[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]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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