[Federal Register Volume 60, Number 217 (Thursday, November 9, 1995)]
[Notices]
[Pages 56567-56575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27832]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-843]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Bicycles From the People's Republic of China

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

EFFECTIVE DATE: November 9, 1995.

FOR FURTHER INFORMATION CONTACT: Katherine Johnson or Shawn Thompson, 
Office of Antidumping Investigations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-4929 or (202) 482-1776, respectively.

THE APPLICABLE STATUTE: Unless otherwise indicated, all citations to 
the statute are references to the provisions effective January 1, 1995, 
the effective date of the amendments made to the Tariff Act of 1930 
(the Act) by the Uruguay Rounds Agreements Act (URAA).

PRELIMINARY DETERMINATION: We preliminarily determine that bicycles 
from the People's Republic of China (PRC) are being, or are likely to 
be, sold in the United States at less than fair value (LTFV), as 
provided in section 733 of the Act. The estimated margins are shown in 
the ``Suspension of Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on April 25, 1995 (60 FR 
21065, May 1 , 1995) the following events have occurred:
    On April 28 and May 11 and 12, 1995, we sent surveys to the PRC's 
Ministry of Foreign Trade and Economic Cooperation (MOFTEC) requesting 
the identification of producers and exporters, and information on 
production and sales of bicycles exported to the United States. We also 
sent courtesy copies of this survey to the China Chamber of Commerce 
for Machinery and Electronics Products Imports and Exports (China 
Chamber) and the China Chamber of Commerce for Import/Export of Light 
Industrial Products. In June, the China Chamber submitted responses to 
the Department of Commerce's (the Department's) surveys. These 
responses included partial company-specific data from 29 companies and 
export data from all companies. See Respondent Selection section of 
this notice. 

[[Page 56568]]

    On May 22, 1995, the United States International Trade Commission 
(ITC) notified the the Department of its affirmative preliminary 
determination that there is a reasonable indication that an industry in 
the United States is threatened with material injury by reason of 
bicycle imports from China.
    On June 22, 1995, petitioners amended the petition to revise the 
definition of an ``incomplete bicycle'' in order to discourage 
circumvention of any antidumping order issued in this investigation. We 
have revised the scope of this investigation to reflect petitioners' 
amendment (see the ``Scope of Investigation'' section of this notice, 
below).
    On June 30, 1995, we determined that, due to limited resources, we 
would only be able to analyze the responses of the nine largest 
exporters of PRC bicycles to the United States. In August 1995, we 
received responses from three of the nine mandatory respondents. We 
also received responses from six of the nine exporters who had 
requested voluntary participation. (See Respondent Selection section of 
this notice).
    Also, on June 30, 1995, the Department requested that interested 
parties provide information for valuing the factors of production and 
for surrogate country selection. We received comments from the 
interested parties in September 1995.
    On August 18, 1995, petitioners requested a postponement of the 
preliminary determination. We granted petitioners' request, and 
postponed the preliminary determination until not later than November 
1, 1995 (60 FR 44006, August 24 , 1995).
    In September 1995, we issued supplemental questionnaires to the 
nine exporters from whom we received questionnaire responses. Responses 
to these questionnaires were received in September and October 1995.
    On September 15, 1995, petitioners alleged that critical 
circumstances exist with respect to imports of bicycles from the PRC. 
Accordingly, on September 20, 1995, the Department requested 
information regarding shipments of bicycles for the period January 1993 
to November 1995 from all respondents participating in this 
investigation. We received the requested information on October 4 and 
5, 1995. For these responding companies, we used company-specific 
shipment data to perform our critical circumstances analysis. On 
October 25, 1995, we received updated shipment data for Hua Chin 
Bicycle Co., Ltd. (Hua Chin). However, this information was received 
too late to be analyzed for purposes of the preliminary determination.
    On September 28, 1995, we issued a supplemental questionnaire to 
respondents requesting information regarding their selling, general, 
and administrative (SG&A) expenses. On October 27 and 31, 1995, 
respondents submitted responses to this questionnaire. Due to the time 
constraints of this investigation, the Department was unable to analyze 
this data for purposes of the preliminary determination.
    Between September 28, and October 31, 1995, 11 PRC exporters 
submitted unsolicited section A questionnaire responses and requested 
separate rates treatment.
    On September 25, 1995, and in subsequent submissions, certain 
respondents requested that the Department terminate the investigation 
on the grounds that the petition failed to contain all relevant price 
and cost information reasonably available to petitioners, and because 
the petition relied on unsubstantiated assertions regarding U.S. 
prices.

Scope of the Investigation

    The product covered by this investigation is bicycles of all types, 
whether assembled or unassembled, complete or incomplete, finished or 
unfinished, including industrial bicycles, tandems, recumbents, and 
folding bicycles. For purposes of this investigation, the following 
definitions apply irrespective of any different definition that may be 
found in Customs rulings, U.S. Customs law, or the Harmonized Tariff 
Schedule of the United States (HTSUS): (1) The term ``unassembled'' 
means fully or partially unassembled or disassembled; (2) the term 
``incomplete'' means lacking one or more parts or components with which 
the complete bicycle is intended to be equipped; and (3) the term 
``unfinished'' means wholly or partially unpainted or lacking decals or 
other essentially aesthetic material. Specifically, this investigation 
is intended to cover: (1) Any assembled complete bicycle, whether 
finished or unfinished; (2) any unassembled complete bicycle, if 
shipped in a single shipment, regardless of how it is packed and 
whether it is finished or unfinished; and (3) any incomplete bicycle, 
defined for purposes of this investigation as a frame, finished or 
unfinished, whether or not assembled together with a fork, and imported 
in the same shipment with any two of the following components, whether 
or not assembled together with the frame and/or fork: (a) The rear 
wheel; (b) the front wheel; (c) a rear derailleur; (d) a front 
derailleur; (e) any one caliper or cantilever brake; (f) an integrated 
brake lever and shifter, or separate brake lever and click stick lever; 
(g) crankset; (h) handlebars, with or without a stem; (i) chain; (j) 
pedals; and (k) seat (saddle), with or without seat post and seat pin.
    The scope of this investigation is not intended to cover bicycle 
parts except to the extent that they are attached to or in the same 
shipment as an unassembled complete bicycle or an incomplete bicycle, 
as defined above.
    Complete bicycles are classifiable under subheadings 8712.00.15, 
8712.00.25, 8712.00.35, 8712.00.44, and 8712.00.48 of the 1995 HTSUS. 
Incomplete bicycles, as defined above, may be classified for tariff 
purposes under any of the aforementioned HTSUS subheadings covering 
complete bicycles or under HTSUS subheadings 8714.91.20-8714.99.80, 
inclusive (covering various bicycle parts). The HTSUS subheadings are 
provided for convenience and customs purposes. The written description 
of the scope of this investigation is dispositive.

Period of Investigation

    Our normal practice in cases involving non-market economy countries 
is to examine sales over a six-month period. In this case, however, we 
examined the import data for bicycles and noticed a distinct seasonal 
pattern associated with the Christmas and Spring selling seasons. We, 
therefore, determined that it would be appropriate to extend the POI to 
capture a full-year seasonal pattern. As a result, the period of 
investigation (POI) in this case is April 1, 1994, through March 31, 
1995.

Nonmarket Economy Country Status

    The Department has treated the PRC as a nonmarket economy country 
(NME) in all past antidumping investigations (see, e.g., Final 
Determination of Sales at Less Than Fair Value: Silicon Carbide from 
the People's Republic of China 59 FR 22585 (May 2, 1994) (Silicon 
Carbide) and Final Determination of Sales at Less Than Fair Value: 
Furfuryl Alcohol from the People's Republic of China 60 FR 22544 (May 
8, 1995) (Furfuryl Alcohol). Neither respondents nor petitioners have 
challenged such treatment. Therefore, in accordance with section 
771(18)(C) of the Act, we will continue to treat the PRC as an NME in 
this investigation.
    When the Department is investigating imports from an NME, section 
773(c)(1) of the Act directs us to base normal value (NV) on the NME 
producers' factors of production, valued, to the extent possible, in a 
comparable market economy that is a significant producer of comparable 
merchandise. The 

[[Page 56569]]
sources of individual factor prices are discussed under the NV section, 
below.

Surrogate Country

    The Department has determined that India, Kenya, Nigeria, Pakistan, 
Sri Lanka, and Indonesia are countries comparable to the PRC in terms 
of overall economic development (see Memorandum from David Mueller, 
Director, Office of Policy, to Gary Taverman, Acting Director, Office 
of Antidumping Investigations, dated June 15, 1995).
    According to the available information on the record, we have 
determined that India and Indonesia are significant producers of 
merchandise comparable to the subject merchandise. India and Indonesia, 
in fact, produce a broad range of bicycles, including children's 
bicycles, mountain bicycles, lightweight road bicycles, and BMX 
bicycles. Moreover, the bicycle industries in both countries, like 
their PRC counterparts, purchase imported components for production of 
export-quality bicycles.
    Because both countries are significant producers of bicycles, we 
analyzed the availability and quality of the surrogate price data from 
both India and Indonesia. Regarding Indonesia, petitioners submitted 
excerpts from a 1992 Indonesian government survey pertaining to the 
Indonesian bicycle industry. The survey is an annual government study 
which contains the average unit values for the majority of components 
used to produce bicycles. However, this survey does not report prices 
by material composition, quality, size, or other variations in the 
physical characteristics of the components. Furthermore, the portions 
within the survey that pertain to SG&A expenses, as well as profit, are 
not readily identifiable. It is, therefore, not apparent what should or 
should not be included in these categories. Lastly, it appears that 
certain factor values provided in the 1992 study are abnormally high 
when compared with comparable figures from 1991 and 1993, as provided 
by respondents subsequent to the initiation of this case.
    Regarding India, respondents submitted Indian bicycle industry 
publications containing suggested wholesale and retail prices of 
several of the largest bicycle companies in India, covering the entire 
POI. Respondents also submitted a price list, contemporaneous with the 
POI, from one of the largest bicycles manufacturers in India, as well 
as 1993-1994 annual reports from two of the largest bicycle 
manufacturers in India. We also note that India, like the PRC, has a 
long and established tradition of bicycles production. This is not the 
case with Indonesia, where the bicycles industry was developed 
relatively recently.
    The Indian data, like the Indonesian data, contains prices for 
components without specific descriptions with regard to size, material 
content, design, or other variations in the physical characteristics. 
However, the Indian data, in certain instances, does contain more 
specific information regarding the characteristics of components than 
the Indonesian data. In addition, the Indian data encompasses the 
entire POI. Moreover, contrary to petitioners' assertion that the 
Indian data submitted by respondents was self-serving, the objectivity 
of the data was corroborated by the U.S. embassy in New Delhi when it 
transmitted the identical market publication in response to the 
Department's request for pricing information. Lastly, the financial 
reports submitted for two large Indian bicycle companies provided 
information which was sufficiently detailed to render it usable in 
calculating factory overhead, SG&A, and profit.
    For these reasons, we find that the availability and quality of the 
Indian data is superior to the Indonesian data. In instances where the 
Indian data was not available for a particular item, we used Indonesian 
data (subject to the conditions noted below).
    Accordingly, we have calculated NV using Indian prices to value the 
PRC producers' factors of production, when available and where 
appropriate. We have obtained and relied upon published publicly 
available information wherever possible. However, due to the unique 
nature of the subject merchandise in this investigation, there are 
certain instances in which the Department determined that the published 
publicly available information was not adequate. Below is a discussion 
regarding situations in which we did not use the Indian prices (see, 
the ``Valuation of Bicycle Parts'' section of this notice).

Respondent Selection

    In NME cases, we presume a single rate is applicable to all 
exporters and we attempt to examine the sales of all exporters during 
the POI. As is our normal practice, we sent a survey to MOFTEC to 
determine who the producers and exporters were, the relationships 
between and among these companies, and relevant information about 
production and exports. In response to the survey, the China Chamber of 
Commerce for Import & Export of Machinery and Electronics (the 
Chamber), which covers the bicycle industry, provided a list of 
companies identified by Chinese Customs as exporters of bicycles from 
the PRC to the United States, along with their respective export 
volumes. The Chamber also provided limited company-specific data 
regarding 29 other firms. This information showed that the number of 
exporters was extremely large. In fact, based on the information 
submitted by the Chamber, it appeared that there were well over 100 
exporters of Chinese bicycles during the calendar year 1994. Given that 
we did not have the administrative resources to examine the sales of 
all exporters, we determined that our investigation would be limited to 
the analysis of the sales of the nine largest PRC exporters of bicycles 
to the United States. The identification of the largest exporters was 
based on the data supplied by the Chamber. We issued questionnaires to 
MOFTEC with instructions that all nine companies were required to 
respond to the questionnaire.
    At the time we selected these companies, we were aware of at least 
ten other companies that wished to participate in the investigation as 
voluntary respondents. Although we had already determined that we did 
not have the resources to examine more than nine, we indicated that 
should any of the nine mandatory respondents fail to respond, we would 
randomly select voluntary respondents for analysis from those companies 
providing complete questionnaire responses, including a valid separate 
rates claim, on the date the mandatory responses were due.
    On the due date for the nine mandatory respondents, we received 
questionnaire response from only three, that is, six mandatory 
respondents failed to respond. Instead, six other companies supplied 
voluntary responses.
    All nine companies who submitted complete questionnaire responses 
on the due date have qualified for a separate rate. See Separate Rates 
section below.
    Finally, in October, several months after the due date for the 
mandatory and voluntary responses, we received partial questionnaire 
responses from 11 companies. These were responses to only section A of 
the questionnaire which deals primarily with separate rates. We are 
rejecting these unsolicited responses as untimely. See China-Wide Rate 
section below for these companies.

Separate Rates

    Four of the responding exporters in this investigation are located 
outside the 

[[Page 56570]]
PRC. They are (1) Merida Industry (Hong Kong) Co., Ltd./Merida Bicycle 
Co., Ltd . (hereinafter Merida); (2) Giant China Co., Ltd. (hereinafter 
Giant); (3) Hua Chin Bicycle Co., Ltd. (hereinafter Hua Chin); and (4) 
Chitech Industries, Ltd. (Hong Kong) (and affiliated parties Tandem 
Industries, Ltd. (Hong Kong), Magna Technology Corp. (Taiwan), Taiwan 
Tandem Co., Ltd. (Taiwan), and Shun Lu Bicycle Co. (aka Shunde Tandem 
Bicycle Parts Company) (hereinafter Chitech)). Further, there is no PRC 
ownership of any of these companies. Therefore, we determine that no 
separate rates analysis is required for these exporters because they 
are beyond the jurisdiction of the PRC government. See, e.g., Final 
Determination of Sales at Less Than Fair Value: Disposable Pocket 
Lighters from the People's Republic of China (60 FR 22359, 22361, May 
5, 1995).
    The remaining five respondents are joint ventures between Chinese 
and foreign companies. They are (1) CATIC Bicycle Co, Ltd. (hereinafter 
CATIC); (2) Shenzhen China Bicycles Co. (Holdings)., Ltd. (hereinafter 
CBC); (3) Shenzhen Overlord Bicycle Co., Ltd. (hereinafter Overlord); 
(4) Universal Cycle Corp. (hereinafter Universal); and (5) Bo An Bike 
Co., Ltd. (hereinafter Bo An). For these respondents, a separate rates 
analysis is necessary to determine whether the exporters are 
independent from government control.
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China 56 FR 20588 (May 6, 1991) (Sparklers) and 
amplified in Silicon Carbide. Under the separate rates criteria, the 
Department assigns separate rates in nonmarket economy cases only if 
respondents can demonstrate the absence of both de jure and de facto 
governmental control over export activities.

1. Absence of De Jure Control

    The respondents have placed on the administrative record a number 
of documents to demonstrate absence of de jure control, including laws, 
regulations and provisions enacted by the State Council of the central 
government of the PRC. Respondents have also submitted documents which 
establish that bicycles are not included on the list of products that 
may be subject to central government export constraints (Export 
Provisions).
    In prior cases, the Department has analyzed the laws which the 
respondents have submitted in this record and found that they establish 
an absence of de jure control. See Notice of Preliminary Determination 
of Sales at Less Than Fair Value and Postponement of Final 
Determination; Certain Partial-Extension Steel Drawer Slides With 
Rollers From the People's Republic of China, 60 FR 29572, 29573 (June 
5, 1995); see also Notice of Final Determination of Sales at Less Than 
Fair Value: Furfuryl Alcohol From the People's Republic of China, 60 FR 
22544 (May 8, 1995). We have no new information in this preceding which 
would cause us to reconsider this determination.
    However, as in previous cases, there is some evidence, that the PRC 
central government enactments have not been implemented uniformly among 
different sectors and/or jurisdictions in the PRC. (See Silicon Carbide 
and Furfuryl Alcohol.) Therefore, the Department has determined that an 
analysis of de facto control is critical in determining whether 
respondents are, in fact, subject to a degree of governmental control 
which would preclude the Department from assigning separate rates.

2. Absence of De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by or 
subject to the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses (see Silicon Carbide and Furfuryl Alcohol).
    Each respondent has asserted the following: (1) It establishes its 
own export prices; (2) it negotiates contracts, without guidance from 
any governmental entities or organizations; (3) it makes its own 
personnel decisions and, according to respondents, there is no 
information on the record suggesting central government control over 
selection of management; and (4) it retains the proceeds of its export 
sales, uses profits according to its business needs and has the 
authority to sell its assets and to obtain loans. In addition, 
respondents' questionnaire responses indicate that company-specific 
pricing during the POI does not suggest coordination among exporters. 
This information supports a preliminary finding that there is a de 
facto absence of governmental control of export functions.
    Consequently, we preliminarily determine that each of the nine 
exporters has met the criteria for the application of separate rates. 
We will examine this matter further at verification and determine 
whether the questionnaire responses are supported by verifiable 
documentation.

China-Wide Rate

    As stated above, six of the mandatory respondents did not respond 
to the questionnaire. Hence, we are applying a single antidumping rate 
to these exporters as well as all other exporters in the PRC based on 
our presumption that the export activities of these respondents who 
failed to respond are controlled by the PRC government. This PRC-wide 
antidumping rate is based on adverse facts available.

Facts Available

    We have based the China-wide rate on facts available using adverse 
inferences. Given that this margin involves secondary data contained in 
the petition (i.e., secondary information), we are required to 
corroborate this data, to the extend practible, pursuant to section 
776(c) of the Act. See, also, Statement of Administrative Action at 
200. We have identified several major items (i.e., depreciation, 
interest, and profit, as well as the factor values for frames, forks, 
and rims) contained in the petition which individually comprise a 
significant portion of the normal value calculations. We compared the 
data in the petition to secondary data which includes but is not 
limited to the same type of data used as the basis for the petition and 
the audited financial reports of two of the largest Indian bicycle 
producers.
    As a result of our analysis, we found that, in the majority of 
instances, the secondary information for these factor values are 
comparable to those provided in the petition. Accordingly, this 
petition information has been corroborated.
    However, after analyzing the figures contained in the petition for 
depreciation, interest and profit (value-added), we found, as did both 
petitioners and respondents, that this figure does not reflect usual 
cost and profit in the Indonesian bicycle industry. Specifically, the 
57.91 percent figure provided in the petition for 1992 does not 
correspond with the 22.84 and 22 percent figures provided for 1993 and 
1991, respectively. Therefore, we find that the 57.91 percent figure is 
not 

[[Page 56571]]
corroborated, (i.e., has no probative value in determining 
depreciation, interest, and profit).
    We have used the 1991 value-added figure for depreciation, profit, 
and interest in recalculating the margins in the petition. We did not 
use the more current 1993 figure, because the study containing it was 
issued only in draft form.
    Finally, the respondents have made numerous submissions requesting 
that the Department rescind the investigation based on the fact that 
the petitioners had a variety of information available to them which 
showed lower or even de minimis dumping margins. The respondents argue 
that the Indonesia study is demonstrably aberrant and that the 
petitioners had access to more accurate Indian data. The respondents 
also show that the petitioners had access to some Chinese bicycle 
prices which they did not use in the petition.
    We disagree with the respondents that any of the information they 
provided forms a basis for rescinding the investigation. The statute 
and regulations lay out in detail the requirements for a petition. In 
particular, the statute states that the domestic producers are required 
to provide information supporting each element required, to the extent 
it is reasonably available. Nevertheless, we are concerned about any 
potential for abuse or misrepresentation by all parties and to that 
extent have carefully considered the respondents' allegations. After 
comparing data in the petition with the information provided by the 
respondents, we find no evidence of abuse or misrepresentation. 
Moreover, as discussed above, we have corroborated the data in the 
petition and, with one exception, are satisfied with the data and have 
relied on it in making our determination.

Fair Value Comparisons

    To determine whether sales of bicycles from the PRC to the United 
States by the nine PRC exporters were made at less than fair value, we 
compared the ``United States Price'' (USP) to the NV, as specified in 
the ``United States Price'' and ``Normal Value'' sections of this 
notice.

United States Price

    For all responding exporters, with the exception of CATIC, which 
had only constructed export price (CEP) sales, we based USP on export 
price (EP) in accordance with section 772(a) of the Act, when the 
subject merchandise was sold directly to the first unaffiliated 
purchaser in the United States prior to importation and when CEP 
methodology was not otherwise indicated.
    In addition, for Giant, CBC, CATIC, and Chitech, where sales to the 
first unaffiliated purchaser took place after importation into the 
United States, we based USP on CEP, in accordance with section 772(b) 
of the Act.
    We made company-specific adjustments as follows:

1. Bo An

    We calculated EP based on packed, FOB Hong Kong port prices to 
unaffiliated purchasers in the United States. We made deductions from 
the FOB Hong Kong price, where appropriate, for foreign inland freight 
and brokerage and handling (which includes containerization, 
documentation fees, the Hong Kong terminal handling charge and PRC 
brokerage costs) and Hong Kong duty. As all foreign inland freight and 
brokerage and handling were provided by PRC suppliers, these services 
were valued in India.

2. CBC

    We calculated EP and CEP based on packed, FOB Hong Kong port or CIF 
U.S. port prices to unaffiliated purchasers in the United States, as 
appropriate. We made deductions from the starting price, where 
appropriate, for the following services which were provided by market 
economy suppliers: ocean freight, foreign brokerage and handling (which 
includes containerization, documentation fees, the Hong Kong terminal 
handling charge and PRC brokerage costs), marine insurance, Hong Kong 
duty expenses, U.S. brokerage and handling fees, U.S. duty expenses 
(which also included harbor maintenance fees and merchandise processing 
fees), and freight expenses to the first unrelated U.S. customer and/or 
to the U.S. warehouse. We also deducted from the starting price, where 
appropriate, an amount for foreign inland freight. However, because 
these movement services were provided by PRC suppliers, these services 
were valued in India. We also deducted, where appropriate, discounts 
and rebates from the starting price.
    Because there was insufficient time to analyze U.S. selling expense 
data submitted by CBC for purposes of this preliminary determination, 
we did not deduct U.S. selling expenses from CEP. This information will 
be considered for purposes of the final determination.

3. CATIC

    We calculated CEP based on FOB warehouse or CIF delivered prices to 
unaffiliated purchasers in the United States. We made deductions from 
the starting price, where appropriate, for the following services which 
were provided by market economy suppliers: ocean freight, marine 
insurance, Kong Kong duty expenses, U.S. brokerage and handling fees, 
U.S. duty expenses (which also included harbor maintenance fees and 
merchandise processing fees), and freight expenses to the first 
unrelated U.S. customer and/or to the U.S. warehouse. We also deducted 
from the starting price, where appropriate, an amount for foreign 
inland freight and foreign brokerage and handling expenses. However, 
because these movement services were provided by PRC suppliers, these 
services were valued in India. We also deducted, where appropriate, 
discounts and repacking expenses from the starting price.
    Because there was insufficient time to analyze U.S. selling expense 
data submitted by CATIC for purposes of this preliminary determination, 
we did not deduct U.S. selling expenses from CEP. This information will 
be considered for purposes of the final determination.

4. Giant

    We calculated EP and CEP based on packed, FOB PRC port or CIF U.S. 
port prices to unaffiliated purchasers in the United States, as 
appropriate. We made deductions from the starting price, where 
appropriate, for the following: foreign inland freight, foreign 
brokerage and handling, U.S. brokerage, international freight (which 
includes U.S. inland freight), U.S. duty, loading and containerization, 
and marine insurance (which also includes U.S. inland insurance, harbor 
maintenance fees and merchandise processing fees). All of the above 
expenses were provided by market economy carriers and paid for in 
market economy currencies. We also deducted an amount for foreign 
inland freight but since this service was provided by a PRC supplier, 
we valued this expense in India. We also deducted from the starting 
price, where appropriate, discounts and rebates.
    Because there was insufficient time to analyze U.S. selling expense 
data submitted by Giant for purposes of this preliminary determination, 
we did not deduct U.S. selling expenses from CEP. This information will 
be considered for purposes of the final determination.

5. Hua Chin

    We calculated EP based on packed, FOB Hong Kong port prices to 

[[Page 56572]]
    unaffiliated purchasers in the United States. We made deductions from 
the FOB Hong Kong price, where appropriate, for foreign inland freight 
and Hong Kong terminal handling fees. As all foreign inland freight and 
handling fees were provided by PRC suppliers, these services were 
valued in India.

6. Merida

    We calculated EP based on packed, FOB Hong Kong port prices to 
unaffiliated purchasers in the United States. We made deductions from 
the FOB Hong Kong price, where appropriate, for foreign inland freight 
and brokerage and handling (which includes containerization, 
documentation fees, the Hong Kong terminal handling charge and PRC 
brokerage costs) and Hong Kong duty. As all foreign inland freight and 
brokerage and handling were provided by PRC suppliers, these services 
were valued in India.

7. Overlord

    We calculated EP based on packed, FOB Hong Kong port prices to 
unaffiliated purchasers in the United States. We made deductions from 
the FOB Hong Kong price, where appropriate, for foreign inland freight 
brokerage and handling and Hong Kong duty. As all foreign inland 
freight and brokerage and handling were provided by PRC suppliers, 
these services were valued in India.

8. Chitech

    We calculated EP and CEP based on packed, FOB Hong Kong port or CIF 
U.S. port prices to unaffiliated purchasers in the United States, as 
appropriate. We made deductions from the starting price, where 
appropriate, for the following: foreign inland freight, domestic inland 
insurance, ocean freight (which includes ``door to door'' delivery and 
handling), marine insurance, Hong Kong Customs fees, and U.S. duties 
(including harbor maintenance and merchandise processing fees), U.S. 
brokerage and handling and U.S. inland freight from port to warehouse, 
all of which were provided by non-PRC suppliers and paid for in market 
economy currencies. In addition, we deducted from EP and CEP four types 
of discounts Chitech offers its customers.
    Because there was insufficient time to analyze U.S. selling expense 
data submitted by Chitech for purposes of this preliminary 
determination, we did not deduct U.S. selling expenses from CEP. This 
information will be considered for purposes of the final determination.

9. Universal

    We calculated EP based on packed, FOB Hong Kong port prices to 
unaffiliated purchasers in the United States. We made deductions from 
the FOB Hong Kong price, where appropriate, for foreign inland freight, 
foreign brokerage and handling (which includes containerization, 
documentation fees, the Hong Kong terminal handling charge, and PRC 
brokerage costs), and Hong Kong duty. As all foreign inland freight and 
brokerage and handling were provided by PRC suppliers, these services 
were valued in India.

Normal Value

    In accordance with section 773(c) of the Act we calculated NV based 
on factors of production reported by the responding exporters. To 
calculate NV where an input was sourced from a market economy and paid 
for in market economy currency, we have used the actual price paid for 
the input in accordance with Department practice, when possible. Lasko 
Metal Products v. United States, 437.3d 1442, 1443 (Fed. Cir. 1994) 
(Lasko)
    In instances where inputs were sourced domestically, we valued the 
factors using publicly available published information from India where 
possible. Where appropriate Indian values were not available, we used 
publicly available published information from Indonesia, where 
possible, or other facts available, such as the publicly ranged market 
economy prices of the other responding exporters.

Valuation of Bicycle Parts and Components

    The nine responding exporters reported that they purchased a large 
number of different components (e.g., brake sets) and sub-components 
(e.g. brake arms) for use in assembling finished bicycles. The vast 
majority of these purchased inputs are sub-components. These inputs, 
both components and sub-components, vary in terms of material 
composition (e.g., carbon steel versus aluminum), size, design (e.g., 
cantilever versus side-pull brakes), and other relevant physical 
characteristics.
    Some inputs are purchased from market-economy suppliers and paid 
for in convertible currency. Following our normal practice, we used the 
actual price paid for these inputs, where possible, See, Final 
Determination of Sales at Less Than Fair Value: Oscillating Fans and 
Ceiling Fans from the People's Republic of China FR 56 55271, (October 
25, 1991) (Fans). However, where the input was not purchased from a 
market economy supplier and paid for in a market economy currency, it 
was necessary to develop a surrogate value.
    For certain components and sub-components, differences in material 
content and design result in large price differentials. For example, 
there is a substantial difference in the price of a frame tube made 
from high-tensile steel versus one made with chrome-molybdenum. Thus, 
for example, using a surrogate value for a frame tube of high-tensile 
steel would unreasonably distort the calculation of NV for a bicycle 
with a chrome-molybdenum frame. In reality, for certain components, a 
specific design or material composition can result in a distinctly 
different input.
    With respect to the factors of production methodology, the Court of 
Appeals has noted that ``there is much in the statute that supports the 
notion that it is Commerce's duty to calculate margins as accurately as 
possible and to use the best information in doing so.'' See, Lasko. 
Therefore, to minimize distortions and ensure the most accurate margin 
calculation possible, we developed a hierarchy for selection of 
surrogate values for parts and components based on the need for 
specificity with respect to design or material composition or both. Our 
first choice under that hierarchy is to use data from India or 
Indonesia if it is specific with respect to design and material 
composition or if we could not determine, based on the evidence, 
whether significant variations in the price data stemmed from design or 
material composition. Where design or material composition appeared to 
have a significant impact on price but design or material-specific data 
was not available in a surrogate country, we used the publicly ranged 
data on prices from market-economy suppliers to the PRC. We believe 
that in spite of the ranging, these data are far superior to average 
values that would not reflect important differences in design and 
material composition. However, we used this ranged data strictly as a 
second alternative to design- or material-specific data from India or 
Indonesia, where available. In one instance, a respondent reported a 
number of sub-components produced by its affiliated supplier. In that 
instance, we did not value those subcomponents because we did not have 
any sufficient price information to do so. Instead, we valued the 
smallest component that incorporated these subcomponents.

[[Page 56573]]


Other Factor Valuations

    Where possible, we used public information for the surrogate 
values. The selection of the surrogate values was based on the quality 
and contemporaneity of the data. Where possible, we attempted to value 
material inputs on the basis of tax-exclusive domestic prices. As 
appropriate, we adjusted input prices to make them delivered prices. 
For those values not contemporaneous with the POI, we adjusted for 
inflation using wholesale price indices or, in the case of labor rates, 
consumer price indices, published in the International Monetary Fund's 
International Financial Statistics. For a complete analysis of 
surrogate values, see the Factors Calculation Memorandum to Barbara R. 
Stafford from the team, dated November 1, 1995.
    To value caustic soda, sulfuric acid, nitric acid, oxalic acid, and 
chromic anhydride, we used public information from POI issues of the 
Indian publication Chemical Weekly. For various phosphates, we relied 
on import prices contained in the September 1994 issue of Monthly 
Statistics of the Foreign Trade of India (Monthly Statistics).
    Regarding sodium bichromate, we could not find a price for this 
exact input. Therefore, we used an average of prices for two chemicals 
we found to be equally similar in name to sodium bichromate: sodium 
dichromate and sodium chromate. We used Indian import price data from 
Monthly Statistics and from the Indian publication, Chemical Business, 
to value this input.
    Regarding dimethyl benzene, we could not obtain an exact material 
price from public information from India. Absent public information 
from India, we used the price of a similar chemical to value this input 
from an Indonesian publication. To do this, we used a 1993 price for 
diethyl benzene from the Indonesian Foreign Trade Statistical Bulletin 
for Imports (Statistical Bulletin).
    To value acetylene, argon gas, and carbon dioxide, we relied on 
1993 Indonesian price data in the Statistical Bulletin because we could 
not locate a price from Indian publications.
    To value hydrochloric acid, we relied on a 1993 Indian domestic 
price quote from Chemical Weekly because the prices for this input in 
other known Indian publications are based on an Indian import category 
that is not exclusive to hydrochloric acid (see Final Determination of 
Sales at Less Than Fair Value: Coumarin from the People's Republic of 
China FR 59 66895 (December 28, 1995.)
    To value degreaser, we used information from the only known Indian 
publication which contained such a price, The Analyst's Import 
Reference 1993, Chemical & Pharmaceutical Products (The Analyst).
    To value solvent, we could not find a material price from publicly 
available information. Therefore, we used the price of a similar 
chemical which also dilutes paint, thinner, to value this input. To 
value solvent, we used Indian price data from Monthly Statistics.
    To value diesel fuel, we used a POI Indian price from the 
publication AP Worldstream. To value liquefied petroleum gas, we used a 
POI price from the periodical Financial Times of India.
    To value electricity, we used an average 1992 industrial rate from 
the publication Current Energy Scene in India because this publication 
contained data more contemporaneous to the POI than other known 
publications.
    To value labor, we used data from the United Nations' publication 
Yearbook of Labor Statistics. Following the method established in the 
Preliminary Determination of Sales at Less Than Fair Value: Polyvinyl 
Alcohol from the PRC 60 FR 52647 (October 10, 1995), we find no basis 
to assume the skill level of the surrogate value, nor do we have 
agreement among parties regarding use of this labor rate for skilled 
and unskilled labor rate assumptions. Thus, we applied a single labor 
value to all reported labor factors, including indirect labor.
    To value scrap metal, we relied on Indian data from Monthly 
Statistics. We treated the scrap metal as a by-product and deducted its 
value from the cost of manufacture for Merida, Chitech, Overlord, and 
Giant. This adjustment was not appropriate for the remaining 
respondents.
    For certain subcomponents we had no published prices or publicly 
ranged market prices from which to choose. Therefore, we valued these 
specific components based on the content of material (e.g., steel, 
plastic or rubber). To value components made of steel, we used an 
average tax-exclusive 1994 domestic steel price from the Indian 
publication Statistics for Iron and Steel. For components made of 
plastic, we used Indian price data from Monthly Statistics. For 
components made of rubber, we could not obtain publicly available 
information. Therefore, we could not value such items for the 
preliminary determination.
    To value factory overhead, SG&A, and profit, we calculated average 
percentages based on 1993-94 data from the financial reports of two 
Indian producers of the subject merchandise. We made certain 
adjustments to the percentages calculated by the respondents as a 
result of reclassifying expenses contained in the financial reports.
    Finally, to value the packing materials, corrugated cartons, 
uncorrugated cartons, bubble wrap, staples, adhesive tape, rope, 
packing paper, polypropylene, polyethylene, and plastic bags, we relied 
on Indian data from Monthly Statistics. To value glue, we used an 
average price based on Indian price data for two types of glue products 
from the publication Chemical Weekly.

Critical Circumstances

    On September 15, 1995, petitioners made a timely allegation that 
there is a reasonable basis to believe or suspect that critical 
circumstances exist with respect to imports of subject merchandise.

    Section 733(e)(1) of the Act provides that the Department will 
determine that there is a reasonable basis to believe or suspect 
that critical circumstances exist if:
    (A)(i) there is a history of dumping and material injury by 
reason of dumped imports in the United States or elsewhere of the 
subject merchandise, or
    (ii) the person by whom, or for whose account, the merchandise 
was imported knew or should have known that the exporter was selling 
the subject merchandise at less than its fair value and that there 
was likely to be material injury by reason of such sales, and
    (B) there have been massive imports of the subject merchandise 
over a relatively short period.

    In this investigation, the first criterion is satisfied. Two 
countries and a customs union--Canada, Mexico, and the European Union--
have recently imposed antidumping orders on bicycles from the PRC. 
Therefore, we preliminarily determine that there is a history of 
dumping elsewhere of bicycles by PRC producers/exporters. Because there 
is a history of dumping, it is not necessary to address importer 
knowledge.
    Because we have preliminarily found that the first statutory 
criterion is met, we must consider the second statutory criterion: 
whether imports of the merchandise have been massive over a relatively 
short period. According to 19 CFR 353.16(f) and 353.16(g), we consider 
the following to determine whether imports have been massive over a 
relatively short period of time: (1) Volume and value of the imports: 
(2) seasonal trends (if applicable); and (3) the share of domestic 
consumption accounted for by the imports.

[[Page 56574]]

    When examining volume and value data, the Department typically 
compares the export volume for equal periods immediately preceding and 
following the filing of the petition. Under 19 CFR 353.16(f)(2), unless 
the imports in the comparison period have increased by at least 15 
percent over the imports during the base period, we will not consider 
the imports to have been ``massive.'' The Department examines shipment 
information submitted by the respondent or import statistics when 
respondent-specific shipment information is not available.
    To determine whether or not imports of subject merchandise have 
been massive over a relatively short period, we compared each 
respondent's export volume for either the five or six months subsequent 
to the filing of the petition to that during the five or six months 
prior to the filing of the petition for all respondents, except Hua 
Chin, because we had such data. For Hua Chin, we only had three months 
of shipment data. Therefore, for this company, we compared the export 
volume for the three months subsequent to the filing of the petition to 
that during the three months prior to the filing of the petition. These 
periods were selected based on the Department's practice of using the 
longest period for which information is available from the month that 
the petition was submitted through the effective date of the 
preliminary determination. For the non-responding PRC exporters, we did 
this analysis using import statistics.
    Based on our analysis, we preliminarily find that the increase in 
imports were less than 15 percent with respect to Merida, Giant, 
Overlord, CBC, Universal, and CATIC. We found that the increase in 
imports of the subject merchandise from Bo An, Hua Chin and Chitech and 
the non-responding companies in the PRC increased by more than 15 
percent over a relatively short period. However, based on the evidence 
of seasonality, discussed below, we do not find the increases to be 
massive with respect to Bo An, Chitech and the non-responding companies 
in the PRC. We do find, however, the increase in imports of the subject 
merchandise from Hua Chin to be massive over a relatively short period 
of time.
    We compared the increase in shipments from the first to the second 
quarter for the period 1993 to 1995 for Bo An, Chitech, and Hua Chin 
and the non-responding PRC companies to determine if there was a 
regular seasonal occurrence associated with spring sales. We found that 
for Bo An, Chitech, and the non-responding PRC government there was 
such a regular occurrence and, therefore, determined the observed 
increase in the imports between the two periods was not reflective of a 
massive surge of imports associated with the filing of the petition. 
Therefore, we determined that imports were not massive for these two 
companies and the non-responding PRC companies. We noted no such 
pattern for Hua Chin. We were unable to consider the share of domestic 
consumption accounted for by the imports, pursuant to 
353.16(f)(1)(iii), because the available data did not permit such 
analysis.
    Therefore, because there is a history of dumping of such or similar 
merchandise, and imports of bicycles from Hua Chin have been massive 
over a relatively short period of time, we preliminarily determine that 
there is a reasonable basis to believe or suspect that critical 
circumstances exist with respect to imports of bicycles from Hua Chin. 
Because imports from Merida, Giant, Overlord, CBC, Universal, CATIC Bo 
An, Chitech and the non-responding PRC companies have not been massive, 
we preliminarily determine that there is not a reasonable basis to 
believe or suspect that critical circumstances exist with respect to 
imports of subject merchandise from these companies.
    We will make a final determination concerning critical 
circumstances when we make our final determination of sales at less 
than fair value in this investigation.

Verification

    As provided in section 782(i) of the Act, we will verify the 
information used in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all entries of bicycles from 
the PRC, that are entered, or withdrawn from warehouse, for consumption 
on or after the date of publication of this notice in the Federal 
Register. The Customs Service will require a cash deposit or posting of 
a bond equal to the estimated dumping margins by which the normal value 
exceeds the USP, as shown below. These suspension of liquidation 
instructions will remain in effect until further notice. Bo An, CATIC, 
and Giant will be excepted from these instructions because their sales 
of subject merchandise were found not to have been sold below fair 
value. Bo An, CATIC, and Giant's sales of subject merchandise will be 
excluded from an antidumping duty order should one be issued.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
              Manufacturer/producer/exporter                   margin   
                                                             percentage 
------------------------------------------------------------------------
Bo An.....................................................          0.00
CATIC.....................................................          0.00
Giant.....................................................          0.00
Hua Chin..................................................         18.04
Merida....................................................          2.39
CBC.......................................................          5.69
Overload..................................................          3.10
Chitech...................................................          5.29
Universal.................................................          2.87
                                                           -------------
    PRC-wide rate.........................................          61.7
------------------------------------------------------------------------

    The PRC-Wide rate applies to all entries of subject merchandise 
except for entries from exporters/factories that are identified 
individually above.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Public Comment

    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary for Import Administration no later than December 27, 1995, 
and rebuttal briefs, no later than January 2, 1996. A list of 
authorities used and a summary of arguments made in the briefs should 
accompany these briefs. Such summary should be limited to five pages 
total, including footnotes. We will hold a public hearing, if 
requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. At this time, the hearing 
is scheduled for January 4, 1996, the time and place to be determined, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, N.W., Washington, D.C. 20230. Parties should confirm by 
telephone the time, date, and place of the hearing 48 hours before the 
scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
B-099, within ten days of the publication of this notice. Requests 
should contain: (1) The party's name, address, and telephone number; 
(2) the number of participants; and (3) 

[[Page 56575]]
a list of the issues to be discussed. In accordance with 19 CFR 
353.38(b) oral presentations will be limited to issues raised in the 
briefs. If this investigation proceeds normally, we will make our final 
determination by January 16, 1996.
    This determination is published pursuant to section 733(f) of the 
Act.

    Dated: November 1, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-27832 Filed 11-8-95; 8:45 am]
BILLING CODE 3510-DS-P