[Federal Register Volume 60, Number 158 (Wednesday, August 16, 1995)]
[Notices]
[Pages 42516-42519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20207]



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DEPARTMENT OF COMMERCE
[A-570-803]


Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, From the People's Republic of China; Preliminary Results and 
Termination in Part of Antidumping Duty Administrative Reviews

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

ACTION: Notice of preliminary results and termination in part of 
antidumping duty administrative reviews.

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SUMMARY: In response to requests by two resellers of the subject 
merchandise, the Department of Commerce (the Department) is conducting 
administrative reviews of the antidumping duty orders on heavy forged 
hand tools, finished or unfinished, with or without handles, (HFHTs) 
from the People's Republic of China (PRC). The reviews cover two 
exporters of subject merchandise to the United States and the period 
February 1, 1993, through January 31, 1994. The reviews indicate the 
existence of dumping margins during the period of review.
    We have preliminarily determined that sales have been made below 
the foreign market value (FMV). If these preliminary results are 
adopted in our final results of administrative reviews, we will 
instruct U.S. Customs to assess antidumping duties equal to the 
difference between United States price (U.S. price) and FMV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: August 16, 1995.

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

SUPPLEMENTARY INFORMATION:

Background

    On February 19, 1991, the Department published in the Federal 
Register (56 FR 6622) the antidumping duty orders on HFHTs from the 
PRC. On February 4, 1994, the Department published in the Federal 
Register (59 FR 5390) a notice of opportunity to request administrative 
reviews of these antidumping duty orders. On February 28, 1994, in 
accordance with 19 CFR 353.22(a), two resellers of the subject 
merchandise to the United States, Fujian Machinery & Equipment Import & 
Export Corporation (FMEC) and Shandong Machinery Import & Export 
Corporation (SMC), requested that we conduct administrative reviews of 
their exports of subject merchandise to the United States. We published 
the notice of initiation of these antidumping duty administrative 
reviews on March 14, 1994 (59 FR 11768). The notice of initiation was 
amended on June 15, 1994 (59 FR 30770) and July 15, 1994 (59 FR 36160). 
The Department is conducting these administrative reviews in accordance 
with section 751 of the Tariff Act of 1930, as amended (the Act).

Termination of Review in Part

    On June 10, 1994, FMEC withdrew its request for a review of the 
order on picks and mattocks (picks/mattocks), and SMC withdrew its 
request for a review of the order on axes, adzes and other similar 
hewing tools (axes/adzes). Given the early stage of review at the time 
of FMEC's and SMC's withdrawal requests, we informed FMEC that it did 
not need to respond to the questionnaire with respect to picks/
mattocks, and we informed SMC that it did not need to respond to the 
questionnaire with regard to axes/adzes. See File Memorandum from Karin 
Price, dated July 5, 1994, ``Telephone conversation regarding the 
withdrawal requests of respondents in the third administrative reviews 
of heavy forged hand tools, finished or unfinished, with or without 
handles, from the People's Republic of China,'' which is on file in the 
Central Records Unit (room B-099 of the Main Commerce Building). We 
hereby are terminating the review of the order on picks/mattocks with 
respect to FMEC and the review of the order on axes/adzes with respect 
to SMC, in accordance with 19 CFR 353.22(a)(5).

Scope of These Reviews

    Imports covered by these reviews are shipments of HFHTs from the 
PRC comprising the following classes or kinds of merchandise: (1) 
hammers and sledges with heads over 1.5 kg. (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools and wedges 
(bars and wedges); (3) picks/mattocks; and (4) axes/adzes.
    HFHTs include heads for drilling, hammers, sledges, axes, mauls, 
picks, and mattocks, which may or may not be painted, which may or may 
not be finished, or which may or may not be imported with handles; 
assorted bar products and track tools including wrecking bars, digging 
bars and tampers; and steel woodsplitting wedges. HFHTs are 
manufactured through a hot forge operation in which steel is sheared to 
required length, heated to forging temperature and 

[[Page 42517]]
formed to final shape on forging equipment using dies specific to the 
desired product shape and size. Depending on the product, finishing 
operations may include shot blasting, grinding, polishing and painting, 
and the insertion of handles for handled products. HFHTs are currently 
provided for under the following Harmonized Tariff System (HTS) 
subheadings: 8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. 
Specifically excluded are hammers and sledges with heads 1.5 kg. (3.33 
pounds) in weight and under, hoes and rakes, and bars 18 inches in 
length and under.
    These reviews cover two exporters of HFHTs from the PRC, FMEC and 
SMC. The review period is February 1, 1993, through January 31, 1994.
Separate Rates

    The business licenses of both FMEC and SMC indicate that they are 
owned by ``all the people.'' As stated in the Notice of 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), ``ownership by `all of the people' does not require the 
application of a single rate.'' Accordingly, FMEC and SMC are eligible 
for consideration for separate rates.
    To establish whether a company is sufficiently independent to be 
entitled to a separate rate, the Department analyzes each exporting 
entity under the test established 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), as amplified in Silicon 
Carbide. Under this policy, exporters in non-market-economy (NME) 
countries are entitled to separate, company-specific margins when they 
can demonstrate an absence of government control, both in law and in 
fact, with respect to exports. Evidence supporting, though not 
requiring, a finding of de jure absence of government control includes: 
(1) an absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies. 
De facto absence of government control with respect to exports is based 
on four criteria: (1) whether the export prices are set by or subject 
to the approval of a government authority; (2) whether each exporter 
retains the proceeds from its sales and makes independent decisions 
regarding the disposition of profits and financing of losses; (3) 
whether each exporter has autonomy in making decisions regarding the 
selection of management; and (4) whether each exporter has the 
authority to negotiate and sign contracts.
    We have found that the evidence on the record demonstrates an 
absence of government control, both in law and in fact, with respect to 
FMEC's and SMC's exports according to the criteria identified in 
Sparklers and Silicon Carbide for this period of review. For further 
discussion of the Department's preliminary determination that FMEC and 
SMC are entitled to separate rates, see Decision Memorandum to Holly A. 
Kuga, Director, Office of Antidumping Compliance, dated July 21, 1995, 
``Separate rates for Fujian Machinery & Equipment Import & Export 
Corporation and Shandong Machinery Import & Export Corporation in the 
third administrative reviews of heavy forged hand tools, finished or 
unfinished, with or without handles, from the People's Republic of 
China,'' which is on file in the Central Records Unit (room B-099 of 
the Main Commerce Building).

United States Price

    The Department used purchase price and exporter's sales price 
(ESP), in accordance with sections 772 (b) and (c) of the Act, in 
calculating U.S. price. We made deductions from purchase price and ESP 
sales, where appropriate, for brokerage and handling, foreign inland 
freight, ocean freight, and marine insurance. Ocean freight services 
were provided by both PRC-owned and non-PRC-owned companies. Where we 
knew that the company providing the ocean freight services was not a 
PRC-owned company, we used the actual rates charged; for ocean freight 
services provided by PRC-owned companies, we applied a weighted-average 
ocean freight rate derived from those sales for which we used actual 
ocean freight rates. Since marine insurance services were provided by 
PRC-owned companies, we based the deduction for marine insurance on 
surrogate values. We also used surrogate data to value foreign inland 
freight and brokerage and handling. We selected India as the surrogate 
country for reasons explained in the ``Foreign Market Value'' section 
of this notice.
    Complete sales data for SMC's ESP sales have not been provided to 
the Department, despite the Department's requests for such data. In its 
original questionnaire response, SMC did not report its ESP sales, 
stating that SMC did not sell the subject merchandise to its U.S. 
subsidiary, CMC Pacific Tools, Inc. (Pacific Tools) during the period 
of review, despite the request in the questionnaire that ESP sales, 
i.e., sales made to unrelated purchasers in the United States after the 
date the merchandise was imported into the United States by or for the 
account of the exporter, be reported. In our supplemental 
questionnaire, we asked SMC to report any ESP sales of subject 
merchandise made by Pacific Tools to unrelated customers in the United 
States during the period of review and to answer all questions in the 
original questionnaire regarding these sales. When it reported these 
ESP sales in its supplemental questionnaire response, SMC did not 
report any movement expenses for these sales, stating that these 
expenses had been reported in a questionnaire response submitted for 
the previous administrative reviews of this case. Since movement 
expenses were not reported for the record of these reviews, as best 
information available (BIA), we applied a weighted-average ocean 
freight rate derived from those PP sales for which we used actual ocean 
freight rates to adjust for ocean freight, and we used surrogate values 
to make deductions for all other applicable movement expenses. We also 
made a deduction for U.S. duties.

Foreign Market Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine FMV using a factors of 
production methodology if (1) the merchandise is exported from a NME 
country, and (2) the information does not permit the calculation of FMV 
using home market prices, third country prices, or constructed value 
(CV) under section 773(a) of the Act.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. None of the parties to these 
proceedings has contested such treatment in these reviews. Accordingly, 
we calculated FMV in accordance with section 773(c) of the Act and 
section 353.52 of the Department's regulations. We determined that 
India is comparable to the PRC in terms of per capita gross national 
product (GNP), the growth rate in per capita GNP, and the national 
distribution of labor, and is a significant producer of comparable 
merchandise. For further discussion of the Department's selection of 
India as the primary surrogate country, see File Memorandum from Karin 
Price, dated June 13, 1994, ``Telephone conversations regarding the 
surrogate country selection in the third administrative reviews of 
heavy forged hand tools, finished or unfinished, with or without 
handles, from the People's 

[[Page 42518]]
Republic of China,'' which is on file in the Central Records Unit (room 
B-099 of the Main Commerce Building), with attached Memorandum to 
Laurie Lucksinger, dated March 18, 1993, ``AD Order on Heavy Forged 
Hand Tools from the People's Republic of China (case #A-570-803): 
Nonmarket-Economy Status and Surrogate Country Determinations.''
    For purposes of calculating FMV, we valued PRC factors of 
production in the year in which production occurred as follows, in 
accordance with section 773(c)(1) of the Act:
     To value all direct materials used in the production of 
HFHTs, including steel, resin glue, paint, varnish, wood for handles, 
iron wedges, anti-rust oil, scrap steel, and dilution, we used the 
rupee per metric ton, per kilogram, or per cubic meter value of imports 
into India during April-December 1992, for production in 1992, and 
during April 1993-January 1994, for production in 1993, obtained from 
the Monthly Statistics of the Foreign Trade of India, Volume II--
Imports, December 1992, and the Monthly Statistics of the Foreign Trade 
of India, Volume II--Imports, March 1994, respectively (Indian Import 
Statistics). Some of the factories in the PRC used imported steel for 
producing HFHTS, and, in these instances, we used the import price of 
the steel to value the relevant portion of steel which was imported. We 
made adjustments to include freight costs incurred between the 
suppliers and the HFHT factories. We also made an adjustment to the 
steel input factor for scrap and waste steel which was sold.
     For direct labor, we used the labor rates reported in the 
Business International Corporation reports IL&T India, released 
November 1992 and November 1993. This source breaks out labor rates 
between skilled, unskilled, semi-skilled, and foreman labor for 1993 
and provides information on the number of labor hours worked per week.
     For factory overhead, we used information reported in the 
December 1992 and September 1994 Reserve Bank of India Bulletin. From 
this information, we were able to determine factory overhead as a 
percentage of total cost of manufacture. We included steel pellets used 
to remove oxidization from the tool heads and detergent used to clean 
the tool heads in factory overhead as these materials are not 
physically incorporated into the subject merchandise.
     For selling, general and administrative (SG&A) expenses, 
we used information obtained from the December 1992 and September 1994 
Reserve Bank of India Bulletin. We calculated an SG&A rate by dividing 
SG&A expenses by the cost of manufacture. Since the calculated SG&A 
expense rate is less than 10 percent, we used the statutory minimum of 
10 percent to calculate SG&A expenses.
     To calculate a profit rate, we used information obtained 
from the December 1992 and September 1994 Reserve Bank of India 
Bulletin. We calculated a profit rate by dividing the before-tax profit 
by the sum of those components pertaining to the cost of manufacturing 
plus SG&A. Since the calculated profit rate is less than 8 percent, we 
used the statutory minimum of 8 percent to calculate profit.
     To value the packing materials, including cartons (except 
for imported cartons used at some of the factories), pallets, anti-rust 
paper, anti-damp paper, plastic and iron straps, plastic bags, iron 
buttons and knots, synthetic fiber, and iron wire, we used import 
statistics for India obtained from the Indian Import Statistics. We 
adjusted these values to include freight costs incurred between the 
suppliers and the HFHT factories. Some of the factories used imported 
cartons for packing, and, in these instances, we used the import price 
of the cartons to value the relevant percentage of cartons which was 
imported.
     To value coal, we used the price of steam coal reported 
for 1990 in the International Energy Agency publication Energy Prices 
and Taxes, 2nd Quarter 1994. We adjusted the value of coal to reflect 
inflation through 1992 and 1993 using wholesale price indices of India 
(WPI) as published in the International Financial Statistics by the 
International Monetary Fund (IMF).
     To value electricity, we used the price of electricity for 
1990 reported in the Asian Development Bank publication Energy 
Indicators of Developing Member Countries of Asian Development Bank, 
July 1992. We adjusted the value of electricity to reflect inflation 
through 1992 and 1993 using WPI published by the IMF.
     To value truck freight, we used the rates reported in a 
June 1992 cable from the U.S. Embassy in India submitted for the Final 
Determination of Sales at Less Than Fair Value: Sulfanilic Acid from 
the People's Republic of China (57 FR 29705, July 6, 1992) and an 
August 1993 cable from the U.S. Embassy in India submitted for the 
Final Determination of Sales at Less Than Fair Value: Certain Helical 
Spring Lock Washers from the People's Republic of China (58 FR 48833, 
September 20, 1993).
     To value rail freight, we used the price reported in a 
December 1989 cable from the U.S. Embassy in India submitted for the 
Final Results of Antidumping Duty Administrative Review: Shop Towels of 
Cotton from the People's Republic of China (56 FR 4040, February 1, 
1991). We adjusted the rail freight rates to reflect inflation through 
1992 and 1993 using WPI published by the IMF.
Currency Conversion

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

Best Information Available

    SMC did not provide factors-of-production data for one model, sales 
of which were first reported to the Department in SMC's supplemental 
questionnaire response. Since U.S. sales data for this model were 
submitted without the data necessary for the calculation of FMV, we 
must rely upon BIA, in accordance with section 776(1) of the Act, for 
these sales. As BIA, we are assigning a rate of 31.76 percent, which is 
the rate from the LTFV investigation for this class or kind of 
merchandise.

Preliminary Results of the Reviews

    As a result of our reviews, we preliminarily determine that the 
following margins exist:

------------------------------------------------------------------------
                                                                Margin  
          Manufacturer/exporter               Time period      (percent)
------------------------------------------------------------------------
Fujian Machinery & Equipment Import &                                   
 Export Corporation:                                                    
    Axes/Adzes...........................     2/1/93-1/31/94       11.72
    Bars/Wedges..........................     2/1/93-1/31/94       30.40
    Hammers/Sledges......................     2/1/93-1/31/94       12.17
Shandong Machinery Import & Export                                      
 Corporation:                                                           
    Bars/Wedges..........................     2/1/93-1/31/94       28.54

[[Page 42519]]
                                                                        
    Hammers/Sledges......................     2/1/93-1/31/94        7.26
    Picks/Mattocks.......................     2/1/93-1/31/94       36.92
------------------------------------------------------------------------


    Parties to the proceedings may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. See section 353.38(d) of the Department's regulations. The 
Department will publish a notice of final results of these 
administrative reviews, which will include the results of its analysis 
of issues raised in any such comments.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and FMV may vary from the percentages 
stated above. The Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of these administrative reviews 
for all shipments of HFHTs from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(1) of the Act: (1) The cash deposit 
rates for the reviewed companies named above which have separate rates 
will be the rates for those firms established in the final results of 
these administrative reviews; (2) for all other PRC exporters, the cash 
deposit rates will be the rates established in the LTFV investigations, 
the all-China rates; and (3) the cash deposit rates for non-PRC 
exporters of subject merchandise from the PRC will be the rates 
applicable to the PRC supplier of that exporter. The rates established 
in the LTFV investigations are 45.42 percent for hammers/sledges, 31.76 
percent for bars/wedges, 50.81 percent for picks/mattocks, and 15.02 
percent for axes/adzes. These deposit requirements, when imposed, shall 
remain in effect until publication of the final results of the next 
administrative reviews.

Notification of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 353.26 of the Department's regulations to 
file a certificate regarding the reimbursement of antidumping duties 
prior to liquidation of the relevant entries during this review period. 
Failure to comply with this requirement could result in the Secretary's 
presumption that reimbursement of antidumping duties occurred and the 
subsequent assessment of double antidumping duties.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22 
of the Department's regulations.

    Dated: August 8, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-20207 Filed 8-15-95; 8:45 am]
BILLING CODE 3510-DS-P