[Federal Register Volume 61, Number 111 (Friday, June 7, 1996)]
[Notices]
[Pages 29073-29077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14309]
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DEPARTMENT OF COMMERCE
[A-570-815]
Sulfanilic Acid From the People's Republic of China; Preliminary
Results and Partial Rescission of Antidumping 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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[[Page 29074]]
SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on sulfanilic acid
from the People's Republic of China (PRC) in response to requests by
petitioner, Nation Ford Chemical Company (formerly known as R-M
Industries, Inc.), by a respondent, Sinochem Hebei Import and Export
Corporation (Sinochem Hebei), and by an importer, PHT International
(PHT). This review covers shipments of this merchandise to the United
States during the period August 1, 1994 through July 31, 1995.
We have preliminarily determined that sales have been made below
normal value (NV). If these preliminary results are adopted in our
final results, we will instruct U.S. Customs to assess antidumping
duties equal to the differences between the United States price and NV.
Interested parties are invited to comment on these preliminary
results. Parties who submit argument are requested to submit with each
argument (1) a statement of the issue and (2) a brief summary of the
argument.
EFFECTIVE DATE: June 7, 1996.
FOR FURTHER INFORMATION CONTACT: Karin Price or Maureen Flannery,
Office of Antidumping Compliance, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., 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 August 19, 1992, the Department published in the Federal
Register (57 FR 37524) an antidumping duty order on sulfanilic acid
from the PRC. On August 1, 1995, we published in the Federal Register
(60 FR 39150) a notice of opportunity to request an administrative
review of the antidumping duty order on sulfanilic acid from the PRC
covering the period August 1, 1994 through July 31, 1995.
On August 11, 1995, in accordance with 19 CFR 353.22(a)(1)(1995),
petitioner, Nation Ford Chemical Company (formerly known as R-M
Industry, Inc.), requested that we conduct an administrative review of
Sinochem Hebei, China National Chemical Construction Corporation,
Beijing Branch (CNCCC), China National Chemical Construction
Corporation, Qingdao Branch (CNCCC Qingdao), Sinochem Qingdao, Sinochem
Shandong, Baoding No. 3 Chemical Factory (Baoding), Jinxing Chemical
Factory (Jinxing), Zhenxing Chemical Industry Company (Zhenxing),
Mancheng Xinyu Chemical Factory, Shijiazhuang (Xinyu Shijiazhuang),
Mancheng Xinyu Chemical Factory, Beijing (Xinyu Beijing), Hainan Garden
Trading Company (Hainan Garden), Yude Chemical Industry Company (Yude),
and Shunping Lile (Shunping). Petitioner also requested an
administrative review of Mancheng Xinyu Chemical Factory, Baoding, but
as this company changed its name to Yude when it formed its joint
venture with PHT, we have considered them to be one respondent. See
File Memorandum from Karin Price, Case Analyst, dated February 6, 1996,
``The questionnaire for Mancheng Xinyu Chemical Factory, Baoding in the
1994/1995 administrative review of the antidumping duty order on
sulfanilic acid from the People's Republic of China,'' which is on file
in the Central Records Unit (room B-099 of the Main Commerce Building).
On August 25, 1995, with a clarification on October 5, 1995, PHT, a
U.S. importer of sulfanilic acid from the PRC, requested that we
conduct a review of its two related Chinese exporters, Yude and
Zhenxing. On August 25, 1995, Sinochem Hebei requested that we conduct
a review of its sales. We published a notice of initiation of this
antidumping duty administrative review on September 15, 1995 (60 FR
47930). The Department is conducting this administrative review in
accordance with section 751 of the Act.
Scope of Review
Imports covered by this review are all grades of sulfanilic acid,
which include technical (or crude) sulfanilic acid, refined (or
purified) sulfanilic acid and sodium salt of sulfanilic acid.
Sulfanilic acid is a synthetic organic chemical produced from the
direct sulfonation of aniline with sulfuric acid. Sulfanilic acid is
used as a raw material in the production of optical brighteners, food
colors, specialty dyes, and concrete additives. The principal
differences between the grades are the undesirable quantities of
residual aniline and alkali insoluble materials present in the
sulfanilic acid. All grades are available as dry, free flowing powders.
Technical sulfanilic acid contains 96 percent minimum sulfanilic
acid, 1.0 percent maximum aniline, and 1.0 percent maximum alkali
insoluble materials. Refined sulfanilic acid contains 98 percent
minimum sulfanilic acid, 0.5 percent maximum aniline and 0.25 percent
maximum alkali insoluble materials.
Sodium salt is a powder, granular or crystalline material which
contains 75 percent minimum equivalent sulfanilic acid, 0.5 percent
maximum aniline based on the equivalent sulfanilic acid content, and
0.25 percent maximum alkali insoluble materials based on the equivalent
sulfanilic acid content.
This merchandise is classifiable under Harmonized Tariff Schedule
(HTS) subheadings 2921.42.22 and 2921.42.90. Although the HTS
subheadings are provided for convenience and customs purposes, our
written description of the scope of this proceeding is dispositive.
This review covers 13 manufacturers/exporters of sulfanilic acid
from the PRC, and the period August 1, 1994 through July 31, 1995.
Verification
We conducted verification of Yude's and Zhenxing's sales
questionnaire responses at PHT's facility in Charlotte, North Carolina
on April 16 and 17, 1995. We conducted the verification using standard
verification procedures, including the examination of relevant sales
and financial records, and selection of original documentation
containing relevant information. Our verification results are outlined
in the public version of the verification report.
Use of Facts Otherwise Available
We preliminarily determine, in accordance with section 776(a) of
the Act, that the use of facts available is appropriate for CNCCC,
CNCCC Qingdao, Jinxing, Shunping, Sinochem Hebei, Sinochem Qingdao,
Sinochem Shandong, Xinyu Beijing, and Xinyu Shijiazhuang, because these
companies did not respond to the Department's antidumping
questionnaire.
Where the Department must base the entire dumping margin for a
respondent in an administrative review on the facts available because
that respondent failed to cooperate, section 776(b) 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
[[Page 29075]]
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) 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 best information available
because the margin was based on another company's uncharacteristic
business expense resulting in an unusually high margin). In this case,
we have used the highest rate from any prior segment of the proceeding,
85.20 percent, the PRC rate established during the less-than-fair-value
(LTFV) investigation of this case. See Final Determination of Sales at
Less Than Fair Value: Sulfanilic Acid from the People's Republic of
China (57 FR 29705, July 6, 1992). We have no reason to believe this
rate is not relevant.
Separate Rates
To establish whether a company operating in a state-controlled
economy is sufficiently independent to be entitled to a separate rate,
the Department analyzes each exporting entity under the test
established in the Final Determination of Sales at Less Than Fair
Value: Sparklers from the People's Republic of China (56 FR 20588, May
6, 1991) (Sparklers), as amplified in 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 over export activities
includes: (1) an absence of restrictive stipulations associated with an
individual exporter's business and export licenses; (2) any legislative
enactments decentralizing control of companies; and (3) any other
formal measures by the government decentralizing control of companies.
De facto absence of government control 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 and other agreements.
Yude and Zhenxing have responded to the Department's request for
information regarding separate rates. We have found that the evidence
on the record demonstrates an absence of government control, both in
law and in fact, with respect to Yude's and Zhenxing's exports
according to the criteria identified in Sparklers and Silicon Carbide
for this period of review, and have assigned a separate rate to each of
these companies. For further discussion of this finding, see Decision
Memorandum to Holly A. Kuga, Director, Office of Antidumping
Compliance, dated May 21, 1996, ``Separate rates in the 1994/1995
administrative review of sulfanilic acid from the People's Republic of
China,'' which is on file in the Central Records Unit (room B-099 of
the Main Commerce Building).
In the LTFV investigation of this case, we found that Sinochem
Hebei was eligible for a separate rate under the criteria set forth in
Sparklers. However, since Sparklers does not address the additional
information required by Silicon Carbide for making a determination of
separate rates (i.e., whether each exporter has autonomy in making
decisions regarding the selection of management and whether each
exporter has the authority to negotiate and sign contracts and other
agreements), we need to analyze information on the record of this
review to determine whether Sinochem Hebei merits a separate rate with
respect to the additional criteria. See Certain Helical Spring Lock
Washers from the People's Republic of China; Preliminary Results of
Antidumping Administrative Review (60 FR 42519, August 16, 1995). Since
Sinochem Hebei did not respond to our separate rates questionnaire, we
are not able to make this determination. Therefore, we have found that
Sinochem Hebei is not eligible for a separate rate in this review.
Yude and Zhenxing: Affiliation and Collapsing
Yude and Zhenxing are each joint venture partners with PHT. Due to
PHT's ownership interest in both joint ventures and the fact that some
of the same people sit on the boards of directors of each joint
venture, and especially because PHT is legally and operationally in a
position to exercise restraint or direction over both joint ventures,
we consider Yude and Zhenxing to be affiliated pursuant to section
771(33)(F) of the Act.
The Department ``collapses'' affiliated firms (i.e., treats them as
a single entity for review purposes and assigns them a single dumping
margin) where the type and degree of relationship is so significant
that we find that there is a strong possibility of manipulation of
prices or production. See 19 CFR Parts 351, 353, and 355 Antidumping
Duties; Countervailing Duties; Proposed Rule (61 FR 7381, February 27,
1996) (Proposed Rule). See also Nihon Cement Co., Ltd. v. United
States, 17 CIT 400 (1993). Because Yude and Zhenxing are each joint
venture partners with PHT, we have considered whether Yude and Zhenxing
should be collapsed for purposes of this administrative review as a
result of their relationships with PHT.
The Department's current policy is to treat two or more affiliated
producers as a single entity where those producers have production
facilities that would not require substantial retooling of either
facility in order to restructure manufacturing priorities and the
Department concludes that there is a significant potential for the
manipulation of prices or production. In identifying a significant
potential for the manipulation of prices or production, the Department
considers the following:
The level of common ownership;
[[Page 29076]]
Whether managerial employees or board members of one of
the affiliated producers sit on the board of directors of the other
affiliated person; and
Whether operations are intertwined, such as through the
sharing of sales information, information on production and pricing
decisions, the sharing of facilities or employees, or significant
transactions between the affiliated producers.
See Proposed Rule
Based on our analysis of these criteria, we have determined that
there is a strong possibility of manipulation of prices or production
between Yude and Zhenxing. In addition to PHT's ownership percentage in
each joint venture, we have found that some of the same people sit on
Yude's and Zhenxing's boards of directors, and that PHT makes sales and
pricing decisions for each of the joint ventures. We have also found
that Yude and Zhenxing have similar production processes such that
substantial retooling of either facility would not be necessary to
restructure manufacturing priorities. Therefore, we have determined
that Yude and Zhenxing should be collapsed as a result of their
relationships with PHT. For a further discussion of this issue, see
Decision Memorandum to Holly A. Kuga, Director, Office of Antidumping
Compliance, dated May 20, 1996, ``Collapsing in the 1994/1995
administrative review of sulfanilic acid from the People's Republic of
China,'' which is on file in the Central Records Unit (room B-099 of
the Main Commerce Building).
We are collapsing Yude and Zhenxing for the purposes of calculating
margins, and we are collapsing their factor data for use in calculating
NV. We have calculated one NV for Yude and Zhenxing by weight averaging
Yude's and Zhenxing's factors based on the quantities of sulfanilic
acid each produced during the period of review.
United States Price
For sales made by Yude and Zhenxing, we calculated constructed
export price based on FOB, CIF, or CIP prices to unrelated purchasers
in the United States. We made deductions for foreign inland freight,
ocean freight, marine insurance, U.S. duties, U.S. transportation,
credit, commissions, warehousing, repacking in the United States,
indirect selling expenses, and constructed export price profit, as
appropriate, in accordance with section 772(d)(3) of the Act.
Normal Value
For companies located in NME countries, section 773(c)(1) of the
Act provides that the Department shall determine NV using a factors of
production methodology if (1) the merchandise is exported from a NME
country, and (2) the available information does not permit the
calculation of NV using home-market prices, third-country prices, or
constructed value under 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. Pursuant to section
771(18)(C)(i), any determination that a foreign country is a NME
country shall remain in effect until revoked by the administering
authority. None of the parties to this proceeding has contested such
treatment in this review. Accordingly, we treated the PRC as a NME
country for purposes of this review and calculated NV by valuing the
factors of production as set forth in section 773(c)(3) of the Act in a
comparable market economy country which is a significant producer of
comparable merchandise. Pursuant to section 773(c)(4) and section
353.52(2) of the Department's regulations, we determined that India is
comparable to the PRC in terms of per capita gross national product
(GNP), the growth rate in per capita GNP, and the national distribution
of labor, and that India is a significant producer of comparable
merchandise. For further discussion of the Department's selection of
India as the primary surrogate country, see Memorandum from David
Mueller, Director, Office of Policy, to Maureen Flannery, dated March
28, 1996, ``Sulfanilic Acid from the People's Republic of China (PRC):
Nonmarket Economy Status and Surrogate Country Selection,'' and File
Memorandum, dated May 23, 1996, ``India as a significant producer of
comparable merchandise in the 1994/1995 administrative review of
sulfanilic acid from the People's Republic of China,'' which are on
file in the Central Records Unit (room B-099 of the Main Commerce
Building).
For purposes of calculating NV, we valued PRC factors of production
as follows, in accordance with section 773(c)(1) of the Act:
To value aniline used in the production of sulfanilic
acid, we used the rupee per kilogram value of imports into India during
April 1994-April 1995, obtained from the February 1995 and April 1995
Monthly Statistics of the Foreign Trade of India, Volume II--Imports
(Indian Import Statistics). Using wholesale price indices (WPI)
obtained from the International Financial Statistics, published by the
International Monetary Fund (IMF), we adjusted this value to reflect
inflation through the period of review. We made adjustments to include
freight costs incurred between the suppliers and the sulfanilic acid
factories.
To value sulfuric acid used in the production of
sulfanilic acid, we used the rupee per kilogram value reported in
Chemical Weekly. We made adjustments to include freight costs incurred
between the suppliers and the sulfanilic acid factories.
To value activated carbon used in the production of
sulfanilic acid, we used the rupee per kilogram value reported in
Chemical Weekly. We made adjustments to include freight costs incurred
between the suppliers and the sulfanilic acid factories.
For direct labor, we used the labor rates reported in the
Economist Intelligence Unit's Investing, Licensing and Trading
Conditions Abroad: India, released November 1994. This source breaks
out labor rates between skilled and unskilled labor for 1994 and
provides information on the number of labor hours worked per week.
Using WPI obtained from the International Financial Statistics, we
adjusted the labor rates to reflect inflation through the period of
review.
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.
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 inner and outer bags used as packing
materials, we used import statistics for India obtained from the Indian
Import Statistics. Using WPI obtained from the International Financial
Statistics, we adjusted these values to reflect inflation through the
period of review. We adjusted these values to include freight costs
incurred between the suppliers and the sulfanilic acid factories.
[[Page 29077]]
To value coal, we used the price of steam coal reported in
The Gazette of India, June 16, 1994. We adjusted the value of coal to
reflect inflation through the period of review using WPI published by
the IMF.
To value electricity, we used the price of electricity on
March 1, 1995 reported in Current Energy Scene in India, July 1995, by
the Centre for Monitoring Indian Economy.
To value truck freight, we used the rate reported in 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 the truck freight rates to reflect
inflation through the period of review using 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 the rail freight rates to reflect inflation through
the period of review using WPI published by the IMF.
Non-shippers
Baoding and Hainan Garden stated that they did not have shipments
during the period of review, and we confirmed this with the United
States Customs Service. Therefore, we are treating them as non-shippers
for this review, and are rescinding this review with respect to these
companies. See Proposed Rule, section 351.213(d)(3) (61 FR 7365). The
cash deposit rates for these firms will continue to be the rates
established in the most recently completed final determination.
Preliminary Results of the Review
We preliminarily determine that the following dumping margins
exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Yude Chemical Industry Company............ 8/1/94-7/31/95 20.78 *
Zhenxing Chemical Industry Company........ 8/1/94-7/31/95 20.78 *
PRC Rate 1................................ 8/1/94-7/31/95 85.20
------------------------------------------------------------------------
\1\ This rate will be applied to all firms which have not demonstrated
that they are separate from the PRC government, including, but not
limited to, the following firms for which a review was requested:
China National Chemical Construction Corporation, Beijing Branch;
China National Chemical Construction Corporation, Qingdao Branch;
Jinxing Chemical Factory; Mancheng Xinyu Chemical Factory, Beijing;
Mancheng Xinyu Chemical Factory, Shijiazhuang; Shunping Lile; Sinochem
Hebei Import and Export Corporation; Sinochem Qingdao; and Sinochem
Shandong.
* Yude and Zhenxing have been collapsed for the purposes of this
administrative review. However, we have listed them separately on this
chart for Customs purposes.
Parties to the proceeding may request disclosure within 5 days of
the date of publication of this notice. Any interested party may
request a hearing within 10 days of publication. Any hearing, if
requested, will be held 44 days after the publication of this notice,
or the first workday thereafter. Interested parties may submit case
briefs within 30 days of the date of publication of this notice.
Rebuttal briefs, which must be limited to issues raised in the case
briefs, may be filed not later than 37 days after the date of
publication. The Department will publish a notice of final results of
this administrative review, which will include the results of its
analysis of issues raised in any such comments.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and NV may vary from the
percentage stated above. Upon completion of this review, the Department
will issue appraisement instructions directly to the Customs Service.
Furthermore, the following deposit rates will be effective upon
publication of the final results of these administrative reviews for
all shipments of sulfanilic acid from the PRC entered, or withdrawn
from warehouse, for consumption on or after the publication date, as
provided for by section 751(a)(2)(c) of the Act: (1) the cash deposit
rate for reviewed companies named above which have separate rates will
be the rates for those firms established in the final results of this
review; (2) for the companies named above which were not found to have
a separate rate, as well as for all other PRC exporters, the cash
deposit rate will be the highest margin ever in the LTFV investigation
or in this or prior administrative reviews, the PRC rate; and (3) the
cash deposit rate for non-PRC exporters of subject merchandise from the
PRC will be the rate applicable to the PRC supplier of that exporter.
These deposit rates, when imposed, shall remain in effect until
publication of the final results of the next administrative review.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 353.26 to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: May 29, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-14309 Filed 6-6-96; 8:45 am]
BILLING CODE 3510-DS-P