[Federal Register Volume 59, Number 61 (Wednesday, March 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7564]


[[Page Unknown]]

[Federal Register: March 30, 1994]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-823]

 

Final Determination of Sales at Less Than Fair Value: 
Nitromethane From the People's Republic of China

agency: Import Administration, International Trade Administration, 
Commerce.

effective date: March 30, 1994.

for further information contact: Ellen Grebasch or Erik Warga, Office 
of Antidumping Investigations, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
3773 or (202) 482-0922.

final determination: The Department of Commerce (``the Department'') 
determines that nitromethane from the People's Republic of China 
(``PRC'') is being, or is likely to be, sold in the United States at 
less than fair value (``LTFV''), as provided in section 735 of the 
Tariff Act of 1930, as amended (``the Act''). The estimated margin is 
shown in the ``Suspension of Liquidation'' section of this notice.

Case History

    Since making our preliminary determination on November 1, 1993 (58 
FR 59237, November 8, 1993), the following events have occurred.
    On November 8, 1993, respondent exporters Shanghai Native Produce 
Import/Export Corporation, Sinochem Jiangsu Suzhou Import/Export 
Corporation, and Sinochem Liaoning, along with their associated 
manufacturers, requested that we postpone making our final 
determination by 60 days pursuant to 19 CFR 353.20(b)(1). We published 
a notice postponing the final determination on November 29, 1993 (58 FR 
62644).
    Various additional information from the five participating 
companies was filed on December 17 and December 28, 1993, as well as on 
January 6, 1994.
    From January 10-29, 1994, we conducted verification of the 
questionnaire responses of the following companies: exporters Shanghai 
Native Produce (``SNP'') and Sinochem Jiangsu Suzhou (``SJS''); and 
manufacturers Wujin Hongda Chemical Factory, Kunshan Synthetic Chemical 
Factory, and Suzhou Wu Xian No. 2 Perfume Factory. We also visited the 
facilities of another exporter, Shanghai Chemicals Import/Export 
Corporation, because we determined that that company might have shared 
ownership with one of the two exporters that were being verified.
    Petitioner and respondents filed case briefs on February 24, 1994, 
and rebuttal briefs on March 2, 1994. On March 3, 1994, we held a 
public hearing in which petitioners and respondents participated.

Scope of Investigation

    The product covered by this investigation is nitromethane, a 
chemical compound with the formula CH3NO2. Nitromethane is a 
nitroparaffin in which the nitro group is attached to the single carbon 
atom of that number of the alkane family known as methane. 
Nitroparaffins are any of a homologous series of compounds whose 
generic formula is CnH2n+1NO2, the nitro groups being 
attached to a carbon atom through the nitrogen.
    Nitromethane has numerous industrial uses, including as a solvent 
in polymers for coatings, as a component of special fuels for internal 
combustion engines, as a stabilizer for chlorinated hydrocarbons, and 
as an extraction solvent. Nitromethane is a raw material used in the 
synthesis of other useful chemicals including chloropicrin, a primary 
soil nematocide; tris (hydroxymethyl)-aminomethane, a pharmaceutical 
and diagnostic buffer; and bronopol, a preservative for nonwoven moist 
towelettes.
    Nitromethane is currently classifiable under subheading 
2904.20.50.00 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). This subheading, a basket provision, is defined to include 
sulfonated, nitrated, or nitrosated derivatives of hydrocarbons, 
whether or not halogenated. Although the HTSUS subheading is provided 
for convenience and customs purposes, our written description of the 
scope of this investigation is dispositive.

Period of Investigation

    The period of investigation (``POI'') is December 1, 1992, through 
May 31, 1993.

Best Information Available

    The PRC's Ministry of Foreign Trade and Economic Cooperation 
(``MOFTEC'') identified four exporters who sold the subject merchandise 
to the United States during the POI: Sinochem Hebei, Sinochem Liaoning, 
SJS, and SNP. Sinochem Hebei submitted no information. Sinochem 
Liaoning provided substantially incomplete information in response to 
the Department's requests. Verification revealed that the other two 
exporters, SJS and SNP, failed to provide adequate information on 
foreign market value (See Comment 1 in the ``Interested Party 
Comments'' section of this determination, below). Thus, all exporters 
have failed to provide adequate responses to our questionnaire. 
Accordingly, the Department has used the best information available 
(``BIA''), in accordance with section 776(c) of the Act and 19 CFR 
353.37, to calculate the margins for all exporters from the PRC.
    In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower 
margins to those respondents who cooperated in an investigation and 
margins based on more adverse assumptions for those respondents who did 
not cooperate in an investigation. See Final Determination of Sales at 
Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, 
Certain Cold-Rolled Carbon Steel Flat Products, and Certain Cut-to-
Length Carbon Steel Plate From Belgium (58 FR 37083, July 9, 1993). In 
this case, however, we do not need to determine whether SJS and SNP 
were cooperative since there is no choice as to which margin should be 
used. Accordingly, we are using as BIA 233.70 percent, which is the 
sole margin calculated in the petition.

Separate Rates

    Because all four exporters either provided insufficient responses 
or failed to respond altogether, and because the same BIA margin 
applies to all four exporters, we do not need to consider whether to 
accept the claims for separate rates made by the participating 
exporters.

Fair Value Comparisons

    To determine whether sales of nitromethane from the PRC to the 
United States were made at less than fair value, we compared, using 
BIA, the United States price to the foreign market value, as provided 
in the petition. See our notice of initiation of this proceeding (58 FR 
33617, June 8, 1993) for a complete description of the methodology 
used.

Verification

    As provided in section 776(b) of the Act, we attempted to verify 
all information submitted by respondents for use in our final 
determination. We used standard verification procedures, including 
examination of relevant accounting records and original source 
documents provided by respondents.

Interested Party Comment

    The petitioner contends that the respondents by their obfuscation 
and substantial response inaccuracies have impeded the investigation so 
thoroughly that the Department should use BIA for the final 
determination. Petitioner listed, among others, the following reasons 
as justification for their position:

     Respondents' tardy disclosure of the use of, and 
outright refusal to identify, two raw materials, which petitioner 
notes could be a significant part of the cost of production; and
     The general inaccuracy and unreliability of the 
information reported, such as raw material usage; and energy usage.

    Respondents contend that their questionnaire responses contained 
sufficient information to permit margin calculations. Respondents make 
the following essential arguments regarding their responses:

     The names of the unreported ingredients, although 
regarded by respondents as trade secrets and thus not mentioned in 
responses to the questionnaire, were nevertheless informally 
disclosed at verification both orally and by allowing verifiers to 
review company documents and observe the manufacturing process; and
     The companies' responses were verified in their most 
significant respects, discrepancies discovered at verification were 
not serious, and the Department does not have to verify every 
reported fact in order to make an overall assessment that submitted 
information is suitable for margin calculations. At most, certain 
errors warrant ``non-punitive BIA''.

DOC Position

    The responses of the manufacturers that supplied SJS and SNP with 
nitromethane were largely inaccurate and unverifiable to the point of 
being totally unusable. Accordingly, because their supplying 
manufacturers' responses were incomplete, both exporters must be deemed 
to have failed verification and be assigned margins based on BIA.
    The most egregious deficiency is that all factories supplying the 
nitromethane exporters failed to report certain materials (i.e., two 
additives for each manufacturer) used in the manufacturing process.
    In our July 26, 1993, questionnaire, we specifically required 
respondents to furnish the identity and amount of every material used 
in the production of nitromethane. See Section D (III-A) of our 
questionnaire. Our regulations set out the time frame within which 
questionnaire responses must be submitted. See 19 CFR 353.31. However, 
at no time did any of the respondents identify the two additives used 
in the production process (despite being permitted to file information 
in response to the questionnaire as late as five months after the 
questionnaire's issue).
    Further, the companies did not, as they contend, disclose the 
information at verification. Although Department verifiers traced the 
existence of these additives through various records, they deliberately 
did not attempt to translate into English the names because the 
respondents insisted that the ingredients were trade secrets and could 
not be divulged to the verifiers. The Department's role is not to 
surreptitiously collect information that a respondent has characterized 
as a trade secret and has refused to reveal. The fact, revealed for the 
first time in respondents' case brief, that one of the three 
manufacturers inadvertently included the Chinese characters for the 
names of the additives in a verification exhibit (which, despite the 
requirement set forth under 19 CFR 353.31(f), was untranslated) does 
not alter the overall fact that respondents refused to reveal, much 
less permit verification of, the additives' identities.
    Respondents' explanation for their refusal to divulge this 
information was that the additives were highly confidential and could 
not be revealed even to the Department. The Department's procedures for 
handling business proprietary information, which can include not 
disclosing certain very sensitive information under administrative 
protective order (``APO'') (see 19 CFR 353.32), were explained in the 
cover letter to our questionnaire and were repeatedly reiterated at 
verification. Nevertheless, each responding manufacturer chose not to 
reveal the identity of the additives.
    Although Department practice generally accepts minor corrections to 
questionnaire responses during verification, the revelation of 
unidentified materials is not a ``minor correction.'' In fact, it must 
be considered significant new information. That the relative amounts 
used per ton of nitromethane are small does not make the failure to 
report the identity and use of the additives in the production process 
a ``minor correction.'' See Tapered Roller Bearings from Japan 
(Administrative Review) (56 FR 65228, December 16, 1991); Gray Portland 
Cement from Mexico (Administrative Review) (56 FR 12156, March 22, 
1991).
    By refusing to identify these materials, respondents allow us no 
means of determining their value in a surrogate economy. As petitioners 
point out, these additives could be quite valuable and add 
substantially to the overall production costs. Only in knowing the 
precise identity and quantity can we judge the materials' importance, 
and thereby the gravity of their omission. Relatively small per-batch 
amounts cannot be considered a criterion for evaluating the gravity of 
failing to report these materials.
    In addition to the respondents' failure to report certain materials 
used in the production process, two other significant deficiencies 
exist. First, Wu Xian failed to report the fact it purchased crude 
nitromethane from another PRC factory for use in its production of 
refined nitromethane. Essentially, another significant ingredient in 
the production process was unreported by Wu Xian. Second, SNP failed to 
report information regarding an additional supplying manufacturer even 
though our questionnaire specifically asked that factors data be 
provided by all manufacturers that produced for merchandise sold to the 
United States during the POI. This omission leaves us with no factor 
information for some of SNP's POI sales.
    We agree with the respondents that the Department does not have to 
verify every reported fact. However, decisions regarding what is to be 
verified are the Department's and not a respondent's. At no time were 
the respondents relieved of their obligation to report in their 
questionnaire response, and allow verification of, the additives' 
identities and the other factors.
    In light of the numerous significant deficiencies in the responses, 
there is no acceptable alternative to disregarding the respondents' 
responses. Additionally, the failure of both Sinochem Hebei and 
Sinochem Liaoning to respond adequately to our questionnaire renders 
incontrovertible the need to base our final determinations for those 
two companies on BIA. Thus, the margin for all four exporters can only 
be based on BIA. Therefore, we are using the only margin provided in 
the petition, 233.7 percent.
    Because our final determination is based on BIA, we do not need to 
address interested party comments pertaining to issues other than the 
basis for our final determination.

Critical Circumstances

    The petitioner alleges that critical circumstances exist with 
respect to imports of the subject merchandise from the PRC. Section 
735(a)(3) of the Act provides that the Department will determine that 
critical circumstances exist if we determine that there is a reasonable 
basis to believe or suspect that:
    (A)(i) There is a history of dumping in the United States or 
elsewhere of the merchandise which is the subject of the investigation, 
or
    (ii) The person by whom, or for whose account, the merchandise was 
imported knew, or should have known, that the exporter was selling the 
merchandise which is the subject of the investigation at less than its 
fair value, and
    (B) There have been massive imports of the merchandise which is the 
subject of the investigation over a relatively short period.
    We normally consider margins of 15 percent or more sufficient to 
impute knowledge of dumping under section 735(a)(3)(A)(ii) for 
exporter's sales price sales, and margins of 25 percent or more for 
purchase price sales. (See, e.g., Final Determination of Sales at Less 
Than Fair Value; Tapered Roller Bearings and Parts Thereof, Finished or 
Unfinished, from Italy, 52 FR 24198, June 29, 1987). Since the final 
margin for nitromethane from the PRC is above 25 percent, we determine 
in accordance with section 735(a)(3)(A)(ii) of the Act that there is 
knowledge that dumping existed for nitromethane from the PRC. Since we 
determined that importers knew, or should have known, that imports of 
nitromethane from the PRC were being sold at LTFV prices, we do not 
need to consider whether there is a history of dumping.
    Under 19 CFR 353.16(f)(1), we normally consider the following 
factors in determining whether imports have been massive over a short 
period of time:
    (1) The volume and value of the imports;
    (2) Seasonal trends (if we find that they are applicable); and
    (3) The share of domestic consumption accounted for by imports.
    Because the overall integrity of the response was unreliable (see 
March 23, 1994, Concurrence Memorandum for detailed discussion), we 
have relied upon BIA for determining whether there have been massive 
imports of nitromethane from the PRC. As BIA we are making the adverse 
assumption that imports were massive over a relatively short period of 
time in accordance with section 735(a)(3)(B) of the Act. Additionally, 
we note that the unreliable company-specific information, if used, 
would also lead to a finding of massive imports.
    Accordingly, based on our analysis, we determine that critical 
circumstances exist for imports of nitromethane from the PRC.

Suspension of Liquidation

    In accordance with sections 773(d)(1) and 733(e)(2) of the Act, we 
are directing the Customs Service to continue to suspend liquidation of 
all entries of nitromethane from the PRC that are entered, or withdrawn 
from warehouse, for consumption on or after August 10, 1993 (i.e., 90 
days prior to the date of publication of our preliminary determination 
in the Federal Register). The Customs Service shall require a cash 
deposit or posting of a bond equal to 233.70 percentad valorem on all 
entries of certain nitromethane from the PRC. This suspension of 
liquidation will remain in effect until further notice.

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (``ITC'') of our determination. The ITC 
will now determine, within 45 days, whether these imports are 
materially injuring, or threaten material injury to, the U.S. industry. 
If the ITC determines that material injury, or threat of material 
injury, does not exist, the proceeding will be terminated and all 
securities posted will be refunded or cancelled. If the ITC determines 
that such injury does exist, the Department will issue an antidumping 
duty order directing Customs officials to assess antidumping duties on 
all imports of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the effective date of the 
suspension of liquidation.

Notice to Interested Parties

    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility, pursuant 
to 19 CFR 353.34(d), concerning the return or destruction of 
proprietary information disclosed under APO. Failure to comply is a 
violation of the APO.
    This determination is published pursuant to section 735(d) of the 
Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).

    Dated: March 23, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-7564 Filed 3-29-94; 8:45 am]
BILLING CODE 3510-DS-M