[Federal Register Volume 62, Number 91 (Monday, May 12, 1997)]
[Notices]
[Pages 25917-25920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12387]


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DEPARTMENT OF COMMERCE

[A-570-815]


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

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on sulfanilic acid 
from the People's Republic of China. The review covers exports of this 
merchandise to the United States for the period August 1, 1995 through 
July 31, 1996, and thirteen firms: China National Chemical Import and 
Export Corporation, Hebei Branch (Sinochem Hebei); China National 
Chemical Construction Corporation, Beijing Branch; China National 
Chemical Construction Corporation, Qingdao Branch; Sinochem Qingdao; 
Sinochem Shandong; Baoding No. 3 Chemical Factory; Jinxing Chemical 
Factory; Zhenxing Chemical Factory; Mancheng Zinyu Chemical Factory, 
Shijiazhuang; Mancheng Xinyu Chemical Factory, Bejing; Hainan Garden 
Trading Company; Yude Chemical Company and Shunping Lile. The 
preliminary results of this review indicate that there were no dumping 
margins for the two responding parties: Yude Chemical Company (Yude) 
and Zhenxing Chemical Factory (Zhenxing).
    We invite interested parties to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the argument (1) A statement of the issue and (2) a 
brief summary of the argument.

EFFECTIVE DATE: May 12, 1997.

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

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    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 August 12, 1996, the Department of Commerce (the Department) 
published in the Federal Register (61 FR 41768) a notice of 
``Opportunity to Request Administrative Review'' for the August 1, 1995 
through July 31, 1996, period of review (POR) of the antidumping duty 
order on Sulfanilic Acid from the People's Republic of China (57 FR 
37524). In accordance with 19 CFR 353.22, Sinochem Hebei, Yude Chemical 
Industry Co. (Yude), Zhenxing Chemical Industry Co. (Zhenxing), PHT 
International and the petitioners, Nation Ford Chemical Company, 
requested a review for the aforementioned period. On September 17, 
1996, the Department published a notice of ``Initiation of Antidumping 
Review.'' 61 FR 48882. The Department is now conducting a review 
pursuant to section 751(a) of the Act.

Scope of Review

    Imports covered by this review are all grades of sulfanilic acid, 
which include technical (or crude) sulfanilic acid, refined (or 
purified) sulfanilic acid and sodium salt of sulfanilic acid.
    Sulfanilic acid is a synthetic organic chemical produced from the 
direct sulfonation of aniline with sulfuric acid. Sulfanilic acid is 
used as a raw material in the production of optical brighteners, food 
colors, specialty dyes, and concrete additives. The principal 
differences between the grades are the undesirable quantities of 
residual aniline and alkali insoluble materials present in the 
sulfanilic acid. All grades are available as dry, free flowing powders.
    Technical sulfanilic acid, classifiable under the subheading 
2921.42.24 of the Harmonized Tariff Schedule (HTS), contains 96 percent 
minimum sulfanilic acid, 1.0 percent maximum aniline, and 1.0 percent 
maximum alkali insoluble materials. Refined sulfanilic acid, also 
classifiable under the subheading 2921.42.24 of the HTS, contains 98 
percent minimum sulfanilic acid, 0.5 percent maximum aniline and 0.25 
percent maximum alkali insoluble materials.
    Sodium salt, classifiable under the HTS subheading 2921.42.79, is a 
powder, granular or crystalline material which contains 75 percent 
minimum equivalent sulfanilic acid, 0.5 percent maximum aniline based 
on the

[[Page 25918]]

equivalent sulfanilic acid content, and 0.25 percent maximum alkali 
insoluble materials based on the equivalent sulfanilic acid content.
    Although the HTS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding is dispositive.
    This review covers thirteen producers/exporters of Chinese 
sulfanilic acid. The review period is August 1, 1995 through July 31, 
1996.

Separate Rates

    To establish whether a company is sufficiently independent to be 
entitled to a separate rate, the Department analyzes each exporting 
entity in a nonmarket economy (NME) country under the test established 
in the Final Determination of Sales at Less Than Fair Value: Sparklers 
from the People's Republic of China, 56 FR 20588 (May 6, 1991) 
(Sparklers), as amplified 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 NME countries are entitled to separate, company-specific 
margins when they can demonstrate an absence of government control, 
both in the law (de jure) and in fact (de facto), with respect to 
exports of the subject merchandise. 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 criteria: (1) Whether the export prices are set by or subject 
to 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 and financing of losses; (3) 
whether each exporter has autonomy in making decisions regarding the 
selection of management; and (4) whether each exporter has the 
authority to sign contracts and other agreements.
    Yude and Zhenxing were the only companies to respond to the 
Department's request for information regarding separate rates. We have 
found that the evidence on the record demonstrates an absence of 
government control, both in law and in fact, with respect to their 
exports according to the criteria identified in Sparklers and Silicon 
Carbide for this period of review, and have assigned to each of these 
companies a separate rate. For further discussion of the Department's 
preliminary determination that these two companies are entitled to a 
separate rate, see Decision Memorandum to Joe Spetrini, Assistant 
Deputy Secretary, DAS III, dated April 14, 1997, and titled ``Separate 
rates in the 1995/1996 administrative review of sulfanilic acid from 
the People's Republic of China.'' This memorandum is on file in the 
Central Record Unit (room B-099 of the Main Commerce Building).

Collapsing

    We have determined, after examining the relevant criteria, that 
Yude and Zhenxing, are affiliated parties within the meaning of section 
771(33)(F) of the Act. We have further determined that these affiliated 
producers, both of which make export sales to the United States, should 
be treated as a single entity (i.e., ``collapsed'') for purposes of 
assigning an antidumping margin in this review. Section 351.401(f) of 
the proposed antidumping regulations sets forth the Department's policy 
with respect to the treatment of affiliated producers in antidumping 
proceedings. 61 FR 7308, 7329 (February 27, 1996.) Specifically, the 
Department ``will treat two or more affiliated producers as a single 
entity where those producers have production facilities for similar or 
identical products that would not require substantial retooling of 
either facility in order to restructure manufacturing priorities and 
the Secretary concludes that there is a significant potential for the 
manipulation of price or production.'' In identifying the potential for 
manipulation of price or production, the proposed rules provide that 
the Department may consider the following factors: level of common 
ownership; whether managerial employees or board members of one of the 
affiliated producers sit on the board of directors of the other 
affiliated person; and whether operations are intertwined, such as 
through the sharing of facilities or employees, or significant 
transactions between the affiliated parties. A full discussion of our 
conclusions, requiring reference to proprietary information, is 
contained in a Department memorandum in the official file for this case 
(a public version of this memorandum is on file in room B-099 of the 
Department's main building). Generally, however, we have found that: 
Yude and Zhenxing are ``affiliated'' parties, substantial retooling 
would not be necessary to restructure manufacturing priorities and 
there is potential for manipulating price and production between the 
two producers. As a result we are collapsing Yude and Zhenxing for 
purposes of conducting the 1995/1996 administrative review.

Use of Facts Otherwise Available

    All firms that have not demonstrated that they qualify for a 
separate rate are deemed to be part of a single enterprise under the 
common control of the government (the ``PRC enterprise''). Therefore, 
all such entities receive a single margin, the ``PRC rate.'' We 
preliminarily determine, in accordance with section 776(a) of the Act 
that resort to the facts otherwise available is appropriate for the PRC 
rate because companies deemed to be part of the PRC enterprise for 
which a review was requested have not responded to the Department's 
antidumping questionnaire.
    Where the Department must resort to the facts otherwise available 
because a respondent fails to cooperate by not acting to the best of 
its ability to comply with a request for information, 776(b) authorizes 
the Department to use an inference adverse to the interests of that 
respondent in choosing from the facts available. Section 776(b) also 
authorizes the Department to use as adverse facts available information 
derived from the petition, the final determination, a previous 
administrative review, or other information placed on the record. The 
Statement of Administrative Action (SAA) accompanying the URAA 
clarifies that information from the petition and prior segments of the 
proceeding is ``secondary information.'' See H. Doc. 3216, 103rd Cong. 
2d Sess. 870 (1996). If the Department relies on secondary information 
as facts available, section 776(c) provides that the Department shall, 
to the extent practicable, corroborate such information using 
independent sources reasonably at its disposal. The SAA further 
provides that ``corroborate'' means simply that the Department will 
satisfy itself that the secondary information to be used has probative 
value. However, where corroboration is not practicable, the Department 
may use uncorroborated information.
    In the present case the Department has based the margin on 
information in the petition. See Notice of Final Determination of Sales 
at Less Than Fair Value: Circular Welded Non-Alloy Steel Pipe from 
South Africa, 61 FR 24272 (May 14, 1996). In accordance with section 
776(c) of the Act, we corroborated the data contained in the petition, 
as adjusted for intitiation purposes, to the extent possible. The 
petition data on major material inputs are consistent with Indian 
import statistics, and also with price quotations

[[Page 25919]]

obtained by the U.S. Embassies in Pakistan and India. Both of these 
corroborating sources were placed on the record during the 
investigation and have been added to the record of this review. In 
addition, we note that the petition used World Bank labor rates which 
we have repeatedly found to be a probative source of data. Based on our 
ability to corroborate other elements of the petition calculation, we 
preliminarily find that the information contained in the petition has 
probative value. However, we will continue to evaluate this information 
on the basis of more current data.
    Accordingly, we have relied upon the information contained in the 
petition. We have assigned to all exporters other than Yude and 
Zhenxing a margin of 85.20, the margin in the petition, as adjusted by 
the Department for initiation purposes.

United States Price

    For sales made by Yude and Zhenxing, we calculated constructed 
export price based on FOB prices to unrelated purchasers in the United 
States. We made deductions for foreign inland freight, ocean freight, 
U.S. duties, U.S. transportation, credit, warehousing, repacking in the 
U.S., indirect selling expenses and constructed export price profit, as 
appropriate, in accordance with section 772(d)(3) of the Act.

Normal Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine NV using a factors of 
production methodology if (1) the merchandise is exported from an NME 
country, and (2) the available 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), 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 section 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, we 
determined that India is comparable to the PRC in terms of per capita 
gross national product (GNP), the growth rate in per capita GNP, and 
the national distribution of labor, and that India is a significant 
producer of comparable merchandise. For further discussion of the 
Department's selection of India as the primary surrogate country, see 
Memorandum from David Mueller, Director, Office of Policy, to Steve 
Presing, dated March 20, 1997, ``Sulfanilic Acid from the PRC: 
Nonmarket Economy Status and Surrogate Country Selection,'' and File 
Memorandum, dated April 11, 1997, ``India as a significant producer of 
comparable merchandise in the 1995/1996 administrative review of 
sulfanilic acid from the People's Republic of China,'' which are on 
file in the Central Records Unit (room B-099 of the Main Commerce 
Building).
    For purposes of calculating NV, we valued PRC factors of production 
as follows, in accordance with section 773(c)(1) of the Act:
    To value aniline used in the production of sulfanilic acid, we used 
the rupee per kilogram value of imports into India during April 1995-
March 1996, obtained from the March 1996, Monthly Statistics of the 
Foreign Trade of India, Volume II--Imports (Indian Import Statistics.) 
Using wholesale price indices (WPI) obtained from the International 
Financial Statistics, published by the International Monetary Fund 
(IMF), we adjusted this value to reflect inflation in India through the 
period of review. We made adjustments to include costs incurred for 
freight between the Chinese aniline suppliers and the Chinese 
sulfanilic acid factories, based on freight rates from the August 1993 
embassy cable for 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) (Lock Washers) and the 
December 22, 1989 embassy cable for the Final Results of Antidumping 
Duty Administrative Review: Shop Towels of Cotton from the People's 
Republic of China (56 FR 4040, February 1, 1991) and used in Lock 
Washers. These rates were inflated to be concurrent with the period of 
review.
    To value sulfuric acid used in the production of sulfanilic acid, 
we used the rupee per kilogram value for sales in India during the 
period of review as reported in Chemical Weekly. We have adjusted this 
value to exclude the Central Excise Tariff of India and the Bombay 
Sales Tax. We made additional adjustments to include costs incurred for 
freight between the Chinese sulfuric acid supplier and the sulfanilic 
acid factories in the PRC.
    To value activated carbon used in the production of sulfanilic 
acid, we used the rupee per kilogram value for sales in India reported 
in Chemical Weekly from March 1995 to January 1996, adjusting sales 
outside of the period of review for inflation using the WPI index data 
from International Statistics published by the International Monetary 
Fund. We made adjustments to include cost incurred for inland freight 
between Chinese activated carbon suppliers and the sulfanilic acid 
factories in the PRC.
    For direct labor, we used the labor rates reported in the Economist 
Intelligence Unit's Investing, Licensing and Trading Conditions Abroad: 
India, released November 1995, and November 1996. This source breaks 
out labor rates between skilled and unskilled labor for 1995, and 1996, 
and provides information on the number of labor hours worked per week 
and fringe benefits paid to workers.
    For factory overhead, we used information reported in the April 
1995 Reserve Bank of India Bulletin. From this information, we were 
able to determine factory overhead as a percentage of total cost of 
manufacture.
    For selling, general and administrative (SG&A) expenses, we used 
information obtained from the April 1995 Reserve Bank of India 
Bulletin. We calculated an SG&A rate by dividing SG&A expenses by the 
cost of manufacture.
    To calculate a profit rate, we used information obtained from the 
April 1995 Reserve Bank of India Bulletin. We calculated a profit rate 
by dividing the before-tax profit by the sum of those components 
pertaining to the cost of manufacturing plus SG&A.
    To value the inner and outer bags used as packing materials, we 
used import statistics for India obtained from Indian Import 
Statistics. Using WPI obtained from International Financial Statistics, 
we adjusted these values to reflect inflation through the period of 
review. We adjusted these values to include freight costs incurred 
between the Chinese plastic bag suppliers and the sulfanilic acid 
factories in the PRC.
    To value coal, we used the price of steam coal reported in the 
Gazette of India, June 16, 1994. We adjusted the value of coal to 
reflect inflation through the period of review using WPI index data 
published by the IMF.
    To value electricity, we used the simple average of the Indian 
state electricity rates for the large industry category on March 1, 
1995 as reported in Current Energy Scene in India, July 1995, by the 
Centre for Monitoring the

[[Page 25920]]

Indian Economy. We adjusted the value of electricity to reflect 
inflation through the period of review using WPI index data published 
by the IMF.
    To value truck freight, we used the rate reported in an August 
1993, cable from the U.S. Embassy in India submitted for 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), and added to the record of this review. We 
adjusted the truck freight rates to reflect inflation through the 
period of review using WPI data published by the IMF.
    To value rail freight, we used the price reported in a December 
1989, cable from the U.S. Embassy in India submitted for the Final 
Results of Antidumping Duty Administrative Review: Shop Towels of 
Cotton from the People's Republic of China (56 FR 4040, February 1, 
1991). We adjusted the rail freight rates to reflect inflation through 
the period of review using WPI data indices published by the IMF.

Preliminary Results of the Review

    We preliminarily determine the dumping margin for Yude and Zhenxing 
for the period August 1, 1995-July 31, 1996 to be 0. The rate for all 
others firms which have not demonstrated that they are entitled to a 
separate rate is 85.20. This rate will be applied to all firms other 
than Yude and Zhenxing, including all firms which did not respond to 
our questionnaire requests: China National Chemical Import and Export 
Corporation, Hebei Branch (Sinochem Hebei); China National Chemical 
Construction Corporation, Beijing Branch; China National Chemical 
Construction Corporation, Qingdao Branch; Sinchem Qingdao; Sinochem 
Shandong; Baoding No. 3 Chemical Factory; Jinxing Chemical Factory; 
Mancheng Zinyu Chemical Factory, Shijiazhuang; Mancheng Xinyu Chemical 
Factory, Bejing; Hainan Garden Trading Company; and Shunping Lile.
    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice or 
the first workday thereafter. Interested parties may submit case 
briefs, which should not contain factual information not already on the 
record of this review, within 30 days of the date of publication of 
this notice. Rebuttal briefs, which must be limited to issues raised in 
the case briefs and which should not contain factual information not 
already on the record of this review, may be filed not later than 37 
days after the date of this preliminary determination.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between United States prices and NV may vary from the 
percentage stated above. Upon completion of this review, the Department 
will issue appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit rates will be effective with 
respect to all shipments of sulfanilic acid 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) The cash 
deposit rate for reviewed companies listed below will be the rates for 
those firms established in the final results of this review; (2) for 
companies previously found to be entitled to a separate rate and for 
which no review was requested, the cash deposit rate will be the rate 
established in the most recent review of that company; (3) for all 
other PRC exporters, the cash deposit rate will be the China-wide rate 
of 85.20; and (4) the cash deposit rate for non-PRC exporters of 
subject merchandise from the PRC will be the rate applicable to the PRC 
supplier of that exporter. These deposit requirements, when imposed, 
shall remain in effect until publication of the final results of the 
next administrative review.

------------------------------------------------------------------------
                                                              Margin    
            Manufacturer/ producer/ exporter                percentage  
------------------------------------------------------------------------
Yude Chemical Industry, Co..............................               0
Zhenxing Chemical Industry, Co..........................               0
PRC Rate................................................            85.2
------------------------------------------------------------------------

Notification of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under Sec. 353.26 of the Department's regulation to file 
a certificate regarding the reimbursement of antidumping duties prior 
to liquidation of the relevant entries during this review period. 
Failure to comply with this requirement could result in the Secretary's 
presumption that reimbursement of antidumping duties occurred and the 
subsequent assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
Sec. 751(a)(1) of the Act (19 U.S.C. 1674(a)(1)) and Sec. 353.22 of the 
Department's regulations.

    Dated: May 5, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-12387 Filed 5-9-97; 8:45 am]
BILLING CODE 3510-DS-P