received no 

comments regarding the scope of this 

investigation. 

Non–Market Economy Treatment 

In the Preliminary Determination, the 

Department considered the PRC to be a 

non–market economy (‘‘NME’’) country. 

In accordance with section 771(18)(C)(i) 

of the Act, any determination that a 

country is an NME country shall remain 

in effect until revoked by the 

administering authority. See Tapered 

Roller Bearings and Parts Thereof, 

Finished and Unfinished, From the 

People’s Republic of China: Preliminary 

Results of 2001–2002 Administrative 

Review and Partial Rescission of 

Review, 68 FR 7500 (February 14, 2003), 

unchanged in Tapered Roller Bearings 

and Parts Thereof, Finished and 

Unfinished, from the People’s Republic 

of China: Final Results of 2001–2002 

Administrative Review and Partial 

Rescission of Review, 68 FR 70488 

(December 18, 2003). No party has 

commented on the Department’s 

classification of the PRC as an NME. 

Therefore, for the final determination, 

we continue to consider the PRC to be 

an NME. 

Separate Rates 

In proceedings involving NME 

countries, the Department begins with a 

rebuttable presumption that all 

companies within the country are 

subject to government control and, thus, 

should be assigned a single 

antidumping duty deposit rate. It is the 

Department’s policy to assign all 

exporters of merchandise subject to an 

investigation in an NME country this 

single rate unless an exporter can 

demonstrate that it is sufficiently 

independent so as to be entitled to a 

separate rate. See Final Determination of 

Sales at Less Than Fair Value: Sparklers 

from the People’s Republic of China, 56 

FR 20588 (May 6, 1991), as amplified by 

Notice of Final Determination of Sales 

at Less Than Fair Value: Silicon Carbide 

from the People’s Republic of China, 59 

FR 22585 (May 2, 1994), and 19 CFR 

351.107(d). 

In the Preliminary Determination, we 

found that Wujin Fine Chemical and 

Jiangsu Jianghai demonstrated eligibility 

for separate–rate status. Since the 

publication of the Preliminary 

Determination, no party has commented 

on the eligibility of Wujin Fine 

Chemical and Jiangsu Jianghai for 

separate–rate status. For the final 

determination, we continue to find that 

the evidence placed on the record of 

this investigation by Wujin Fine 

Chemical and Jiangsu Jianghai 

demonstrates both de jure and de facto 

absence of government control with 

respect to each company’s respective 

exports of the merchandise under 

investigation. Thus, we continue to find 

that Wujin Fine Chemical and Jiangsu 

Jianghai are eligible for separate–rate 

status. Normally the separate rate is 

determined based on the estimated 

weighted–average dumping margins 

established for exporters and producers 

individually investigated, excluding 

zero and de minimis margins or margins 

based entirely on adverse facts available 

(‘‘AFA’’). See section 735(c)(5)(A) of the 

Act. In this case, because there are no 

rates other than de minimis or those 

based on AFA, we have determined to 

take a simple average of the AFA and 

the de minimis rate calculated for Wujin 

Water as a reasonable method for 

purposes of determining the rate 

assigned to Wujin Fine Chemical and 

Jiangsu Jianghai. See section 

735(c)(5)(B) of the Act. We note that this 

methodology is consistent with the 

Department’s past practice. See Notice 

of Preliminary Determination of Sales at 

Less Than Fair Value and Postponement 

of Final Determination; Light–Walled 

Rectangular Pipe and Tube From the 

Republic of Korea, 73 FR 5794, 5800 

(January 31, 2008) (‘‘Preliminary 

Determination of Light–Walled Pipe’’), 

unchanged in Final Determination of 

Sales at Less Than Fair Value: Light– 

Walled Rectangular Pipe and Tube from 

the Republic of Korea, 73 FR 35655 

(June 24, 2008) (‘‘Final Determination of 

Light–Walled Pipe’’); see also 

‘‘Corroboration’’ section below. 

We determined in the Preliminary 

Determination that because Kewei 

withdrew from the investigation, thus 

preventing the Department from asking 

additional questions on its separate rate 

status and preventing the Department 

from verifying its responses, the 

Department has no basis upon which to 

grant Kewei a separate rate. We received 

no comments on this denial of a 

separate rate. Although Kewei remains a 

mandatory respondent, the Department 

will continue to consider Kewei part of 

the PRC–wide entity because it failed to 

demonstrate that it qualifies for a 

separate rate. 

The PRC–Wide Rate 

In the Preliminary Determination, the 

Department found that certain 

companies did not respond to our 

requests for information. See 

Preliminary Determination, 73 FR at 

62473–74. We treated these PRC 

producers/exporters as part of the PRC– 

wide entity because they did not 

demonstrate that they operate free of 

government control over their export 

activities. Id. In addition, in the 

Preliminary Determination, the 

Department applied total AFA to Kewei. 

We determined, as AFA, that Kewei was 

not eligible for a separate rate and we 

would treat Kewei as part of the PRC– 

wide entity. Id. No additional 

information was placed on the record 

with respect to any of these companies 

after the Preliminary Determination. 

Therefore, pursuant to section 

776(a)(2)(A) of the Act, the Department 

continues to find that the use of facts 

available is appropriate to determine the 

PRC–wide rate. 

Section 776(b) of the Act provides 

that, in selecting from among the facts 

otherwise available, the Department 

may employ an adverse inference if an 

interested party fails to cooperate by not 

acting to the best of its ability to comply 

with requests for information. See 

Tapered Roller Bearings and Parts 

Thereof, Finished or Unfinished, from 

the People’s Republic of China: 

Preliminary Results of Antidumping 

Duty Administrative Review and Notice 

of Rescission in Part and Intent to 

Rescind in Part, 72 FR 14078, 14079 

(March 26, 2007) (‘‘Preliminary Results 

of TRBs’’), unchanged in Tapered Roller 

Bearings and Parts Thereof, Finished or 

Unfinished, from the People’s Republic 

of China: Final Results of 2005–2006 

Administrative Review and Partial 

Rescission of Review, 72 FR 56724 

(October 4, 2007) and Tapered Roller 

Bearings and Parts Thereof, Finished 

and Unfinished, From the People’s 

Republic of China: Amended Final 

Results of 2005–2006 Administrative 

Review, 72 FR 70302 (December 11, 

2007) (‘‘Final Results of TRBs’’). See 

also Statement of Administrative Action 

accompanying the Uruguay Round 

Agreements Act (‘‘SAA’’), H.R. Doc. No. 

103–316, Vol. 1 (1994), at 870. We 

determine that, because the PRC–wide 

entity, including Kewei, did not 

respond to our requests for information, 

the PRC–wide entity has failed to 

cooperate to the best of its ability. See 

id. Therefore, the Department finds that, 

in selecting from among the facts 

otherwise available, an adverse 

inference is appropriate for the PRC– 

wide entity. 

Because we begin with the 

presumption that all companies within 

an NME country are subject to 

government control, and because only 

Wujin Water, Wujin Fine Chemical, and 

Jiangsu Jianghai have overcome that 

presumption, we are applying a single 

antidumping rate (i.e., the PRC–wide 

entity rate) to all other exporters of 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 10547 

subject merchandise from the PRC. Such 

companies did not demonstrate 

entitlement to a separate rate. See, e.g., 

Synthetic Indigo From the People’s 

Republic of China; Notice of Final 

Determination of Sales at Less Than 

Fair Value, 65 FR 25706 (May 3, 2000). 

The PRC–wide entity rate applies to all 

entries of subject merchandise except 

for entries from Wujin Water, Wujin 

Fine Chemical, and Jiangsu Jianghai. 

In the Preliminary Determination, we 

assigned to the PRC–wide entity the 

margin alleged in the petition, i.e., 72.42 

percent. See Preliminary Determination, 

73 FR at 22331. For the final 

determination, we have continued to 

assign to the PRC–wide entity the rate 

of 72.42 percent. 

Corroboration 

Section 776(c) of the Act provides 

that, when the Department relies on 

secondary information in using the facts 

otherwise available, it must, to the 

extent practicable, corroborate that 

information from independent sources 

that are reasonably at its disposal. We 

have interpreted ‘‘corroborate’’ to mean 

that we will, to the extent practicable, 

examine the reliability and relevance of 

the information submitted. See 

Preliminary Determination of TRBs, 72 

FR at 14080 (unchanged in Final Results 

of TRBs). 

Because there are no respondents 

receiving rates other than de minimis or 

those based on AFA, we relied upon our 

pre–initiation analysis of the adequacy 

and accuracy of the information in the 

petition to corroborate the 72.42 percent 

petition margin selected as AFA for the 

PRC–wide entity. This corroborated 

margin was then used in the calculation 

of the rate assigned to Wujin Fine 

Chemical and Jiangsu Jianghai pursuant 

to section 735(c)(5)(B) of the Act. See 

‘‘Import Administration Antidumping 

Investigation Initiation Checklist: 1– 

Hydroxyethylidene–1, 1–Diphosphonic 

Acid from the People’s Republic of 

China,’’ (April 8, 2008). We note that 

this practice is consistent with the 

Department’s past practice in instances 

where the only rates on the record are 

either de minimis or based entirely 

upon AFA. See Preliminary 

Determination of Light–Walled Pipe, 73 

FR at 5797 (unchanged in Final 

Determination of Light–Walled Pipe). 

During the initiation stage, we examined 

evidence supporting the calculations in 

the petition and the supplemental 

information provided by Petitioner to 

determine the probative value of the 

margins alleged in the petition. During 

our pre–initiation analysis, we 

examined the information used as the 

basis of export price (‘‘EP’’) and normal 

value (‘‘NV’’) in the petition, and the 

calculations used to derive the alleged 

margins. Also during our pre–initiation 

analysis, we examined information from 

various independent sources provided 

either in the petition or, based on our 

requests, in supplements to the petition, 

which corroborated key elements of the 

EP and NV calculations. Id. Therefore, 

for the final determination, the 

Department finds that the rate derived 

from the petition for purposes of 

initiation has probative value for the 

purpose of being selected as the AFA 

rate assigned to the PRC–wide entity, 

including Kewei, and used in the 

calculation of the rate assigned to Wujin 

Fine Chemical and Jiangsu Jianghai 

pursuant to 735(c)(5)(B) of the Act. 

Final Determination Margins 

We determine that the following 

percentage dumping margins exist for 

the POI: 

Manufacturer/Exporter Weighted–Average 

Margin (Percent) 

Nanjing University of 

Chemical Technology 0.00 

Changzhou 

Wujin Water 

Quality Stabilizer Factory Ltd.3.

Changzhou Wujin Fine 

Chemical Factory 

Co., Ltd.4 ................... 36.21 

Jiangsu Jianghai Chemical Group Co., Ltd.5 36.21 

PRC–wide Entity (including Kewei) ........... 72.42 

3 Nanjing University of Chemical Technology 

Changzhou Wujin Water Quality Stabilizer 

Factory Ltd. manufactures and exports subject 

merchandise. 4 Changzhou Wujin Fine Chemical Factory 

Co., Ltd. manufactures and exports subject 

merchandise. 5 Jiangsu Jianghai Chemical Group Co., Ltd. 

manufactures and exports subject 

merchandise. 

Disclosure 

We will disclose the calculations 

performed within five days of the date 

of publication of this notice to parties in 

this proceeding in accordance with 19 

CFR 351.224(b). 

Continuation of Suspension of 

Liquidation 

In accordance with section 

735(c)(1)(B) of the Act, we will instruct 

U.S. Customs and Border Protection 

(‘‘CBP’’) to continue to suspend 

liquidation of all entries of HEDP from 

the PRC, except those produced and 

exported by Wujin Water, as described 

in the ‘‘Scope of Investigation’’ section, 

entered, or withdrawn from warehouse, 

for consumption on or after October 21, 

2008, the date of publication of the 

Preliminary Determination in the 

Federal Register. We will instruct CBP 

to require a cash deposit or the posting 

of a bond equal to the weighted–average 

dumping margin amount by which the 

NV exceeds U.S. price, as follows: (1) 

The rate for the manufacturer/exporter 

combinations listed in the chart above 

will be the rate we have determined in 

this final determination; (2) for all PRC 

exporters of subject merchandise which 

have not received their own rate, the 

cash–deposit rate will be the PRC–wide 

entity rate; and (3) for all non–PRC 

exporters of subject merchandise which 

have not received their own rate, the 

cash–deposit rate will be the rate 

applicable to the PRC exporter/producer 

combination that supplied that non– 

PRC exporter. We are directing CBP not 

to suspend liquidation of imports of 

HEDP from the PRC produced and 

exported by Wujin Water, and entered, 

or withdrawn from warehouse, for 

consumption on or after October 21, 

2008, the date of publication of the 

Preliminary Determination in the 

Federal Register. CBP shall not require 

a cash deposit or the posting of a bond 

for Wujin Water because we have 

calculated a margin of zero percent for 

Wujin Water. These suspension–ofliquidation instructions will remain in 

effect until further notice. 

International Trade Commission 

Notification 

In accordance with section 735(d) of 

the Act, we have notified the 

International Trade Commission (‘‘ITC’’) 

of our final determination of sales at 

LTFV. As our final determination is 

affirmative, in accordance with section 

735(b)(2) of the Act, within 45 days the 

ITC will determine whether the 

domestic industry in the United States 

is materially injured, or threatened with 

material injury, by reason of imports or 

sales (or the likelihood of sales) for 

importation of the subject merchandise. 

If the ITC determines that material 

injury or threat of material injury does 

not exist, the proceeding will be 

terminated and all securities posted will 

be refunded or canceled. If the ITC 

determines that such injury does exist, 

the Department will issue an 

antidumping duty order directing CBP 

to assess, upon further instruction by 

the Department, antidumping duties on 

all imports of the subject merchandise 

entered, or withdrawn from warehouse, 

for consumption on or after the effective 

date of the suspension of liquidation. 

Notification Regarding APO 

This notice also serves as a reminder 

to the parties subject to administrative 


rwilkins on PROD1PC63 with NOTICES
10548 Federal Register / Vol. 74, No. 46 / Wednesday, March 11, 2009 / Notices 

protective order (‘‘APO’’) of their 

responsibility concerning the 

disposition of proprietary information 

disclosed under APO in accordance 

with 19 CFR 351.305. Timely 

notification of return or destruction of 

APO materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and the terms of an APO is a 

sanctionable violation. 

This determination is issued and 

published in accordance with sections 

735(d) and 777(i)(1) of the Act. 

Dated: March 5, 2009. 

Ronald K. Lorentzen, 

Acting Assistant Secretary for Import 

Administration. 

Appendix: 

Issues in Decision Memorandum 

Comment 1: Financial Ratios 

Comment 2: Surrogate Value for 

Phosphorus Trichloride 

Comment 3: Surrogate Value for 

Chemical Drums 

Comment 4: Surrogate Value for Steam 

Comment 5: Treatment of Acetyl 

Chloride 

Comment 6: Separate Rates for Wujin 

Fine Chemical and Jiangsu Jianghai 

Comment 7: Combination Rate for Hong 

Kong Exporter 

[FR Doc. E9–5237 Filed 3–10–09; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

(A- 570–881) 

Malleable Cast Iron Pipe Fittings from 

the People’s Republic of China: Notice 

of Rescission of the 2007–2008 

Administrative Review of the 

Antidumping Duty Order 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

EFFECTIVE DATE: March 11, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Brendan Quinn, AD/CVD Operations, 

Office 8, Import Administration, 

International Trade Administration, 

U.S. Department of Commerce, 14th 

Street and Constitution Avenue, NW, 

Washington, DC 20230; telephone: (202) 

482–5848. 

Background 

On December 1, 2008, the Department 

of Commerce (‘‘the Department’’) 

published a notice of opportunity to 

request an administrative review of the 

antidumping duty order on malleable 

cast iron pipe fittings from the People’s 

Republic of China (‘‘PRC’’). See 

Antidumping or Countervailing Duty 

Order, Finding, or Suspended 

Investigation; Opportunity to Request 

Administrative Review, 73 FR 72764 

(December 1, 2008). On December 30, 

2008, LDR Industries (LDR) and Beijing 

Sai Lin Ke Hardware Co., Ltd. (SLK) 

(collectively, ‘‘LDR/SLK’’) requested 

that the Department conduct an 

administrative review of SLK’s exports 

to the United States for the period 

December 1, 2007, through November 

30, 2008. On December 31, 2008, 

Mueller Comercial de Me ́xico, S. De R.L. 

de C.V. (‘‘Mueller’’) and Southland Pipe 

Nipples Company, Inc. (‘‘Southland’’) 

requested that the Department conduct 

an administrative review of Mueller’s 

exports to the United States for the 

period December 1, 2007, through 

November 30, 2008. Pursuant to these 

requests, the Department published a 

notice of the initiation of the 

administrative review of the 

antidumping duty order on malleable 

cast iron pipe fittings from the PRC. See 

Initiation of Antidumping and 

Countervailing Duty Administrative 

Reviews and Request for Revocation in 

Part, 74 FR 5821 (February 2, 2009). 

Rescission of Review 

Pursuant to 19 CFR 351.213(d)(1), the 

Department will rescind an 

administrative review, in whole or in 

part, if the parties that requested a 

review withdraw the requests within 90 

days of the date of publication of the 

notice of initiation. On February 11, 

2009, LDR/SLK timely withdrew its 

request for a review of SLK, and no 

other interested party requested a 

review of this company. On February 

12, 2009, Mueller and Southland timely 

withdrew their request for a review of 

Mueller, and no other interested party 

requested a review of this company. 

Therefore, the Department is rescinding 

this administrative review of the 

antidumping duty order on malleable 

cast iron pipe fittings from the PRC 

covering the period December 1, 2007, 

through November 30, 2008, in 

accordance with 19 CFR 351.213(d)(1). 

Assessment 

The Department will instruct U.S. 

Customs and Border Protection (‘‘CBP’’) 

to assess antidumping duties on all 

appropriate entries. Antidumping duties 

shall be assessed at rates equal to the 

cash deposit of estimated antidumping 

duties required at the time of entry, or 

withdrawal from warehouse, for 

consumption, in accordance with 19 

CFR 351.212(c)(1)(i). The Department 

intends to issue appropriate assessment 

instructions directly to CBP 15 days 

after the publication of this notice in the 

Federal Register. 

Notification to Interested Parties 

This notice serves as a final reminder 

to importers of their responsibility 

under 19 CFR 351.402(f)(2) to file a 

certificate regarding the reimbursement 

of antidumping duties prior to 

liquidation of the relevant entries 

during this review period. Pursuant to 

19 CFR 351.402(f)(3), failure to comply 

with this requirement could result in 

the Secretary’s presumption that 

reimbursement of antidumping duties 

occurred and the subsequent assessment 

of doubled antidumping duties. 

This notice also serves as a reminder 

to parties subject to administrative 

protective order (‘‘APO’’) of their 

responsibility concerning the 

disposition of proprietary information 

disclosed under APO, in accordance 

with 19 CFR 351.305 and as explained 

in the APO itself. Timely written 

notification of the return/destruction of 

APO materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and the terms of an APO is a 

sanctionable violation. 

This notice is in accordance with 

section 777(i)(1) of the Tariff Act of 

1930, as amended, and 19 CFR 

351.213(d)(4). 

Dated: March 3, 2009. 

John M. Andersen, 

Acting Deputy Assistant Secretary for 

Antidumping and Countervailing Duty 

Operations. 

[FR Doc. E9–5119 Filed 3–10–09; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

Cable Television Trade Mission to 

South Korea 

AGENCY: International Trade 

Administration, Department of 

Commerce. 

ACTION: Notice and call for applications 

for the Cable Television Trade Mission 

to South Korea, June 3–5, 2009. 

Mission Description 

The United States Department of 

Commerce, International Trade 

Administration, U.S. and Foreign 

Commercial Service is organizing a 

Trade Mission to Seoul, South Korea, 

June 3–5, 2009. The mission will 

provide an excellent venue for U.S. 

companies to promote their television 

programming content, and broadcasting 

equipment and services. The Korea 


rwilkins on PROD1PC63 with NOTICES
 

B-1

APPENDIX B

HEARING WITNESSES

 

B-3

CALENDAR OF PUBLIC HEARING

Those listed below appeared as witnesses at the United States International Trade

Commission=s hearing:

Subject: HEDP from China and India

Inv. Nos.: 731-TA-1146 and 1147 (Final)

Date and Time: March 3, 2009 - 9:30 a.m.

Sessions were held in connection with these investigations in the Main Hearing Room (room

101), 500 E Street, S.W., Washington, D.C.

OPENING REMARKS:

Petitioner (Jeffrey S. Levin, Mondial Trade Compliance Services & Solutions, Inc.)

Respondents (David J. Craven, Riggle & Craven)

In Support of the Imposition of

 Antidumping Duty Orders:

Mondial Trade Compliance Services & Solutions, Inc.

Bethesda, MD

on behalf of

Compass Chemical International, LLC (ACompass@)

Daniel McCaul, President and Chief Operating

Officer, Compass

Brian Failon, Vice President, Business Development

& Technology, Compass

Jeffrey S. Levin ) – OF COUNSEL
 

B-4

In Opposition to the Imposition of

 Antidumping Duty Orders:

Riggle & Craven

Chicago, IL

on behalf of

The Ad Hoc Water Treatment Chemical Producers

Committee (AAWTCP@) and its individual

members

George Collias, Treasurer, Uniphos, Inc.

Dr. Jeff Wang, President, Bosgen, Inc.

David J. Craven ) – OF COUNSEL

REBUTTAL/CLOSING REMARKS:

Petitioner (Jeffrey S. Levin, Mondial Trade Compliance Services & Solutions, Inc.)

Respondents (David J. Craven, Riggle & Craven)
 

APPENDIX C

SUMMARY DATA
 
 

Table C-1

HEDP: Summary data concerning the U.S. market, 2005-07, January-September 2007, and

January-September 2008

* * * * * * *

C-3

 

APPENDIX D

ADDITIONAL SOURCE-SPECIFIC

TRADE AND PRICE DATA

 

D-3

Weighted-average prices of HEDP which identify quarters in which Compass sold U.S.-produced

HEDP and separately report Compass's sales of subject imports from China are presented in tables D-1

through D-4. Tables D-5 and D-6 present data on apparent U.S. consumption of HEDP by sources,

including Compass.

Table D-1

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 1, for

Compass and other firms by quarter, January 2005-September 2008

* * * * * * *

Table D-2

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 2, for

Compass and other firms by quarter, January 2005-September 2008

* * * * * * *

Table D-3

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 3, for

Compass and other firms by quarter, January 2005-September 2008

* * * * * * *

Table D-4

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 4, for

Compass and other firms by quarter, January 2005-September 2008

* * * * * * *

Table D-5

HEDP: U.S. shipments of domestic product, U.S. shipments of imports, by sources, and apparent

U.S. consumption, 2005-07, January-September 2007, and January-September 2008

* * * * * * *

Table D-6

HEDP: Apparent U.S. consumption and market shares, 2005-07, January-September 2007, and

January-September 2008

* * * * * * *