[Federal Register Volume 61, Number 65 (Wednesday, April 3, 1996)]
[Notices]
[Pages 14740-14742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8022]



[A-570-845, A-570-846]


Initiation of Antidumping Duty Investigations: Certain Brake 
Drums and Certain Brake Rotors From the People's Republic of China

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

EFFECTIVE DATE: April 3, 1996.

FOR FURTHER INFORMATION CONTACT: Katherine Johnson at (202) 482-4929 or 
James Terpstra at (202) 482-3965, Office of Antidumping Investigations, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, DC 20230.

Initiation of Investigations

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 Round Agreements Act (``URAA'').

The Petition

    On March 7, 1996, the Department of Commerce (``the Department'') 
received a petition filed in proper form by The Coalition for the 
Preservation of American Brake Drum and Rotor Aftermarket Manufacturers 
(``petitioner''), whose members consist of Brake Parts, Inc., Iroquois 
Tool Systems, Inc., and Wagner Brake Corporation, a Division of Wagner 
Electric Corp. (domestic producers of both brake drums and rotors) and 
Kinetic Parts Manufacturing, Inc. (domestic producer of brake rotors).
    In accordance with section 732(b) of the Act, the petitioner 
alleges that imports of both brake drums and brake rotors 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 within the meaning of 
section 731 of the Act, and that such imports are materially injuring, 
or threatening material injury to, respective U.S. industries.
    The petitioner is a coalition, the majority of whose members are 
producers of both domestic like products as defined in the petition. 
Therefore, it has standing to file the petition because it is an 
interested party, as defined under section 771(9)(E) of the Act, with 
respect to both products.

Determination of Industry Support for the Petition

    Section 732(c)(4)(A) of the Act requires the Department to 
determine, prior to the initiation of an investigation, that a minimum 
percentage of the domestic industry supports an antidumping petition. A 
petition meets these minimum requirements if the domestic producers or 
workers who support the petition account for (1) at least 25 percent of 
the total production of the domestic like product; and (2) more than 50 
percent of the production of the domestic like product produced by that 
portion of the industry expressing support for, or opposition to, the 
petition.
    A review of the production data provided in the petition and other 
information readily available to the Department indicates that the 
petitioner accounts for more than 50 percent of the total production of 
each of the domestic like products. The Department received no 
expressions of opposition to the petition from any domestic producer or 
workers. Accordingly, the Department determines that the petition is 
supported by the respective domestic industries.

Scope of the Investigations

    The products covered by these two investigations are 1) certain 
brake drums and 2) certain brake rotors.

Brake Drums

    Brake drums are made of gray cast iron, whether finished, 
semifinished, or unfinished, ranging in diameter from 8 to 16 inches 
(20.32 to 40.64 centimeters) and in weight from 8 to 45 pounds (3.63 to 
20.41 kilograms). The size parameters (weight and dimension) of the 
brake drums limit their use to the following types of motor vehicles: 
automobiles, all-terrain vehicles, vans and recreational vehicles under 
``one ton and a half,'' and light trucks designated as ``one ton and a 
half.''
    Finished brake drums are those that are ready for sale and 
installation without any further operations. Semi-finished drums are 
those on which the surface is not entirely smooth, and has undergone 
some drilling. Unfinished drums are those which have undergone some 
grinding or turning.
    These brake drums are for motor vehicles, and do not contain in the 
casting a logo of an original equipment manufacturer (OEM) which 
produces vehicles sold in the United States (e.g., General Motors, 
Ford, Chrysler, Honda, Toyota, Volvo). Brake drums covered in this 
investigation are not certified by OEM producers of vehicles sold in 
the

[[Page 14741]]

United States. The scope also includes composite brake drums that are 
made of gray cast iron, which contain a steel plate, but otherwise meet 
the above criteria.
    Brake drums are classifiable under subheading 8708.39.5010 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Although the 
HTSUS subheading is provided for convenience and Customs purposes, our 
written description of the scope of this investigation is dispositive.

Brake Rotors

    Brake rotors are made of gray cast iron, whether finished, 
semifinished, or unfinished, ranging in diameter from 8 to 16 inches 
(20.32 to 40.64 centimeters) and in weight from 8 to 45 pounds (3.63 to 
20.41 kilograms). The size parameters (weight and dimension) of the 
brake rotors limit their use to the following types of motor vehicles: 
automobiles, all-terrain vehicles, vans and recreational vehicles under 
``one ton and a half,'' and light trucks designated as ``one ton and a 
half.''
    Finished brake rotors are those that are ready for sale and 
installation without any further operations. Semi-finished rotors are 
those on which the surface is not entirely smooth, and has undergone 
some drilling. Unfinished rotors are those which have undergone some 
grinding or turning.
    These brake rotors are for motor vehicles, and do not contain in 
the casting a logo of an original equipment manufacturer (OEM) which 
produces vehicles sold in the United States (e.g., General Motors, 
Ford, Chrysler, Honda, Toyota, Volvo). Brake rotors covered in this 
investigation are not certified by OEM producers of vehicles sold in 
the United States. The scope also includes composite brake rotors that 
are made of gray cast iron, which contain a steel plate, but otherwise 
meet the above criteria.
    Brake rotors are classifiable under subheading 8708.39.5010 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Although the 
HTSUS subheading is provided for convenience and Customs purposes, our 
written description of the scope of this investigation is dispositive.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which our decisions to initiate are based. 
Petitioners have provided separate margin calculations for brake drums 
and brake rotors. Should the need arise to use any of this information 
in our preliminary or final determinations, we will re-examine the 
information and may revise the margin calculations, if appropriate.

Export Price

    The petitioner based export price on prices charged by U.S. 
distributors of Chinese brake drums and brake rotors, and deducted from 
these prices a distributor mark-up. In addition, the petitioner 
deducted an amount for freight, insurance and duties based on the 
percentage difference between the c.i.f. price and the Customs value 
price of PRC imports of like products during the POI.

Normal Value

    The petitioner asserts that the PRC is a nonmarket economy country 
(NME) within the meaning of section 771(18) of the Act. Thus, pursuant 
to section 773(c) of the Act and in accordance with the Department's 
usual practice with respect to NMEs, the normal value of the products 
should be based on the producer's factors of production, valued in a 
surrogate market economy country. In previous investigations, the 
Department has determined that the PRC is an NME, and the presumption 
of NME status continues for the initiation of these investigations. 
See, e.g., Final Determination of Sales at Less Than Fair Value: Pure 
Magnesium and Alloy Magnesium from the People's Republic of China, 60 
FR 16437 (March 30, 1995).
    It is our practice in NME cases to calculate normal value based on 
the factors of production of those factories that produced subject 
merchandise sold to the United States during the period of 
investigation.
    In the course of these investigations, all parties will have the 
opportunity to provide relevant information related to the NME status 
of the PRC and the assignment of separate rates to individual 
exporters. See, e.g., Final Determination of Sales at Less Than Fair 
Value: Silicon Carbide from the PRC, 59 FR 22585 (May 2, 1994).
    The petitioner based the factors of production (i.e., raw 
materials, labor, and energy) for brake drums and brake rotors on its 
own experience, claiming that its production process is similar to that 
of the Chinese producers. These factors were valued by the petitioner, 
where possible, using publicly available published Indian data. India 
is an acceptable surrogate country because its level of economic 
development is comparable to that of the PRC and it is a producer of 
both brake drums and brake rotors.
    Where Indian data were unavailable, the petitioner valued the 
factor of production on the basis of its own costs. Except as noted 
below for the ferromanganese input, we disregarded factor values where 
the inputs were based on prices in the United States because the 
petitioner (1) failed to follow the Department's established hierarchy 
regarding selection of surrogate countries for the PRC with respect to 
factor valuation by failing to examine possible values in other 
appropriate surrogate countries, and (2) provided no basis for 
determining that United States values are representative of the 
appropriate surrogate country values. See Initiation of Antidumping 
Duty Investigations: Furfuryl Alcohol from the People's Republic of 
China, the Republic of South Africa, and Thailand, 59 FR 32953, 32954, 
June 27, 1994.
    Because of the similarity in production processes, the petitioner 
valued factory overhead, selling general, and administrative expenses 
and profit using data from a State Department cable contained in the 
public record of the Final Results of the Antidumping Administrative 
Review: Certain Iron Construction Castings from the People's Republic 
of China, 57 FR 10644 (March 27, 1992.)
    To value the ferromanganese input, the petitioner used its own 
costs. Although the petitioner was able to identify an Indian value for 
this input material, it rejected this value claiming that it was not 
representative of the true price of ferromanganese. The petitioner 
claimed that the use of its own cost of ferromanganese was not only 
conservative, but comparable to world prices for this commodity 
product.
    We excluded from our petition analysis the margin calculation of a 
particular model for which the petitioner was unable to provide a 
surrogate value for purchased castings.
    Based on comparisons of export price to the factors of production, 
the calculated dumping margins, as revised by the Department, ranged 
from 46.76 percent to 105.56 percent for brake drums and from 52.08 
percent to 62.55 percent for brake rotors.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of brake drums and brake rotors from the PRC are 
being, or are likely to be, sold at less than fair value.

Initiation of Investigations

    We have examined the petition on brake drums and brake rotors and 
have found that it meets the requirements of section 732 of the Act, 
including the requirements concerning allegations of the material 
injury or threat of material injury to the domestic producers of 
domestic like products by reason of the

[[Page 14742]]
complained-of imports, allegedly sold at less than fair value. 
Therefore, we are initiating antidumping duty investigations to 
determine whether imports of brake drums and brake rotors from the PRC 
are being, or are likely to be, sold in the United States at less than 
fair value. Unless the investigations are extended, we will make our 
preliminary determinations by August 14, 1996.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the representatives 
of the government of the PRC.

International Trade Commission (ITC) Notification

    We have notified the ITC of our initiations, as required by section 
732(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will determine by April 22, 1996, whether there is a 
reasonable indication that imports of brake drums and brake rotors from 
the PRC are causing material injury, or threatening to cause material 
injury, to a U.S. industry. A negative ITC determination in either of 
the investigations will result in that investigation being terminated; 
otherwise, the investigations will proceed according to statutory and 
regulatory time limits.

    Dated: March 27, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-8022 Filed 4-2-96; 8:45 am]
BILLING CODE 3510-DS-P