[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