[Federal Register Volume 61, Number 171 (Tuesday, September 3, 1996)]
[Notices]
[Pages 46440-46444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22413]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE
[A-570-825]


Sebacic Acid From the People's Republic of China; Preliminary 
Results of Antidumping Duty Administrative Review

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


[[Page 46441]]


ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review of Sebacic Acid from the People's Republic of 
China.

-----------------------------------------------------------------------

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on sebacic acid 
from the People's Republic of China (PRC) in response to requests from 
petitioner, Union Camp Corporation and three respondents: Tianjin 
Chemicals Import and Export Corporation (Tianjin), Guangdong Chemicals 
Import and Export Corporation (Guangdong) and Sinochem International 
Chemicals Company, Ltd. (SICC). This review covers four exporters of 
the subject merchandise, including the three respondent companies above 
and Sinochem Jiangsu Import and Export Corporation (Jiangsu). The 
period of review (POR) is July 13, 1994 through June 30, 1995.
    We have preliminarily determined that sales have been made below 
normal value (NV) during this period. 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 (USP) and NV. Interested parties 
are invited to comment on these preliminary results.

EFFECTIVE DATE: September 3, 1996.

FOR FURTHER INFORMATION CONTACT: Elizabeth Patience or Jean Kemp, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th and Constitution Avenue, NW., Washington, 
DC 20230; telephone: (202) 482-3793.

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

    The Department published in the Federal Register an antidumping 
duty order on sebacic acid from the PRC on July 14, 1994 (59 FR 35909). 
On July 3, 1995, the Department published in the Federal Register (60 
FR 34511) a notice of opportunity to request an administrative review 
of the antidumping duty order on sebacic acid from the PRC covering the 
period July 13, 1994 through June 30, 1995.
    On July 26, 1995, in accordance with 19 CFR 353.22(a), Union Camp 
requested that we conduct an administrative review of Tianjin, 
Guangdong, SICC, and Jiangsu. On July 28, 1996, Tianjin, Guangdong and 
SICC requested that we conduct an administrative review. 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

    The products covered by this order are all grades of sebacic acid, 
a dicarboxylic acid with the formula (CH2)8(COOH)2, which include but 
are not limited to CP Grade (500ppm maximum ash, 25 maximum APHA 
color), Purified Grade (1000ppm maximum ash, 50 maximum APHA color), 
and Nylon Grade (500ppm maximum ash, 70 maximum ICV color). The 
principal difference between the grades is the quantity of ash and 
color. Sebacic acid contains a minimum of 85 percent dibasic acids of 
which the predominant species is the C10 dibasic acid. Sebacic acid is 
sold generally as a free-flowing powder/flake.
    Sebacic acid has numerous industrial uses, including the production 
of nylon 6/10 (a polymer used for paintbrush and toothbrush bristles 
and paper machine felts), plasticizers, esters, automotive coolants, 
polyamides, polyester castings and films, inks and adhesives, 
lubricants, and polyurethane castings and coatings.
    Sebacic acid is currently classifiable under subheading 
2917.13.00.00 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 
proceeding remains dispositive.
    This review covers the period July 13, 1994 through June 30, 1995, 
and four exporters of Chinese sebacic acid.

Verification

    We conducted verifications of the sales and factor information 
provided by SICC and Tianjin Zhong He Chemical Plant (Zhong He) in 
Beijing and Tianjin, PRC. We conducted the verifications using standard 
verification procedures, including onsite inspection of the 
manufacturer's facilities, the examination of relevant sales and 
financial records, and selection of original documentation containing 
relevant information. Our verification results are outlined in the 
public versions of the verification reports.

Separate Rates

1. Background and Summary of Findings

    It is the Department's standard policy to assign all exporters of 
the merchandise subject to review in non-market-economy countries a 
single rate, unless an exporter can demonstrate an absence of 
government control, both in law and in fact, with respect to exports. 
To establish whether an exporter is sufficiently independent of 
government control to be entitled to a separate rate, the Department 
analyzes the exporter in light of the criteria 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 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). 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. Evidence relevant to a de facto absence of government 
control with respect to exports is based on four factors, whether the 
respondent: (1) Sets its own export prices independent from the 
government and other exporters; (2) can retain the proceeds from its 
export sales; (3) has the authority to negotiate and sign contracts; 
and (4) has autonomy from the government regarding the selection of 
management. See Silicon Carbide at 22587; see also Sparklers at 20589.
    In our final determination of sales at less than fair value, the 
Department determined that there was de jure and de facto absence of 
government control and determined that each company warranted a 
company-specific dumping margin. See Final Determination of Sales at 
Less Than Fair Value: Sebacic Acid From the People's Republic of China, 
59 FR 28053 (May 31, 1994) (Sebacic Acid). For this period of review, 
SICC, Tianjin, and Guangdong have responded to the Department's request 
for information regarding separate rates. We have found that the

[[Page 46442]]

evidence on the record is consistent with the final determination in 
the LTFV investigation and continues to demonstrate an absence of 
government control, both in law and in fact, with respect to their 
exports, in accordance with the criteria identified in Sparklers and 
Silicon Carbide. For SICC, although we applied the PRC, country-wide 
rate to two sales reported by SICC, we have preliminarily determined 
that SICC is separate from government control and Jiangsu. During 
verification of SICC, we examined its business license and charter, 
government notices announcing its separation from the government, its 
tax registration certificate, company management election ballots, and 
financial statements. These documents showed no evidence of government 
control of SICC or of any affiliation between Jiangsu and SICC.

2. Separate Rate Determination for Non-responsive Company

    For Jiangsu, which did not respond to the questionnaire, we 
preliminarily determine that this company does not merit a separate 
rate. Although Jiangsu met the Department's criteria for separate rates 
in the LTFV investigation, because it failed to respond in this review, 
we have no information to support continued application of a separate 
rate. Therefore, because the Department assigns a single rate to 
companies in a non-market economy unless an exporter can demonstrate 
absence of government control, we preliminarily determine that Jiangsu 
is subject to the country-wide rate for this case.

United States Price

    For SICC, Tianjin, and Guangdong, the Department based USP on 
export price (EP), in accordance with section 772(a) of the Act. We 
made deductions from EP, where appropriate, for foreign inland freight, 
ocean freight, brokerage and handling, and marine insurance. We valued 
these adjustments using surrogate data based on Indian internal freight 
costs and international shipping costs. We selected India as the 
surrogate country for the reasons explained in the ``Normal Value'' 
section of this notice.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the normal value (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.
    The Department has treated the PRC as an NME country in all 
previous antidumping cases. In accordance with section 771(18)(C)(i) of 
the Act, 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. Furthermore, available information does not permit the 
calculation of NV using home market prices, third country prices or CV 
under section 773(a) of the Act. Therefore, we treated the PRC as a NME 
country for purposes of this review and calculated NV by valuing the 
factors of production in a comparable market economy country which is a 
significant producer of comparable merchandise. In such cases, the 
factors include, but are not limited to: (1) Hours of labor required; 
(2) quantities of raw materials employed; (3) amounts of energy and 
other utilities consumed; and (4) representative capital cost, 
including depreciation.
    In accordance with section 773(c)(4) of the Act and section 
353.52(b) 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. (See Memorandum from Director, Office of Policy, to Division 
Director, Office of Antidumping Compliance, dated March 4, 1996.) The 
statute directs us to select a country that is comparable economically 
to the PRC. Based on the list of possible surrogate countries, we find 
that India is a comparable economy to the PRC.
    The statute also requires that, to the extent possible, the 
Department use a surrogate country that is a significant producer of 
merchandise comparable to sebacic acid. The countries that we were able 
to confirm still produce sebacic acid, such as Japan and the United 
States, do not have economies comparable to the PRC. However, we found 
that India was a significant producer of comparable merchandise (e.g., 
oxalic acid) during the POR. Though sebacic acid and oxalic acid have 
different end uses, both are dicarboxylic acids. In addition, many of 
the inputs used to produce sebacic acid are also used to produce oxalic 
acid. Therefore, we find that India fulfills both requirements of the 
statute.
    For purposes of calculating NV, we valued PRC factors of 
production, in accordance with section 773(c)(1) of the Act. In 
determining which surrogate value to use for valuing each factor of 
production, we selected, where possible, the publicly available 
published value which was: (1) An average non-export value; (2) 
representative of a range of prices within the POR if submitted by an 
interested party, or most contemporaneous with the POR; (3) product-
specific; and (4) tax-exclusive. We chose values with a preference for 
prices representative of the POR because these prices more closely 
reflect the prices paid for inputs in the surrogate during the POR. 
Where we could not obtain a POR-representative price for an input, we 
selected a value in accordance with the remaining criteria mentioned 
above and which was closest in time to the POR. In accordance with this 
section methodology, we valued the factors of production as follows:
    For castor oil, the Department valued this material at the market 
rate as reported in The Economic Times (Bombay) for Calcutta, Delhi, 
Hyderabad, Kanpur, and Madras during the months of July, August, and 
November 1994. These values were reported by counsel for the 
respondents. The Department adjusted these values to account for 
freight costs between the supplier and the respondents' sebacic acid 
manufacturing facilities.
    For caustic soda, the Department used the value reported in the 
publication Indian Chemical Weekly, using data from the months of 
October-December 1994, and January and April, 1995. These reported 
values were adjusted to include freight expense incurred from the 
suppliers to the respondents' sebacic acid manufacturing facilities.
    For cresol, also referred to as orthol cresol, respondents reported 
the market value as indicated in Chemical Weekly. Respondents provided 
information concerning prices during the months of October and 
November, 1994. The Department reviewed pricing information for other 
months of the POR which indicated that the market prices reported by 
respondents is representative of the market price of the material for 
the entire POR.
    The valuation of activated carbon, which is interchangeable with 
macropore resin, was based upon information found in the publication 
India's Imports by Commodities-Countries (Monthly Statistics of the 
Foreign Trade of India (IMF). This pricing information reflects the 
average unit price for the period April-October, 1994. This average 
unit value was adjusted to account for inland freight expense.
    The market value for sodium chloride (also referred to as sodium 
chlorite or vacuum salt) and zinc oxide was based upon the published 
market prices

[[Page 46443]]

reported in Chemical Weekly. Respondents provided information 
concerning the market price of sodium chloride on December 27, 1994 and 
March 28, 1995, and of zinc oxide on March 28, 1995. The Department 
reviewed other dates throughout the POR and determined that the market 
prices published on these dates were representative of the prices for 
the entire POR.
    For direct labor, we used 1994 data from Investing, Licensing & 
Trading Conditions Abroad, India, published in November 1994 by the 
Economist Intelligence Unit. We then adjusted the 1994 labor value to 
the POR to reflect inflation using wholesale price indices (WPI) of 
India as published in the International Financial Statistics by the 
International Monetary Fund (IMF).
    For factory overhead, we used information obtained from the April 
1995 Reserve Bank of India Bulletin. From ``Statement 1--Combined 
Income, Value of Production, Expenditure and Appropriation Accounts, 
Industry Group-wise'' of that report for the Indian metals and 
chemicals industries, we summed those components which pertain to 
overhead expenses and divided them by the sum of those components 
pertaining to the cost of manufacturing to calculate an overhead rate 
of 10.74 percent.
    For coal we used prices published in the Gazette of India for June 
1994; for electricity we used information obtained from the Current 
Energy Scene in India for July 1995.
    For selling, general, and administrative (SG&A) expenses, we used 
information from the same source as was used for factory overhead. We 
summed the values which comprised the components of SG&A and divided 
that figure by the same cost of manufacturing figure used to determine 
factory overhead, to arrive at an SG&A rate of 17.99 percent.
    For the calculation of profit, we used information from the same 
Reserve Bank of India Bulletin. We divided the reported before-tax 
profit by the sum of those components pertaining to the cost of 
manufacturing plus SG&A to calculate a profit rate of 5.71 percent.
    For the value of export packing (plastic bags), the Department used 
the value of imports into India during April 1994-February 1995 and for 
April 1995, as obtained from the Indian Import Statistics, for HTS 
number 3923.21.
    For foreign inland freight, the Department relied upon the trucking 
freight rates reported to the Department in an August 1993 embassy 
cable from India, pursuant to the less-than-fair-value investigation of 
certain helical spring lock washers from the PRC. This is the same 
information we used in the sebacic acid less-than-fair-value 
investigation. We adjusted these rates to the POR to reflect inflation.
    For ocean freight, the Department used the information provided by 
respondents, which is based upon the common rates tariff filed by 
Nippon Yusen Kaisha with the Federal Maritime Commission for rates from 
China to New York.
    To calculate the expense for marine insurance, the Department used 
information from a publicly summarized version of the questionnaire 
response for the investigation of sales of less than fair value of 
sulphur dyes from India. The marine insurance rate reported in the 
public version of the October 8, 1992 response was adjusted to reflect 
marine insurance charges during the POR.
    To value fatty acid, we used publicly available published 
information from the Monthly Statistics of the Foreign Trade of India 
(Monthly Statistics) and adjusted the value to account for inflation 
between the time period applicable to the value in question and the POR 
using wholesale price indices (WPI) published in International 
Financial Statistics (IFS) by the IMF. To value glycerine, we used a 
value for crude glycerine in the publication Monthly Statistics of the 
Foreign Trade of India and adjusted the value to account for inflation 
between the time period applicable to the value in question and the POR 
using WPI published in IFS by the IMF. Consistent with the methodology 
employed in the final determination in the less-than-fair-value 
investigation, we have determined that fatty acid and glycerine are by-
products. See Sebacic Acid at 28056. Therefore, as by-products, we 
subtracted the sales revenue of fatty acid and glycerine from the 
production costs of sebacic acid. This treatment of by-products is 
consistent with generally accepted accounting principles. (See Cost 
Accounting: A Managerial Emphasis (1991) at pages 539-544).
    To value caproyl alcohol, we used publicly available published 
information from Chemical Weekly. Consistent with the methodology 
employed in the final determination in the less-than-fair-value 
investigation, we have determined that caproyl alcohol is a co-product. 
Therefore, we have allocated the factor inputs, based on the relative 
quantity of output of this product and sebacic acid. Additionally, we 
have used the production times necessary to complete each production 
stage of sebacic acid as a basis for allocating the amount of labor, 
energy usage, and factory overhead among the products. This treatment 
of co-products is consistent with generally accepted accounting 
principles. (See Cost Accounting: A Managerial Emphasis (1991) at pages 
528-533).

Margin Calculation

    For SICC, at verification we found that certain sales reported as 
SICC sales were in fact sales by another respondent company, Jiangsu, 
(See Memorandum from Analyst to File: Verification of Sales 
Questionnaire Response of Sinochem International Chemicals Company, 
dated August 26, 1996.) Therefore, for these sales, we applied the rate 
applicable to Jiangsu's sales, 243.40 percent, and then weighted these 
sales into the overall calculation of SICC's margin. (See Memorandum 
from Edward Yang, Office Director for AD/CVD Enforcement to Joseph 
Spetrini, Deputy Assistant Secretary for AD/CVD Enforcement: 
Appropriate Rate for Certain Sales Reported by Sinochem International 
Chemical Corporation, First Administrative Review of the Antidumping 
Duty Order on Sebacic Acid from the People's Republic of China, dated 
August 27).

Preliminary Results of Review

    We preliminarily determine that the following dumping margins 
exist:

------------------------------------------------------------------------
                                                                Margin  
     Manufacturer/exporter              Time period           (percent) 
------------------------------------------------------------------------
Tianjin Chemicals I/E Corp....  7/13/94-6/30/95............        35.42
Guangdong Chemicals I/E Corp..  7/13/94-6/30/95............        14.06
Sinochem International          7/13/94-6/30/95............        70.55
 Chemicals Corp.                                                        
Country-Wide Rate.............  7/13/94-6/30/95............       243.40
------------------------------------------------------------------------


[[Page 46444]]


    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 written 
comments (case briefs) within 30 days of the date of publication of 
this notice. Rebuttal comments (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, within 180 days of publication of these preliminary results.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between USP and NV may vary from the percentages stated 
above. The Department will issue appraisement instructions directly to 
the Customs Service.
    Furthermore, the following cash deposit requirements will be 
effective upon publication of the final results of this administrative 
review for all shipments of the subject merchandise 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 (SICC, Tianjin and Guangdong) 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 
243.40 percent; 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. These deposit rates, when imposed, shall 
remain in effect until publication of the final results of the next 
administrative review.

Notification of Interested Parties

    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 section 353.22 
of the Department's regulations.

    Dated: August 26, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-22413 Filed 8-30-96; 8:45 am]
BILLING CODE 3510-DS-P