[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8262]


[[Page Unknown]]

[Federal Register: April 6, 1994]


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DEPARTMENT OF COMMERCE
[A-588-832]

 

Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Antidumping Duty Investigation of 
Color Negative Photographic Paper and Chemical Components Thereof From 
Japan

Agency: Import Administration, International Trade Administration, 
Commerce.

EFFECTIVE DATE: April 6, 1994.

FOR FURTHER INFORMATION CONTACT: Bill Crow, Office of Antidumping 
Investigations, Import Administration, U.S. Department of Commerce, 
14th Street and Constitution Avenue, NW., Washington, DC 20230; 
telephone (202) 482-0116.

Preliminary Determination

    We preliminarily determine that color negative photographic paper 
and chemical components thereof (CNPP) from Japan are being, or are 
likely to be, sold in the United States at less than fair value, as 
provided in section 733 of the Tariff Act of 1930, as amended (the 
Act). The estimated margins are shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on September 20, 1993 
(58 FR 50331, September 27, 1993), the following events have occurred.
    On October 15, 1993, the International Trade Commission (ITC) 
issued an affirmative preliminary injury determination.
    On November 15, 1993, the Department presented an antidumping duty 
questionnaire for CNPP to Fuji Photo Film, Company, Ltd., hereinafter 
referred to as ``Fuji'' or ``respondent'' (see February 28, 1994, 
memorandum to the file). Respondent submitted sales questionnaire 
responses in December 1993 and January 1994. The Department issued 
supplemental sales questionnaires in February 1994. Respondent 
submitted the responses to these supplemental questionnaires in 
February and March 1994.
    On December 14, 1993, respondent submitted a statement in support 
of the Department postponing the preliminary determination in this 
investigation. On December 23, 1993, petitioner requested that the 
Department postpone the preliminary determination until March 29, 1994, 
pursuant to 19 CFR 353.15(c) (1993). The Department granted this 
request on January 6, 1994 (59 FR 1927, January 13, 1994).
    On March 2, 1994, petitioner submitted an allegation that critical 
circumstances exist with respect to imports of CNPP from Japan. On 
March 4, 1994, the Department sent respondent a critical circumstances 
questionnaire. Respondent submitted responses to the Department's 
critical circumstances questionnaire on March 18, 1994.
    On March 8, 1994, in accordance with 19 CFR 353.20(b), respondent 
requested that, in the event of an affirmative preliminary 
determination, the Department postpone the final determination.

Scope of Investigation

    For purposes of this investigation, color negative photographic 
paper is all sensitized, unexposed silver-halide color negative 
photographic paper, whether in master rolls, smaller rolls or sheets. 
Chemical components include sensitized (whether chemically or 
spectrally) and unsensitized emulsions, couplers, and coupler 
dispersions used in making color negative photographic paper.
    Unsensitized silver-halide emulsions consist of silver-halide 
microcrystals dispersed in a gelatin and water matrix after preparation 
and washing to remove soluble salts. Unsensitized emulsions are 
naturally sensitive to blue and ultraviolet light, but cannot 
efficiently convert light to form a color image without further 
processing. Sensitized emulsions have been treated to increase their 
sensitivity across the entire spectrum and/or treated by the addition 
of spectral sensitizing dyes to make the emulsions selectively 
sensitive to specific wavelengths of light. A coupler is a colorless, 
water-insoluble chemical capable of reacting with a silver-halide 
development product to form a dye. A coupler dispersion consists of a 
coupler dispersed in a water-gel solution, and may contain organic 
solvents, chemicals to stabilize the coupler and other substances.
    Specifically excluded from this investigation are all paper and 
chemical products not used in the silver halide process which are used 
in other imaging technologies. Products outside the scope include toner 
and developer chemicals used in electrostatic or indirect imaging 
processes (e.g., xerography), products used in laser printing, and 
instant photography products.
    Also excluded from the scope of the investigation is paper that is 
designed exclusively for use in graphic arts proofing equipment and 
does not exceed 160 microns in thickness, and emulsions classified 
under subheading 3707.10.0000 of the Harmonized Tariff Schedule of the 
United States (HTSUS) that are used in the manufacture of monochrome 
graphic arts film or paper that are not used in the production of color 
negative photographic paper.
    The color negative photographic paper subject to this investigation 
is currently classifiable under HTSUS subheadings 3703.10.3030 and 
3703.20.3030. Emulsions are currently classifiable under HTSUS 
subheadings 3707.10.0000 and 3707.90.3000. Couplers and coupler 
dispersions are currently classifiable under HTSUS subheadings 
3707.90.3000, 3707.90.6000, 2933.19.3000, 2933.90.2500 and 
2934.90.2000. Although the HTSUS subheadings are provided for 
convenience and customs purposes, our written description of the scope 
of this investigation is dispositive.
    To avoid suspension of liquidation of non-subject chemicals, those 
items entered under the HTSUS subheadings listed above, which are not 
for use in the color negative photographic paper production process, 
must be accompanied by an importer's declaration to the Customs Service 
to that effect.
    In order to be excluded from the suspension of liquidation ordered 
in this notice, all sensitized (whether chemically or spectrally) and 
unsensitized emulsions, couplers, and coupler dispersions entered into 
the United States must be accompanied by an importer's declaration to 
the Customs Service to the effect that they are not for use in the 
color negative photographic paper production process and will not be 
used in the color negative photographic paper production process.
    On February 18, 1994, petitioner and respondent submitted comments 
on whether the chemical components are in the same class or kind of 
merchandise as color negative photographic paper. Petitioner argues 
that the subject merchandise constitutes one class or kind of 
merchandise, whereas respondent argues that the merchandise included in 
the scope of investigation constitutes two classes or kinds of 
merchandise. We determined that color negative photographic paper and 
the chemical components constitute one class or kind of merchandise 
(see March 24, 1994, decision memorandum from Richard W. Moreland to 
Barbara R. Stafford). We based our determination on the criteria set 
forth in Diversified Products v. United States, 572 F. Supp. 883 (1983) 
and Kyowa Gas Chemical Industry Co., Ltd. v. United States, 582 F. 
Supp. 887 (1984).

Period of Investigation

    The period of investigation (POI) is March 1, 1993, through August 
31, 1993.

Such or Similar Comparisons

    In this investigation, we have only examined sales of color 
negative photographic paper; we have not examined sales of chemical 
components because respondent did not make such sales during the POI 
(see October 22, 1993, memorandum from James Maeder to David Binder). 
We have determined for purposes of the preliminary determination that 
the color negative photographic paper covered by this investigation 
comprise a single category of ``such or similar'' merchandise. 
Respondent reported products that are identical according to the 
Department's matching criteria, but have minor cost differences based 
on the emulsions contained in each product. For purposes of the 
preliminary determination, we are treating these products as identical 
and are making no adjustments for differences in merchandise between 
the products as claimed by respondent in accordance with 19 CFR 353.57. 
This is because respondent failed to provide a narrative description 
for its adjustments for differences in merchandise that explains the 
exact nature, source, and size of each difference. We have instructed 
the respondent to submit a thorough description of its adjustments for 
differences in merchandise so that these adjustments can be considered 
for use in the final determination (see February 23, 1994, decision 
memorandum from Richard W. Moreland to Barbara R. Stafford).

Fair Value Comparisons

    To determine whether sales of CNPP from Japan to the United States 
were made at less than fair value, we compared the United States price 
(USP) to the foreign market value (FMV), as specified in the ``United 
States Price'' and ``Foreign Market Value'' sections of this notice.

United States Price

    We based USP on exporter's sales price (ESP), in accordance with 
section 772(c) of the Act, because the subject merchandise was sold to 
the first unrelated purchaser after importation into the United States.
    On March 22, 1994, respondent submitted clarifications regarding 
its response to section C of the Department's questionnaire regarding 
U.S. sales. Respondent requested that the Department consider backup 
calculations for reported ocean freight charges, and U.S. short-term 
interest rates. In this submission, Fuji also provided clarification 
concerning certain Fuji-Hunt (a U.S. entity related to Fuji) delivery 
expenses and certain Fuji-Hunt indirect selling expenses. This 
submission was received too late to be used for purposes of the 
preliminary determination; however, we will consider this submission in 
our final determination.
    Based on information submitted by respondent, we reclassified a 
certain movement expense as revenue, and added it to the U.S. gross 
unit price. We added, where appropriate, freight revenue to the U.S. 
gross price, before adjusting for freight costs.
    We made deductions, where appropriate, for discounts and rebates, 
and the following movement charges: foreign brokerage, foreign inland 
freight, ocean freight, marine insurance, U.S. brokerage and handling, 
U.S. broker's commission, U.S. duty, and several U.S. inland freight 
charges including inland freight insurance. For certain inland freight 
charges applicable to sales made through Fuji-Hunt, as minor charge-
specific best information available (BIA), the Department increased the 
reported charges to account for missing values. Additionally, we 
deducted commissions and direct selling expenses which include 
advertising, credit expenses, and a combination of promotional expenses 
which constitute other direct selling expenses. We recalculated U.S. 
imputed credit using the reported dates of shipment and payment because 
the amounts reported by the respondent did not consistently reflect the 
method described in the questionnaire response. We then adjusted the 
U.S. price for additional product preparation performed by certain 
parties after exportation. The preparation performed by certain parties 
was treated as a component of total packing costs which were deducted 
from USP.
    We also deducted indirect selling expenses which include those 
indirect selling expenses that Fuji-USA (Fuji's principal related U.S. 
entity) incurred in its general sales activities, those indirect 
selling expenses that Fuji-Hunt incurred in its sales and marketing 
activities, foreign and U.S. pre-sale warehousing expenses, inventory 
carrying costs, premiums for product liability insurance, and indirect 
selling expenses incurred in Japan.
    For purposes of the preliminary determination, we are accepting 
respondent's treatment of Fuji-USA's commissions paid to an unrelated 
party and Fuji-Hunt's commissions as direct selling expenses and 
commissions paid to Fuji-USA's employees as indirect selling expenses 
pending the receipt of additional information to be used for the final 
determination. We treated all advertising costs as direct selling 
expenses because respondent reported that all advertising is directed 
at their customers' customers.
    We made an adjustment to U.S. price for the consumption tax paid on 
the comparison sales in Japan. In Federal-Mogul Corporation and The 
Torrington Company v. United States, Slip Op. 93-194 (CIT, October 7, 
1993), the Court of International Trade (CIT) prohibited us from 
applying a purely tax-neutral margin calculation methodology. 
Accordingly, we made our tax methodology conform to the instructions of 
the CIT, and adjusted U.S. price for taxes by multiplying the home 
market tax rate by the price of the U.S. merchandise at the point in 
the chain of commerce of the U.S. merchandise that is analogous to the 
point in the home market chain of commerce at which the foreign 
government applies the home market consumption tax.
    In this investigation, the tax levied on the subject merchandise in 
the home market is three percent. We calculated the appropriate tax 
adjustment to be three percent of the price of the U.S. merchandise net 
of discounts reflected on the invoice at the time of sale (which, in 
this case, is the point in the chain of commerce of the U.S. 
merchandise that is analogous to the point in the home market chain of 
commerce at which the foreign government applies the home market 
consumption tax). We then added this amount to the U.S. price. We also 
calculated the amount of the tax adjustment that was due solely to the 
inclusion of expenses in the original tax base that are later deducted 
from the price to calculate USP (i.e., three percent of the sum of any 
adjustments, expenses and charges that were deducted from the price of 
the U.S. merchandise). We deducted this amount after all other 
additions and deductions had been made. By making this additional tax 
adjustment, we avoid a distortion that would cause the creation of a 
dumping margin even when pre-tax dumping is zero.
    The Department instructed respondent to report by April, 1, 1994, a 
revised sales listing for sales of further manufactured merchandise. 
Since respondent will submit this sales information too late to be 
included in our preliminary analysis, and because respondent's first 
submission was too deficient to use for purposes of this preliminary 
determination, we have not included further manufacturing sales in our 
analysis (see March 24, 1994, decision memorandum from Richard W. 
Moreland to Barbara R. Stafford).

Foreign Market Value

    We compared the volume of home market sales of subject merchandise 
to the volume of third country sales to determine whether there was a 
sufficient volume of sales in the home market to serve as a viable 
basis for calculating FMV. We found that the home market was viable for 
sales of CNPP.
    The Department excluded from its analysis certain sales of control 
paper, hobby paper, crystal paper, and softech paper, because these 
sales were made outside of the ordinary course of trade due to the 
nature of the products and were made in insignificant quantities. We 
omitted error entries and inventory adjustment entries because these 
entries are not sales of CNPP, and because respondent did not directly 
tie these entries to the relevant sales in the CNPP database. 
Additionally, we dropped cancellation transactions from the sales 
database, as respondent has stated that it cannot identify the original 
transaction to which a specific cancellation entry applies. We also 
excluded certain low-priced sales of CNPP because, despite a specific 
request to do so, respondent did not adequately explain the nature of, 
or circumstances surrounding, these low-priced sales.
    We used the Department's current related party test, which 
considers differences in the level of trade, to determine whether sales 
to related customers were made on an arm's-length basis. For purposes 
of the preliminary determination, we considered a party as related to 
respondent whenever respondent had substantial ownership in, or 
contractual agreements constituting business control over, the party. 
See Appendix II to the Final Determination of Sales at Less Than Fair 
Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina 
(58 FR 37077, July 9, 1993) for more information on the Department's 
related party test. We did not include in our analysis any sales to 
related customers that we determined were not at arm's length.
    We calculated FMV based on delivered prices, inclusive of packing. 
We made deductions for inland freight, rebates and discounts, and 
direct selling expenses, including promotional and advertising 
expenses, credit expenses, warranty and guaranty expenses, and interest 
for guarantee deposits, where applicable. For those rebate programs 
where respondent did not identify in the database which customer 
actually received the rebate, we made no adjustment. We disallowed any 
rebate not established before the filing of the petition. For one 
expense claimed as a rebate, we determined that the expense, although 
viewed as a direct selling expense for CNPP, was overstated through a 
misallocation of the costs; consequently we did not make any adjustment 
for this expense, but will consider doing so subsequent to verification 
and further explanation. With regard to one promotional program 
reported as a direct selling expense, we did not make an adjustment to 
FMV because respondent failed to report the expense properly.
    We treated all advertising costs as direct selling expenses because 
respondent reported that all advertising is directed at the customers' 
customers. We deducted home market packing costs and added U.S. packing 
costs in accordance with section 773(a)(1) of the Act. Where 
respondent's reported total packing costs in Japan for certain 
transactions for certain packing forms omitted a particular packing 
processing charge, we added, as minor charge-specific BIA, the reported 
average charge.
    We made the following deductions from FMV in accordance with 19 CFR 
353.56. We calculated home market credit expenses using the reported 
dates of shipment and payment. Where no payment had been received we 
used the average credit period for home market sales.
    We deducted from FMV the weighted-average home market indirect 
selling expenses, including inventory carrying costs, warehousing 
expenses, product liability premiums, technical service expenses, and 
two promotional minilab programs, up to the amount of indirect selling 
expenses incurred on U.S. sales. We reclassified these two promotional 
programs as indirect selling expenses. While respondent had reported 
these as direct selling expenses, we have preliminarily determined that 
respondent has not directly tied them to specific sales of CNPP. We 
also reclassified technical expenses as indirect selling expenses 
because respondent's documentation illustrates that these expenses 
relate to general long-term assistance, rather than customer- or sales-
specific expenses. We offset commissions paid to unrelated parties in 
the United States by the amount of indirect selling expenses incurred 
in the home market by respondent, capped by the sum of U.S. commissions 
and indirect selling expenses incurred, both in Japan and the United 
States, for U.S. sales.
    For purposes of the preliminary determination, we have treated all 
movement expenses as direct selling expenses. Therefore, in accordance 
with the decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray 
Portland Cement v. United States, Slip Op. 93-1239 (Fed. Cir., January 
5, 1994), we made a circumstance-of-sale adjustment for home market 
movement expenses. We recalculated indirect selling expenses incurred 
in the home market by reallocating certain rebates and promotional 
programs as indirect selling expenses rather than as charges or direct 
selling expenses, respectively, because we found that respondent 
misclassified these expenses. We classified product liability expenses 
as indirect selling expenses because respondent's explanations 
demonstrate that its liability policy is general in nature and not tied 
to specific sales.
    We included in FMV the amount of the consumption tax collected in 
the Japanese home market. We also calculated the amount of the tax that 
was due solely to the inclusion of expenses in the original tax base 
that are later deducted from home market price to calculate FMV (i.e., 
three percent of the sum of any adjustments, expenses, charges, and 
offsets that were deducted from the home market price). We deducted 
this amount from the FMV after all other additions and deductions were 
made. By making this additional tax adjustment, we avoid a distortion 
that would cause the creation of a dumping margin even when pre-tax 
dumping is zero. In addition, we calculated a re-adjustment of the 
amount of tax to take into account the amount of packing expenses added 
to FMV (i.e., three percent of the packing expenses).

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the dates of the U.S. sales as certified by the Federal 
Reserve Bank.

Verification

    As provided in section 776(b) of the Act, we will verify the 
information used in making our final determination.

Critical Circumstances

    On March 2, 1994, petitioner alleged that ``critical 
circumstances'' exist with respect to imports of CNPP and chemical 
components thereof from Japan. We preliminarily find that critical 
circumstances do not exist with respect to imports of CNPP from Japan, 
in accordance with section 733(e)(1) of the Act. To determine whether 
or not there have been massive imports of CNPP (one of the criteria in 
a critical circumstances analysis) we compared the export volume for 
the six months subsequent to the filing of the petition to that for the 
six months prior to the filing of the petition. We found that exports 
of this merchandise from respondent during the period subsequent to 
receipt of the petition had decreased. Unless we find that imports of 
the subject merchandise were massive, we do not need to determine 
whether there is a history of dumping in the United States or elsewhere 
or whether there is knowledge that the exporter was selling the 
merchandise at less than its fair value.

Suspension of Liquidation

    In accordance with section 733(d)(1) of the Act, we are directing 
the Customs Service to suspend liquidation of all entries of CNPP from 
Japan, as defined in the ``Scope of Investigation'' section of this 
notice, that are entered, or withdrawn from warehouse, for consumption 
on or after the date of publication of this notice in the Federal 
Register.
    The Customs Service shall require a cash deposit or posting of a 
bond equal to the estimated preliminary dumping margin, as shown below. 
The suspension of liquidation will remain in effect until further 
notice.

------------------------------------------------------------------------
                                                                Margin  
               Producer/manufacturer/exporter                 percentage
------------------------------------------------------------------------
Fuji Photo Film Co. Ltd....................................       360.95
All Others.................................................       360.95
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination.
    If our final determination is affirmative, the ITC will determine 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry before the later of 120 days after the 
date of this preliminary determination or 45 days after our final 
determination.

Postponement of Final Determination

    On March 8, 1994, in accordance with 19 CFR 353.20(b), the sole 
respondent requested that, in the event of an affirmative 
determination, the Department postpone the final determination. We find 
no compelling reason to deny the request. Accordingly, we are 
postponing the date of the final determination until not later than 135 
days after the date of publication of this notice.

Public Comment

    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies may be submitted by any interested 
party to the Assistant Secretary for Import Administration no later 
than June 30, 1994, and rebuttal briefs no later than July 8, 1994. We 
request that parties in this case provide an executive summary of no 
more than 2 pages in conjunction with case briefs on the major issues 
to be addressed. Further, briefs should contain a table of authorities. 
Citations to Commerce determinations and court decisions should include 
the page number where cited information appears. In preparing the 
briefs, please begin each issue on a separate page. In accordance with 
19 CFR 353.38(b), we will hold a public hearing, if requested, to give 
interested parties an opportunity to comment on arguments raised in 
case or rebuttal briefs. Tentatively, the hearing will be held on July 
15, 1994, at 10 a.m. at the U.S. Department of Commerce, room 3708, 
14th Street and Constitution Avenue, NW., Washington, DC 20230. Parties 
should confirm the time, date, and place of the hearing 48 hours before 
the scheduled time.
    Interested parties who wish to request a hearing must submit a 
written request to the Assistant Secretary for Import Administration, 
U.S. Department of Commerce, room B-099, within ten days of the 
publication of this notice in the Federal Register. Requests should 
contain:
    (1) The party's name, address, telephone number;
    (2) The number of participants; and
    (3) A list of the issues to be discussed. In accordance with 19 CFR 
353.38(b), oral presentations will be limited to the issues raised in 
the briefs.
    This determination is published pursuant to section 733(f) of the 
Act (19 U.S.C. 1673b(f)) and 19 CFR 353.15(a)(4).

    Dated: March 29, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-8262 Filed 4-5-94; 8:45 am]
BILLING CODE 3510-DS-P