[Federal Register Volume 59, Number 241 (Friday, December 16, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30982]


[[Page Unknown]]

[Federal Register: December 16, 1994]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-835]

 

Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Furfuryl Alcohol From 
the People's Republic of China

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

EFFECTIVE DATE: December 16, 1994.

FOR FURTHER INFORMATION CONTACT: John Brinkmann or Donna Berg, Office 
of Antidumping Investigations, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, D.C. 20230; telephone (202) 482-
5288 or 482-0114, respectively.

Preliminary Determination

    We preliminarily determine that imports of furfuryl alcohol 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 June 20, 1994, (59 FR 
32953, June 27, 1994), the following events have occurred.
    On July 19, 1994, officials of the Department of Commerce (the 
Department) visited the petitioner's facilities to observe the furfuryl 
alcohol production process for purposes of developing the 
questionnaire.
    On June 21, 1994, we sent a survey to the PRC's Ministry of Foreign 
Trade and Economic Cooperation (MOFTEC) and certain companies in the 
PRC requesting information on production and sales of furfuryl alcohol 
exported to the United States. The names of the companies were found in 
the petition and in data supplied by the Port Import Export Reporting 
Service (PIERS). We requested MOFTEC's assistance in forwarding the 
survey to all exporters and producers of furfuryl alcohol and in 
submitting complete responses on their behalf. On June 23, 1994, MOFTEC 
sent us a list of exporters of furfuryl alcohol. On July 1 and 8, 1994, 
we sent letters to the China Chamber of Commerce of Metals, Minerals & 
Chemical Importers & Exporters (CCCMMC) for assistance in identifying 
the producers and any other exporters of furfuryl alcohol. CCCMMC 
provided a list of producers on July 12, 1994.
    On July 15, 1994, the U.S. International Trade Commission (ITC) 
notified the Department of its preliminary determination that there is 
a reasonable indication that an industry in the United States is 
materially injured by reason of imports of furfuryl alcohol from the 
PRC that are alleged to be sold at less than fair value.
    The Department forwarded to MOFTEC and those PRC producers and 
exporters identified in the course of this proceeding full 
questionnaires on August 5, 1994. Additionally, during the month of 
August 1994, the Department held a questionnaire presentation with 
company officials in China.
    On September 2, 1994, responses to section A of our questionnaire 
were received from the following two exporters of furfuryl alcohol: 
Qingdao Chemicals & Medicines Import & Export Corporation (Qingdao I&E) 
and Sinochem Shandong Import & Export Group Corporation Ltd. (Sinochem 
Shandong I&E). The following three manufacturers also submitted Section 
A responses on September 2, 1994: Linzi Organic Chemicals Co., Ltd. 
(Linzi), Shandong Zhucheng Chemical Co., Ltd. (Zhucheng), and Zibo 
Gaintact Chemical Co., Ltd. (Zibo).
    On September 20, 1994, we received relevant responses to the 
remaining sections of our questionnaire from Qingdao I&E, Sinochem 
Shandong I&E, Linzi, Zhucheng, and Zibo.
    The petitioner submitted comments concerning the respondents' 
questionnaire responses on September 16 and October 16, 1994.
    At the request of the petitioner, on October 18, 1994, the 
Department postponed its preliminary determination until no later than 
December 9, 1994 (59 FR 53634, October 25, 1994).
    On October 7, 1994, the respondents' counsel submitted comments 
concerning surrogate country selection. The petitioner submitted its 
comments on October 7 and 14, 1994.
    On November 3, 1994, the Department issued supplemental 
questionnaires to all producers and exporters in the investigation. The 
respondents submitted responses to these questionnaires on November 21, 
22, 23 and December 8, 1994.

Postponement of Final Determination

    Pursuant to section 735(a)(2)(A) of the Act, on December 9, 1994, 
the respondents requested that, in the event of an affirmative 
preliminary determination in this investigation, the Department 
postpone its final determination until 135 days after the date of 
publication of an affirmative preliminary determination in the Federal 
Register. Pursuant to 19 CFR 353.20(b), because our preliminary 
determination is affirmative, and no compelling reasons for denial 
exist, we are doing so.

Scope of the Investigation

    The product covered by this investigation is furfuryl alcohol 
(C4H3OCH2OH). Furfuryl alcohol is a primary alcohol, and 
is colorless or a pale yellow in appearance. It is used in the 
manufacture of resins and as a wetting agent and solvent for coating 
resins, nitrocellulose, cellulose acetate, and other soluble dyes.
    The product subject to this investigation is classifiable under 
subheading 2932.13.0000 of the U.S. Harmonized Tariff Schedule (HTSUS). 
Although the HTSUS subheading is provided for convenience and Customs 
purposes, our written description of the scope of this investigation is 
dispositive.

Period of Investigation

    The 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.

Separate Rates

    Qingdao I&E and Sinochem Shandong I&E each has requested that it be 
assigned a separate, company-specific dumping margin. Their respective 
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, 22586, May 2, 1994) (Silicon Carbide), ``ownership of a company 
by all the people does not require the application of a single rate.'' 
Accordingly, these two respondents are eligible for consideration for 
separate rates.
    To establish whether a firm is sufficiently independent to be 
entitled to a separate rate, the Department analyzes each exporting 
entity under a test arising out of the Final Determination of Sales at 
Less Than Fair Value: Sparklers from the People's Republic of China (56 
FR 20588, May 6, 1991) (Sparklers) and amplified in Silicon Carbide. 
Under the separate rates criteria, the Department assigns separate 
rates only where the 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 in this investigation have submitted a number of 
documents to demonstrate absence of de jure control. 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 
``Regulations for Transformation of Operational Mechanism of State-
Owned Industrial Enterprises,'' approved on August 23, 1992 (1992 
Regulations), both of which indicate that the responsibility for 
managing enterprises ``owned by all of the people'' is with the 
enterprises themselves and not with the government. They have also 
submitted 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 the whole 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 also has other provisions which support a finding 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. While furfuryl alcohol is included on the list of 
commodities that are subject to export quotas, the quotas are confined 
to exports to the countries of the European Community and Japan and are 
not applicable to PRC exports to the United States. There is no 
indication that the export prices to the United States of furfuryl 
alcohol are subject to governmental control.
    The existence of these enactments indicates that Qingdao I&E and 
Sinochem Shandong I&E are not de jure subject to governmental control. 
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 an analysis of de facto control is critical to 
determining whether the respondents are, in fact, subject to 
governmental control.

2. Absence of De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental 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).
    Qingdao I&E and Sinochem Shandong I&E each has asserted that (1) it 
establishes its own export prices; (2) it negotiates contracts without 
guidance from any governmental entities or organizations; (3) its 
management operates with a high degree of autonomy and there is no 
information on the record that suggests central government control over 
selection of management; and (4) it retains the proceeds of its export 
sales, and has the authority to sell its assets and to obtain loans. In 
addition, questionnaire responses indicating that company-specific 
pricing during the POI does not suggest any coordination among 
exporters (i.e., the prices for comparable products differ among 
companies). This information supports a preliminary finding that there 
is a de facto absence of governmental control of export functions.
    Consequently, Qingdao I&E and Sinochem Shandong I&E 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

    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. We have done so in this case.
    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. 
Further, Indonesian government statistics and other data indicate that 
the country is a significant producer of the product under 
investigation. Based on available information, Indonesia is the only 
surrogate country, of those identified by our Office of Policy, that 
meets both of these criteria. For those factors that we have been 
unable to value using information from Indonesia, we have used India as 
the surrogate. India is economically comparable to the PRC and is a 
significant producer of furfuryl, which is comparable to furfuryl 
alcohol within the meaning of section 773(c)(1). Furfuryl is the 
feedstock, and the major input, in the production of furfuryl alcohol. 
When a furfuryl producer sees a demand for furfuryl alcohol, the 
facilities necessary to produce the furfuryl alcohol are usually added 
on site. (See, memorandum to the file from Donna Lea Berg to John 
Brinkmann, Surrogate Producers of Furfuryl Alcohol, dated November 22, 
1994, and memorandum from David Mueller, Director, Office of Policy to 
Gary Taverman, Director, Office of Antidumping Investigations, dated 
August 2, 1994, Furfuryl Alcohol from the People's Republic of China, 
Non-Market Economy Status and Surrogate Country Selection.)

Fair Value Comparisons

    To determine whether sales of furfuryl alcohol from the PRC by 
Qingdao I&E and Sinochem Shandong I&E 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

    We based USP on purchase price, in accordance with section 772(b) 
of the Act, because the subject merchandise was sold directly by the 
Chinese exporters to unrelated parties in the United States prior to 
importation into the United States.
    For the two responding exporters, we calculated purchase price 
based on packed, CIF U.S.-port or FOB Chinese-port prices to unrelated 
purchasers in the United States. As necessary, we made deductions for 
foreign inland freight, containerization, port storage, foreign 
brokerage and handling expenses, and marine insurance, valued in India. 
Where applicable, we made deductions for ocean freight based on rates 
of a market-economy shipper. (For a complete analysis of USP 
deductions, see the calculation memorandum for this proceeding on file 
in Room B-099 of the Main Commerce Department building.)

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 two responding 
exporters. 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).
    The respondents have argued that the PRC prices for the major input 
in the production of furfuryl alcohol (i.e., furfuryl) are market 
determined. Thus, the respondents assert that the Department should 
rely on the domestic prices of furfuryl in the PRC. We disagree with 
this argument and have not used the prices for these inputs in 
calculating FMV. Our practice is to afford respondents the opportunity 
to show that the subject merchandise is produced within a market-
oriented industry. Showing that a respondent purchases one input at a 
market-determined price is relevant to but, alone, not sufficient for 
granting market-oriented treatment (see e.g., Final Determination of 
Sales at Less Than Fair Value: Sulfanilic Acid from the PRC, 57 FR 
29705, July 6, 1992).
    In determining which surrogate value to use for each factor of 
production that was not sourced from a market-economy country, we 
selected, where possible, from publicly available, published 
information that is: (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 corn cobs and furfuryl, we used Indonesian 
import prices taken from the Indonesian Foreign Trade Statistical 
Bulletin--Imports, November 1993. For furfuryl and corn cobs, we relied 
on a December 5, 1994, U.S. State Department cable from the U.S. 
Embassy in Indonesia. We were unable to find public information on corn 
cobs. In the case of furfuryl, the publicly available data that we 
found was inconsistent (see attachment three of the concurrence 
memorandum to this proceeding).
    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 furfuryl alcohol factories. In those cases where the respondent 
failed to provide any information on transportation distances and 
modes, we applied, as the best information available, the furthest 
distance and the more expensive mode of transport available from the 
surrogate information we had selected.
    To value electricity, we used public information from Electric 
Utilities Data Book for the Asian and Pacific Region, (January 1993) 
published by the Asian Development Bank. For other energy inputs, we 
relied on values for Indonesia published in Energy Detente, and 
Indonesian Foreign Trade Statistical Bulletin--Imports, November 1993.
    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, 1994.
    We adjusted the factor values, when necessary, to the POI using 
wholesale price and consumer price indices published by the 
International Monetary Fund.
    To value factory overhead, we calculated percentages specific to 
the furfuryl alcohol industry based on a December 2, 1994, U.S. State 
Department cable from the U.S. Embassy in Jakarta.
    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 a 
December 2, 1994 U.S. State Department cable from the U.S. Embassy in 
Jakarta.

All Other Rate

    MOFTEC and CCCMMC have identified two PRC exporters of furfuryl 
alcohol to the United States during the POI. Both have responded in 
this investigation. Accordingly, we have based the All Other Rate on 
the weighted average of the margins calculated in this proceeding.

Verification

    As provided in section 776(b) of the Act, we will verify 
information used 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 furfuryl 
alcohol 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  
------------------------------------------------------------------------
Qingdao I&E................................................       109.34
Sinochem Shandong I&E......................................        85.88
All Others.................................................        91.82
------------------------------------------------------------------------

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 
the preliminary determination or 45 days after our final determination 
whether imports of the subject merchandise are materially injuring, or 
threaten material injury to, the U.S. industry.

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 March 27, 1995, and rebuttal briefs no later 
than March 30, 1995. A hearing, if requested, will be held on Monday, 
April 3, 1995, at 2:00 pm at the U.S. Department of Commerce in Room 
1414. 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 135 days after 
the signing 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 9, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-30982 Filed 12-15-94; 8:45 am]
BILLING CODE 3510-DS-P