[Federal Register: February 4, 2004 (Volume 69, Number 23)]
[Notices]
[Page 5316-5319]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04fe04-48]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-865]
Notice of Initiation of Antidumping Duty Investigation: Outboard
Engines from Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Initiation of Antidumping Duty Investigation.
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EFFECTIVE DATE: February 4, 2004.
FOR FURTHER INFORMATION CONTACT: James Kemp at (202) 482-5346 or Salim
Bhabhrawala at (202) 482-1784, AD/CVD Enforcement Office 5, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230.
INITIATION OF INVESTIGATION:
The Petition
On January 8, 2004, the U.S. Department of Commerce (the
Department) received a petition filed in proper form by Mercury Marine,
a division of Brunswick Corporation (the petitioner). The Department
received supplemental information from the petitioner on
January 20, and January 22, 2004.
In accordance with section 732(b)(1) of the Tariff Act of 1930, as
amended (the Act), the petitioner alleges that imports of outboard
engines from Japan are, or are likely to be, sold in the United States
at less than fair value within the meaning of section 731 of the Act,
and that imports from Japan are materially injuring, or are threatening
to materially injure, an industry in the United States.
The Department finds that the petitioner filed the petition on
behalf of the domestic industry because the petitioner is an interested
party as defined in section 771(9)(C) of the Act and the petitioner
demonstrated sufficient industry support with respect to the
antidumping investigation that the petitioner is requesting the
Department to initiate. See infra, ``Determination of Industry Support
for the Petition.''
Period of Investigation
The period of investigation (POI) is January 1, 2003, through
December 31, 2003.
Scope of Investigation
For the purpose of this investigation, the products covered are
outboard engines (also referred to as outboard motors), whether
assembled or unassembled; and powerheads, whether assembled or
unassembled. The subject engines are gasoline-powered spark-ignition,
internal combustion engines designed and used principally for marine
propulsion for all types of light recreational and commercial boats,
including, but not limited to, canoes, rafts, inflatable, sail and
pontoon boats. Specifically included in this scope are two-stroke,
direct injection two-stroke, and four-stroke outboard engines.
Outboard engines are comprised of (1) a powerhead assembly, or an
internal combustion engine, (2) a midsection
[[Page 5317]]
assembly, by which the outboard engine is attached to the vehicle it
propels, and (3) a gearcase assembly, which typically includes a
transmission and propeller shaft, and may or may not include a
propeller. To the extent that these components are imported together,
but unassembled, they collectively are covered within the scope of this
investigation. An ``unassembled'' outboard engine consists of a
powerhead as defined below, and any other parts imported with the
powerhead that may be used in the assembly of an outboard engine.
Powerheads are comprised of, at a minimum, (1) a cylinder block,
(2) pistons, (3) connecting rods, and (4) a crankshaft. Importation of
these four components together, whether assembled or unassembled, and
whether or not accompanied by additional components, constitute a
powerhead for purposes of this investigation. An ``unassembled''
powerhead consists of, at a minimum, the four powerhead components
listed above, and any other parts imported with it that may be used in
the assembly of a powerhead.
The scope does not include parts or components (other than
powerheads) imported separately.
The outboard engines and powerheads subject to this investigation
are typically classified in the Harmonized Tariff Schedule of the
United States (HTSUS) at subheadings 8407.21.0040 and 8407.21.0080.
Although the HTSUS subheadings are provided for convenience and customs
purposes, the written description of the merchandise under
investigation is dispositive.
Product Coverage
During our review of the petition, we discussed the scope with the
petitioner to ensure that it is an accurate reflection of the products
for which the domestic industry is seeking relief. As discussed in the
preamble to the Department's regulations (Antidumping Duties;
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)),
we are setting aside a period for parties to raise issues regarding
product coverage. The Department encourages all parties to submit such
comments within 20 calendar days of publication of this notice.
Comments should be addressed to Import Administration's Central Records
Unit, Room 1870, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230, following the filing
requirements outlined in section 351.303 of the Department's
regulations. The period of scope consultations is intended to provide
the Department with ample opportunity to consider all comments and
consult with parties prior to the issuance of a preliminary
determination.
Determination of Industry Support for the Petition
Section 732(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 732(c)(4)(A) of the Act
provides that the Department's industry support determination, which is
to be made before the initiation of the investigation, be based on
whether a minimum percentage of the relevant industry supports the
petition. A petition satisfies this requirement if the domestic
producers or workers who support the petition account for: (1) at least
25 percent of the total production of the domestic like product; and
(2) more than 50 percent of the production of the domestic like product
produced by that portion of the industry expressing support for, or
opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act
provides that, if the petition does not establish support of domestic
producers or workers accounting for more than 50 percent of the total
production of the domestic like product, the Department shall either
poll the industry or rely on other information in order to determine if
there is support for the petition.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers of a domestic like product. Thus, to determine whether a
petition has the requisite industry support, the statute directs the
Department to look to producers and workers who produce the domestic
like product. The U.S. International Trade Commission (ITC), which is
responsible for determining whether the domestic industry has been
injured, must also determine what constitutes a domestic like product
in order to define the industry. While both the Department and the ITC
must apply the same statutory definition regarding the domestic like
product (section 771(10) of the Act), they do so for different purposes
and pursuant to separate and distinct authority. In addition, the
Department's determination is subject to limitations of time and
information. Although this may result in different definitions of the
like product, such differences do not render the decision of either
agency contrary to the law.\1\
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\1\ See USEC, Inc., v. United States, 132 F. Supp. 2d 1,8 (CIT
2001), citing Algoma Steel Corp. Ltd., v. United States, 688 F.
Supp. 639, 642-44 (CIT 1988). See also High Information Content Flat
Panel Displays and Display Glass from Japan: Final Determination;
Rescission of Investigation and Partial Dismissal of Petition, 56 FR
32376, 32380-81 (July 16, 1991).
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Section 771(10) of the Act defines the domestic like product as ``a
product which is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this title.'' Thus, the reference point from which the domestic
like product analysis begins is ``the article subject to an
investigation,'' i.e., the class or kind of merchandise to be
investigated, which normally will be the scope as defined in the
petition.
In this case, the petition covers a single class or kind of
merchandise, outboard engines, as defined in the ``Scope of
Investigation'' section, above. The petitioner does not offer a
definition of the domestic like product distinct from the scope of the
investigation. Further, based on our analysis of the information
presented to the Department by the petitioner, we have determined that
there is a single domestic like product which is consistent with the
definition of the ``Scope of the Investigation'' section above and have
analyzed industry support in terms of this domestic like product.
The Department has determined that the petitioner has established
industry support representing over 50 percent of total production of
the domestic like product, requiring no further action by the
Department pursuant to section 732(c)(4)(D) of the Act. In addition,
the Department received no opposition to the petition from domestic
producers of the like product. Therefore, the domestic producers or
workers who support the petition account for at least 25 percent of the
total production of the domestic like product, and the requirements of
section 732(c)(4)(A)(i) of the Act are met. Furthermore, the domestic
producers or workers who support the petition account for more than 50
percent of the production of the domestic like product produced by that
portion of the industry expressing support for or opposition to the
petition. Thus, the requirements of section 732(c)(4)(A)(ii) of the Act
also are met.
Accordingly, we determine that the petition is filed on behalf of
the domestic industry within the meaning of section 732(b)(1) of the
Act. See Office 5 AD/CVD Enforcement, Initiation Checklist: Outboard
Engines from Japan (January 28, 2004) (Initiation Checklist) at
Attachment I, on file in the Central Records Unit, Room B-099 of the
Department of Commerce.
[[Page 5318]]
Constructed Export Price and Normal Value
The following are descriptions of the allegations of sales at less
than fair value upon which the Department based its decision to
initiate this investigation. The sources of data for the deductions and
adjustments relating to U.S. and home market prices are discussed in
greater detail in the Initiation Checklist. Should the need arise to
use any of this information as facts available under section 776 of the
Act in our preliminary or final determination, we may re-examine the
information and revise the margin calculations, if appropriate.
Constructed Export Price
The petitioner based constructed export price (CEP) on U.S. dealer
list prices issued by Japanese companies during the POI. The petitioner
determined that CEP was appropriate because sales were made in the
United States through affiliated resellers. Starting with base prices
from the dealer lists, the petitioner made adjustments for various
discounts and rebates, foreign inland freight, ocean freight (including
insurance), and indirect selling expenses incurred in the United
States. The petitioner made no adjustment to CEP for U.S. inland
freight charges because this information was not readily available.
Normal Value
With respect to normal value (NV), the petitioner also started with
Japanese dealer list prices issued during the POI by Japanese producers
of outboard engines. The petitioner stated the prices in yen, their
original currency, and converted them to U.S. dollars, using a single
average exchange rate for the POI derived from monthly average exchange
rates published by the Board of Governors of the Federal Reserve Board,
after making adjustments for discounts and inland freight.
Although the petitioner provided margins based on a price-to-price
comparisons, the petitioner also provided information demonstrating
reasonable grounds to believe or suspect that sales of outboard engines
in the home market were made at prices below the fully absorbed cost of
production (COP), within the meaning of section 773(b) of the Act, and
requested that the Department conduct a country-wide sales-below-cost
investigation. See ``Initiation of Cost Investigation'' section infra
for further discussion.
The estimated dumping margins for subject merchandise from Japan,
based on a comparison of CEP and NV, ranged from 11.80 percent to 41.50
percent.
Fair Value Comparisons
Based on the data provided by the petitioner, there is reason to
believe that imports of outboard engines from Japan are being, or are
likely to be, sold at less than fair value in the United States.
Initiation of Cost Investigation
As noted above, pursuant to section 773(b) of the Act, the
petitioner provided information demonstrating reasonable grounds to
believe or suspect that sales in the home market were made at prices
below the fully absorbed COP and, accordingly, requested that the
Department conduct a country-wide sales-below-COP investigation in
connection with the requested antidumping investigation. Pursuant to
section 773(b)(3) of the Act, COP consists of cost of manufacture
(COM), selling, general, and administrative (SG&A) expenses, and
packing expenses. The petitioner based its cost buildup on an outboard
engine model produced by Yamaha Motor Co., Ltd. (Yamaha). However, the
petitioner was unable to obtain Yamaha's manufacturing costs and,
instead, calculated COM based on the experience of a U.S. producer of
outboard engines, adjusted for known differences between costs incurred
to manufacture outboard engines in the United States and Japan. See
Petition at Exhibit I-10-A and Initiation Checklist at 9. To calculate
the depreciation, SG&A, and financial expenses, which were also
included in the cost buildup, the petitioner used information from
Yamaha's 2003 financial statements.
The Statement of Administrative Action (SAA), submitted to the U.S.
Congress in connection with the interpretation and application of the
Uruguay Round Agreement Action, states that an allegation of sales
below COP need not be specific to individual exporters or producers.
SAA, H.R. Doc. No. 103-316 at 833 (1994). The SAA states that
``Commerce will consider allegations of below-cost sales in the
aggregate for a foreign country, just as Commerce currently considers
allegations of sales at less than fair value on a country-wide basis
for purposes of initiating an antidumping investigation.'' Id.
Further, the SAA provides that ``new section 773(b)(2)(A) retains
the current requirement that Commerce have 'reasonable grounds to
believe or suspect' that below cost sales have occurred before
initiating such an investigation. 'Reasonable grounds' ... exist when
an interested party provides specific factual information on costs and
prices, observed or constructed, indicating that sales in the foreign
market in question are at below-cost prices.'' Id.
Based upon a comparison of the price of the foreign like product in
the home market to the calculated COP of the product, we find
reasonable grounds to believe or suspect that sales of the foreign like
product were made below the COP, within the meaning of section
773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a
country-wide cost investigation.
Allegations and Evidence of Material Injury and Causation
The petitioner alleges that the U.S. industry producing the
domestic like product is being materially injured, or is threatened
with material injury, by reason of the imports of the subject
merchandise from Japan and sold at less than NV.
The petitioner contends that the industry's injured condition is
evident in the declining trends in operating profits, net sales
volumes, domestic prices, revenue, production employment, capacity
utilization, and domestic market share. The allegation of injury and
causation is supported by relevant evidence including U.S. import data,
lost sales, and pricing information.
The Department has assessed the allegation and supporting evidence
regarding material injury and causation and determined that this
allegation is properly supported by adequate evidence and meets the
statutory requirements for initiation. See the Initiation Checklist at
Attachment II.
Initiation of Antidumping Investigation
Based upon our examination of the petition, we have found that it
meets the requirements of section 732 of the Act. See the Initiation
Checklist. Therefore, we are initiating an antidumping duty
investigation to determine whether imports of outboard engines from
Japan are being, or are likely to be, sold in the United States at less
than fair value. Unless this deadline is extended, we will make our
preliminary determination no later than 140 days after the date of this
initiation.
Distribution of Copies of the Petition
In accordance with section 732(b)(3)(A) of the Act, a copy of the
public version of the petition has been provided to the representative
of the government of Japan. We will attempt to provide a copy of the
public version of the petition to each exporter named in the petition,
as provided for under 19 CFR 351.203(c)(2).
[[Page 5319]]
ITC Notification
We have notified the ITC of our initiation as required by section
732(d) of the Act.
Preliminary Determination by the ITC
The ITC will determine no later than February 23, 2004, whether
there is a reasonable indication that imports of outboard engines from
Japan are causing material injury, or threatening to cause material
injury, to a U.S. industry. A negative ITC determination will result in
the investigation being terminated; otherwise, this investigation will
proceed according to statutory and regulatory time limits.
This notice is issued and published pursuant to section 777(i) of
the Act.
Dated: January 28, 2004.
James Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-2277 Filed 2-3-04; 8:45 am]