[Federal Register Volume 61, Number 171 (Tuesday, September 3, 1996)]
[Notices]
[Pages 46440-46444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22413]
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DEPARTMENT OF COMMERCE
[A-570-825]
Sebacic Acid From the People's Republic of China; Preliminary
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
[[Page 46441]]
ACTION: Notice of Preliminary Results of Antidumping Duty
Administrative Review of Sebacic Acid from the People's Republic of
China.
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SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on sebacic acid
from the People's Republic of China (PRC) in response to requests from
petitioner, Union Camp Corporation and three respondents: Tianjin
Chemicals Import and Export Corporation (Tianjin), Guangdong Chemicals
Import and Export Corporation (Guangdong) and Sinochem International
Chemicals Company, Ltd. (SICC). This review covers four exporters of
the subject merchandise, including the three respondent companies above
and Sinochem Jiangsu Import and Export Corporation (Jiangsu). The
period of review (POR) is July 13, 1994 through June 30, 1995.
We have preliminarily determined that sales have been made below
normal value (NV) during this period. If these preliminary results are
adopted in our final results of administrative review, we will instruct
the U.S. Customs Service to assess antidumping duties equal to the
difference between United States price (USP) and NV. Interested parties
are invited to comment on these preliminary results.
EFFECTIVE DATE: September 3, 1996.
FOR FURTHER INFORMATION CONTACT: Elizabeth Patience or Jean Kemp,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th and Constitution Avenue, NW., Washington,
DC 20230; telephone: (202) 482-3793.
Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
current regulations, as amended by the interim regulations published in
the Federal Register on May 11, 1995 (60 FR 25130).
SUPPLEMENTARY INFORMATION:
Background
The Department published in the Federal Register an antidumping
duty order on sebacic acid from the PRC on July 14, 1994 (59 FR 35909).
On July 3, 1995, the Department published in the Federal Register (60
FR 34511) a notice of opportunity to request an administrative review
of the antidumping duty order on sebacic acid from the PRC covering the
period July 13, 1994 through June 30, 1995.
On July 26, 1995, in accordance with 19 CFR 353.22(a), Union Camp
requested that we conduct an administrative review of Tianjin,
Guangdong, SICC, and Jiangsu. On July 28, 1996, Tianjin, Guangdong and
SICC requested that we conduct an administrative review. We published a
notice of initiation of this antidumping duty administrative review on
September 15, 1995 (60 FR 47930). The Department is conducting this
administrative review in accordance with section 751 of the Act.
Scope of Review
The products covered by this order are all grades of sebacic acid,
a dicarboxylic acid with the formula (CH2)8(COOH)2, which include but
are not limited to CP Grade (500ppm maximum ash, 25 maximum APHA
color), Purified Grade (1000ppm maximum ash, 50 maximum APHA color),
and Nylon Grade (500ppm maximum ash, 70 maximum ICV color). The
principal difference between the grades is the quantity of ash and
color. Sebacic acid contains a minimum of 85 percent dibasic acids of
which the predominant species is the C10 dibasic acid. Sebacic acid is
sold generally as a free-flowing powder/flake.
Sebacic acid has numerous industrial uses, including the production
of nylon 6/10 (a polymer used for paintbrush and toothbrush bristles
and paper machine felts), plasticizers, esters, automotive coolants,
polyamides, polyester castings and films, inks and adhesives,
lubricants, and polyurethane castings and coatings.
Sebacic acid is currently classifiable under subheading
2917.13.00.00 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheading is provided for convenience and
customs purposes, our written description of the scope of this
proceeding remains dispositive.
This review covers the period July 13, 1994 through June 30, 1995,
and four exporters of Chinese sebacic acid.
Verification
We conducted verifications of the sales and factor information
provided by SICC and Tianjin Zhong He Chemical Plant (Zhong He) in
Beijing and Tianjin, PRC. We conducted the verifications using standard
verification procedures, including onsite inspection of the
manufacturer's facilities, the examination of relevant sales and
financial records, and selection of original documentation containing
relevant information. Our verification results are outlined in the
public versions of the verification reports.
Separate Rates
1. Background and Summary of Findings
It is the Department's standard policy to assign all exporters of
the merchandise subject to review in non-market-economy countries a
single rate, unless an exporter can demonstrate an absence of
government control, both in law and in fact, with respect to exports.
To establish whether an exporter is sufficiently independent of
government control to be entitled to a separate rate, the Department
analyzes the exporter in light of the criteria established in the Final
Determination of Sales at Less Than Fair Value: Sparklers from the
People's Republic of China (56 FR 20588, May 6, 1991) (Sparklers), as
amplified in the Final Determination of Sales at Less Than Fair Value:
Silicon Carbide from the People's Republic of China (59 FR 22585, May
2, 1994) (Silicon Carbide). Evidence supporting, though not requiring,
a finding of de jure absence of government control over export
activities includes: (1) An absence of restrictive stipulations
associated with an individual exporter's business and export licenses;
(2) any legislative enactments decentralizing control of companies; and
(3) any other formal measures by the government decentralizing control
of companies. Evidence relevant to a de facto absence of government
control with respect to exports is based on four factors, whether the
respondent: (1) Sets its own export prices independent from the
government and other exporters; (2) can retain the proceeds from its
export sales; (3) has the authority to negotiate and sign contracts;
and (4) has autonomy from the government regarding the selection of
management. See Silicon Carbide at 22587; see also Sparklers at 20589.
In our final determination of sales at less than fair value, the
Department determined that there was de jure and de facto absence of
government control and determined that each company warranted a
company-specific dumping margin. See Final Determination of Sales at
Less Than Fair Value: Sebacic Acid From the People's Republic of China,
59 FR 28053 (May 31, 1994) (Sebacic Acid). For this period of review,
SICC, Tianjin, and Guangdong have responded to the Department's request
for information regarding separate rates. We have found that the
[[Page 46442]]
evidence on the record is consistent with the final determination in
the LTFV investigation and continues to demonstrate an absence of
government control, both in law and in fact, with respect to their
exports, in accordance with the criteria identified in Sparklers and
Silicon Carbide. For SICC, although we applied the PRC, country-wide
rate to two sales reported by SICC, we have preliminarily determined
that SICC is separate from government control and Jiangsu. During
verification of SICC, we examined its business license and charter,
government notices announcing its separation from the government, its
tax registration certificate, company management election ballots, and
financial statements. These documents showed no evidence of government
control of SICC or of any affiliation between Jiangsu and SICC.
2. Separate Rate Determination for Non-responsive Company
For Jiangsu, which did not respond to the questionnaire, we
preliminarily determine that this company does not merit a separate
rate. Although Jiangsu met the Department's criteria for separate rates
in the LTFV investigation, because it failed to respond in this review,
we have no information to support continued application of a separate
rate. Therefore, because the Department assigns a single rate to
companies in a non-market economy unless an exporter can demonstrate
absence of government control, we preliminarily determine that Jiangsu
is subject to the country-wide rate for this case.
United States Price
For SICC, Tianjin, and Guangdong, the Department based USP on
export price (EP), in accordance with section 772(a) of the Act. We
made deductions from EP, where appropriate, for foreign inland freight,
ocean freight, brokerage and handling, and marine insurance. We valued
these adjustments using surrogate data based on Indian internal freight
costs and international shipping costs. We selected India as the
surrogate country for the reasons explained in the ``Normal Value''
section of this notice.
Normal Value
Section 773(c)(1) of the Act provides that the Department shall
determine the normal value (NV) using a factors-of-production
methodology if: (1) The merchandise is exported from an NME country;
and (2) the information does not permit the calculation of NV using
home-market prices, third-country prices, or constructed value under
section 773(a) of the Act.
The Department has treated the PRC as an NME country in all
previous antidumping cases. In accordance with section 771(18)(C)(i) of
the Act, any determination that a foreign country is a NME country
shall remain in effect until revoked by the administering authority.
None of the parties to this proceeding has contested such treatment in
this review. Furthermore, available information does not permit the
calculation of NV using home market prices, third country prices or CV
under section 773(a) of the Act. Therefore, we treated the PRC as a NME
country for purposes of this review and calculated NV by valuing the
factors of production in a comparable market economy country which is a
significant producer of comparable merchandise. In such cases, the
factors include, but are not limited to: (1) Hours of labor required;
(2) quantities of raw materials employed; (3) amounts of energy and
other utilities consumed; and (4) representative capital cost,
including depreciation.
In accordance with section 773(c)(4) of the Act and section
353.52(b) of the Department's regulations, we determined that India is
comparable to the PRC in terms of per capita gross national product
(GNP), the growth rate in per capita GNP, and the national distribution
of labor. (See Memorandum from Director, Office of Policy, to Division
Director, Office of Antidumping Compliance, dated March 4, 1996.) The
statute directs us to select a country that is comparable economically
to the PRC. Based on the list of possible surrogate countries, we find
that India is a comparable economy to the PRC.
The statute also requires that, to the extent possible, the
Department use a surrogate country that is a significant producer of
merchandise comparable to sebacic acid. The countries that we were able
to confirm still produce sebacic acid, such as Japan and the United
States, do not have economies comparable to the PRC. However, we found
that India was a significant producer of comparable merchandise (e.g.,
oxalic acid) during the POR. Though sebacic acid and oxalic acid have
different end uses, both are dicarboxylic acids. In addition, many of
the inputs used to produce sebacic acid are also used to produce oxalic
acid. Therefore, we find that India fulfills both requirements of the
statute.
For purposes of calculating NV, we valued PRC factors of
production, in accordance with section 773(c)(1) of the Act. In
determining which surrogate value to use for valuing each factor of
production, we selected, where possible, the publicly available
published value which was: (1) An average non-export value; (2)
representative of a range of prices within the POR if submitted by an
interested party, or most contemporaneous with the POR; (3) product-
specific; and (4) tax-exclusive. We chose values with a preference for
prices representative of the POR because these prices more closely
reflect the prices paid for inputs in the surrogate during the POR.
Where we could not obtain a POR-representative price for an input, we
selected a value in accordance with the remaining criteria mentioned
above and which was closest in time to the POR. In accordance with this
section methodology, we valued the factors of production as follows:
For castor oil, the Department valued this material at the market
rate as reported in The Economic Times (Bombay) for Calcutta, Delhi,
Hyderabad, Kanpur, and Madras during the months of July, August, and
November 1994. These values were reported by counsel for the
respondents. The Department adjusted these values to account for
freight costs between the supplier and the respondents' sebacic acid
manufacturing facilities.
For caustic soda, the Department used the value reported in the
publication Indian Chemical Weekly, using data from the months of
October-December 1994, and January and April, 1995. These reported
values were adjusted to include freight expense incurred from the
suppliers to the respondents' sebacic acid manufacturing facilities.
For cresol, also referred to as orthol cresol, respondents reported
the market value as indicated in Chemical Weekly. Respondents provided
information concerning prices during the months of October and
November, 1994. The Department reviewed pricing information for other
months of the POR which indicated that the market prices reported by
respondents is representative of the market price of the material for
the entire POR.
The valuation of activated carbon, which is interchangeable with
macropore resin, was based upon information found in the publication
India's Imports by Commodities-Countries (Monthly Statistics of the
Foreign Trade of India (IMF). This pricing information reflects the
average unit price for the period April-October, 1994. This average
unit value was adjusted to account for inland freight expense.
The market value for sodium chloride (also referred to as sodium
chlorite or vacuum salt) and zinc oxide was based upon the published
market prices
[[Page 46443]]
reported in Chemical Weekly. Respondents provided information
concerning the market price of sodium chloride on December 27, 1994 and
March 28, 1995, and of zinc oxide on March 28, 1995. The Department
reviewed other dates throughout the POR and determined that the market
prices published on these dates were representative of the prices for
the entire POR.
For direct labor, we used 1994 data from Investing, Licensing &
Trading Conditions Abroad, India, published in November 1994 by the
Economist Intelligence Unit. We then adjusted the 1994 labor value to
the POR to reflect inflation using wholesale price indices (WPI) of
India as published in the International Financial Statistics by the
International Monetary Fund (IMF).
For factory overhead, we used information obtained from the April
1995 Reserve Bank of India Bulletin. From ``Statement 1--Combined
Income, Value of Production, Expenditure and Appropriation Accounts,
Industry Group-wise'' of that report for the Indian metals and
chemicals industries, we summed those components which pertain to
overhead expenses and divided them by the sum of those components
pertaining to the cost of manufacturing to calculate an overhead rate
of 10.74 percent.
For coal we used prices published in the Gazette of India for June
1994; for electricity we used information obtained from the Current
Energy Scene in India for July 1995.
For selling, general, and administrative (SG&A) expenses, we used
information from the same source as was used for factory overhead. We
summed the values which comprised the components of SG&A and divided
that figure by the same cost of manufacturing figure used to determine
factory overhead, to arrive at an SG&A rate of 17.99 percent.
For the calculation of profit, we used information from the same
Reserve Bank of India Bulletin. We divided the reported before-tax
profit by the sum of those components pertaining to the cost of
manufacturing plus SG&A to calculate a profit rate of 5.71 percent.
For the value of export packing (plastic bags), the Department used
the value of imports into India during April 1994-February 1995 and for
April 1995, as obtained from the Indian Import Statistics, for HTS
number 3923.21.
For foreign inland freight, the Department relied upon the trucking
freight rates reported to the Department in an August 1993 embassy
cable from India, pursuant to the less-than-fair-value investigation of
certain helical spring lock washers from the PRC. This is the same
information we used in the sebacic acid less-than-fair-value
investigation. We adjusted these rates to the POR to reflect inflation.
For ocean freight, the Department used the information provided by
respondents, which is based upon the common rates tariff filed by
Nippon Yusen Kaisha with the Federal Maritime Commission for rates from
China to New York.
To calculate the expense for marine insurance, the Department used
information from a publicly summarized version of the questionnaire
response for the investigation of sales of less than fair value of
sulphur dyes from India. The marine insurance rate reported in the
public version of the October 8, 1992 response was adjusted to reflect
marine insurance charges during the POR.
To value fatty acid, we used publicly available published
information from the Monthly Statistics of the Foreign Trade of India
(Monthly Statistics) and adjusted the value to account for inflation
between the time period applicable to the value in question and the POR
using wholesale price indices (WPI) published in International
Financial Statistics (IFS) by the IMF. To value glycerine, we used a
value for crude glycerine in the publication Monthly Statistics of the
Foreign Trade of India and adjusted the value to account for inflation
between the time period applicable to the value in question and the POR
using WPI published in IFS by the IMF. Consistent with the methodology
employed in the final determination in the less-than-fair-value
investigation, we have determined that fatty acid and glycerine are by-
products. See Sebacic Acid at 28056. Therefore, as by-products, we
subtracted the sales revenue of fatty acid and glycerine from the
production costs of sebacic acid. This treatment of by-products is
consistent with generally accepted accounting principles. (See Cost
Accounting: A Managerial Emphasis (1991) at pages 539-544).
To value caproyl alcohol, we used publicly available published
information from Chemical Weekly. Consistent with the methodology
employed in the final determination in the less-than-fair-value
investigation, we have determined that caproyl alcohol is a co-product.
Therefore, we have allocated the factor inputs, based on the relative
quantity of output of this product and sebacic acid. Additionally, we
have used the production times necessary to complete each production
stage of sebacic acid as a basis for allocating the amount of labor,
energy usage, and factory overhead among the products. This treatment
of co-products is consistent with generally accepted accounting
principles. (See Cost Accounting: A Managerial Emphasis (1991) at pages
528-533).
Margin Calculation
For SICC, at verification we found that certain sales reported as
SICC sales were in fact sales by another respondent company, Jiangsu,
(See Memorandum from Analyst to File: Verification of Sales
Questionnaire Response of Sinochem International Chemicals Company,
dated August 26, 1996.) Therefore, for these sales, we applied the rate
applicable to Jiangsu's sales, 243.40 percent, and then weighted these
sales into the overall calculation of SICC's margin. (See Memorandum
from Edward Yang, Office Director for AD/CVD Enforcement to Joseph
Spetrini, Deputy Assistant Secretary for AD/CVD Enforcement:
Appropriate Rate for Certain Sales Reported by Sinochem International
Chemical Corporation, First Administrative Review of the Antidumping
Duty Order on Sebacic Acid from the People's Republic of China, dated
August 27).
Preliminary Results of Review
We preliminarily determine that the following dumping margins
exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Tianjin Chemicals I/E Corp.... 7/13/94-6/30/95............ 35.42
Guangdong Chemicals I/E Corp.. 7/13/94-6/30/95............ 14.06
Sinochem International 7/13/94-6/30/95............ 70.55
Chemicals Corp.
Country-Wide Rate............. 7/13/94-6/30/95............ 243.40
------------------------------------------------------------------------
[[Page 46444]]
Parties to the proceeding may request disclosure within 5 days of
the date of publication of this notice. Any interested party may
request a hearing within 10 days of publication. Any hearing, if
requested, will be held 44 days after the publication of this notice,
or the first workday thereafter. Interested parties may submit written
comments (case briefs) within 30 days of the date of publication of
this notice. Rebuttal comments (rebuttal briefs), which must be limited
to issues raised in the case briefs, may be filed not later than 37
days after the date of publication. The Department will publish a
notice of final results of this administrative review, which will
include the results of its analysis of issues raised in any such
comments, within 180 days of publication of these preliminary results.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between USP and NV may vary from the percentages stated
above. The Department will issue appraisement instructions directly to
the Customs Service.
Furthermore, the following cash deposit requirements will be
effective upon publication of the final results of this administrative
review for all shipments of the subject merchandise entered, or
withdrawn from warehouse, for consumption on or after the publication
date, as provided for by section 751(a)(1) of the Act: (1) the cash
deposit rates for the reviewed companies named above which have
separate rates (SICC, Tianjin and Guangdong) will be the rates for
those firms established in the final results of this administrative
review; (2) for all other PRC exporters, the cash deposit rates will be
243.40 percent; and (3) the cash deposit rates for non-PRC exporters of
subject merchandise from the PRC will be the rates applicable to the
PRC supplier of that exporter. These deposit rates, when imposed, shall
remain in effect until publication of the final results of the next
administrative review.
Notification of Interested Parties
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 353.26 to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22
of the Department's regulations.
Dated: August 26, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-22413 Filed 8-30-96; 8:45 am]
BILLING CODE 3510-DS-P