[Federal Register Volume 60, Number 76 (Thursday, April 20, 1995)]
[Notices]
[Pages 19720-19723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9835]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-808]


Chrome-Plated Lug Nuts From the People's Republic of China; 
Preliminary Results of Antidumping Administrative Review

AGENCY: International Trade Administration/Import Administration.

ACTION: Notice of preliminary results of the Antidumping Duty 
Administrative Review of chrome-plated lug nuts from the People's 
Republic of China.

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SUMMARY: The Department of Commerce (the Department) is conducting 
administrative reviews of the antidumping duty order on chrome-plated 
lug nuts (lug nuts) from the People's Republic of China (PRC) in 
response to requests by petitioner, Consolidated International 
Automotive, Inc. (Consolidated), for the first and second reviews, and 
an importer, Krossdale Accessories, Inc., for the second administrative 
review. These reviews cover shipments of this merchandise to the United 
States during the period April 18, 1991, through August 31, 1992, and 
September 1, 1992, through August 31, 1993.
    We have preliminarily determined that sales have been made below 
the foreign market value (FMV). If these preliminary results are 
adopted in our final results, we will instruct U.S. Customs to assess 
antidumping duties equal to the difference between the United States 
price (USP) and FMV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: April 20, 1995.

FOR FURTHER INFORMATION CONTACT: Donald Little, Elisabeth Urfer, or 
Maureen Flannery, Office of Antidumping Compliance, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington D.C. 
20230; telephone (202) 482-4733.

Background

    The Department published in the Federal Register an antidumping 
duty order on lug nuts from the PRC on April 24, 1992 (57 FR 15052). On 
September 11, 1992, and September 7, 1993, the Department published in 
the Federal Register (57 FR 41725 and 58 FR 47116) notices of 
opportunity to request administrative reviews of the antidumping duty 
order on lug nuts from the PRC covering the periods April 18, 1991, 
through August 31, 1992, (91-92 review) and September 1, 1992, through 
August 31, 1993 (92-93 review).
    For the 91-92 review, in accordance with 19 CFR 353.22(a)(1994), 
the petitioner, Consolidated, requested that we conduct an 
administrative review of China National Automotive Industry I/E Corp.; 
China National Machinery & Equipment Import and Export Corporation, 
Jiangsu Co., Ltd. (Jiangsu); Rudong Grease Gun Factory (Rudong); China 
National Automotive Industry Shanghai Automobile Import & Export Corp. 
(Shanghai Automobile); Chu Fong Metallic Industrial Corporation (Chu 
Fong); and San Chien Electric Industrial Works, Ltd. (San Chien). We 
published a notice of initiation of this [[Page 19721]] antidumping 
duty administrative review on October 22, 1992 (57 FR 48201).
    For the 92-93 review, in accordance with 19 CFR 353.22(a), 
Consolidated requested that we conduct an administrative review of 
China National Automotive Industry I/E Corp; Jiangsu; China National 
Automobile Import and Export Corp., Yangzhou Branch (Yangzhou); Rudong; 
Ningbo Knives & Scissors Factory (Ningbo); Shanghai Automobile; and 
Tianjin Automotive Import and Export Co. (Tianjin). In accordance with 
19 CFR 353.22(a), Krossdale Accessories, Inc. requested a review of its 
supplier, China National Machinery & Equipment Import & Export Corp., 
Nantong Branch (Nantong). We published a notice of initiation of this 
antidumping duty administrative review on October 18, 1993 (58 FR 
53710). The Department is conducting these administrative reviews in 
accordance with section 751 of the Tariff Act of 1930, as amended (the 
Act).

Scope of Review

    On April 19, 1994, the Department issued its ``Final Scope 
Clarifications on Chrome-Plated Lug Nuts from Taiwan and the PRC.'' The 
scope, as clarified, is described in the subsequent paragraph. All lug 
nuts covered by these reviews conform to the April 19, 1994, scope 
clarification.
    Imports covered by these reviews are one-piece and two-piece 
chrome-plated lug nuts, finished or unfinished. The subject merchandise 
includes chrome-plated lug nuts, finished or unfinished, which are more 
than \11/16\ inches (17.45 millimeters) in height and which have a 
hexagonal (hx) size of at least \3/4\ inches (19.05 millimeters) but 
not over one inch (25.4 millimeters), plus or minus \1/16\ of an inch 
(1.59 millimeters). The term ``unfinished'' refers to unplated and/or 
unassembled chrome-plated lug nuts. The subject merchandise is used for 
securing wheels to cars, vans, trucks, utility vehicles, and trailers. 
Zinc-plated lug nuts, finished or unfinished, and stainless-steel 
capped lug nuts are not included in the scope of this review. Chrome-
plated lock nuts are also not subject to this review.
    Chrome-plated lug nuts are currently classified under subheading 
7318.16.00.00 of the Harmonized Tariff Schedule (HTS). Although the HTS 
subheading is provided for convenience and customs purposes, the 
written description of the scope of this proceeding is dispositive.
    These reviews cover the periods April 18, 1991, through August 31, 
1992, and September 1, 1992, through August 31, 1993. The 91-92 review 
covers six producer/exporters of Chinese lug nuts. The 92-93 review 
covers eight producer/exporters of Chinese lug nuts.

Separate Rates

    To establish whether a company operating in a state-controlled 
economy is sufficiently independent to be entitled to a separate rate, 
the Department analyzes each exporting entity under the test 
established in Final Determination of Sales at Less Than Fair Value: 
Sparklers from the People's Republic of China (56 FR 20588, May 6, 
1991) (Sparklers), as amplified by the Final Determination of Sales at 
Less Than Fair Value: Silicon Carbide from the People's Republic of 
China (59 FR 22585, May 2, 1994) (Silicon Carbide). Under this policy, 
exporters in non-market economies (NMEs) are entitled to separate, 
company-specific margins when they can demonstrate an absence of 
government control, both in law and in fact, with respect to exports. 
Evidence supporting, though not requiring, a finding of de jure absence 
of government control includes: (1) An absence of restrictive 
stipulations associated with an individual exporter's business and 
export licenses; (2) any legislative enactments decentralizing control 
of companies; and (3) any other formal measures by the government 
decentralizing control of companies. De facto absence of government 
control with respect to exports is based on four factors: (1) Whether 
each exporter sets its own export prices independently of the 
government and without the approval of a government authority; (2) 
whether each exporter retains the proceeds from its sales and makes 
independent decisions regarding the disposition of profits or financing 
of losses; (3) whether each exporter has the authority to negotiate and 
sign contracts and other agreements; and (4) whether each exporter has 
autonomy from the government regarding the selection of management.
    Nantong was the only exporter that responded to the Department's 
request for information; therefore, Nantong was the only firm on which 
we made a determination of whether it should receive a separate rate. 
The determination of whether Nantong should receive a separate rate is 
to be made under the policy set forth in Silicon Carbide and Sparklers. 
In Silicon Carbide we concluded that ownership by the people does not 
require the application of a single rate, and amplified the test set 
out in Sparklers by examining the management of an enterprise.
    Nantong is owned by the local government. Such ownership does not, 
however, preclude a determination that a separate rate is appropriate. 
Nantong's management is elected by Nantong's staff, and is responsible 
for all decisions such as profit distribution, employment policy and 
marketing strategy.
    We have found that the evidence on the record demonstrates an 
absence of government control, both in law and in fact, with respect to 
Nantong's exports according to the criteria identified in Sparklers and 
Silicon Carbide. With respect to the absence of de jure government 
control, evidence on the record indicates that, even though Nantong is 
registered as a state-owned company, it is an independent entity. 
Further, several PRC laws establish that the responsibility for 
managing entities has been transferred from the central government to 
the enterprise. (See August 30, 1994, memorandum to the file, with 
attachments and November 18, 1994 memorandum to the file). In 
particular, ``The People's Republic of China All People's Ownership 
Business Law,'' enacted on April 13, 1988, indicates that branch 
companies have become legally and financially independent of centrally-
controlled foreign trade companies. Nantong is such a branch company. 
Additionally, lug nuts do not appear on the ``Temporary Provisions for 
Administration of Export Commodities,'' approved on December 21, 1992, 
and are not, therefore, subject to the constraints of those provisions. 
With respect to the absence of de facto government control, Nantong 
states that it makes decisions based upon market requirements, that it 
is not subject to adverse financial costs for choosing one export 
strategy over another, that the management team makes all decisions, 
that there are no restrictions on the use of its profits, that the 
employees of Nantong elect the general manager and management team, and 
that it conducts negotiations with U.S. importers. For further 
discussion of the Department's preliminary determination that Nantong 
is entitled to a separate rate, see Decision Memorandum: ``Separate 
Rates in the First and Second Administrative Reviews of Chrome-Plated 
Lug Nuts from the People's Republic of China,'' dated March 13, 1995; 
which is on file in the Central Record Unit (room B099 of the Main 
Commerce Building).

United States Price

    For sales made by Nantong we based the USP on purchase price (PP), 
in accordance with section 772(b) of the Act, because the subject 
merchandise was sold to unrelated purchasers in the United States prior 
to importation into the United States. [[Page 19722]] 
    We calculated PP based on the FOB price to unrelated purchasers. We 
made deductions for brokerage and handling and foreign inland freight. 
We valued brokerage and handling and foreign inland freight deductions 
using surrogate data based on Indian freight costs. We selected India 
as the surrogate country for the reasons explained in the ``Foreign 
Market Value'' section of this notice.

Foreign Market Value

    For all companies located in NME countries, section 773(c)(1) of 
the Act provides that the Department shall determine FMV using a 
factors-of-production methodology if (1) the merchandise is exported 
from an NME country, and (2) the information does not permit the 
calculation of FMV using home market prices, third country prices, or 
constructed value (CV) under section 773(a) of the Act.
    In the amendment to the final determination of sales at less than 
fair value (LTFV), the Department treated the PRC as an NME country, 
and determined that lug nuts is not a market-oriented industry. (See 
Amendment to Final Determination of Sales at Less Than Fair Value and 
Amendment to Antidumping Duty Order: Chrome-Plated Lug Nuts from the 
People's Republic of China, 57 FR 15052, April 24, 1992.) Because no 
company in this review has argued that the PRC is a market-economy 
country, or that the lug nut industry in the PRC is market-oriented, we 
continue to consider the PRC to be an NME country, and the lug nut 
industry to be non- market oriented and, therefore, we have applied 
surrogate values to factors of production to determine CV and movement 
costs.
    We calculated FMV based on factors of production in accordance with 
section 773(c) of the Act and section 353.52 of the Department's 
regulations. We determined that India is comparable to the PRC in terms 
of per capita gross national product (GNP), the growth rate in per 
capita GNP, and the national distribution of labor, and is a 
significant producer of comparable merchandise. For these reviews, we 
chose India as the most comparable surrogate on the basis of the above 
criteria, and have used publicly available information relating to 
India to value the various factors of production. (See Memorandum dated 
July 29, 1994).
    We valued the factors of production as follows:
     For steel wire rods, we used a per kilogram value obtained 
from the Monthly Statistics of Foreign Trade of India for the period 
April through December, 1992. Using wholesale price indices (WPI) 
obtained from the International Financial Statistics, published by the 
International Monetary Fund (IMF), we adjusted these values to reflect 
inflation. We made further adjustments to include freight costs 
incurred between the supplier and the factory in the PRC.
     For chemicals used in the production of lug nuts, we used 
per kilogram values obtained from the Monthly Statistics of Foreign 
Trade of India, Chemical Business, and Chemical Weekly. We adjusted 
these rates to reflect inflation using WPI from the International 
Financial Statistics.
     For direct labor, we used the Business International 
Report IL&T India released in November 1992. We adjusted this rate to 
reflect inflation using WPI from the International Financial 
Statistics. The labor cost for each component was calculated by 
multiplying the labor time requirement by the surrogate labor rate.
     For factory overhead, we used information obtained from 
the Reserve Bank of India Bulletin, December 1992, for Indian metals 
and chemicals industries. From this information, we were able to 
determine factory overhead as a percentage of total cost of 
manufacture. We added factory overhead into the cost of manufacture. 
Factory overhead did not include electricity; therefore, we added an 
amount for electricity, using information from Energy Indicators of 
Developing Member Countries of Asian Development Bank from July 1992. 
We adjusted these rates to reflect inflation using WPI from the 
International Financial Statistics.
     For SG&A expenses, we used information obtained from the 
Reserve Bank of India Bulletin from December 1992. From this 
information, we calculated an SG&A rate by dividing SG&A expenses by 
the cost of manufacture. SG&A expenses were less than ten percent of 
the cost of manufacture. Therefore, we used the statutory minimum of 
ten percent of the cost of manufacture for SG&A.
     For profit, we used the profit rate obtained from the 
Reserve Bank of India Bulletin from December 1992 because it was in 
excess of the statutory eight percent minimum.
     For packing, we used, as best information available (BIA), 
one percent of the cost of production. We applied BIA for packing 
because Rudong, the producer, did not supply sufficient factor 
information by which to allocate packing costs. This percentage, 
applied to publicly available data, was used in the Final Determination 
of Sales at Less than Fair Value: Tapered Roller Bearings from Italy, 
52 FR 24198 (June 29, 1987). This methodology is consistent with the 
Department's valuation of packing in the Final Results of Antidumping 
Duty Administrative Review: Tapered Roller Bearings from the People's 
Republic of China, 56 FR 67590 (December 31, 1991).

Currency Conversion

    We made currency conversions in accordance with 19 CFR 353.60(a). 
Currency conversions were made at the rates certified by the Federal 
Reserve Bank.

Best Information Available

    We preliminarily determine, in accordance with section 776(c) of 
the Act, that the use of BIA is appropriate for the China National 
Automotive Industry I/E Corp., Jiangsu, Shanghai Automobile, Chu Fong, 
San Chien, Yangzhou, Ningbo, and Tianjin because these firms did not 
respond to the Department's antidumping questionnaire.
    In deciding what to use as BIA, 19 CFR 353.37(b) provides that the 
Department may take into account whether a party refused to provide 
requested information. Thus, the Department determines on a case-by-
case basis what is BIA. When a company refuses to provide the 
information requested in the form required, or otherwise significantly 
impedes the Department's review, the Department will normally assign to 
that company the higher of (1) The highest rate for any firm in the 
investigation or prior administrative reviews of sales of subject 
merchandise from that same country; or (2) the highest rate found in 
the review for any firm. When a company has cooperated with the 
Department's request for information but fails to provide the 
information requested in a timely manner or in the form required, the 
Department will normally assign to that company the higher of either: 
(1) The highest margin calculated for that company in any previous 
review or the original investigation; or (2) the highest calculated 
margin for any respondent that supplied an adequate response for the 
current review. (See Antifriction Bearings (Other than Tapered Roller 
Bearings) and Parts Thereof From the Federal Republic of Germany, et. 
al.; Final Results of Administrative Review, 56 FR 31705 (July 11, 
1991).
    For the 91-92 review we have applied BIA to sales made by China 
National Automotive Industry I/E Corp., Jiangsu, Shanghai Automobile, 
Chu Fong, and San Chien. Because these firms did not 
[[Page 19723]] respond to our questionnaire, we have applied as BIA the 
highest margin ever calculated in the investigation or this first 
review.
    For the 92-93 review we have applied BIA to sales made by China 
National Automotive Industry I/E Corp, Jiangsu, Yangzhou, Ningbo, 
Shanghai Automobile, and Tianjin. Because these firms did not respond 
to our questionnaire, as BIA we have applied the highest margin ever 
calculated in the investigation or this or the prior review.
    Rudong responded to the Department's requests for information for 
both review periods, but reported no direct exports to the United 
States during either period. Therefore, we are treating Rudong as a 
non-shipper for these reviews. Since the Department has never 
determined that a separate rate should apply to exports from Rudong, 
future exports from Rudong will be subject to cash deposit at the PRC 
rate.

Preliminary Results of the Review

    We preliminarily determine that the following dumping margins 
exist:

------------------------------------------------------------------------
                                                                Margin  
       Manufacturer/exporter               Time period         (percent)
------------------------------------------------------------------------
China National Machinery &                                              
 Equipment Import & Export Corp.,                                       
 Nantong Branch....................        09/01/92-08/31/93       45.41
Rudong Grease-Gun..................        04/18/91-08/31/92      *42.42
Factory............................        09/01/92-08/31/93     *45.41 
------------------------------------------------------------------------
*No shipments during the period, but never determined to merit a        
  separate rate. Therefore, we applied the PRC rate established in this 
  review. This is the rate for companies that had shipments, or are     
  presumed to have shipments, during the period, but which were not     
  given separate rates.                                                 

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. The Department will publish a notice of final results of 
this administrative review, which will include the results of its 
analysis of issues raised in any such comments.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. The Department 
will issue appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of these administrative reviews for 
all shipments of lug nuts from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(1) of the Act: (1) For Nantong, which 
has a separate rate, the cash deposit rate will be the company-specific 
rate published for the most recent (1992-1993) period; (2) for Jiangsu, 
which was previously investigated and given a separate rate, the cash 
deposit rate will be the company-specific rate published for the most 
recent (1992-1993) period, which is based on BIA; (3) for the companies 
named above which were not found to have separate rates, China National 
Automotive Industry I/E Corp., Yangzhou, Ningbo, Shanghai Automobile, 
and Tianjin, as well as for all other PRC exporters, the cash deposit 
rate will be 45.41 percent; and (4) for non-PRC exporters of subject 
merchandise from the PRC, the cash deposit rate will be the rate 
applicable to the PRC supplier of that exporter.
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 353.26 to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: April 13, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-9835 Filed 4-19-95; 8:45 am]
BILLING CODE 3510-DS-P