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

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATES:

December 27, 2004.

FOR FURTHER INFORMATION CONTACT:

Mark Flessner at (202) 482-6312 or Robert James at (202) 482-0649, AD/CVD Operations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

Preliminary Determination

We preliminarily determine that certain purified carboxymethylcellulose (CMC) from Mexico 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 Act). The estimated margins of sales at LTFV are shown in the “Suspension of Liquidation” section of this notice.

Case History

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 Caarboxymethylcellulose 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 Quimica Amtex S.A. de C.V. of Mexico (Amtex), 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 August 19, 2004. The Department issued appendix V to the questionnaire on August 30, 2004.

On September 1, 2004, the Department received the section A questionnaire response from Amtex). Responses to sections B and C were received on September 22, 2004.

On September 21, 2004, the Department issued a supplemental section A questionnaire. A response was received on September 29, 2004.

On October 8, 2004, the Department issued a supplemental questionnaire; this questionnaire contained a second set of questions concerning the section A response and a set of questions concerning the section B and C responses. Responses were received on October 21, 2004.

On October 25, 2004, petitioner requested a 30-day postponement of the preliminary determination. In response to petitioner's request and pursuant to section 733(c)(1)(B) of the Act, on October 28, 2004, the Department postponed the preliminary determination of the antidumping duty investigation on purified CMC from Mexico until not later than December 16, 2004. See Postponement of Preliminary Determinations of Anitdumping Duty Investigations: Purified Carboxymethylcellulose from Finland, Mexico, the Netherlands and Sweden, 69 FR 64030 (November 3, 2004).

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 petitioner. 19 CFR 351.210(e)(2) requires that requests by exporters 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 23, 2004, amtex requested that, in the event of an affirmative preliminary determination in this investigation, the Department postpone its final determination until a date not later than 135 days after the date on which the Department publishes its notice of preliminary determination. amtex also included a request to extend the provisional measures by an additional 60 days. Such extension is permitted by section 733(d) of the Act. In addition, on November 19, 2004, petitioner requested that, in the event of a negative preliminary determination, the Department postpone the deadline for its final determination until a date not later than 135 days after the date on which the Department publishes its notice of preliminary determination.

Accordingly, because we have made an affirmative preliminary determination in this case, the request for postponement was made by an exporter that accounts for a significant portion of exports of the subject merchandise, and there is no compelling reason to deny the respondent's request, we are postponing the final determination until not later than 135 days after the date of publication of this notice and are extending the provisional measures six months.

Period of Investigation (POI)

The POI is April 1, 2003, through March 31, 2004. This period corresponds to the four most recent fiscal quarters prior to the month of the filing of the petition, i.e., June 2004.

Scope of Investigation

For purposes of this investigation, the products covered are all purified 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 power, 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 this investigation is classified in the Harmonized 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 this investigation is dispositive.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all CMC produced and sold by the respondent in Mexico during the POI fitting the description in the “Scope of Investigations” section of this notice to be foreign like product for purposes of determining appropriate product comparisons to U.S. sales. We compared U.S. sales to sales made in the home market. Where there were no sales of identical merchandise in the home market in the ordinary course of trade to compare to U.S. sales, we compared U.S. sales to sales of the most similar foreign like product made in the ordinary course of trade.

In making the product comparisons, we matched foreign like products based on the physical characteristics reported by the respondent in the following order of importance: grade, viscosity, degree of substitution, particle size, and solution characteristics. Petitioner's model match comments listed the criteria in descending order of importance: grade, viscosity, degree of substitution, particle size, and solution characteristics, and provided subfields for each criterion. Petitioner agreed that the addition of one subfield for oil drilling and an extra viscosity range to reflect more meaningful distinctions in the market was justified.

Fair Value Comparisons

To determine whether sales of purified CMC from Mexico to the United States were made at LTFV, we compared the export price (EP) to Normal Value (NV), as described in the “Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI weighted-average EPs to NVs.

As discussed below under “Home Market Viability and Comparison Market Selection,” we determined that Amtex had a viable home market during the POI.

Export Price

Section 772(a) of the Act defines EP as the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection 772(c) of the Act.

We used EP methodology for Amtex, in accordance with section 772(c) of the Act, because the subject merchandise was sold directly to the first unaffiliated purchaser in the United States before importation. We based EP on the packed price to unaffiliated purchasers in the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions for movement expenses, where appropriate, for foreign inland freight from the plant to the distribution warehouse, warehousing, foreign inland freight from the plant/warehouse to the port of exportation, foreign inland insurance, foreign brokerage and handling, U.S. brokerage and handling, international freight, and U.S. inland freight from the port to the warehouse. In addition, we deducted billing adjustments and other discounts from EP, where appropriate.

Normal Value

A. Home Market Viability and Comparison Market Selection

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., the aggregate volume of home market sales of the foreign like product is equal to or greater than five percent of the aggregate volume of U.S. sales), we compared respondent's volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(C) of the Act.

In this investigation, we determined Amtex's aggregate volume of home market sales of the foreign like product was greater than five percent of the aggregate volume of U.S. sales of the subject merchandise. Therefore, we used home market sales as the basis for NV in accordance with section 773(a)(1)(B) of the Act.

B. Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade (LOT) as the EP transaction. See also 19 CFR 351.412. The NV LOT is the level of the starting-price sales in the comparison market. For EP sales, the U.S. LOT is the level of the starting-price sale, which is usually from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. In analyzing differences in selling functions, we determine whether the LOTs identified by the respondent are meaningful. See Antidumping Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27371 (May 19, 1997). If the claimed LOTs are the same, we expect the functions and activities of the seller should be similar. Conversely, if a party claims that LOTs are different for different groups of sales, the functions and activities of the seller should be dissimilar. See Porcelain-on-Steel Cookware from Mexico: Final Results of Administrative Review, 65 FR 30068 (May 10, 2000). If the NV transactions are at a different LOT than EP transactions, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and the U.S. sales at the LOT of the export transactions, we make an LOT adjustment under section 773(a)(7)(A) of the Act.

In this investigation, we obtained information from Amtex regarding the marketing stages involved in its selling activities for its reported home market and U.S. sales, including a description of the selling activities performed by the respondent for each channel of distribution it claimed (see Amtex Section B & C Response, September 22, 2004, at page C-15).

Analysis

Amtex provided a Selling Functions Chart (see Amtex's Section A Response, September 1, 2004, at Exhibit A-14) in which there is a division between four categories: (1) Home market sales to end-users; (2) Home market sales to distributors; (3) U.S. sales to end-users; and (4) U.S. sales to distributors. None of the selling activity entries under any of these four categories are properly quantified; they are only reported as “performed” or “not performed.” No distinctions such as “heavy” or “medium” or “slight” are attributed to any function. Further, the Selling Functions Chart lists several functions as not being performed when the narrative descriptions would indicate otherwise. One example would be the selling activity “pay commissions,” which Amtex clearly states occurs in the home market (see Amtex's Section B Response, September 22, 2004, at B-20). Another example would be the selling activity “order input/processing,” which Amtex states occurs in the U.S. market (see Amtex's Section A Response, September 1, 2004, at A-12). Since these selling activities are not properly quantified or analyzed, the Department has no means of comparison.

Level of Trade in the Home Market

Amtex reported on LOT in the Mexican market with one channel of distribution to two classes of customers: (1) Direct sales from the mill to end-users, and (2) direct sales from the mill to distributors. Generally, Amtex claims a higher number of selling activities performed for sales to end-users than for sales to distributors. As discussed above, whoever, the selling functions are not properly quantified or analyzed in Amtex's response. Therefore, based on our review of evidence on the record, we find home market sales to both customer categories were substantially similar with respect to selling functions and stages of marketing. Accordingly, we preliminarily find that Amtex had only one LOT for its home market sales.

Level of Trade in the U.S. Market

We also reviewed the selling functions and services performed by Amtex in the U.S. market for EP sales. Amtex reported one LOT in the U.S. market with one channel of distribution to two classes of customers: (1) Direct sales from the mill to end-users, and (2) direct sales from the mill to distributors (see Amtex's Section A Response, September 1, 2004, at Exhibit A-3). Amtex's Selling Function Chart indicated the same three selling activities for both categories of sales: (1) Inventory Maintenance; (2) Warranty Services; and (3) Freight and Delivery. Therefore, there is no difference between these two classes of customers in the U.S. market. As with the home market sales, some functions are reported as not having any activity when the narrative descriptions would indicate otherwise; an example would be the selling activity “order input/processing,” which Amtex states occurs in the U.S. market (see Amtex's Section A Response, September 1, 2004, at A-12). Also, as with the home market entries, Amtex did not quantify the extent to which it performs these functions. Accordingly, we preliminarily determine there is one EP LOT in the U.S. market.

Comparison of Levels of Trade Between Markets

Amtex states that due to the smaller type of customer in the home market and the greater need of support there, there is greater activity in the home market (see Amtex's Section A Response, September 1, 2004, at page A-9). We find the selling functions and services performed by Amtex on direct sales for the one U.S. channel of distribution relating to the EP LOT (i.e., sales of merchandise produced to order for unaffiliated end-users or distributors and sales or merchandise from stock to unaffiliated end-users and distributors) have not been shown to be substantially different from those provided for home market sales. As discussed above, none of the selling activity entries are properly quantified, nor is the Selling Function Chart consistent with the narrative descriptions. Since the selling activities are not properly quantified or analyzed, the Department has no means of comparison. Therefore, we preliminarily determine the EP LOT is the same as the LOT in the home market.

C. Calculation of Normal Value Based on Home Market Prices

We calculated Amtex's NV based on delivered prices to unaffiliated customers. We made deductions for movement expenses, including inland freight from the plant to the distribution warehouse, warehousing, inland freight from the plant/warehouse to the customer, and inland insurance, under section 773(a)(6)(B)(ii) of the Act. In addition, we made adjustments under section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences in circumstances of sale for direct selling expenses, including commissions and inventory carrying costs. We also deducted home market packing costs and added U.S. packing costs to the starting price in accordance with section 773(a)(6)(A) and (B) of the Act. Furthermore, we made an adjustment for differences in costs attributable to differences in the physical characteristics of the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

Currency Conversion

We made currency conversions into U.S. dollars, in accordance with section 773A(a) of the Act, based on exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank.

Verification

As provided in section 782(i) of the Act, we will verify the information relied upon in making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, we are directing U.S. Customs and Border Protection (CBP) to suspend liquidation of all imports of subject merchandise 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 NV exceeds EP, 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:

See Memorandum to the File, “Preliminary Determination Analysis for Amtex,” December 16, 2004. Public versions of our analysis memoranda are on file in the Central Records Unit (CRU), room B-099 of the Herbert C. Hoover Department of Commerce building, 14th Street and Pennsylvania Avenue, NW., Washington, DC.

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the Commission of our preliminary affirmative determination. If our final determination is affirmative, the Commission will determine before the later of 120 days after the date of this preliminary determination or 45 days after our final determination whether these imports are materially injuring, or threaten material injury to, the U.S. industry. Because we have postponed the deadline for our final determination to 135 days from the date of the publication of this preliminary determination, the Commission will make its final determination within 45 days of our final determination.

Disclosure

We will disclose the calculations used in our analysis to parties in this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

Case briefs for this investigation must be submitted to the Department by the later of 30 days after publication of this preliminary determination or seven days after the date the final verification report is issued in this proceeding. Rebuttal briefs must be filed five days from the deadline date for 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. Section 774 of the Act provides that the Department will hold a public 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 this investigation, the hearing will tentatively be held two days after the rebuttal brief deadline date at the U.S. Department of Commerce, 14th Street and Pennsylvania Avenue, NW., Washington, DC. 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 to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs.

We will make our final determination not later than 135 days after the publication of this notice in the Federal Register.

This determination is published pursuant to sections 733(f) and 777(i) of the Act.