[Federal Register Volume 60, Number 51 (Thursday, March 16, 1995)]
[Notices]
[Pages 14263-14270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6523]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-549-810]

Notice of Final Determination of Sales at Less Than Fair Value 
and Final Negative Critical Circumstances Determination: Disposable 
Pocket Lighters From Thailand
AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
EFFECTIVE DATE: March 16, 1995.
FOR FURTHER INFORMATION CONTACT: David Boyland or Susan Strumbel, 
Office of Countervailing Investigations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, D.C. 20230; telephone 
(202) 482-4198 and 482-1442, respectively.

Final Determination

    We determine that disposable pocket lighters from Thailand are 
being, or are [[Page 14264]] 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 October 24, 1994 preliminary determination (59 FR 53414 
(October 24, 1994)), the following events have occurred:
    Between October 24 and October 28, 1994, we conducted verification 
of the questionnaire responses. On October 31, 1994, petitioner 
requested a public hearing. Respondent requested that the Department 
postpone its final determination in this investigation on November 2, 
1994. On November 16, 1994, the Department published its notice of 
postponement of the final determination (59 FR 59211).
    On February 1, 1995, petitioner filed a critical circumstances 
allegation. The Department issued a preliminary negative critical 
circumstances determination on March 3, 1994.
    On February 13 and February 21, 1995, petitioner and respondent 
filed case and rebuttal briefs, respectively. On February 28, 1995, the 
Department held a public hearing.

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 descriptions of the 
scope of these proceedings are dispositive.

Period of Investigation

    The period of investigation (``POI'') is December 1, 1993 through 
May 31, 1994.

Critical Circumstances

    Petitioner alleged that critical circumstances exist with respect 
to imports of disposable lighters from Thailand. In our determination 
on March 3, 1995, pursuant to section 733(e)(1) of the Act and 19 CFR 
353.16, we analyzed the allegations using the Department's standard 
methodology.
    On March 6, 1995, both petitioner and respondent submitted comments 
with regard to the Department's preliminary negative critical 
circumstances determination. In addition to submitting general 
comments, petitioner also provided Port Import and Export Reporting 
Services (``P.I.E.R.S.'') data (see, Exhibit C of petitioner's March 6, 
1995 submission) in order to show that Thai Merry's shipments have 
dropped off dramatically since the Department's preliminary affirmative 
determination of sales at less than fair value (``LTFV''). According to 
petitioner, the decline in imports of subject merchandise from Thailand 
subsequent to the post-petition period indicates that critical 
circumstances exist.
    With respect to the additional information supplied by petitioner, 
we note that the Department's analysis of critical circumstances 
compared data covering December 1, 1993 through April 30, 1994 (the 
``pre-petition period'') with data covering May 1, 1994 through 
September 30, 1994 (the ``post-petition period''). As noted in the 
preliminary negative critical circumstances determination, the 
Department considered the post-petition period to be the first day of 
the month of initiation through the period immediately prior to the 
preliminary determination of sales at LTFV. While the data submitted by 
petitioner show that shipments have declined subsequent to the 
Department's preliminary LTFV determination, our analysis, and the 
critical circumstances allegation itself, is based on respondent's 
actions prior to the preliminary LTFV determination. Accordingly, while 
we have examined the additional information provided by petitioner, it 
does not alter our original analysis (see, February 27, 1995 Memorandum 
to Susan H. Kuhbach, Director, Office of Countervailing Investigations 
from David R. Boyland, Case Analyst, Office of Countervailing 
Investigations). In the absence of information that would alter our 
original analysis, we determine that critical circumstances do not 
exist.

Class or Kind of Merchandise

    The Department considers standard and child-resistant lighters to 
be one class or kind of merchandise (see, Interested Party Comments, 
Comment 1).

Product Comparisons

    We have continued to treat standard lighters sold in the home 
market as similar to child-resistant lighters, and identical to 
standard lighters sold in the United States (see, Interested Party 
Comments, Comment 2). For the U.S. sales compared to home market sales 
of similar merchandise, we made an adjustment, pursuant to 19 CFR 
353.57, for physical differences in merchandise.

Level of Trade

    For the preliminary determination, respondent argued that, since 
Thai Merry sells to large national distributors in the United States, 
the home market sales used for comparison purposes should be limited to 
those sales made to the single national distributor in the home market. 
The Department, in its preliminary determination, stated that the 
information submitted by the respondent did not justify distinguishing 
between the national distributor in the home market and other 
distributors.
    Although the Department gave respondent the opportunity to provide 
additional information to substantiate its claim that there is a 
distinct national distributor level of trade in the home market, 
respondent declined to do so. Moreover, at verification, we learned 
that respondent's division of customers into either the retail level of 
trade or the distributor level of trade was based solely on the volume 
of lighters purchased by home market customers.
    The Department analyzes levels of trade based on the differences in 
functions performed by the seller or differences in the category of 
customer. In this case, however, respondent based its level of trade 
claim solely on differences in quantities purchased. Therefore, we have 
not performed a level of trade analysis.
    We note, however, that there are substantial differences in 
quantities ordered by U.S. and home market customers. Moreover, within 
the home market, sales are made in a wide range of quantities and with 
larger quantities being sold at lower prices. In accordance with 19 CFR 
353.55, we have identified the largest home market transactions and 
have compared those with sales to the United States.

Fair Value Comparisons

    To determine whether Thai Merry's sales for export to the United 
States were made at less than fair value, we compared the United States 
price (``USP'') to the foreign market value (``FMV''), as specified in 
the ``United States Price'' and ``Foreign Market Value'' sections of 
this notice.
    We made revisions to Thai Merry's reported data, where appropriate, 
based on verification findings. [[Page 14265]] 

United States Price

    Because Thai Merry's U.S. sales of disposable pocket lighters were 
made to unrelated purchasers prior to importation into the United 
States, and the exporter's sales price methodology was not indicated by 
other circumstances, in accordance with section 772(b) of the Act, we 
based USP on the purchase price (``PP'') sales methodology. We 
calculated Thai Merry's PP sales based on packed, CIF prices to 
unrelated customers in the United States.
    We made deductions to the U.S. price, where appropriate, for 
foreign inland freight, foreign brokerage/handling expenses, marine 
insurance, and ocean freight. In calculating the imputed U.S. credit 
expense, we used the borrowing rate in the United States on short-term 
dollar-denominated loans (see, Interested Party Comments, Comment 11). 
For a further discussion of the Department's treatment of U.S. credit 
expense, please see Memorandum to Barbara R. Stafford, Deputy Assistant 
Secretary, Investigations from Susan H. Kuhbach, Director, Office of 
Countervailing Investigations, (September 26, 1994) on file in room B-
099 of the U.S. Department of Commerce.
    In accordance with Section 772(d)(1)(B) of the Act, we made an 
addition to the U.S. price for the amount of import duties imposed but 
not collected on inputs. We also made an adjustment to U.S. price for 
VAT taxes paid on the comparison sales in Thailand, in accordance with 
our practice, pursuant to the Court of International Trade (``CIT'') 
decision in Federal-Mogul, et al versus United States, 834 F. Sup. 
1993. See, Preliminary Antidumping Duty Determination and Postponement 
of Final Determination; Color Negative Photographic Paper and Chemical 
Components Thereof from Japan, 59 FR 16177, 16179 (April 6, 1994), for 
an explanation of this tax methodology.

Foreign Market Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating 
FMV, we compared the volume of home market sales of subject merchandise 
to the volume of third country sales of subject merchandise, in 
accordance with section 773(a)(1)(B) of the Act. As a result, we 
determined that the home market was viable.
    We calculated FMV based on delivered prices, inclusive of packing, 
to customers in the home market. From the delivered price, we deducted 
home market packing and added U.S. packing costs.
    Pursuant to section 773(a)(4)(B) of the Act and 19 CFR 
353.56(a)(2), we made circumstance-of-sale-adjustments for differences 
in movement charges between shipments to the United States and 
shipments in the home market. We also made circumstance-of-sale-
adjustments for differences in advertising expenses, and direct selling 
expenses, including payments made by Thai Merry to a third party. With 
respect to the home market credit expense, we have attributed this 
expense to only those home market sales identified as ``credit sales.'' 
Additionally, we note that respondent provided a value-based allocation 
for advertising expense in its home market sales listing. We have 
substituted respondent's value-based allocation with a per unit 
advertising expense for the final determination.

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the dates of the U.S. sales as certified by the Federal 
Reserve Bank of New York.

Verification

    As provided in section 776(b) of the Act, we verified information 
provided by the respondent using standard verification procedures, 
including the examination of relevant sales, cost and financial 
records, and selection of original source documentation used in making 
our final determination.

Interested Party Comments

    Comment 1: Respondent argues that since standard lighters can no 
longer be imported into the United States because of a Consumer Product 
Safety Commission (``CPSC'') regulation which came into effect after 
the POI, standard lighters and child-resistant lighters should be 
considered two separate classes or kinds of merchandise. In support of 
its arguments, respondent has outlined differences between standard and 
child-resistant lighters relevant to the Diversified Products criteria 
(see, Diversified Product Corporation versus United States, 582 F. 
Supp. 887 CIT 1983). These differences are summarized as follows: (1) 
The differences in physical characteristics are minor. However, the 
fact that child-resistant lighters can be legally imported, while 
standard lighters cannot, makes these differences significant, 
according to respondent; (2) with respect to ultimate use, respondent 
notes that the types of lighters are in fact different since the child-
resistant lighter is intended to be used only by persons mature enough 
to understand the danger associated with the lighter; (3) as regards, 
expectation of the ultimate purchaser, respondent argues that, while 
both types of lighters can produce flames with which to light 
something, the child-resistant lighter is expected to be safer; (4) 
with respect to channels of trade, respondent notes that once the 
inventories of standard lighters imported prior to July 12, 1994 have 
been sold, the channels of trade of the two types of lighters will be 
distinct because only one will exist legally (child-resistant) while 
the other will not (standard); (5) as regards advertising and display, 
respondent argues that child-resistant lighters are marketed as not 
only disposable lighters, but child-proof products which marketing 
officials promote as such. Additionally, according to respondent, the 
CPSC regulation requires that the two types of lighters be displayed 
differently and that once inventories of standard lighters are sold, 
they will not be displayed or advertised anywhere; (6) with respect to 
cost, respondent notes that the cost of producing the child-resistant 
lighters is legally significant because the additional cost allows the 
lighters to be exported to the United States. Also, with respect to 
cost, respondent argues that the price of standard and child-resistant 
lighters are sharply different.
    Petitioner argues that both standard and child-resistant lighters 
will be sold in competition with one another until the large stockpiled 
supply of standard lighters imported prior to the CPSC ban is 
exhausted. Petitioner argues that both lighters are functionally 
equivalent, their physical characteristics are almost identical, the 
ultimate use and expectation of the consumer is the same, and that 
child-resistant and standard lighters are sold through the same 
channels of distribution, with the same advertising and display. 
Additionally, petitioner points out that the difference in price 
between the standard and child-resistant lighter is distorted because 
standard lighters are being dumped, as admitted in respondent's case 
brief. Finally, petitioner states that the cost differences between the 
two types of lighters is insufficient to support a class or kind 
distinction.
    DOC Position: Regarding the class or kind issue, the Department has 
determined that there is only one class or kind of merchandise.
    As regards physical characteristics, all parties agree, and the 
record supports, that there is no distinct difference between standard 
and child-resistant lighters. With respect to cost, the 
[[Page 14266]] Department has already determined that it can match 
child-resistant lighters sold in the United States to standard lighters 
sold in the home market with a difference in merchandise adjustment 
(``difmer'') (i.e., the difference in variable costs between the child-
resistant lighter and the standard lighter does not exceed 20 percent 
of the total cost of manufacturing of the child-resistant lighter). 
Therefore, we find that the difference in cost is not significant 
enough to support a class or kind distinction. With respect to ultimate 
use, and expectations of the ultimate purchaser, we note that, while 
child-resistant lighters have a safety feature and the standard lighter 
does not, the primary function of standard and child-resistant lighters 
is the same. Additionally, the expectations of the consumer with regard 
to the utility of child-resistant lighters and standard lighters are 
the same. Also, regardless of the CPSC ban, standard and child-
resistant lighters are sold through the same channels of trade. 
Finally, while we note that the advertising and display of standard and 
child-resistant lighters may be marginally different because of the 
child-safety feature, the differences in advertising and display are 
minor and do not outweigh the fact that no differences are evident in 
the other Diversified Products criteria, as noted above.
    Respondent also argues that the import restriction distinction 
between the two types of lighters is a ``clear dividing line,'' as that 
term is used by the Department in Final Affirmative Less Than Fair 
Value Determination: Sulfur Dyes, Including Vat Sulfur Dyes, from the 
U.K. (``Sulfur Dyes From the U.K.'') 58 FR 3253 (January 8, 1993)). In 
Sulfur Dyes From the U.K., the Department stated that ``when examining 
differences in physical characteristics in the context of class or kind 
analysis, the Department looks for 'clear dividing lines' between 
product groups, not merely the presence or absence of physical 
differences.'' (58 FR at 3254). According to respondent, because 
standard lighters may no longer be imported, the Diversified Products 
factors vis-a-vis child-resistant lighters are all diametrically 
different.
    Except for the import restriction associated with standard 
lighters, respondent has provided no compelling reason to divide these 
products into separate classes or kinds of merchandise. While 
indicating that a ``clear dividing line'' is necessary to make a class 
or kind distinction, the Department went on to state in Sulfur Dyes 
from the U.K. that multiple classes or kinds did not exist because the 
Department did not find ``clearly defined differences in any of the 
Diversified Products criteria.'' In the instant case, the differences 
presented by respondent to support its Diversified Products analysis, 
as discussed above, are not compelling. Therefore, we continue to find 
standard and child-resistant lighters to be one class or kind of 
merchandise.
    With respect to using an average-to-average methodology, we note 
that, except in the most extraordinary circumstances, the Department's 
long-standing practice is to compare individual U.S. transactions with 
a weighted average FMV (see, 19 CFR 353.44(a)).
    As to respondent's point that an average-to-average methodology 
will be required under the new antidumping law, we note that this final 
determination is being made pursuant to the previous law, which does 
not require an average-to-average comparison. Finally, with respect to 
applying a zero margin to child-resistant lighters, we note that the 
Department applies a dumping margin on the basis of a class or kind of 
merchandise, not on a product-specific basis (see, section 731 of the 
Tariff Act of 1930, as amended).
    Comment 2: Petitioner objects to the Department's preliminary 
determination that child-resistant lighters can be compared to home 
market sales of standard lighters. Petitioner argues that, based on the 
differences in the cost of manufacture and commercial value, standard 
and child-resistant lighters should not be considered ``similar.'' 
According to petitioner, information that it submitted shows that the 
two types of lighters are not ``approximately equal in commercial 
value.'' Thus, petitioner argues that the requirements of 19 U.S.C. 
1677(16)(B)(iii) have not been met. Instead, the Department improperly 
relied solely on the physical characteristics of the merchandise in 
making its preliminary determination. Furthermore, petitioner argues 
that the commercial value aspect of 19 U.S.C. 1677(16)(b)(iii) is 
designed for cases such as the instant one in which the differences in 
overall cost and commercial value result from the mandatory child-
safety requirements. Such differences are attributable to capital 
expenditures for research and development. Petitioner argues that the 
Department should at least factor in the high cost of developing the 
safety mechanism when making its such or similar analysis.
    Respondent argues that there is no support for using cost in 
determining whether the two lighters can be considered similar, except 
to the extent that the Department will generally not compare products 
where the difmer exceeds 20 percent of the cost of manufacturing of the 
U.S. product. Moreover, respondent argues that the Department's 
preliminary determination was consistent with past cases and the CIT's 
ruling in United Engineering and Forging versus United States, 779 F. 
Sup. 1375, 1381 (1991)).
    DOC Position: We agree with respondent. The Department places 
little weight on the commercial value criterion in determining what 
constitutes such or similar merchandise (see, Final Results of 
Administrative Review: Certain Forged Steel Crankshafts from the United 
Kingdom , 56 FR 5975 (February 14, 1991)), and Final Determination of 
Sales at Less Than Fair Value: Certain Portable Electric Typewriters 
From Singapore, 58 FR 43334 (August 16, 1993)). Instead, the Department 
focuses on the similarity of the physical characteristics, as evidenced 
in the Department's such or similar determination in this 
investigation. The Department's position in this regard has been upheld 
by the CIT in United Engineering.
    In this case, child-resistant and standard lighters closely 
resemble each other in terms of their physical characteristics. 
Moreover, while the commercial value of the two products (as reflected 
in their prices) differed, the difference was not large (in absolute 
terms) and decreased over time. Therefore, we have continued to find 
that child-resistant lighters are similar to standard lighters.
    Except for our general practice of limiting difmers to those which 
do not exceed 20 percent of the cost of manufacturing the good sold in 
the United States, we do not consider cost in determining what 
constitutes similar merchandise. We note that the alleged research and 
development costs referred to by petitioner would not be included in 
the difmer, which includes only variable manufacturing costs.
    Comment 3: Petitioner argues that Thai Merry gives quantity 
discounts, which eliminates the need for a level of trade adjustment. 
Petitioner also argues that Thai Merry has been unable to determine 
which home market customers are retailers and which home market 
customers are distributors, and instead has simply relied on volume 
sold to distinguish between these levels. Additionally, petitioner 
notes that Thai Merry has been unable to substantiate its claim that 
the distributor level of trade should be sub-divided into distinct 
levels of trade. Thus, according to petitioner, all of Thai Merry's 
home [[Page 14267]] market sales should be found to be made at the same 
level of trade.
    Respondent argues that petitioner is incorrect in stating that Thai 
Merry was unable to identify which customers were retailers or 
distributors. Respondent argues that the threshold it provided for 
dividing its customers into the two groups was conservative, i.e., this 
threshold eliminates home market customers from the Department's LTFV 
comparison that are clearly not distributors. Additionally, some of 
those home market customers identified as distributors were in all 
likelihood retailers. Respondent argues that use of a threshold was 
necessary given the difficulty in identifying the exact level of trade 
of every home market customer. Finally, respondent argues that the 
Department is required to make comparisons at the same level of trade 
(see, 19 CFR 353.58) and there is a significant dividing line between 
the quantities purchased by the retail customers in the home market and 
the quantities purchased by the large national distributors in the 
United States. Therefore, the Department should rely on sales to home 
market distributors, as defined by respondent, in making its 
comparisons to U.S. sales.
    DOC Position: While this issue has been framed in the context of 
level of trade, the Department finds that the appropriate approach is 
to identify home market sales that are in quantities comparable to U.S. 
sales. We note that there is no home market customer who orders in 
quantities approaching the average quantities ordered by U.S. 
customers. Nevertheless, we examined the data and found that average 
transaction prices varied with quantity. Therefore, we have selected 
for comparison purposes large quantity home market transactions (see, 
March 8, 1995 Memorandum to Barbara R. Stafford, Deputy Assistant 
Secretary, Investigations from David Boyland, Case Analyst, Office of 
Countervailing Investigations).
    Comment 4: Petitioner argues that the Department's verification 
report indicates that the U.S. price changed between the purchase order 
date and the invoice date. As such, petitioner argues that the invoice 
date should be considered the date of sale.
    Respondent argues that the Department's verification report is 
misleading because, while the invoice date is Thai Merry's first record 
of the sale price, previously submitted information shows that the 
price and quantity are recorded at the time of the purchase order. 
Additionally, respondent argues that the ``revisions'' referred to in 
the verification report were prospective changes in price, as opposed 
to price changes to orders already made.
    DOC Position: The verification report states that ``during our 
examination of U.S. sales completeness...the standard and child-safety 
lighter per-unit prices were applied consistently throughout the POI 
with several upward price revisions occurring in the latter half of the 
POI.'' ``Revisions,'' in the context of the verification report, 
referred to assumed increases in the negotiated price, as opposed to a 
change in price between the purchase order date and the invoice date.
    The verification report also states that the first ``written'' 
record generated by Thai Merry of the negotiated price is the invoice. 
While respondent has cited to a Purchasing and Payment Records 
spreadsheet maintained by U.S. customers, this information does not by 
itself prove when the purchase price was first recorded. The 
spreadsheet includes Thai Merry's invoice number and hence was 
generated sometime after Thai Merry's invoice information, including 
unit price, was available to the U.S. customer. Therefore, it is not 
correct to say, as respondent claims, that this information proves the 
price was recorded at the time of the purchase order.
    Given the fact that respondent's price negotiations with its U.S. 
customers were unrecorded, it was not possible to ``verify'' that the 
purchase order date was the date on which both price and quantity were 
fixed. The information provided by respondent indicates that it is 
reasonable to assume that the price was established prior to the 
purchase order and that the purchase order established the quantity. 
However, as the Department noted in Certain Stainless Steel Butt-Weld 
Pipe and Tube Fittings From Japan; Final Results of Antidumping Duty 
Administrative Review, 59 FR 12240, 12241 (March 16, 1994)), the date 
of sale is evidenced by the ``first document which systematically 
records agreement as to price and quantities * * * [m]oreover the 
invoice date represents an accurate, reasonable, consistent methodology 
to determine the date of sale.'' In this case, the appropriate date of 
sale is the invoice date because it is the first written record 
generated by Thai Merry of both price and quantity. Additionally, this 
date was subject to verification during our examination of the U.S. 
sales listing.
    Comment 5: With respect to certain sales at the end of the POI, 
respondent argues that a fire at one of Thai Merry's facilities made it 
impossible to fill the entire May 15, 1994 purchase order. According to 
a May 26, 1994 letter from the U.S. customer to Thai Merry, the 
customer notified Thai Merry of a certain volume of lighters that would 
be accepted for shipment. Respondent argues that the amount of child-
resistant lighters ultimately shipped pursuant to both the May 15, 1994 
purchase orders and the June 15, 1994 purchase orders matched the 
volume accepted by the U.S. customer in the May 26, 1994 letter to Thai 
Merry. Accordingly, since these shipments were accepted during the POI 
(i.e., May 26, 1994), the sales reflected in the June 15, 1994 purchase 
orders should be considered POI sales. In response to the Department's 
verification report, which indicates that the unfilled portion of the 
May 15, 1994 purchase order was not accounted for in the subsequent 
June 15, 1994 purchase orders, respondent argues that this is due to 
the fact that standard lighters ordered on May 15, 1994, could not be 
re-ordered because of the pending CPSC ban.
    Petitioner argues that respondent's explanation should be rejected 
because (1) the terms of the purchase could be changed up to the 
invoice date, (2) there is no clearly established connection between 
the June 15 and May 15 purchase orders, and (3) the May 26, 1994 letter 
discusses a forthcoming purchase order which was not found to exist.
    DOC Position: As noted in Comment 5, the Department is considering 
the invoice date to be the date of sale. Accordingly, only those sales 
invoiced during the POI will be considered POI sales for purposes of 
the final determination.
    Comment 6: Petitioner argues that sales by Thai Merry Hong Kong 
(``TMHK'') to the United States should be included in the Department's 
LTFV comparison. Petitioner notes that the factors the Department 
considers when determining if the sales of two parties should be 
collapsed include: (1) whether the companies are closely intertwined; 
(2) whether transactions take place between the companies; (3) whether 
the companies have similar types of production equipment, such that it 
would be unnecessary to retool either plant's facilities before 
implementing a decision to restructure either company's manufacturing 
facilities; and (4) whether the companies involved are capable, through 
their sales and production operations, of manipulating prices or 
affecting production decisions (see, Final Determination of Sales at 
Less Than Fair Value: Certain Granite Products from Italy, 53 FR 27187 
(July 19, 1988)). Petitioner argues that the 
[[Page 14268]] longstanding business relationship and the continued use 
of the Thai Merry name indicate that the relationship between the two 
companies did not end subsequent to Thai Merry's gradual sale of its 
ownership interest in TMHK. Petitioner argues that the relatedness 
issue is only one prong in the test used by the Department in 
determining whether to collapse sales. When the preceding factors are 
combined with the fact that the two companies are capable of price 
manipulation, it is clear that TMHK's sales to the United States should 
be included in the calculation of FMV. Petitioner argues that this 
potential to manipulate prices is the primary factor in determining 
whether TMHK's sales should be included in FMV and that the facts in 
this case show that there was price manipulation.
    Respondent argues that section 771(13) of the Tariff Act of 1930, 
19 U.S.C. 1677(13), governs the determination of ``related parties.'' 
Under this section of the statute, the Department has established a 
test under which parties will not be considered related unless 
ownership is greater than five percent. Respondent argues that since 
Thai Merry has no ownership interest in TMHK, as shown at verification, 
the two parties are not related. Respondent also argues that the 
evidence provided by petitioner for collapsing the two parties is 
unconvincing because: (1) The similarity in names between Thai Merry 
and TMHK is merely cosmetic, and in fact TMHK has changed its name, (2) 
buyers and sellers typically have frequent business transactions, and 
(3) the price TMHK charged Thai Merry's U.S. customer is not unusual 
because unrelated parties often sell similar products for similar 
prices.
    DOC Position: We note that the Department only collapses sales 
under section 773(13) of the statute if the parties are related. Since 
Thai Merry has no ownership interest in TMHK, the Department has not 
considered TMHK's sales to the United States for purposes of 
calculating the margin.
    Comment 7: Petitioner argues that because of the nature of payments 
by Thai Merry to Thai Merry America (``TMA'') (i.e., a specific amount 
based on each U.S. sale), and because of the type of assistance being 
provided by TMA (i.e., production consulting, research and 
development), the payments to TMA should be treated as a direct selling 
expense. Petitioner argues that the payments to TMA were, in part, for 
research and development for the child safety lighter. Thus, the 
payments to TMA were tied to the sale of a specific product line. 
According to petitioner, the other assistance provided by TMA, for 
example, production management, can also be tied directly to the sale 
of child-resistant and standard lighters because, in the absence of 
this assistance and the costs associated with them, these products 
would not have been manufactured. Finally, petitioner argues that it is 
precisely because these payments are directly tied to U.S. sales that a 
circumstance-of-sale adjustment is necessary.
    Respondent argues that the TMA payments, as characterized by 
petitioner, indicate that these payments were related to production, as 
opposed to sales. While these payments resemble commissions, they are 
actually G&A expenses that do not qualify for a circumstance of sale 
adjustment.
    DOC Position: Before determining how to treat this payment, we 
examined the payment arrangement between Thai Merry and TMA. Under this 
arrangement Thai Merry's ultimate payment to TMA is based on total U.S. 
sales. The services provided by TMA consist of production consulting, 
research and development, and market research. Because the payments to 
TMA are not connected with sales activity in the United States, we do 
not view them as commissions. However, since the payments to TMA are 
based on each U.S. sale, and calculated as a percentage of each U.S. 
sale, we consider these payments to be a direct U.S. selling expense. 
As a consequence, for purposes of the final determination, we have 
added these payments to FMV.
    Comment 8: Respondent argues that the incentive bonuses paid to 
home market salesmen were not commissions. According to respondent, 
this is because these payments are not tied to the number or value of 
sales. Respondent argues that this is evidenced by the fact that 
Chamber (the home market selling arm of Thai Merry) does not keep 
records of sales per salesperson. Additionally, respondent notes that 
there is no correlation between the amount of incentive bonus paid and 
the value of sales during the previous month; i.e., if the bonus was in 
fact a commission based on the value of sales, one would expect that 
when the value of sales dropped the subsequent amount of incentive 
bonuses paid would also drop. This was not the case.
    DOC Position: Based on our review of the information, we see no 
correlation between home market sales and the ``incentive bonuses'' 
paid to Chamber's salesmen. The absence of an observable correlation or 
relationship between sales and incentive bonuses supports respondent's 
claim that these payments are not commissions. Therefore, for the final 
determination, we have determined that these payments are not 
commissions.
    Comment 9: Petitioner argues that for the final determination the 
Department should apply the credit expense to only those home market 
sales identified as ``credit sales.''
    DOC Position: We agree and have made this correction.
    Comment 10: Petitioner argues that the home market freight expense 
should have been allocated on a weight or per-unit basis, instead of 
using a value-based factor. Given customary freight rate structures, it 
is unreasonable, according to petitioner, to allocate freight expenses 
based on the value of subject merchandise. Finally, given respondent's 
refusal to cooperate in providing a non-value-based freight amount, as 
well the Department's preference for not including depreciation as part 
of the freight expense, the Department should use the per-unit freight 
cost incurred by Thai Merry on direct sales shipped in the home market, 
as best information available (``BIA'').
    Respondent argues that it was not possible to provide a weight-
based or per-unit cost for home market inland freight because home 
market deliveries include subject and non-subject merchandise. Hence, 
there is no common denominator with which to perform an allocation of 
cost. Additionally, a weight-based calculation is not possible because 
records are not kept with respect to total weight shipped. Respondent 
also argues that there have been cases in which the Department has 
accepted a value-based allocation (see, Antifriction Bearing (Other 
than Tapered Roller Bearings) and Parts Thereof from France, Germany, 
Italy, Japan, Romania, Singapore, Sweden, Thailand and the United 
Kingdom, 58 FR 39729 (July 26, 1993)).
    DOC Position: We agree with respondent. The Department verified 
elements of respondent's value-based freight allocation. This 
allocation incorporated expenses, including depreciation, which were 
directly related to Chamber's transportation costs. The allocation 
involved the appropriate costs and therefore appeared to be reasonable. 
As such, we have continued to use a value-based factor for the final 
determination.
    Comment 11: Petitioner argues that, in this case, the use of a U.S. 
interest rate to calculate the U.S. credit expense does not represent 
``commercial reality.'' According to petitioner, since Thai Merry has 
no loans in U.S. dollars and, therefore, finances all of its operations 
[[Page 14269]] in Thai baht, the actual credit expense to Thai Merry is 
a home market borrowing expense. Petitioner argues that, if the 
Department must use a U.S. interest rate, it should at least impute a 
credit expense based on a Thai interest rate for the ``time on the 
water'' period between shipment date and payment date.
    Respondent argues that, with respect to the U.S. credit expense 
calculated at the preliminary determination, the Department correctly 
interpreted LMI-LA Metalli Industriale, S.p.A. v. United States, 912 F. 
2d. 455, 460 (Fed. Cir. 1990)) (``LMI''). Respondent argues that LMI 
was not a fact-specific decision in which the respondent company's 
dollar loans justified the use of a U.S. dollar interest rate. Rather, 
according to respondent, the Court focused on the availability of a 
lower borrowing rate. Respondent argues that the Department reasonably 
found the borrowing rate to be based on the currency of sale at the 
preliminary determination and should continue to use a dollar interest 
rate for the final determination.
    DOC Position: While Thai Merry had liabilities denominated solely 
in baht, some of its assets (e.g., receivables pursuant to U.S. sales) 
were denominated in dollars. As such, the cost to Thai Merry is the 
cost it would incur in discounting a dollar receivable which would be 
based on a dollar interest rate.
    Because we believe that our original decision was correct and is 
supported by LMI, we have continued to use a U.S. dollar interest rate 
to calculate the U.S. credit expense.
    Comment 12: Respondent argues that the methodology employed by the 
Department at the preliminary determination, while consistent with the 
decision in Federal-Mogul, et. al. v. United States, (``Federal 
Mogul'') 834 F. Supp. 1391 (CIT)), is inconsistent with the expectation 
of tax neutrality under GATT and ignores the methodology sanctioned by 
a higher court, the U.S. Court of Appeals for the Federal Circuit (see, 
Zenith Corp. v. United States, (``Zenith'') 988 F.2d 1573, 1583 n.4 
(Fed. Cir, 1993) which stated that it was appropriate for the 
Department to adjust U.S. price by the amount of VAT actually paid on 
home market sales. Because the adjustments pursuant to Federal Mogul 
exaggerate existing margins, the use of this methodology is in 
violation of GATT. Respondent cites Article VI(1) and Article VI(4) of 
the GATT and Article 2(6) of the Agreement on Implementation of Article 
VI of the GATT, as unambiguously requiring that differences in the 
level of indirect taxes shall not create/inflate dumping margins. 
Petitioner argues that respondent's reliance on footnote 4 of Zenith is 
incorrect because the Court of International Trade found that 
``footnote 4 (of Zenith) is clearly at odds with Zenith and the 
language of the statute and is dicta.'' Petitioner states that in 
Avesta Sheffield, Inc. et. al. v. United States, Slip Op. 93-217 (CIT 
Nov. 18, 1993) the court also found footnote 4 of Zenith to be dicta. 
Additionally, with respect to respondent's argument that the 
Department's VAT methodology is in conflict with Article VI(4) of GATT, 
petitioner argues that under a proper interpretation of this article, 
in which a multiplier effect only occurs in the presence of a dumping 
margin, the Department's methodology fully comports with GATT.
    DOC Position: We agree with petitioner. The VAT methodology used at 
the preliminary determination has been used by the Department for all 
recent antidumping determinations and is in accordance with both the 
statute and the GATT. Accordingly, for the final determination we have 
continued to use the VAT methodology used for the preliminary 
determination (see, Preliminary Antidumping Duty Determination and 
Postponement of Final Determination; Color Negative Photographic Paper 
and Chemical Components Thereof from Japan, 59 FR 16177, 16179, (April 
6, 1994)).
    Comment 13: Petitioner states that it is not clear whether the 
Department verified that all of Thai Merry's advertising expenses were 
related to lighter sales. Additionally, it is also not clear, according 
to petitioner, whether Thai Merry's general ledger distinguishes 
between advertising for lighters and advertising for scouring pads. 
Petitioner notes that only advertising expenses associated with the 
sale of disposable lighters should be used to adjust the FMV.
    Respondent argues that the Department examined Thai Merry's 
advertising expense adjustment and found no indication that the company 
incurs advertising expense for anything other than the sale of 
lighters. Accordingly, the Department should utilize the verified 
figure for home market advertising expenses in the final determination.
    DOC Position: We agree with respondent. During our verification of 
Thai Merry's advertising expenses, we noted no information indicating 
that Thai Merry paid for any advertising other than advertising for 
lighters. Accordingly, we have used the advertising expense, as 
verified, for the final determination.
    Comment 15: Petitioner argues that sales of imprinted and non-
imprinted Aladdin lighters, as well as wrapped lighters, should be used 
in the calculation of FMV without a difmer adjustment because the 
physical differences between these lighters and standard lighters are 
minor. According to petitioner, respondent's argument that wrapped and 
imprinted lighters should not be used in the FMV calculation because 
there are no U.S. sales of such lighters is dubious since respondent 
has already argued that standard and child-resistant lighters are one 
such or similar category.
    Respondent argues that it is a basic tenet of the antidumping law 
that U.S. sales should be matched to identical sales in the home market 
or, if an identical product is unavailable, the most similar home 
market product should be compared to the U.S. sale. At verification, 
respondent was able to identify home market sales of imprinted and non-
imprinted Aladdin lighters, as well as wrapped lighters. Since 
imprinted and wrapped lighters are neither identical nor most similar 
to U.S. sales, they should be excluded from the Department's LTFV 
comparison.
    DOC Position: We agree with respondent. Petitioner seems to argue 
that imprinted and wrapped lighters sold in the home market should be 
matched to non-imprinted, non-wrapped lighters sold in the U.S. This is 
in spite of the fact that merchandise which is identical to the 
merchandise sold in the U.S. is being sold in the home market. While 
imprinted and wrapped lighters are within the same such or similar 
category, they are not identical or most similar to the merchandise 
sold in the United States. Therefore, we have excluded imprinted and 
wrapped lighters from the calculation of FMV for the final 
determination.
    Comment 16: Petitioner argues that the Department should find 
critical circumstances to exist. According to petitioner, when May 1994 
shipments are excluded (i.e., the period which the Department referred 
to as a unique ``spike''), Thai Merry's post-petition shipments 
increased by an amount that can still be considered massive under 19 
CFR 353.16(f)(2). Petitioner argues that critical circumstance should 
be found to exist since the Department focused on the effect of the 
CPSC ban, and that removing this period for comparison purposes still 
yields a post-petition period increase which is ``massive.'' 
Additionally, because it received notification of the Department's 
preliminary negative critical [[Page 14270]] circumstances 
determination after close of business (``COB'') on March 3, 1995 and 
the deadline for submitting comments to the determination was March 6, 
1995, petitioner indicates that it was not allotted ``sufficient time'' 
to comment on the Department's analysis.
    Respondent states that, while the Department could have based its 
negative preliminary critical circumstances determination on factors 
other than the CPSC ban and its effect on shipments, the Department 
correctly found that critical circumstances do not exist.
    DOC Position: We first note that the Department's preliminary 
negative critical circumstance determination was not based solely on 
the effect of the CPSC ban on Thai Merry's shipments during the post-
petition period. In making the negative preliminary critical 
circumstances determination, the Department stated that its decision 
was ``[b]ased on (1) an evaluation of apparent domestic consumption 
during the pre- and post-petition period, as calculated by petitioner, 
(2) Thai Merry's share of domestic consumption during the pre- and 
post-petition periods, (3) the shipment data provided by respondent as 
compared to previous periods, and (4) consideration of the 
circumstances surrounding the large increase in shipment in May 1994* * 
*'' (see, page 7 of unpublished version of the Department's March 3, 
1995 preliminary negative critical circumstances Federal Register 
notice). Because no additional information has been provided by 
petitioner that conflicts with our preliminary determination, we 
continue to find that critical circumstances do not exist.
    With regard to petitioner's claim that it did not have sufficient 
time to analyze the Department's preliminary negative critical 
circumstances determination, we note that petitioner did not request 
additional information under administrative protective order (``APO'') 
(i.e., the Department's February 27, 1995 analysis memo) with which to 
make its analysis until late in the afternoon of March 6, 1995 (i.e., 
the deadline date). Additionally, we note that on March 6, 1995, the 
Department offered petitioner an extension for filing comments on the 
preliminary negative critical circumstances determination if requested. 
Petitioner specifically declined to make an extension request (see, 
March 7, 1995 memo to case file from David R. Boyland, Case Analyst, 
Office of Countervailing Investigations).

Continuation of Suspension of Liquidation

    We are directing the Customs Service to continue to suspend 
liquidation of all entries of disposable lighters, that are entered, or 
withdrawn from warehouse, for consumption on or after October 24, 1994, 
the date of publication of our affirmative determination in the Federal 
Register. The Customs Service shall require a cash deposit or the 
posting of a bond equal to the estimated amount by which the FMV of the 
merchandise of this investigation exceeds the USP, as shown below. This 
suspension of liquidation will remain in effect until further notice. 
The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                               Weighted-
                                                                average 
               Producer/manufacturer/exporter                   margin  
                                                              percentage
------------------------------------------------------------------------
Thai Merry..................................................       25.04
All Others..................................................       25.04
------------------------------------------------------------------------

International Trade Commission (ITC) Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. The ITC will now determine, within 45 days, 
whether these imports are materially injuring, or threatening material 
injury to the U.S. industry. If the ITC determines that material 
injury, or threat of material injury, does not exist, the proceeding 
will be terminated and all securities posted will be refunded or 
cancelled. If the ITC determines that such injury does exist, the 
Department will issue an antidumping order directing Customs officials 
to assess antidumping duties on all imports of the subject merchandise 
entered, or withdrawn from warehouse, for consumption on or after the 
effective date of the suspension of liquidation.

Notification to Interested Parties

    This notice also serves as the only reminder to parties of their 
responsibility concerning the return or destruction of proprietary 
information disclosed under APO in accordance with 19 CFR 353.34(d). 
Failure to comply is a violation of the APO.
    This determination is published pursuant to section 735(d) of the 
Act and 19 CFR 353.20(a)(4).

    Dated: March 8, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-6523 Filed 3-15-95; 8:45 am]
BILLING CODE 3510-DS-P