[Federal Register Volume 60, Number 158 (Wednesday, August 16, 1995)]
[Notices]
[Pages 42504-42507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20211]



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DEPARTMENT OF COMMERCE
[A-570-808]


Chrome-Plated Lug Nuts From The People's Republic of China; 
Preliminary Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of the Antidumping Duty 
Administrative Review of Chrome-Plated Lug Nuts from the People's 
Republic of China.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on chrome-plated 
lug nuts (lug nuts) from the People's Republic of China (PRC) in 
response to a request by petitioner, Consolidated International 
Automotive, Inc. (Consolidated). This review covers shipments of this 
merchandise to the United States during the period September 1, 1993, 
through August 31, 1994.
    We have preliminarily determined that sales have been made below 
foreign market value (FMV). If these preliminary results are adopted in 
our final results, we will instruct the U.S. Customs Service to assess 
antidumping duties equal to the difference between United States price 
(USP) and FMV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: August 16, 1995.

FOR FURTHER INFORMATION CONTACT: Donald Little, Elisabeth Urfer, or 
Maureen Flannery, Office of Antidumping Compliance, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington DC 
20230; telephone (202) 482-4733.

Background

    The Department published in the Federal Register an antidumping 
duty order on lug nuts from the PRC on April 24, 1992 (57 FR 15052). On 
September 2, 1994, the Department published in the Federal Register (59 
FR 45664) a notice of opportunity to request an administrative review 
of the antidumping duty order on lug nuts from the PRC covering the 
period September 1, 1993, through August 31, 1994.
    On September 21, 1994, in accordance with 19 CFR 353.22(a), 
Consolidated requested that we conduct an administrative review of 
China National Automotive Industry I/E Corp., Nantong Branch (Nantong); 
China National Automobile Import and Export Corp., Yangzhou Branch 
(Yangzhou); Jiangsu Rudong Grease-Gun Factory (Rudong); Ningbo Knives & 
Scissors Factory (Ningbo); Shanghai Automobile Import & Export Corp. 
(Shanghai Automobile); Tianjin Automotive Import and Export Co. 
(Tianjin); China National Machinery & Equipment Import & Export Corp., 
Jiangsu Branch (Jiangsu); and China National Automotive Industry I/E 
Corp. (China National). We published a notice of initiation of this 
antidumping duty administrative review on October 13, 1994 (59 FR 
51939). The Department is conducting this administrative review in 
accordance with section 751 of the Tariff Act of 1930, as amended (the 
Act).

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the statute and the 
Department's regulations are in reference to the provisions as they 
existed on December 31, 1994.

Scope of Review

    On April 19, 1994, the Department issued its ``Final Scope 
Clarifications on Chrome-Plated Lug Nuts from Taiwan and the PRC.'' The 
scope, as clarified, is described in the subsequent paragraph. All lug 
nuts covered by this review conform to the April 19, 1994, scope 
clarification.
    Imports covered by this review are one-piece and two-piece chrome-
plated lug nuts, finished or unfinished. The subject merchandise 
includes chrome-plated lug nuts, finished or unfinished, which are more 
than \11/16\ inches (17.45 millimeters) in height and which have a 
hexagonal (hx) size of at least \3/4\ inches (19.05 millimeters) but 
not over one inch (25.4 millimeters), plus or minus \1/16\ of an inch 
(1.59 millimeters). The term ``unfinished'' refers to unplated and/or 
unassembled chrome-plated lug nuts. The subject merchandise is used for 
securing wheels to cars, vans, trucks, utility vehicles, and trailers. 
Zinc-plated lug nuts, finished or unfinished, and stainless-steel 
capped lug nuts are not included in the scope of this review. Chrome-
plated lock nuts are also not subject to this review.
    Chrome-plated lug nuts are currently classified under subheading 
7318.16.00.00 of the Harmonized Tariff Schedule (HTS). Although the HTS 
subheading is provided for convenience and customs purposes, the 
written description of the scope of this proceeding is dispositive.
    This review covers the period September 1, 1993, through August 31, 
1994, and eight producer/exporters of Chinese lug nuts.

Market-Oriented Industry

    Rudong submitted, with its March 30, 1995 questionnaire response, a 
request that we treat the lug nuts industry as a market-oriented 
industry (MOI). Rudong claims that its material inputs are acquired at 
market prices and that, accordingly, we should find that the Chinese 
lug nuts industry is an MOI, and use Rudong's home market sales and/or 
costs as the basis of FMV.
    The criteria for determining whether an MOI exists are: (1) For the 
merchandise under review, there must be virtually no government 
involvement in setting prices or amounts to be produced; (2) the 
industry producing the merchandise under review should be characterized 
by private or collective ownership; and (3) market-determined prices 
must be paid for all significant inputs, whether material or non-
material (e.g., labor and overhead), and for all but an insignificant 
portion of all the inputs accounting for the total value of the 
merchandise under review. (See Amendment to Final Determination of 
Sales at Less than Fair Value and Amendment to Antidumping Duty Order: 
Chrome-Plated Lug Nuts from the People's Republic of China (57 FR 
15054, April 24, 1992) (Lug Nuts Redetermination).)
    As we found in the Lug Nuts Redetermination, in the original 
investigation of this case, the third criterion of the test, noted 
above, has not been met in this review. Rudong has not submitted any 
factual evidence that demonstrates that it pays market-determined 
prices for steel, a major input in lug nut production, or that the 
steel industry is not subject to significant state control and state-
required production. Further, Rudong has not placed on the record any 
factual evidence that it pays market-determined prices for chemical 
inputs, or that the chemicals industry is not subject to significant 
state control. Rudong has not supplied any description of the supply 
and demand factors supporting a claim that the steel and chemicals 
industries in the PRC are market-driven. Based on the foregoing, we 
preliminarily determine that Rudong has not demonstrated the lug nut 
industry is an MOI and accordingly have calculated foreign market value 
in accordance with section 773(c) of the Act. For a further discussion 
of the Department's preliminary determination that the lug 

[[Page 42505]]
nuts industry does not constitute an MOI, see Decision Memorandum to 
Holly A. Kuga, Director of Antidumping Compliance, dated July 31, 1995, 
``Market Oriented Industry Request in the Third Administrative Review 
of Chrome-Plated Lug Nuts from the People's Republic of China,'' which 
is on file in the Central Record Unit (room B099 of the Main Commerce 
Building).

Separate Rates

    To establish whether a company operating in a state-controlled 
economy 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 by 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). Under this policy, 
exporters in non-market economies (NMEs) 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 over export activities 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 over exports is based on four factors: (1) 
Whether each exporter sets its own export prices independently of the 
government and without 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 or financing 
of losses; (3) whether each exporter has the authority to negotiate and 
sign contracts and other agreements; and (4) whether each exporter has 
autonomy from the government regarding the selection of management.
    Rudong and Nantong responded to the Department's request for 
information regarding separate rates; therefore, Rudong and Nantong 
were the only firms on which we made a determination of whether they 
should receive a separate rate. In the previous administrative review 
covering the period from September 1, 1992 through August 31, 1993 
(1992-93 review), we preliminarily determined that Nantong merited a 
separate rate. Because the results from the 1992-93 review are not 
final, we analyzed Nantong's submission in this review to determine 
whether Nantong merits a separate rate. We have made the determination 
of whether Rudong and Nantong should receive separate rates under the 
policy set forth in Silicon Carbide and Sparklers. In Silicon Carbide, 
we concluded that ownership by the people does not require the 
application of a single rate, and amplified the test set out in 
Sparklers by examining the management of an enterprise. With respect to 
the absence of de jure government control, evidence on the record 
indicates that Nantong is a local government-owned company, an 
independent entity. Further, several PRC laws establish that the 
responsibility for managing entities has been transferred from the 
central government to the enterprise. (See July 18, 1995 memorandum to 
the file, with attachments, ``Chrome-Plated Lug Nuts from the People's 
Republic of China: laws and regulations governing various categories of 
companies in the PRC.'') In particular, ``The People's Republic of 
China All People's Ownership Business Law,'' enacted on April 13, 1988, 
indicates that branch companies have become legally and financially 
independent of centrally-controlled foreign trade companies. 
Additionally, lug nuts do not appear on the ``Temporary Provisions for 
Administration of Export Commodities,'' approved on December 21, 1992, 
and are not, therefore, subject to the constraints of this provision.
    With respect to the absence of de facto control, although Nantong 
is a local government-owned company, such ownership does not preclude a 
determination that a separate rate is appropriate. Nantong's management 
is elected by company staff, and is responsible for all decisions such 
as determining export prices, allocation and retention of profit on 
export sales, and negotiating export sales contracts. Nantong stated 
that the PRC government does not become involved with its business 
activities.
    With respect to the absence of de jure government control, evidence 
on the record indicates that Rudong is a collectively-owned enterprise. 
Rudong stated that it has always operated as a decentralized company. 
The ``Regulations on Rural Collective Enterprises'' identify rules and 
regulations pertaining to collectively-owned enterprises which give 
rural collective enterprises such rights as the right to act on their 
own, adopt independent accounting, and assume the sole responsibility 
for their profits and losses. (See July 20, 1995 memorandum to the 
file, with attachments, ``Chrome-Plated Lug Nuts from the People's 
Republic of China: laws and regulations governing various categories of 
companies in the PRC.'')
    With respect to the absence of de facto control, Rudong is a 
collectively-owned enterprise. Rudong's management is elected by 
Rudong's staff, and is responsible for all decisions such as 
determining its export prices, profit distribution, employment policy, 
marketing strategy, and negotiating contracts. During verification, we 
saw no evidence of government involvement in these decisions.
    We have found that the evidence on the record demonstrates an 
absence of government control, both in law and in fact, with respect to 
Rudong and Nantong according to the criteria identified in Sparklers 
and Silicon Carbide. For further discussion of the Department's 
preliminary determination that Rudong and Nantong are each entitled to 
a separate rate, see Decision Memorandum to Holly A. Kuga, Director of 
Antidumping Compliance, dated July 31, 1995, ``Separate Rate for 
Jiangsu Rudong Grease-Gun Factory in the Third Administrative Review of 
Chrome-Plated Lug Nuts from the People's Republic of China,'' and 
Decision Memorandum to Holly A. Kuga, Director of Antidumping 
Compliance, dated July 31, 1995, ``Separate Rate for China National 
Machinery & Equipment Import & Export Corp., Nantong Company, in the 
Third Administrative Review of Chrome-Plated Lug Nuts from the People's 
Republic of China,'' which are on file in the Central Record Unit (room 
B099 of the Main Commerce Building).

Verification

    We verified the information submitted by Rudong in the PRC from May 
4 through May 6, 1995, and May 8 and May 9, 1995. We used standard 
verification procedures, including examination of relevant accounting 
and production records and original source documents provided by 
Rudong.

United States Price

    For sales made by Rudong we based USP on purchase price, in 
accordance with section 772(b) of the Act, because the subject 
merchandise was sold to unrelated purchasers in the United States prior 
to importation into the United States.
    We calculated purchase price based on the price to unrelated 
purchasers. We 

[[Page 42506]]
made deductions, where appropriate, for brokerage and handling, foreign 
inland freight, marine insurance, and ocean freight. We valued 
brokerage and handling, foreign inland freight, marine insurance, and 
ocean freight deductions using surrogate data based on Indian freight 
costs. We selected India as the surrogate country for the reasons 
explained in the ``Foreign Market Value'' section of this notice.

Foreign Market Value

    For all 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 an NME country, and (2) the information does not permit the 
calculation of FMV under section 773(a) of the Act.
    In the amendment to the final determination of sales at less than 
fair value (LTFV), the Department treated the PRC as an NME country, 
and determined that the lug nuts industry is not a MOI (see Lug Nuts 
Redetermination). Rudong has argued that the lug nut industry is a MOI; 
however, as discussed above, we have preliminarily determined the lug 
nut industry not to be market-oriented. Accordingly, we are not able to 
determine FMV on the basis of Rudong's costs and prices, and have 
applied surrogate values to the factors of production to determine FMV.
    We calculated FMV based on factors of production in accordance with 
section 773(c) of the Act and section 353.52 of our regulations. We 
determined that India is comparable to the PRC in terms of: (1) Per 
capita gross national product (GNP), (2) the growth rate in per capita 
GNP, and (3) the national distribution of labor. In addition, India is 
a significant producer of comparable merchandise. Therefore, for this 
review, we chose India as the most comparable surrogate on the basis of 
the above criteria, and have used publicly available information 
relating to India to value the various factors of production. (See 
Memorandum to Laurie Parkhill from David Mueller, dated June 9, 1995, 
``Chrome-Plated Lug Nuts from the People's Republic of China: Non-
market Economy Status and Surrogate Country Selection,'' and Memorandum 
to the File from Donald Little, dated July 20, 1995, ``India: 
Significant Production of Comparable Merchandise,'' which are on file 
in the Central Record Unit (room B099 of the Main Commerce Building).)
    We valued the factors of production as follows:
     For steel wire rods, we used a per kilogram value obtained 
from the March 1994 Monthly Statistics of Foreign Trade of India 
(Indian Import Statistics) for the period April 1993 through March 
1994. Using wholesale price indices (WPI) obtained from the 
International Financial Statistics, published by the International 
Monetary Fund (IMF), we adjusted these values to reflect inflation 
through the period of review (POR). We made further adjustments to 
include freight costs incurred between the supplier and Rudong.
     For chemicals used in the production and plating of lug 
nuts, we used per kilogram values obtained from the Indian Import 
Statistics. We adjusted these rates to reflect inflation through the 
POR using WPI published by the IMF. We made further adjustments to 
include freight costs incurred between the supplier and Rudong.
     For hydrochloric acid, we based the value on an Indian 
price quote used in 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), because the Indian Import Statistics for 
hydrochloric acid were found to be aberrational. We adjusted the value 
used in Coumarin to reflect inflation through the POR using WPI 
published by the IMF.
     For direct labor, we used the labor rates reported in the 
Business International Corporation report IL&T India, released November 
1993. This source breaks out labor rates between skilled and unskilled 
labor for 1993 and provides information on the number of labor hours 
worked per week. We adjusted these rates to reflect inflation through 
the POR using WPI published by the IMF.
     For factory overhead, we used information reported in the 
September 1994 Reserve Bank of India Bulletin for the Indian metals and 
chemicals industries. From this information, we were able to determine 
factory overhead as a percentage of the total cost of manufacture.
     For selling, general and administrative (SG&A) expenses, 
we used information obtained from the September 1994 Reserve Bank of 
India Bulletin for the Indian metals and chemicals industries. 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 of the cost of manufacture, we used the statutory minimum of 10 
percent.
     To calculate a profit rate, we used information obtained 
from the September 1994 Reserve Bank of India Bulletin for the Indian 
metals and chemicals industries. We calculated a profit rate by 
dividing the before-tax profit by the cost of manufacturing plus SG&A. 
Since the calculated profit rate is less than eight percent, we used 
the statutory minimum of eight percent to calculate profit.
     For packing materials, we used per kilogram values 
obtained from the Indian Import Statistics. We adjusted these values to 
reflect inflation through the POR using WPI published by the IMF.
     To value electricity, we used the price of electricity for 
1993 reported in the Confederation of Indian Industries Handbook of 
Statistics. We adjusted the value of electricity to reflect inflation 
through the POR using WPI published by the IMF.
     To value truck freight, we used the rates reported in an 
August 1993 cable from the U.S. Consulate 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). We adjusted the rates to reflect inflation through 
the POR 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

    We preliminarily determine, in accordance with section 776(c) of 
the Act, that the use of best information available (BIA) is 
appropriate for Yangzhou, Ningbo, Jiangsu, China National, Tianjin, and 
Shanghai Automobile because these firms did not respond to the 
Department's antidumping questionnaire.
    In deciding what to use as BIA, 19 CFR 353.37(b) provides that the 
Department may take into account whether a party refused to provide 
requested information. Thus, the Department determines on a case-by-
case basis what is BIA. When a company refuses to provide the 
information requested in the form required, or otherwise significantly 
impedes the Department's review, the Department will normally assign to 
that company the higher of (1) The highest rate for any firm in the 
investigation or prior administrative reviews of sales of subject 
merchandise from that same country; or (2) the highest rate found in 
the current review for any firm. When 

[[Page 42507]]
a company has cooperated with the Department's request for information 
but fails to provide the information requested in a timely manner or in 
the form required, the Department will normally assign to that company 
the higher of (1) the highest margin calculated for that company in any 
previous review or the original investigation; or (2) the highest 
calculated margin for any respondent that supplied an adequate response 
for the current review. (See Antifriction Bearings (Other than Tapered 
Roller Bearings) and Parts Thereof From the Federal Republic of 
Germany, et al.; Final Results of Administrative Review (56 FR 31705, 
July 11, 1991).)
    We have applied BIA to sales made by China National, Jiangsu, 
Yangzhou, Ningbo, Shanghai Automobile, and Tianjin. Because these firms 
did not respond to our questionnaire, as BIA we have applied the 
highest margin ever in the LTFV investigation or in this or prior 
administrative reviews. The highest rate in this proceeding is 42.42 
percent, which the Department determined in the LTFV investigation. If 
the publication of the final results of the 1992-93 review occurs prior 
to the final results for this review, we will consider those results in 
our final BIA determination. These firms form the basis of the PRC 
country-wide rate, which is therefore also based on non-cooperative 
BIA.

Non-Shipper

    Nantong submitted a questionnaire response to the Department 
stating that it did not ship lug nuts to the United States during the 
period of review. There is no evidence on the record to demonstrate 
that Nantong shipped subject merchandise to the United States during 
the period of review. We have preliminarily determined that Nantong 
merits a separate rate for this review period, as discussed in the 
separates rates section above. Assuming that we determine, in the final 
results of review for the 1992-93 period, that Nantong merits a 
separate rate for that period, we will assign to Nantong for this 
period its own rate we determine in the final results of the 1992-93 
period.
Preliminary Results of the Review

    We preliminarily determine that the following dumping margin 
exists:

------------------------------------------------------------------------
                                                                 Margin 
             Manufacturer/Exporter               Time Period   (percent)
------------------------------------------------------------------------
Jiangsu Rudong Grease-Gun Factory.............  09/01/93-08/       20.59
                                                 31/94                  
------------------------------------------------------------------------

    Parties to the proceeding 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. The Department will publish a notice of final results of 
this administrative review, which will include the results of its 
analysis of issues raised in any such comments.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and FMV may vary from the percentage 
stated above. The Department will issue appraisement instructions 
directly to the U.S. Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of lug nuts 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) For Rudong, which has 
a separate rate, the cash deposit rate will be the company-specific 
rate established in the final results of this administrative review; 
(2) for Nantong, which had no shipments to the United States during 
this review period and which has a separate rate, the cash deposit rate 
will be the company-specific rate established for the last period in 
which it was reviewed, i.e., the 1992-93 period; (3) for the companies 
named above which were not found to have separate rates, China 
National, Jiangsu, Yangzhou, Ningbo, Shanghai Automobile, and Tianjin, 
as well as for all other PRC exporters, the cash deposit rate will be 
the highest margin ever in the LTFV investigation or in this or prior 
administrative reviews, the PRC rate; and (4) for non-PRC exporters of 
subject merchandise from the PRC, the cash deposit rate will be the 
rate applicable to the PRC supplier of that exporter.
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 353.26 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.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: August 8, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-20211 Filed 8-15-95; 8:45 am]
BILLING CODE 3510-DS-P