[Federal Register Volume 60, Number 87 (Friday, May 5, 1995)]
[Notices]
[Pages 22359-22370]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11161]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-834]
Notice of Final Determination of Sales at Less Than Fair Value:
Disposable Pocket Lighters From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 5, 1995.
FOR FURTHER INFORMATION CONTACT: Julie Anne Osgood or Todd Hansen,
Office of Countervailing Investigations, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-0167 or (202) 482-1276, respectively.
Final Determination
We determine that disposable pocket lighters from the People's
Republic of China (``PRC'') are being, or are likely to be, sold in the
United States at less than fair value (``LTFV''), as provided in
section 735 of the Tariff Act of 1930, as amended (``the Act''). The
estimated margins are shown in the ``Continuation of Suspension of
Liquidation'' section of this notice. The U.S. Department of Commerce
(``the Department'') also determines that critical circumstances exist
for all exporters except Gao Yao (HK) Hua Fa Industrial Company Ltd.
(``Gao Yao''), Guangdong Light Industrial Products Import & Export
Corporation (``GLIP'') and PolyCity Industrial Limited (``PolyCity'').
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are references to the provisions as they
existed on December 31, 1994.
Case History
Since the preliminary determination on December 5, 1994, (Notice of
Preliminary Determination of Sales at Less Than Fair Value: Disposable
Pocket Lighters from the People's Republic of China, 59 FR 64191
(December 13, 1994)), the following events have occurred:
On December 23, 1994, we issued our preliminary determination of
critical circumstances with respect to the subject merchandise (60 FR
436, January 4, 1995).
On December 9 and December 19, 1994, Cli-Claque Company Limited
(``Cli-Claque''), China National Overseas Trading Corporation
(``COTCO''), Gao Yao and GLIP, requested a postponement of the final
determination, pursuant to 19 CFR 353.20. Accordingly, on January 20,
1995, the deadline for the final determination was extended to April
27, 1995 (60 FR 5899, January 31, 1995).
From February 28 through March 17, 1995, we verified the responses
of the exporters and producers of disposable lighters.
Petitioner and respondents filed case briefs on April 6, 10, 11,
and 12, and rebuttal briefs on April 13 and 14, 1995. A public hearing
was held on April 17, 1995.
Scope of Investigation
The products covered by this investigation are disposable pocket
lighters (``lighters''), whether or not refillable, whose fuel is
butane, isobutane, propane, or other liquefied hydrocarbon, or a
mixture containing any of these, whose vapor pressure at 75 degrees
fahrenheit (24 degrees Celsius) exceeds a gauge pressure of 15 pounds
per square inch. Non-refillable pocket lighters are imported under
subheading 9613.10.0000 of the Harmonized Tariff Schedule of the United
States (``HTSUS''). Refillable, disposable pocket lighters would be
imported under subheading 9613.20.0000. Although the HTSUS subheadings
are provided for convenience and Customs purposes, our written
description of the scope of this proceeding is dispositive.
Certain windproof refillable lighters, as described in memoranda to
Barbara R. Stafford, dated December 5, 1994, and April 25, 1995, are
excluded from the scope of this investigation. Also, excluded from the
scope of this investigation are electric lighters (as described in the
April 25, 1995 memo) which use two AA batteries to heat a coil for
purposes of igniting smoking materials, rather than using butane,
isobutane, propane, or other liquefied hydrocarbon to fuel a flame for
purposes of igniting smoking materials.
Period of Investigation
The period of investigation (``POI'') is December 1, 1993 through
May 31, 1994.
Non-market Economy Status
The PRC has been treated as a non-market economy country (``NME'')
in past antidumping investigations (see, e.g., Final Determination of
Sales at Less Than Fair Value: Saccharin from the People's Republic of
China, 59 FR 58818 (November 15, 1994) (``Saccharin''). No information
has been provided in this proceeding that would lead us to overturn our
former determinations. Therefore, in accordance with section
[[Page 22360]] 771(18)(c) of the Act, we are continuing to treat the
PRC as an NME for purposes of this investigation.
Separate Rates
All five of the responding companies in this investigation have
requested separate antidumping duty rates. In cases involving NMEs, the
Department's policy is to assign a separate rate only when an exporter
can demonstrate the absence of both de jure and de facto governmental
control over export activities.
In this case, two of the five respondents, PolyCity and Cli-Claque,
are Hong Kong companies that are involved in joint ventures in the PRC
that manufacture disposable lighters. Since PolyCity and Cli-Claque are
located outside the PRC, the PRC government does not have jurisdiction
over them. Moreover, the PRC government does not have any ownership
interest in these exporters and, therefore, it cannot exercise control
through ownership of these companies. On this basis, we determine that
there is no need to apply our separate rates analysis to these two
companies and that PolyCity and Cli-Claque are entitled to individual
rates.
In contrast to PolyCity and Cli-Claque, Gao Yao is a 50/50 joint
venture between a Chinese company, owned ``by all the people,'' and a
Hong Kong company. The joint venture owns both the production and
export facilities used to manufacture and export the disposable
lighters it sells to the United States. Given the direct PRC ownership
in Gao Yao's export operations, we have determined that it is
appropriate to apply our separate rates analysis to this company.
Of the remaining companies, COTCO and GLIP indicated that they were
owned ``by all the people'' during the POI. As stated in the Final
Determination of Sales at Less than Fair Value: Silicon Carbide from
the PRC, 59 FR 22585 (May 2, 1994) (``Silicon Carbide''), ``ownership
of a company by all the people does not require the application of a
single rate.'' Accordingly, COTCO and GLIP are eligible for
consideration for a separate rate under our criteria.
Although GLIP was owned during the POI by ``all the people,'' after
the POI it became a shareholding company whose shares are held by a
variety of investors. GLIP received approval to become a shareholding
company in March 1994, but issued shares after the POI. A portion of
the company's shares representing the initial investment in the company
are held in trust by the State Asset Management Bureau (``SAMB'').
However, the record of the investigation indicates that the SAMB has
entrusted voting rights of its shares to the management of the company.
In past cases involving similar circumstances, we found that the
granting of a separate rate to the responding exporters was not
precluded. (See, e.g., Final Determination of Sales at Less Than Fair
Value: Certain Cased Pencils from the People's Republic of China, 59 FR
55625 (November 8, 1994), and Final Determination of Sales at Less than
Fair Value: Certain Paper Clips from the People's Republic of China, 59
FR 511680 (October 7, 1994).) As stated above, we have applied our
separate rates analysis to GLIP.
To establish whether a firm is entitled to a separate rate, the
Department analyzes each exporting entity under a test arising out of
the Final Determination of Sales at Less Than Fair Value: Sparklers
from the PRC, 56 FR 20588 (May 6, 1991) (``Sparklers'') and amplified
in Silicon Carbide. Under the separate rates criteria, the Department
assigns separate rates only where respondents can demonstrate the
absence of both de jure and de facto governmental control over export
activities.
1. Absence of de Jure1 Control
\1\Evidence supporting, though not requiring, a finding of de
jure absence of central 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; or (3) any other formal measure
by the government decentralizing control of companies.
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The respondents submitted a number of documents to demonstrate
absence of de jure control, including two PRC laws indicating that the
responsibility for managing enterprises owned by ``all the people'' is
with the enterprises themselves and not with the government. These are
the ``Law of the People's Republic of China on Industrial Enterprises
Owned by the Whole People,'' adopted on April 13, 1988 (``1988 Law'');
and the ``Regulations for Transformation of Operational Mechanism of
State-Owned Industrial Enterprises,'' approved on August 23, 1992
(``1992 Regulations''). Respondents' submission also included the
``Temporary Provisions for Administration of Export Commodities,''
approved on December 21, 1992 (``Export Provisions''). In April 1994,
the State Council enacted the ``Emergent Notice of Changes in Issuing
Authority for Export Licenses Regarding Public Quota Bidding for
Certain Commodities'' (Quota Measures).
The 1988 Law and 1992 Regulations shifted control of companies
owned ``by all the people'' from the government to the enterprises
themselves. The 1988 Law provides that enterprises owned by ``all the
people'' shall make their own management decisions, be responsible for
their own profits and losses, choose their own suppliers and purchase
their own goods and materials. The 1988 Law contains other provisions
which indicate that enterprises have management independence from the
government. The 1992 Regulations provide that these same enterprises
can, for example, set their own prices (Article IX); make their own
production decisions (Article XI); use their own retained foreign
exchange (Article XII); allocate profits (Article II); sell their own
products without government interference (Article X); make their own
investment decisions (Article XIII); dispose of their own assets
(Article XV); and hire and fire employees without government approval
(Article XVII). The Export Provisions indicate those products that may
be subject to direct government control. Lighters do not appear on the
Export Provisions list nor on the Quota Measures list and are not,
therefore, subject to export constraints.
Since GLIP was initially a company owned by ``all the people,'' the
laws cited above establish that the government devolved control over
such companies. The only additional law that is pertinent to the de
jure analysis of GLIP as a share company is the Company Law (effective
July 1, 1994). While GLIP indicated that it is now organized consistent
with the Company Law, the law did not enter into force until two months
after the POI. In any event, this law does not alter the government's
de jure devolution of control that occurred when the company was owned
``by all the people.'' Therefore, we have determined that GLIP is not
subject to de jure control.
Consistent with Silicon Carbide, we determine that the existence of
these laws demonstrates that COTCO, GLIP, and Gao Yao are not subject
to de jure central government control with respect to export sales and
pricing decisions. However, there is some evidence that the provisions
of the above-cited laws and regulations have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC (see
``PRC Government Findings on Enterprise Autonomy,'' in Foreign
Broadcast Information Service-China-93-133 (July 14, 1993)). Therefore,
the Department has determined that a de facto analysis is critical to
determine whether COTCO, Gao Yao and GLIP are [[Page 22361]] subject to
governmental control over export sales and pricing decisions.
2. Absence of de Facto Control
The Department typically considers four factors in evaluating
whether a respondent is subject to de facto government control of its
export functions: (1) whether the export prices are set by, or subject
to the approval of, a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses (see Silicon Carbide).
During the verification proceedings, Department officials viewed
evidence in the form of sales documents, company correspondence, and
bank statements, and confirmed through inquiries of company
representatives and officials from the China Chamber of Commerce for
Machinery and Electronic Products Import & Export (``CCCME''), that
COTCO, GLIP, and Gao Yao:
Maintain their own bank accounts, including foreign
exchange accounts;
Are not restricted in their access to their bank accounts;
Make independent business decisions, based on market
conditions;
Set their own prices independently and that the prices are
not subject to review by government authorities;
Are not subject to foreign exchange targets set by either
the central or provincial governments; and
Have the ability to sell, transfer, or acquire assets.
Exporter-Specific Information
Gao Yao
Is a Sino-Hong Kong 50-50 joint venture whose Chinese
participant is a company owned by ``all the people'';
Maintains a bank account in Hong Kong where all monies
received from Gao Yao's foreign sales are deposited;
Has management that is selected by the board of directors,
without any governmental interference;
Divides its profits evenly between the joint venture
partners according to ownership participation; and
Retains a general manager who is a Hong Kong resident.
GLIP
Is owned by ``all the people'' during the POI, but became
a shareholding company in July 1994;
Has management that is selected by its board of directors;
Selection and continued employment of management is not
subject to government approval;
May issue additional shares through the company's board of
directors with the approval of shareholders; and
Government contact was limited to the issuance of GLIP's
shareholding license and a general notice pertaining to penalties for
illegal exporting.
COTCO
Is owned by ``all the people'';
Has managers that are hired following public notices of
vacancy, screening, and hiring negotiations; and
Has management that is evaluated by the employees of the
company. The selection and promotion of management are not subject to
any governmental entity's review or approval.
Based on the record evidence as verified, we find that there is a
de facto absence of governmental control of export functions of each of
the three companies. Consequently, COTCO, Gao Yao and GLIP have been
granted separate rates in our final determination.
Surrogate Country
Section 773(c)(4) of the Act requires that the Department value the
NME producers' factors of production, to the extent possible, in one or
more market economy countries that are (1) at a level of economic
development comparable to that of the NME country, and (2) significant
producers of comparable merchandise. The Department has determined that
Indonesia is the most suitable surrogate for purposes of this
investigation. Based on available statistical information, Indonesia is
at a level of economic development comparable to that of the PRC, and
is a significant producer of lighters (see, memorandum to the file from
Todd Hansen, dated December 5, Surrogate Country Selection and
memorandum from David Mueller to Susan Kuhbach, dated September 8,
1994, Lighters from the People's Republic of China and Surrogate
Country Selection.)
Fair Value Comparisons
To determine whether sales of lighters from the PRC to the United
States by respondents 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.
United States Price
For all respondents, we based USP on purchase price, in accordance
with section 772(b) of the Act, because lighters were sold directly to
unrelated parties in the United States prior to importation into the
United States and because exporters sales price methodology was not
otherwise indicated.
We calculated purchase price based on packed, FOB foreign port
prices for unrelated purchasers in the United States and packed, CIF
prices, where appropriate. We made deductions for discounts, foreign
inland freight, containerization, loading, port handling expenses,
ocean freight and marine insurance, as indicated. When these services
were purchased from a market economy supplier and paid for in a market
economy currency, we used the actual cost. Otherwise, these charges
were valued in the surrogate country. In addition, we have relied upon
a price quote provided by an unrelated Hong Kong company to value
freight in those instances where Cli-Claque used a related trucking
company for the delivery of finished lighters.
At the request of the Department, on March 22 and 23, 1995,
PolyCity and Cli-Claque submitted revised U.S. sales and factors of
production information to reflect minor changes due to errors noted at
verification. In addition, PolyCity revised: the U.S. sales listing to
include additional sales that had been inadvertently omitted (see
Comment 8); foreign inland freight to include additional charges
incurred at the border; marine insurance and foreign brokerage and
handling to reflect costs incurred on a value basis rather than a per
piece basis; and ocean freight to reflect additional charges on certain
invoices and payment in Hong Kong dollars rather than U.S. dollars.
Cli-Claque's submission included small number of additional sales which
had been inadvertently omitted and revisions to foreign inland freight
figures on deliveries of finished lighters and purchases of inputs.
Pursuant to findings at verification, minor revisions were made to
COTCO's sales price. For Gao Yao, we adjusted USP for port handling
charges that had been paid in a market economy currency to a Hong Kong
company.
Foreign Market Value
In accordance with section 773(c) of the Act, we calculated FMV
based on factors of production reported by the factories in the PRC
which produced the subject merchandise for the five responding
exporters. The factors used [[Page 22362]] to produce lighters include
materials, labor, and energy. To calculate FMV, the reported factor
quantities were multiplied by the appropriate surrogate values from
Indonesia for those inputs purchased domestically from PRC suppliers.
Where inputs were imported from market economy countries and paid in a
market economy currency, we used the actual costs incurred by the
producers to value these 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). We adjusted
these input prices to make them delivered prices. We then added amounts
for overhead, general expenses and profit, the cost of containers and
coverings, and other expenses incident to placing the merchandise in
condition packed and ready for shipment to the United States.
In addition, we have made the following changes to our preliminary
calculations:
For PolyCity, we valued certain inputs purchased from
market-economy sources with market-economy currency using invoices
dated outside the POI. For inputs that were not purchased from market-
economy sources with market-economy currency, we used surrogate values
(see Comment 11).
For Cli-Claque, we calculated foreign inland freight based
on verified distances for packing materials and finished lighters. In
addition, we have relied upon a price quote provided by an unrelated
Hong Kong company to value freight in those instances where Cli-Claque
used a related trucking company for the delivery of imported inputs. We
have adjusted direct labor hours to reflect verified information.
Finally, to value the packing trays which were made by a factory
located in the PRC with imported inputs, we have used surrogate values.
For GLIP, we adjusted labor hours, butane usage,
electricity usage, certain lighter parts and packing materials to
reflect verified information. Also, we adjusted the prices paid to
market economy suppliers based on verified information.
For Gao Yao, we used surrogate values for inputs that we
verified were purchased from PRC suppliers, but had originally been
reported as purchased from market economy suppliers. We adjusted waste
and electricity figures to reflect verified information. In addition,
certain consumption figures were changed from a per kilogram basis to a
per-piece basis. Finally, the weights of certain lighter parts were
changed due to findings at verification.
For COTCO, we adjusted labor hours and consumption of
certain raw materials to reflect verified information. We also adjusted
the weights of certain lighter parts and packing materials based on
verified information.
In determining the surrogate price to be used for valuing the
remaining factors of production, we selected, when available, publicly
available published information (``public information'') from
Indonesia.
With the exception of butane, we used the Indonesian import prices
taken from the Indonesian Foreign Trade Statistical Bulletin--Imports,
December 1993 and April 1994 to value material inputs. Based on
discussions with U.S. Customs officials (see Memorandum to the File
from Todd Hansen, dated April 26, 1995, Appropriate HAS Numbers), we
have changed certain surrogate values to more accurately reflect the
cost of the input used.
For butane, the quantity imported into Indonesia was insignificant.
Therefore, for those PRC producers that did not import butane from
market economy sources, we relied on Indonesian export statistics, as
reported in the Indonesian Foreign Trade Statistical Bulletin--Exports,
December 1993 and April 1994.
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 factor and the
disposable lighter factory.
To value electricity, we used the public information from the
Electric Utilities Data Book for Asian and Pacific Region (January
1993) published by the Asian Development Bank. To value labor amounts,
we have used figures for skilled and unskilled labor obtained from
Doing Business in Indonesia (1991) and the International Labor Office's
1994 Special Supplement to the Bulletin of Labor Statistics. We have
determined that these figure more accurately represent hourly wage
rates paid in Indonesia than the rate provided in the Department of
Labor's ``Foreign Labor Trends,'' which was the rate used in the
preliminary determination.
We adjusted the factor values, when necessary, to the POI using
wholesale price indices (``WPIs'') published by the International
Monetary Fund (``IMF'').
Because we were unable to locate appropriate information on factory
overhead in Indonesia, we relied upon data published by the Reserve
Bank of India pertaining to Manufacturing--metals, chemicals, and
products thereof. Because this figure includes indirect expenses and
water, we have not calculated separate costs for these inputs.
For general expense percentages, we also used the Reserve Bank of
India data. For profit, we used the statutory minimum of eight percent
of materials, labor, factory overhead, and general expenses. We could
not obtain Indonesian values for either general expenses or profit. The
Indian profit rate was less than the statutory minimum of eight
percent.
We added packing based on Indonesian values obtained from the
Indonesian Foreign Trade Statistical Bulletin--Imports, December 1993
and April 1994.
Best Information Available (BIA)
In this investigation, some PRC exporters failed to respond to our
questionnaire. We have determined that those exporters should receive
rates based on BIA. In addition, because we presume all exporters to be
centrally controlled, absent verified information to the contrary, in
accordance with section 776(c) of the Act, we have assigned a margin
based on BIA to all exporters who have not demonstrated their
independence from central control. This determination is consistent
with our use of a BIA-based ``PRC-Wide'' rate in other recent
investigations (see e.g., Saccharin).
In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns less
adverse margins to those respondents that cooperated in an
investigation and more adverse margins for those respondents that did
not cooperate in an investigation. As outlined in the Antifriction
Bearings (Other than Tapered Roller Bearings) and Parts Thereof from
the Federal Republic of Germany; Final Results of Antidumping
Administrative Review (56 FR 31692, 31704-05, July 11, 1991), when a
company refuses to provide the information requested in the form
required, or otherwise significantly impedes the Department's
investigation, it is appropriate for the Department to assign to that
company the higher of (a) the highest margin alleged in the petition,
(b) the highest calculated rate of any respondent in the investigation,
or (c) the margin from the preliminary determination for that firm.
We consider all PRC exporters that did not respond, or otherwise
did not participate in the investigation, to be uncooperative and are
assigning to them the highest margin based on information submitted in
an amendment to the petition.
Critical Circumstances
In our notice of Preliminary Determination of Critical
[[Page 22363]] Circumstances: Disposable Pocket Lighters from the
People's Republic of China, 60 FR 436 (January 4, 1995), we found that
critical circumstances exist with respect to imports of disposable
lighters from COTCO and Cli-Claque.
Pursuant to section 733(e)(1) of the Act and 19 CFR 353.16, we
based our determination for COTCO on a finding of (1) an imputed
knowledge of dumping to the importers because the estimated dumping
margins were in excess of 25 percent, and (2) massive imports of
disposable lighters over a relatively short period, based on an
analysis of respondent's shipment data. Because Cli-Claque did not
submit shipment information for the preliminary critical circumstances
determination, we determined, as best information available, that
critical circumstances exist. Cli-Claque submitted the requested
information on January 6, 1995. For non-respondent exporters, we
determined that critical circumstances do exist.
Respondents' shipment information has now been verified. The
Department affirms the analysis as explained in its preliminary finding
with respect to PolyCity, Gao Yao, GLIP and COTCO. Accordingly, we
determine that critical circumstances do not exist with respect to
imports of disposable lighters from PolyCity, Gao Yao, and GLIP and do
exist with respect to COTCO and all non-responding exporters. With
respect to Cli-Claque, we also determine that critical circumstances do
exist (see Comment 13).
Verification
As provided in section 776(b) of the Act, we verified the
information submitted by respondents for use in our final
determination. We used standard verification procedures, including
examination of relevant accounting and production records, and original
source documents provided by respondents. Our verification results are
outlined in detail in the public version of the verification report,
available in Room B-099 of the Main Commerce Building, 14th and
Constitution, Washington DC 20230.
Interested Party Comments
General Issues
Comment 1: Separate Rates
Petitioner argues that an exporter should not receive a separate
rate unless the producer supplying the exporter can demonstrate that it
is also independent of central government control. The fact that an
exporter is independent from central government control provides no
guarantee that the producer or producers supplying it are also free of
government control. Since respondents have not overcome the presumption
that their Chinese disposable lighter producers are government
controlled, and the exporters merely serve as middlemen for the sale of
lighters to the U.S., the exporters should be assigned the ``PRC-Wide''
rate.
Petitioner questions whether the Department originally intended to
apply the separate rates analysis only to exporters. Petitioner points
to 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), where the Department enumerated separate rates for
``producer/exporter'' combinations. However, in recent cases, such as
Final Determination of Sales at Less Than Fair Value: Coumarin from the
People's Republic of China (59 FR 66899, December 28, 1994) (Coumarin),
the Department has indicated that it is intentionally restricting its
analysis of freedom from government control solely to exporters.
Petitioner argues that under this policy, the Department could find
itself in the position of certifying that an exporter is independent
and, therefore, can be assigned a separate rate, while the exporter is
purchasing from a producer who would not be allowed a separate rate
because of government control. Petitioner does not believe that this is
what the Department intended when it enunciated its separate rates
analysis in Sparklers. Petitioner also questions why the market
oriented industry (``MOI'') test looks at the producer and not the
exporter, while the separate rates test does the opposite.
Gao Yao, GLIP, and COTCO argue that the independence of their
suppliers is not relevant to the Department's determination of whether
Gao Yao, GLIP, and COTCO should receive separate rates. The Department
has sought, received, and verified information concerning the
independence of Chinese exporters. Gao Yao, GLIP, and COTCO argue that
examining the suppliers is irrelevant and conflicts with well-
established Department policy.
Both PolyCity and Cli-Claque argue that they are independent Hong
Kong companies, and the Chinese government does not own and cannot
control PolyCity's or Cli-Claque's activities. Therefore, they are
entitled to separate rates.
DOC Position
The separate rates policy reflects the Department's concern that
the Chinese government may interfere in the export activities of
companies selling to the United States and manipulate these companies'
export prices. Where an exporter is able to demonstrate that its export
activities are not controlled by the government, then the Department
will recognize that independence by awarding the exporter a separate
rate (see, e.g., Saccharin).
Petitioner's argument that trading companies are merely middlemen
suggests that the Chinese government manipulates the price of exports
to the United States (1) by controlling the price between the factory
and the trading company, or (2) by controlling the exporter's price to
the United States through the producer. With respect to the first
concern, the manufacturer's price to the exporter does not play any
role in the Department's calculation. U.S. price is based on the
exporter's (usually a trading company's) price to the United States and
FMV is based on the producer's factors of production. Therefore,
potential government control of prices between the producers and
exporters is irrelevant. Moreover, where the producer is not the
exporter, we have determined there is no evidence that the producer is
involved in the export activities of the exporter.
Because the exporter/trading company sets the export price, it is
appropriate to focus the separate rates analysis on the exporter. In
contrast, the purpose of the MOI test is to determine whether foreign
market value can be determined using prices or costs in the NME. Thus,
the test focuses on government control of the domestic industry, rather
than on export activities. Thus, petitioner's attempt to draw a
parallel between a separate rates analysis and an MOI analysis is
misplaced.
Comment 2: ``Tied'' Antidumping Duty Rates for Exporter/Supplier
Petitioner argues that where the Department issues a separate rate
to an exporter, that rate should be applied to the producer/exporter
combination that gave rise to the rate. Consequently, if the exporter
later purchases from another producer, the ``PRC-Wide'' rate should
apply. Such ``tied'' rates would prevent producers from channeling
merchandise out of the PRC through the exporter with the lowest rate.
Petitioner agrees with the Department's decision to tie Gao Yao and
its manufacturer when it assigned them a zero margin in the preliminary
determination, making any other manufacturers shipping through Gao Yao
subject to the ``PRC-Wide'' rate. However, petitioner contends that the
Department has refused to recognize [[Page 22364]] that other exporters
have been given a free hand to export disposable lighters from any
producer in China to the United States at the rate applicable to that
exporter. Consequently, producers will sell through exporters with low
rates, thereby avoiding the higher rates found in this investigation,
particularly the ``PRC-Wide'' rate. Because of the distinction made for
zero margins, petitioner argues that it is more beneficial for an
exporter to have a small positive margin than to have a zero margin, as
an exporter with a small positive margin may export for any producer at
that small margin. Therefore, petitioner requests that the Department
issue antidumping duty rates for exporter/producer combinations.
Gao Yao, GLIP, and COTCO state that petitioner's conclusion
regarding the channeling of all exports through the exporter with the
lowest dumping margin is erroneous. In the past, trading companies
which export to the United States have received individual rates
irrespective of their suppliers. COTCO and GLIP state that it is
appropriate for Gao Yao to receive a ``tied'' rate for merchandise sold
and manufactured by Gao Yao, because Gao Yao is a manufacturer who
exports, not a trading company. COTCO and GLIP state that, as trading
companies, they should not receive a ``tied'' rate even if they receive
a zero margin. Gao Yao, GLIP, and COTCO argue that even if a new
factory made shipments of goods to the United States through an
exporter with a lower dumping rate, the subsequent antidumping review
would require a factors analysis of the supplying factory.
Cli-Claque maintains that it is an independent Hong Kong company
that competes with all other lighter manufacturers. It has no incentive
or desire to help its competitors ship to the United States. Moreover,
if Cli-Claque shipped other companies' lighters to the United States,
Cli-Claque would risk losing its low dumping margin in subsequent
reviews.
DOC Position:
We have determined that the pairing of exporters and producers for
calculating antidumping rates is inappropriate under the circumstances
discussed above. Recent Department practice has been to assign rates
only to exporters except in the case of producer/exporter combinations
that have been found not to be dumping. (See e.g., Pencils, Saccharin,
Coumarin, and Final Antidumping Duty Determination: Certain Cased
Pencils from the People's Republic of China, 59 FR 55625, November 8,
1994, where the Department assigned a zero rate to a producer/exporter
for purposes of exclusion from the order, but the remaining rates were
assigned to exporters only.) Where a producer/exporter combination is
found not to be dumping, it is appropriate to publish a rate that
applies to that producer/exporter combination because they are excluded
from the order and, therefore, future administrative reviews. However,
all other exporters remain subject to the order and administrative
reviews. Hence, contrary to petitioner's assertion, those exporters
have no incentive to export the output of producers that might yield a
high FMV unless they adjust their U.S. prices accordingly. If they fail
to do so, an administrative review would result in an assessment of
additional duties, with interest, and a higher cash deposit rate for
future entries.
Comment 3: Overhead and Energy
COTCO, Gao Yao and GLIP argue that the cable from the U.S. Embassy
in Jakarta, relied upon by the Department in its preliminary
determination, does not state if indirect labor and electricity are
included in overhead. Since this is unclear, COTCO, Gao Yao and GLIP
argue that the Department should assume, as it has in past cases, that
indirect labor and electricity are included in factory overhead. (See
Sebacic Acid from the People's Republic of China, (59 FR 28053, 28060,
May 31, 1994) and Shop Towels of Cotton from the People's Republic of
China (56 FR 4040, 4042 , February 1, 1991).) COTCO, Gao Yao and GLIP
also state that the activities of the indirect laborers are not
directly related to production and would normally be included in
overhead.
PolyCity states that the standard cost accounting treatment
throughout the world for electricity and other utilities is to include
these items in factory overhead. According to PolyCity, the Department
double-counted these items when it separately included values for them
in addition to calculating a factory overhead rate.
Petitioner acknowledges that the factory overhead rate in the U.S.
Embassy cable does not make clear whether indirect labor is included.
However, since COTCO, Gao Yao and GLIP argue that there is very little
indirect labor involved in lighter production, petitioner states that
there would be little, if any, double counting if indirect labor were
valued separately.
DOC Position
For this final determination, we are using information from the
Reserve Bank of India Bulletin, (``RBIB'') December 1993 to value
factory overhead. We were unable to obtain an overhead rate for light
manufacturing plants in Indonesia. Therefore, we turned to India, where
a manufacturing overhead rate was available. We have determined that
this overhead figure represents the best overhead figure for the
industry in question because it is industry specific.
In determining what items should be valued separately from factory
overhead, we examined the costs included in the particular overhead
rate being used. Since the RBIB factory overhead rate does not include
indirect labor and energy, we are assigning separate values for these
items, notwithstanding respondents' arguments about standard cost
accounting practices.
Comment 4: Date of Sale
Petitioner argues that the date of sale should be the date of Cli-
Claque's and PolyCity's facsimile confirmation, not the date of
invoice. Petitioner contends that Cli-Claque and PolyCity negotiate
price, quantity, and estimated delivery date by phone and confirm these
terms by facsimile. However, these companies reported the date of
invoice as the date of sale. Because of a drastic increase in imports
during June and the first half of July, petitioner is particularly
concerned about any sales confirmed in the POI, but not invoiced in the
POI.
PolyCity and Cli-Claque state that the Department chose the date of
sale based on our normal methodology and that they correctly complied
with its request.
DOC Position
At verification, we confirmed that the appropriate date of sale was
the date PolyCity and Cli-Claque issued the invoice which accompanied
the shipping documentation. We noted that changes in delivery terms and
quantity did occur between the facsimile confirmation and the date of
invoice. Although the verification report stated that the facsimile was
a ``confirmation'' facsimile, that statement was not meant to imply
that all the terms of sale were agreed upon and could not change. The
facsimile, as verified, is merely an acknowledgement that a sales
transactions will occur between the company and its customer.
Generally speaking, the Department will consider the date of sale
to be the date on which all substantive terms of the sale are agreed
upon by the parties. This normally includes the price and quantity. If
the terms of sales agreement or contract permit the revision of prices
up to the date of invoice, shipment, or [[Page 22365]] the purchase
order, then it is the Department's practice to base the date of sale on
the shipment date, invoice date, or the purchase order date, depending
upon which date the revisions are made. Thus, we accept the date of
sale as verified.
Comment 5: Non-market Economy Currency
PolyCity and petitioners have advanced arguments regarding the
valuation of certain inputs purchased from market economy suppliers,
that cannot be addressed in this notice because of their proprietary
nature. These comments are addressed in a separate memorandum to the
file.
Comment 6: Appropriate BIA Rate
Petitioner maintains that the Department should use the highest
rate (i.e., 346.55 percent) alleged in the petition as the ``PRC-Wide''
rate. Petitioner calculated the FMV used in this margin calculation
based on a combination of Indian input values and its own costs.
Petitioner states that because the Department believed that it relied
too heavily on its own costs and that India may not be the most
appropriate surrogate country, the Department requested that petitioner
recalculate FMV based on the price of lighters exported from the
Philippines. (The Philippines is a known producer of disposable
lighters and, in prior cases, the Philippines had been determined to be
at a level of economic development comparable to the PRC.) The
estimated dumping margin using the Philippine export data is 197.85
percent. Petitioner argues that, although it submitted additional
information requested by the Department (offered as an alternative set
of documents to supplement the exhibits in the original petition), the
margin calculated in the original petition has not been discredited.
DOC Position
We are continuing to use the rate based on Philippine export data.
We believe this rate is appropriate because: (1) The original petition
rate relies too heavily on petitioner's own costs; (2) we initiated the
case on the basis of the Philippine export data; and (3) India is not a
significant producer of lighters.
Company Specific Issues
PolyCity Industrial Limited
Comment 7: BIA
Petitioner argues that the Department should use BIA in determining
the antidumping duty margin for PolyCity because, due to the numerous
corrections submitted to the Department since the preliminary
determination and the errors discovered at verification, the
reliability of PolyCity's data is called into question. In particular,
petitioner notes: (1) Every sale examined at verification required
revision; (2) foreign inland freight, ocean freight, and marine
insurance were misreported; (3) PolyCity used an unusual sales process;
and (4) PolyCity's method of documenting input purchases lacked
consistency. Petitioner contends that PolyCity had more than adequate
time to correct these errors in the numerous submissions PolyCity filed
between the preliminary determination and verification. Petitioner
argues that these facts, along with the inaccuracies uncovered at
verification, make PolyCity's data unreliable. Therefore, the
Department should use uncooperative BIA in calculating PolyCity's
margin.
If the Department does not use total uncooperative BIA, petitioner
then argues that the Department should use partial BIA for these costs.
Petitioner contends that since PolyCity failed to report certain
additional charges for foreign inland freight, reported ocean freight
in the wrong currency, and miscalculated marine insurance, using BIA
values for these factors is appropriate.
PolyCity maintains that accepting petitioner's allegations would
run counter to the Department's practice and regulations. PolyCity
states that all of its submissions and corrections have been timely
filed. The verification at PolyCity was routine, and the Department
treated it routinely. The Department typically makes corrections and
adjustments at verification. The corrections discovered at verification
were merely errors, not hidden or misrepresented information. In
addition, PolyCity maintains that it erred in favor of the petitioner,
rounding numbers up on most observations. To use BIA in this situation
would be a radical departure from the Department's rules and practice.
Hence, the Department should use PolyCity's verified information.
DOC Position
We agree with respondent that the final determination should be
based on PolyCity's verified data. The items described by petitioner
are minor changes that were corrected for this final determination.
Omissions from the response were inadvertent and corrected information
was verified. We are satisfied that the record is now complete and
accurate regarding this company's sales of subject merchandise during
the POI.
Comment 8: New Sales
Petitioner states that the three new invoices discovered at
verification should be included in the margin calculations and should
be assigned the highest BIA rate. Since these sales were not reported
in a timely manner, petitioner argues that the Department should assign
a unit margin for each of these sales based on BIA. Due to the numerous
errors found at verification, petitioner recommends using the
uncooperative BIA rate. For one sale, which was added to PolyCity's
sales listing after the preliminary determination, petitioner
recommends using the cooperative BIA rate.
PolyCity states that three sales were inadvertently excluded from
the sales listing but that they have now been included. Therefore, BIA
for these sales is unwarranted. The one sale petitioner alleges was
added to PolyCity's sales listing after the preliminary determination
was, in fact, included in the first sales listing and every listing
since. Therefore, it should not be treated differently than the other
sales that have been reported.
DOC Position
We determine that the omissions described above were inadvertent
and the corrected information was verified. The new sales represent a
small percentage of total sales during the POI and, at verification,
were not hidden or misrepresented. Further, we are satisfied that the
record is now complete and accurate as to this company's sales during
the POI of subject merchandise. Accordingly, the reported information,
as corrected based on verification, is the appropriate basis for this
LTFV determination for PolyCity.
Comment 9: Untimely Submissions
Petitioner argues that changes and additions to PolyCity's data
which were submitted on February 21, 1995, should be rejected as
untimely filed with the Department.
PolyCity states that this submission was timely filed in accordance
to instructions given by Department officials. PolyCity argues,
however, that petitioner's comment should not have been included in the
brief filed on April 10, 1995, since only comments on verification
reports were to be filed. Accordingly, PolyCity argues that this
comment cannot be included in the record.
DOC Position
We agree with respondent, in part. Respondent's submissions were
timely filed, in accordance with our instructions. However, we disagree
with [[Page 22366]] respondent that petitioner's comments should have
been rejected. Due to miscommunication between the Department and the
parties in this case, parties were unclear where to report company-
specific issues that were not verification issues. Therefore, we have
determined that this argument was properly included in this brief and
have allowed it to remain in the record of this investigation.
Comment 10: Use Actual Labor Rates
Respondent argues that the Department should use the actual wage
rates paid by PolyCity to its Chinese workers. In the past, the
Department has used actual costs for certain factors of production, if
these costs represent accurate, market-based values. Since the workers
of PolyCity freely negotiate their wages without interference from the
central government (e.g. unemployed workers wait at the factory gate to
interview for open positions,) respondent believes that there is no
basis for the use of surrogate values.
If the Department rejects the use of PolyCity's wage rates,
respondent asks that we use the average of the wages on the record for
unskilled factory0 workers in Indonesia. The rate used by the
Department in its preliminary determination based on locally engaged
U.S. Embassy personnel in Indonesia is not a valid surrogate for the
cost of unskilled factor labor in China.
DOC Position
As stated above, we have determined that the PRC is a non-market
economy country for purposes of this determination. Moreover, there has
been no claim and we have not found that available information would
permit us to determine FMV under the market economy provisions of the
antidumping duty law (see section 773(c)(1)(b) of the Act). Hence, we
are basing FMV on the Chinese factors of production values in a
surrogate country.
PolyCity points to Lasko Metal Prods., Inc. v. United States 810 F.
Sup. 314 (CIT 1992) aff'd 43 F.3d 1442 (Fed. Cir. 1994) to support the
proposition that the Department can use respondent's actual costs when
those costs represent accurate market-economy values. However, Lasko
addresses Department's practice of using respondent's actual costs in
narrow circumstances--i.e., where the input is purchased from a market
economy country and paid for in a market economy currency. We do not
use values within the non-market economy.
Moreover, in the one case cited by PolyCity (Final Determination of
Sales at Less Than Fair Value: Chrome Plated Lug Nuts From the People's
Republic of China, 56 FR 46153, 46154, September 10, 1991), the
Department was investigating an MOI claim, not a claim that labor was
market oriented. In addition, the Department did not find that wages in
the PRC were market determined. To the contrary, we stated,'' * * * we
have concluded that respondent has not overcome the presumption of
state control with respect to labor and that the PRC wage rate should
not be used for purposes of the factors of production analysis.''
Comment 11: Manufactured Parts vs. Purchased Parts
In cases where PolyCity both purchases a part and produces the same
part from imported raw materials, it argues that the price it pays for
the purchased part should not be used to value this input. Instead, the
Department should construct a value using the factors needed to produce
the part.
PolyCity contends that valuing the part using the price paid for
the finished part would overstate the amount of labor and overhead
allocated to PolyCity's other activities. This is because PolyCity's
labor and overhead figures include labor and overhead to produce these
parts, and the Department does not have the necessary information to
back out these amounts. Alternatively, if the Department does not
accept PolyCity's proposal to use solely a constructed value, then it
should value the parts on a weight-average basis between the purchased
and the manufactured parts.
DOC Position
We disagree with respondent that we should use the factors
methodology for all of the parts consumed during the POI. Contrary to
PolyCity's assertion, to use the factors methodology for all parts
consumed during the POI would understate the labor and overhead because
it would not include additional labor and overhead needed to produce
those parts. Thus, we have only applied the factors methodology for
inputs actually produced by PolyCity.
For the portion of the parts used which PolyCity purchases from
market economy suppliers in a market economy currency, we valued the
part using an invoice price outside the POI. While our first preference
would be an invoice price during the POI, in this investigation we are
accepting actual, pre-POI prices paid to a market economy producer in
market economy currency because such prices, although outside the POI,
are the best available information on the value of these inputs and are
more accurate than surrogate values. In many instances, the Department
uses surrogate values that are from pre-POI time periods and are
generally further removed from the POI than the pre-POI market economy
prices. Using pre-POI market economy prices that the producer actually
paid is consistent with that practice.
Comment 12: Jakarta vs. Non-Jakarta Rates
PolyCity maintains that the Department should use a non-Jakarta
wage rate in valuing labor. It states that wage rates in Jakarta are
not an appropriate surrogate for wages in Chinese factories because
Chinese lighter factories are located in small, provincial towns, not
major cities like Jakarta. Moreover, PolyCity states that not one of
the Indonesian lighter factories is located in Jakarta.
DOC Position
We disagree that we are required ``to customize'' factor values to
reflect the conditions of certain PRC respondents. We have used ILO
data pertaining to Indonesian wage rates to value the labor input for
all PRC producers. This data reflects an Indonesian-wide average, not
the wage rate in Jakarta.
Cli-Claque Company Limited
Comment 13: Electronic Lighters
Cli-Claque claims that its flat, refillable electronic lighter,
referred to as a card lighter, is not disposable and should not be
included within the scope of the investigation. In contrast to flint
lighters, this Cli-Claque lighter uses a piezo electronic lighting
mechanism. Further, because of its unique flat shape, the lighter must
be produced from a more costly, higher grade of plastic.
With respect to channels of distribution, Cli-Claque sell these
lighters at wholesale to tobacco and other companies for use as
promotional items. Because these lighters are considerably more costly
to produce, Cli-Claque states that it could not sell them at retail in
competition with ordinary flint lighters.
Throughout the investigation, petitioner has maintained that the
existence of an electric lighting mechanism alone should not be a
determining factor in deciding whether a lighter is or is not
disposable. Petitioner cites examples of disposable lighters that use
the piezo electric ignition mechanism. Regarding ultimate use of the
lighter, petitioner maintains that it is the same as the flint
lighter--to light various tobacco products. Regarding channels of
distribution, petitioner states that Cli-Claque's
[[Page 22367]] lighters could compete at retail with flint lighters, if
the manufacturer imprinted designer wraps or logos to entice customers
to pay a somewhat higher price.
DOC Position
Although Cli-Claque's card lighters are not currently sold at
retail but are sold at wholesale to tobacco and other companies as
promotional items, these lighters are not the only type of lighters to
be sold to companies as promotional items. The standard, disposable
butane lighter is also sold to companies as a promotional item. Thus,
the card lighters are not unique in their use as promotional items,
because standard, disposable lighters clearly serve this purpose as
well.
Also, the existence of a piezo electric ignition mechanism is not
decisive. Several brands of disposable lighter employ the piezo
mechanism rather than the more common flint ignition system. The fact
that a lighter is refillable is also not controlling, as indicated in
the scope of this investigation, which recognizes that a disposable
lighter may be refillable or non-refillable.
Further, card lighters come in both refillable and non-refillable
versions. The lighters are identical in every respect with the
exception of the refill valve on the refillable lighter. Both lighters
feature the more expensive plastic and the piezo electric lighting
mechanism. The addition of a refill value to the card lighter is
insufficient to warrant reclassifying it as a non-disposable lighter.
Therefore, disposable lighters with refill valves clearly fall within
the scope of the investigation.
Comment 14: Critical Circumstances
Cli-Claque argues that critical circumstances do not exist. Cli-
Claque maintains that the increase in July 1994 is due to a shipment to
a U.S. customer to meet the July 12, 1994 deadline. This deadline,
established by the Consumer Products Safety Commission's (``CPSC'').
The CPSC barred the import of disposable lighters that did not meet
more stringent safety requirements after July 1994. Thus, Cli-Claque
argues that this shipment did not result from the filing of the
antidumping petition, but from U.S. regulatory requirements imposed by
CPSC.
Cli-Claque argues that, with respect to the history of dumping,
although the Council of European Communities found dumping of gas-
fueled, non-refillable pocket flint lighters, the margin in the case of
China was only 16.90 percent, well below the Department's 25 percent
threshold. In addition, according to Cli-Claque, the European
determination did not cover piezo-electric lighters, but only flint
lighters. Since piezo-electric lighters represent a significant
percentage of the lighters exported to the United States by Cli-Claque,
the Department should not impute knowledge of dumping to Cli-Claque.
Moreover, Cli-Claque maintains that the Department cannot impute
knowledge of dumping to Cli-Claque's importers since the Department
found a dumping margin of only 7.03 percent. The Department's practice
has been to impute such knowledge only where it finds a preliminary
margin equal to or greater than 25 percent.
Petitioner argues that although the European determination only
covers flint lighters, the Department has preliminarily determined that
electronic lighters are in the same class or kind of merchandise as
flint lighters. In addition, petitioner argues that, as noted in the
verification report, Cli-Claque used the date of sale, rather than the
shipment date, for reporting monthly shipments. According to
petitioner, this incorrect reporting understates the massiveness of
imports by shifting shipments from the post-petition filing period to
the pre-petition filing period. Finally, petitioner argues that
although Cli-Claque claims that the increase in July 1994 was due to a
shipment to a customer to meet the July 12, 1994 deadline established
by the CPSC, the Department has repeatedly held that the statute and
regulations make no mention of weighing other factors or examining
alternative causes as to the reason for increased imports.
Petitioner also argues that the Department should continue to find
that critical circumstances exist with respect to imports of lighters
from Cli-Claque. Petitioner maintains that the first prong of the
statutory requirement for critical circumstances, i.e., knowledge of
dumping, is fulfilled. Petitioner states that disposable lighters from
the PRC have been found to be dumped in both the European Union and
Argentina. In 1991, the European Commission (EC) imposed antidumping
duties on gas-fueled, non-refillable pocket flint lighters originating
in China. The fact that the margin on lighters from China was only 16.9
percent is irrelevant for this prong of the knowledge test. According
to petitioner, the Department requires a 25 percent margin on imports
only when the Department is imputing knowledge of dumping under the
second alternative criteria for knowledge of dumping, not when the
Department is inquiring whether there is a history of dumping in the
United States or elsewhere under the first alternative criteria for
knowledge of dumping.
DOC Position
We disagree with petitioner that a history of dumping exists with
respect to disposable lighters. We do not require the scope of our
proceeding to match exactly the scope of the foreign proceeding. Since
the lighters examined by the EC are subject to this investigation, we
find that there is a history of dumping with respect to the class or
kind of merchandise as a whole and, by extension, with respect to Cli-
Claque. We have established a history of dumping with respect to Cli-
Claque and we agree with petitioner that in evaluating this criterion,
the size of the margin found by the EC is irrelevant. Because there is
a history of dumping, we are not required to consider whether the
importer knew or should have known that the exporter was selling the
subject merchandise at less than fair value.
We have also considered whether imports of the merchandise have
been massive over a relatively short period of time in accordance with
19 CFR 353.16(f) and (g). Based on verified information on shipments by
Cli-Claque, we find that imports have been massive over a relatively
short period of time, even when taking into account the increase in
volume in advance of the July 1994 deadline for importing non-
childproof lighters. (For a more detailed analysis, see the proprietary
Calculation Memorandum for this final determination.) Therefore, we
find that critical circumstances exist with respect to imports on
behalf of Cli-Claque because a history of dumping exists and because
imports have been massive over a relatively short period of time.
Comment 15: Defective Lighters
Cli-Claque argues that there is no need to adjust total production
figures to account for defective lighters, as petitioner maintains,
since the production figures used in the factor of production
calculations are already net of defective lighters sold to customers in
the PRC which were later returned to Cli-Claque.
DOC Position
We agree with petitioners and have made an adjustment to the cost
of manufacture to account for the defective lighters sold which were
later returned to Cli-Claque.
Comment 16: Water and Diesel
Petitioner argues that the Department should not include water and
diesel in overhead, but should calculate values [[Page 22368]] for
these inputs separately, using surrogate values. Petitioner maintains
that the diesel fuel used to power the generators is a direct factor of
production in producing lighters, and not, as in some other cases, an
incidental expense. As a direct factor of production, diesel fuel
should be included as a separate factor of production and not included
as a part of factory overhead.
Cli-Claque argues that water should be treated as an overhead item.
With regard to diesel fuel, Cli-Claque has submitted the total kilowatt
hours of electricity used because electricity is the direct input used
in the production process. Cli-Claque asserts that if the Department
were to also include diesel fuel used to produce electricity as a
factor of production, it would be double-counting the cost of
electricity.
DOC Position
We agree with respondents that water should be included in factory
overhead and, therefore, should not be valued separately. Because it is
normal practice to include such cost in factory overhead, and the RBIB
data did not indicate to the contrary, we find it reasonable to presume
that water is included in the overhead value we used (See Saccharin).
We also agree with Cli-Claque that, for those companies that
generate electricity using diesel-powered generators, inclusion of
diesel fuel and electricity as separate factors of production would
result in double-counting. Since diesel fuel is the factor actually
used by these companies, we have used the diesel fuel input in our
calculation of FMV, where possible. However, for some companies this
was not possible and, instead, we valued the electrical output of the
generators as the best available information.
Comment 17: Labor Hours
Petitioner argues that the Department should adjust labor hours
used to make the electronic lighter caps because, at verification, the
Department noted differences for the total number of hours worked by
unskilled labor in the metal workshop.
Cli-Claque maintains that no adjustment should be made to its labor
calculations for the metal workshop and that petitioner's comment on
this point is based on a misreading of the verification report.
According to Cli-Claque, as stated in the verification report, the
labor hours per month for the metal workshop were calculated by
multiplying the number of days per month a machine was in operation by
the average labor hours worked per day. The difference, cited by
petitioner, was not a discrepancy between the data reported and the
figure verified but the difference between the skilled and unskilled
hours worked per day in the metal workshop.
DOC Position
We agree with respondent. Our discussion in the verification report
was to note only the difference in the number of hours worked between
skilled and unskilled workers in the metal workshop. We did not note
any discrepancies in the information we reviewed.
Comment 18: Electroplating
Petitioner argues that the Department should assign appropriate
surrogate values for electroplating as best information available since
electroplating was done by a non-market economy source. In addition,
petitioner argues that Cli-Claque likely incurred transportation
charges for shipping lighter caps for electroplating. Therefore,
surrogate values for these transportation charges should also be
included.
Respondent argues that electroplating merely adds a finish to caps
produced by Cli-Claque. The Department reviewed the invoice provided by
the subcontractor at verification and found that the charges were
insignificant.
DOC Position
Based on information reviewed at verification, we agree with
respondent that electroplating was an insignificant cost, and would be
included in the surrogate overhead value. We disagree with petitioner's
characterization of the Department's practice, i.e., if a material is
used in the production process, it should be included in the direct
materials calculation. As stated in Saccharin, it is standard practice
to classify certain inputs as variable overhead. Electroplating is
infrequently used in the production process, is small in value relative
to the total cost of manufacturing the product and, hence, would be
included in the surrogate country overhead value. Therefore, we have
not valued it separately.
Gao (HK) Hua Fa Industrial Co. Ltd.(Gao Yao)
Comment 19: Market Economy Inputs Originally Reported in Renminbi (RMB)
Petitioner states that the Department should use surrogate values
for all inputs Gao Yao reported to the Department in Renminbi (RMB),
but actually purchased in Hong Kong dollars. Petitioner argues that Gao
Yao incorrectly reported purchases based on Gao Yao's calculation of
the exchange rate.
Gao Yao argues that certain accounting records are maintained in
RMB but this should not be grounds for using surrogate values. Gao Yao
states that the discrepancy caused by its calculation of the exchange
rate had a negligible effect on import prices, and the Department
should use market economy prices for material inputs purchased from
market economy suppliers.
DOC Position
When a respondent purchases imports from a market economy and pays
in a market economy currency, the Department prefers using the actual
price of that input rather than a surrogate value, (see, e.g., Final
Determinations of Sales at Less Than Fair Value: Oscillating Fans and
Ceiling Fans from the PRC, (56 FR 55271, 55275, October 25, 1991),
upheld Lasko Metal Products v. U.S. 810 F. Sup. 314, Aff'd, 43 F. 3rd
1142 (Fed. Cir. 1994)). For purposes of our final determination, we
have used actual, verified prices for those inputs which were purchased
by Gao Yao from a market economy supplier and paid for in market
economy currencies.
Comment 20: Natural Gas
Petitioner argues that the Department should include natural gas in
its calculation of Gao Yao's FMV since it reported that it uses natural
gas.
Gao Yao states that the reference in its response to ``natural
gas'' was incorrect. The input in question was butane--a factor which
was separately reported. According to Gao Yao, the Department verified
that it did not use natural gas as an energy source.
DOC Position
We agree with respondent. At verification, we determined no natural
gas was being used in the production process.
Comment 21: Port Handling Charges and Rejected Lighters
Petitioner also asserts that the Department should adjust Gao Yao's
production information to reflect lighters which failed internal
quality control inspection.
DOC Position
We agree with petitioner. We have adjusted our calculation of FMV
to account for lighters which were unsaleable. [[Page 22369]]
Guangdong Light Industrial Products Import and Export Corporation
(GLIP)
Comment 22: Governmental Ownership and Independence
Petitioner states that GLIP should not be granted a separate rate
because a portion of the company's shares are held by a governmental
entity. Petitioner argues that, while no evidence of governmental
interference was found during verification, the fact remains that
shares of the company are held by the government and, since GLIP only
transformed to a shareholding company shortly after the POI,
circumstances may change inciting the State Asset Management Bureau to
take actions which interfere in the company's operations.
Petitioner states further that not enough is known about the level
of governmental control exerted over GLIP during the POI, when the
company was still owned by ``all the people.'' Accordingly, petitioner
argues that GLIP should not be granted a separate rate in this
investigation and should be assigned the ``PRC-Wide rate.''
DOC Position
During verification, the Department examined all correspondence
files pertaining to the period prior to the POI, the POI, and the
period after the POI. We also examined bank records during the POI and
found no evidence of government control over the company activities. In
addition, based on discussions with GLIP officials, described in detail
in our verification report, that GLIP's management has not changed
since the company's transformation from a company owned by ``all the
people'' to a company owned by shareholders. It is not the Department's
practice to deny eligibility for a separate rate based on speculation
that a government might someday try to influence a company's
operations. If this did occur, a future administrative review would
analyze such government influence in its determination of whether to
grant a separate rate for this company. Currently, based on our de
facto analysis of governmental control over the company's export
activities, we conclude that GLIP is independent of government control.
(See Separate Rates discussion).
Comment 23: Cost Factors Should be Adjusted for Variances
Petitioner states that the Department should adjust the standard
usage amounts for materials and labor when calculating FMV for the
lighters sold by GLIP to account for variances from standard observed
at verification. Petitioner additionally states that since warehouse
withdrawal tickets are the only method for establishing variances for
material usage, the Department should use these tickets to calculate
variances for material usage.
DOC Position
We have adjusted labor figures to account for variances observed
during verification for purposes of our final determination. We have
based material usage on reported amounts, however, because the
variances calculated using warehouse tickets appeared to be largely
influenced by the amount of raw materials in work-in-process. Since the
producer of lighters did not maintain records of raw materials
inventory in work-in-process, it is not possible to calculate actual
consumption.
Comment 24: Butane Consumption
Petitioner states that the Department should use gross consumption
figures for butane in calculating GLIP's FMV for purposes of its final
determination.
DOC Position
We agree with petitioner, and have made this adjustment for
purposes of our final determination with respect to GLIP. Factory
officials stated at the beginning of verification that they had
inadvertently reported the net amount of butane in the final product in
the company's response to the Department's antidumping questionnaire
rather than the gross amount of butane used in producing the lighters.
We verified the correct amounts and have used them in this
determination.
China National Overseas Trading Corporation (COTCO)
Comment 25: Foreign Exchange Controls
Petitioner argues that COTCO should not be granted a separate rate
because the company is subject to foreign currency controls which are
indicative of a lack of independence from the central government.
Petitioner states that in Sparklers, the Department stated that for an
exporter to be granted a separate rate the company must (1) set its own
export prices, and (2) be allowed to keep the proceeds from its sales.
Petitioner cites to the Department's verification report, where
management states that COTCO must ask permission to refund foreign
currency on returned merchandise. Petitioner contends this statement is
indicative of a lack of control over earnings and, consequently, a lack
of independence.
Respondent argues that there is ample evidence of COTCO's
independence from government control. Respondent adds that Department
officials verified that there were no returns or refunds for any
subject merchandise during the POI.
DOC Position
Although COTCO must receive permission to purchase foreign
currency, during verification we viewed evidence that COTCO regularly
purchases foreign exchange to pay for imported merchandise. We saw no
evidence of returned merchandise; the statement by COTCO officials
concerning returned merchandise was in response to a hypothetical
question from Department officials. The PRC's complex system of foreign
exchange controls is not per se evidence of governmental control (see,
e.g., Coumarin). The body of evidence gathered at verification
indicates that COTCO retains control over its earnings, both foreign
and domestic.
Comment 26: Affiliated Companies
Petitioner states that the companies which are affiliated with
COTCO did not cooperate in this investigation and it should be assumed
that they had unreported lighter sales to U.S. customers during the
POI. Accordingly, petitioner argues, COTCO should not be granted a
separate rate, and should be assigned the ``PRC-Wide'' rate as punitive
BIA.
Respondent states that COTCO included information for all lighter
sales to U.S. customers in its response and that during verification
Department officials requested information to confirm that all sales
had been reported. Respondent argues that a separate rate based on its
verified response is appropriate in the Department's final
determination.
DOC Position
We agree with respondent. At verification, consistent with normal
verification practices, we verified that no COTCO affiliate, except for
the one under investigation, sold the subject merchandise during the
POI. COTCO officials cooperated with Department verifiers to the best
of their ability and we are satisfied that our tests of the
completeness of COTCO's response demonstrates that all sales of subject
merchandise have been included.
Comment 27: Shipment After POI
Petitioner states that a shipment made by COTCO after the POI and
for which there was no sales contract should be assumed to have been a
sale during the POI and should be included in the company's sales
listing. [[Page 22370]]
Respondent states that all sales made during the POI were included
in the data submitted to the Department, and that sales made after the
POI should not be included in the Department's antidumping duty rate
calculation.
DOC Position
We agree with respondent. We saw no evidence during verification
that the sale relating to the shipment in question was made during the
POI. During verification, we viewed another example of a sale by COTCO
where a contract was not generated prior to shipment of the
merchandise. Given the date of shipment, the invoice date, and based on
statements by COTCO officials, we believe the sale should not be
included in COTCO's sales data for the POI.
Continuation of Suspension of Liquidation
For Gao Yao, we calculated a zero margin. Consistent with Notice of
Final Determination of Sales at Less Than Fair Value: Certain Cased
Pencils from the People's Republic of China (59 FR 55625, November 8,
1994), merchandise that is sold by Gao Yao but manufactured by other
producers will not receive the zero margin. Instead, such entries will
be subject to the ``PRC-wide'' margin.
In accordance with sections 733(d)(1) and 735(c)(4)(B) of the Act,
we are directing the Customs Service to continue to suspend liquidation
of all entries of disposable pocket lighters from the PRC, 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 amount by which the FMV exceeds the USP as shown below. These
suspension of liquidation instructions will remain in effect until
further notice. The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average Critical
Manufacturer/producer/exporter margin circumstances
percentage
------------------------------------------------------------------------
China National Overseas Trading 0 Affirmative.
Corporation*.
Cli-Claque Company Ltd.................... 6.15 Affirmative.
Gao Yao (HK) Hua Fa Industrial Co., Ltd... 0 Negative.
Guangdong Light Industrial Products Import 27.91 Negative.
and Export Corporation.
PolyCity Industrial, Ltd.................. 5.50 Negative.
PRC-Wide.................................. 197.85 Affirmative.
------------------------------------------------------------------------
*This company has not disclosed for the public record the identity of
its supplier or suppliers in the PRC. Upon public disclosure of this
information to the Department, we will notify the Customs Service that
sales through certain supply channels have an LTFV margin of zero and
thus an exclusion from any order resulting from this investigation.
Until and unless such disclosure is made, all entries will be subject
to the ``PRC-wide'' deposit rate.
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
International Trade Commission (ITC) of our determination. As our final
determination is affirmative, the ITC will determine whether these
imports are causing material injury, or threat of material injury, to
the industry in the United States, within 45 days. 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 duty 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.
This determination is published pursuant to section 735(d) of the
Act and 19 CFR 353.20(a)(4).
Dated: April 27, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-11161 Filed 5-4-95; 8:45 am]
BILLING CODE 3510-DS-P