[Federal Register Volume 60, Number 114 (Wednesday, June 14, 1995)]
[Notices]
[Pages 31281-31285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14567]



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[[Page 31282]]


DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-840]


Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Manganese Metal From the People's 
Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: June 14, 1995.

FOR FURTHER INFORMATION CONTACT: David Boyland or Sue Strumbel, Office 
of Countervailing Investigations, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-4198 
or (202) 482-1442.

Preliminary Determination

    We preliminarily determine that manganese metal 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, as provided in section 733 of 
the Tariff Act of 1930 (``the Act''), as amended. The estimated margins 
are shown in the ``Suspension of Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on November 28, 1994 (59 
FR 61869, December 2, 1994), the following events have occurred: On 
December 23, 1994, the United States International Trade Commission 
(ITC) issued an affirmative preliminary injury determination (see ITC 
Investigation No. 731-TA-724). On December 30, 1994, we sent a letter 
to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and 
to the China Chamber of Commerce for Metals, Minerals, and Chemical 
Products (CCCMMCP) requesting names and addresses of PRC producers and 
exporters of manganese metal sold in the United States. On February 13, 
1995, we received a list of producers and exporters of manganese metal 
from the Beijing Foreign Economic Relations and Trade Commission. This 
list indicated the number of exporters of manganese metal during the 
period of investigation.
    On February 15, 1995, we postponed the preliminary determination 
until June 6, 1995 (60 FR 10065, February 23, 1995). On February 6 and 
23, 1995, responses to the Department's questionnaire were received 
from the following exporters of manganese metal: China Hunan 
International Economic Development Corporation (HIED), China 
Metallurgical Import and Export Hunan Corporation (CMIECHN), China 
National Electronic Import and Export Hunan Company (CEIEC), Great Wall 
Industry Import and Export Corporation (GWIIEC), Hunan Golden Globe 
Import and Export Company (HGG), and Minmetal Precious and Rare 
Minerals Import and Export Company (Minmetals). On April 14, 1995, we 
sent supplemental questionnaires to the respondents, as well as 
questionnaires regarding sales to intermediate countries. Responses to 
the intermediate and supplemental questionnaires were received on April 
24 and May 10, 1995, respectively. Based on the April 24, 1995 
responses to the Department's intermediate country questionnaires, the 
Department sent out questionnaires on May 15, 1995, to those companies 
in third countries that purchased subject merchandise from respondent 
companies during the POI. To date the Department has received three 
responses from these third-country purchasers.
Postponement of Final Determination

    Pursuant to section 735(a)(2)(A) of the Act, on June 2, 1995, the 
PRC respondents in this investigation requested that, in the event of 
an affirmative preliminary determination in these proceedings, the 
Department postpone the final determination in these proceedings to 135 
days after the date of publication of the affirmative determination in 
the Federal Register. Given that there is no compelling reason not to 
do so, we are postponing the final determination.

Scope of the Investigation

    The subject merchandise in this investigation is manganese metal, 
which is composed principally of manganese, by weight, but also 
contains some impurities such as carbon, sulfur, phosphorous, iron and 
silicon. Manganese metal contains by weight not less than 95 percent 
manganese. All compositions, forms and sizes of manganese metal are 
included within the scope of this investigation, including metal flake, 
powder, compressed powder, and fines. The subject merchandise is 
currently classifiable under subheadings 8111.00.45.00 and 
8111.00.60.00 of the Harmonized Tariff schedule of the United States 
(HTSUS). Although the HTSUS subheadings are 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 June 1 through November 30, 
1994.

Nonmarket Economy Country Status

    The Department has treated the PRC as a nonmarket economy country 
(NME) in all past antidumping investigations (see Notice of Final 
Determination of Sales at Less than Fair Value: Saccharin from the PRC 
(59 FR 58818, November 15, 1994)). No information has been provided in 
this proceeding that would lead us to overturn our former 
determinations. Therefore, in accordance with section 771(18)(C) of the 
Act, we have treated the PRC as an NME for purposes of this 
investigation.
    Where the Department is investigating imports from an NME, section 
773(c)(1) of the Act directs us when possible to base foreign market 
value (FMV) on the NME producers' factors of production, valued in a 
market economy that is at a level of economic development comparable to 
that of the NME under investigation and that is a significant producer 
of comparable merchandise. We have done so in this preliminary 
determination. The sources of individual factor prices are discussed in 
the FMV section below.

Intermediate Country Resellers

    Based on the responses to the Department's May 5, 1995 
questionnaires to third-country purchasers of subject merchandise from 
the PRC, none of the subject merchandise that such parties purchased 
from the PRC during the POI was subsequently sold to the United States.

Separate Rates

    All six respondent companies have requested separate antidumping 
duty rates. For the reasons indicated in the June 6, 1995, concurrence 
memorandum to the Deputy Assistant Secretary, the Department does not 
consider HGG to be the seller of subject merchandise for the sales 
activity reported by that company. Accordingly, HGG's request for a 
separate rate is not considered below. Its exports will be subject to 
the PRC-wide margin.
    In cases involving nonmarket economies, 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 determining whether companies should receive separate 
rates, we focus our attention on the exporter rather than the 
manufacturer, as our concern is the manipulation of export prices. 

[[Page 31283]]

    HIED is ``owned by all the people.'' It is the parent company of 
China Hunan International Economic Development Corporation, Zhuhai 
Corporation (Zhuhai) and China Hunan International Economic Development 
Ming Hua Trading Corporation (Ming Hua). Both Zhuhai and Ming Hua 
reportedly exported subject merchandise during the POI. Although Zhuhai 
and Ming Hua have been identified individually as being ``owned by all 
the people,'' HIED states that it consolidates the financial statements 
of these companies into its own financial statements. Additionally, the 
higher level management of both companies are assigned and approved by 
HIED.
    GWIIEC is an exporter of subject merchandise. The corporate 
structure provided by GWIIEC identifies the company as a ``subsidiary'' 
of a larger holding company. This holding company (the first tier-
holding company) is in turn a ``subsidiary'' of another company (the 
second-tier holding company) which reportedly received its initial 
capital from a government ministry. GWIIEC and the first-tier holding 
company have been identified as being ``owned by all the people.'' The 
submissions do not state whether the second-tier holding company is 
``owned by all the people.''
    CMIECHN and ``Hunan Nonferrous Metals Import & Export Associated 
Co. (CNIECHN) exported the subject merchandise during the POI. Although 
each is individually ``owned by all the people'' and has its own 
business license, CMIECHN and CNIECHN reportedly share the same high 
level management, business address, and accounting department.
    Minmetals is the exporter of subject merchandise and was identified 
in its response as being ``owned by all the people.'' The president and 
vice president of Minmetals hold these same positions at another 
company which is reportedly a separate business entity and which is not 
involved in the manufacture or sale of subject merchandise.
    CEIEC is the exporter of subject merchandise and is reportedly 
``owned by all people.'' This company claims to have three subsidiaries 
which are not involved in the manufacture or sale of subject 
merchandise.
    In the Final Determination of Sales at Less than Fair Value: 
Silicon Carbide from the PRC (Silicon Carbide) (59 FR 22585, May 2, 
1994), the Department stated that ``ownership of a company by all the 
people does not require the application of a single rate.'' 
Accordingly, these companies are eligible for consideration for a 
separate rate under our criteria. However, as discussed below, the 
business structures of the respondent companies, as well as the manner 
in which they have requested separate rates, raises certain issues 
concerning which company should be considered the recipient of the 
separate rate.
    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 (Sparklers) (56 FR 20588, May 6, 1991) 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 Jure Control

    The respondents submitted a number of documents to demonstrate the 
absence of de jure control of their business activities by the PRC 
central government. The documents include the following:
     Law of the People's Republic of China on Industrial 
Enterprises Owned by the Whole People (April 13, 1988) This law granted 
autonomy to state-owned enterprises by separating ownership and control 
(Article 2). It also granted enterprises the right to set prices and 
the right to decide what type of commodity to produce (Article 22-26).
     Excerpts from PRC's States Council Decree: Provisions on 
Changing the System of Business Operation for States Owned Enterprises 
(December 31, 1992) This decree superseded the April 13, 1988 law and 
codified existing practice. It also gave state-owned enterprises the 
right to establish ``production, management, and operation[al] 
policies;'' the right to set prices, sell products, purchase production 
inputs, make investment decisions, and dispose of profits and assets. 
These rights apply specifically to an enterprise's import and export 
activities (Provision 12).
     Order from MOFERT, No. 4, 1992 and Temporary Provision for 
Administration of Export Commodities (Export Provisions) (December 21, 
1992) The Export Provisions indicate those products subject to direct 
government control. Electrolytic manganese metal does not appear on the 
Export Provisions list and hence, the subject merchandise under 
investigation is not subject to export constraints. We note that the 
Emergent Notice on Changes in Issuing Authority for Export Licenses 
Regarding Public Bidding Quota for Certain Commodities (MOFTEC #140) 
(Effective April 1994) cancelled previous export licenses for certain 
commodities. Manganese metal was not among these commodities.
    Consistent with Silicon Carbide and subsequent PRC determinations, 
we determine that the existence of the laws cited to above demonstrates 
that the respondent companies are not subject to de jure central 
government control with respect to export sales and pricing decisions. 
In addition to the above laws and regulations, respondents provided the 
following documents.
     PRC's Enterprise Legal Person Registration Administrative 
Regulations (June 13, 1988) This regulation sets forth the procedure 
for registering enterprises as legal persons.
     Law of the People's Republic of China on Enterprise 
Bankruptcy (December 2, 1986) This law sets forth bankruptcy procedures 
for state-owned enterprises.
     GATT Document Concerning Transparency of China's Foreign 
Trade Regime (February 12, 1992) This document listed the PRC central 
government's response to questions by a GATT committee regarding the 
PRC's foreign trade regime.
    We note that 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 within the PRC (see ``PRC 
Government Findings on Enterprise Autonomy,'' in Foreign Broadcast 
Information Service-China-93-133 (July 14, 1993)). As such, the 
Department has determined that a de facto analysis is necessary to 
determine whether HIED, GWIIEC, CMIECHN/CNIECHN, Minmetals, and CEIEC 
are subject to central government control over export sales and pricing 
decisions.

2. Absence of De Facto Control

    The Department typically considers four factors when 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).
    Normally, to determine whether a respondent is entitled to a 
separate rate, 

[[Page 31284]]
we apply the separate rate test to individual companies ``owned by all 
the people.'' However, in this case, groups of individual companies 
``owned by all the people'' are presenting themselves as single 
business units. The relationship between these companies (i.e., CMIECHN 
and CNIECHN, and HIED and its ``subsidiaries'' Zhuhai and Ming Hua) 
appears to be ``corporate `` in nature. We are uncertain of what 
significance we should attach to these corporate relationships in the 
PRC. Thus, for purposes of the preliminary determination, when the 
facts presented to the Department indicate that respondents are 
operating as individual business units, we have applied the 
Department's separate rates analysis to the business unit (i.e., two or 
more ``owned by all the people'' companies operating in unison), as 
opposed to the individual companies ``owned by all the people.''
    HIED and its subsidiaries, Zhuhai and Ming Hua, are treated as one 
business entity in HIED's response. Similarly, the responses of 
CMIECHN/CNIECHN characterize these two companies as a single business 
entity. The information provided in the questionnaire and supplemental 
questionnaire responses appears to support these characterizations. 
Accordingly, the Department considers HIED and its subsidiaries (Zhuhai 
and Ming Hua), and CMIECHN/CNIECHN to be single business entities for 
purposes of the preliminary determination.
    In response to our questionnaires, HIED, GWIIEC, CMIECHN/CNIECHN, 
MINMETALS, and CEIEC have each asserted that they: (1) Are allowed to 
retain the proceeds from export sales; (2) maintain their own 
unrestricted bank accounts, including foreign exchange earnings which 
have been converted into remninbi (RMB); (3) are able to sell assets; 
(4) set prices independently of government direction; (5) base the 
prices charged customers on arm's length negotiations without 
governmental interference; (6) are not subject to foreign exchange 
targets set by either the central or provincial governments; and (7) 
select their own management without outside interference.
    Based on these claims and information regarding their operations, 
we have determined that HIED, CMIECHN/CNIECHN, MINMETALS, and CEIEC, 
have preliminarily met the criteria for the application of separate 
rates. With respect to HIED and its subsidiaries (Zhuhai and Ming Hua), 
and CMIECHN/CNIECHN, we will examine at verification the extent to 
which these companies operate as single business entities.
    For this preliminary determination, we have denied GWIIEC's claim 
for a separate rate. The standard for a separate rate claim requires 
that respondent demonstrate, inter alia, that the company has autonomy 
from the government in making decisions regarding selection of 
management. In its response, GWIIEC asserted that the government does 
not exercise control over the company's decision making either directly 
or indirectly through its first and second tier holding companies. 
GWIIEC's response indicates that the company's president is selected 
internally. However, the response also indicates that the president is 
appointed by one or both of the first and second tier holding 
companies. Moreover, GWIIEC's response indicates that the senior 
management of the first and second tier holding companies is ``selected 
under the auspices'' of a government ministry. Although the Department 
requested that this statement be clarified, the role of the government 
in the selection process remains unclear at this time. Further, the 
nature and function of the appointment process for GWIIEC's president 
is unclear. Accordingly, GWIIEC has not demonstrated to the 
Department's satisfaction that the company has autonomy from the 
government in making decisions regarding selection of management, and 
thus has not met the standard for the Department to grant a separate 
rate for purposes of this preliminary determination.

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 economies that (1) Are at a level of economic development 
comparable to that of the NME country and (2) are significant producers 
of comparable merchandise. The Department has determined that India is 
the most suitable surrogate for purposes of this investigation. Based 
on available statistical information, India is at a level of economic 
development comparable to that of the PRC, and Indian export statistics 
indicate that the country is a significant producer of comparable 
merchandise.

Fair Value Comparisons

    To determine whether sales of manganese metal from the PRC by HIED, 
GWIIEC, CMIECHN/CNIECHN, MINMETALS, and CEIEC 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 the notice.

United States Price

    For all respondents, we based USP on purchase price, in accordance 
with section 772(b) of the Act, because manganese metal was sold 
directly to unrelated parties in the United States prior to importation 
into the United States, and because exporter's sales price (ESP) 
methodology was not indicated by other circumstances. Where 
appropriate, we calculated purchase price based on packed, FOB-port, 
C&F, and CIF prices to unrelated purchasers in the United States. We 
made deductions to these prices for foreign inland freight, 
containerization, loading, port handling expenses, and marine 
insurance, as appropriate. Generally, costs for these items were valued 
in the surrogate country. However, where transportation services were 
purchased from market economy suppliers and paid for in a market 
economy currency, we used the cost actually incurred by the exporter.

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 exporters analyzed 
in this determination. The factors used to produce manganese metal 
include materials, labor and energy. To calculate FMV, the reported 
factor quantities were multiplied by the appropriate surrogate values 
from India for those inputs purchased domestically from PRC suppliers. 
Where a respondent failed to provide certain factor information in a 
usable form, we have relied upon publicly available information from 
the petition as best information available in valuing these factors.
    In determining which surrogate value to use for each factor of 
production, we selected, where possible, an average non-export value, 
which was representative of a range of prices within the POI, or most 
contemporaneous with the POI, specific to the input in question, and 
tax-exclusive.
    With the exception of the manganese ore and one other input, the 
identity of which is business proprietary, we obtained surrogate 
material values from the following sources: the Monthly Trade 
Statistics of Foreign Trade of India, Volume II--Imports, August 1994, 
(Indian Import Statistics); The Analyst: Import Reference 1993, 
Chemical and 

[[Page 31285]]
Pharmaceutical Products; and the Indian Chemical Weekly (July-November 
1993). For the business proprietary input referenced above, we relied 
upon information submitted by the petitioners (taken from the June-
October 1994 Chemical Marketing Report) for a similar input.
    To value the manganese ore, we used a 1992 contract price for low-
grade manganese ore (26-28% Mn content) between an Indian mine and 
Japanese purchasers, as published in the July 7, 1992, TEX Report. 
Although it is our normal practice to apply an inflation adjustment to 
prices predating the period of investigation, in this case, we have 
information which indicates that prices for this product have fallen 
over time. Therefore, we adjusted this price to account for declining 
manganese ore prices between 1992 and our POI.
    To value electricity, we used the April 1992 through March 1993 
average tax-exclusive price for industrial electricity in India, as 
provided by the World Bank. To value labor amounts, we used labor rates 
in Investing, Licensing, and Technology November 1994 (India) as 
published by the Economist Intelligence Unit. We adjusted the factor 
values, when necessary, to the POI using wholesale price indices 
(WPI's) published by the International Monetary Fund (IMF).
    To value factory overhead, we calculated the ratio of factory 
overhead expenses to the cost of material, labor, and energy for 
industries involved in ``Processing and Manufacture--Metals, Chemicals 
and products thereof,'' as reported in the September 1994 Reserve Bank 
of India Bulletin's (RBI Bulletin). This same source was used to 
calculate expense (SG&A) as a percentage of cost of manufacturing. 
Because the RBI percentage was greater than the minimum 10 percent 
required by the statute, we used the SG&A percentage calculated from 
the RBI Bulletin. With respect to profit, we used the statutory minimum 
of 8 percent of materials, labor, energy, overhead, and SG&A costs 
calculated for each factory.
Best Information Available

    Potential exporters identified by MOFTEC failed to respond to our 
questionnaire. In the absence of responses from these and other PRC 
exporters during the POI, we are basing the PRC-wide rate on the best 
information available (BIA). When a company refuses to provide 
information requested in the form required, or otherwise significantly 
impedes the Department's investigation, it is appropriate for the 
Department to assign to the company the higher of (a) the highest 
margin alleged in the petition, or (b) the highest calculated rate of 
any respondent in the investigation (see Final Determination of Sales 
at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, 
Certain Cold-Rolled Carbon Steel Flat Products, and Certain Cut-to-
Length Carbon Steel Plate from Belgium (Belgium Steel) 58 FR 37083, 
July 9, 1993). Since some PRC exporters failed to respond to our 
questionnaire, we are assigning any exporter not granted a separate 
rate the highest margin alleged in the November 8, 1994 petition.

Verification

    As provided in section 776(b) of the Act, we will verify 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(1) of the Act, we are directing 
the Customs Service to suspend liquidation of all entries of manganese 
metal from the PRC, as defined in the ``Scope of the Investigation'' 
section of this notice, 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 dumping margins, as shown 
below. This suspension of liquidation will remain in effect until 
further notice. The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                                 Margin 
                Manufacture/producer/exporter                   percent 
------------------------------------------------------------------------
CEIEC........................................................     132.22
CMIECHN/CNIECHN..............................................      82.44
HIED.........................................................     148.82
Minmetals....................................................     148.24
PRC-Wide Rate................................................     148.82
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine whether these imports are materially injuring, 
or threaten material injury to, the U.S. industry within 75 days after 
our final determination.

Public Comment

    Interested parties who wish to request a hearing must submit a 
written request to the Assistant Secretary for Import Administration, 
U.S. Department of Commerce, Room B-099, within ten days of the 
publication of this notice. Requests should contain: (1) The party's 
name, address, and telephone number; (2) the number of participants; 
and (3) a list of the issues to be discussed. In accordance with 19 CFR 
353.38, case briefs or other written comments in at least ten copies 
must be submitted to the Assistant Secretary no later than September 
27, 1995, and rebuttal briefs no later than September 29, 1995. A 
hearing, if requested, will be held on October 3, 1995, at 2:00 p.m. at 
the U.S. Department of Commerce in Room 1815. Parties should confirm by 
telephone the time, date, and place of the hearing 48 hours prior to 
the scheduled time. In accordance with 19 CFR 353.38(b), oral 
presentations will be limited to issues raised in the briefs. We will 
make our final determination not later than 135 days after the 
publication of this preliminary determination in the Federal Register. 
This determination is published pursuant to section 733(f) of the Act 
and 19 CFR 353.15(a).

    Dated: June 5, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-14567 Filed 6-13-95; 8:45 am]
BILLING CODE 3510-DS-P