[Federal Register Volume 60, Number 88 (Monday, May 8, 1995)]
[Notices]
[Pages 22544-22550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11262]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-835]
Notice of Final Determination of Sales at Less Than Fair Value:
Furfuryl Alcohol From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 8, 1995.
FOR FURTHER INFORMATION CONTACT: John Brinkmann or Greg Thompson,
Office of Antidumping Investigations, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-5288 or (202) 482-2336, respectively.
Final Determination
We determine that furfuryl alcohol from the People's Republic of
China (PRC) is being, or is 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.
Case History
Since the preliminary determination of sales at LTFV on December 9,
1994, (59 FR 65009, December 16, 1994), the following events have
occurred:
Verification of the questionnaire responses was conducted in
February 1995. Reports concerning these verifications were issued in
March 1995.
QO Chemicals, Inc. (the petitioner) as well as Qingdao Chemicals &
Medicines & Health Products Import & Export Company (Qingdao) and
Sinochem Shandong Import & Export Company (Sinochem Shandong) (together
referred to as respondents) submitted case and rebuttal briefs on March
27 and 30, 1995, respectively. A public hearing was held on April 3,
1995. Inasmuch as the submitted briefs contained certain untimely, new
information, the Department of Commerce (the Department) issued letters
to the petitioner and the respondents concerning the redaction from the
record of this new information on April 10, 1994.
Scope of Investigation
The product covered by this investigation is furfuryl alcohol
(C4H3OCH2OH). Furfuryl alcohol is a primary alcohol, and
is colorless or pale yellow in appearance. It is used in the
manufacture of resins and as a wetting agent and solvent for coating
resins, nitrocellulose, cellulose acetate, and other soluble dyes.
The product subject to this investigation is classifiable under
subheading 2932.13.00 of the Harmonized Tariff Schedule of the United
States (HTSUS). Although the HTSUS subheading is provided for
convenience and customs purposes, our written description of the scope
of this proceeding is dispositive.
Period of Investigation
The period of investigation (POI) is December 1, 1993 through May
31, 1994.
Separate Rates
Both of the participating exporters, Qingdao and Sinochem Shandong
have requested a separate, company-specific dumping margin. Their
respective business licenses indicate that they are owned ``by all the
people.'' In the Final Determination of Sales at Less Than Fair Value:
Silicon Carbide from the People's Republic of China, 59 FR 22585, (May
2, 1994) (Silicon Carbide) and the Final Determination of Sales at Less
Than Fair Value: Coumarin from the People's Republic of China, 59 FR
66895 (December 28, 1994) (Coumarin), we found that the PRC central
government had devolved control of state-owned enterprises, i.e.,
enterprises ``owned by all the people.'' As a result, we determined
that companies owned ``by all the people'' were eligible for individual
rates, if they met the criteria developed in the Final Determination of
Sales at Less Than Fair Value: Sparklers from the People's Republic of
China 56 FR 20588 (May 6, 1991) (Sparklers) and amplified in Silicon
Carbide. Under this analysis, the Department assigns a separate rate
only when an exporter can demonstrate the absence of both de jure and
de facto governmental control over export activities.
De Jure Analysis\1\
The PRC laws placed on the record of this investigation establish
that the responsibility for managing companies owned by ``all the
people,'' including the respondent companies, has been transferred from
the government to the enterprises themselves. These laws include: ``Law
of the People's Republic of China on Industrial Enterprises Owned by
the Whole People,'' adopted on April 13, 1988 (1988 Law); ``Regulations
for Transformation of Operational Mechanism of State-Owned Industrial
Enterprises,'' approved on August 23, 1992 (1992 Regulations); and the
``Temporary Provisions for Administration of Export Commodities,''
approved on December 21, 1992 (1992 Export Provisions). In particular,
the 1988 Law states that enterprises have the right to set their own
prices (see Article 26). This principle was restated in the 1992
Regulations (see Article IX).
\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.
---------------------------------------------------------------------------
The 1992 Export Provisions list includes those products subject to
direct government control. In April 1994, the ``Emergent Notice of
Changes in Issuing Authority for Export Licenses Regarding Public Quota
Bidding for Certain Commodities'' (1994 Quota Measure) entered into
force, superseding earlier laws that had listed the subject
merchandise. Although furfuryl alcohol was on the 1992 version of the
Export Provisions list, it has since been removed. (See discussion in
Comment 1.)
Consistent with Silicon Carbide, we determine that the existence of
these laws demonstrates that Qingdao and Sinochem Shandong, companies
owned by ``all the people,'' are not subject to de jure control.
In light of reports\2\ indicating that laws shifting control from
the government to the enterprises themselves have not been implemented
uniformly, our analysis of de facto control becomes critical in
determining whether respondents are, in fact, subject to governmental
control.
\2\See ``PRC Government Findings on Enterprise Autonomy,'' in
Foreign Broadcast Information Service-China-93-133 (July 14, 1993)
and 1992 Central Intelligence Agency Report to the Joint Economic
Committee, Hearings on Global Economic and Technological Change:
Former Soviet Union and Eastern Europe and China, Pt. 2 (102 Cong.,
2d Sess.).
---------------------------------------------------------------------------
De Facto Control Analysis\3\
In the course of verification, we confirmed that export prices for
both [[Page 22545]] Qingdao and Sinochem Shandong are not set by, nor
subject to approval of, any government authority. This point was
supported by the companies' sales documentation and customer
correspondence. We also confirmed, based on examination of documents
related to sales negotiations, written agreements and other
correspondence, that respondents have the authority to negotiate and
sign contracts and other agreements independent of government
intervention. Moreover, the respondents' financial statements,
accounting records, and bank statements support the conclusion that
these companies retain the proceeds of their export sales and finance
their losses.
\3\The factors considered include: (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).
---------------------------------------------------------------------------
Based on our examination of company records during verification, we
have determined that both Qingdao and Sinochem Shandong had autonomy
from the central government in making decisions regarding the selection
of management. Qingdao's general manager is selected for a three-year
term by worker elections. Sinochem Shandong's general manager is
selected by worker elections for a term of five years. We found no
involvement by any government entity in the selection of management or
of hiring for either company. See the verification reports for Qingdao
(March 3, 1995) and Sinochem Shandong (March 22, 1995).
Conclusion
For both Sinochem Shandong and Qingdao, the record demonstrates an
absence of de jure and de facto government control. Accordingly, we
determine that each of these exporters should receive a separate rate.
(For further discussion, see Comment 1 below and the concurrence
memorandum, dated May 1, 1995, on file in Room B-099 of the main
Department of Commerce Building.)
Nonmarket Economy
The PRC has been treated as a nonmarket economy country (NME) in
all past antidumping investigations. Given that no information has been
provided in this proceeding that would lead us to conclude otherwise,
in accordance with section 771(18)(c) of the Act, we continue to treat
the PRC as an NME for purposes of this investigation.
Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
NME producers' factors of production, to the extent possible, in one or
more market 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. As stated in our preliminary
determination, the Department has determined that Indonesia is the most
suitable surrogate for purposes of this investigation. Based on
available statistical information, Indonesia is at a level of economic
development comparable to that of the PRC. Further, Indonesian
government statistics and other data indicate that the country is a
significant producer of furfuryl alcohol. Based on available
information, Indonesia is the only surrogate country, of those
identified by our Office of Policy, that meets both of these criteria.
For those adjustments to United States price that we have been
unable to value using information from Indonesia, we have used India as
the surrogate. India is economically comparable to the PRC and is a
significant producer of furfuryl, which is comparable to furfuryl
alcohol within the meaning of section 773(c)(1). Furfuryl is the
feedstock, and the major input, in the production of furfuryl alcohol.
(See memoranda to the file, dated November 22, 1994 and March 23, 1995,
and memorandum from David Mueller, Director, Office of Policy to Gary
Taverman, Acting Director, Office of Antidumping Investigations, dated
August 2, 1994, furfuryl alcohol from the People's Republic of China,
Non-Market Economy Status and Surrogate Country Selection.)
Fair Value Comparisons
To determine whether sales of furfuryl alcohol from the PRC to the
United States by Sinochem Shandong and Qingdao 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
United States price was calculated on the basis of purchase price,
as described in the preliminary determination, in accordance with
section 772(b) of the Act. Pursuant to findings at verification, we
made minor adjustments to foreign inland freight, sales quantities and
the date of payment for certain sales reported by Sinochem Shandong. We
also made an adjustment for Sinochem Shandong's iso-tanker rental
expense (see Comment 11). In the case of Qingdao, we adjusted its
reported amounts for ocean freight. (See calculation memorandum,
attached to the Department's concurrence memorandum of May 1, 1995).
Foreign Market Value
In accordance with section 773(c) of the Act, we calculated FMV
based on the factors of production reported by the factories in the PRC
which produced the subject merchandise for the two participating
exporters. We calculated FMV for this final determination as discussed
in the preliminary determination, making adjustments for specific
verification findings and certain revisions to surrogate values,
discussed below (see, also, calculation memorandum attached to the
concurrence memorandum of May 1, 1995).
In our December 9, 1994, preliminary determination, we had valued
individually the energy inputs used to produce the subject merchandise.
We subsequently received additional information from the U.S. Embassy
in Jakarta indicating that energy costs and indirect labor were
included in the factory overhead rate used in our margin calculations
(see memorandum to the file, dated March 23, 1995). Therefore, to avoid
double-counting costs, we no longer have applied individual values for
energy inputs in the final determination.
The Indonesian labor rates used in our preliminary determination
were those that the Department had relied upon in the Preliminary
Determination of Sales at Less Than Fair Value: Disposable Pocket
Lighters from the PRC, 59 FR 64191, December 13, 1994 (Lighters). In
the Final Determination of Sales at Less Than Fair Value: Disposable
Pocket Lighters from the PRC, signed on April 27, 1995 (Lighters
Final), the Department found that these labor rates were not
appropriate for valuing labor factors. Therefore, for the Lighters
Final, the Department relied on updated labor 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 adopted the revised labor rates
for this investigation as well.
Additionally, we revised the surrogate values for the material
inputs of sulfuric acid and ammonia water because we determined that
the 1993 Indonesian import values used in the preliminary determination
were inappropriate. (For the details of our analysis of these
[[Page 22546]] values, see the calculation memorandum attached to the
concurrence memorandum of May 1, 1995). Since the Indonesian import
values for both sulfuric acid and ammonia water were found to be
inappropriate, we based our calculations on the export values derived
from the Indonesian Foreign Trade Statistical Bulletin--Exports,
November 1993.
For the primary material input, furfuryl, we continued to rely on
the Indonesian selling price supplied by the U.S. Embassy in Jakarta
because it was the information on the record most contemporaneous to
the POI. We applied this value to furfuryl that was purchased and used
in the production of furfuryl alcohol. For those factories that also
produced their own furfuryl, we constructed a surrogate value from
verified factor data for this input. This surrogate value was then
applied to the amount of self-produced furfuryl used to make furfuryl
alcohol during the POI (see Comment 4).
China-Wide Rate
The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and
the China Chamber of Metals, Minerals & Chemical Importers & Exporters
identified what we believe to be the only two PRC exporters of furfuryl
alcohol to the United States during the POI. Both have responded in
this investigation. We compared the respondents' sales data with U.S.
import statistics for the period of investigation and found no
inconsistencies. Accordingly, we have based the China-wide rate on the
weighted-average of the margins calculated in this proceeding.
Verification
As provided in section 776(b) of the Act, we verified all the
information relied upon for this final determination.
Interested Party Comments
Comment 1: Separate Rates Eligibility
The respondents contend that the Department should uphold its
preliminary determination and issue separate rates to both Qingdao and
Sinochem Shandong. They argue that the information on the record, as
verified by the Department, supports their claims regarding the lack of
central government ownership and the absence of de jure and de facto
governmental control. Therefore, respondents assert, they are eligible
for receiving separate, calculated margins in the final determination.
The petitioner argues that the respondents are subject to
significant control by the PRC government and are, thus, ineligible to
receive separate rates in the final determination. According to the
petitioner, governmental control is evidenced by several factors that
apply both generally and selectively to the respondents in this
investigation.
First, the petitioner argues that the 1988 Law provides an example
of de jure control by the central government. Petitioner points to
chapter VI, article 55, of the 1988 Law, which states that the PRC
government has the authority to ``issue mandatory plans'' to
enterprises.
Second, the petitioner makes reference to a 1994 World Bank report,
``China Foreign Trade Reform,'' that was cited with approval in the
Department's determination in Coumarin. This report states that the
foreign contract system in the PRC has ``the effect of holding local
authorities and FTCs [foreign trade companies] to what are in effect
mandatory export targets.''
Third, the petitioner refers to the 1992 Export Provisions which
indicate that furfuryl alcohol is subject to quotas on exports to Japan
and the European Community (EC). According to the petitioner, the
imposition of these export quotas had an indirect effect on exports of
furfuryl alcohol to the U.S. market.
Fourth, the petitioner contends that the Department has determined
that if a product is included on the 1992 Export Provisions list, then
it is subject to mandatory plans and export targets (see Coumarin).
Focusing specifically on Sinochem Shandong, the petitioner alleges
that this exporter is a subsidiary of the national trading company,
China National Chemicals Import and Export Corporation (commonly known
as Sinochem Import & Export Corporation) which, in turn, is under the
control of the State Council. The petitioner argues that the linkage
between these entities is established by (a) the 1994 company catalog
of Sinochem Shandong, and (b) the 1992 ``Directory of Chinese
Enterprises for Foreign Economic Relations and Trade'' which suggests
that Sinochem Shandong is under the control of the State Council.
In response, Qingdao and Sinochem Shandong assert that the
provisions of the 1988 Law concerning mandatory plans are not
applicable to the furfuryl alcohol industry. Furthermore, the 1992
Regulations, indicate that the responsibility for managing enterprises
``owned by all of the people'' is with the enterprises themselves and
not with the government.
On the subject of furfuryl alcohol export quotas, the respondents
agree with the Department's preliminary determination that such quotas
are not applicable to PRC exports to the United States. According to
the respondents, any suggestion that the quotas on exports to the EC
and Japan might have had some distortive effect on pricing of furfuryl
alcohol exports to the United States is ``pure speculation.''
Regarding the specific allegation against Sinochem Shandong, that
company states that the national trading company was dismantled during
the 1992 decentralization and its former branches made independent. It
notes, moreover, that the Department had granted Sinochem Shandong a
separate rate in past investigations.
DOC Position
We disagree with the petitioner. Regarding petitioner's argument
that the 1988 Law allows for the imposition of mandatory plans, we note
that (1) the 1992 Regulations, which further devolved control from the
government to the enterprises, provides that ``enterprises have the
right to reject mandatory plan targets'' (Article VIII), and (2) we
confirmed at verification that these exporters (a) establish their own
export prices; (b) negotiate their own sales without guidance from any
government entities; (c) select their own management without
interference from any government entities; and d) retain the proceeds
from the sales of the subject merchandise.
Regarding the petitioner's argument about the 1992 Export
Provisions, we recognize that furfuryl alcohol was included on the list
of commodities that were subject to export quotas. However, as stated
in the preliminary determination, these quotas were confined to exports
to Japan and the countries of the European Community and were not
applicable to PRC exports to the United States. Petitioner did not
offer any explanation as to how the quotas on exports to the EC
countries and Japan might have affected the pricing of the PRC sales of
furfuryl alcohol to the United States. Moreover, furfuryl alcohol is
not included in the more recent 1994 Quota Measure.
With regard to the specific allegation concerning Sinochem
Shandong, the Department found Sinochem Shandong eligible for a
separate rate, on a de jure basis, on the ground that the national
trading company was dismantled and its former branches became
independent (see Sparklers and Final Determination of Sales at Less
Than Fair Value: Sulfur Dyes From the People's Republic of China, 58 FR
7537-38 (February 8, 1993). The 1992 ``Directory of Chinese Enterprises
for Foreign Economic Relations and Trade'' referenced by the
[[Page 22547]] petitioner is outdated; the Sinochem national trading
company was dismantled after the directory was compiled. As stated in
the ``Separate Rates'' section of this notice, we therefore find that
the administrative record in this investigation supports a final
determination that there is the de jure and de facto absence of
governmental control over the export activities of both respondents.
Consequently, we find that these exporters have met the criteria for
application of separate rates.
Comment 2: Assigning Separate Rates for Different Suppliers
The respondents urge the Department to determine separate rates for
each manufacturing respondent and to establish dual rates for trading
companies sourcing from two manufacturers. In support of this request,
the respondents cite to the Final Determination of Sales at Less Than
Fair Value: Certain Cased Pencils from the PRC, 59 FR 55625 (November
8, 1994) (Pencils).
The petitioner argues that respondents' reliance on Pencils is
misplaced, noting that the Department established factory-specific
rates in that case to prevent investigated producer/exporter
combinations with no dumping margin from becoming conduits for
merchandise produced by producers that had been found to have positive
dumping margins. Accordingly, the petitioner urges that respondents'
request be rejected.
DOC Position
We agree with the petitioner. The Department's practice is to apply
separate rates only to those exporters of the subject merchandise who
responded to the Department's questionnaire, whose responses were
verified on this issue, and who satisfy the criteria of our separate
rates test. For those exporters that have multiple suppliers, margins
are based on weighted-average FMVs (see, Coumarin, 59 FR 66895, 66899).
In Pencils, the Department found no dumping margin for one exporter
based upon the factors of production provided by the suppliers of that
exporter. The Department determined that, for purposes of exclusion
from the order, the exclusion applied only to the exporter's sales of
merchandise produced by those suppliers. If the exporter sold
merchandise produced by other suppliers, that merchandise would be
subject to the order at the ``China-wide'' rate. The Department
assigned a margin based on the weighted-average FMV of all suppliers to
other exporters that did not qualify for exclusion. In this
investigation, because none of the exporter-supplier combinations are
without a dumping margin, the Department assigned each exporter a rate
based on the respective weight-average FMV of the exporter/producer
combinations.
Comment 3: Market-Oriented Treatment for Certain Inputs
At the preliminary determination, respondents requested market-
oriented-industry (MOI) treatment and the use of domestic PRC prices
for major inputs in the production of furfuryl alcohol (furfuryl and
its primary material input, corn cobs). The Department rejected
respondents' claim. In its subsequent briefs, the respondents argued
that MOI treatment and the use of domestic PRC prices was appropriate
for the furfuryl alcohol itself.
The petitioner cites the Final Determination of Less Than Fair
Value: Sulfanilic Acid from the PRC, 57 FR 29705 (July 6, 1992)
(Sulfanilic Acid), for the proposition that the MOI test is not and
should not be applied on an input-by-input basis.
DOC Position
The Department's practice with MOI claims has been to require the
respondents to show that the subject merchandise is produced within an
MOI. Showing that a respondent purchases one input at a market-
determined price (which we have not concluded in this investigation) is
relevant but, alone, not sufficient to find an MOI for the subject
merchandise (Sulfanilic Acid, 57 FR 29705). Respondents failed to show
that the other inputs were available at market-determined prices.
Accordingly, respondents have not demonstrated eligibility for MOI
treatment and, in accordance with the statute, we must determine FMV on
the basis of surrogate market economy values for inputs produced or
purchased within the PRC.
Comment 4: Constructed Surrogate Value for All Furfuryl
The respondents urge the Department to use the reported factors of
production to value both self-produced and purchased furfuryl during
the POI. They argue that, according to the Omnibus Trade and
Competitiveness Act of 1988 (1988 Act), the Department's first
preference in determining FMV in an NME investigation is the
calculation of the value of factors of production. Since the Department
has verified the factors of production in the PRC, using the actual
factor inputs and surrogate values for those inputs is the most
accurate way to value furfuryl. The respondents assert that, at a
minimum, the factors of production of furfuryl should be used to value
both the furfuryl produced and the furfuryl purchased for the producers
that did both during the POI.
The petitioner contends that the respondents' reference to the
change to using factor inputs and surrogate values for NME
investigations in the 1988 Act is both factually and legally incorrect.
To support its assertion, the petitioner states: (1) The Department has
not constructed a surrogate value for furfuryl produced in the PRC as
claimed by the respondents--the factors of production for furfuryl,
based on the few responding producers in this investigation, are not
necessarily applicable to all furfuryl producers in the PRC; (2) the
1988 Act requires merely that the Department value in a surrogate
country input factors of production of the subject merchandise; and (3)
no statutory support exists for applying one NME producer's factors of
production to another NME manufacturer's product.
DOC Position
We agree with the petitioner that the 1988 Act does not support the
respondents' proposal. In accordance with the statute's direction to
measure and value ``the factors of production utilized in the
production of the merchandise,'' we valued the inputs for furfuryl for
the factories producing furfuryl. For those factories that purchased
furfuryl for their production of furfuryl alcohol, we continued to
treat the purchased furfuryl as the input to be valued on the basis of
a surrogate.
Comment 5: Corn Cob Value
The petitioner argues that corn cobs, a primary direct material of
furfuryl and, therefore, furfuryl alcohol, should be assigned a value
based on a price in one of the surrogate countries. In the preliminary
determination the Department, based on information provided in a cable
from the U.S. Embassy in Indonesia, treated corn cobs as an
agricultural waste product and only assigned corn cobs the costs
applicable to transporting corn cobs to the factory. The petitioner
contends that it is inapposite to treat corn cobs as agricultural waste
because the respondents have to pay for corn cobs. If a price for corn
cobs is unavailable in Indonesia, the petitioner urges the Department
to use a price from another surrogate country.
The respondents argue that if furfuryl production is based on the
use of market factors, including corn cobs, then home market prices
should be used for these factors. If, however, the Department continues
to value furfuryl production [[Page 22548]] using the factor
methodology, the respondents contend that corn cobs should be valued at
Indonesian prices, as established in the preliminary determination.
DOC Position
We agree with the petitioner that corn cobs should be assigned a
value based on a price in one of the surrogate countries. However, we
disagree with the petitioner that it is inapposite to treat corn cobs
as agricultural waste because the respondents pay for corn cobs. In
this investigation, we obtained information relating to the value of
corn cobs in the surrogate country, Indonesia. In Indonesia, corn cobs
are treated as agricultural waste and have no commercial value.
Inasmuch as we valued these corn cobs on the basis of our surrogate
country methodology, the surrogate value is appropriate.
Comment 6: Inappropriate Import Value for Furfuryl
The petitioner contends that the Department should rely on publicly
available information from 1992 Indonesian import statistics rather
than a price quote received from a factory in Indonesia to value
furfuryl.
DOC Position
As in the preliminary determination, we used the respective factors
of production in our calculation of FMV for the furfuryl that was
produced by the respondents; however, for the furfuryl that was
purchased, we based the value on cable information received from the
U.S. Embassy in Indonesia. As stated in the calculation memorandum
attached to the concurrence memorandum, dated December 9, 1994, the
1992 value that the petitioner is referring to is publicly available,
but it is less contemporaneous with the POI than the cable information,
and therefore, was rejected.
Comment 7: Zhucheng's Claimed By-Product Credit
The petitioner urges the Department to reject Shandong Zhucheng
Chemical Company Limited's (Zhucheng) claimed by-product credit for a
factor of production because the information was submitted during
verification and, therefore, constitutes an untimely submission of
data.
The respondents argue that the record in this investigation
indicates that the petitioner improperly characterized Zhucheng's
claimed credit as untimely. Zhucheng indicates that it had reported the
credit in its original response to Section D of the Department's
questionnaire. While the respondents acknowledge that they provided a
correction and calculation worksheet on this topic at verification,
they argue that the documentation is fully in line with that which the
Department normally accepts or requires at verification. Accordingly,
the respondents request that the Department use the verified credit
information in the final margin calculations.
DOC Position
While we agree with the respondents that this information was not
untimely, we did not include this credit in our final margin
calculations because, as noted in our verification report, Zhucheng was
unable to provide documentation to support its worksheet calculations
for the credit amount of the factor. (For a further discussion of this
issue, see our calculation memorandum attached to the May 1, 1995,
concurrence memorandum and Zhucheng's verification report at page 17,
dated March 22, 1995).
Comment 8: Zhucheng's Understated Usage of Corn Cobs
The petitioner argues that the Department's verification revealed
that Zhucheng underreported its consumption of corn cobs, and that the
Department should base its final margin calculations on the verified
amounts.
According to the respondents, the petitioner has mischaracterized
the Department's verification findings. The respondents suggest that
the understatement was related to impurities, not corn cobs. The
respondents also suggest that Zhucheng quite properly reported corn cob
consumption, not the consumption of both the factor corn cobs and the
impurities. However, the respondents view petitioner's argument as
irrelevant because corn cobs are considered an agricultural waste in
the surrogate, Indonesia.
DOC Position
We agree with the petitioner that Zhucheng underreported its
consumption of corn cobs. Our questionnaire requests respondents to
report the gross, not net, amount of materials consumed in the
production of the subject merchandise. Therefore, we have increased
Zhucheng's consumption of this input, as verified. Inasmuch as the
surrogate information in Indonesia assigns no monetary value to corn
cobs, this increase in consumption will have an affect only on the
expenses to transport the corn cobs to the furfuryl alcohol factory.
Comment 9: Zhucheng's Reallocation of Labor Hours
The petitioner contends that the Department should reject
Zhucheng's reallocation of labor hours presented at verification
because the information is both untimely and without merit.
According to the respondents, the petitioner has misinterpreted the
record in arguing that Zhucheng submitted new data on labor hours in
the middle of verification. The respondents emphasize that Zhucheng had
reported labor hours in its original questionnaire responses to the
Department. At verification, the respondents contend that the
Department was able to review Zhucheng's records on labor and assess
the proper division of direct, indirect and unrelated labor. Inasmuch
as Zhucheng's reallocation verified without discrepancy, the
respondents request that the Department include its verification
findings on labor in its final margin calculations.
DOC Position
We agree with the respondents. As noted in our verification report,
Zhucheng had overstated the amount of labor used for producing the
input furfuryl because the reported amounts included both indirect and
unrelated labor. Since our surrogate value for factory overhead
includes indirect labor and it is the Department's practice to only
include the production labor related to the subject merchandise, we
have revised our final calculations on labor to avoid double counting
indirect labor.
Comment 10: Zhucheng's Self-Produced Input, Hydrogen
Zhucheng requests that the Department revise its valuation of
hydrogen for the final determination by not valuing it separately. The
company argues that the costs associated with the manufacture of this
input are included in the surrogate value for factory overhead and that
the Department's separate valuation of this input constitutes double
counting.
The petitioner argues that the Department should reject Zhucheng's
attempt to disregard hydrogen as a direct material and assign a factor
value to the process used to produce this input. Moreover, inasmuch as
the respondent failed to report usage rates for this process, the
petitioner urges that the Department assign a value based upon the best
information otherwise available.
DOC Position
We confirmed that the process necessary to produce hydrogen is
[[Page 22549]] accounted for in the surrogate value for factory
overhead and that to value the company's input separately would involve
double counting. Therefore, we have not assigned a separate value to
hydrogen in our calculations for the final determination. (For a
further discussion of this issue, see our calculation memorandum
attached to the concurrence memorandum of May 1, 1995).
Comment 11: Iso-Tanker Rental Expense
The petitioner asserts that, in computing movement expenses, the
Department should include a rental expense for iso-tankers used by
Sinochem Shandong because the Department verified that these expenses
were incurred. The petitioner argues that it is appropriate to rely on
the public information provided in the petition for the valuation of
these expenses in the final margin calculations.
DOC Position
We agree with the petitioner that Sinochem Shandong incurred a
rental expense for transporting the subject merchandise in iso-tanker
trucks during the POI. Given that we were unable to obtain any publicly
available data, or other information, regarding this expense in any of
our surrogate countries, we relied on the publicly available
information in the petition for the rental of iso-tanker trucks from
Thailand for shipments to the United States to derive a MT per
kilometer cost. We applied this figure to the distance between the
factory and the port for each PRC supplier of Sinochem Shandong.
Comment 12: BIA for Sinochem Shandong
The petitioner argues that the Department should use BIA to
calculate a margin for Sinochem Shandong because it failed to furnish a
complete list of suppliers that provided the furfuryl alcohol it sold
to the United States during the POI. The petitioner states that the
reported suppliers did not deliver furfuryl alcohol from a total of
five invoices in time for one of Sinochem Shandong's shipments.
Accordingly, the petitioner asserts that Sinochem Shandong must have
purchased the furfuryl alcohol elsewhere, and has failed to disclose
that supplier to the Department.
The respondents contend that the petitioner's allegation regarding
Sinochem Shandong's sourcing is unfounded. The respondents argue that
the integrity of Sinochem Shandong and its suppliers are demonstrated
in the Department's verification reports and, therefore, there is no
reason to use BIA. To support their argument, the respondents cite to
the Department's verification reports.
DOC Position
We agree with the respondents that the sales reported by Sinochem
Shandong and by its suppliers did, in fact, correspond, and that the
discrepancy was only a result of differences in the bookkeeping
practices of these different entities. For these reasons, we relied on
Sinochem Shandong's verified data and did not resort to using BIA to
calculate its margin.
Comment 13: Additional Movement Expenses for Qingdao
The petitioner asserts that the Department should deduct from the
USP the additional expenses incurred for the movement of Qingdao's
furfuryl alcohol from the point of shipment to the point of delivery.
At verification, Qingdao indicated that it received partial payment for
certain invoices and that the difference between the invoiced amounts
and the actual payments represents movement expenses. The petitioner
argues that these movement expenses must be accounted for in the
Department's calculations.
The respondents indicate that the record demonstrates that these
additional charges are not those of Qingdao and that this was affirmed
at verification. Accordingly, it would be inappropriate to charge these
additional movement expenses to Qingdao.
DOC Position
We agree with the respondents. The Department verified that only
partial payments for three U.S. sales had been forwarded by the
customer to Qingdao because of a dispute over shipping charges between
the shipper and Qingdao's customer. Both Qingdao and its customer
acknowledge that these charges are not the responsibility of Qingdao.
The customer stated that it will complete payment to Qingdao as soon as
the issue with the shipper is resolved (see Qingdao verification
report, dated March 20, 1995). Accordingly, the Department is satisfied
that a third party, not Qingdao, is liable for the additional movement
expenses.
Comment 14: Ministerial Error on Packing
The respondents state that the Department should correct the
multiplication errors made in calculating packing expenses in the
preliminary determination. Specifically, they state that for the
producers Zibo Gaintact Chemical Company Limited and Zhucheng, the
Department incorrectly multiplied the drum cost per metric ton by the
number of drums in a metric ton. In addition, the respondents state
that with respect to the producers Linzi Organic Chemicals Co. Ltd. and
Zibo, the Department confirmed that shipment of products by Sinochem
Shandong was by iso-tanker. Accordingly, the respondents assert that
packing material costs for these shipments should be zero.
The petitioner notes that although the Department's preliminary
calculation has a mathematical error, it is not the error alleged by
the respondent. In fact, the petitioner postulates that the packing
figures used in the preliminary determination were partially correct.
The petitioner makes the assumption that the Department charged all
sales of furfuryl alcohol with packing cost to account for the packing
that would be needed for the purchased furfuryl. Therefore, the
petitioner states that all sales should include packing cost, and that
the drum sales should have packing cost included twice.
DOC Position
We agree with the respondents. These were ministerial errors and
have been corrected (see calculation memorandum attached to the
concurrence memorandum, dated May 1, 1995).
Comment 15: Labor Rates
The respondents state that, in the preliminary determination, the
Department used unrealistically high labor rates for both skilled and
unskilled labor, and such rates did not accurately reflect the actual
wage rates in Indonesia.
The petitioner argues that the Department should continue to rely
on the U.S. Department of Labor statistics for Indonesian labor that
were used in the preliminary determination.
DOC Position
We agree with the respondents. The labor rates used in the
preliminary and final determinations are discussed above in the section
on Foreign Market Value.
Comment 16: Indirect Labor & Energy
The respondents state that, based on the March 23, 1995, memorandum
to the file, the calculations for all three manufacturers should be
corrected to eliminate indirect labor, coal, steam, and electricity
because the memorandum states that the costs of indirect labor and
energy are included [[Page 22550]] in the Indonesian surrogate value
for factory overhead.
The petitioner urges the Department not to eliminate indirect labor
and energy, and instead use a surrogate valuation based on a percentage
of direct materials, all labor and energy costs. In any event, the
petitioner states that the Department should not ignore the
respondent's energy costs.
DOC Position
We agree with the respondents. Based on the Department's surrogate
value methodology, Indonesia is our preferred surrogate, and since the
factory overhead percentage for Indonesia includes the above-mentioned
items, we have not separately valued those items in our calculations
for the final determination.
Comment 17: Salt
The respondents state that the Department verified that salt, not
the originally reported factor, was used by two of the factories. To
value this factor, the respondents suggest using either the Indonesian
price, if available, or the U.S. price. Alternatively, the respondents
state that the Department should consider disregarding the cost of salt
altogether because it was not used in the production process. They
point to the verification report for one of the factories, wherein salt
was referred to as ``a low cost consumable'' used for equipment
maintenance.
The petitioner argues that the Department's calculations of
surrogate values in the preliminary determination were correct and
should not be changed.
DOC Position
We agree with both parties, in part. For the factory that treats
salt as a ``low cost consumable,'' we have treated these costs as part
of factory overhead and have not valued them separately as a factor of
production. For the other factory, there is no evidence concerning how
salt was used in the production process or what kind of salt was used.
Therefore, we have treated salt as a factor of production, and have
continued to use the surrogate value that was used in the preliminary
determination.
Comment 18: Sulfuric Acid
The respondents state that the surrogate value used for sulfuric
acid in the preliminary determination is either erroneous or
aberrational and should be corrected. They state that a more realistic
value for sulfuric acid has been established in the Pencils
investigation, where an Indian price was used.
The petitioner contends that the Department should follow the
surrogate country hierarchy established in this case.
DOC Position
We agree with both parties, in part. We agree with the petitioner
that the Department should use the established hierarchy. Based on our
analysis, we also agree with the respondents that a more accurate value
should be used. Because furfuryl alcohol is not produced in India, we
based our calculations on the export values derived from the November
1993 Indonesian Foreign Trade Statistical Bulletin-- Exports. Because
this was a contemporaneous value, no adjustment for inflation was
needed (see calculation memorandum attached to the concurrence
memorandum, dated May 1, 1995).
Comment 19: Valuation of Ammonia Water
The respondents state that the surrogate value used for ammonia
water in the preliminary determination was aberrational and should be
corrected. The respondent cites to the Department's publication of an
``Index of Factor Values for Use in Antidumping Duty Investigations
Involving Products from the People's Republic of China'' which lists a
price for ammonia water in another approved surrogate, India.
The petitioner alleges that the respondents misuse the terms
``erroneous'' and ``aberrational'' and completely disregard the
Department's factor valuation hierarchy. The petitioner urges the
Department not to change its surrogate value for this factor.
DOC Position
We agree with the respondents in part. Based on our analysis, we
determined that the surrogate value used in the preliminary
determination was inappropriate. (For the details of our analysis of
this value, see the calculation memorandum attached to the concurrence
memorandum, dated May 1, 1995.) Since the Indonesian import value for
ammonia water was found to be inappropriate, we based our calculations
on the export values derived from the November 1993 Indonesian Foreign
Trade Statistical Bulletin--Exports. Because this was a contemporaneous
value, no adjustment for inflation was needed.
Continuation of Suspension of Liquidation
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 furfuryl alcohol 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
Manufacturer/producer/exporter Margin
Percentage
------------------------------------------------------------------------
Sinochem Shandong........................................... 43.54
Qingdao..................................................... 50.43
China-Wide.................................................. 45.27
------------------------------------------------------------------------
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: May 1, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-11262 Filed 5-5-95; 8:45 am]
BILLING CODE 3510-DS-P