[Federal Register Volume 83, Number 149 (Thursday, August 2, 2018)]
[Notices]
[Pages 37785-37790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16565]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-878; C-580-879; A-583-856]


Certain Corrosion-Resistant Steel Products From the Republic of 
Korea and Taiwan: Initiation of Anti-Circumvention Inquiries on the 
Antidumping Duty and Countervailing Duty Orders

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from ArcelorMittal USA LLC, Nucor 
Corporation, United States Steel Corporation, Steel Dynamics, Inc. and 
California Steel Industries (collectively, the domestic producers), the 
Department of Commerce (Commerce) is initiating a country-wide anti-
circumvention inquiries to determine whether imports of certain 
corrosion-resistant steel products (CORE), which are completed in the 
Socialist Republic of Vietnam (Vietnam) from hot-rolled steel (HRS) 
and/or cold-rolled steel (CRS) products (i.e., substrate) produced in 
Taiwan and the Republic of Korea (Korea), are circumventing the 
antidumping duty (AD) and countervailing duty (CVD) orders on CORE from 
Korea and the AD order on CORE from Taiwan.

DATES: Applicable August 2, 2018.

FOR FURTHER INFORMATION CONTACT: Chien-Min Yang (Korea) and Shanah Lee 
(Taiwan), AD/CVD Operations, Office VII and III, respectively, 
Enforcement and Compliance, International Trade Administration, U.S. 
Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 
20230; telephone: (202) 482-5484 and (202) 482-6386, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On June 3, 2015, the domestic producers filed petitions seeking the 
imposition of antidumping and countervailing duties on imports of CORE 
from Korea and Taiwan.\1\ In response to these petitions, Commerce 
initiated AD and CVD investigations on June 23, 2015.\2\ Following 
Commerce's final affirmative determinations of dumping and 
countervailable subsidies,\3\ and the U.S. International Trade 
Commission (ITC)'s finding of material injury,\4\ Commerce issued AD 
and CVD orders on imports of CORE from Korea and an AD order on imports 
of CORE from Taiwan (collectively, Orders).\5\
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    \1\ See the domestic producers' letter, ``Petitions for the 
Imposition of Antidumping and Countervailing Duties: Certain 
Corrosion-Resistant Steel Products from the People's Republic of 
China, the Republic of Korea, India, Italy, and Taiwan,'' dated June 
3, 2015 (collectively, petitions).
    \2\ See Certain Corrosion-Resistant Steel Products from Italy, 
India, the People's Republic of China, the Republic of Korea, and 
Taiwan: Initiation of Less-Than-Fair-Value Investigations, 80 FR 
37228 (June 30, 2015).
    \3\ See Certain Corrosion-Resistant Steel Products from the 
Republic of Korea: Final Determination of Sales at Less Than Fair 
Value and Final Affirmative Determination of Critical Circumstances, 
81 FR 35303 (June 2, 2016); see also Certain Corrosion-Resistant 
Steel Products from India, Italy, Republic of Korea and the People's 
Republic of China: Countervailing Duty Order, 81 FR 48387 (July 25, 
2016); Certain Corrosion-Resistant Steel Products from India, Italy, 
the People's Republic of China, the Republic of Korea and Taiwan: 
Amended Final Affirmative Antidumping Determination for India and 
Taiwan, and Antidumping Duty Orders, 81 FR 48390 (July 25, 2016); 
Countervailing Duty Investigation of Certain Corrosion-Resistant 
Steel Products from Taiwan: Final Negative Countervailing Duty 
Determination, 81 FR 35299 (June 2, 2016).
    \4\ See Certain Corrosion-Resistant Steel Products from China, 
India, Italy, Korea, and Taiwan; Determinations, 81 FR 47177 (July 
20, 2016).
    \5\ See Certain Corrosion-Resistant Steel Products from India, 
Italy, the People's Republic of China, the Republic of Korea and 
Taiwan: Amended Final Affirmative Antidumping Determination for 
India and Taiwan, and Antidumping Duty Orders, 81 FR 48390 (July 25, 
2016); Certain Corrosion-Resistant Steel Products from India, Italy, 
Republic of Korea and the People's Republic of China: Countervailing 
Duty Order, 81 FR 48387 (July 25, 2016) (Orders).
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    On June 12, 2018, pursuant to section 781(b) of the Tariff Act of 
1930, as amended (the Act) and 19 CFR 351.225(h), the domestic 
producers submitted a request for Commerce to initiate anti-
circumvention inquiries to determine whether entities in Vietnam are 
circumventing the Orders by exporting, to the United States, CORE which 
is completed or assembled in Vietnam using HRS and/or CRS sourced from 
Korea and Taiwan.\6\ Further, pursuant to 19 CFR 351.225(f), the 
domestic producers request that Commerce initiate anti-circumvention 
inquiries and issue in conjunction with initiation of the inquiries a 
preliminary determination of circumvention of the Orders to suspend 
liquidation of imports of CORE from Vietnam.\7\
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    \6\ See the domestic producers' letters, ``Certain Corrosion-
Resistant Steel Products from Taiwan: Request for Circumvention 
Ruling,'' dated June 12, 2018 (Anti-Circumvention Ruling Request--
Taiwan); ``Certain Corrosion-Resistant Steel Products from the 
Republic of Korea: Request for Circumvention Ruling Pursuant to 
Section 781(b) of the Tariff Act of 1930,'' dated June 12, 2018 
(Anti-Circumvention Ruling Request--Korea).
    \7\ See Anti-Circumvention Ruling Request--Taiwan at 22; Anti-
Circumvention Ruling Request--Korea at 25.
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Scope of the Orders

    The products covered by these orders are certain flat-rolled steel 
products, either clad, plated, or coated with

[[Page 37786]]

corrosion-resistant metals such as zinc, aluminum, or zinc-, aluminum-, 
nickel- or iron-based alloys, whether or not corrugated or painted, 
varnished, laminated, or coated with plastics or other non-metallic 
substances in addition to the metallic coating. The products covered 
include coils that have a width of 12.7 mm or greater, regardless of 
form of coil (e.g., in successively superimposed layers, spirally 
oscillating, etc.). The products covered also include products not in 
coils (e.g., in straight lengths) of a thickness less than 4.75 mm and 
a width that is 12.7 mm or greater and that measures at least 10 times 
the thickness. The products covered also include products not in coils 
(e.g., in straight lengths) of a thickness of 4.75 mm or more and a 
width exceeding 150 mm and measuring at least twice the thickness. The 
products described above may be rectangular, square, circular, or other 
shape and include products of either rectangular or non-rectangular 
cross-section where such cross-section is achieved subsequent to the 
rolling process, i.e., products which have been ``worked after 
rolling'' (e.g., products which have been beveled or rounded at the 
edges). For purposes of the width and thickness requirements referenced 
above:
    (1) Where the nominal and actual measurements vary, a product is 
within the scope if application of either the nominal or actual 
measurement would place it within the scope based on the definitions 
set forth above, and
    (2) where the width and thickness vary for a specific product 
(e.g., the thickness of certain products with non-rectangular cross-
section, the width of certain products with non-rectangular shape, 
etc.), the measurement at its greatest width or thickness applies.
    Steel products included in the scope of these orders are products 
in which: (1) Iron predominates, by weight, over each of the other 
contained elements; (2) the carbon content is 2 percent or less, by 
weight; and (3) none of the elements listed below exceeds the quantity, 
by weight, respectively indicated:
    <bullet> 2.50 percent of manganese, or
    <bullet> 3.30 percent of silicon, or
    <bullet> 1.50 percent of copper, or
    <bullet> 1.50 percent of aluminum, or
    <bullet> 1.25 percent of chromium, or
    <bullet> 0.30 percent of cobalt, or
    <bullet> 0.40 percent of lead, or
    <bullet> 2.00 percent of nickel, or
    <bullet> 0.30 percent of tungsten (also called wolfram), or
    <bullet> 0.80 percent of molybdenum, or
    <bullet> 0.10 percent of niobium (also called columbium), or
    <bullet> 0.30 percent of vanadium, or
    <bullet> 0.30 percent of zirconium
    Unless specifically excluded, products are included in this scope 
regardless of levels of boron and titanium.
    For example, specifically included in this scope are vacuum 
degassed, fully stabilized (commonly referred to as interstitial-free 
(IF)) steels and high strength low alloy (HSLA) steels. IF steels are 
recognized as low carbon steels with micro-alloying levels of elements 
such as titanium and/or niobium added to stabilize carbon and nitrogen 
elements. HSLA steels are recognized as steels with micro-alloying 
levels of elements such as chromium, copper, niobium, titanium, 
vanadium, and molybdenum.
    Furthermore, this scope also includes Advanced High Strength Steels 
(AHSS) and Ultra High Strength Steels (UHSS), both of which are 
considered high tensile strength and high elongation steels.
    Subject merchandise also includes corrosion-resistant steel that 
has been further processed in a third country, including but not 
limited to annealing, tempering, painting, varnishing, trimming, 
cutting, punching and/or slitting or any other processing that would 
not otherwise remove the merchandise from the scope of the orders if 
performed in the country of manufacture of the in-scope corrosion 
resistant steel.
    All products that meet the written physical description, and in 
which the chemistry quantities do not exceed any one of the noted 
element levels listed above, are within the scope of these orders 
unless specifically excluded. The following products are outside of 
and/or specifically excluded from the scope of these orders:
    <bullet> Flat-rolled steel products either plated or coated with 
tin, lead, chromium, chromium oxides, both tin and lead (``terne 
plate''), or both chromium and chromium oxides (``tin free steel''), 
whether or not painted, varnished or coated with plastics or other non-
metallic substances in addition to the metallic coating;
    <bullet> Clad products in straight lengths of 4.7625 mm or more in 
composite thickness and of a width which exceeds 150 mm and measures at 
least twice the thickness; and
    <bullet> Certain clad stainless flat-rolled products, which are 
three-layered corrosion-resistant flat-rolled steel products less than 
4.75 mm in composite thickness that consist of a flat-rolled steel 
product clad on both sides with stainless steel in a 20%-60%-20% ratio.
    The products subject to these orders are currently classified in 
the Harmonized Tariff Schedule of the United States (HTSUS) under item 
numbers: 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 
7210.49.0091, 7210.49.0095, 7210.61.0000, 7210.69.0000, 7210.70.6030, 
7210.70.6060, 7210.70.6090, 7210.90.6000, 7210.90.9000, 7212.20.0000, 
7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 
7212.40.5000, 7212.50.0000, and 7212.60.0000.
    The products subject to these orders may also enter under the 
following HTSUS item numbers: 7210.90.1000, 7215.90.1000, 7215.90.3000, 
7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 
7217.90.5030, 7217.90.5060, 7217.90.5090, 7225.91.0000, 7225.92.0000, 
7225.99.0090, 7226.99.0110, 7226.99.0130, 7226.99.0180, 7228.60.6000, 
7228.60.8000, and 7229.90.1000.
    The HTSUS subheadings above are provided for convenience and 
customs purposes only. The written description of the scope of these 
orders is dispositive.

Merchandise Subject to the Anti-Circumvention Inquiries

    These anti-circumvention inquiries cover imports of CORE exported 
from Vietnam manufactured from HRS and/or CRS inputs produced in Korea 
and Taiwan.
    The domestic producers request that Commerce treat CORE imports 
from Vietnam as subject merchandise under the scope of the Orders and 
impose cash deposit requirements for estimated AD and CVD duties on all 
imports of CORE from Vietnam.\8\
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    \8\ See Anti-Circumvention Ruling Request--Korea at 3; Anti-
Circumvention Ruling Request--Taiwan at 22.
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Initiation of Anti-Circumvention Inquiries

    Section 781(b)(1) of the Act provides that Commerce may find 
circumvention of an AD or CVD order when merchandise of the same class 
or kind subject to the order is completed or assembled in a foreign 
country other than the country to which the order applies. In 
conducting an anti-circumvention inquiry, under section 781(b)(1) of 
the Act, Commerce relies on the following criteria: (A) Merchandise 
imported into the United States is of the same class or kind as any 
merchandise produced in a foreign country that is the

[[Page 37787]]

subject of an antidumping or countervailing duty order or finding; (B) 
before importation into the United States, such imported merchandise is 
completed or assembled in another foreign country from merchandise 
which is subject to the order or merchandise which is produced in the 
foreign country that is subject to the order; (C) the process of 
assembly or completion in the foreign country referred to in section 
(B) is minor or insignificant; (D) the value of the merchandise 
produced in the foreign country to which the AD or CVD order applies is 
a significant portion of the total value of the merchandise exported to 
the United States; and (E) the administering authority determines that 
action is appropriate to prevent evasion of such order or finding. As 
discussed below, domestic producers provided evidence with respect to 
these criteria.

A. Merchandise of the Same Class or Kind

    The domestic producers claim that CORE exported to the United 
States is the same class or kind as that covered by the Orders in these 
inquiries.\9\ The domestic producers provided evidence to show that the 
merchandise from Vietnam enters the United States under the same tariff 
classification as subject merchandise.\10\
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    \9\ See Anti-Circumvention Ruling Request--Taiwan at 8; Anti-
Circumvention Ruling Request--Korea at 8. See also sections 
781(b)(1)(A)(i) and (iii) of the Act.
    \10\ See Anti-Circumvention Ruling Request--Taiwan at Exhibit 4; 
Anti-Circumvention Ruling Request--Korea at Exhibit 1.
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B. Completion of Merchandise in a Foreign Country

    The domestic producers presented evidence demonstrating how CORE in 
Vietnam is produced from HRS or CRS produced and imported from Taiwan 
and Korea.\11\ Further, the domestic producers provided evidence that 
Vietnam had no capacity to produce hot-rolled steel until very 
recently, May 2017.\12\ The domestic producers claim that this mill is 
``still in the ramp-up phase,'' and thus, ``most CORE that is produced 
in Vietnam must still be made from imported substrate.'' \13\
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    \11\ See Anti-Circumvention Ruling Request--Taiwan at 4-5, 8-9; 
Anti-Circumvention Ruling Request--Korea at 9-10.
    \12\ See Anti-Circumvention Ruling Request--Taiwan at 9-10, 
Exhibits 5-7; Anti-Circumvention Ruling Request--Korea at 9, Exhibit 
3.
    \13\ See Anti-Circumvention Ruling Request--Taiwan at 9-10, 
Exhibits 6-8; Anti-Circumvention Ruling Request--Korea at 9, Exhibit 
3.
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    Regarding Taiwan, the domestic producers note that China Sumikin 
Vietnam (CSVC), one of Vietnam's principle manufacturers and exporters 
of CORE, stated in a response to Commerce in the previously completed 
anti-circumvention inquiry with regard to Chinese substrate finished in 
Vietnam that it ``produces its CORE only with hot-rolled steel from 
Japan and Taiwan.'' \14\ The domestic producers assert that Commerce's 
recent affirmative decision in CORE China Circumvention Final that 
Chinese HRS and CRS are used to produce CORE in Vietnam provides more 
incentive for Vietnamese CORE producers to shift to Taiwanese-produced 
inputs.\15\
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    \14\ See Anti-Circumvention Ruling Request--Taiwan at 8, citing 
CSVC's letter, ``Certain Corrosion-Resistant Steel Products from 
China--Response to Petitioners' Circumvention Allegations,'' dated 
October 20, 2016.
    \15\ See Anti-Circumvention Ruling Request--Taiwan at 8 (citing 
Certain Corrosion-Resistant Steel Products from the People's 
Republic of China: Affirmative Final Determination of Circumvention 
of the Antidumping Duty and Countervailing Duty Orders, 83 FR 23895 
(May 23, 2018) (CORE China Circumvention Final) and accompanying 
Issues and Decision Memorandum (CORE China Circumvention IDM).
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    As discussed above, the domestic producers assert that because 
Vietnam has little capacity to produce HRS domestically, Vietnamese 
CORE producers rely heavily on HRS imports. In support of this 
assertion, the domestic producers presented evidence showing increasing 
and substantial imports of Korean and Taiwanese HRS into Vietnam 
between 2015 and 2017.\16\ Specifically, the domestic producers contend 
that the surge in imports of HRS from Taiwan is evidence that, as 
Commerce began its anti-circumvention investigation of Vietnamese CORE 
produced from Chinese substrate, Taiwanese steel producers stepped in 
to fill that gap.\17\
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    \16\ . See Anti-Circumvention Ruling Request--Taiwan at 10-11, 
Exhibit 9; Anti-Circumvention Ruling Request--Korea at 8-10, 
Exhibits 2, 4.
    \17\ See Anti-Circumvention Ruling Request--Taiwan at 10.
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    As to the imports of HRS and CRS to Vietnam from Korea, the 
domestic producers provided information showing those shipments 
increased from 879,537 tons in 2014 to nearly 1.1 million tons in 2015, 
continued to grow in 2016, and remained substantial in 2017.\18\ 
Additionally, the domestic producers also provided information 
demonstrating that imports into the United States of CORE from Korea 
and Taiwan significantly decreased after the imposition of the Orders. 
Simultaneously, the domestic producers provided information 
demonstrating that imports into the United States of CORE from Vietnam 
increased more than ten-fold between 2015 and 2016.\19\
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    \18\ See Anti-Circumvention Ruling Request--Korea at 8-9; 
Exhibit 2.
    \19\ See Anti-Circumvention Ruling Request--Taiwan at 9-11, 
Exhibit 1; Anti-Circumvention Ruling Request--Korea at 24, Exhibit 
2.
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C. Minor or Insignificant Process

    The domestic producers maintain that the process for completing 
CORE from HRS and CRS is minor or insignificant. Under section 
781(b)(2) of the Act, Commerce considers five factors to determine 
whether the process of assembly or completion in the foreign country is 
minor or insignificant: (A) The level of investment in the foreign 
country in which the merchandise is completed or assembled; (B) the 
level of research and development in the foreign country in which the 
merchandise is completed or assembled; (C) the nature of the production 
process in the foreign country in which the merchandise is completed or 
assembled; (D) the extent of production facilities in the foreign 
country in which the merchandise is completed or assembled, and (E) 
whether the value of the processing performed in the foreign country in 
which the merchandise is completed or assembled represents a small 
proportion of the value of the merchandise imported into the United 
States.
(1) Level of Investment
    The domestic producers contend that the level of investment 
necessary to complete CORE in Vietnam is less than the level of 
investment required to construct a factory that can produce HRS and CRS 
in Korea and Taiwan.\20\ In support of their contention, the domestic 
producers compared the investment necessary to install a cold-rolling 
and coating facility with the investment necessary to produce HRS using 
a fully-integrated production process for melting iron and casting 
steel.\21\ The domestic producers rely on Commerce's level of 
investment findings in CORE China Circumvention Final, which found that 
Vietnamese CORE that uses Chinese substrate circumvents the Chinese 
CORE order.\22\ In that proceeding, Commerce pointed to record evidence 
showing the cost to build an integrated steel mill in China to produce 
HRS was in the range of 250 million to 10 billion U.S. dollars (USD)

[[Page 37788]]

and that the cost to build a cold-rolling mill in Vietnam to produce 
CRS from HRS substrate was as low as 28 million USD.\23\ Regarding 
Taiwan, the domestic producers also rely on Commerce's findings in CORE 
China Circumvention Final to explain that the cost of building a basic 
steel mill in Taiwan is as great as China, or much larger given 
Taiwan's higher level of development and GDP.\24\ Specifically, the 
domestic producers explain that the property, plant, and equipment of 
China Steel Corporation (CSC), a Taiwanese steel manufacturer that owns 
56 percent of Vietnamese CORE producer, CSVC, was valued at $14 billion 
USD at the end of 2014.\25\ Conversely, the domestic producers provide 
evidence to demonstrate that a smaller level of investment, ranging 
from $70 million to $1.15 billion USD, is needed to build a coating 
mill in Vietnam.\26\ Relying on the cost of building an integrated 
steel mill in Korea--for example, Hyundai Steel invested 5 billion USD 
in 2010 for its integrated steel mill--the domestic producers claim 
that the level of investment required in Vietnam to complete the 
production of CORE by rolling and coating is far less than the 
investment required to establish an integrated mill to produce the hot-
rolled steel substrate.\27\
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    \20\ See Anti-Circumvention Ruling Request--Taiwan at 11; Anti-
Circumvention Ruling Request--Korea at 11-14.
    \21\ See Anti-Circumvention Ruling Request--Taiwan at 11-12, 
Exhibits 9-18; Anti-Circumvention Ruling Request--Korea at 11-14, 
Exhibits 9-11.
    \22\ See Anti-Circumvention Ruling Request--Taiwan at 11-12, 
Exhibits 9-18; Anti-Circumvention Ruling Request--Korea at 11-14, 
Exhibits 9-11.
    \23\ See Anti-Circumvention Ruling Request--Taiwan at 12-13, 
citing Certain Corrosion-Resistant Steel Products from the People's 
Republic of China: Affirmative Preliminary Determination of Anti-
Circumvention Inquiries on the Antidumping Duty and Countervailing 
Duty Orders, 82 FR 58170 (December 11, 2017) (CORE China 
Circumvention Prelim) and accompanying Preliminary Decision 
Memorandum (CORE China Circumvention PDM) at 17; see also CORE China 
Circumvention IDM at 32.
    \24\ See Anti-Circumvention Ruling Request--Taiwan at 13, 
Exhibits 10, 12, and 13.
    \25\ Id.
    \26\ See Anti-Circumvention Ruling Request--Taiwan at 14, 
Exhibits 14, 15; Anti-Circumvention Ruling Request--Korea at 11-14, 
Exhibits 9-11.
    \27\ See Anti-Circumvention Ruling Request--Korea at 13-14, 
Exhibits 8-11.
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    Finally, the domestic producers provide evidence that the cost of 
building a coated steel sheet factory in Vietnam was a fraction of the 
amount of investment needed to build a basic steel mill.\28\ The 
domestic producers therefore conclude that in comparison to the level 
of investment necessary to build an integrated steel mill in Korea and 
Taiwan, the level of investment to build a cold-rolling mill in Vietnam 
is insignificant.\29\
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    \28\ See Anti-Circumvention Ruling Request--Taiwan at 14 Exhibit 
16.
    \29\ See Anti-Circumvention Ruling Request--Korea at 14, 
Exhibits 9-11.
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(2) Level of Research and Development
    The domestic producers assert that the level of research and 
development (R&D) needed to produce steel substrate, such as HRS, is 
greater than the R&D specifically needed to produce CORE from the 
substrate.\30\ The domestic producers cite to Commerce's findings in 
CORE China Circumvention Prelim, where Commerce found that the evidence 
provided by Vietnamese CORE producers ``did not support their claims 
that their R&D programs and level of expenditures are significant.'' 
\31\ The domestic producers contend that, rather than developing its 
own technology, the Vietnamese steel industry uses technology developed 
abroad.\32\ As an example of Vietnamese producers using technology 
developed abroad, the domestic producers provided evidence that 
Vietnamese producer Ton Dong A Corp installed European and Japanese 
equipment in its new CORE facility.\33\ Furthermore, the domestic 
producers explain that CSVC, the sole mill in Vietnam with galvanneal 
(the process of galvanizing followed by annealing) capability needed 
for auto and appliance use, is a joint venture between Taiwanese and 
Japanese parent companies.\34\ The domestic producers provide various 
evidence to support the contention that steel mills in Vietnam relied 
on foreign technology and cheap domestic labor.\35\ Moreover, the 
domestic producers contend that, because there is greater focus in 
producing products for building construction in Vietnam, there is 
little incentive for Vietnamese CORE producers to invest in R&D for 
more advanced products.\36\ In contrast, the domestic producers point 
to global R&D efforts on behalf of CSC, the largest steel company in 
Taiwan, including employing highly-skilled researchers and 
collaborating with Taiwan's leading universities.\37\ Similarly, the 
domestic producers compare the R&D expenditures of POSCO Korea, the 
largest steel producer in Korea, and suggest that the level of R&D in 
Vietnam for CORE production is minimal to non-existent.\38\
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    \30\ See Anti-Circumvention Ruling Request--Taiwan at 14.
    \31\ Id. at 15, citing CORE China Anticircumvention PDM at 19.
    \32\ See Anti-Circumvention Ruling Request--Taiwan at 15-16, 
Exhibits 5, 8, 14; Anti-Circumvention Ruling Request--Korea at 14-16 
and Exhibits 10, 12-15.
    \33\ See Anti-Circumvention Ruling Request--Taiwan at 15, 
Exhibit 14; Anti-Circumvention Ruling Request--Korea at 14-16, 
Exhibits 10, 12-15. The domestic producers cited several other 
examples, including CSVC, Hoa Phat Group (HPG) and Thai Nguyen Iron 
and Steel Corporation (TISCO).
    \34\ See Anti-Circumvention Ruling Request--Taiwan at 15, 
Exhibit 14; Anti-Circumvention Ruling Request--Korea at 14-16, 
Exhibits 10, 12-15.
    \35\ See Anti-Circumvention Ruling Request--Taiwan at Exhibit 4; 
Anti-Circumvention Ruling Request--Korea at 15 and Exhibit 13.
    \36\ See Anti-Circumvention Ruling Request--Taiwan at Exhibit 5.
    \37\ Id. at 16, Exhibits 15,16.
    \38\ See Anti-Circumvention Ruling Request--Korea at 15-16, 
Exhibit 15.
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(3) Nature of Production Process
    According to the domestic producers, the completion process 
undertaken by Vietnamese producers of CORE is less complex and 
significant than manufacturing the steel substrate in Taiwan and 
Korea.\39\ Citing Commerce's finding in CORE China Circumvention Final, 
the domestic producers contend that while the process of galvanizing 
steel is not trivial, it is insignificant compared to the greater 
steel-making processes that include smelting iron, making, casting, and 
hot-rolling steel.\40\ The galvanizing process is the end of the 
production line, and it adds a small part of the total value, requires 
little capital and a small proportion of input by weight and 
volume.\41\ Thus, the domestic producers explain that even relatively 
sophisticated galvanizing operations will involve less intensive 
processing than processing steel substrate.\42\
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    \39\ See Anti-Circumvention Ruling Request--Taiwan at 16-18; 
Anti-Circumvention Ruling Request--Korea at 16-21.
    \40\ See Anti-Circumvention Ruling Request--Taiwan at 17; see 
also CORE China Circumvention IDM at 20-21.
    \41\ See Anti-Circumvention Ruling Request--Taiwan at 17.
    \42\ Id.
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(4) Extent of Production Facilities in Vietnam
    Moreover, the domestic producers contend that more capital is 
required to build an integrated steel mill that includes blast furnace, 
casting, and hot rolling, as compared to building a cold-rolling and 
coating facility.\43\ A larger amount of capital also represent larger 
production facilities, more equipment and workers. As an example, the 
domestic producers explain that CSVC employs 800 employees in Vietnam 
whereas its Taiwanese parent, CSC, has 7949 employees.\44\
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    \43\ See Anti-Circumvention Ruling Request--Taiwan at 17-18 
(Taiwan); Anti-Circumvention Ruling Request--Korea at 17-20.
    \44\ See Anti-Circumvention Ruling Request--Taiwan at 18 and 
Exhibit 21.
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(5) Value of Processing in Vietnam
    The domestic producers point to Commerce's finding in CORE China 
Circumvention Prelim to contend that ``the value of the materials, 
labor, energy, overhead, and other items consumed in the production of 
CORE

[[Page 37789]]

represents an insignificant value when compared to the value of the 
merchandise sold to the United States.'' \45\ Moreover, the domestic 
producers maintain that Commerce's quantitative and qualitative finding 
that the finishing process in Vietnam adds only a small part of the 
total value of the CORE exported to the United States applies to Korean 
and Taiwanese substrate.\46\ As the Korean and Taiwanese steel 
industries have more sophisticated and advanced technology than those 
in either China and Vietnam, the domestic producers assert that the 
percentage of value added in Vietnam to Taiwanese and Korean substrate 
is likely to be lower than it was in CORE China Circumvention 
Final.\47\ Based on these assertions, the domestic producers contend 
that every statutory factor that Commerce has considered in making its 
affirmative finding in CORE China Circumvention Final similarly applies 
to both Korea and Taiwan.\48\
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    \45\ Id. at 18, citing CORE China Circumvention PDM at 21.
    \46\ See Anti-Circumvention Ruling Request--Taiwan at 19, citing 
CORE China Circumvention PDM at 22 and CORE China Circumvention IDM 
at 23; Anti-Circumvention Ruling Request--Korea at 21-22, citing 
CORE China Circumvention IDM at 9 and CORE China Circumvention PDM 
at 21.
    \47\ See Anti-Circumvention Ruling Request--Taiwan at 20 and 
Exhibit 8; Anti-Circumvention Ruling Request--Korea at 22-24, 
Exhibits 14, 17.
    \48\ See Anti-Circumvention Ruling Request--Taiwan at 21; Anti-
Circumvention Ruling Request--Korea at 24.
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    Additionally, the domestic producers cite the recent ITC 
investigation of CORE from China, India, Italy, Korea and Taiwan, 
stating that the information contained therein demonstrates that the 
cost of Taiwanese and Korean HRS inputs accounts for 69 to 79 percent 
of the price of CORE.\49\ Additionally, the domestic producers explain 
that the price of Taiwanese and Korean CRS inputs accounts for 84 to 90 
percent of the price of CORE.\50\
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    \49\ See Anti-Circumvention Ruling Request--Taiwan at 20, 
Exhibit 1; Anti-Circumvention Ruling Request--Korea at 23-24.
    \50\ See Anti-Circumvention Ruling Request--Taiwan at 20, 
Exhibit 1; Anti-Circumvention Ruling Request--Korea at 23-24.
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D. Additional Factors To Consider in Determining Whether Action Is 
Necessary

    Section 781(b)(3) of the Act directs Commerce to consider 
additional factors in determining whether to include merchandise 
assembled or completed in a foreign country within the scope of the 
order, such as: ``(A) The pattern of trade, including sourcing 
patterns, (B) whether the manufacturer or exporter of the merchandise . 
. . is affiliated with the person who uses the merchandise . . . to 
assemble or complete in the foreign country the merchandise that is 
subsequently imported into the United States, and (C) whether imports 
into the foreign country of the merchandise . . . have increased after 
the initiation of the investigation which resulted in the issuance of 
such order or finding.''
    Regarding patterns of trade, the domestic producers contend that 
exports of CORE from Vietnam to the United States skyrocketed as 
exports from Korea and Taiwan declined in the period after the filing 
of the petition in the underlying investigations, as compared to the 
period before it.\51\ The domestic producers further explain that while 
recently exports of CORE from Vietnam to the United States have 
declined slightly, this decline is largely due to Commerce's 
investigation of circumvention of the AD and CVD orders on CORE the 
China.\52\ The domestic producers also point to the fact that exports 
of HRS from Korea and Taiwan to Vietnam also increased after the 
underlying investigations commenced.\53\ Finally, regarding 
affiliation, the domestic producers point out that major Vietnamese 
CORE producer CVSC is majority-owned by Taiwan's largest steel 
manufacturer, CSC.\54\ Similarly, the domestic producers assert that 
Korea's largest steel manufacturer POSCO has 13 Vietnamese affiliates 
and offices, including POSCO VIETNAM, and has the capacity to produce 
700,000 tons of cold-rolled steel.\55\
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    \51\ See Anti-Circumvention Ruling Request--Taiwan at 21; Anti-
Circumvention Ruling Request--Korea at 24, Exhibit 2.
    \52\ See Anti-Circumvention Ruling Request--Taiwan at 21; Anti-
Circumvention Ruling Request--Korea at 24, Exhibit 2.
    \53\ See Anti-Circumvention Ruling Request--Taiwan at 21; Anti-
Circumvention Ruling Request--Korea at 24, Exhibit 2.
    \54\ See Anti-Circumvention Ruling Request--Taiwan at 21; Anti-
Circumvention Ruling Request--Korea at 24, Exhibit 2.
    \55\ See Anti-Circumvention Ruling Request--Korea at 24-25.
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Analysis of the Allegations

    Based on our analysis of the domestic producer's anti-circumvention 
allegations and the information provided therein, Commerce determines 
that anti-circumvention inquiries of the AD and CVD orders on CORE from 
Korea and Taiwan are warranted.
    With regard to whether the merchandise from Vietnam is of the same 
class or kind as the merchandise produced in Korea and Taiwan, the 
domestic producers presented information to Commerce indicating that, 
pursuant to section 781(b)(1)(A) of the Act, the merchandise being 
produced in and/or exported from Vietnam is of the same class or kind 
as CORE produced in Korea and Taiwan, which is subject to the 
Orders.\56\ Consequently, Commerce finds that the domestic producers 
provided sufficient information in their requests regarding the class 
or kind of merchandise to support the initiation of these anti-
circumvention inquiries.
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    \56\ See Anti-Circumvention Ruling Request--Taiwan at 8-10, 
Exhibit 4; Anti-Circumvention Ruling Request--Korea at 8, Exhibit 1.
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    With regard to completion or assembly of merchandise in a foreign 
country, pursuant to section 781(b)(1)(B) of the Act, the domestic 
producers also presented information to Commerce indicating that the 
CORE exported from Vietnam to the United States is produced in Vietnam 
using HRS and CRS from Korea and Taiwan.\57\ We find that the 
information presented by the domestic producers regarding this 
criterion supports its request to initiate these anti-circumvention 
inquiries.
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    \57\ See Anti-Circumvention Ruling Request--Taiwan at 20-21, 
Exhibits 1, 4, 9; Anti-Circumvention Ruling Request--Korea at 8-10, 
Exhibits 2-4.
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    Commerce finds that the domestic producers sufficiently addressed 
the factors described in sections 781(b)(1)(C) and 781(b)(2) of the Act 
regarding whether the process of assembly or completion of CORE in 
Vietnam is minor or insignificant. In particular, information in the 
domestic producers' submission indicates that: (1) The level of 
investment in coating facilities is minimal when compared with the 
level of investment for basic steel making facilities; \58\ (2) there 
is little or no research and development taking place in Vietnam; \59\ 
(3) the CORE production processes involve the simple processing of HRS 
or CRS from a country subject to the Orders, (4) the CORE production 
facilities in Vietnam are more limited compared to HRS facilities in 
Korea and Taiwan; \60\ and (5) the value of the processing performed in 
Vietnam is a small proportion of the value of the CORE imported into 
the United States.\61\
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    \58\ See Anti-Circumvention Ruling Request--Taiwan at 11-14; 
Anti-Circumvention Ruling Request--Korea at 10-11.
    \59\ See Anti-Circumvention Ruling Request--Taiwan at 14-16; 
Anti-Circumvention Ruling Request--Korea at 14-16.
    \60\ See Anti-Circumvention Ruling Request--Taiwan at 16-18; 
Anti-Circumvention Ruling Request--Korea at 16-21.
    \61\ See Anti-Circumvention Ruling Request--Taiwan at 18-21; 
Anti-Circumvention Ruling Request--Korea at 21-24.
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    With respect to the value of the merchandise produced in Korea and 
Taiwan, pursuant to section 781(b)(1)(D) of the Act, the domestic 
producers

[[Page 37790]]

relied on published sources, Commerce's prior conclusions in CORE China 
Circumvention Final, and information presented in the ``minor or 
insignificant process'' portion of their anti-circumvention allegations 
to indicate that the value of the substrate (HRS and CRS manufactured 
in Korea and Taiwan) is a significant portion of the total value of the 
CORE exported from Vietnam to the United States.\62\ We find that this 
information adequately meets the requirements of this factor, as 
discussed above, for the purposes of initiating these anti-
circumvention inquiries.
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    \62\ See Anti-Circumvention Ruling Request--Taiwan at Exhibits 
1, 4, and 9; Anti-Circumvention Ruling Request--Korea at Exhibits 
14, 17.
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    Finally, with respect to the additional factors listed under 
section 781(b)(3) of the Act, we find that the domestic producers 
presented evidence indicating that shipments of CORE from Vietnam to 
the United States increased since the imposition of the Orders \63\ and 
that shipments of HRS from Korea and Taiwan to Vietnam also increased 
since the Orders took effect.\64\ Furthermore, we find that the 
domestic producers have presented evidence that the largest Korean 
manufacturer of CRS (POSCO) is affiliated with a company in Vietnam 
that completes the merchandise.\65\ We also find that the domestic 
producers provided sufficient evidence to demonstrate that a Taiwanese 
steel manufacturer, CSC, owns 56 percent of Vietnamese CORE producer, 
CSVC.\66\ Accordingly, we are initiating formal anti-circumvention 
inquiries concerning the AD and CVD orders on CORE from Korea and the 
AD order on CORE from Taiwan, pursuant to section 781(b) of the Act.
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    \63\ See Anti-Circumvention Ruling Request--Taiwan at 9-10, 
Exhibit 4; Anti-Circumvention Ruling Request--Korea at 24 and 
Exhibit 2.
    \64\ See Anti-Circumvention Ruling Request--Taiwan. at 10-11, 
Exhibit 9; Anti-Circumvention Ruling Request--Korea at 24, Exhibit 
2.
    \65\ See Anti-Circumvention Ruling Request--Korea at 24-25, 
Exhibit 19.
    \66\ See Anti-Circumvention Ruling Request--Taiwan at 11, 
Exhibit 10.
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    As these inquiries are initiated on a country-wide basis (i.e., not 
exclusive to the producers mentioned immediately above), Commerce 
intends to issue questionnaires to solicit information from the 
Vietnamese producers and exporters concerning their shipments of CORE 
to the United States and the origin of any imported HRS and CRS being 
processed into CORE. A company's failure to respond completely to 
Commerce's requests for information may result in the application of 
partial or total facts available, pursuant to section 776(a) of the 
Act, which may include adverse inferences, pursuant to section 776(b) 
of the Act.
    While we believe sufficient factual information has been submitted 
by the domestic producers supporting their request for inquiries, we do 
not find that the record supports the simultaneous issuance of a 
preliminary ruling. Such inquiries are by their nature typically 
complicated and can require information regarding production in both 
the country subject to the order and the third country completing the 
product. As noted above, Commerce intends to request additional 
information regarding the statutory criteria to determine whether 
shipments of CORE from Vietnam are circumventing the AD and CVD orders 
on CORE from Korea and the AD order on CORE from Taiwan. Thus, with 
further development of the record required before a preliminary ruling 
can be issued, Commerce does not find it appropriate to issue a 
preliminary ruling at this time.

Notification to Interested Parties

    In accordance with 19 CFR 351.225(e), Commerce finds that the issue 
of whether a product is included within the scope of an order cannot be 
determined based solely upon the application and the descriptions of 
the merchandise. Accordingly, Commerce will notify by mail all parties 
on Commerce's scope service list of the initiation of these anti-
circumvention inquiries. In addition, in accordance with 19 CFR 
351.225(f)(1)(i) and (ii), in this notice of initiation issued under 19 
CFR 351.225(e), we have included a description of the product that is 
the subject of these anti-circumvention inquiries (i.e., CORE that 
contains the characteristics as provided in the scope of the Orders) 
and an explanation of the reasons for Commerce's decision to initiate 
an anti-circumvention inquiry, as provided above.
    In accordance with 19 CFR 351.225(l)(2), if Commerce issues a 
preliminary affirmative determination, we will then instruct U.S. 
Customs and Border Protection to suspend liquidation and require a cash 
deposit of estimated antidumping and countervailing duties, at the 
applicable rate, for each unliquidated entry of the merchandise at 
issue, entered or withdrawn from warehouse for consumption on or after 
the date of initiation of the inquiry. Commerce will establish a 
schedule for questionnaires and comments on the issues. In accordance 
with section 781(f) of the Act and 19 CFR 351.225(f)(5), Commerce 
intends to issue its final determination within 300 days of the date of 
publication of this initiation.
    This notice is published in accordance with 19 CFR 351.225(f).

    Dated: July 27, 2018.
Gary Taverman,
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations, performing the non-exclusive functions and duties of the 
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2018-16565 Filed 8-1-18; 8:45 am]
 BILLING CODE 3510-DS-P