[Federal Register Volume 61, Number 132 (Tuesday, July 9, 1996)]
[Notices]
[Pages 36025-36029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17463]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-808]


Chrome-Plated Lug Nuts From The People's Republic of China; 
Preliminary Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of the Antidumping Duty 
Administrative Review of Chrome-Plated Lug Nuts from the People's 
Republic of China.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on chrome-plated 
lug nuts (lug nuts) from the People's Republic of China (PRC) in 
response to a request by petitioner, Consolidated International 
Automotive, Inc. (Consolidated). This review covers shipments of this 
merchandise to the United States during the period September 1, 1994, 
through August 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 the U.S. Customs Service to assess 
antidumping duties equal to the difference between export 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: July 9, 1996.

FOR FURTHER INFORMATION CONTACT: Donald Little, Elisabeth Urfer, 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).

Background

    The Department published in the Federal Register an antidumping 
duty order on lug nuts from the PRC on April 24, 1992 (57 FR 15052). On 
September 12, 1995, the Department published in the Federal Register 
(60 FR 47349) a notice of opportunity to request an administrative 
review of the antidumping duty order on lug nuts from the PRC covering 
the period September 1, 1994, through August 31, 1995.
    On September 28, 1995, in accordance with 19 CFR 353.22(a), 
Consolidated requested that we conduct an administrative review of 
China National Automotive Industry I/E Corp., Nantong

[[Page 36026]]

Branch (Nantong); China National Automobile Import and Export Corp., 
Yangzhou Branch (Yangzhou); Jiangsu Rudong Grease-Gun Factory, also 
known as JiangSu Huanghai Auto Parts Share Co., Ltd. (Rudong); Ningbo 
Knives & Scissors Factory (Ningbo); Shanghai Automobile Import & Export 
Corp. (Shanghai Automobile); Tianjin Automotive Import and Export Co. 
(Tianjin); China National Machinery & Equipment Import & Export Corp., 
Jiangsu Branch (Jiangsu); and China National Automotive Industry I/E 
Corp. (China National). We published a notice of initiation of this 
antidumping duty administrative review on October 12, 1995 (60 FR 
53165). The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of Review

    On April 19, 1994, the Department issued its ``Final Scope 
Clarifications on Chrome-Plated Lug Nuts from Taiwan and the PRC.'' The 
scope, as clarified, is described in the subsequent paragraph. All lug 
nuts covered by this review conform to the April 19, 1994 scope 
clarification.
    Imports covered by this review are one-piece and two-piece chrome-
plated lug nuts, finished or unfinished. The subject merchandise 
includes chrome-plated lug nuts, finished or unfinished, which are more 
than 11/16 inches (17.45 millimeters) in height and which have a 
hexagonal (hx) size of at least 3/4 inches (19.05 millimeters) but not 
over one inch (25.4 millimeters), plus or minus 1/16 of an inch (1.59 
millimeters). The term ``unfinished'' refers to unplated and/or 
unassembled chrome-plated lug nuts. The subject merchandise is used for 
securing wheels to cars, vans, trucks, utility vehicles, and trailers. 
Zinc-plated lug nuts, finished or unfinished, and stainless-steel 
capped lug nuts are not included in the scope of this review. Chrome-
plated lock nuts are also not subject to this review.
    Chrome-plated lug nuts are currently classified under subheading 
7318.16.00.00 of the Harmonized Tariff Schedule (HTS). Although the HTS 
subheading is provided for convenience and customs purposes, the 
written description of the scope of this proceeding is dispositive.
    This review covers the period September 1, 1994, through August 31, 
1995, and eight producers/exporters of Chinese lug nuts.

Market-Oriented Industry

    In every case conducted by the Department involving the PRC, the 
PRC has been treated as a non-market economy (NME) country. Pursuant to 
section 771(18)(c)(i) of the Act, any determination that a foreign 
country is an NME country shall remain in effect until revoked by the 
administering authority. Information presented in this review has not 
caused the Department to change that determination.
    Rudong submitted, with its January 25, 1996 questionnaire response, 
a request that we treat the lug nuts industry as a market-oriented 
industry (MOI). Rudong claims that its material inputs are acquired at 
market prices and that, accordingly, we should find that the Chinese 
lug nuts industry is an MOI, and use Rudong's home market sales and/or 
costs as the basis of NV.
    The criteria for determining whether an MOI exists are: 1) for the 
merchandise under review, there must be virtually no government 
involvement in setting prices or amounts to be produced; 2) the 
industry producing the merchandise under review should be characterized 
by private or collective ownership; and 3) market-determined prices 
must be paid for all significant inputs, whether material or non-
material (e.g., labor and overhead), and for all but an insignificant 
portion of all the inputs accounting for the total value of the 
merchandise under review. (See Amendment to Final Determination of 
Sales at Less than Fair Value and Amendment to Antidumping Duty Order: 
Chrome-Plated Lug Nuts from the People's Republic of China (57 FR 
15054, April 24, 1992) (Lug Nuts Redetermination).)
    We find preliminarily in this review that the PRC lug nut industry 
does not meet these three criteria. With respect to the first and 
second criteria, Rudong has stated that it is the only producer of lug 
nuts, that it is a collectively-owned public enterprise, and that it 
independently negotiates prices. However, we did not receive a PRC 
government response to our questionnaire requesting the names of all 
lug nut producers in the PRC. We were unable, therefore, to determine 
whether the first and second criteria are met for the industry as a 
whole. With respect to the third criterion, Rudong did not submit any 
information on supply and demand factors indicating that it pays 
market-determined prices for steel, a major input in lug nut 
production, or that the steel industry is not subject to significant 
state control. Further, Rudong has not placed on the record any 
information on supply and demand factors indicating that it pays 
market-determined prices for chemical inputs, or that the chemicals 
industry is not subject to significant state control. Based on the 
foregoing, we preliminarily determine that Rudong has not demonstrated 
the lug nut industry is an MOI and accordingly have calculated NV in 
accordance with section 773(c) of the Act. For a further discussion of 
the Department's preliminary determination that the lug nuts industry 
does not constitute an MOI, see Decision Memorandum to Holly A. Kuga, 
Director of the Office of Antidumping Compliance, dated June 18, 1996, 
``Market Oriented Industry Request in the Third Administrative Review 
of Chrome-Plated Lug Nuts from the People's Republic of China,'' which 
is on file in the Central Records Unit (room B099 of the Main Commerce 
Building).

Facts Available

    We preliminarily determine that, in accordance with section 776(a) 
of the Act, the use of facts available is appropriate for Nantong, 
Yangzhou, Ningbo, Jiangsu, China National, Tianjin, and Shanghai 
Automobile because these firms did not respond to the Department's 
antidumping questionnaire. The Department finds that, in not responding 
to the questionnaire, these seven firms failed to cooperate by not 
acting to the best of their ability to comply with requests for 
information from the Department. Because necessary information is not 
available on the record with regard to sales by these firms as a result 
of their withholding the requested information, we must make our 
preliminary determination based on facts otherwise available pursuant 
to section 776(a) of the Act.
    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 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

[[Page 36027]]

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, September 26, 1995), where the 
Department disregarded the highest margin 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, 44.99 percent. There is no indication that 
this rate is not appropriate. This rate was calculated in the review 
covering the period September 1, 1992 through August 31, 1993 (1992-
1993 review).

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 by the 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 economies (NMEs) are entitled to separate, 
company-specific margins when they can demonstrate an absence of 
government control, both in law and in fact, with respect to export 
activities. 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 over exports is based on four factors: 1) whether 
each exporter sets its own export prices independently of the 
government and without 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 or financing 
of losses; 3) whether each exporter has the authority to negotiate and 
sign contracts and other agreements; and 4) whether each exporter has 
autonomy from the government regarding the selection of management.
    In the administrative review covering the period from September 1, 
1992 through August 31, 1993 (1992-93 review), we determined that 
Nantong merited a separate rate, and in the 1993-94 review we 
preliminary determined that Rudong merited a separate rate. Because we 
made a final determination, under the criteria set forth in Sparklers 
and Silicon Carbide, that Nantong merited a separate rate, and 
therefore did not request that Nantong respond to the separate rates 
section of the questionnaire, and because no evidence was put on the 
record of this review demonstrating that Nantong did not merit a 
separate rate, for this review we continue to assign Nantong a separate 
rate. (As noted above, this rate is based on facts available.) Because 
the results from the 1993-94 review are not final, we analyzed Rudong's 
submission in this review to determine whether Rudong merits a separate 
rate. We have made the determination of whether Rudong should receive a 
separate rate under the policy set forth in Silicon Carbide and 
Sparklers. No other company in this review was previously determined to 
merit a separate rate under the Sparklers and Silicon Carbide criteria, 
or responded to our request for information regarding separate rates; 
therefore, we are assigning the PRC rate to these remaining companies.
    With respect to the absence of de jure government control, evidence 
on the record indicates that Rudong is a collectively-owned enterprise. 
The ``Regulations on Rural Collective Enterprises'' identify rules and 
regulations pertaining to collectively-owned enterprises which give 
rural collective enterprises such rights as the right to act on their 
own, adopt independent accounting, and assume the sole responsibility 
for their profits and losses. (See May 31, 1996 memorandum to the file, 
with attachments, ``Chrome-Plated Lug Nuts from the People's Republic 
of China: laws and regulations governing various categories of 
companies in the PRC.'')
    Further, several PRC laws establish that the responsibility for 
managing entities has been transferred from the central government to 
the enterprise. (See July 18, 1995 memorandum to the file, with 
attachments, ``Chrome-Plated Lug Nuts from the People's Republic of 
China: laws and regulations governing various categories of companies 
in the PRC.'') Additionally, lug nuts do not appear on the ``Temporary 
Provisions for Administration of Export Commodities,'' approved on 
December 21, 1992, and are not, therefore, subject to the constraints 
of this provision.
    With respect to the absence of de facto control, Rudong's 
management is elected by Rudong's staff, and is responsible for all 
decisions such as the determination of its export prices, profit 
distribution, employment policy, and marketing strategy, and for 
negotiating contracts.
    We have found that the evidence on the record demonstrates an 
absence of government control, both in law and in fact, with respect to 
Rudong according to the criteria identified in Sparklers and Silicon 
Carbide. For further discussion of the Department's preliminary 
determination that Rudong is entitled to a separate rate, see Decision 
Memorandum to Holly A. Kuga, Director of the Office of Antidumping 
Compliance, dated June 18, 1996, ``Separate Rate for Jiangsu Rudong 
Grease-Gun Factory in the Fourth Administrative Review of Chrome-Plated 
Lug Nuts from the People's Republic of China,'' which is on file in the 
Central Records Unit (room B099 of the Main Commerce Building).

Export Price

    For sales made by Rudong we used export price, in accordance with 
section 772(a) of the Act, because the subject merchandise was sold to 
unrelated purchasers in the United States prior to importation into the 
United States.
    We calculated export price based on the price to unrelated 
purchasers. We deducted an amount for foreign inland freight. We valued 
foreign inland freight using surrogate data based on Indian freight 
costs. We selected India as the

[[Page 36028]]

surrogate country for the reasons explained in the ``Normal Value'' 
section of this notice.

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 an NME 
country, and (2) the 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 the amendment to the final determination of sales at less than 
fair value (LTFV), the Department treated the PRC as an NME country, 
and determined that the lug nuts industry is not an MOI (see Lug Nuts 
Redetermination). Rudong has argued that the lug nut industry is an 
MOI; however, as discussed above, we have preliminarily determined the 
lug nut industry not to be market-oriented. Accordingly, we are not 
able to determine NV on the basis of Rudong's costs and prices, and 
have applied surrogate values to the factors of production to determine 
NV.
    We calculated NV based on factors of production in accordance with 
section 773(c)(4) of the Act and section 353.52(c) of our regulations. 
We determined that India (1) is comparable to the PRC in terms of level 
of economic development, and (2) is a significant producer of 
comparable merchandise. Therefore, for this review, we have used 
publicly available information relating to India to value the various 
factors of production. (See Memorandum to Laurie Parkhill from David 
Mueller, dated March 15, 1996, ``Chrome-Plated Lug Nuts from the 
People's Republic of China: Non-market Economy Status and Surrogate 
Country Selection,'' and Memorandum to the File from Elisabeth Urfer, 
dated June 14, 1996, ``India: Significant Production of Comparable 
Merchandise,'' which are on file in the Central Records Unit (room B099 
of the Main Commerce Building).)
    We valued the factors of production as follows:
     For steel wire rods, we used a per kilogram value obtained 
from the Monthly Statistics of Foreign Trade of India (Indian Import 
Statistics). Using wholesale price indices (WPI) obtained from the 
International Financial Statistics, published by the International 
Monetary Fund (IMF), we adjusted these values to reflect inflation 
through the period of review (POR). We made further adjustments to 
include freight costs incurred between the supplier and Rudong.
     For chemicals used in the production and plating of lug 
nuts, we used per kilogram values obtained from the Indian publication 
Chemical Weekly and the Indian Import Statistics. We adjusted the 
Indian Import Statistics rates to reflect inflation through the POR 
using WPI published by the IMF. We made further adjustments to include 
freight costs incurred between the supplier and Rudong.
     For hydrochloric acid, we based the value on an Indian 
price quote used in the Final Determination of Sales at Less Than Fair 
Value: Coumarin from the People's Republic of China (59 FR 66895, 
December 28, 1994) (Coumarin), because data in the Indian Import 
Statistics for hydrochloric acid has been found to be aberrational (see 
Coumarin). We adjusted the value used in Coumarin to reflect inflation 
through the POR using WPI published by the IMF.
     For direct labor, we used the labor rates reported in the 
Economic Intelligence Unit report Investing, Licensing & 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. We 
adjusted these rates to reflect inflation through the POR using WPI 
published by the IMF.
     For factory overhead, we used information reported in the 
April 1995 Reserve Bank of India Bulletin for the Indian metals and 
chemicals industries. From this information, we were able to determine 
factory overhead as a percentage of the 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 for the Indian metals and chemicals industries. 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 for the Indian 
metals and chemicals industries. We calculated a profit rate by 
dividing the before-tax profit by the cost of manufacturing plus SG&A.
     For packing materials, we used per kilogram values 
obtained from the Indian Import Statistics. We adjusted these values to 
reflect inflation through the POR using WPI published by the IMF.
     To value electricity, we used the average price of 
electricity as of March 1995 published in the Current Energy Scene in 
India. We adjusted the value of electricity to reflect inflation 
through the POR using WPI published by the IMF.
     To value truck freight, we used the rates reported in an 
August 1993 cable from the U.S. Consulate 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 rates to reflect inflation through 
the POR using WPI published by the IMF.

Currency Conversion

    We made currency conversions pursuant to section 353.60 of the 
Department's regulations at the rates certified by the Federal Reserve 
Bank.

Preliminary Results of Review

    We preliminarily determine that the following dumping margin 
exists:

------------------------------------------------------------------------
                                                                Margin  
       Manufacturer/exporter              Time period         (percent) 
------------------------------------------------------------------------
Jiangsu Rudong Grease-Gun Factory,                                      
 also known as JiangSu Huanghai                                         
 Auto Parts Share Co., Ltd........        09/01/94-08/31/95        20.11
China National Automotive Industry                                      
 I/E Corp., Nantong Branch........        09/01/94-08/31/95        44.99
PRC rate..........................        09/01/94-08/31/95        44.99
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice in accordance with 19 CFR 
353.22(c)(6). Any interested party may request a hearing within 10 days 
of publication in accordance with 19 CFR 353.38(b). 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 in 
accordance with 19 CFR 353.38(c). Rebuttal briefs, which must be 
limited to issues raised in the case

[[Page 36029]]

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 U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and NV may vary from the percentage 
stated above. The Department will issue appraisement instructions 
directly to the U.S. Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of lug nuts 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) for Rudong, which 
has a separate rate, the cash deposit rate will be the company-specific 
rate established in the final results of this administrative review; 
(2) for Nantong, which has a separate rate, the cash deposit rate will 
be the highest margin ever in the LTFV investigation or in this or 
prior administrative reviews; (3) for the companies named above which 
have not been found to have separate rates, China National, Jiangsu, 
Yangzhou, Ningbo, Shanghai Automobile, and Tianjin, as well as for all 
other PRC exporters, the cash deposit rate will be the PRC rate; and 
(4) for non-PRC exporters of subject merchandise from the PRC, the cash 
deposit rate 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: July 1, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-17463 Filed 7-8-96; 8:45 am]
BILLING CODE 3510-DS-P