[Federal Register Volume 62, Number 49 (Thursday, March 13, 1997)]
[Notices]
[Pages 11813-11820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6378]
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DEPARTMENT OF COMMERCE
[A-570-803]
Heavy Forged Hand Tools From the People's Republic of China;
Final Results of Antidumping Duty Administrative Reviews
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
reviews.
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SUMMARY: On November 6, 1996, the Department of Commerce (the
Department) published the preliminary
[[Page 11814]]
results of its administrative reviews of the antidumping duty orders on
heavy forged hand tools (HFHTs) from the People's Republic of China
(PRC). The period of review is February 1, 1995 through January 31,
1996.
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: March 13, 1997.
FOR FURTHER INFORMATION CONTACT: Daniel Singer or Maureen Flannery,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, D.C. 20230; telephone: (202) 482-4733.
Supplementary Information:
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
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 November 6, 1996, the Department published in the Federal
Register the preliminary results of the administrative reviews of the
antidumping duty orders on HFHTs from the PRC (61 FR 57384). We
received case briefs from petitioner, respondents, and an importer. We
received rebuttal briefs from petitioner and respondents. We held a
hearing on December 20, 1996. The Department has now completed these
administrative reviews in accordance with section 751 of the Act.
Scope of Review
Imports covered by these reviews are shipments of HFHTs from the
PRC comprising the following classes or kinds of merchandise: (1)
Hammers and sledges with heads over 1.5 kg (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools, and wedges
(bars/wedges); (3) picks/mattocks; and (4) axes/adzes.
HFHTs include heads for drilling hammers, sledges, axes, mauls,
picks, and mattocks, which may or may not be painted, which may or may
not be finished, or which may or may not be imported with handles;
assorted bar products and track tools including wrecking bars, digging
bars and tampers; and steel wool splitting wedges. HFHTs are
manufactured through a hot forge operation in which steel is sheared to
required length, heated to forging temperature, and formed to final
shape on forging equipment using dies specific to the desired product
shape and size. Depending on the product, finishing operations may
include shot-blasting, grinding, polishing, and painting, and the
insertion of handles for handled products. HFHTs are currently provided
for under the following Harmonized Tariff System (HTS) subheadings:
8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. Specifically
excluded are hammers and sledges with heads 1.5 kg (3.33 pounds) in
weight and under, hoes and rakes, and bars 18 inches in length and
under. Although the HTS subheadings are provided for convenience and
customs purposes, our written description of the scope of these orders
is dispositive. These reviews cover three exporters of HFHTs from the
PRC, Fujian Machinery Import & Export Corporation (FMEC), Shandong
Machinery & Equipment Import & Export Corporation (SMC), and Tianjin
Machinery & Equipment Import & Export Corporation (TMC). The review
period is February 1, 1995 through January 31, 1996.
Analysis of the Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received case briefs and rebuttal briefs from
petitioner and FMEC, SMC, and TMC, and a case brief from Olympia
Industrial, Inc. (Olympia), an interested party.
Comment 1
Petitioner argues that, when valuing the steel input as a factor of
production in the manufacture of HFHTs, the Department should use
Indian steel prices quoted by a consultant familiar with the Indian
steel industry and submitted for the record by petitioner, rather than
1992 data from the Monthly Statistics of the Foreign Trade of India
(Indian Import Statistics), adjusted for inflation. (Petitioner points
out that the Department determined that 1993-1995 data from the Indian
Import Statistics was aberrational or unreliable.) Petitioner argues
that the production of HFHTs requires special, high quality grades of
steel with exacting characteristics in areas such as surface quality,
grain structure, and internal strength. If these requirements are not
met, petitioner claims, the use of lower grade qualities of steel can
result in cracking during the production or use of the HFHT. Petitioner
argues that the Indian Import Statistics data for the HTS subheading
7214.50, ``Forged Bars and Rods Containing 0.25% or Greater But Less
Than 0.6% of Carbon,'' which the Department used to value steel for the
preliminary results, is inadequate because this subheading is too broad
and encompasses both merchant quality and special bar quality (SBQ)
steel products. As a result, petitioner claims, the average import
values are too low and do not accurately reflect the value of the steel
used in making HFHTs. Petitioner maintains that the specific price
quotations for the grades of steel used in the production of HFHTs
provided by a consultant familiar with the Indian steel industry are
superior to the Indian Import Statistics or data published by the Steel
Authority of India Limited (SAIL), the latter of which was suggested by
respondents. Furthermore, petitioner argues that, in situations where
import statistics were found to be distortive or aberrational, the
Department has used alternatives, such as specific price quotations,
citing Furfuryl Alcohol from the PRC; Final Results of Administrative
Review, 60 FR 22544, 22548 (May 8, 1995) (Furfuryl Alcohol), and
Coumarin from the PRC; Final Results of Antidumping Duty Administrative
Review, 59 FR 66895, 66900 (December 28, 1994) (Coumarin).
Respondents argue that the steel price quotes are for a different
quality of steel than the steel used in the PRC to produce the subject
merchandise.
Department's Position
We disagree with petitioner that we should use its submitted Indian
price quotations for valuing steel. There is no evidence on the record
supporting petitioner's contention that respondents use SBQ steel for
the production of HFHTs. As we explained in the fourth administrative
review, our objective is to value the surrogate steel at prices which
most closely reflect the type of steel used by the PRC producers. See
Heavy Forged Hand Tools, Finished or Unfinished, With or Without
Handles, From the People's Republic of China; Final Results of
Antidumping Administrative Review, 61 FR 51272 (October 1, 1996). We
verified that the respondents use 1045 carbon steel, which is
classified under HTS subheading 7214.50. See Memorandum to the file
from Daniel Singer, regarding the verification of Tianjin Machinery
Import & Export Corporation (December 19, 1996). The price quotation
submitted by petitioner is for an alloy steel with a higher carbon
content than
[[Page 11815]]
1045 carbon steel. Furthermore, HTS subheading 7214.50 would include
both merchant quality and SBQ steel. Unlike in Furfuryl Alcohol and
Coumarin, we have not found the Indian Import Statistics to be
distortive or aberrational. (See Comment 2.) Therefore, we have
continued to value steel using HTS subheading 7214.50 of the Indian
Import Statistics.
Comment 2
Respondents argue that the steel value the Department used in the
preliminary results, 1992 data from the Indian Import Statistics
inflated by the wholesale price index (WPI), is not supported by
evidence on the record and does not reflect ``the best available
evidence'' of the factor values. Respondents maintain that the
Department's steel valuation was unreasonable since the value is
inconsistent with secondary evidence.
Respondents argue that the steel value used by the Department is
higher than the value of steel imported into the United States and into
Indonesia under HTS category 7214.50, and European steel wire rod
export prices for a similar HTS category. Respondents maintain that
changes in the WPI reflect exchange rate changes rather than changes in
the value of steel. Respondents argue that, because the value of the
Indian rupee decreased since 1992, domestic Indian steel prices should
have fallen relative to world steel prices. Respondents assert that the
SAIL data on the record of these reviews supports this argument.
Respondents argue that the 1992 Indian import value for steel used by
the Department in the preliminary results, adjusted for inflation by
the WPI, does not accurately reflect this decrease in Indian domestic
steel prices.
Respondents also note that the surrogate value of steel scrap used
by the Department in these reviews is lower, not higher, than the 1992
value of steel scrap. Respondents argue that the value for steel scrap
should be positively correlated to the value for steel, and conclude
that this is evidence that the value of Indian steel decreased.
Respondents argue that, in light of the above, the Department
should use the price of HTS category 7214.50 steel from the Indian
Import Statistics for the current period of review (POR), after
excluding aberrational values. Respondents argue that the fact that
import quantities were small does not, ipso facto, render the prices
aberrational or invalid. Respondents argue that prices of 1995 imports
into India from Saudi Arabia are not aberrational in comparison with
1992 Indian imports, 1995 Indonesian and U.S. import prices, and
European steel wire rod export prices. If the Department determines not
to use the price of Indian imports from Saudi Arabia, respondents
argue, the Department should consider other surrogate countries, such
as Indonesia, or U.S. steel import prices.
Petitioner argues that the alternative factor value sources cited
by respondents, including the Indonesian Import Statistics, U.S. import
prices, and European wire rod export prices, are largely irrelevant to
the price of carbon steel bar in India. In addition, petitioner objects
to the use of wire rod export prices for comparison purposes because
wire rod is an entirely different product than bar and requires
different production methods. Petitioner also questions the
respondents' recommendation of steel wire rod prices when they had
objected to use of those prices in prior administrative reviews of
these orders. Petitioner maintains that, since India and China are
highly protected markets, there is no reason to believe that steel
prices in either country track such prices in other countries with more
open trade policies or a world market price. Petitioner also argues
that there is no evidence on the record demonstrating a positive
correlation between steel scrap and steel prices, and that evidence
would actually reveal otherwise.
Petitioner argues that it is reasonable to inflate the steel value
through the use of the WPI because China and India have significant
inflationary economies, citing International Financial Statistics,
published by the International Monetary Fund, November 1996. Petitioner
also states that the use of the WPI is appropriate because it reflects
prices paid for inputs at the wholesale level, as well as overall
economic activity. Petitioner maintains that, because it is widely
recognized that steel prices move with overall economic activity and
because the Department has used the WPI as an inflator in the original
investigations, in subsequent reviews of these dumping orders, and in
other non-market economy (NME) cases, the Department should therefore
continue to use the WPI.
Petitioner asserts that the record demonstrates that the Indian
Import Statistics, adjusted for inflation and used in the preliminary
results of these reviews, are reasonable. The petitioner argues that,
since the inflated Indian Import Statistics correspond closely to data
submitted by the petitioner on actual steel prices during the POR for
the specific type and grade of steel used in manufacturing HFHTs, the
inflated import values used in the preliminary results are
representative of the actual prices charged in the surrogate country.
Therefore, the petitioner requests that, for the final results, the
Department use either the Indian steel price quotations it submitted,
or the 1992 Indian Import Statistics, adjusted for inflation.
Department's Position
We agree with respondents that the steel surrogate value we used in
the preliminary results is not the best information by which to value
the steel factor. It is our objective to value surrogate steel at
prices which most closely reflect the type of steel used by the PRC
producer during the POR. As stated in the October 30, 1996 surrogate
value memorandum for the preliminary results (Surrogate Value
Memorandum, Preliminary Results), the 1995 Indian Import Statistics
reflected a small quantity of imports. In the 1994/1995 administrative
reviews of these orders, we determined that 1994 Indian Import
Statistics were based on a small quantity of imports and that 1993
Indian Import Statistics were aberrational when compared to 1992 Indian
and 1993 U.S. import statistics. Therefore, we used the 1992 Indian
Import Statistics value, adjusted for inflation, in the preliminary
results.
For these final results, we reevaluated the 1995 Indian import
data. We determined that the price of 1995 Indian imports from Saudi
Arabia was reliable because it is comparable to 1995 U.S. import data,
1995 Indonesian import data, and the inflated 1992 Indian import data
we used for the preliminary results. See the Analysis Memorandum for
the final results of these reviews, (Analysis Memorandum, Final
Results, March 6, 1997). We used the 1995 Indian steel value from Saudi
Arabia for HTS category 7214.50 because it is contemporaneous with the
POR, and is specific to the grade and chemical composition of the type
of steel used by respondents. Because we have changed our source for
steel valuation to a source contemporaneous with the POR, the issue of
how best to inflate earlier data is moot.
Comment 3
Respondents argue that the Department failed to use the most
contemporaneous labor rate data. Respondents note that the Department
determined a POR labor rate based on 1990 data from the International
Labor Organization's Yearbook of Labor Statistics (YLS) and adjusted
for inflation using the consumer price index (CPI) reported in
International Monetary Fund's International Financial Statistics.
Respondents contend that the Department has not shown that indexed
[[Page 11816]]
1990 data is the best data available or that the labor rate in India
during the POR corresponds to the 1990 rate inflated by the CPI.
Respondents argue that the Department failed to determine whether
the daily wage rate for 1990 in the YLS was for 5 or 6 days a week. It
is equally possible, even probable, respondents maintain, that the work
week includes 5 and one-half days, with the rate being for the full day
(or even a work week of five days with more than 8 hours per day).
Respondents further state that the Department assumed that an Indian
employee works 6 days a week, 52 weeks a year. Respondents maintain
that instead of working 4.333 weeks a month (6 days a week every week
of the year), it is more accurate to assume a 50 work-week year.
Furthermore, respondents assert that the Department erred in
calculating the hourly labor rate. Respondents point out that the
Department used data for labor hours worked per week from the IL&T and
argue that the IL&T does not explain how the daily wage rate was
determined for the YLS. Respondents contend that the IL&T data does not
correspond to the POR nor does it correspond to the rates in the YLS.
Respondents cite chapter 12 of the YLS as specifically including the
number of hours worked per week in manufacturing.
Respondents also assert that the Department failed to adjust labor
rates to reflect different levels of labor skills. Respondents state
that the workers in the factories have different skill levels and that,
to the extent possible, the Department should determine different labor
rates to correspond with the different skill levels. Respondents argue
that the Department used data for hours worked from Investing,
Licensing, and Trading Conditions Abroad (IL&T), published by the
Economist Intelligence Unit in November 1994, and could have used the
same source to reflect estimates of the rate differentials. Respondents
suggest that, absent more contemporaneous data, the Department should
use the information contained in Foreign Labor Trends--India (FLTI),
published by the American Embassy in New Delhi. The FLTI provides 1992
Indian wage rates for three skill categories: skilled, semi-skilled,
and unskilled. If the Department chooses to use the YLS, respondents
contend, the Department should determine different skill level wage
rates, considering the single YLS rate as the semi-skilled worker rate.
Respondents assert that, since the Department has preliminarily
determined to use IL&T for hours worked, the IL&T can be used as the
``best evidence available'' of the wage differentials.
Department's Position
We disagree with respondents. When labor data contemporaneous with
the POR is unavailable, and an inflation index specific to labor is
also unavailable, the Department's practice in NME cases is to adjust
labor values prior to the period of review using the CPI. See, e.g.,
Chrome-Plated Lugnuts from the PRC; Final Results of Administrative
Review, 61 FR 58518, 58518 (November 15, 1996) (Lug Nuts).
As respondents noted, chapter 12 of the YLS contains the hours
worked per week specific to SIC code 381, the category that includes
the HFHT industry, and from which we used the daily wage rate. See
Analysis Memorandum, Final Results, page 3. For these final results, we
have used the hours worked per week in chapter 12 of the YLS rather
than in the IL&T because it is more specific to the HFHT industry.
We disagree with the respondents' comments on the days worked per
week and the weeks worked per year. The IL&T specifies that factory
workers work a six-day week. The YLS specifies the daily wage rate
earned and the hours worked per week. Since the number of days worked
per week was not specified in the YLS, we have continued to use the
six-day work week indicated in the IL&T, along with the daily wage rate
and hours worked per week as shown in the YLS, in our calculations of
the hourly wage rate. (See Analysis Memorandum, Final Results.) Because
we are using the hours worked per week from the YLS, respondents' claim
regarding the number of weeks worked per year is moot.
With respect to valuing labor by skill level, although the YLS data
is less contemporaneous than the FLTI data submitted by respondents and
does not specify labor rates covering different skill levels, the YLS
provides labor rates on an industry-specific basis. As in Lug Nuts and
Notice of Final Results of Antidumping Duty Administrative Review;
Helical Spring Lock Washers from the PRC, 66260 (December 17, 1996), we
used SIC code 381 because this category covers the HFHT industry.
Because the YLS data does not break out labor rates among skill levels,
we applied the same wage rate to each skill level reported by
respondents. See page 7 of Surrogate Values Memorandum, Preliminary
Results.
Comment 4
Respondents argue that the data used by the Department to determine
selling, general, and administrative expenses (SG&A), factory overhead,
and profit do not comport with the legislative history to Section
773(c) (the NME provision). Respondents cite the Conference Report,
Omnibus Trade and Competitiveness Act of 1988, at 591, which states
that ``Commerce should seek to use, if possible, data based on
production of the same general class or kind of merchandise using
similar levels of technology and at similar levels of volume * * *'' as
in the NME. Respondents assert that the April 1995 Reserve Bank of
India Bulletin (RBI) data for ``Processing and Manufacture: Metals,
Chemicals and Products Thereof,'' used by the Department in the
preliminary results, encompasses a broader industry spectrum than the
same general class or kind of merchandise in these reviews. Respondents
argue that the Department has failed to provide a rationale for why the
SG&A expenses incurred in the chemical industry in India are similar to
SG&A expenses incurred in the Chinese HFHT industry. Respondents
suggest that the Department revise its methodology in calculating SG&A,
factory overhead, and profit, and use the same basic methodology it
used in Helical Spring Lock Washers from the PRC; Notice of Preliminary
Results of Antidumping Administrative Review, 61 FR 42000 (August 13,
1996) (Lock Washers 1994/1995), noting that, in Lock Washers 1994/1995,
the Department prorated certain expenses. Respondents suggest the
elimination of royalty, research and development, and insurance
expenses, which they claim the Chinese companies do not incur.
Respondents maintain that these changes would change the SG&A,
overhead, and profit percentages significantly.
The petitioner argues that the Department should reject the
respondents' proposal to eliminate costs such as research and
development, royalty, and insurance expenses. The petitioner points to
the subjective process of naming account categories in financial
statements. Petitioner contends the fact that a particular account on
the Indian statements does not exist on the Chinese statements does not
necessarily imply that the Chinese companies do not incur these costs.
Petitioner asserts that it would be inappropriate to pick and choose
among the Indian account titles based simply on what the Chinese
companies have chosen to name their accounts. Moreover, petitioner
maintains, the removal of these costs from the SG&A calculation will
only serve to increase
[[Page 11817]]
the profit rate and not alter the end result.
Petitioner argues that the Department should follow Lock Washers
1994/1995 by adding fifty percent of employment cost to the SG&A
calculation. Petitioner claims that this was done in prior reviews of
HFHTs. However, petitioner contends, the Department should not follow
Lock Washers 1994/1995 in its omission of the amount listed as ``other
expenses'' in the RBI Bulletin.
Department's Position
We disagree with respondents. We note that the RBI data covers both
the Indian chemical and metal industries, not solely the chemical
industry. Because similar SG&A data specific to the Indian HFHT
industry, or the Indian metals industry exclusively, is absent from the
record of these reviews, we continue to rely on the RBI data used in
the preliminary results.
We also disagree with respondents that we should prorate or
eliminate certain expenses from the SG&A calculation. The Department's
practice is to use the overall surrogate SG&A expenses to value the
SG&A expenses of the NME respondents. Because we do not have detailed
knowledge of how and where SG&A expenses are classified by the NME
respondents, it would be inappropriate to make item-by-item adjustments
to the surrogate SG&A. While the respondents may not incur insurance,
research and development, and royalties, there may be other expenses
incurred that are not included in the surrogate SG&A calculation. In
Lug Nuts, the respondent made a similar argument to eliminate research
and development from the surrogate factory overhead calculation,
arguing that as a mature industry, it does not incur any research and
development expense. We rejected the respondent's argument in that
case, stating that while the respondent may not incur research and
development expenses, there may be other factory overhead expenses
incurred that are not included in the surrogate factory overhead. We
have similarly addressed this issue in Lug Nuts and Notice of Final
Determination of Sales at Less Than Fair Value; Pure Magnesium and
Alloy Magnesium from the Russian Federation, 60 FR 16440 (March 30,
1995). Based on the foregoing, we have not adjusted the surrogate SG&A
expenses for claimed differences between respondents and the India
surrogate.
We disagree with the petitioner that we should prorate employment
costs and add fifty percent of employment costs to the SG&A
calculation, as in Lock Washers 1994/1995. As stated in Sulfanilic Acid
from the People's Republic of China; Final Results and Partial
Rescission of Antidumping Duty Administrative Review, 61 FR 53711
(October 15, 1996), in the absence of any information to the contrary,
it is reasonable to assume that the factories involved in these reviews
would employ a majority of their workers in production operations, and
therefore that most of the employment costs would be applicable to the
cost of manufacturing rather than to SG&A expenses. We have continued
to include all of the employment costs in the cost of manufacturing.
Also, we agree with petitioner that the amount listed as ``other
expenses'' should not be omitted. Absent evidence to the contrary, it
is reasonable to treat ``other expenses'' as miscellaneous items
appropriately included in SG&A. Therefore, we have not adjusted the
SG&A expenses used in the preliminary results.
Comment 5
The respondents object to the Department's methodology for valuing
inland freight, which used the price of inland rail freight as reported
in a 1989 cable from the U.S. embassy in India, inflated by the average
WPI for the review period. Respondents contend that because this value
is dated, is unsupported by secondary data, and is less contemporaneous
than other rail freight data on the record, it does not represent the
best available information.
As an alternative source for inland rail freight data, respondents
argue that the Department should use information contained in Doing
Business in India: An Economic Profile, prepared by the Director,
Economic Coordination Unit, Ministry of External Affairs of the
Government of India. Respondents argue that this data provides a better
source for rail freight prices because (1) it is official Indian
government data, (2) it is more current than the data used by the
Department for the preliminary results, and (3) it provides specific
rates on a per-kilometer basis, thus eliminating the need to separately
compute rates for distances over 1,000 kilometers.
Department's Position
We disagree with respondents. The data in the 1989 Embassy cable,
though less contemporaneous than data provided by respondents by one
year, provides relative freight rates for various distances. Thus, it
more precisely reflects freight charges than the average rate provided
by respondents. We therefore have continued to use this data for these
final results.
Comment 6
Respondents argue that, in calculating weighted-average factor
values from the Indian import data, the Department should not disregard
prices paid for imports from NME countries. Respondents contend that
the practice of excluding such prices is not supported by the Act or
the Department's regulations, and distorts the surrogate value.
Respondents point out that, in deriving factor values from surrogate
country import data, the Department usually rejects three categories of
prices: (1) Prices which are aberrational; (2) prices from NME
countries; and (3) prices which represent dumped or subsidized prices.
In rejecting aberrational prices, respondents maintain that the
Department is utilizing its authority to use the ``best available
information.'' In rejecting dumped or subsidized prices, respondents
state, the Department is relying on the legislative history of the Act,
and the fact that dumped prices do not reflect an appropriate value. In
the case of NME prices, however, respondents argue that there is no
presumption that they are either dumped or subsidized. Thus,
respondents argue, the prices of imports from an NME country cannot be
excluded automatically.
Petitioner argues that the Department is correct in disregarding
prices for imports from NME countries. Petitioner asserts that this is
a reasonable methodology, and that the Department should continue to
reject import data from NME countries in calculating factor values.
Department's Position
We disagree with respondents. To include import data from NME
countries in the weighted-average factor values would be contrary to
the Department's established policy. Section 771(18) of the Act defines
an NME country as ``* * * any foreign country that the [Department]
determines does not operate on market principles of cost or pricing
structures, so that sales of merchandise in such country do not reflect
the fair value of the merchandise.'' Section 773 (c)(1)(B) states ``* *
* the valuation of the factors of production shall be based on the best
available information regarding the values of such factors in a market
economy country or countries considered to be appropriate * * *.''
Because the purpose of section 773(c) is to find market values, our
established policy is to value factor inputs based on prices paid by
the manufacturer for inputs purchased from a market
[[Page 11818]]
economy source, because those prices reflect commercial reality, while
prices paid for inputs from NME manufacturers may not. See Tapered
Roller Bearings, and Parts Thereof, Finished and Unfinished from the
People's Republic of China; Final Results of Antidumping Duty
Administrative Review, 61 FR 65533 (December 13, 1996).
Comment 7
Olympia, a U.S. importer of the subject merchandise, requests that
the Department assign to it the same antidumping cash deposit rate as
the Department assigns to FMEC. Olympia notes that, in previous reviews
of these orders, the Department assigned dumping margins based on the
exporter, rather than the producer. Furthermore, in the 1994/1995
administrative reviews, the Department assigned separate rates to FMEC
and SMC, while all other exporters were assigned the single PRC-wide
rate.
Olympia argues that the statute and regulations afford the
Department flexibility with respect to the assignment of rates in NME
cases, and that the statute does not specify an NME standard for
deposit rates. Citing to Section 751(a)(2)(A) of the Act, Olympia
argues that the statute merely stipulates that the Department will
determine the normal value and export price (or constructed export
price) of each entry of the subject merchandise and the dumping margins
for each entry. Furthermore, Section 751(a)(2)(C) of the Act provides
that the determination of the dumping margins ``shall be the basis for
the assessment of countervailing or antidumping duties or entries
covered by the determination and for deposits of estimated duties.''
Olympia asserts that the Department's regulations are consistent with
the statute by simply providing that the Department will publish the
final results of an administrative review, including ``the weighted-
average dumping margins, if any * * *,'' citing section 353.22(c)(8) of
the Department's Regulations.
Olympia further contends that the Department's proposed regulations
clearly indicate the possible application of ``producer-assigned''
rates in NME cases. Olympia cites to the explanatory notes to the
Department's proposed regulations (61 FR 7316, February 27, 1996), in
which it says, the Department stated it was considering the possible
use of separate exporter/producer rates. Olympia further noted that
these explanatory notes stated that assessment rates should ``be
specific to each importer, because the amount of duties assessed should
correspond to the degree of dumping reflected in the price paid by each
importer.'' (61 FR 7613.) Olympia acknowledged that the Department did
not take a position with respect to producer/importer rates.
Olympia asserts that, even though the Department has followed an
exporter-assigned rates methodology, it has recognized the significance
of producers in assigning NME rates. Olympia cites to several cases to
support this point. The first case is the Final Determination of Sales
at Less Than Fair Value; Chrome Plated Lug Nuts from the PRC, 56 FR
46153 (September 10, 1991) (Lug Nuts 1990). Olympia states that there
was only one producer and one exporter of lug nuts in the PRC, and the
Department assigned the same rate to the exporter as to ``all other
manufacturers, producers, and exporters.'' Furthermore, Olympia
asserts, the Department recognized that the prices it used were from
the PRC exporter to the unrelated U.S. importer, and not between the
exporter and producer, and the Department ignored any selling expenses
incurred by the exporter. The PRC exporter, Olympia maintains, thus
became a non-entity. Olympia claims that the Department has a practice
of disregarding the exporter, except with respect to the pricing.
Olympia claims that in Final Determination of Sales at Less Than
Fair Value; Helical Spring Lock Washers from the PRC, 58 FR 48833,
48849 (September 20, 1993) (Lock Washers 1992), the Department adopted
a de facto producer rate. In that case, Olympia states, the respondent,
the Hangzhou Spring Washer Plant (HSWP), was both producer and
exporter. HSWP also sold lock washers to trading companies for export
to the United States. Olympia asserts that the Department assigned the
HSWP rate to those trading companies instead of assigning them rates
based on the trading company's export prices.
Olympia cites the Notice of Preliminary Determinations of Sales at
Less Than Fair Value and Postponement of Final Determinations: Brake
Drums and Brake Rotors from the PRC, 61 FR 53190 (October 10, 1996)
(Brake Drums), and Notice of Final Determination of Sales at Less Than
Fair Value; Certain Cased Pencils from the PRC, 59 FR 55625 (November
8, 1994) (Pencils), where the Department excluded from the antidumping
order exports of the subject merchandise sold by specific exporters and
manufactured by the producers whose factors of production formed the
basis for the de minimis and zero margins found in those cases.
Olympia argues that, by assigning FMEC's cash deposit rates to both
the producer and the importer of the subject merchandise, the
Department will avoid effectively tying the NME producer and U.S.
importer to selected exporters because of the rates assigned. Olympia
suggests that the Department adopt a parallel producer/importer rate in
situations where (1) an importer specifically requests such a rate; (2)
the transaction between the producer and importer have been subject to
at least one previous review; (3) the producer is not state-controlled;
and (4) the producer is not related to the exporter. Olympia maintains
that its situation satisfies all these requirements. Furthermore,
Olympia argues that employing a specific producer/importer rate (1)
promotes accuracy and fairness since the rates are specific to, and
reflect actual prices paid by, a particular importer; and (2) avoids
unnecessary trade restrictions by allowing an importer the freedom to
import directly from the producer.
Petitioner argues that the Department should deny Olympia's request
for an exemption from standard antidumping duty deposit rules.
Petitioner adds that such exemptions are made only under the most
limited circumstances for PRC exporters.
Petitioner states that PRC producers typically export through
unrelated trading companies, and, in most cases, the Department
establishes a deposit rate for future importation for each trading
company. Petitioner claims that the Department has deviated from this
principle only in a few unusual cases, such as those cited by Olympia,
by applying the dumping margin for a certain producer to imported goods
made by that producer. Petitioner argues that the rationale for
deviating from the Department's normal practice presented in those
cases does not apply to these reviews of HFHTs. Petitioner asserts that
the majority of cases cited by Olympia involve PRC producers whose
products were assigned a zero dumping margin. Thus, the Department had
to assign a specific rate to zero-margin producers to avoid imposing
duty deposits on products that had been found not to be dumped.
Petitioner asserts that the record in these reviews indicates that all
of the HFHT producers have dumping margins, so no such concern applies.
Petitioner points out that in Lug Nuts 1990, since only one factory
in the PRC manufactured the subject merchandise, the Department knew
that any lug nut exporter would eventually be assigned the margin for
the sole producer. Therefore, petitioner argues, it made sense for the
Department to apply the producer's dumping margin as the duty deposit
rate for all producers in that
[[Page 11819]]
case. Petitioner asserts that this rationale does not apply to HFHTs,
which are produced by numerous factories in the PRC.
Petitioner asserts that Olympia's request to apply FMEC's dumping
margin to all of Olympia's purchases direct from PRC producers is an
entirely different situation. Petitioner states that FMEC is a trading
company, not a producer, whose dumping margin is based on the producers
whose products it bought during the POR. Petitioner maintains that
granting Olympia's request would require applying the FMEC dumping
margin even to HFHTs made by producers that were not included in the
FMEC dumping calculation. Petitioner states that Department practice
does not support the application of one producer's dumping margins to
the products of another.
Petitioner objects to Olympia's designation of its name as
proprietary information. Petitioner states that it is not aware of any
Department practice that allows the name of an interested party to be
granted proprietary treatment.
Department's Position
We disagree with respondents that the same antidumping cash deposit
rate for FMEC should be applied to Olympia, and note that it would be
administratively infeasible to apply cash deposit rates on an importer-
specific basis.
Olympia's reference to the explanatory notes to our proposed
regulations, with respect to importer-specific assessment rates, is
misplaced. It has long been the Department's practice to assess duties
on an importer-specific basis; what Olympia is asking the Department to
do here is to establish an importer-specific cash deposit rate.
However, the cases cited by Olympia entail different circumstances
than those presented in these administrative reviews for HFHTs. In Lock
Washers 1992, a single company, HSWP, was both producer and exporter.
We calculated and assigned a single rate based on HSWP's sales to
unrelated customers in the United States, and to market-economy trading
companies which were based outside the United States, for sales of lock
washers exported from the PRC by HSWP and destined for the United
States. HSWP's sales of lock washers sold to the first unrelated
customer based in the United States were not assigned a separate cash
deposit rate. Unlike in Lock Washers 1992, the exporter and producer
are not the same in these reviews.
In Lug Nuts 1990, we determined there was one producer and one
exporter of lug nuts from the PRC to the United States during the
period. Therefore, the calculated rate was based on the sales from the
sole exporter and applied to all other producers and exporters who
began to ship after the publication of the order. In these reviews,
there is more than one exporter of the subject merchandise. In both
Brake Drums and Pencils, we found de minimis and zero margins for the
subject merchandise that was sold by certain exporters and manufactured
by specific producers. In order to ensure that merchandise that was
sold by those exporters, but manufactured by other producers, would be
subject to the antidumping duty order, we applied the exclusion from
the order only to the producer whose factors formed the basis of the
zero or de minimis rate analysis. Exclusion from the order is not an
issue in administrative reviews, therefore, Olympia's references to
Pencils and Brake Drums do not support its arguments.
There are no factual circumstances in these reviews similar to
those in the NME cases cited by Olympia, and we find no reason to
assign a specific importer-producer rate for Olympia. We note that
Olympia's lack of a specific importer-producer cash deposit rate does
not preclude it from purchasing HFHTs directly from the producer, and
subsequently requesting a review of that producer's exports.
Final Results of Review
As a result of our review, we have determined that the following
margins exist:
------------------------------------------------------------------------
Manufacturer/exporter Time period Margin
------------------------------------------------------------------------
Fujian Machinery Import & Export
Corporation:
Axes/Adzes.............................. 2/1/95-1/31/96 18.72
Bars/Wedges............................. 2/1/95-1/31/96 36.76
Hammers/Sledges......................... 2/1/95-1/31/96 15.95
Picks/Mattocks.......................... 2/1/95-1/31/96 98.77
Shandong Machinery Import & Export
Corporation:
Bars/Wedges............................. 2/1/95-1/31/96 36.66
Hammers/Sledges......................... 2/1/95-1/31/96 3.12
Picks/Mattocks.......................... 2/1/95-1/31/96 63.87
Tianjin Machinery Import & Export
Corporation:
Axes/Adzes.............................. 2/1/95-1/31/96 2.42
Hammers/Sledges......................... 2/1/95-1/31/96 15.81
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and normal value may vary from
the percentages stated above. The Department will issue appraisement
instructions directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of reviews for all
shipments of HFHTs from the PRC entered, or withdrawn from warehouse,
for consumption on or after the publication date of these final
results, as provided for by 751(a)(1) of the Act: (1) The cash deposit
rates for the reviewed companies named above which have separate rates
(FMEC, SMC, and TMC) will be the rates for those firms as stated above
for the classes or kinds of merchandise listed above; (2) for axes/
adzes from SMC, which are not covered by these reviews, the cash
deposit rate will be the rate established in the most recent review of
that class or kind of merchandise in which SMC received a separate
rate--that is, the February 1, 1992 through January 31, 1993 reviews;
(3) for bars/wedges and picks/mattocks from TMC, which are not covered
by these reviews, the cash deposit rate will be the rate established in
the most recent review of those classes or kinds of merchandise, i.e.,
66.32 percent for bars/wedges and 108.20 percent for picks/mattocks;
and (4) the cash deposit rates for non-PRC exporters of the subject
merchandise from the PRC will be the rate applicable to the PRC
supplier of that exporter. The PRC-wide rates are 44.41 percent for
hammers/sledges, 66.32 percent for bars/wedges, 108.2 percent for
picks/
[[Page 11820]]
mattocks and 21.93 percent for axes/adzes.
This notice serves as a final reminder to importers of their
responsibility under section 353.26 of the Department's regulations to
file a certificate regarding 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 the parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with section 353.34(d) of the Department's
regulations. Timely 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.
These administrative reviews 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: March 6, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-6378 Filed 3-12-97; 8:45 am]
BILLING CODE 3510-DS-P