[Federal Register Volume 59, Number 120 (Thursday, June 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15329]


[[Page Unknown]]

[Federal Register: June 23, 1994]


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COMMISSION ON CIVIL RIGHTS
International Trade Administration
[A-570-829]

 

Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Saccharin From the People's Republic of China

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

EFFECTIVE DATE: June 23, 1994.

FOR FURTHER INFORMATION CONTACT:
Gary Bettger or Jennifer Yeske, Office of Countervailing 
Investigations, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
2239 or (202) 482-0189, respectively.

Preliminary Determination

    We preliminarily determine that saccharin 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 
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 December 8, 1993 (58 
FR 65335; December 14, 1993), the following events have occurred:
    During December 1993 and January 1994, the Department attempted to 
identify possible PRC exporters of saccharin to the United States 
during the period of investigation (POI). We learned of 18 potential 
respondents through the petition, Port Import Export Reporting Service 
(``PIERS'') data and other sources of information.
    On January 3, 1994, 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 materially injured 
by reason of saccharin imports from the PRC that are alleged to be sold 
at less than fair value.
    On January 18, 1994, the Department of Commerce (the Department) 
sent its antidumping duty questionnaire to the Ministry of Foreign 
Trade and Economic Cooperation (MOFTEC) and the above-referenced 18 PRC 
companies. We asked MOFTEC to submit a comprehensive list of all 
producers and exporters of saccharin to the United States within two 
weeks of the receipt of the questionnaire and to provide copies of the 
questionnaire to those producers and exporters. On February 24, 1994, 
MOFTEC designated the China Chamber of Commerce of Medicines and Health 
Products Importers and Exporters (``Chamber'') as the contact 
organization for this investigation.
    On March 4, 1994, the Department determined that this investigation 
was extraordinarily complicated due to the large number of producers 
and resellers. We also determined that respondent parties to the 
proceeding were cooperating in this investigation. Therefore, we 
determined that it was appropriate under section 733(c)(1)(B) of the 
Tariff Act, as amended (``the Act''), and 19 CFR 353.15(b), to postpone 
the date of the preliminary determination until no later than June 16, 
1994.
    On March 24, 1994, MOFTEC submitted a list of four exporters and 
six supplying manufacturers which sold or manufactured saccharin 
exported to the United States during the POI. On March 8, 1994, and 
April 8, 1994, respectively, we received unofficially filed facsimiles 
from one company on the MOFTEC list, Xia Men Electrochemical Company, 
and also from another factory, Shanghai Fortune Chemical Company (which 
is not on the MOFTEC list). Both companies stated that they did not 
sell the subject merchandise to the United States during the POI.
    During the period March through June, 1994, the Department received 
responses to its questionnaire from the following respondents: Shanghai 
KJ Import and Export Corporation (``Shanghai IE'') and Suzhou Cereals 
Import and Export Corporation (``Suzhou IE'').
    On June 14, 1994, two days before the preliminary determination in 
this investigation, Shanghai IE reported that it would provide factors 
of production for a second workshop of its supplier factory at a later 
date, without giving any indication how much production was accounted 
for by this second workshop. Prior to this submission, we had no 
indication on the record that Shanghai IE had failed to report certain 
factor information. On June 16, 1994, the date of this determination, 
Shanghai IE provided factor information for this second workshop. This 
submission also contained new factor information for both Suzhou IE's 
and Shanghai IE's supplier factories. Due to the timing of this June 
16th submission, it was administrably infeasible to use this 
information for purposes of our preliminary determination.

Scope of Investigation

    The product covered by this investigation is saccharin. Saccharin 
is a non-nutritive sweetener used in beverages and foods, personal care 
products such as toothpaste, table-top sweeteners, animal feeds, and 
metalworking fluids. Three forms of saccharin are typically available 
as referenced in the American Chemical Society's Chemical Abstract 
Service (CAS). These forms are sodium saccharin (CAS #128-44-9), 
calcium saccharin (CAS #6485-34-3), and acid (or insoluble) saccharin 
(CAS #81-07-2). Saccharin is classified under subheading 2925.11.00 of 
the Harmonized Tariff Schedule of the United States (HTS). The scope of 
this investigation includes all types of saccharin imported under this 
HTS subheading including research and specialized grades.
    Although the HTS 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 June 1, 1993, through November 30, 1993.

Separate Rates

    Shanghai IE and Suzhou IE have each requested a separate rate. 
Shanghai IE's and Suzhou IE's business licenses each indicate that they 
are owned ``by all the people.'' 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, Shanghai IE and Suzhou IE 
are eligible for consideration for separate rates.
    To establish whether a firm is 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

    The respondents submitted a number of documents to demonstrate 
absence of de jure control, including two PRC laws indicating that the 
responsibility for managing enterprises ``owned by all the people'' is 
with the enterprises themselves and not with the government. These are 
the ``Law of the People's Republic of China on Industrial Enterprises 
Owned by the Whole People,'' adopted on April 13, 1988 (``1988 Law''); 
and the ``Regulations for Transformation of Operational Mechanism of 
State-Owned Industrial Enterprises,'' approved on August 23, 1992 
(``1992 Regulations''). The record of this investigation also includes 
the ``Temporary Provisions for Administration of Export Commodities,'' 
approved on December 21, 1992 (``Export Provisions'').
    The 1988 Law and 1992 Regulations shifted control from the 
government to the enterprises themselves. The 1988 Law provides that 
enterprises owned by ``all the people'' shall make their own management 
decisions, be responsible for their own profits and losses, choose 
their own suppliers and purchase their own goods and materials. The 
1988 Law contains other provisions which indicate that enterprises have 
management independence from the government. The 1992 Regulations 
provide that these same enterprises can, for example, set their own 
prices (Article IX); make their own production decisions (Article XI); 
use their own retained foreign exchange (Article XII); allocate profits 
(Article II); sell their own products without government interference 
(Article X); make their own investment decisions (Article XIII); 
dispose of their own assets (Article XV); and hire and fire their 
employees without government approval (Article XVII).
    The Export Provisions list those products subject to direct 
government control. Saccharin does not appear on the Export Provisions 
list and is not, therefore, subject to export constraints.
    The existence of these laws indicates that Shanghai IE and Suzhou 
IE are not de jure subject to central government control with respect 
to export sales and pricing decisions. However, there is some evidence 
that the provisions of the above-cited laws and regulations have not 
been implemented uniformly among different sectors and/or jurisdictions 
in the PRC (see ``PRC Government Findings on Enterprise Autonomy,'' in 
Foreign Broadcast Information Service-China-93-133 (July 14, 1993)). 
Therefore, the Department has determined that a de facto analysis is 
critical in determining whether respondents are subject to governmental 
control over export sales and pricing decisions.

2. Absence of De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto government control of 
its export functions: (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).
    Shanghai IE and Suzhou IE have both asserted that (1) they 
establish their own export prices; (2) they negotiate contracts without 
guidance from any governmental entities or organizations; (3) they 
operate with a high degree of management autonomy; and (4) they retain 
the proceeds of their export sales and have the authority to sell 
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 of export functions.
    Consequently, Shanghai IE and Suzhou IE 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 is an additional issue relating to governmental control that 
we will consider further for purposes of our final determination. 
First, the companies have indicated that they are ``under the 
jurisdiction'' of their respective city or province. While the meaning 
and significance of this phrase is unclear, the evidence cited above 
indicates that the local governments do not control the key functions 
of the enterprises. However, we will address the precise nature of the 
authority that these governments exercise over the enterprises at 
verification and in our final determination.

Market-Oriented Industry Claim

    Respondents have argued that they should be treated as a market-
oriented industry (``MOI''). However, we have received MOI information 
from only two saccharin producers in the PRC. We have no information on 
the remaining producers, of which there are at least four (according to 
information provided by MOFTEC). Consequently, we have no basis to 
determine whether the production and sales practices of these two 
producers are representative of PRC saccharin producers as a whole. 
Therefore, we have preliminarily determined that an MOI does not exist 
with respect to the PRC saccharin industry.

Nonmarket-Economy

    The PRC has been treated as a nonmarket-economy (NME) in past 
antidumping investigations. (See, e.g., Final Determination of Sales at 
Less than Fair Value: Sebacic Acid from the People's Republic of China 
(59 FR 28053 (May 31, 1994)). No information has been provided in this 
proceeding that would lead us to determine otherwise. Therefore, in 
accordance with section 771(18)(c) of the Act, we have treated the PRC 
as an NME for purposes of this investigation.

Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value the 
NME producers' factors of production, to the extent possible, in one or 
more market-economy countries that are at a level of economic 
development comparable to that of the nonmarket-economy country, and 
that are significant producers of comparable merchandise. The 
Department has determined that India is the country most comparable to 
the PRC in terms of overall economic development. (See Memorandum from 
the Office of Policy to the file, dated May 17, 1994, on file in the 
Central Records Unit, Room B099, Department of Commerce Main Building, 
14th and Constitution, Washington DC 20230.) In addition, there is 
evidence on the record that saccharin is produced in India.

Fair Value Comparisons

    To determine whether sales of saccharin from the PRC to the United 
States by Suzhou IE 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 Shanghai IE failed to report complete production and factor 
information, we do not have information on all of the saccharin 
produced for export by Shanghai IE. Therefore, we are basing Shanghai 
IE's margin on best information available (``BIA''). Finally, because 
other exporters listed by MOFTEC decided not to participate in this 
investigation, we also based their margins on BIA. (See ``Best 
Information Available'' section of this notice.)

United States Price

    We based USP on purchase price, in accordance with section 772(b) 
of the Act, because the subject merchandise was sold directly by Suzhou 
IE to unrelated parties in the United States prior to importation into 
the United States and because ESP methodology is not indicated by any 
other circumstances. We calculated purchase price based on packed, CIF 
delivered prices to unrelated purchasers in the United States. We made 
deductions for containerization expenses, foreign inland freight, 
foreign handling and brokerage fees, and marine insurance. The deducted 
amounts were calculated using Indian values. We also deducted ocean 
freight, which was calculated on the basis of market-economy, 
international freight rates paid in U.S. dollars from Shanghai to New 
York.

Foreign Market Value

    In accordance with section 773(c) of the Act, we calculated FMV 
using factors of production reported by the factory which produced 
saccharin for Suzhou IE. The factors used to produce saccharin include 
materials, labor, and energy. To calculate FMV, the reported quantities 
were multiplied by the appropriate surrogate values for the different 
inputs. For Suzhou IE, we made adjustments to material costs for 
recovery of by-products in the production process. In determining which 
surrogate value to use for valuing each factor of production, we 
selected, where possible, a value based on publicly-available published 
information (``PAPI'') which was: (1) An average non-export value; (2) 
representative of a range of prices within the POI if submitted by an 
interested party, or most contemporaneous with the POI; (3) product-
specific; and (4) tax-exclusive. We note that we have used Indian 
import statistics for eight of the chemicals used in the production of 
saccharin.
    We used surrogate transportation rates to value inland freight 
between the source of the production factor and the saccharin 
factories. In those cases where the respondent failed to provide any 
information on transportation distances and modes, we applied, as BIA, 
the most expensive distance/mode combination that was available from 
the surrogate information we had selected. For inland water transport, 
we were unable to obtain PAPI or cable information in time for this 
preliminary determination. To value this mode of transportation, we 
have assumed that this form competed effectively with the alternate 
form of transportation (e.g., trucking) over similar distances, and 
used the applicable rates for the alternate form.
    To value certain raw materials, we used PAPI from India Chemical 
Weekly for July 1993-November 1993. For packing materials and raw 
materials which were not listed in India Chemical Weekly, we used the 
Monthly Trade Statistics of Foreign Trade of India, Volume II--Imports 
for April 1992-March 1993. We adjusted the factor values, when 
necessary, to the POI using wholesale price indices (WPIs) published by 
the International Monetary Fund (IMF). No product-specific PAPI 
pertaining to India or any other potential surrogate country was 
available for the chemical sodium hypochlorite. Therefore, we have used 
a price quote obtained by the Department from a U.S. chemical producer 
which is neither an interested party, nor related to an interested 
party, in this investigation.
    To value electricity, we used PAPI from the Electric Utilities Data 
Book for the Asian and Pacific Region (January 1993) published by the 
Asian Development Bank. We selected this source because it provides an 
electricity rate for industrial use during the POI from our preferred 
surrogate country. To value water, we have used PAPI information from 
the Water Utilities Data Book for the Asian and Pacific Region 
(November 1993) which is published by the Asian Development Bank. To 
value coal, we used the Monthly Trade Statistics of Foreign Trade of 
India, Volume II--Imports for April 1992-March 1993. We adjusted the 
factor values, when necessary, to the POI using WPIs published by the 
IMF.
    To value labor amounts, we used the International Labor Office's 
1993 Yearbook of Labor Statistics. We used the Country Reports: Human 
Rights Practices for 1990 to determine the number of hours in an Indian 
workday.
    To value factory overhead, we calculated percentages based on 
elements of industry group income statements from The Reserve Bank of 
India Bulletin (RBI), December 1993. For general expense percentages, 
we used the RBI data and allocated total general expenses over the 
total RBI-based materials, labor, and overhead cost calculated for each 
factory. The RBI data yielded a general expense percentage greater than 
the ten percent statutory minimum. For profit we used the statutory 
minimum of eight percent of materials, labor, factory overhead, and 
general expenses, because the RBI percentage was less than eight 
percent. We added packing based on Indian values obtained from Indian 
Import Statistics.

Best Information Available

    Because Shanghai IE failed to report complete factor information 
prior to this determination, we were unable to use Shanghai IE's data, 
and are basing its margin on BIA. Additionally, because information has 
not been presented to the Department to prove otherwise, any PRC 
companies not participating in this investigation are not entitled to 
separate dumping margins. Potential exporters identified by MOFTEC have 
failed to respond to our questionnaire. In the absence of responses 
from these and other PRC exporters during the POI, we are basing the 
PRC country-wide rate on BIA.
    In determining what to use as BIA in this case, 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. When a company 
cooperates with our requests for information but fails to provide the 
information requested in a timely manner or in the form required, we 
use as BIA the higher of: (1) the average of margins in the petition; 
or (2) the calculated margin for another firm for the same class or 
kind of merchandise from the same country. 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) (``Belgium Steel''). Since Shanghai IE has been cooperative in 
this proceeding, and since we have preliminarily determined it is 
eligible for a separate rate, we are assigning to it the calculated 
rate for the other respondent in the investigation, Suzhou IE, which is 
higher than the average of the margins in the petitions.
    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 (see, Belgium Steel). Here, since some PRC exporters 
failed to respond to our questionnaire, we are assigning to all other 
PRC exporters the margin calculated for Suzhou IE because it is higher 
than the highest margin in the petition.

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 saccharin 
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: 

------------------------------------------------------------------------
                                                               Weight-  
                                                               average  
               Manufacturer/producer/exporter                   margin  
                                                              percentage
------------------------------------------------------------------------
Shanghai IE................................................       452.85
Suzhou IE..................................................       452.85
PRC Country-Wide Rate......................................       452.85
------------------------------------------------------------------------


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 12, 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 15, 1994, at 10:00 a.m. at the U.S. Department of Commerce, Room 
3708, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
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 this 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: June 16, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-15329 Filed 6-22-94; 8:45 am]
BILLING CODE 3510-DS-P