[Federal Register Volume 59, Number 163 (Wednesday, August 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20869]
[[Page Unknown]]
[Federal Register: August 24, 1994]
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DEPARTMENT OF COMMERCE
[A-421-806]
Color Negative Photographic Paper (CNPP) and Chemical Components
Thereof From the Netherlands; Suspension of Investigation
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice.
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SUMMARY: The Department of Commerce has decided to suspend the
antidumping investigation involving color negative photographic paper
(CNPP) and chemical components thereof from the Netherlands. The basis
for the suspension is an agreement by the Dutch producers/exporters,
which account for substantially all of the known imports of these
products from the Netherlands, to revise their prices to eliminate
sales of this merchandise to the United States at less than fair value.
EFFECTIVE DATE: August 24, 1994.
FOR FURTHER INFORMATION CONTACT: Steven Presing, Office of Agreements
Compliance, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-3793.
SUPPLEMENTARY INFORMATION:
Case History
On September 20, 1993, the Department initiated an AD investigation
on CNPP and chemical components thereof from the Netherlands based on a
petition filed by the Eastman Kodak Company. The International Trade
Commission issued an affirmative preliminary injury determination on
October 15, 1993. On March 29, 1994, the Department preliminarily
determined that imports of CNPP from the Netherlands are being sold at
less than fair value in the United States .
Scope of the Agreement
The merchandise covered by this investigation consists of color
negative photographic paper (CNPP) sensitized, unexposed silver-halide
color negative photographic paper, whether in master rolls, smaller
rolls or sheets. Subject chemical components are 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 sales. 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 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 suspension agreement are: (1) all
paper and chemical products not used in the silver-halide process which
are used in other imaging technologies; (2) precursors of sensitized
(whether chemically or spectrally) and unsensitized emulsions
(including ``seed emulsions'' that are used exclusively in the process
of producing unsensitized emulsions and do not exceed 0.25 microns in
grain size (in cubic edge length)), couplers and coupler dispersions;
and (3) those items entered under the Harmonized Tariff Schedule of the
United States (HTSUS) subheadings 3707.10.0000, 3707.90.3000,
3707.90.6000, 2933.19.3000, 2933.90.2500 and 2934.90.2000, which are
precursors of couplers, emulsions and coupler dispersions (except
couplers dispersed in water gel solution) or are couplers, emulsions,
and coupler dispersions not for actual use in the color negative
photographic paper production process. 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 this investigation are paper that
is designed exclusively for use in graphic arts proofing, equipment and
does not exceed 160 microns in thickness, and emulsions classified
under 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 CNPP.
The CNPP subject to this investigation are 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.
Period of Investigation
The period of investigation (POI) is March 1, 1993 through August
31, 1993.
Suspension of Investigation
The Department consulted with the parties to the proceeding and has
considered the comments submitted with respect to the proposed
suspension agreement. We have determined that the agreement will
eliminate sales of this merchandise to the United States at less than
fair value, that the agreement can be monitored effectively, and that
the agreement is in the public interest. We find, therefore, that the
criteria for suspension of an investigation pursuant to section 734 of
the Act have been met. The terms and conditions of the agreement,
signed August 19, 1994, are set forth in Annex 1 to this notice.
Pursuant to section 734(f)(2)(A) of the Act, effective (date of
publication of Federal Register notice), the suspension of liquidation
of all entries, entered or withdrawn from warehouse, for consumption of
CNPP from the Netherlands, as directed in our notice of ``Antidumping
Preliminary Determination of Sales at Less than Fair Value, Color
Negative Photographic Paper and Chemical Components Thereof from the
Netherlands'' is hereby terminated. Any cash deposits on entries of
CNPP from the Netherlands pursuant to that suspension of liquidation
shall be refunded and any bonds shall be released.
Nothwithstanding the suspension agreement, the Department will
continue the investigation if we receive such a request in accordance
with section 734(g) of the Act within 20 days after the date of
publication of this notice. This notice is published pursuant to
section 734(f)(1)(A) of the Act.
Dated: August 19, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
Annex 1: Suspension Agreement; Color Negative Photographic Paper and
Chemical Components Thereof From the Netherlands
Under section 734 of the Tariff Act of 1930, as amended (19 U.S.C.
1673c) (the Act), and 19 CFR 353.18, the U.S. Department of Commerce
(the Department) and the signatory producers/exporters of color
negative photographic paper and chemical components thereof from the
Netherlands enter into this suspension agreement (the Agreement). On
the basis of this suspension agreement, the Department shall suspend
its antidumping investigation initiated on September 20, 1993 (58 FR
50331), with respect to color negative photographic paper and chemical
components thereof from the Netherlands, subject to the terms and
provisions set out below.
(A) Product Coverage
The merchandise subject to this Agreement is the following
merchandise which has the Netherlands as its origin:
(1) For purposes of the Agreement, color negative photographic
paper is all sensitized, unexposed silver-halide color negative
photographic paper, whether in master rolls, smaller rolls or sheets.
Subject chemical components are 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 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 the Agreement are: (1) all paper and
chemical products not used in the silver-halide process which are used
in other imaging technologies; (2) precursors of sensitized (whether
chemically or spectrally) and unsensitized emulsions (including ``seed
emulsions'' that are used exclusively in the process of producing
unsensitized emulsions and do not exceed 0.25 microns in grain size (in
cubic edge length)), couplers and coupler dispersions; and (3) those
items entered under the Harmonized Tariff Schedule of the United States
(HTSUS) subheadings 3707.10.0000, 3707.90.3000, 3707.90.6000,
2933.19.3000, 2933.90.2500 and 2934.90.2000, which are precursors of
couplers, emulsions and coupler dispersions (except couplers dispersed
in water-gel solution) or are couplers, emulsions, and coupler
dispersions not for actual use in the color negative photographic paper
production process. 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 Agreement 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 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.
(2) The color negative photographic papers subject to this
Agreement are 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.
(B) U.S. Import Coverage
The signatory producers/exporters collectively are the producers
and exporters in the Netherlands which, during the antidumping
investigation on the merchandise subject to the Agreement, accounted
for substantially all (not less than 85 percent) of the subject
merchandise imported into the United States, as provided in the
regulations. The Department may at any time during the period of the
Agreement require additional producers/exporters in the Netherlands to
sign the Agreement in order to ensure that not less than substantially
all imports into the United States are covered by the Agreement.
In reviewing the operation of the Agreement for the purpose of
determining whether this Agreement has been violated or is no longer in
the public interest, the Department will consider imports into the
United States from all sources of the merchandise described in Section
A of the Agreement. For this purpose, the Department will consider
factors including, but not limited to, the following: volume of trade,
pattern of trade, whether or not the reseller is an original equipment
manufacturer, and the reseller's purchase price (PP).
(C) Basis of the Agreement
On and after the effective date of the Agreement, each signatory
producer/exporter individually agrees to make any necessary price
revisions to eliminate completely any amount by which the foreign
market value (FMV) of this merchandise exceeds the U.S. price of its
merchandise subject to the Agreement. For this purpose, the Department
will determine the FMV in accordance with section 773(e) of the Act and
U.S. price in accordance with section 772 of the Act.
(1) For all sales occurring on or after the effective date of the
Agreement through November 30, 1994, each signatory producer/exporter
agrees not to sell its merchandise subject to the Agreement to
unrelated purchasers in the United States at prices that are less than
its FMV, as determined by the Department based on cost information for
the period December 1, 1993, through May 31, 1994, and provided to
parties not later than August 19, 1994; and
(2) For all sales occurring on or after December 1, 1994, each
producer/exporter agrees not to sell its merchandise subject to the
Agreement to any unrelated purchaser in the United States at prices
that are less than its FMV of the merchandise, as determined by the
Department on the basis of information submitted to the Department not
later than the dates specified in section D of the Agreement and
provided to parties not later than November 20, February 20, May 20,
and August 20 of each year. This FMV shall apply to sales occurring
during the fiscal quarter beginning on the first day of the month
following the date the Department provides the FMV, as stated in this
paragraph.
(D) Monitoring
Each signatory producer/exporter will supply to the Department all
information that the Department decides is necessary to ensure that the
producer/exporter is in full compliance with the terms of the
Agreement. As explained below, the Department will provide each
signatory producer/exporter a detailed request for information and
prescribe a required format and method of data compilation, not later
than the beginning of each reporting period.
(1) Sales Information
The Department will require each producer/exporter to report, on
computer tape in the prescribed format and using the prescribed method
of data compilation, each sale (which includes further manufactured
sales) of the merchandise subject to the Agreement, either directly or
indirectly to unrelated purchasers in the United States, including each
adjustment applicable to each sale, as specified by the Department.
The reporting of further manufacturing costs shall be in accordance
with Appendix A.
The first report of sales data shall be submitted to the
Department, on computer tape in the prescribed format and using the
prescribed method of data compilation, not later than December 30,
1994, and shall contain the specified sales information covering the
period August 19, 1994, to November 30, 1994. Subsequent reports of
sales data shall be submitted to the Department not later than March
31, June 30, September 29, and December 30 of each year, and each
report shall contain the specified sales information for the quarterly
period ending one month prior to the due date, except that if the
Department receives information that a possible violation of the
Agreement may have occurred, the Department may request sales data on a
monthly, rather than quarterly basis.
(2) Cost Information
Producer/exporters must request FMVs for all subject merchandise
that will be sold in the United States. For those products which the
producer/exporter is requesting FMVs, the Department will require each
producer/exporter to report: their actual cost of manufacturing;
selling, general and administrative (SG&A) expenses; further
manufacturing costs; and profit data on a quarterly basis, in the
prescribed format and using the prescribed method of data compilation.
Further manufacturing costs will be subtracted from the U.S. sale price
to determine compliance with the FMV. As indicated in Appendix B,
profit from sales to a third country\1\ will be utilized, and country-
specific and consolidated research and development costs will be
reported by the producers/exporters on a quarterly basis. Each such
producer/exporter also must report anticipated increases in production
costs and may report anticipated decreases in production costs in the
quarter in which the information is submitted resulting from factors
such as anticipated changes in production yield, changes in production
process, changes in production quantities or changes in production
facilities.
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\1\The Department calculated this figure based on information
collected during the period of investigation.
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The first report of cost data shall be submitted to the Department
not later than September 29, 1994, and shall contain the specified cost
data covering the period June 1, 1994, through August 31, 1994. Each
subsequent report shall be submitted to the Department not later than
December 30, March 31, June 30, and September 29 of each year, and each
report shall contain specified information for the quarter ending one
month prior to the due date.
(3) Special Adjustment of Foreign Market Value
If the Department determines that the FMV is determined for a
previous quarter was erroneous because the reported costs for that
period were inaccurate or incomplete, or for any other reason, the
Department may adjust FMV in a subsequent period or periods, unless the
Department determines that Section F of the Agreement applies.
(4) Verification
Each producer/exporter agrees to permit full verification of all
cost and sales information semi-annually, or more frequently, as the
Department deems necessary.
(5) Bundling or Other Arrangements
Producers/exporters agree not to circumvent the Agreement. In
accordance with the date set forth in Section D(1) of the Agreement,
producers/exporters will submit a written statement to the Department
certifying that the sales reported herein were not, or are not part of
or related to, any bundling arrangement, on-site processing
arrangement, discounts/free goods/financing package, swap, or other
exchange where such arrangement is designed to circumvent the basis of
the Agreement.
Where there is reason to believe that such an arrangement does
circumvent the basis of the Agreement, the Department will request
producers/exporters to provide within 15 days all particulars regarding
any such agreement, including, but not limited to, sales information
pertaining to covered and non-covered merchandise that is manufactured
or sold by producers/exporters. The Department will accept written
comments, not to exceed 30 pages, from all parties no later than 15
days after the date of receipt of such producer/exporter information.
If the Department, after reviewing all submissions, determines that
such arrangement circumvents the basis of the Agreement, it may, as it
deems most appropriate, utilize one of two options: (1) the amount of
the effective price discount resulting from such arrangement shall be
reflected in FMV in accordance with Section D(3), or (2) the Department
shall determine that the Agreement has been violated and take action
according to the provisions under Section F.
(6) Rejection of Submissions
The Department may reject any information submitted after the
deadlines set forth in this section or any information which it is
unable to verify to its satisfaction. If information is not submitted
in a complete and timely fashion or is not fully verifiable, the
Department may calculate fair value, FMV, and/or U.S. price based on
best information available, as it determines appropriate, unless the
Department determines that Section F applies.
(E) Disclosure and Comment
(1) The Department may make available to representatives of each
domestic party to the proceeding, under appropriately drawn
administrative protective orders, business proprietary information
submitted to the Department during the reporting period as well as the
results of its analysis under section 773 of the Act.
(2) Not later than November 1, February 1, May 1, and August 1 of
each year, the Department will disclose to each producer/exporter the
results and the methodology of the Department's calculations of its
FMV. At that time, the Department may also make available such
information to the domestic parties to the proceeding, in accordance
with this section.
(3) Not later than 7 days after the date of disclosure under
paragraph E(2), the parties to the proceeding may submit written
comments to the Department, not to exceed 15 pages. After reviewing
these submissions, the Department will provide to each producer/
exporter its FMV as provided in paragraph C(2). In addition, the
Department may provide such information to domestic interested parties
as specified in this section.
(F) Violations of the Agreement
If the Department determines that the Agreement is being or has
been violated or no longer meets the requirements of section 734 (b) or
(d) of the Act, the Department shall take action it determines
appropriate under section 734(i) of the Act and the regulations. In the
event that the Department determines that the investigation shall be
resumed, it will be resumed on the basis of the original administrative
record, and the statutes, regulations, policies, and practices in
effect on the effective date of the Agreement.
(G) Provision for Existing Commitments
Pursuant to Appendix C and the terms and conditions outlined below,
producers/exporters may continue shipments under existing commitments
and their existing terms for a period not to exceed 60 days after the
effective date of the Agreement. Recognizing that certain long-term
contracts must be renegotiated and that terminated customers may
require time to find alternative suppliers, the producers/exporters may
continue shipments under existing contract terms for a period, the
deadline of which is equal to the earliest of: (1) the earliest date on
which an alternative supplier can begin supplying the customer; (2) the
earliest date, not to exceed 45 days, on which an existing customer has
renegotiated the contract terms with the producer/exporter, or (3) 60
days after the effective date of the Agreement to customers who are
terminated.
Appendix C contains a list of companies subject to this provision
along with their corresponding requirements that have been approved for
shipment by the producer/exporter under this provision. Total shipments
to a specific company may not exceed that company's corresponding
quantity listed on Appendix C or the aggregate for ``all other'', in
the case for smaller customers. Appendix C also contains the total
shipment quantity allowable under this provision for all companies;
this amount is less than the sum of the individual company requirements
listed on Appendix C. This difference is in anticipation of termination
prior to all permitted shipments taking place to individual customers.
If a company renegotiates or terminates its commitments with the
producer/exporter prior to receiving and accepting its maximum
shipments approved, this provision no longer applies and the company
will be removed from those eligible under Appendix C. The remaining
quantities that have not been shipped, but were approved for a certain
customer, may not be used to increase another customer's corresponding
requirements. The maximum customer-specific quantities listed in
Appendix C cannot be increased to account for undershipments to other
customers. If a customer would like to accept additional supply above
and beyond its corresponding quantity listed in Appendix C, these sales
must be made at or above the applicable FMV.
If a company-specific shipment would bring the total shipments for
all companies to an amount in excess of the total quantity allowable,
the producer/exporter must only ship a quantity that ensures compliance
with the total quantity allowable for all companies. Any quantities in
excess of the total quantity allowable must be sold at or above the
applicable FMV.
The producer/exporter shall notify the Department weekly of each
shipment made under this provision and provide a written statement from
the producer/exporter certifying that each shipment is pursuant to
commitments listed in Appendix C. The certification must contain all
particulars concerning each specific shipment including, but not
limited to, customer, date, quantity, price, and delivery and
particulars concerning the terms and conditions under which the
shipment is being made. The Department will review and approve the
certification upon receipt, thereby monitoring on an individual basis
all such shipments to ensure compliance with this provision. Where
there is reason to believe that shipments, which do not meet the
criteria described above, have nonetheless been shipped under this
provision, and that certification has been made falsely, the producer/
exporter will share within 5 days of any such request from the
Department all particulars regarding such shipment(s). After reviewing
the information, the Department will determine whether the terms of
this provision have been satisfied. If the Department determines that a
certification has been provided falsely or does not meet the
requirements of this provision, Section F of the Agreement applies.
At the end of the 60 days, the Department will calculate upon
request the total difference between the FMV in effect on the date of
shipment and the actual net price at which the goods were sold. The
total difference will be added to the FMV to be in effect during
succeeding period(s). The resulting FMV will apply to a number of units
identical to the number for which a difference was calculated. The
specific units to which this resulting FMV will apply will be those
units first sold in the succeeding quarter.
To the extent necessary, this provision supersedes the dates set
forth in Section C of the Agreement.
(H) Non-Participating Signatories
For signatories which did not receive a questionnaire in the less-
than-fair-value investigation on the subject merchandise, the
Department will issue, if requested in a timely manner, the initial FMV
9 months after the effect date of the Agreement. The total sales volume
made during the 9-month period prior to the issuance of the initial FMV
may not exceed the total sales volume made by the signatory during the
period January 1994 through June 1994. All sales made by the
signatories will be made during this 9-month period at prices that are
not less than fair value.
At the end of the initial 9 months, the Department may upon request
review all sales made during this period. For those sales which have
occurred, the Department will calculate an FMV using information for
the most recent 9-month period available. The Department will calculate
the total difference between the FMV and the actual price at which the
goods were sold. The total difference will be added to the FMV to be in
effect during the succeeding period(s). The resulting FMV will apply to
a number of units identical to the number for which a difference was
calculated. The specific units to which this resulting FMV will apply
will be those units first sold in the succeeding quarter(s).
For all sales of covered merchandise made after the 9-month period
the producer/exporter must request an FMV consistent with Section D(2)
of the Agreement. Signatories will collect and report all information
required by the Department for the calculation of FMV in the format
specified under the Agreement.
The Department will consult with the signatories regarding data
preparation and reporting format in order to ensure that all
requirements are met.
To the extent necessary, this provision supersedes the dates set
forth in Section C of the Agreement.
(I) Re-Export Provision
Imports into the United States of subject merchandise which are
physically incorporated into a further manufactured product by a
related party and are subsequently exported by the related party, are
not covered by the Agreement if the following conditions apply. Upon
request by the producer/exporter, the Department may approve a system
which tracks imports of covered merchandise through production, to the
point of re-export, and allows for verification.
The approved system will reflect an understanding between the
Department and the producer/exporter that there have been a historical
volume of entries of covered merchandise imported into the United
States and subsequently exported in the form of a further manufactured
good by a related party. Understanding this history, and taking into
consideration an element for growth, the Department and the producer/
exporter will agree that the volumes of entries for the duration of the
Agreement will not be inconsistent with that history. The producer/
exporter agrees to provide quarterly reports detailing the entries and
subsequent re-exports which will be subject to verification semi-
annually or more frequently as the Department deems appropriate.
(J) Other Provision
(1) In entering into the Agreement, the signatory producers/
exporters do not admit that any sales of the merchandise subject to the
Agreement have been made at less-than-fair-value.
(2) Changes in U.S. legislation resulting from U.S. implementation
of Article VI of GATT 1994, shall be applicable to the requirements and
obligations of the Agreement for the period beginning on the first full
quarter after the effective date of any such changes.
(K) Termination
The Department will not consider requests for termination of this
suspended investigation prior to August 1999. Termination will be
conducted in accordance with section 353.25 of the Department's
regulations.
Any producer/exporter may terminate the Agreement at any time upon
notice to the Department. Termination shall be effective 60 days after
such notice is given to the Department. Upon termination, the
Department shall follow the procedures outlined in section 734(i)(1) of
the Act.
(L) Definitions
For purposes of the Agreement, the following definitions apply:
(1) U.S. PRICE--means the price at which merchandise is sold by the
producer or exporter to the first unrelated party in the United States,
including the amount of any discounts, rebates, price protection or
ship and debit adjustments, and other adjustments affecting the net
amount paid or to be paid by the unrelated purchaser, as determined by
the Department under section 772 of the Act.
(2) FOREIGN MARKET VALUE--means the constructed value (CV) of the
merchandise, as determined by the Department under section 773 of the
Act and the corresponding sections of the Department's regulations, as
determined by the Department.
(3) PRODUCER/EXPORTER--means (1) the foreign manufacturer or
producer, (2) the foreign producer or reseller which also exports, and
(3) the related person by whom or for whose account the merchandise is
imported into the United States, as defined in section 771(13) of the
Act.
(4) DATE OF SALE--means the date on which the essential terms of
the contract, including price, are agreed and determinable normally the
date of confirmation of sale.
The effective date of the Agreement is the date on which it is
published in the Federal Register.
For Dutch Producers/Exporters.
Fuji Photo Film U.S.A. Inc., and Fuji Photo Film B.V.
Date-----------------------------------------------------------------
William H. Barringer, Esq.,
Willkie, Farr & Gallagher.
For U.S. Department of Commerce.
Date-----------------------------------------------------------------
Susan G. Esserman,
Assistant Secretary for Import Administration.
APPENDIX A--COLOR NEGATIVE PHOTOGRAPHIC PAPER (CNPP) AND CERTAIN
CHEMICAL COMPONENTS FROM THE NETHERLANDS SUSPENSION AGREEMENT
PRINCIPLES OF COST
General Framework
The cost information reported to the Department that will form the
basis of the FMV calculations for purposes of the Agreement must be:
comprehensive in nature and based on a reliable accounting
system (i.e., a system based on well-established standards and can be
tied to the audited financial statements);
representative of the company's costs incurred for the
general class of merchandise;
calculated on a quarterly weighted-average basis of the
plants or cost centers manufacturing the product;
based on fully-absorbed costs of production, including any
downtime;
valued in accordance with generally accepted accounting
principles;
reflective of appropriately allocated common costs so that
the cost necessary for the manufacturing of the product are not
absorbed by other products; and
reflective of the actual cost of producing the product.
Additionally, a single figure should be reported for each cost
component.
Cost of Manufacturing
Costs of manufacturing are reported by major cost category and for
major stages of production. Weighted-average costs are used for a
product that is produced at more than one facility (including further
manufacturing in the United States); based on the cost at each
facility.
Direct materials--cost of those materials which are input into the
production process and physically become part of the final product.
Direct labor--cost identified with a specific product. These costs
are not allocated among products except when two or more products are
produced at the same cost center. Direct labor costs should include
salary, bonus, and overtime pay, training expenses, and all fringe
benefits. Any contracted-labor expense should reflect the actual billed
cost or the actual costs incurred by the subcontractor when the
corporation has influence over the contractor.
Factory overhead--overhead costs include indirect materials,
indirect labor, depreciation, and other fixed and variable expenses
attributable to a production line or factory. Because overhead costs
are typically incurred for an entire production line, an appropriate
portion of those costs must be allocated to covered products, as well
as any other products produced on that line. Acceptable cost
allocations can be based on labor hours or machine hours. Overhead
costs should also reflect any idle or downtime and be fully absorbed by
the products.
Cost of Production (COP)
Is equal to the sum of materials, labor, and overhead (COM) plus
SG&A expenses in the home market (HM).
SG&A--those expenses incurred for the operation of the corporation
as a whole and not directly related to the manufacture of a particular
product. They include corporate general and administrative expenses,
financing expenses, financing expenses, and general research and
development expenses. Additionally, direct and indirect selling
expenses incurred in the HM for sales of the product under
investigation are included. Such expenses are allocated over cost of
goods sold.
Constructed Value
Is equal to the sum of materials, labor, and overhead (COM) and
SG&A expenses plus profit.
Calculation of Suspension Agreement FMVs
FMVs (for purposes of the Agreement) are calculated by adjusting
the CV and are provided for both PP and ESP transactions. In effect,
any expenses uniquely associated with the covered products sold in the
HM are subtracted from the CV, and any such expenses which are uniquely
associated with the covered products sold in the United States are
added to the CV to calculate the FMV.
Purchase price--price at which the exported merchandise is sold to
the first unrelated buyer when the sale occurs prior to the
importation. Typically, when the producer sells directly to an
unrelated U.S. importer or to a foreign trading company for export to
the United States. For PP FMVs, the CV is adjusted for movement costs,
packing costs, and differences in direct selling expenses such as
commissions, credit, warranties, technical services, advertising, and
sales promotion.
Exporter's sales price--price at which the exported merchandise is
sold to the first unrelated buyer after importation into the United
States. Typically, when a related party in the United States makes the
sale. For ESP FMVs, the CV is adjusted similar to PP sales, with
differences for adjustments to U.S. and HM indirect-selling expenses.
Home market direct-selling expenses--expenses that are incurred as
a direct result of a sale. These include such expenses as commissions,
co-op advertising, discounts and rebates, credit, warranty expenses,
freight costs, etc. Certain direct-selling expenses are treated
individually. They include:
Commission expenses--payments to unrelated parties for sales in the
HM.
Credit expenses--expenses incurred for the extension of credit to
the HM customers.
Movement expenses--freight, brokerage and handling, packing, and
insurance expenses.
Home market indirect-selling expenses--fixed portion of a
corporation's expenses and includes such items as salaries of
administrative personnel, warehousing expenses, advertising expenses,
and sales promotion. These expenses will not increase or decrease
depending on production or sales.
U.S. direct-selling expenses--the same as HM direct-selling
expenses except that they are incurred in the United States for sales
in the United States.
Movement expenses--additional expenses incidental to importation
into the United States. Typically include U.S. inland freight,
insurance, brokerage and handling expenses, U.S. Customs duties, and
international ocean, air, or land freight.
U.S. indirect-selling expenses--include general-fixed expenses
incurred by the U.S. sales subsidiary or related exporter for sales to
the United States. They may also include a portion of indirect expenses
incurred in the HM for export sales.
Further Manufacturing
Further manufacturing costs are calculated by taking the sum of
COM, plus SG&A expenses, plus profit in the U.S. market for further
manufacturing. Where further manufacturing modifies the subject
merchandise to the extent that the finished product is no longer within
the scope of the investigation, the Department will provide its
calculations of further manufacturing.
For ESP Transactions
direct materials
+ direct labor
+ factory overhead
= Cost of Manufacturing
+ home market SG&A\2\
---------------------------------------------------------------------------
\2\Home market SG&A must be at least 10 percent of the cost of
manufacturing.
---------------------------------------------------------------------------
= Cost of Production
+ Profit\3\
---------------------------------------------------------------------------
\3\Profit must be at least 8 percent of the cost of production.
---------------------------------------------------------------------------
= Constructed Value
+ U.S. direct-selling expense
+ U.S. indirect-selling expense
+ U.S. commission expense
+ U.S. movement expense
+ U.S. credit expense
- HM direct-selling expense
- HM indirect-selling expense\4\
---------------------------------------------------------------------------
\4\This expense is capped and can be no greater than either (1)
the total of U.S indirect-selling expense or (2) the combined total
of U.S. indirect-selling expense and U.S. commission when no HM
commissions are paid.
---------------------------------------------------------------------------
- HM commission expense
- HM credit expense
= FMV for ESP sales
For PP Transactions
direct materials
+ direct labor
+ factory overhead
= Cost of Manufacturing
+ home market SG&A\5\
---------------------------------------------------------------------------
\5\Home market SG&A must be at least 10 percent of the cost of
manufacturing.
---------------------------------------------------------------------------
= Cost of Production
+ Profit\6\
---------------------------------------------------------------------------
\6\Profit must be at least 8 percent of the cost of production.
---------------------------------------------------------------------------
= Constructed Value
+ U.S. direct-selling expense
+ U.S. commission expense
+ U.S. movement expense
+ U.S. credit expense
- HM direct-selling expense
- HM commission expense\7\
---------------------------------------------------------------------------
\7\If the company does not have HM commissions, HM indirects are
subtracted only up to the amount of U.S. commissions.
---------------------------------------------------------------------------
- HM credit expense
= FMV for PP sales
For Further Manufacturing
direct materials
+ direct labor
+ factory overhead
= Cost of Further Manufacturing
+ further manufacturing SG&A
= Further Manufacturing Cost of Production
+ further manufacturing profit
= Total Further Manufacturing Costs
Appendix B--Profit Calculation
The profit figure represents the profit from sales of CNPP to
unrelated customers in Germany during the period of Investigation
(POI). The Department computed the profit percentage in the
following manner:
Gross Sales Price
--Discounts
--Rebates
--Movement Expenses
=Net Price
Less: Cost of Production (materials, labor, overhead, selling,
general and administrative expenses, interest, other, packing)
=Profit per transaction
Profit percentage=Profit from all transactions/COP from all
transactions
=[ ] percent
BILLING CODE 3510-DS-M
TN24AU94.000
[FR Doc. 94-20869 Filed 8-22-94; 8:45 am]
BILLING CODE 3510-DS-C