[Federal Register Volume 61, Number 67 (Friday, April 5, 1996)]
[Notices]
[Pages 15218-15221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8364]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-803]


Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, from the People's Republic of China; Preliminary Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to requests by the petitioner and two resellers of 
the subject merchandise, the Department of Commerce (the Department) is 
conducting an administrative review of the antidumping duty order on 
heavy forged hand tools, finished or unfinished, with or without 
handles, (HFHTs) from the People's Republic of China (PRC). The review 
covers four exporters of subject merchandise to the United States and 
the period February 1, 1994 through January 31, 1995. The review 
indicates the existence of dumping margins during the period of review.
    We have preliminarily determined that sales have been made below 
normal value (NV). If these preliminary results are adopted in our 
final results of administrative review, we will instruct the U.S. 
Customs Service to assess antidumping duties equal to the difference 
between United States price (U.S. price) and NV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: April 5, 1996.

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

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). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations, as amended by the interim regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

    On February 19, 1991, the Department published in the Federal 
Register (56 FR 6622) the antidumping duty order on HFHTs from the PRC. 
On February 2, 1995, the Department published in the Federal Register 
(60 FR 6524) a notice of opportunity to request an administrative 
review of this antidumping duty order. On February 27, 1995, in 
accordance with 19 CFR 353.22(a), two exporters of the subject 
merchandise to the United States, Fujian Machinery & Equipment Import & 
Export Corporation (FMEC) and Shandong Machinery Import & Export 
Corporation (SMC), requested that the Department conduct an 
administrative review of their exports of subject merchandise to the 
United States. On February 28, 1995, the petitioner, Woodings-Verona 
Tool Works, Inc., requested that the Department conduct an 
administrative review of FMEC, SMC, Henan Machinery Import and Export 
Co. (Henan) and Tianjin Machinery Import and Export Co. (Tianjin). We 
published the notice of initiation of this review on March 15, 1995 (60 
FR 13956).
    The Department received no questionnaire responses from either 
Henan or Tianjin. Therefore, we have based our analysis of these two 
companies on facts otherwise available. The Department is conducting 
this administrative review in accordance with section 751 of the Act.

Scope of the Review

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

[[Page 15219]]
grinding, polishing and painting, and the insertion of handles for 
handled products. HFHTs are currently provided for under the following 
Harmonized Tariff System (HTS) subheadings: 8205.20.60, 8205.59.30, 
8201.30.00, and 8201.40.60. Specifically excluded are hammers and 
sledges with heads 1.5 kg. (3.33 pounds) in weight and under, hoes and 
rakes, and bars 18 inches in length and under.
    This review covers four exporters of HFHTs from the PRC. The review 
period is February 1, 1994 through January 31, 1995.

Separate Rates

    To establish whether a company is sufficiently independent to be 
entitled to a separate rate, the Department analyzes each exporting 
entity under the test established in the Final Determination of Sales 
at Less Than Fair Value: Sparklers from the People's Republic of China, 
56 FR 20588 (May 6, 1991) (Sparklers), as amplified in Final 
Determination of Sales at Less Than Fair Value: Silicon Carbide from 
the People's Republic of China, 59 FR 22585 (May 2, 1994) (Silicon 
Carbide). Under this policy, exporters in non-market-economy (NME) 
countries are entitled to separate, company-specific margins when they 
can demonstrate an absence of government control, both in law (de jure) 
and in fact (de facto), with respect to exports. Evidence supporting, 
though not requiring, a finding of de jure absence of government 
control includes: (1) an absence of restrictive stipulations associated 
with an individual exporter's business and export licenses; (2) any 
legislative enactments decentralizing control of companies; and (3) any 
other formal measures by the government decentralizing control of 
companies. De facto absence of government control with respect to 
exports is based on four criteria: (1) whether the export prices are 
set by or subject to the approval of a government authority; (2) 
whether each exporter retains the proceeds from its sales and makes 
independent decisions regarding the disposition of profits and 
financing of losses; (3) whether each exporter has autonomy in making 
decisions regarding the selection of management; and (4) whether each 
exporter has the authority to negotiate and sign contracts. See Silicon 
Carbide, 59 FR at 22587.
    In our final results of review for the 1992-1993 review period of 
this order, the Department determined that FMEC and SMC warranted 
company-specific dumping margins according to the criteria identified 
in Sparklers and Silicon Carbide. See Preliminary Results of 
Antidumping Duty Administrative Review: Heavy Forged Hand Tools from 
the PRC 60 FR 19723, 19724 (April 20, 1995), and Final Results of 
Antidumping Duty Administrative Review: Heavy Forged Hand Tools from 
the PRC, 60 FR 49251 (September 22, 1995). Because there is no new 
evidence on the record, we preliminarily determine that these two 
companies continue to be entitled to separate rates.
    Because Henan and Tianjin did not respond to our separate rates 
questionnaire, we preliminarily determine that they do not merit 
separate rates.

United States Price

    The Department used export price (EP), in accordance with section 
772(a) of the Act, in calculating U.S. price. We made deductions from 
EP, where appropriate, for brokerage and handling, foreign inland 
freight, ocean freight, and marine insurance. Ocean freight services 
were provided by both PRC-owned and non-PRC-owned companies. Where we 
knew that the company providing the ocean freight services was not a 
PRC-owned company, we used the actual rates charged; for ocean freight 
services provided by PRC-owned companies, we applied a weighted-average 
ocean freight rate derived from those sales for which we used actual 
ocean freight rates. Since marine insurance services were provided by 
PRC-owned companies, we based the deduction for marine insurance on 
surrogate values. We also used surrogate data to value foreign inland 
freight and brokerage and handling.

Normal Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine normal value (NV) 
using a factors of production methodology if (1) the subject 
merchandise is exported from an NME country, and (2) available 
information does not permit the calculation of NV using home market 
prices or third country prices, in accordance with section 773(a) of 
the Act.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. In accordance with section 
771(18)(c)(i), any determination that a foreign country is an NME 
country shall remain in effect until revoked by the administering 
authority. Accordingly, we calculated NV in accordance with section 
773(c) of the Act and section 353.52 of the Department's regulations. 
In accordance with section 773(c)(3) of the Act, the factors of 
production utilized in producing HFHTs include, but are not limited 
to--(A) hours of labor required, (B) quantities of raw materials 
employed, (C) amounts of energy and other utilities consumed, and (D) 
representative capital cost, including depreciation. In accordance with 
section 773(c)(4) of the Act, the Department valued the factors of 
production, to the extent possible, using the prices or costs of 
factors of production in a market economy country that is--(A) at a 
level of economic development comparable to that of the PRC, and (B) a 
significant producer of comparable merchandise. We determined that 
India is comparable to the PRC in terms of per capita gross national 
product (GNP), the growth rate in per capita income, and the national 
distribution of labor. Furthermore, India is a significant producer of 
comparable merchandise. For a further discussion of the Department's 
selection of India as the surrogate country, see File Memorandum, dated 
February 26, 1996, on file in Room B-099 of the Commerce Department.
    In accordance with section 773(c) of the Act, for purposes of 
calculating NV, we valued PRC factors of production in the year in 
which production occurred as follows:
     To value all direct materials used in the production of 
HFHTs, including steel, resin glue, paint, varnish, wood for handles, 
iron wedges, anti-rust oil, scrap steel, and dilution, we used the 
rupee per metric ton, per kilogram, or per cubic meter value of imports 
into India during April-December 1993, for production in 1993, and 
during April 1994-January 1995, for production in 1994, obtained from 
the Monthly Statistics of the Foreign Trade of India, Volume II--
Imports, January 1994 and January 1995 (Indian Import Statistics).
     For direct labor, we used the labor rates reported in the 
Economist Intelligence Unit's Investing, Licensing & Trading Conditions 
Abroad: India, released in November 1993 and November 1994. This source 
breaks out labor rates between skilled, unskilled, semi-skilled, and 
foreman labor, and provides information on the number of labor hours 
worked per week.
     For factory overhead, we used information reported in the 
April 1995 Reserve Bank of India Bulletin. From this information, we 
were able to determine factory overhead as a percentage of total cost 
of manufacture. We included steel pellets used to remove oxidization 
from the tool heads and detergent used to clean the tool heads in 
factory overhead as these materials are not physically incorporated 
into the subject merchandise.

[[Page 15220]]

     For selling, general and administrative (SG&A) expenses, 
we used information obtained from the April 1995 Reserve Bank of India 
Bulletin. We calculated an SG&A rate by dividing SG&A expenses by the 
cost of manufacture.
     To calculate a profit rate, we used information obtained 
from the April 1995 Reserve Bank of India Bulletin. We calculated a 
profit rate by dividing the before-tax profit by the sum of those 
components pertaining to the cost of manufacturing plus SG&A.
     To value the packing materials, including cartons, 
pallets, anti-rust paper, anti-damp paper, plastic and iron straps, 
plastic bags, iron buttons and knots, synthetic fiber, and iron wire, 
we used the rupee per metric ton, per kilogram, or per cubic meter 
value of imports into India during April-December 1993, for production 
in 1993, and during April 1994-January 1995, for production in 1994, 
obtained from the 1994 and 1995 Indian Import Statistics. We adjusted 
these values to include freight costs incurred between the suppliers 
and the HFHT factories.
     To value coal, we used the price of steam coal reported 
for 1990 in the International Energy Agency publication Energy Prices 
and Taxes, 2nd Quarter 1995. We adjusted the value of coal to reflect 
inflation, using wholesale price indices (WPI) of India as published in 
the International Financial Statistics by the International Monetary 
Fund (IMF).
     To value electricity, we used the price of electricity for 
India for 1990, reported in the Asian Development Bank publication 
Energy Indicators of Developing Member Countries of the Asian 
Development Bank, July 1992. We adjusted the value of electricity to 
reflect inflation, using the WPI published by the IMF.
     To value truck freight, we used the rates reported in a 
June 1992 cable from the U.S. Embassy in India submitted for the Final 
Determination of Sales at Less Than Fair Value: Sulfanilic Acid from 
the People's Republic of China, 57 FR 29705 (July 6, 1992) and an 
August 1993 cable from the U.S. Embassy in India submitted for the 
Final Determination of Sales at Less Than Fair Value: Certain Helical 
Spring Lock Washers from the People's Republic of China, 58 FR 48833 
(September 20, 1993). We adjusted truck freight rates to reflect 
inflation, using the WPI published by the IMF.
     To value rail freight, we used the price reported in a 
December 1989 cable from the U.S. Embassy in India submitted for the 
Final Results of Antidumping Duty Administrative Review: Shop Towels of 
Cotton from the People's Republic of China, 56 FR 4040 (February 1, 
1991). We adjusted rail freight rates to reflect inflation, using the 
WPI published by the IMF.

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the date of the U.S. sales as certified by the Federal 
Reserve Bank.

Use of Facts Otherwise Available

    On August 18, 1995, the Department sent to each respondent the 
Department's antidumping questionnaire. We established that all of the 
respondents received the questionnaires; however Henan and Tianjin 
failed to submit responses. See File Memorandum dated September 11, 
1995, on file in Room B-099 of the Commerce Department. Because Henan 
and Tianjin have withheld the requested information, we must make our 
preliminary determination based on facts otherwise available, in 
accordance with section 776(a)(2)(A) of the Act.
    The Department finds that, in not responding to the questionnaire, 
Henan and Tianjin failed to cooperate by not acting to the best of 
their abilities to comply with a request for information from the 
Department. Section 776(b) of the Act therefore authorizes the 
Department to use an inference adverse to the interests of that 
respondent in choosing the facts available. Section 776(b) also 
authorizes the Department to use as adverse facts available information 
derived from the petition, the final determination, a previous 
administrative review, or other information placed on the record. 
Because information from prior proceedings constitutes secondary 
information, section 776(c) of the Act provides that the Department 
shall, to the extent practicable, corroborate that secondary 
information from independent sources reasonably at its disposal. The 
Statement of Administrative Action (SAA) provides that ``corroborate'' 
means simply that the Department will satisfy itself that the secondary 
information to be used has probative value.
    To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. However, unlike other types of information, 
such as input costs or selling expenses, there are no independent 
sources for calculated dumping margins. The only source for margins is 
administrative determinations. Thus, in an administrative review, if 
the Department chooses as total adverse facts available a calculated 
dumping margin from a prior segment of the proceeding, it is not 
necessary to question the reliability of the margin for that time 
period. With respect to the relevance aspect of corroboration, however, 
the Department will consider information reasonably at its disposal as 
to whether there are circumstances that would render a margin not 
relevant. Where circumstances indicate that the selected margin is not 
appropriate as adverse facts available, the Department will disregard 
the margin and determine an appropriate margin (see, e.g., Fresh Cut 
Flowers from Mexico; Preliminary Results of Antidumping Duty 
Administrative Review (60 FR 49567)), where the Department disregarded 
the highest margin in that case as adverse BIA because the margin was 
based on another company's uncharacteristic business expense resulting 
in an unusually high margin). For these reviews, we have used the 
highest rate from any prior segment of each proceeding. These were 
21.92 percent for axes/adzes, 66.32 percent for bars/wedges, 45.42 
percent for hammers/sledges, and 108.20 percent for picks/mattocks.

Preliminary Results of the Review

    As a result of our review, we preliminarily determine that the 
following margins exist for the period February 1, 1994 through January 
31, 1995:

------------------------------------------------------------------------
                                                                 Margin 
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Fujian Machinery & Equipment Import & Export Corp:                      
    Axes/Adzes...............................................       0.34
    Bars/Wedges..............................................       3.89
    Hammers/Sledges..........................................       0.34
    Picks/Mattocks...........................................      46.91
Shandong Machinery Import & Export Corp:                                
    Bars/Wedges..............................................      12.51
    Hammers/Sledges..........................................       0.36
    Picks/Mattocks...........................................      39.19
Henan Machinery Import & Export Co:                                     
    Axes/Adzes...............................................      21.92
    Bars/Wedges..............................................      66.32
    Hammers/Sledges..........................................      45.42
    Picks/Mattocks...........................................     108.20
Tianjin Machinery Import & Export Co:                                   
    Axes/Adzes...............................................      21.92
    Bars/Wedges..............................................      66.32
    Hammers/Sledges..........................................      45.42
    Picks/Mattocks...........................................     108.20
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44

[[Page 15221]]
days after the publication of this notice, or the first workday 
thereafter. Interested parties may submit case briefs within 30 days of 
the date of publication of this notice. Rebuttal briefs, which must be 
limited to issues raised in the case briefs, may be filed not later 
than 37 days after the date of publication. See section 353.38(d) of 
the Department's regulations. Parties who submit argument in this 
proceeding are requested to submit with the argument (1) a statement of 
the issue and (2) a brief summary of the argument. The Department will 
publish a notice of final results of these administrative reviews, 
which will include the results of its analysis of issues raised in any 
such comments.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and NV may vary from the percentages 
stated above. The Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this administrative review for 
all shipments of HFHTs from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(1) of the Act: (1) the cash deposit 
rates for the reviewed companies named above which have separate rates 
(FMEC and SMC) will be the rates for those firms established in the 
final results of this administrative review; (2) for all other PRC 
exporters, the cash deposit rates will be the PRC-wide rates 
established in the final results of this administrative review; and (3) 
the cash deposit rates for non-PRC exporters of subject merchandise 
from the PRC will be the rates applicable to the PRC supplier of that 
exporter. We preliminarily determine the PRC-wide rates to be: 21.92 
percent for axes/adzes; 66.32 percent for bars/wedges; 44.41 percent 
for hammers/sledges; and 108.20 percent for picks/maddocks. These are 
the highest rates found for any respondent in the LTFV investigation or 
any review. These deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    The Department acknowledges a recent decision of the Court of 
International Trade, UCF America Inc. v. United States, Slip Op. 96-42 
(CIT Feb. 27, 1996), in which the Court affirmed the Department's 
remand results for reinstatement of the relevant cash deposit rate, but 
expressed disagreement with use of the ``PRC-wide'' rate as the 
underlying basis for reinstatement. The Court raised various concerns 
with the Department's application of a ``PRC-wide'' rate.
    The Court suggested that the Department lacks authority for 
applying a ``PRC-wide'' rate in lieu of an ``all others'' rate. We 
note, however, that section 777A(c) requires the Department to 
determine individual dumping margins for each known exporter or 
producer. Pursuant to this authority, the Department implements a 
policy in NME cases whereby all exporters or producers are presumed to 
comprise a single entity, the ``NME entity''. The Court has upheld our 
NME policy in previous cases. See e.g., UCF America, Inc. v. United 
States, 870 F. Supp. 1120, 1126 (CIT 1994); Sigma Corp. v. United 
States, 841 F. Supp. 1255, 1266-67 (CIT 1993); Tianjin Machinery Import 
& Export Corp. v. United States, 806 F. Supp. 1008, 1013-15 (CIT 1992).
    The ``NME-wide'' rate is consistent with section 
735(c)(1)(B)(i)(I). This provision directs the agency to assign a 
dumping margin for each exporter or producer individually investigated. 
As discussed above, in NME cases, all producers and exporters comprise 
a single entity. Thus, we assign the NME rate to the NME entity just as 
we assign an individual rate to a single exporter or producer operating 
in a market economy. As a result, all exporters and producers that are 
part of the NME entity are assigned the ``NME-wide'' rate. Because the 
``NME-wide'' rate is the equivalent of a company-specific rate, it 
changes only when we review the NME entity (i.e., all NME producers and 
exporters that have not qualified for a separate rate). To qualify for 
a separate rate, an NME exporter or producer must provide evidence 
showing both de jure and de facto absence of government control. See 
Silicon Carbide. Until such evidence is presented, a company is 
presumed to be part of the NME entity and receives the ``NME-wide'' 
rate. Consequently, whenever the NME enterprise has been investigated 
or reviewed, calculation of an ``all others'' rate under section 
735(c)(1)(B)(i)(II) is unnecessary. All exporters or producers will 
either qualify for a separate company-specific rate, or be part of the 
NME enterprise, and receive the ``NME-wide'' rate. Thus, there can be 
no exporters or producers who have never been investigated or reviewed.
    In this review, FMEC and SMC qualify for separate rates as 
discussed in the ``Separate Rates'' section of this notice. Because 
Henan and Tianjin do not qualify for separate rates, they remain 
representative of the NME entity, which is subject to the new PRC-wide 
rate established in the final results of this administrative review.

Notification of Interested Parties

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

    Dated: March 27, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-8364 Filed 4-4-96; 8:45 am]
BILLING CODE 3510-DS-P