[Federal Register Volume 60, Number 193 (Thursday, October 5, 1995)]
[Notices]
[Pages 52155-52162]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24805]



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DEPARTMENT OF COMMERCE
[A-570-841]


Notice of Final Determination of Sales at Less Than Fair Value: 
Manganese Sulfate From the People's Republic of China

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

EFFECTIVE DATE: October 5, 1995.

FOR FURTHER INFORMATION CONTACT: Ellen Grebasch, Dorothy Tomaszewski or 
Erik Warga, 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) 482-3773; (202) 482-0631 or (202) 482-0922, 
respectively.

Applicable Statute and Regulations

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

Final Determination

    We determine that manganese sulfate 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 733 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 on May 9, 1995 (59 FR 25885, 
May 16, 1995), the following events have occurred:
    On May 12, 1995, the Department issued an additional supplemental 
questionnaire to respondents China National Nonferrous Metals Import 
and Export Company (``CNIEC'') and its U.S. subsidiary, Hunan Chemicals 
Import and Export Company (``Hunan Chemicals''), Xian Lu Chemical 
Factory, and Yan Jiang Chemical Factory. The Department received 
responses and subsequent revisions to those submissions from 
respondents in June 1995.
    Petitioner, American Microtrace Corporation, submitted clerical 
error allegations following the Department's preliminary determination. 
The Department found that clerical errors were made in the preliminary 
determination; however, these errors did not result in a combined 
change of at least 5 absolute percentage points in, and no less than 25 
percent of, any of the original preliminary dumping margins. 
Accordingly, no revision to the preliminary determination was made (see 
Notice of Amended Preliminary Determinations of Sales at Less Than Fair 
Value: Antidumping Duty Investigations of Pure and Alloy Magnesium from 
the Russian Federation and Pure Magnesium from Ukraine, (60 FR 7519, 
February 8, 1995)).
    In June and July 1995, we verified the respondents' questionnaire 
responses. Additional publicly available published information on 
surrogate values was submitted by petitioner and respondents on August 
4, 1995, and comments from the respective parties were submitted on 
August 11, 1995. Petitioner and respondents filed case briefs on August 
18, 1995, and rebuttal briefs on August 25, 1995.

Scope of Investigation

    The product covered by this investigation is manganese sulfate, 
including manganese sulfate monohydrate (MnSO4H2O) and any 
other forms, whether or not hydrated, without regard to form, shape or 
size, the addition of other elements, the presence of other elements as 
impurities, and/or the method of manufacture. The subject merchandise 
is currently classifiable under subheading 2833.29.50 of the Harmonized 
Tariff Schedule of the United States (``HTSUS''). Although the 

[[Page 52156]]
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 June 1, 1994, through 
November 30, 1994.

Best Information Available

    As stated in the preliminary determination, we have based the duty 
deposit rate for all other exporters in the PRC (``the `PRC-wide' 
rate'') on best information available (``BIA''). The evidence on record 
indicates that the responding companies may not account for all exports 
of the subject merchandise.
    In the case of Hunan Chemicals, verification revealed that, for its 
sole POI sale to the U.S., there was no evidence that Hunan Chemicals 
knew at the time of its sale to its customer that the merchandise was 
destined for the United States. Therefore, we have not treated that 
transaction as a sale by Hunan Chemicals to the United States. 
Accordingly, Hunan Chemicals will be subject to the ``PRC-wide'' 
deposit rate for manganese sulfate. (see Comment 2, ``Interested Party 
Comments'' section of this notice).
    Because information has not been presented to the Department to 
prove otherwise, other PRC exporters not participating in this 
investigation are not entitled to separate dumping margins. In the 
absence of responses from all exporters, therefore, we are basing the 
country-wide deposit rate on BIA, pursuant to section 776(c) of the 
Act. (See, e.g., Final Determination of Sales at Less Than Fair Value: 
Antidumping Duty Investigation of Pure Magnesium From Ukraine (61 FR 
16433, March 30, 1995).
    In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower 
margins to those respondents who cooperated in an investigation and 
margins based on more adverse assumptions for those respondents who did 
not cooperate in an investigation. As outlined in the 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 (58 
FR 37083, July 9, 1993), when a company refuses to provide the 
information requested in the form required, or otherwise significantly 
impedes the Department's investigation, it is appropriate for the 
Department to assign to that company the higher of (a) the highest 
margin alleged in the petition, or (b) the highest calculated rate of 
any respondent in the investigation. In this investigation, we are 
assigning to any PRC company, other than those specifically identified 
below, the ``PRC-Wide'' deposit rate of 362.23 percent, ad valorem. 
This margin represents the highest margin in the petition, as 
recalculated by the Department for purposes of the final determination. 
In the preliminary determination, we adjusted the BIA rate by 
reassigning the value for ocean freight based on the highest reported 
ocean freight charge incurred by a responding company--CNIEC--because 
the surrogate value cited for ocean freight in the petition appeared to 
be aberrational (e.g., the unit charge for ocean freight deducted from 
gross unit price equals 68 percent of the gross unit price). (See 
Calculation Memorandum for the Preliminary Determination of Sales at 
Less Than Fair Value: Manganese Sulfate from the People's Republic of 
China (59 FR 25885, May 16, 1995)). For the final determination, we 
determined CNIEC's reported ocean freight charges are based on non-
market economy rates (see Comment 7, ``Interested Party Comments'' 
section of this notice). Therefore, we adjusted the PRC-wide rate, as 
recalculated in the preliminary determination, to reflect the market 
economy rate determined by the Department as the appropriate surrogate 
value for ocean freight in final margin calculation for CNIEC.

Separate Rates

    CNIEC and Hunan Chemicals have each requested a separate rate. 
Because, as explained above, we determined that Hunan Chemicals had no 
reported sales to the U.S. during the POI, Hunan Chemicals is precluded 
from being considered for a separate rate, the request of this company 
will not be further analyzed (see Final Determination of Sales at Less 
Than Fair Value: Nitromethane from the People's Republic of China (59 
FR 14834, March 30, 1994)).
    To establish whether a firm is sufficiently independent to be 
entitled to a separate rate, the Department uses criteria that were 
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 in 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 the separate rates 
criteria, the Department assigns a separate rate only when an exporter 
can demonstrate the absence of both de jure 1 and de facto 2 
governmental control over export activities.

    \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 
measures by the government decentralizing control of companies.
    \2\  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).
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    CNIEC's business license indicates that it is owned ``by all the 
people.'' As stated in the Silicon Carbide, ``ownership of a company by 
all the people does not require the application of a single rate.'' 
Accordingly, CNIEC is eligible to be considered for a separate rate.

De Jure Control

    CNIEC has submitted copies of the following laws in support of its 
claim of absence of de jure control: ``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 (``Export Provisions''). 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). 
The Export Provisions list those products subject to direct government 
control. Manganese sulfate does not appear on the Export Provisions 
list and is not, therefore, subject to the constraints of these 
provisions. The 1994 Quota Measure supersedes earlier laws dealing with 
the export of the named commodities. Manganese sulfate was not named in 
the 1994 Quota Measure and does not, therefore, appear to be subject to 
the export quota regulation of this measure.
    The Department stated in Silicon Carbide that the existence of the 
1988 Law and the 1992 Regulations support a finding that the 
respondents are not subject to de jure control either by the central 
government or otherwise. However, we found in Silicon Carbide 

[[Page 52157]]
and other reports (see ``PRC Government Findings on Enterprise 
Autonomy,'' in Foreign Broadcast Information Service-China-93-133 (July 
14, 1993)) that laws shifting control from the government to the 
enterprises themselves have not been implemented uniformly. Therefore, 
the Department has determined that an analysis of de facto control is 
critical to determining whether respondents are, in fact, subject to 
governmental control.

De Facto Control

    During verification, our examination of correspondence and sales 
documentation revealed no evidence that CNIEC's export prices are set, 
or subject to approval, by any governmental authority. That CNIEC has 
the authority to negotiate and sign contracts and other agreements 
independent of any government authority was evident from our 
examination of correspondence and written agreements and contracts. We 
also noted that CNIEC retained proceeds from its export sales and made 
independent decisions regarding disposition of profits and financing of 
losses (based on our examination of financial records and purchase 
invoices). Finally, we have determined that CNIEC has autonomy from the 
central government in making decisions regarding the selection of 
management, based on our examination of management election notices, 
staff congress election ballots and minutes from the last company 
election meeting. According to CNIEC's company constitution, the 
company president is elected by the staff congress. Examination of 
management documents and correspondence provided no evidence of 
involvement by the central or provincial government in CNIEC's 
management selection process. Further, there is no evidence in this 
proceeding that any exporters are subject to common control.

Conclusion

    Given that the record of this investigation demonstrates a de jure 
and de facto absence of governmental control over the export functions 
of CNIEC, we determine that CNIEC should receive a separate rate.

Fair Value Comparisons

    To determine whether sales by CNIEC of manganese sulfate from the 
PRC to the United States were made at less-than-fair value prices, 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

    USP for CNIEC was calculated on the same basis as in the 
preliminary determination. Certain adjustments were made to the CNIEC's 
reported U.S. sales, based on verification findings, as follows: 
reported quantities were changed for certain transactions; one sale was 
added and another reported sale was determined actually to be two 
sales; and no deduction for marine insurance was made since it was 
determined that this charge was not incurred. We also rejected CNIEC's 
reported ocean freight in favor of a surrogate freight rate (see 
Comment 7, ``Interested Party Comments'' section of this notice) For 
the one unreported sale discovered at verification, adjustments for 
freight charges and duty were made using the highest figures for any 
transportation charges reported by CNIEC as best information available 
(``BIA''). (See Calculation Memorandum, attached to the Concurrence 
Memorandum, on file in room B-099 of the Main Commerce Department 
Building, for details of adjustments made.)

Foreign Market Value

    We calculated FMV based on Yan Jiang's and Xian Lu's factors of 
production cited in the preliminary determination, making adjustments 
based on verification findings. To calculate FMV, the verified factor 
amounts were multiplied by the appropriate surrogate values for the 
different inputs. We have used the same surrogate values as the 
preliminary determination with the exception of certain factors. The 
identities of certain factors were deemed proprietary by the Department 
and, therefore, their names are not disclosed in this notice. The two 
factors in question will be referred to as ``factor X'' and ``factor 
Z'' for the remaining sections of this notice.
    For Xian Lu and Yan Jiang we used verified packing factor amounts 
to calculate packing cost for the final calculations.

Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value the 
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 non-market economy country, and (2) 
significant production of comparable merchandise. The Department has 
determined that India is the country most comparable to the PRC in 
terms of overall economic development and significant production of 
comparable merchandise. (See memorandum from the Office of Policy to 
the file, dated April 13, 1995.) To value factors of production, we 
have obtained and relied upon published, publicly available information 
wherever possible.

Verification

    As provided in section 776(b) of the Act, we verified the 
information submitted by respondents for use in our final 
determination. We used standard verification procedures, including 
examination of relevant accounting and production records and original 
source documents provided by respondents.

Interested Party Comments

Comment 1: Dumping Margins Based on BIA
    Petitioner asserts that the Department should calculate the dumping 
margins for CNIEC and Hunan Chemicals based on the highest margins 
alleged in the petition as BIA. First, petitioner notes that 
respondents failed to file questionnaire responses to section A for the 
responding companies within the deadline established by the Department 
and failed to request an extension before that deadline expired. 
Further, according to petitioner, the perpetual revision of the 
responses has reduced the credibility of the information presented in 
respondents' submissions.
    Respondents contend that there is no legal basis in this case for 
the use of BIA to calculate the responding trading companies' 
respective margins. Respondents note that the Department accepted and 
verified the respondents' questionnaire responses. According to 
respondents, the minor deviations and discrepancies discovered at 
verification were well within the limits of what the Department accepts 
as correcting insignificant errors found at verification.

DOC Position

    Given the special circumstances outlined in the Memorandum to the 
File dated June 8, 1995, the Department exercised its discretion to 
accept the questionnaire responses (19 CFR 353.31(b)(1)). Further, 
except for Hunan Chemicals' response, the discrepancies discovered at 
verification were not such that the overall reliability of the 
responses was called into question. Therefore, the Department is basing 
its final determination on verified information from questionnaire 
responses from CNIEC and supplier factories. 

[[Page 52158]]

Comment 2: Hunan Chemicals' Status as Respondent
    Petitioner contends that the Department has no basis for 
determining a company-specific margin for Hunan Chemicals. According to 
petitioner, evidence on the record for its only reported sale indicates 
that Hunan Chemicals did not know, at the time of sale, that the 
merchandise it sold to the third country trading company was ultimately 
destined for the United States. All documentary evidence on the record 
indicates that Hunan Chemicals only learned that the merchandise was 
destined for the United States at the time of shipment, after the sale 
had already been made.
    Respondents argue that the Department should continue to treat 
Hunan Chemicals' only reported sale as a U.S. sale and, therefore, 
assign Hunan Chemicals a separate rate for the final determination 
because of the following evidence on the record: (1) The bill of lading 
for the shipment in question listed the destination as a U.S. port; (2) 
PRC Customs export statistics' printout of exports to the United States 
showed that this shipment was sent to the United States; and, (3) 
correspondence from a company in New York with respect to this shipment 
was dated before the issuance of this sales contract.

DOC Position

    We agree with petitioner. Based on the evidence on the record, we 
determine that this transaction was not a U.S. sale made by Hunan 
Chemicals. The sales contract for the reported sale did not stipulate 
the ultimate destination. The customer listed on the sales contract was 
a non-U.S. trading company. The actual sales documents (i.e., sales 
contract, invoice, bill of lading), sales records, or accounting 
records do not mention the name of the company with the New York 
address found on the facsimile correspondence dated before the issuance 
of the sales contract. Further, the sales correspondence up to and 
including the date of sale does not mention the identity of the U.S. 
customer or the ultimate destination as the United States. The terms of 
delivery on the sales invoice were not to the United States. The fact 
that the bill of lading lists the U.S. port as destination of the 
shipment does not prove that Hunan Chemicals knew the ultimate 
destination at the time of the sale because this shipping document was 
issued well after the date of the sales contract which established the 
date of sale in this case. The PRC Customs export statistics do not 
provide any supporting evidence as to the company's knowledge at the 
date of the sale that the destination of the shipment was the United 
States. Even though Hunan Chemicals cooperated in supplying the 
requested information and permitting verification, absence of a viable 
U.S. sale made by Hunan Chemicals gives the Department no choice but to 
reject the company as a respondent in this investigation. Therefore, 
based on the record of this investigation, the Department did not 
calculate a separate margin for Hunan Chemicals for the final 
determination. Accordingly, Hunan Chemicals will be subject to the 
``PRC-wide'' rate.
Comment 3: Surrogate Value for Factor X
    (N.b., Due to the proprietary nature of this issue, the following 
discussion is presented in non-confidential form. A more detailed 
analysis of the interested parties' positions and the Department's 
position is given in the September 28, 1995, decision memorandum to the 
file.)
    Petitioner asserts that the surrogate value for factor X from the 
Indian Minerals Yearbook (``Yearbook'') used in the preliminary 
determination is aberrational and should not be used in the final 
determination. In support of its assertion, petitioner (1) cites to 
past cases where the Yearbook value was not chosen as the surrogate 
value; (2) observes that the Yearbook value is significantly lower than 
other values on the record for comparable material, including a price 
quotation from a PRC supplier; and (3) notes that there is no evidence 
on the record of any company in India purchasing the material at the 
price listed in the Yearbook.
    Moreover, petitioner argues that the type of material respondents 
claim to use is different from the type of material priced in the 
Yearbook. Based on these reasons, petitioner requests the Department to 
use publicly available published value information in the TEX Report 
(for a material that petitioner characterizes as similar to that used 
by the PRC producers) and adjust the price to account for any 
differences.
    Respondents assert that the material used by the PRC producers is 
in fact the same material as priced in the Yearbook. Contrary to 
petitioner's claims, respondents contend that the Department has no 
basis for determining the Yearbook price as aberrational since the 
Yearbook price reflects a publicly available, published domestic price 
in the chosen surrogate country based on credible source used in past 
cases. Accordingly, respondents request that the Department use the 
Yearbook unit price as the appropriate surrogate value for factor X in 
the final determination.

DOC Position

    We have determined to use the Yearbook price for valuing factor X. 
Contrary to petitioner's suggestion, the Yearbook has been used 
repeatedly by the Department as a reasonable source of publicly 
available public information for factor valuation. Additionally, 
information submitted by petitioner does not establish that the value 
is aberrational. Specifically, with the exception of one price provided 
by petitioner, all other prices apply to products which are less 
comparable to the input used by the PRC producers than the product 
described in the Yearbook. Hence, those values are not appropriate to 
value factor X; and, the evidence provided does not allow us to use 
them to test whether the Yearbook price is correct. With respect to the 
one price provided by petitioner that is for a comparable product, the 
information is not publicly available published information. Therefore, 
consistent with our policy (see Notice of Final Determination of Sales 
at Less Than Fair Value: Antidumping Duty Investigation of Certain 
Carbon Steel Butt-Weld Pipe Fittings From the PRC (57 FR 21062, May 18, 
1992)), we will give preference to the Yearbook price.
    Further, a comparison of the Yearbook price to a non-market export 
price quotation for the comparable material, as petitioner suggested, 
cannot be considered a reasonable or meaningful test of whether a 
surrogate value is aberrational. It has been the Department's practice 
not to rely on prices set in non-market economies due to state controls 
imposed on prices, wages, currency and production as well as the 
absence of market forces in the economy. Petitioner asserts that a non-
market economy price quotation would be an understatement of the market 
price due to price controls. However, the Department cannot be certain 
that the quoted export price is in fact an understatement due to the 
market distortions existing in a non-market economy.
Comment 4: Surrogate Value for Factor Z
    (N.b., Due to the proprietary nature of this issue, the following 
discussion is presented in non-confidential form. A more detailed 
analysis of the interested parties' positions and the Department's 
position is given in the September 28, 1995, decision memorandum to the 
file.)
    Respondents argue that the Chemical Weekly price used to value 
factor Z in the preliminary determination is an 

[[Page 52159]]
inappropriate surrogate value for the following reasons: (1) it 
includes selling and movement expenses for smaller quantity purchases 
not normally incurred in bulk purchases, and (2) it is for a different 
type of material. According to respondents, the PRC producers bought a 
different type of material in bulk quantities. While not considered 
publicly available published information, respondents suggest that a 
more appropriate surrogate value data for this material is a price 
quotation based on information that respondents obtained from the 
Department's US&FCS office in New Delhi and market research 
correspondence since those prices are for a more comparable material 
and reflect a unit price figure for bulk quantity purchases. 
Respondents also suggest that, if the Department does not decide to 
change the surrogate value, it should adjust the surrogate value used 
in the preliminary determination to reflect the actual quality of the 
material and further adjust the value to reflect a unit price exclusive 
of any selling/movement expenses that are normally included in the 
retail price from Chemical Weekly.
    Petitioner counters that the Department's choice of a surrogate 
value for factor Z in the preliminary determination is appropriate 
because it is based on publicly available information from an Indian 
publication and has been accepted by the Department in past 
investigations as an appropriate surrogate value for factor Z. 
Petitioner asserts that the alternative suggested by respondents is not 
a preferred surrogate value under the Department's hierarchy because it 
stems from individuals' statements and single transactions--information 
which does not demonstrate that the Chemical Weekly price is in any way 
an ``incorrect'' or aberrational value for the material.
    Further, petitioner argues that the Department should not make an 
adjustment for the difference in material type allegedly used by the 
PRC producers. Petitioner considers the disclosure of the specific type 
of material as new information since this information was not provided 
to petitioner until August 4, 1995, when it was disclosed in 
respondents' factor valuation submission. Therefore, petitioner urges 
the Department to reject respondents' arguments to adjust the surrogate 
value in the Chemical Weekly for differences in type and as best 
information available, to assume that the PRC producers value factor Z 
without adjustment.

DOC Position

    We agree with petitioner. The Department verified that the PRC 
producers use a specific type of factor Z. Verification did not reveal 
the nature of the purchase arrangements or the production process for 
the input (nor was any such information on the record prior to 
verification). Further, there is no evidence on the record to indicate 
that the surrogate value from the Chemical Weekly is aberrational for 
purposes of this investigation. In fact, the type of material used by 
PRC producers corresponds to the common description of the material 
priced in Chemical Weekly. Therefore, for purposes of the final 
determination, we are using the preliminary determination's surrogate 
value from the Chemical Weekly without adjustment.
Comment 5: Packing Material Consumption and Surrogate Value
    Petitioner requests that the Department reject respondents' data 
for packing and rely on the petition's packing data as BIA since 
verification revealed that the reported factor consumption for packing 
was substantially understated. In the event that the Department decides 
to base its final determination on the information submitted by 
respondents, it should use the verified packing materials usage factor 
and not the understated figure originally reported by respondents. 
Further, petitioner asserts that the Department should use the 
surrogate unit value for ``polypropylene bags'' based on information in 
Monthly Statistics of Foreign Trade of India. Petitioner notes that 
this surrogate value was used in past cases (see, e.g., Final 
Determination of Sales at Less Than Fair Value: Silicon Carbide from 
PRC (59 FR 22585, May 2, 1994)) and respondents are in agreement with 
this choice of surrogate value for the packing materials (see 
respondents' August 11, 1995, submission on factor valuation).
    Respondents alleged a discrepancy in the weight of the packing 
materials at verification of Xian Lu Chemical Plant, as noted in the 
corresponding verification report.

DOC Position

    We have determined that the value for plastic bags (expressed in 
terms of weight) based on 1991-1992 UN Trade Statistics is the more 
appropriate surrogate value. Information concerning the exact type of 
plastic bag used by respondents was first presented to the Department 
in respondents' August 11, 1995, submission on publicly available 
published information for surrogate values and, therefore, is untimely 
and too late to be verified for purposes of the final determination. 
Further, information on the record does not indicate that the UN Trade 
Statistics data is an inappropriate basis for surrogate value. The UN 
Trade Statistics are the most recent, publicly available, published 
information suitable for valuing plastic bags in this investigation.
    Further, as we note no discrepancy in the verified weight of the 25 
kilogram plastic bag used at Xian Lu Chemical Plant, no change from the 
amount noted in the Department's verification report is warranted.
Comment 6: Surrogate Value for Unskilled Labor
    Respondents argue that the surrogate labor rate from the ILO 
Yearbook used to value unskilled labor in the preliminary determination 
is inappropriate because it is an aggregate labor rate for all skill 
levels of labor in India. According to respondents, the Department 
should adjust downward the surrogate labor rate used in the preliminary 
determination using formulae applied in previous cases.
    Petitioner counters that the Department cannot accept respondents' 
argument because there is no factual evidence on the record of this 
investigation to support such a proposed adjustment. Petitioner 
maintains that it is impossible to know whether the formula used in the 
previous cases would be applicable to the unique circumstances of the 
manganese sulfate industry in India, or whether it is specific to the 
products involved in those cases. Further, petitioner contends that 
respondents failed to provide complete and verifiable information 
regarding their usage of different types of labor. Accordingly, 
petitioner urges the Department to reject respondents' request.

DOC Position

    We agree with petitioner. For purposes of the final determination, 
the Department is valuing unskilled labor using the Indian labor rate 
reported in the ILO Yearbook without adjustment. Respondents' proposed 
method of (1) assuming that the ILO Yearbook labor rate is an average, 
semi-skilled labor rate, and (2) adjusting this labor rate to reflect 
unskilled and skilled labor rates using certain ratio adjustment 
factors was applied by the Department in a particular investigation 
based on the specific record of that investigation (see Final 
Determination of Sales at Less Than Fair Value: Antidumping Duty 

[[Page 52160]]
Investigation of Helical Spring Lock Washers from the People's Republic 
of China (``HSLW'') Concurrence Memorandum (September 20, 1993)). In 
another case, the Department has used the ILO Yearbook without 
adjustment (see, e.g., Preliminary Determination of Sales at Less Than 
Fair Value: Antidumping Duty Investigation of Certain Paper Clips from 
the PRC Calculation Memorandum (May 11, 1995), and Notice of Final 
Determination of Sales at Less Than Fair Value: Antidumping Duty 
Investigation of Certain Paper Clips from the PRC (59 FR 1168, October 
7, 1994)).
    Additionally, there is no evidence on the record of this case on 
which to base the application of the method proposed by respondents. 
The manganese sulfate production process and industry in this 
investigation are not comparable to those examined in HSLW. Because the 
production processes and industries are different, the type of skilled 
and unskilled labor used may vary significantly and, consequently, may 
affect the wage adjustments in each case. Therefore, there is no 
reasonable basis for applying the HSLW's assumptions and formulae to 
the ILO Yearbook Indian labor rate used in this investigation.
    With respect to petitioner's argument concerning the absence of 
verified information on labor amounts, although the total labor hours 
reported by the PRC producers were not verifiable due to record keeping 
deficiencies, the reported hours exceeded the labor hours given in the 
petition. Therefore, our decision to use the PRC producers' reported 
hours represents an adverse inference for purposes of the final 
determination.
Comment 7: Ocean Freight
    Petitioner asserts that verification demonstrated that U.S. sales 
were shipped via a non-market economy carrier, China Ocean Shipping 
Company (``COSCO''). Petitioner requests that the Department revise the 
final margin calculations for CNIEC to use a market-economy ocean 
freight rate as a surrogate value instead of the reported ocean freight 
rates.
    Petitioner further argues that the ocean freight rates provided by 
petitioner are not aberrational, and should be used in the final 
determination. Petitioner maintains that only its information is 
provided from a publicly available market-economy source, and 
representative of terms similar to those verified to have applied to 
CNIEC's shipments. Accordingly, petitioner also requests that the 
Department revise its preliminary determination calculation of the 
``PRC-wide'' deposit rate by using market-economy ocean freight rates 
instead of the reported ocean freight used in the preliminary 
determination.
    Respondents argue that CNIEC's reported ocean freight was verified 
as a market economy freight rate. According to respondents, the 
Department verified that CNIEC's U.S. subsidiary purchased ocean 
freight services in the United States from a U.S. company and paid in 
U.S. dollars.

DOC Position

    We agree in part with petitioner. In NME proceedings, the 
Department's consistent methodology has been to determine whether a 
good or service obtained through a market-economy transaction is, in 
fact, sourced from a market economy rather than merely purchased in a 
market economy (see, e.g., Final Determination of Sales at Less Than 
Fair Value: Antidumping Duty Investigation of Ferrovanadium and 
Nitrided Vanadium from the Russian Federation (60 FR 27962, May 26, 
1995)). Because the good or service is produced in a NME, the 
Department cannot rely on the transaction as a basis for valuation 
because the underlying costs and expenses are not market-based. 
Verification indicated that COSCO performed the service. Although 
CNIEC's U.S. subsidiary arranges ocean freight through a U.S.-based 
company, the company's costs for contracting ocean freight with COSCO, 
a NME provider (see, e.g., Notice of Final Results of Antidumping 
Administrative Review: Iron Castings from the PRC (56 FR 2742, January 
24, 1991)), cannot be relied on unless found to be representative of 
market-economy freight rates. The record of this case does not indicate 
that the COSCO rates are representative of market economy rates and, 
thus, the rate charged to CNIEC's U.S. subsidiary cannot be used for 
purposes of the final determination.
    When a service, such as ocean freight, is determined to be provided 
by a non-market carrier, it has been the Department's practice to use a 
surrogate rate from a market economy country to value that service 
(see, e.g., Final Determination of Sales at Less Than Fair Value: 
Antidumping Duty Investigation of Disposable Pocket Lighters from the 
PRC (60 FR 22361, May 5, 1995); Final Determination of Sales at Less 
Than Fair Value: Antidumping Duty Investigation of Sebacic Acid from 
the PRC (59 FR 28053, May 31, 1994); and Final Determination of Sales 
at Less Than Fair Value: Antidumping Duty Investigation of Sparklers 
from the PRC (56 FR 20588, May 6, 1991)).
    Therefore, we have valued ocean freight using a surrogate, market-
economy value based on international shipping rates.
Comment 8: Brokerage and Handling
    Petitioner contends that foreign brokerage and handling should be 
deducted from USP. Further, these charges should be valued at market 
economy rates provided on the record by petitioner. Petitioner requests 
that the Department adjust the margin calculations to account for this 
movement charge and apply a market economy value for services a 
forwarder provides in the final margin calculations.
    Respondents counter that CNIEC did not incur any separate foreign 
brokerage and handling charges. According to respondents, any foreign 
brokerage and handling charges incurred by CNIEC are subsumed in the 
freight rate.

DOC Position

    We agree with respondents. No separate brokerage or handling 
charges were reported in respondents' questionnaire responses or 
discovered at CNIEC's verification. Accordingly, such charges were not 
valued or accounted for in CNIEC's final margin calculation.
Comment 9: Marine and Foreign Inland Insurance
    Because verification revealed that marine insurance and foreign 
inland insurance were provided by non-market economy suppliers, 
petitioner requests that the Department use market economy surrogate 
rates, as provided in petitioner's July 7, 1995, submission, to value 
these two movement expenses, where appropriate.
    Respondents argue that verification revealed that neither CNIEC nor 
its U.S. subsidiary obtained marine insurance for their manganese 
sulfate shipments within the POI and, therefore, petitioner's proposed 
surrogate value for marine insurance is inapplicable in this case.

DOC Position

    Verification revealed no indication that marine insurance was 
incurred by CNIEC or its U.S. subsidiary; therefore, this expense is 
not considered for purposes of the final margin calculation. However, 
we did confirm that foreign inland insurance was obtained by CNIEC from 
a non-market provider and, therefore, we have valued this expense based 
on market-economy surrogate rates in the margin calculation. 

[[Page 52161]]

Comment 10: Adjusted Calculation to Reflect Actual Working Days in 
India for Surrogate Labor Rate
    Petitioner requests that, if the Department chooses to rely upon 
the reported labor factor amounts in the questionnaire responses, the 
Department adjust the factors to account for labor practices in India. 
According to petitioner, if the PRC producers report that their workers 
worked more hours than the total number of hours worked in India during 
a normal work week, the Department should value the excess hours at 
double the normal labor rate as ``overtime.''
    Respondents assert that there is no basis under law, precedent or 
practice to value PRC producers' ``excess'' hours at double the rate 
the Department decides to use as its surrogate value based on labor 
practices in India. Further, respondents counter that there is no 
indication on the record that any of the PRC producers' employees work 
over the hours calculated based on Indian labor practices. Accordingly, 
respondents request that the Department reject such a request.

DOC Position

    We agree with respondents. While the Department does use 
information on labor practices in India to convert daily, weekly, and 
monthly wage rates from India into hourly wage rates, it is not 
Department practice to apply the surrogate country's overtime policies 
in valuing NME labor. Further, because our questionnaire did not 
require NME producers to report potential ``overtime'' hours worked as 
a component of ``regular'' hours, there was no opportunity for this 
issue to be fully analyzed, verified, and commented upon by interested 
parties.

Critical Circumstances

    In our preliminary determination, we found that critical 
circumstances existed for all non-responding trading companies, but not 
for Hunan Chemicals or CNIEC.
    Under 19 CFR 353.16(a), critical circumstances exist if (1) There 
is a history of dumping in the United States or elsewhere of the class 
or kind of merchandise which is the subject of this investigation; or 
the importer knew or should have known that the producer or reseller 
was selling the merchandise which is the subject of this investigation 
at less than its fair value; and (2) there have been massive imports of 
the class or kind of merchandise which is the subject of this 
investigation over a relatively short period.
    In determining whether imports have been massive over a short 
period of time, 19 CFR 353.16(f) instructs consideration of: (i) The 
volume and value of the imports; (ii) seasonal trends; and (iii) the 
share of domestic consumption accounted for by the imports.
    Further, 19 CFR 353.16(f)(2) states that imports will not generally 
be considered massive unless they have increased by at least 15 percent 
over the imports during the immediately preceding period of comparable 
duration.
    In accordance with 19 CFR 353.16, we preliminarily determined that 
critical circumstances did not exist for CNIEC and Hunan Chemicals 
based on the following criteria: (1) The finding of no imputed 
knowledge of dumping to importers because the estimated dumping margins 
were less than 15 percent (the threshold where, as here, only ESP sales 
are involved) and (2) the adverse assumption, based on BIA, that 
massive imports of manganese sulfate occurred over a relatively short 
period of time. (See Preliminary Determination Notice of Sales at Less 
Than Fair Value: Manganese Sulfate from PRC (59 FR 25885, May 16, 
1995)).
    For the final determination, we continue, as BIA, to determine that 
critical circumstances exist for all non-respondent exporters. The 
``PRC-wide'' margin of 362.23 percent for those exporters exceeds the 
25 percent threshold for imputing a knowledge of dumping to the 
importers of the merchandise. In addition, we have adversely assumed, 
as BIA, a massive increase in imports from these non-respondent 
exporters. We, therefore, determine that critical circumstances exist 
for all non-respondent exporters in this investigation.
    Since the preliminary determination, we have determined that Hunan 
Chemicals is not a respondent and will not be assigned a separate rate. 
Therefore, we extend to Hunan Chemicals the same BIA-based 
determination of critical circumstances applied to the non-responding 
trading companies.
    Additionally, CNIEC submitted shipment information following the 
preliminary determination which has now been verified. While CNIEC's 
margin (32.48%) does indicate that importers knew, or should have 
known, that CNIEC's merchandise was being sold at LTFV prices, CNIEC's 
shipment data shows that there has been no massive increase in the 
shipments from CNIEC in the period following the filing of the 
petition. Accordingly, for CNIEC, we determine that critical 
circumstances do not exist.

Continuation of Suspension of Liquidation

    In accordance with section 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 manganese sulfate from the PRC from all non-
responding trading companies, that are entered, or withdrawn from 
warehouse for consumption, on or after February 14, 1995, which is the 
date that is 90 days prior to the date of publication of our notice of 
preliminary determination in the Federal Register. This retroactive 
suspension will now also apply to Hunan Chemicals. In addition, we are 
instructing Customs to suspend liquidation from the date of publication 
of this notice in the Federal Register for all entries of manganese 
sulfate from the PRC sold by CNIEC. 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:

------------------------------------------------------------------------
                                                 Margin       Critical  
       Manufacturer/producer/exporter          percentage  circumstances
------------------------------------------------------------------------
CNIEC.......................................        32.48  No.          
``PRC-Wide'' Rate...........................       362.23  Yes.         
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. As our final determination is affirmative, 
the ITC will within 45 days determine whether these imports are 
materially injuring, or threaten material injury to, the U.S. industry. 
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, 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).


[[Page 52162]]

    Dated: September 28, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-24805 Filed 10-4-95; 8:45 am]
BILLING CODE 3510-DS-P