[Federal Register Volume 61, Number 197 (Wednesday, October 9, 1996)]
[Notices]
[Pages 52917-52920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25954]


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DEPARTMENT OF COMMERCE
[A-570-501]


Natural Bristle Paint Brushes and Brush Heads From the People's 
Republic of China; Final Results of Antidumping Duty Administrative 
Review

AGENCY: International Trade Administration/Import Administration.

ACTION: Notice of Final Results of the Antidumping Duty Administrative 
Review of Natural Bristle Paint Brushes and Brush Heads from the 
People's Republic of China.

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SUMMARY: On April 4, 1996, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping order on natural bristle paint brushes and brush heads 
(paint brushes) from the People's Republic of China (PRC). The review 
covers six manufacturers/exporters and the period February 1, 1994 
through January 31, 1995.
    We gave interested parties an opportunity to comment on our 
preliminary results. Based on our analysis of the comments received and 
information requested from respondent, we have changed the results from 
those presented in the preliminary results of review.

EFFECTIVE DATE: October 9, 1996.

FOR FURTHER INFORMATION CONTACT: Elisabeth Urfer or Maureen Flannery, 
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

    On April 4, 1996, the Department published in the Federal Register 
(61 FR 15037) the preliminary results of the antidumping duty order on 
paint brushes from the PRC. The Department has now completed this 
administrative review in accordance with section 751 of the Act.

Scope of Review

    Imports covered by this review are shipments of natural bristle 
paint brushes and brush heads from the PRC. The merchandise under 
review is currently classifiable under item 9603.40.40.40 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Although the 
HTSUS subheading is provided for convenience and customs purposes, the 
written description of the merchandise is dispositive.
    This review covers the period February 1, 1994 through January 31, 
1995, and six producers/exporters of Chinese paint brushes.

Separate Rates

    We have changed our separate rates determination with respect to 
the Hebei Animal By-Products I/E Corp. (HACO) from the preliminary 
results of review.
    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 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 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 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.
    The evidence on the record demonstrates that HACO meets the de jure 
and de facto criteria. In the preliminary results we denied HACO a 
separate rate because, based on the information on the record at that 
time, we found that HACO might not have autonomy in making decisions 
regarding the selection of its management. From the record, it appeared 
that the provincial government appointed HACO's general manager. 
However, because the implication of the provincial government's role in 
selection of HACO's management was not clear from the record, given 
that HACO met three of the four de facto criteria, we gave HACO an 
opportunity to clarify its response. We requested additional 
information from HACO, and considered such information in determining 
whether to assign HACO a separate rate in these final results of 
review.
    On April 26, 1996, HACO submitted additional information in order 
to clarify its response. HACO stated that its general manager is 
selected through a poll of company employees, and that the 
``appointment' is a type of pro forma registration with the provincial 
government that occurs after the company employees have voted. Based on 
this explanation, we find that HACO has autonomy from the government 
regarding the selection of management. Therefore, we have determined 
that HACO meets all four of the de facto criteria. For further 
discussion of the Department's final determination that HACO is 
entitled to a separate rate, see Decision Memorandum to the Director, 
dated September 20, 1996: ``Separate rate analysis for Hebei Animal By-
Products I/E Corp in the administrative review of natural bristle paint 
brushes and brush heads from the People's Republic of China,'' which is 
on file in the Central Records Unit (room B099 of the Main Commerce 
Building).

[[Page 52918]]

    Because we have determined that HACO merits a separate rate, we 
have analyzed HACO's sales for the final results of this review. See 
the Export Price and Normal Value sections below.

Facts Available

    In the preliminary results we determined that the use of adverse 
facts available was appropriate for Yixing Sanai Brush Making Co., 
Ltd.; Eastar B.F. (Thailand) Company Ltd.; China National Metals & 
Minerals I/E Corp., Zhenjiang Trading Corp.; China National Native 
Produce and Animal By-Products Import-Export Corporation; and Inner 
Mongolia Autonomous Region Light Industrial Products I/E Corp., because 
these firms did not respond to the Department's antidumping 
questionnaire. We have not changed this determination for the final 
results. However, for the final results of review the rate assigned to 
these and all other companies that have not been found to be entitled 
to a separate rate has changed. As adverse facts available, we are 
assigning these companies the calculated rate for HACO, 351.92, which 
is the highest rate from any segment of the proceeding. Pursuant to 
section 776(c) of the Act, corroboration of this rate is not required 
because it is based on information obtained in the course of the 
review.

Analysis of the Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results of review. We received comments only from the Paint 
Applicator Division of the American Brush Manufacturers Association 
(Paint Applicator Division), a domestic interested party.
    Comment 1: The Paint Applicator Division asserts that HACO is not 
entitled to a separate rate test because not all producers/exporters of 
subject merchandise owned or controlled by the Hebei provincial 
government cooperated with the administrative review. The Paint 
Applicator Division notes that in the preliminary results the 
Department stated that a producer/exporter of subject merchandise 
located in Hebei province other than HACO failed to respond to the 
Department's request for information, and also notes that the 
Department sent this other producer/exporter of subject merchandise a 
questionnaire based on HACO's certified statements that it is owned or 
controlled by the Hebei provincial government.
    The Paint Applicator Division cites to 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), 
accord Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Sebacic Acid From the 
People's Republic of China, 59 FR 565 (January 5, 1994), and asserts 
that it is the Department's practice to first consider whether there 
are any other producers or exporters of subject merchandise under 
common ownership; then, if more than one producer/exporter are owned or 
controlled by the same governmental entity, the Department will 
collapse the producers/exporters and conduct a separate rate test only 
if all producers/exporters of the subject merchandise under common 
ownership cooperate with the Department. Citing 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), and Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Paper 
Clips From the People's Republic of China, 59 FR 51168 (October 7, 
1994) (Paper Clips), the Paint Applicator Division argues that, 
although the Department has previously calculated a separate rate for 
an NME respondent even if that respondent's general manager was 
appointed by the government, the Department has not done so if there 
was any other producer/exporter of subject merchandise controlled by 
the same governmental entity. The Paint Applicator Division argues that 
this prevents exports from a company subject to the country-wide rate 
from being shipped through an affiliated company with a lower, separate 
rate to avoid the imposition of antidumping duties.
    The Paint Applicator Division asserts that, because HACO's sister 
company failed to respond to the Department's questionnaire, 
calculating a separate rate for HACO in this review would create a 
situation where the Hebei provincial government could manipulate 
pricing and production between the affiliates to circumvent the 
antidumping law. The Paint Applicator Division concludes that, for the 
final results, the Department should continue to use the highest rate 
from any prior segment of the proceeding--127.07 percent--as facts 
available for all producers/exporters, including HACO.
    Department's Position: We disagree with the Paint Applicator 
Division. HACO is entitled to a separate rates test to determine 
whether the government exercises control over the company's export 
activities. Only if we determine that HACO is controlled by the 
provincial government do we reach the question of whether there are 
other firms that are under the common control of that government. 
Therefore, for these final results we have considered whether HACO is 
separate from the provincial government. (See comment 2 below.)
    Comment 2: The Paint Applicator Division argues that, should the 
Department conduct a separate rate test for HACO for the final results, 
it should determine that HACO has failed to establish that it is not de 
facto controlled by the Hebei provincial government.
    The Paint Applicator Division cites to Tianjin Machinery Import & 
Export Corp. v. United States, 806 F.Supp. 1008 (CIT 1992), and argues 
that, with respect to the determination of whether HACO is entitled to 
a separate rate in this review, HACO bears the burden of demonstrating 
that it is not de facto controlled by a governmental entity. The Paint 
Applicator Division asserts that any ambiguity in the administrative 
record on this issue must be interpreted in a manner adverse to HACO.
    The Paint Applicator Division states that the Department's 
preliminary determination that HACO is de facto controlled by the Hebei 
provincial government due to the government's control over the 
selection of HACO's general manager was correct and fully supported by 
the evidence on the record. The Paint Applicator Division argues that 
the record at the time of the preliminary results shows that the Hebei 
provincial government exercises de facto control over HACO, through the 
appointment of HACO's general manager, and the role that the general 
manager plays in its business. The Paint Applicator Division cites to 
HACO's questionnaire responses, in which HACO stated that the general 
manager controlled the company, that the general manager controlled the 
company's bank account, and that the only person in its company with 
authority to enter into sales contracts is the general manager.
    The Paint Applicator Division argues that, to the extent that 
clarification was even necessary, HACO's post-preliminary submission 
failed to establish that the preliminary results were incorrect, and, 
therefore, the Department should not change its preliminary results. 
First, the Paint Applicator Division argues, HACO's statements 
contradict its earlier responses, and are not credible. The Paint 
Applicator Division notes that, in response to the Department's two 
previous inquiries about the selection of its general manager, HACO 
never mentioned that its employees selected the general manager through 
a poll; only

[[Page 52919]]

after the preliminary results did HACO claim that its general manager 
is selected by the staff members of the company through a poll, and is 
approved by the Hebei Foreign Trade & Economic Cooperation Department. 
The Paint Applicator Division asserts that it appears that, knowing 
that those earlier certified responses had failed to persuade the 
Department that it was not de facto controlled by the provincial 
government, HACO simply changed its answer in an attempt to manipulate 
the Department's final results. The Paint Applicator Division argues 
that, because it is inconsistent with earlier, certified responses, 
HACO's post-preliminary results response is not reliable and should be 
rejected.
    The Paint Applicator Division further argues that HACO has 
submitted no objective, documentary evidence to corroborate its 
assertion that its employees, not the provincial government, selects 
HACO's general manager. Citing the Notice of Final Determination of 
Sales at Less Than Fair Value: Bicycles From the People's Republic of 
China, 61 FR 19026 (April 30, 1996), Coumarin, and Paper Clips, the 
Paint Applicator Division argues that the Department routinely reviews 
company correspondence, board of directors meeting minutes, company 
newsletters, and other types of documentary evidence to corroborate 
assertions that the government is not involved in a company's personnel 
decisions.
    The Paint Applicator Division argues that, even if the Department 
were to accept HACO's post-preliminary results response as reliable, 
that response confirms that HACO's general manager must be approved by 
the Hebei Foreign Trade & Economic Cooperation Department, and thus the 
record still establishes that the Hebei provincial government has veto 
power over the selection of HACO's management. Therefore, the Paint 
Applicator Division claims, HACO still has not satisfied its burden of 
demonstrating that it is not de facto controlled by the Hebei 
provincial government.
    Department's Position: We disagree with the Paint Applicator 
Division. The information in HACO's April 26, 1996 submission does not 
contradict HACO's earlier submissions, but rather explains some of the 
confusion about the selection and function of the general manager. 
Where a company has the autonomy to select its management, even with 
the pro forma approval or acknowledgment of the provincial government, 
we consider the company to have met the relevant de facto control 
criterion. For example, in Paper Clips, we found that, for one company, 
registration with a local machinery bureau, and, for a second company, 
approval by a government agency, were consistent with the fact that the 
company selected management independent of the government.
    Although we often review company correspondence, board of directors 
meeting minutes, company newsletters, and other types of documentary 
evidence to corroborate assertions that the government is not involved 
in a company's personnel decisions, such a review of documentation is 
performed during verification. However, we did not conduct verfication 
in this review.

Export Price

    For sales made by HACO 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 amounts for foreign inland freight and 
brokerage and handling. We valued foreign inland freight using data on 
Indonesian freight rates. We based brokerage and handling on a quote 
from a shipping company. We selected Indonesia as the 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 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.
    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) of the Act, any determination that a foreign country is 
an 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 an NME country for purposes of 
this review and calculated NV by valuing the factors of production as 
set forth in 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) of the Act and section 353.52(c) of the 
Department's regulations, we determined that Indonesia 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 Indonesia is a significant producer of comparable merchandise. 
Therefore, for this review, we have used publicly available information 
relating to Indonesia to value the various factors of production. (See 
Memorandum to Laurie Parkhill from David Mueller, dated February 6, 
1996, ``Natural Bristle Paint Brushes from the People's Republic of 
China: Non-market Economy Status and Surrogate Country Selection,'' and 
Memorandum to the File from Elisabeth Urfer, dated September 18, 1996, 
``Indonesia: Significant Production of Comparable Merchandise,'' which 
are on file in the Central Records Unit (room B099 of the Main Commerce 
Building).)
    None of the parties submitted publically available published 
information on surrogate values for the Department's consideration. For 
purposes of calculating NV, we valued PRC factors of production as 
follows, in accordance with section 773(c)(1) of the Act:
     For handles, bristles, epoxy, ferrules, and nails, we used 
a per kilogram value obtained from the Foreign Trade Statistical 
Bulletin of Indonesia: Imports (Indonesian 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 included freight costs incurred between the supplier and 
HACO, valued using the Indonesian freight rates. Where applicable, we 
made adjustments for recycled scrap.
     For direct labor, we used the unskilled labor rate 
published by the U.S. Department of Labor, Bureau of International 
Labor Affairs for 1992. This source shows number of hours worked per 
week. We adjusted the rate to reflect inflation through the POR using 
WPI published by the IMF.
     For factory overhead, we used information reported in a 
December 2, 1994 fax from the U.S. Foreign Commercial Service of the 
American Embassy in Jakarta, Indonesia. This data was received for the 
LTFV investigation of furfuryl alcohol from the People's Republic of 
China, and provides an estimated range of factory overhead in 
Indonesia. This information was used in the LTFV investigation of 
disposable pocket lighters from the People's Republic of China. From 
this

[[Page 52920]]

information, we were able to determine factory overhead as a percentage 
of materials and labor. The surrogate overhead rate included energy; 
therefore, we did not include HACO's reported energy factor in the 
calculation.
     For selling, general and administrative (SG&A) expenses, 
we used information obtained from a September, 1991 cable from the U.S. 
Embassy in Jakarta. This cable was received for the LTFV investigation 
of certain carbon steel butt-weld pipe fittings from the People's 
Republic of China, and provides an estimated range of SG&A expenses.
     For profit, we used information obtained from a September, 
1991 cable from the U.S. Embassy in Jakarta. This cable was received 
for the LTFV investigation of certain carbon steel butt-weld pipe 
fittings from the People's Republic of China, and provides a range of 
profit margins.
     HACO did not provide per kilogram amounts for its packing 
materials; therefore, we relied on the facts otherwise available. For 
packing materials, we used a per piece packing rate calculated from the 
public version of the analysis memorandum from the first administrative 
review of this case. The company was a Hong Kong exporter of PRC paint 
brushes. Therfore, we adjusted the value to reflect inflation using the 
Hong Kong Consumer Price Index based on information published by the 
IMF.
     To value truck freight, we used the rates reported in a 
September, 1991 cable from the U.S. Embassy in Jakarta Indonesia. This 
cable was received for the LTFV investigation of certain carbon steel 
butt-weld pipe fittings from the People's Republic of China. We 
adjusted the rates to reflect inflation 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.

Final Results of the Review

    We determine that the following dumping margins exist:

------------------------------------------------------------------------
                                                                 Margin 
           Manufacturer/exporter               Time period     (percent)
------------------------------------------------------------------------
Hebei Animal By-Products I/E Corp.........     2/1/94-1/31/95     351.92
PRC-Wide Rate.............................     2/1/94-1/31/95     351.92
------------------------------------------------------------------------

    The Department shall determine, and the 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 on 
each exporter directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of this notice of final results of review for all shipments 
of paint brushes 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 HACO, which was found to merit 
a separate rate for the final results of this review, the rate will be 
the company-specific rate, which is 351.92 percent; (2) for the 
companies named above which were not found to have separate rates, as 
well as for all other PRC exporters, the cash deposit rate will be the 
PRC-wide rate, which is 351.92; (3) for previously reviewed non-PRC 
exporters, the cash deposit rate will be the rate established in the 
most recent segment of the proceeding; and (4) for all other 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 serves as a final 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 subsequent assessment 
of double antidumping duties.

Notification to Interested Parties

    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    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: October 1, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-25954 Filed 10-8-96; 8:45 am]
BILLING CODE 3510-DS-P