[Federal Register Volume 61, Number 222 (Friday, November 15, 1996)]
[Notices]
[Pages 58519-58523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29243]
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DEPARTMENT OF COMMERCE
[A-570-808]
Chrome-Plated Lug Nuts From the People's Republic of China; Final
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping administrative review.
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SUMMARY: On July 9, 1996, the Department of Commerce (the Department)
published in the Federal Register the preliminary results of its
administrative review of the antidumping duty order on chrome-plated
lug nuts (lug nuts) from the People's Republic of China (PRC) (61 FR
36025). This review covers shipments of this merchandise to the United
States during the period September 1, 1994 through August 31, 1995. We
gave interested parties an opportunity to comment on our preliminary
results. Based upon our analysis of the comments received we have
changed the results from those presented in the preliminary results of
review.
EFFECTIVE DATE: November 15, 1996.
FOR FURTHER INFORMATION CONTACT: Tamara Underwood (202-482-0197),
Elisabeth Urfer (202-482-4052), or Maureen Flannery (202-482-4733),
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230.
Applicable Statute and Regulations
Unless otherwise stated, 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
stated, all citations to the Department's regulations are references to
the 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 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 International Automotive Inc. (Consolidated) requested
that we conduct an administrative review of China National Automotive
Industry I/E Corp. (China National); China National Machinery &
Equipment Import and Export Corporation, Jiangsu Co., Ltd. (Jiangsu);
Jiangsu Rudong Grease Gun Factory (Rudong); China National Automotive
Industry I/E Corp., Nantong Branch (Nantong); China National Automotive
Industry Shanghai Automobile Import & Export Corp. (Shanghai
Automobile); Tianjin Automotive Import & Export Co. (Tianjin); China
National Automobile Import and Export Corp., Yangzhou Branch
(Yangzhou); and Ningbo Knives
[[Page 58520]]
& Scissors Factory (Ningbo). We published a notice of initiation of
this antidumping duty administrative review on October 12, 1995 (60 FR
53165).
On July 9, 1996, the Department published in the Federal Register
the preliminary results of its administrative review of the antidumping
duty order on lug nuts from the PRC (61 FR 36025). There was no request
for a hearing. The Department has now completed this 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 subheadings
7318.16.00.15, 7318.16.00.45, and 7318.16.00.80 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.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received case briefs from petitioner and
Rudong. We received a rebuttal brief from Rudong.
Comment 1: Petitioner concurs with the Department's decision to use
facts available (FA) for firms that refused to cooperate in the review.
Petitioner argues that, where the Department must base the entire
dumping margin for a respondent in an administrative review on the
facts available for failure to cooperate, section 776(b) of the Act
authorizes the Department to use an inference adverse to the interests
of the respondent in choosing FA.
For the seven non-responding firms, petitioner contends that the
Department should continue to apply the highest antidumping duty rate
from any prior segment of the proceeding, 44.99 percent, based upon the
final results of the second administrative review (1992-1993).
Department's Position: We agree with petitioner. In accordance with
Section 776 of the Act, we have for these final results continued to
use FA for Nantong, Yangzhou, Ningbo, Jiangsu, China National, Tianjin,
and Shanghai Automobile. These firms did not respond to the
Department's antidumping questionnaire. (See Chrome-Plated Lug Nuts
From The People's Republic of China; Preliminary Results of Antidumping
Duty Administrative Review, July 9, 1996 (61 FR 36025).) Accordingly,
we have continued to use adverse FA for these firms for the final
results.
Comment 2: Petitioner asserts that the Department appropriately
determined that the PRC lug nut industry was not a market-oriented
industry (MOI) and properly applied factors of production to determine
Rudong's normal value (NV). Petitioner contends that, although the
Department assigned Rudong a separate rate based on lack of government
control of its operations, this does not mean that the entire PRC lug
nut industry is market-oriented. Petitioner cites the criteria applied
in the Department's determination in Sulfur Dyes from China, Final
Determination of Sales at Less than Fair Value (58 FR 7537) (February
8, 1993):
(1) There must be virtually no involvement by the government in
setting prices or amounts to be produced of the merchandise under
investigation.
(2) The industry producing the merchandise under investigation
should be characterized by private or collective ownership. There
may be state-owned enterprises in the industry, but substantial
state ownership weighs against a finding of market-oriented
industry.
(3) Market-determined prices must be paid for all significant
inputs, whether material or non-material, and for an all but
insignificant portion of all the inputs accounting for the total
value of the merchandise under investigation.
Petitioner maintains that, although Rudong asserts that it is the
only PRC producer of lug nuts, it failed to provide objective
corroboration of this claim. Petitioner further maintains that the
Department's attempts to obtain further information on this point have
been frustrated by lack of response from both the PRC government and
the Chinese Chamber of Commerce for Imports & Exports of Machinery &
Electronics (China Chamber). Petitioner claims that, in spite of its
efforts, the Department has been unable to determine whether there are
additional PRC producers of lug nuts. Petitioner argues that it is
insufficient for the Department to rely upon Rudong's response alone to
determine that it is an MOI. Petitioner contends that the Department
must be certain that it has obtained responses from all PRC producers
before determining whether the PRC industry is market-oriented.
Petitioner further argues that, before an industry is considered
``market oriented,'' it must demonstrate that it pays market-determined
prices for all significant inputs and for all but an insignificant
portion of all the inputs accounting for the total value of the
merchandise under review. Petitioner states that, although Rudong
claims its suppliers pay market-determined prices for all inputs,
Rudong failed to produce information that would allow evaluation of
this claim. Petitioner also contends that statements from Rudong's
suppliers regarding the absence of government control over their
industry are unsupported and unverified. Petitioner maintains that the
suppliers of water and electricity to Rudong are ``All People-owned''
and the information supplied by Rudong on vendor ownership is
contradictory.
Petitioner contends that Rudong's submission does not address the
overarching question of the status of the Chinese steel and chemical
industries. Petitioner argues that, regardless of purported
``independence'' of Rudong's suppliers, the Department properly
recognized that the industries supplying materials must be market-
driven. Petitioner further argues that Rudong has not provided any
information concerning the steel and chemical industries nor evidence
that costs for raw materials are not distorted by government control in
the steel and chemical industries.
Rudong disagrees with petitioner regarding Rudong's MOI claim.
Rudong argues that petitioner's argument ignores Rudong's repeated
statements, certified and on the record, that, to its knowledge, it is
the only producer of lug nuts in the PRC. Rudong asserts that the
Chinese government would be able to certify this only if the government
controlled the lug nut industry. Rudong maintains that the Department
incorrectly presumes that other
[[Page 58521]]
producers exist because Rudong supplied no evidence to the contrary.
Rudong argues that the petitioner failed to produce evidence that any
other lug nut producers exist in the PRC.
Rudong argues that statements, certified and on record, from its
suppliers corroborate the absence of government control and provide
varying input prices that are sufficient evidence that Rudong purchases
its inputs at market prices. Rudong claims that input prices vary from
order to order and from supplier to supplier and that it has put on the
record certified statements from suppliers that they are free from
government control and interference. Rudong asserts that only unrelated
sectors of the steel industry are government controlled. Rudong
contends that it does not know what else it can provide to prove the
negative.
Department's Position: Rudong submitted with its January 25, 1996
questionnaire response a request that we treat the lug nuts industry as
an MOI. Rudong claims that it acquires material inputs 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.
Rudong's support of this argument is focused narrowly on
certificates provided by its suppliers stating that they are free of
government control; however, even if Rudong's suppliers are free of
government control, this would not prove absence of government control
in the suppliers' industries. We concluded in the 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 15052 (April 24, 1992) (Amended Final) that
such a narrow focus on Rudong's suppliers is not sufficient for
determining that an industry was an MOI. We stated:
The absence of explicit government involvement in these
transactions is not sufficient to warrant the conclusion that the
prices for these inputs are market-driven. Instead, it is necessary
to examine whether market forces are at work in determining the
steel and chemical prices in general within the PRC. For example, it
may be the case that the state purchases large quantities of the
input in question. Where this is so, it is reasonable to assume that
the state's purchases affect the quantity available to non-state
consumers and the prices they would pay. Also, where the state owns
many of the input producers and where the input is an important
commodity fundamental to the operation of the larger economy, it is
not at all clear that the pricing and production of those input
producers would mirror those of privately-owned, profit maximizing
enterprises.
For the [sic] reasons, it is necessary to look beyond direct
state involvement in the specific transactions between the
manufacturer under investigation and its suppliers to ascertain
whether market forces are actually at work in determining the input
prices.
Amended Final, 15053. For this administrative review, Rudong has not
demonstrated that there have been any changes to the industries from
which it sources its materials that would compel us to reconsider the
determination we made in the Amended Final. In addition, Rudong has
argued that there have been only small quantities of government
purchases in unrelated sectors of the steel industry, but has not put
any information on the record to support this point.
We agree with petitioner's contention that the record lacks
objective corroboration of Rudong's claim that it is the only PRC
producer of lug nuts. We disagree with Rudong's deduction that the lack
of response from the PRC government is indicative of the lack of
government control in the industry. We do not know why the government
failed to respond to our request for information.
Based on the foregoing, we determine the lug nuts industry in the
PRC is not an MOI for this review.
Comment 3: Petitioner supports the Department's use of India as the
surrogate market economy country to determine valuation in the factors
of production. Petitioner submits that India meets both statutory
criteria: India is at a level of economic development comparable to
that of the PRC, and India has significant production of lug nuts.
Petitioner also supports the use of India as the surrogate country
because there is a full set of surrogate data available to value
factors of production. This eliminates the need to obtain and use
valuation data from multiple surrogate countries.
Department's Position: Except for our valuation of the steel wire
rod (see Comment 4 below), we have continued to rely on India as a
surrogate country for factor valuation because India is at a level of
economic development comparable to that of the PRC and has significant
production of lug nuts.
Comment 4: Rudong objects to the Department's use of steel prices
from the Government of India import statistics, stating that these
prices are more than twice as high as all other available data,
especially in light of the requirements for corroboration in the URAA,
and that they should be changed for the final results.
Rudong alleges that the factor value for steel should be based on
Indian market prices for steel wire rod published in Steel Scenario.
Rudong contends that Steel Scenario is a reputable professional journal
which publishes actual market prices in India. Rudong argues that
prices from Steel Scenario are corroborated by their general agreement
with the prices listed in other sources, while the surrogate prices
chosen by the Department are completely out of line with any other
source. Rudong maintains that prices from Steel Scenario are for a
period contemporaneous to the period of review (POR), whereas
Government of India import statistics are from a different period, and
must be adjusted by a potentially distortive inflation factor.
Additionally, Rudong states that Steel Scenario reports prices for the
same input product as Rudong uses to produce lug nuts, whereas the
import statistics are for a ``basket'' category. Rudong asserts that
Steel Scenario reports actual market data collected by professionals
knowledgeable in the industry and in the market; import statistics,
Rudong claims, depend upon product classifications by the importer who
may be guided more by the import duty level than the product
characteristics. Finally, Rudong argues that Steel Scenario prices are
the best information regarding such factors in the market economy
country because they are actual market values in India, while, by
contrast, import statistics reflect the customs value of imported
merchandise.
Rudong asserts that the Department's choice of import statistics
results in landed, duty-paid steel prices in India--a relatively poor
developing country--that are not only over 100% higher than the free-
market prices paid by Rudong, but also over 100% higher than the
corresponding prices in the United States, a wealthy developed country.
Rudong claims that there is no other available steel price anywhere
that approaches the extraordinarily inflated surrogate prices imputed
by the Department. Rudong suggests the Department use the Indian market
prices listed in Steel Scenario because the prices are in the same
range as those prices paid by Rudong and reflect the prevailing market
prices for the exact months of the period under review.
Rudong states that the Department's surrogate number does not agree
with any of the other available data by a wide margin. Rudong contends
that this may be because the Department incorrectly used surrogate
steel prices from a somewhat arbitrary ``basket'' HTS category
comprising ``other'' bars and rods. Rudong argues that the steel
included in this basket may be a special
[[Page 58522]]
and more expensive type used for particular purposes and not relevant
to this case. Also, Rudong contends, the Department's surrogate prices
may not agree with other available data due to simple misclassification
under the HTS. Rudong argues that, in significant part, import
statistics measure only the HTS category chosen by importers to
classify merchandise and are therefore, not a precise measure. Rudong
argues that, whatever the source of distortion, the import statistics
are not an appropriate measure of the price of steel used by Rudong,
and should not be used by the Department in the final results.
Rudong contends that the only potential distortion risked by using
Steel Scenario is that prices therein include excise and sales taxes,
and therefore may be overstated. Rudong argues that this distortion can
be adjusted for by adjusting the price downwards. Rudong argues that
the Department routinely adjusts for this tax factor when it uses
prices published in Chemical Weekly, and cites, as an example, a
memorandum to the file from the ``Bicycles Team'': ``Final
Determination in the Antidumping Duty Investigation of Bicycles from
the People's Republic of China: Factors Valuation'' (initialed April
22, 1996). Rudong maintains that even using unadjusted, overvalued
steel prices from Steel Scenario would be more reasonable than using
Indian import statistics.
Petitioner contends that the Department should rely on the same
surrogate values from Indian import statistics for valuing raw
materials and packing costs that were used in the preliminary results.
Petitioner states that the tariff descriptions provide narrow coverage
for nearly all raw materials and packing materials used by the Chinese
producer, which avoids the problem of over inclusiveness.
Petitioner argues that the Department should continue to use Indian
import statistics for steel valuation. Petitioner states that these
data include material from which Rudong produced lug nuts during the
period of review, and therefore are the most accurate information on
this issue.
Petitioner argues that the Department should continue to decline
use of steel price data submitted by Rudong as the Department did in
the preliminary results, because they are for rounds and not steel wire
rod. Petitioner asserts that steel rounds are not the raw material used
in lug nut production. Petitioner contends that applying such data
would distort the value of steel. Petitioner submits that the use of
steel wire rods in the production of lug nuts was verified by the
Department.
Additionally, petitioner asserts that the steel prices submitted by
Rudong represent sales prices in two Indian cities and may not be
representative of steel prices in India generally. Petitioner claims
that the Indian import statistics provide nationwide average prices for
steel in India.
Petitioner further contends that the steel scrap data used by the
Department reflect that the production process of lug nuts begins with
the steel wire rod, not the further-fabricated steel rounds. Petitioner
notes that the respondent failed to point out that the Department would
have to adjust the scrap calculations to eliminate scrap accounted for
by the production of rounds from rod. Petitioner claims that other
adjustments--to energy and labor--would also be necessary to pretend
that the production process starts with rounds, instead of rod.
Rudong contends that petitioner's assertions are wrong, and that,
even under petitioner's analysis, the Department should use the
surrogate prices submitted by Rudong. Rudong states that it submitted
prices for both wire rod and rounds because it is unclear why steel
wire rod data is preferable to steel rounds data. In addition, Rudong
contends that, although the broad category of product reported in
Rudong's submission was for ``iron and steel,'' it is apparent that the
category ``wire rod'' consists of steel and not iron.
Department's Position: We agree with Rudong, in part. We agree with
Rudong that the information in Steel Scenario is more contemporaneous
with the POR; however, the data submitted by Rudong do not indicate the
grade and specifications of the metal. We noted in Chrome-Plated Lug
Nuts From the People's Republic of China; Final Results of Antidumping
Administrative Review, 60 FR 48687 (September 20, 1995), covering the
1991-1992 and 1992-1993 administrative review periods that the Indian
import statistics are more specific in that they indicate the carbon
content of the steel, whereas by contrast, Steel Scenario does not
specify either the carbon content of the steel or other chemicals
present in the steel. Carbon level is a more important determinant of
price than size. We further note that Steel Scenario prices include
taxes and levies, without indicating the amount of taxes and levies
included. Our objective is to value steel at prices at which it is
available in the surrogate country. Furthermore, we are not convinced
that the prices shown in Steel Scenario are more representative of
prices available in India than are import statistics. While Rudong has
put on the record of this review data that would allow us to adjust for
taxes, it has not assuaged our other concerns regarding the use of
Steel Scenario.
However, in reviewing the Indian import data for steel wire rod, in
comparison with prices of steel wire rod imported into other countries,
we found that Indian import prices were significantly higher than
prices of imports into other countries we examined. We compared the
same ``basket'' HTS number for the United States, the European Union,
Canada, and Indonesia and found that steel wire rod import prices to be
relatively the same in these areas, and significantly lower than Indian
steel wire rod import prices. Indonesia is also comparable to the PRC
in terms of level of economic development and Indonesia has some lug
nut production, albeit not as great as India. (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).) Therefore, for these
final results we have used Indonesian steel wire rod import prices.
These import prices are also for a basket category of steel wire rod
imports, as are the Indian import prices, but are consistent with steel
wire rod prices in other countries. They also do not include taxes.
(See memorandum to the file from Tamara Underwood, ``Comparison of
Steel Prices in the 1994-1995 Administrative Review on Lug Nuts from
the PRC'' dated October 30, 1996.)
Comment 5: Petitioner submits that the Department should continue
to use as the surrogate labor rate data from the Economist Intelligence
Unit's Investing, Licensing, and Trading Conditions Abroad (IL&T), as
the Department did for the preliminary results.
Department's Position: We disagree with petitioner with regard to
the use of the IL&T data. For the final results, we have recalculated
the labor rates, using data from the Yearbook of Labor Statistics
(YLS). As we stated in 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, the IL&T reports estimates based not on
actual wage rates, but on rates stipulated in various
[[Page 58523]]
Indian laws. See Memorandum to the File From Tamara Underwood, ``Labor
Valuation Changes in Lug Nuts Final Calculation'', dated November 6,
1996. Therefore, we have not used IL&T data for the final results. The
YLS provides wage rates on an industry-specific basis. We used the
daily wage rate specified for SIC code 381, ``manufacture of fabricated
metal products, except machinery and equipment,'' because the
description of the various industries this category covers was the best
match for the lug nut industry. Having found the IL&T data to be an
inappropriate source for wage rates, it would be inappropriate to use
the IL&T data to differentiate among skill levels. Because the YLS
provides wage rates from 1990, we inflated the data for the review
period, using the consumer price index, published in the International
Monetary Fund's International Financial Statistics.
Final Results of Review
As a result of the comments received, we have changed the results
from those presented in our preliminary results of review. Therefore,
we determine that the following margins exist as a result of our
review:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Jiangsu Rudong Grease Gun Factory, also
known as China Nantong HuangHai Auto
Parts Group Co., Ltd..................... 09/01/94-08/31/95 2.70
China National Machinery & Equipment
Import & Export Corp., Nantong Branch.... 09/01/93-08/31/94 44.99
PRC rate.................................. 09/01/94-08/31/95 44.99
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and NV may vary from the
percentages stated above. The Department will issue appraisement
instructions directly to the Customs Service.
Furthermore, the following deposit rates will be effective upon
publication of these final results 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)(1) of the
Act: (1) For Rudong and Nantong, which have separate rates, the cash
deposit rates will be the company-specific rates stated above; (2) for
the companies named above which did not respond to our questionnaire
(China National, Jiangsu, Yangzhou, Ningbo, Shanghai Automobile, and
Tianjin), and for all other PRC exporters, the cash deposit rate will
be the PRC rate stated above; (3) 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 shall remain in effect until publication of the
final results of the next administrative review.
This notice also 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 the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification
of the 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: November 6, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-29243 Filed 11-14-96; 8:45 am]
BILLING CODE 3510-DS-P