Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Purified Carboxymethylcellulose From Finland

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) preliminarily determines that purified carboxymethylcellulose (CMC) from Finland is being sold, 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 Tariff Act). The estimated margins of sales at LTFV are shown in the Suspension of Liquidation section of this notice.

EFFECTIVE DATE:

December 27, 2004.

FOR FURTHER INFORMATION CONTACT:

Brian J. Sheba at (202) 482-0145 or Robert M. James at (202) 482-0649, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

On June 9, 2004, the Department of Commerce (the Department) received a petition for the imposition of antidumping duties on purified CMC from Finland, Mexico, the Netherlands, and Sweden, filed in the proper form by Aqualon Company (Aqualon or petitioner), a division of Hercules Incorporated. See Petition for the Imposition of Antidumping Duties on Imports of Purified Carboxymethylcellulose (CMC) from Finland, Mexico, the Netherlands, and Sweden (Petition). The Department initiated the antidumping investigation of purified CMC from Finland, Mexico, the Netherlands, and Sweden on June 29, 2004. See Notice of Initiation of Antidumping Investigations: Purified Carboxymethylcellulose (CMC) from Finland, Mexico, the Netherlands, and Sweden, 69 FR 40617 (July 6, 2004) (Initiation Notice). Since the initiation of this investigation, the following events have occurred.

On July 23, 2004, the International Trade Commission (the Commission) preliminarily determined that there is a reasonable indication that an industry in the United States is materially injured by reason of imports of purified CMC from Finland, Mexico, the Netherlands, and Sweden that are alleged to be sold in the United States at LTFV. See Purified Carboxymethylcellulose from Finland, Mexico, the Netherlands, and Sweden, 69 FR 45851 (July 30, 2004).

On July 29, 2004, the Department issued Sections A, B, and C of the antidumping questionnaire to Noviant CMC OY of Finland (Noviant OY), the sole respondent in this investigation, noting that Appendix V concerning model match criteria was not enclosed. The Department stated that it would serve all parties with a copy of the proposed model match criteria in the near future. We did so on August 18, 2004.

Petitioner filed comments on the Department's proposed model match criteria on July 30, 2004, August, 11, 2004, and August 19, 2004. The respondent submitted rebuttal comments on August 9, 2004 and August 25, 2004. The Department issued its final Appendix V to the questionnaire (model match criteria) on August 30, 2004.

On September 9, 2004, Noviant OY submitted its Section A questionnaire response. On September 15, 2004, Noviant OY, Noviant BV (the Netherlands), and Noviant AB (Sweden) (collectively, the Noviant Group Companies) requested a one-week extension to file the Section B and C responses. On September 17, 2004, the Department granted the Noviant Group Companies' request. On September 24, 2004, Noviant OY notified the Department that it would not be submitting a response to Sections B and C of the Department's questionnaire. Noviant OY cited resource and staff limitations as the reason they could not participate in each parallel proceeding.

On October 25, 2004, the petitioner requested a postponement of the preliminary determination in this investigation. On November 3, 2004, the Department published a Federal Register notice postponing the deadline for the preliminary determination until December 16, 2004. See Purified Carboxymethylcellulose from Finland: Notice of Postponement of Preliminary Determinations of Antidumping Investigations, 69 FR 64030 (November 3, 2004).

On October 12, 2004, the petitioner requested that the Department impose total adverse facts available (AFA) based on the respondent's failure to cooperate fully with the Department in this proceeding. The petitioner filed amended AFA calculations and arguments on November 2, 2004, and December 2, 2004. On November 24, 2004, and December 13, 2004, the respondent filed arguments opposing the use of the petitioner's AFA methodology and, as an alternative argument, proffered its own calculations. See the Application of Adverse Inferences for Facts Available Section of this notice.

Postponement of Final Determination and Extension of Provisional Measures

Section 735(a)(2) of the Act provides that a final determination may be postponed until not later than 135 days after the date of the publication of the preliminary determination if, in the event of an affirmative preliminary determination, a request for such postponement is made by exporters who account for a significant proportion of exports of the subject merchandise, or in the event of a negative preliminary determination, a request for such postponement is made by the petitioners. Section 351.210(e)(2) of the Department's regulations requires that requests by respondents for postponement of a final determination be accompanied by a request for an extension of the provisional measures from a four-month period to not more than six months.

On November 19, 2004, on behalf of Noviant OY, Noviant BV and Noviant AB, the Noviant Group Companies requested that, in the event of an affirmative preliminary determination in this investigation, the Department postpone its final determination. Noviant also included a request to extend the provisional measures from a four-month period to not more than six months. In addition, on November 19, 2004, petitioners requested that, in the event of a negative determination or de minimis against respondents' imports, that the Department postpone the deadline for its final determination until a date not later than the 135th day after the date on which the Department will have published its notice of preliminary determination.

Accordingly, because we have made an affirmative preliminary determination in this case, and the requesting parties account for a significant portion of exports of the subject merchandise, we are postponing the final determination until not later than 135 days after the date of the publication of the preliminary determination and are extending the provisional measures accordingly.

Period of Investigation

The POI is April 1, 2003, through March 31, 2004. See 19 CFR 351.204(b)(1).

Scope Comments

In accordance with the preamble to the Department's regulations (see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997)), we set aside a period of time for parties to raise issues regarding product coverage of the scope of the investigation and encouraged all parties to submit comments on product coverage within 20 calendar days of publication of the Initiation Notice (See 68 FR 40618). Comments were not submitted for the record of this investigation.

Scope of Investigations

For purposes of these investigations, the products covered are all purified carboxymethylcellulose (CMC), sometimes also referred to as purified sodium CMC, polyanionic cellulose, or cellulose gum, which is a white to off-white, non-toxic, odorless, biodegradable powder, comprising sodium carboxymethylcellulose that has been refined and purified to a minimum assay of 90 percent. Purified CMC does not include unpurified or crude CMC, CMC Fluidized Polymer Suspensions, and CMC that is cross-linked through heat treatment. Purified CMC is CMC that has undergone one or more purification operations which, at a minimum, reduce the remaining salt and other by-product portion of the product to less than ten percent.

The merchandise subject to these investigations is classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheading 3912.31.00. This tariff classification is provided for convenience and customs purposes; however, the written description of the scope of these investigations is dispositive.

Facts Available

For the reasons discussed below, we determine that the use of adverse facts available is appropriate for the preliminary determination with respect to Noviant OY.

A. Use of Facts Available

Section 776(a)(2) of the Tariff Act provides that, if an interested party withholds information requested by the Department, fails to provide such information by the deadline or in the form or manner requested, significantly impedes a proceeding, or provides information which cannot be verified, the Department shall use, subject to sections 782(d) and (e) of the Tariff Act, facts otherwise available in reaching the applicable determination. Section 782(d) of the Tariff Act provides that if the Department determines that a response to a request for information does not comply with the Department's request, the Department shall promptly inform the responding party and provide an opportunity to remedy the deficient submission. Section 782(e) of the Tariff Act further states that the Department shall not decline to consider submitted information if all of the following requirements are met: (1) The information is submitted by the established deadline; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability; and (5) the information can be used without undue difficulties.

In this case, Noviant OY has failed to provide pertinent information requested by the Department that is necessary to properly calculate antidumping margin for its preliminary determination. Specifically, Noviant OY failed to provide the following requested information, all of which is necessary to complete the Department's calculations: (1) Department questionnaire Section B, related to home market sales and expenses, and (2) Department questionnaire Section C, related to U.S. market sales and expenses.

Thus, in reaching our preliminary determination, pursuant to sections 776(a)(2)(A), (B), and (C) of the Tariff Act, we have based Noviant OY's dumping margin on facts otherwise available.

B. Application of Adverse Inferences for Facts Available

In applying the facts otherwise available, section 776(b) of the Tariff Act provides that the Department may use an inference adverse to the interests of a party that has failed to cooperate by not acting to the best of its ability to comply with the Department's requests for information. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value and Final Negative Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (August 30, 2002). Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Bottle-Grade Polyethylene Terephthalate(PET) Resin From Thailand, 69 FR 62850 (October 28, 2004), Notice of Final Determination of Sales at Less Than Fair Value: Polyethylene Retail Carrier Bags From Thailand, 69 FR 34122 (June 18, 2004), Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Circular Welded Carbon-Quality Line Pipe From Mexico, 69 FR 59892 (October 6, 2004). Adverse inferences are appropriate “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H. Doc. No. 103-316, at 870 (1994) (SAA). Affirmative evidence of bad faith, or willfulness, on the part of a respondent is not required before the Department may make an adverse inference. See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1383-84 (Fed. Cir. 2003). Although the Department provided the respondent with notice of the consequences of failure to adequately respond to the questionnaires in this case, Noviant OY failed to respond to Sections B and C of the questionnaire. This constitutes a failure on the part of Noviant OY to cooperate to the best of its ability to comply with a request for information by the Department within the meaning of section 776(b) of the Tariff Act. Therefore, the Department has preliminarily determined that in selecting from among the facts otherwise available, an adverse inference is warranted. See, e.g., Notice of Final Determination of Sales at Less than Fair Value: Circular Seamless Stainless Steel Hollow Products from Japan, 65 FR 42985, 42986 (July 12, 2000) (the Department applied total adverse facts available (AFA) where the respondent failed to respond to the antidumping questionnaires).

C. Selection and Corroboration of Information Used as Facts Available

Where the Department applies AFA because a respondent failed to cooperate by not acting to the best of its ability to comply with a request for information, section 776(b) of the Tariff Act authorizes the Department to rely on information derived from the petition, a final determination, a previous administrative review, or other information placed on the record. See also 19 CFR 351.308(c); SAA at 829-831. In this case, because we are unable to calculate margins based on Noviant OY's own data and because an adverse inference is warranted, we have assigned to Noviant OY the margin alleged for Finland in the petition, as recalculated in the initiation and described in detail below. See Initiation Notice.

When using facts otherwise available, section 776(c) of the Tariff Act provides that, when the Department relies on secondary information (such as the petition), it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal.

The SAA clarifies that “corroborate” means the Department will satisfy itself that the secondary information to be used has probative value. See SAA at 870. The Department's regulations state independent sources used to corroborate such evidence may include, for example, published price lists, official import statistics and customs data, and information obtained from interested parties during the particular investigation. See 19 CFR 351.308(d) and SAA at 870.

It is the Department's practice to use the highest calculated rate from the petition in an investigation when a respondent fails to act to the best of its ability to provide the necessary information and there are no other respondents. As discussed in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, from Japan; Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 61 FR 57391, 57392 (November 6, 1996) (TRBs), to corroborate secondary information, the Department will, to the extent practicable, examine the reliability and relevance of the information used.

As noted above in the case history, the petitioner filed comments for an alternative AFA methodology. Noting the initiation rate for Noviant OY was conservative, the petitioner proposed an AFA margin based on cost of production (COP) and constructed value (CV) information gathered from the Noviant OY's financial statements which were included in its Section A questionnaire response.

The respondent argued that the petitioner's alternative AFA calculations were without merit. In a submission filed just three days before the signature date for this preliminary determination, respondent proposed its own alternative AFA calculation based on the COP and CV information available on the record.

The Department intends to evaluate all of the parties' comments on this issue in light of the information and argument placed recently on the record. Therefore, for purposes of this preliminary determination, and consistent with our normal practice, we are relying on the initiation margin for purposes of AFA. Should we choose an alternative basis for AFA subsequent to this preliminary determination, we will provide the parties an opportunity to comment prior to the final determination.

For the purposes of this investigation, to the extent appropriate information was available, we reviewed the adequacy and accuracy of the information in the petition during our pre-initiation analysis and for this preliminary determination. See “Import Administration Investigation AD Initiation Checklist,” at 6 (June 29, 2004) (Initiation Checklist). Also, as discussed below, we examined evidence supporting the calculations in the petition to determine the probative value of the margins in the petition for use as AFA for this preliminary determination. In accordance with section 776(c) of the Tariff Act, to the extent practicable, we examined the key elements of the export price (EP) and normal value (NV) calculations on which the margins in the petition were based. See Memorandum from Brian Sheba to Richard Weible, Re: Corroboration of Data Contained in the Petition for Assigning Facts Available Rates, dated December 16, 2004 (Corroboration Memo).

1. Corroboration of Export Price

The petitioner based EP on a price obtained from a potential U.S. customer of purified CMC produced by Noviant OY's plant in Finland. The petitioner calculated net U.S. price by deducting U.S. inland freight expense, ocean freight and marine insurance, documentation fees, port fees, U.S. customs duties, intra-European freight, and foreign inland freight expense. We compared the U.S. market price quotes with official U.S. import statistics and found the prices used by the petitioner to have probative value. See id.

2. Corroboration of Normal Value

To calculate home market NV, the petitioner met with representatives of a Finnish customer during the POI. During the course of that meeting, the customer stated the current Noviant OY price on a delivered basis. The petitioner's only adjustment to NV is foreign inland freight expense to account for the shipment of the subject merchandise from Noviant OY's plant in Aanekoski, Finland to the customer's plant in Finland. The petitioner obtained this freight expense through a price quote from an independent shipper. To corroborate the petitioner's NV calculations, we compared the prices and expenses used to the source documents upon which the petitioner's methodology was based as well as information submitted in Noviant OY's questionnaire response.

Therefore, based on our efforts, described above, to corroborate information contained in the petition, and in accordance with section 776(c) of the Tariff Act, we consider the highest margin in the petition to be corroborated, to the extent practicable, for purposes of this preliminary determination.

Accordingly, in selecting AFA with respect to Noviant OY, we have applied the margin rate of 6.65 percent, which is the margin alleged in the petition as adjusted by the Department for currency conversion. See Initiation Notice, 68 FR 57667.

All Others Rate

Section 735(c)(5)(B) of the Tariff Act provides that, where the estimated weighted-average dumping margins established for all exporters and producers individually investigated are zero or de minimis margins, or are determined entirely under section 776 of the Tariff Act, the Department may use any reasonable method to establish the estimated “all others” rate for exporters and producers not individually investigated. This provision contemplates that the Department may weight-average margins other than the zero, de minimis, or facts available margins to establish the “all others” rate. When the data do not permit weight-averaging such other margins, the Statement of Administrative Action (SAA) provides that the Department may use any other reasonable methods. See SAA at 873 (1994). Because the petition contained only one estimated dumping margin, there are no additional estimated margins available with which to calculate the “all others” rate. Therefore, we are using the initiation margin of 6.65 percent as the “all others” rate. See Notice of Final Determination of Sales at Less Than Fair Value: Ferrovanadium from the Republic of South Africa, 67 FR 71136 (November 29, 2002).

Suspension of Liquidation

In accordance with section 733(d) of the Tariff Act, we are directing U.S. Customs and Border Protection (CBP) to suspend liquidation of all entries of purified CMC from Finland that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We will instruct CBP to require a cash deposit or the posting of a bond equal to the weighted-average amount by which the NV exceeds the U.S. price, as indicated in the chart below. These suspension-of-liquidation instructions will remain in effect until further notice. The weighted-average dumping margins are as follows:

International Trade Commission Notification

In accordance with section 733(f) of the Tariff Act, we have notified the Commission of our preliminary determination of sales at less than fair value. If our final antidumping determination is affirmative, the Commission will determine whether the imports covered by that determination are materially injuring, or threatening material injury to, the U.S. industry. The deadline for the Commission's determination would be the later of 120 days after the date of this preliminary determination or 45 days after the date of our final determination.

Public Comment

Case briefs for this investigation must be submitted no later than 30 days after the publication of this notice. Rebuttal briefs must be filed within five days after the deadline for submission of case briefs. A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes. Further, the Department respectfully requests that all parties submitting written comments also provide the Department with an additional copy of the public version of any such comments on diskette.

Section 774 of the Act provides that the Department will hold a hearing to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by an interested party. If a request for a hearing is made in an investigation, the hearing normally will be held two days after the deadline for submission of the rebuttal briefs, at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request within 30 days of the publication of this notice. Requests should specify the number of participants and provide a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs. As noted above, the Department will make its final determination within 135 days after the date of the publication of the preliminary determination.