[Federal Register Volume 59, Number 238 (Tuesday, December 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30581]
[[Page Unknown]]
[Federal Register: December 13, 1994]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-834]
Notice of Preliminary Determination of Sales at Less Than Fair
Value: Disposable Pocket Lighters From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: December 13, 1994.
FOR FURTHER INFORMATION CONTACT: Julie Anne Osgood or Todd Hansen,
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) 482-0167 or 482-1276, respectively.
Preliminary Determination
We preliminarily determine that disposable pocket lighters 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, as provided in section
733 of the Tariff Act of 1930 (the ``Act''), as amended. The estimated
margins of sales at less than fair value are shown in the ``Suspension
of Liquidation'' section of this notice.
Case History
Since the initiation of this investigation on May 31, 1994 (59 FR
29412, June 7, 1994), the following events have occurred:
On June 23, 1994, the United States International Trade Commission
(``ITC'') issued an affirmative preliminary injury determination (see
ITC Investigation No. 303-TA-25).
On June 13, 1994, we sent a letter to the China Chamber of Commerce
for Machinery and Electronic Products Import and Export (``CCCME'')
requesting names and addresses of PRC producers and exporters of
disposable pocket lighters (``lighters'') sold in the United States. On
June 22, 1994, we received a list of producers and exporters of
lighters from the CCCME. A questionnaire was presented on July 1, 1994,
to the CCCME and to the Ministry of Foreign Trade and Economic
Cooperation (``MOFTEC'') for distribution to PRC producers and
exporters of lighters.
On September 20, 1994, we postponed the preliminary determination
until December 5, 1994 (59 FR 48284).
On September 9, 1994, responses to the Department's questionnaire
were received from the following exporters of lighters: China National
Overseas Trading Corporation (Ningbo) (``COTCO''), Guangdong Light
Industrial Products Import and Export (``GLIP''), Gao Yao (Hong Kong)
Hua Fa Industrial Company, Ltd. (``Gao Yao''), PolyCity Industrial,
Ltd. (``PolyCity''), and Cli-Claque Company Limited (``Cli-Claque'').
On October 12 and 18, 1994, we sent supplemental/deficiency
questionnaires to the respondents. Responses to the supplemental
questionnaires were received on November 14, 1994. On November 23,
1994, petitioner alleged critical circumstances.
Scope of the Investigation
The products covered by this investigation are disposable pocket
lighters, whether or not refillable, whose fuel is butane, isobutane,
propane, or other liquified hydrocarbon, or a mixture containing any of
these, whose vapor pressure at 75 degrees fahrenheit (24 degrees
celsius) exceeds a gage pressure of 15 pounds per square inch. Non-
refillable pocket lighters are imported under subheading 9613.10.0000
of the Harmonized Tariff Schedule of the United States (``HTSUS'').
Refillable, disposable pocket lighters would be imported under
subheading 9613.20.0000. Although the HTSUS subheadings are provided
for convenience and Customs purposes, our written description of the
scope of this proceeding is dispositive.
Windproof refillable lighters, as described in a memorandum to
Barbara R. Stafford, dated December 5, 1994, are excluded from the
scope of this investigation.
Period of Investigation
The period of investigation (``POI'') is December 1, 1993 through
May 31, 1994.
Nonmarket Economy Country Status
The Department has treated the PRC as a nonmarket economy country
(``NME'') in all past antidumping investigations (see, e.g., Notice of
Final Determination of Sales at Less than Fair Value: Saccharin from
the PRC (59 FR 58818, November 15, 1994). No information has been
provided in this proceeding that would lead us to overturn our former
determinations. Therefore, in accordance with section 771(18)(c) of the
Act, we have treated the PRC as an NME for purposes of this
investigation.
Where the Department is investigating imports from an NME, section
773(c)(1) of the Act directs us to base foreign market value (``FMV'')
on the NME producers' factors of production, valued in a market economy
that is at a level of economic development comparable to that of the
NME under investigation and that is a significant producer of
comparable merchandise. Section 773(c)(2) of the Act alternatively
provides that where available information is inadequate for using the
factors of production methodology, FMV may be based on the export
prices for comparable merchandise from market economy countries at a
comparable level of economic development.
For purposes of the preliminary determination, we have relied on
the methodology provided by section 773(c)(1) of the Act to determine
FMV. The sources of individual factor prices are discussed in the FMV
section below.
Separate Rates
All five respondents have requested separate antidumping duty
rates. In cases involving non-market economies, the Department's policy
is to assign a separate rate only when an exporter can demonstrate the
absence of both de jure and de facto governmental control over export
activities. In determining whether companies should receive separate
rates, we focus our attention on the exporter rather than the
manufacturer, as our concern is manipulation of export prices, and we
examine PRC government control of the exporter. In this case, two of
the five respondents are Hong Kong exporters that are involved in joint
ventures in the PRC that manufacture lighters. Since PolyCity and Cli-
Claque are located outside the PRC, the PRC government does not have
jurisdiction over them. Moreover, the PRC government does not have any
ownership interest in these exporters and, therefore, it cannot
exercise control through ownership of these companies. Further, we have
no evidence on the record indicating that the PRC government exerts
control over these exporters. (See, business proprietary memorandum to
the file dated December 5, 1994.) On this basis, we preliminarily
determine that there is no need to apply our separate rates analysis
and that PolyCity and Cli-Claque are entitled to individual rates.
In contrast to PolyCity and Cli-Claque, Gao Yao is a 50/50 joint
venture between a Chinese company and Hong Kong company. The joint
venture owns both the production and export facilities used to
manufacture and export the lighters it sells to the United States.
Given the direct PRC ownership in Gao Yao's export facilities, we have
preliminarily determined that it is appropriate to apply our separate
rates analysis to this company.
COTCO's and GLIP's business licenses 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 PRC (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, these
companies are eligible for consideration for a separate rate under our
criteria.
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 PRC (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''). Respondents' submission also included 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 employees
without government approval (Article XVII).
The Export Provisions indicate those products subject to direct
government control. Lighters do not appear on the Export Provisions
list and are not, therefore, subject to export constraints.
Consistent with Silicon Carbide, we determine that the existence of
these laws demonstrates that COTCO, GLIP, and Gao Yao are not subject
to de jure 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 to
determine whether COTCO, Gao Yao and GLIP 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 a 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).
In response to our questionnaire, COTCO, GLIP, and Gao Yao have
each asserted that they:
Are able to borrow at market rates from commercial banks;
Maintain their own bank accounts, including foreign
exchange earnings;
Are not restricted in their access to their bank accounts;
Operate at a profit;
Make independent business decisions, including what to
export;
Set their own prices independently and that the prices are
not subject to review by trading companies or government authorities;
Base their relationships with suppliers and customers on
arm's length negotiations without governmental interference;
Are not subject to foreign exchange targets set by either
the central or provincial governments;
Have the ability to sell, transfer, or acquire assets;
Exporter-Specific Information:
The following is a summary of additional information provided by
the exporters:
Gao Yao has stated that:
It is a Sino-Hong Kong 50-50 joint venture;
It has no legal relationship with either the local,
regional and/or national government;
It maintains a bank account in Hong Kong where all monies
received from Gao Yao's foreign sales are deposited and that the
allocation of foreign currency is not subject to governmental review or
approval;
Chinese joint venture and other laws confirm Gao Yao's
independence (Gao Yao submitted an exhibit consisting of laws
pertaining to Sino-Foreign joint ventures in its response);
Management is selected by the board of directors, without
any governmental interference;
Profits are divided evenly between the joint venture
partners according to the shares invested;
The managing director of Gao Yao is a Hong Kong resident;
and
All contracts are negotiated and signed by the officials
of Gao Yao's Hong Kong sales office.
GLIP has stated that:
Management is selected by its board of directors;
Current ownership of the company is by ``all the people.''
The company received authorization to privatize on March 5, 1993, and
``is in the process of totally privatizing;'' and
It is independently managed and operated (a statement to
this effect from CCCME was included in the response as an exhibit).
COTCO has stated that:
It is a limited liability company, owned by COTCO Beijing,
which, in turn, is an ``all the people'' company;
It is independently managed and operated (a statement to
this effect from CCCME was included in the response as an exhibit);
Its manager is hired following a public notice of vacancy,
screening, and hiring negotiations; the manager then selects the
company's management committee; the decisions regarding the selection
and promotion of management are not subject to any entity's review or
approval.
The information submitted on behalf of each of the three companies
supports a preliminary finding that there is a de facto absence of
governmental control of export functions of each of the three
companies.
Consequently, COTCO, Gao Yao and GLIP 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.
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 economies that (1) are at a level of economic development
comparable to that of the NME country and (2) are significant producers
of comparable merchandise. The Department has determined that Indonesia
is the most suitable surrogate for purposes of this investigation.
Based on available statistical information, Indonesia is at a level of
economic development comparable to that of the PRC, and Indonesian
export statistics indicate that the country is a significant producer
of lighters. Based on available information, Indonesia is the only
surrogate country, of those identified by our Office of Policy, that
meet both of these criteria. (See, memorandum to the file from Todd
Hansen to Carole Showers, dated December 5, 1994, Surrogate Country
Selection and memorandum from David Mueller, Director, Office of Policy
to Susan Kuhbach, Director, Office of Countervailing Investigations,
dated September 8, 1994, Lighters from the People's Republic of China,
Non-Market Economy Status and Surrogate Country Selection.)
Fair Value Comparisons
To determine whether sales of lighters from the PRC by COTCO, Gao
Yao, GLIP, PolyCity and Cli-Claque were made at less than fair value,
we compared the United States price (``USP'') to FMV, as specified in
the ``United States Price'' and ``Foreign Market Value'' sections of
the notice.
United States Price
For all respondents, we based USP on purchase price, in accordance
with section 772(b) of the Act, because lighters were sold directly to
unrelated parties in the United States prior to importation into the
United States, and because exporter's sales price (``ESP'') methodology
was not indicated by other circumstances.
We calculated purchase price based on packed, FOB foreign-port
prices to unrelated purchasers in the United States, and packed, CIF
prices, where appropriate. We made deductions for foreign inland
freight, containerization, loading, port handling expenses, and marine
insurance, as indicated. Generally, costs for these items were valued
in the surrogate country. However, where inland freight was purchased
from market economy suppliers and paid for in a market economy
currency, we used the cost actually incurred by the exporter.
Foreign Market Value
In accordance with section 773(c) of the Act, we calculated FMV
based on factors of production reported by the factories in the PRC
which produced the subject merchandise for the five responding
exporters. The factors used to produce lighters include materials,
labor and energy. To calculate FMV, the reported factor quantities were
multiplied by the appropriate surrogate values from Indonesia for those
inputs purchased domestically from PRC suppliers. Where inputs were
imported from market economy countries and paid for in a market economy
currency, we used the actual costs incurred by the producers to value
those factors (see, e.g., Final Determination of Sales at Less Than
Fair Value: Oscillating Ceiling Fans From the People's Republic of
China, 56 FR 55271, October 25, 1991). Where a respondent failed to
provide certain factor information in a usable form, we have used
publicly available information from the petition and other respondents
as best information available in valuing these factors.
Cli-Claque has argued that since it purchases certain input parts
produced in the PRC from a Hong Kong reseller, the Department should
accept these prices as market-determined and use them when calculating
FMV. We disagree with this argument and have not used the prices for
these inputs in calculating FMV. For purposes of valuing factors of
production, it is the Department's practice not to use prices from one
PRC producer to an unrelated PRC producer because those prices are
distorted. In the present case, the two Hong Kong companies negotiated
prices for inputs produced in the PRC on behalf of their related
production facilities located in the PRC. Therefore, we have determined
that these input prices should not be used to value the factors of
production in this case. We have only used prices for imported inputs
which were produced in market-based economies to value those factors.
In determining which surrogate value to use for each factor of
production which was not sourced from a market-economy country, we
selected, where possible, from 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.
With the exception of butane, we used the Indonesian import price
taken from the Indonesian Foreign Trade Statistical Bulletin--Imports,
November 1993. For butane, however, the amount imported into Indonesia
was negligible compared to the amount exported from that country.
Therefore, for those PRC producers that did not import butane from
market economy sources, we relied on Indonesian export statistics, as
reported in the Indonesian Foreign Trade Statistical Bulletin--Exports,
November 1993.
We used Indonesian transportation rates taken from a September 18,
1991, U.S. State Department cable from the U.S. Embassy in Indonesia to
value inland freight between the source of the production factor and
the disposable lighter factories.
To value electricity, we used public information from the Electric
Utilities Data Book for the Asian and Pacific Region (January 1993)
published by the Asian Development Bank. To value labor amounts, we
used labor rates published by the Bureau of International Labor
Affairs, U.S. Department of Labor, in Foreign Labor Trends-Indonesia.
We adjusted the factor values, when necessary, to the POI using
wholesale price indices (``WPIs'') published by the International
Monetary Fund (``IMF'').
To value factory overhead, we calculated percentages based on a
December 2, 1994 U.S. State Department cable from the U.S. Embassy in
Jakarta giving elements of industry group income statements.
For general expense percentages, we used the statutory minimum of
10 percent of materials, labor, and overhead costs calculated for each
factory. For profit we used the statutory minimum of eight percent of
materials, labor, factory overhead, and general expenses. We did not
have Indonesian values for either general expenses or profit.
We added packing based on Indonesian values obtained from the
Indonesian Foreign Trade Statistical Bulletin--Imports, November 1993.
Cli-Claque argues that since it makes all of its sales/exports from
Hong Kong, has all of its management, administrative and selling
operations in Hong Kong, and is wholly-owned and operated as a market-
economy producer, we should treat Cli-Claque as a market-economy
producer and base FMV on Hong Kong home market prices. Failing this,
Cli-Claque maintains that since the PRC production facility does not
know Cli-Claque's customers or the ultimate destination of the
merchandise and since the products enter the commerce of Hong Kong, we
should, at a minimum, consider Cli-Claque as a third country reseller
and consider Hong Kong a viable home market on which to base FMV.
We disagree with Cli-Claque on both accounts. First, its related
production facility is located in a non-market economy country and,
therefore, the FMV of the subject merchandise must be determined using
the factors of production methodology. Second, given the relationship
between Cli-Claque and the PRC production facility, we do not consider
that there is a ``purchase'' from the PRC production facility by Cli-
Claque within the meaning of section 773(f) of the Act. Therefore, Cli-
Claque is not considered a ``reseller'' within the meaning of that
provision.
Best Information Available
Potential exporters identified by MOFTEC 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
best information available (BIA). When a company refuses to provide
information requested in the form required, or otherwise significantly
impedes the Department's investigation, it is appropriate for the
Department to assign to the 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 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 some PRC exporters failed to respond to our
questionnaire, we are assigning to all other PRC exporters the highest
margin in the May 27, 1994, amendment to the petition.
Critical Circumstances
On November 23, 1994, petitioner alleged that ``critical
circumstances'' exist with respect to imports of disposable pocket
lighters from the PRC. We did not receive the allegation in time to
make a critical circumstance determination in this preliminary
determination. However, we will make a preliminary determination with
respect to critical circumstances no later than December 23, 1994,
pursuant to 19 CFR 353.16(b)(2)(ii).
Verification
As provided in section 776(b) of the Act, we will verify
information used in making our final determination.
Suspension of Liquidation
For Gao Yao, we calculated a zero margin. Consistent with Notice of
Final Determination of Sales at Less Than Fair Value: Certain Cased
Pencils from the People's Republic of China (59 FR 55625, November 8,
1994), merchandise that is sold by Gao Yao but manufactured by other
producers will not receive the zero margin. Instead, such entries will
be subject to the ``All Others'' margin.
In accordance with section 733(d)(1) of the Act, we are directing
the Customs Service to suspend liquidation of all entries of disposable
pocket lighters from the PRC, as defined in the ``Scope of the
Investigation'' section of this notice, that are entered, or withdrawn
from warehouse, for consumption on or after the date of publication of
this notice in the Federal Register. The Customs Service shall require
a cash deposit or posting of a bond equal to the estimated dumping
margins, as shown below. This suspension of liquidation will remain in
effect until further notice. The weighted-average dumping margins are
as follows:
------------------------------------------------------------------------
Margin
Manufacture/producer/exporter (Percent)
------------------------------------------------------------------------
China National Overseas Trading Corp....................... 37.48
Cli-Claque Company Ltd..................................... 7.03
Gao Yao (HK) Hua Fa Industrial Co., Ltd.................... \1\0.10
Guangdong Light Industrial Products Import and Export Corp. 35.08
PolyCity Industrial, Ltd................................... 63.09
All others................................................. 197.85
------------------------------------------------------------------------
\1\De minimus.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine whether these imports are materially injuring,
or threaten material injury to, the U.S. industry within 75 days after
our final determination.
Public Comment
Interested parties who wish to request a hearing must submit a
written request to the Assistant Secretary for Import Administration,
U.S. Department of Commerce, Room B-099, within ten days of the
publication of this notice. 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, case briefs or other written
comments in at least ten copies must be submitted to the Assistant
Secretary no later than January 20, 1995, and rebuttal briefs no later
than January 27, 1995. A hearing, if requested, will be held on Friday,
February 3, 1995, at 10:00 am at the U.S. Department of Commerce in
Room 1412. Parties should confirm by telephone the time, date, and
place of the hearing 48 hours prior to the scheduled time. In
accordance with 19 CFR 353.38(b), oral presentations will be limited to
issues raised in the briefs.
We will make our final determination not later than 75 days after
of this preliminary determination.
This determination is published pursuant to section 733(f) of the
Act and 19 CFR 353.15(a)(4).
Dated; December 5, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-30581 Filed 12-12-94; 8:45 am]
BILLING CODE 3510-DS-P