[Federal Register Volume 59, Number 95 (Wednesday, May 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12138]


[[Page Unknown]]

[Federal Register: May 18, 1994]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-826]

 

Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Certain Paper Clips From the 
People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: May 18, 1994.

FOR FURTHER INFORMATION CONTACT: Dorothy Tomaszewski 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) 482-0631 or (202) 482-0922, respectively.

PRELIMINARY DETERMINATION: We preliminarily determine that certain 
paper clips (paper clips) from the People's Republic of China (PRC) are 
being, or are 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 margin is shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on November 2, 1993, (58 
FR 59239, November 8, 1993), the following events have occurred.
    During November and December 1993, the Department attempted to 
identify possible PRC exporters of paper clips to the United States 
during the period of investigation (POI). To that end, on November 4, 
1993, we sent a survey to the PRC's Ministry of Foreign Trade and 
Economic Cooperation (MOFTEC) and 21 PRC companies requesting 
information on U.S. exports of the subject merchandise. The names of 
the 21 potential respondents were identified by petitioners, and 
through examination of PIERS data and other sources of information. We 
received information from several of these companies stating that they 
did not export the subject merchandise during the POI.
    On November 29, 1993, the U.S. International Trade Commission (ITC) 
notified us of its preliminary determination that there is a reasonable 
indication that an industry in the United States is threatened with 
material injury by reason of imports of paper clips from the PRC that 
are alleged to be sold at less than fair value.
    On December 13, 1993, the Department of Commerce (the Department) 
sent MOFTEC, the China Chamber for Import and Export of Machinery, and 
Electronic Products (CCME), and 14 PRC companies the antidumping 
questionnaire. (The antidumping questionnaire was divided into three 
sections: section A requesting general information on each company; 
section C requesting information on, and a listing of, U.S. sales made 
during the POI; and, section D requesting information on the production 
process, including specific amounts of each input used in manufacturing 
paper clips.) We requested MOFTEC's assistance in forwarding the 
questionnaire to all exporters and producers of paper clips and 
submitting complete questionnaire responses on their behalf.
    On December 15 and December 16, 1994 we sent antidumping 
questionnaires to four additional companies.
    On March 9, 1994, MOFTEC designated the CCME as the contact 
organization for this investigation. Subsequently, the CCME submitted a 
list of seven companies (four exporters and three supplying 
manufacturers) which sold or manufactured the subject merchandise 
exported to the United States during the POI. We are accepting this 
list as dispositive for the purposes of our preliminary determination.
    On December 27, 1993, the Department sent a letter to all 
interested parties providing them with the opportunity to submit 
published, publicly-available information for the Department to 
consider when valuing the factor inputs. Petitioners submitted their 
information on January 26, 1994; Respondents submitted none.
    On January 12, 1994, Abel Industries International, one of the four 
identified exporters, advised the Department that it would not respond 
to the questionnaire.
    During January 1994, the Department received responses to sections 
A and C from the following exporters: Shanghai Lansheng Corp. 
(Lansheng), Zhejiang Machinery & Equipment Import & Export Corporation 
(ZMEC), and Zhejiang Light Industrial Products & Export Corporation 
(ZLIP). The Department also received responses to sections A and D from 
the following manufacturers: Wuyi Cultural and Education Commodities 
General Factory (Wuyi), Shanghai Stationery Pins Factory Fengbin 
(Fengbin), and Jiaxing Stationery Pins Factory (Jiaxing).
    The Department requested clarifications of the submitted 
questionnaire responses on February 17, 1994. The six respondents 
submitted additional response information on March 18, 1994.
    On March 2, 1994, the Department postponed its preliminary 
determination until May 11, 1994 (59 FR 11250, March 10, 1994).
    The Department requested additional information from the six 
respondents on April 28, 1994, and received responses on May 0, 1994. 
However, because of the deadline established for its submission, the 
information was not considered for this preliminary determination.

Postponement of Final Determination

    Pursuant to section 735(a)(2)(A) of the Act, on May 4, 1994, 
respondents requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone the final 
determination to 135 days after the date of publication of the 
affirmative preliminary determination. Therefore, we are postponing the 
final determination until the 135th day after the publication of this 
notice in the Federal Register.

Scope of Investigation

    The products covered by this investigation are certain paper clips, 
wholly of wire of base metal, whether or not galvanized, whether or not 
plated with nickel or other base metal (e.g., copper), with a wire 
diameter between 0.025 inches and 0.075 inches (0.64 to 1.91 
millimeters), regardless of physical configuration, except as 
specifically excluded. The products subject to this investigation may 
have a rectangular or ring-like shape and include, but are not limited 
to, clips commercially referred to as ``No. 1 clips'', ``No. 3 clips'', 
``Jumbo'' or ``Giant'' clips, ``Gem clips'', ``Frictioned clips'', 
``Perfect Gems'', ``Marcel Gems'', ``Universal clips'', ``Nifty 
clips'', ``Peerless clips'', ``Ring clips'', and ``Glide-On clips''.
    Specifically excluded from the scope of this investigation are 
plastic and vinyl covered paper clips, butterfly clips, binder clips, 
or other paper fasteners that are not made wholly of wire of base metal 
and are covered under a separate subheading of the Harmonized Tariff 
Schedule of the United States (HTSUS).
    The products subject to this investigation are classifiable under 
subheading 8305.90.3010 of the HTSUS. 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 POI is May 1, 1993, through October 30, 1993.

Separate Rates

    ZMEC, ZLIP, and Lansheng have each requested a separate rate. 
ZMEC's and ZLIP's business licenses each indicate that they are owned 
``by all the people.'' Lansheng has reported that it is a publicly-held 
company whose shares are traded on the Shanghai Security Market. As 
stated 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'') ``ownership of a company by all the 
people does not require the application of a single rate.'' 
Accordingly, ZMEC and ZLIP are eligible for consideration for separate 
rates. Lansheng is not owned by the central government and is therefore 
eligible for consideration for a separate rate.
    To establish whether a firm is sufficiently independent to be 
entitled to a separate rate, the Department analyzes each exporting 
entity under a test arising out of 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'') and amplified in Silicon 
Carbide. Under the separate rates criteria, the Department assigns 
separate rates only where respondents can demonstrate the absence of 
both de jure and de facto governmental control over export activities.

1. Absence of De Jure Control

    In this investigation, MOFTEC stated in its March 9, 1994, letter 
to the Department that it does not have any control in the business of 
this industry. Lansheng, ZLIP, and ZMEC have submitted copies of the 
following laws in support of their claim of absence of de jure control: 
``Law of the People's Republic of China on Industrial Enterprises Owned 
by the Whole People,'' adopted on April 13, 1988 (``1988 Law''); 
``Regulations for Transformation of Operational Mechanism of State-
Owned Industrial Enterprises,'' approved on August 23, 1992 (``1992 
Regulations''); and the ``Temporary Provisions for Administration of 
Export Commodities,'' approved on December 21, 1992 (``Export 
Provisions''). The 1988 Law states that enterprises have the right to 
set their own prices (see Article 26). This principle was restated in 
the 1992 Regulations (see Article IX). The Export Provisions list those 
products subject to direct government control. Paper clips do not 
appear on the Export Provisions list and are not, therefore, subject to 
the constraints of these provisions.
    The Department stated in Silicon Carbide that the existence of the 
1988 Law and the 1992 Regulations support a finding that the 
respondents are not subject to de jure control either by the central 
government or otherwise.\1\ However, we found in Silicon Carbide that 
the laws shifting control from the government to the enterprises 
themselves have not been implemented uniformly. Therefore, the 
Department has determined that an analysis of de facto control is 
critical to determining whether respondents are, in fact, subject to 
governmental control.
---------------------------------------------------------------------------

    \1\Additionally, Lansheng has submitted a copy of the PRC 
Company Law approved on December 29, 1993, (effective on July 1, 
1994) which states that ``the shareholders of a company shall, as 
contributors of the capital, have the right of ownership, be 
entitled, in proportion to the amount of capital contributed by 
each, to the interests of assets of the company, and have the right 
to participate in important decision making processes and in 
selecting management, personnel, etc.'' Although not yet in effect 
this law lends support to a finding of an absence of de jure 
governmental control. As this investigation continues, we will 
consider any additional information on publicly traded enterprises 
and the implementation of the Company Law.
---------------------------------------------------------------------------

2. Absence of De Facto Control

    The Department has considered four factors in evaluating whether de 
facto control exists: (1) Whether the export prices are set by or 
subject to the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses (see Silicon Carbide).
    Each of the three cooperating exporters has asserted that: (1) It 
establishes its own export prices; (2) it negotiates contracts without 
guidance from any governmental entities or organizations; (3) its 
management operates with a high degree of autonomy and there is no 
information on the record that suggests central government control over 
selection of management; and (4) it retains the proceeds of its export 
sales, and has the authority to sell its assets and to obtain loans. In 
addition, company-specific pricing during the POI does not suggest any 
coordination among exporters (i.e., the prices for comparable products 
appear to differ among companies). This information supports a 
preliminary finding that there is a de facto absence of governmental 
control.
    Consequently, these three cooperating exporters have preliminarily 
met the criteria for the application of separate rates. We will examine 
this issue in detail at verification and determine whether the 
questionnaire responses are supported by verifiable documentation.
    There are two additional issues relating to governmental control 
that we will consider further for purposes of our final determination. 
First, ZMEC has indicated that it is ``administratively subject to'' 
the Zhejiang Machinery Bureau, and ZLIP has stated that it is 
``administratively subject to'' the Zhejiang Foreign Trade and Economic 
Cooperation Bureau. While the meaning and significance of these phrases 
are unclear, the evidence cited above indicates that the bureaus do not 
control the key functions of the enterprises. However, we will examine 
the precise nature of the authority that these bureaus exercise over 
the enterprises at verification and in our final determination.
    Second, Lansheng's questionnaire response indicates that a 
``municipal government'' owns 70 percent of its shares. There is no 
evidence on the record that this municipality controls other exporters 
that made sales of the subject merchandise to U.S. customers during the 
POI. We will also evaluate this issue carefully during verification to 
make sure that the municipality in fact does not exercise control over 
other exporters.

Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value the 
factors of production, to the extent possible, in one or more market 
economy countries that are: (1) At a level of economic development 
comparable to that of the non-market economy country, and (2) 
significant producers of comparable merchandise. The Department has 
determined that India and Pakistan are the countries most comparable to 
the PRC in terms of overall economic development. (See memorandum from 
the Office of Policy to the file, dated November 29, 1993.) Although 
India is the preferred surrogate country for purposes of calculating 
the factors of production used in producing the subject merchandise, we 
have resorted to Pakistan for certain surrogate values where Indian 
values were either unavailable or significantly outdated. We have 
therefore used the values for the factors of production, as 
appropriate, from India and Pakistan. We have obtained and relied upon 
published, publicly available information, wherever possible.

Fair Value Comparisons

    To determine whether sales by the three responding exporters of 
paper clips from the PRC 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. Because Abel 
Industries decided not to participate in this investigation, we based 
its margin on the best information available (BIA). (See ``Best 
Information Available'' section of this notice.)

United States Price

    We based USP on purchase price sales, in accordance with section 
772(b) of the Act, because the subject merchandise was sold directly by 
the Chinese exporters to unrelated parties in the United States prior 
to importation into the United States.
    For those exporters that responded to the Department's 
questionnaire, we calculated purchase price based on packed, CIF or FOB 
foreign-port prices to unrelated purchasers in the United States. We 
made deductions for foreign inland freight, which was calculated on the 
basis of surrogate Indian freight rates; for CIF-prices, we also 
deducted ocean freight and marine insurance.
    Since Lansheng reported only FOB sales to the U.S. during the POI, 
no deductions for ocean freight or marine insurance were necessary.
    In the case of ZLIP, we used the reported ocean freight and marine 
insurance charges for its CIF sales since these charges were reported 
as being based on market-economy rates paid in U.S. dollars to 
international carriers.
    ZMEC reported the use of PRC-based providers of ocean freight and 
marine insurance. Since no surrogate country information was available 
for these expenses, we used the reported U.S. dollar charges for those 
expenses as best information available, pursuant to section 773(c)(1) 
of the Act, for this preliminary determination. (See Final 
Determination of Sales at Less Than Fair Value: Sulfanilic Acid from 
PRC, 57 FR 29705, July 6, 1992.)

Foreign Market Value

    We calculated FMV based on factors of production reported by the 
factories which produced the subject merchandise for the three 
exporters. The factors used to produce paper clips include materials, 
labor, and energy. To calculate FMV, the reported quantities were 
multiplied by the appropriate surrogate values for the different 
inputs. (For a complete analysis of surrogate values, see our 
calculation memorandum.)
    We used surrogate transportation rates to value inland freight 
between the source of the production factor and the paper clip 
factories. In those cases where a respondent failed to provide any 
information on transportation distances and modes, we applied, as best 
information available, the most expensive distance/modes combination 
(i.e., the longest truck rates) that was available from the surrogate 
information we had selected.
    To value the raw materials, we used publicly available information 
from the Monthly Trade Statistics of Foreign Trade of India, Volume 
II--Imports for April-December 1992. We adjusted the factor values to 
the POI using wholesale price indices published by the International 
Monetary Fund.
    To value electricity, we used publicly available information from 
the ``Monthly Statistical Bulletin'' published by the Pakistani Federal 
Bureau of Statistics. We selected this source because it provided an 
electricity rate for industrial use in the POI. The most recent 
published, publicly available Indian electricity rate for industrial 
use dated from 1985.
    To value labor amounts, we used the International Labor Office's 
1993 Yearbook of Labor Statistics. To determine the number of hours in 
an Indian workday, we used the Country Reports: Human Rights Practices 
for 1990.
    To value factory overhead, we calculated percentages based on 
elements of industry group income statements from The Reserve Bank of 
India Bulletin (RBI), December 1992. We based our overhead percentage 
calculations on the RBI data, adjusted to reflect an energy-exclusive 
overhead percentage. For selling, general and administrative (SG&A) 
expense percentages, we used the RBI data and allocated total expenses 
over the total RBI-based materials, labor, and overhead cost calculated 
for each factory. We used the calculated SG&A percentages because they 
were greater than the ten percent statutory minimum. For profit we used 
the statutory minimum of eight percent of materials, labor, factory 
overhead, and SG&A expenses, because the calculated figure was less 
than eight percent.
    We also added, as BIA, the unit value cost for packing materials 
based on information in the petition because respondents provided 
insufficient information on packing materials to calculate a factor 
based on surrogate data. We made no adjustments for selling expenses. 
We added surrogate freight costs for the delivery of inputs and packing 
materials to the factories producing paper clips.

Best Information Available

    One exporter, Abel Industries, indicated that it would not 
participate in the investigation. Because information has not been 
presented to the Department to prove otherwise, Abel and any other PRC 
companies not participating in this investigation are not entitled to 
separate dumping margins. Because Abel decided not to participate in 
this investigation, we are basing the ``All Other'' rate, which will 
also apply to Abel, on BIA. This is similar to our use of the BIA-based 
``All Other'' rate in Silicon Carbide.
    In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower 
margins to those respondents that cooperated in an investigation and 
margins based on more adverse assumptions for those respondents which 
did not cooperate in an investigation. As outlined in the 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), when a company refuses to provide the 
information requested in the form required, or otherwise significantly 
impedes the Department's investigation, it is appropriate for the 
Department to assign to that company the higher of: (a) The highest 
margin alleged in the petition, or (b) the highest calculated rate of 
any respondent in the investigation. Here, since some PRC exporters 
failed to respond to our questionnaire, we are assigning a margin of 
126.94 percent (the highest margin in the petition, as recalculated by 
the Department for the initiation) as BIA to all exporters other than 
those responding exporters which have shown their independence from 
central government control.

Verification

    As provided in section 776(b) of the Act, we will verify all 
information determined to be acceptable for use in making our final 
determination.

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 paper 
clips from the PRC 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 amount by which the FMV 
exceeds the USP as shown below. These suspension of liquidation 
instructions will remain in effect until further notice.
    The weighted-average dumping margins are as follows: 

------------------------------------------------------------------------
                                                             Weighted-  
             Manufacturer/producer/exporter               average margin
                                                            percentage  
------------------------------------------------------------------------
Lansheng................................................           82.01
ZLIP....................................................           63.60
ZMEC....................................................          105.88
All Others (including Abel).............................         126.94 
------------------------------------------------------------------------

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 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.

Public Comment

    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary for Import Administration no later than August 8, 1994, and 
rebuttal briefs, no later than August 15, 1994. In accordance with 19 
CFR 353.38(b), we will hold a public hearing, if requested, to afford 
interested parties an opportunity to comment on arguments raised in 
case or rebuttal briefs. Tentatively, the hearing will be held on 
August 17, 1994, at 10 a.m. at the U.S. Department of Commerce, room 
3708, 14th Street and Constitution Avenue, N.W., Washington, DC 20230. 
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 
B-099, within ten 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. In accordance with 19 CFR 353.38(b), oral presentations will 
be limited to issues raised in the briefs. If this investigation 
proceeds normally, we will make our final determination by the 135th 
day after the date of publication of the affirmative preliminary 
determination in the Federal Register.
    This determination is published pursuant to section 733(f) of the 
Act and 19 CFR 353.15(a)(4).

    Dated: May 11, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-12138 Filed 5-17-94; 8:45 am]
BILLING CODE 3510-PS-P