[Federal Register Volume 62, Number 133 (Friday, July 11, 1997)]
[Notices]
[Pages 37194-37201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18286]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-485-602]
Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, From Romania: Final Results of Antidumping Duty
Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On March 11, 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 tapered
roller bearings and parts thereof, finished or unfinished, (TRBs) from
Romania (62 FR 11152-55). The review covers one exporter and two
producers of subject merchandise for the period June 1, 1995 through
May 31, 1996.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have changed the results from those presented in the preliminary
results of review.
We received no comments from interested parties with regard to the
Department's preliminary determination to grant Tehnoimportexport a
separate rate for this review. Therefore, for the final results of
review, we reaffirm our determination that TIE is entitled to a
separate rate.
EFFECTIVE DATE: July 11, 1997.
FOR FURTHER INFORMATION CONTACT: Rick Johnson or Carrie Blozy, AD/CVD
Enforcement Group III, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Ave., NW., Washington, DC 20230; telephone: (202) 482-
3793.
SUPPLEMENTARY INFORMATION:
Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act) are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all references to the Department's regulations are
to Part 353 of 19 CFR, as amended by the regulations published in the
Federal Register on May 19, 1997 (62 Fed. Reg. 27296).
Background
On March 11, 1996, the Department published in the Federal Register
the preliminary results of its administrative review of the antidumping
duty order on TRBs from Romania. We have now completed this
administrative review in accordance with section 751 of the Tariff Act
of 1930, as amended (the Tariff Act), and 19 C.F.R. 355.22. As a result
of changes made to the preliminary results based on interested party
comments, the calculated margin for imports from TIE, the only company
with sales covered by this review, has changed to 2.70%.
Scope of Review
Imports covered by this review are shipments of TRBs from Romania.
These products include flange, take-up cartridge, and hanger units
incorporating tapered roller bearings, and tapered roller housings
(except pillow blocks) incorporating tapered
[[Page 37195]]
rollers, with or without spindles, whether or not for automotive use.
This merchandise is currently classifiable under Harmonized Tariff
Schedule (HTS) item numbers 8482.20.00, 8482.91.00, 8482.99.30,
8483.20.40, 8483.30.40, and 8483.90.20. Although the HTS item numbers
are provided for convenience and Customs purposes, the written
description of the scope of this order remains dispositive.
This review covers 28 companies and the period June 1, 1995 through
May 31, 1996. Of the 28 companies for which petitioner requested a
review, only TIE made shipments of the subject merchandise to the
United States during the period of review (POR). S.C. Rulmenti
Alexandria and S.C. Rulmental S.A. Brasov produced the merchandise sold
by TIE to the United States, but have stated that they did not ship
TRBs directly to the United States. The Department has received
information from the Government of Romania and other respondents
stating that the other manufacturers/exporters covered by this review
did not produce or sell TRBs subject to this review.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received comments from respondent, TIE;
petitioner, the Timken Company; and Universal Automotive Trading
Company, Ltd. (Universal), an interested party. Comments submitted
consisted of petitioner's case brief of April 10, 1997 and rebuttal
brief of April 17, 1997; respondent's case brief of April 10, 1997 and
rebuttal brief of April 24, 1997; and Universal's rebuttal brief of
April 17, 1997.
Comment 1: Petitioner asserts that, in valuing material inputs, the
Department improperly considered two types of imports into Indonesia:
(1) Materials from non-market economy countries; and (2) small
quantities of materials from individual countries. Petitioner also
contends that, when deriving values for bearing-quality steel inputs
based on Indonesian six-digit categories, the Department must exclude
imports from countries that are known not to produce bearing quality
steel.
Respondent argues that the Department should include data from all
countries except for those countries which exported de minimis amounts
to Indonesia. Respondent asserts that the Department should reject
petitioner's proposal to exclude data from countries which are not
listed in the 1994 edition of Iron and Steel Works of the World as
producers of bearing-quality steel because there is no evidence that
this source, which it presumes contains 1993 data, contains a
comprehensive list of all bearing steel producers. Respondent adds that
petitioner's contention that data from these same countries should be
included for the purposes of scrap calculations is inconsistent and
would lead to skewed results.
Further, respondent argues that among the countries petitioner said
must be excluded are some highly industrialized countries which have
bearing producers, such as the Netherlands. According to respondent,
this fact makes petitioner's proposed methodology suspect.
Department's Position: We agree with petitioner that it is
Departmental practice to exclude imports from countries we have
previously determined to be non-market economies (NMEs) in calculating
surrogate values for material inputs, where such exclusions are
possible based on record information. See, e.g., Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished, from the People's
Republic of China; Final Results of Antidumping Duty Administrative
Reviews (``1990-93 TRBs from the PRC''), 61 FR 65527, 65532 (December
13, 1996). Therefore, for the final results, we have adjusted the
surrogate values accordingly for hot-rolled steel bars used for inner
and outer races (cups and cones). See Attachment 1 of the Analysis
Memorandum for the Final Results of Review (July 7, 1997), which is on
file in the Central Records Unit (room B099 of the Main Commerce
Building).
With regard to the exclusion of data pertaining to small quantities
of imports from individual countries, we agree that the inclusion of
such data potentially may be distortive. However, the Department will
only disregard small-quantity import data when the per-unit value in
fact is at variance with other information on the record. See, e.g.,
Heavy Forged Hand Tools from the People's Republic of China: Final
Results of Antidumping Duty Administrative Reviews, 11814, 11815
(Comment 2) (March 13, 1997), in which the Department utilized 1995
Indian import data from Saudi Arabia because it was comparable to other
data on the record. Thus, the Department will reject data from
countries with small quantities of imports only when the per unit value
of those imports is substantially different from the per unit values of
the larger-quantity imports of that product from other countries.
With respect to the exclusion of material input data from countries
which allegedly do not produce bearing-quality steel, we agree with
petitioner that such information should be excluded from our
calculation of surrogate values for bearing-quality steel. We note that
the only information on the record of this review regarding which
countries produce bearing steel is from the 1994 edition of Iron and
Steel Works of the World. Thus, respondent's assertion that some of the
countries which petitioner has identified as not producing bearing-
quality steel do in fact have bearing producers is not supported by any
record evidence. Finally, we agree with petitioner's argument that
countries not producing bearing quality steel nevertheless can produce
bearing-quality scrap. While respondent has asserted that a failure to
adjust the surrogate value for alloy scrap when making such an
adjustment for bearing-quality steel would lead to ``skewed results,''
respondent has not explained how such an adjustment is distortive. In
fact, consistently adjusting values only when record evidence indicates
that a country does not produce that material results in the most
reliable calculation of surrogate values.
There is country-specific information on the record of this review
for four material inputs. Based on this information, we have adjusted
the surrogate value for hot-rolled steel bars for inner and outer races
(cups and cones) to exclude small-quantity exports, and exports from
countries not known to produce bearing-quality steel, to Indonesia.
Additionally, we have adjusted the surrogate value for hot-rolled alloy
steel bar in coils for rollers to exclude exports to Indonesia from
countries not known to produce bearing-quality steel. See Attachment 1
of the Analysis Memorandum for the Final Results of Review.
Comment 2: Petitioner claims that the value for non-alloy scrap is
anomalous, as it allegedly amounts to almost 47 percent of the value of
the cold-rolled sheet from which it would be produced. Instead,
petitioner asserts that the Department should use a ``reasonable''
ratio between the value of scrap and the value of the steel from which
it originates, such as the 20 percent ratio that was used in the
redetermination on remand in TRBs from the PRC. Moreover, petitioner
argues that the ratio should not be higher than the ratio between alloy
scrap and alloy bar for cups and cones used by the Department in the
preliminary results.
Respondent did not comment on this issue.
Department's Position: We disagree with petitioner. We note that,
in the 1993-94 segment of this proceeding, petitioner put forward a
similar
[[Page 37196]]
argument with respect to the value used for Polish hot-rolled scrap in
comparison with the value of the finished product. In Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished, from Romania:
Final Results of Review (1993-94) ``Final Results of Review''), 62 FR
31075, 31077 (June 6, 1997) for that review period, we disagreed with
petitioner, noting that petitioner appeared to object to the use of the
Polish hot-rolled scrap price based solely on the fact that the price
was, in petitioner's opinion, too high. We noted that petitioner
offered no evidentiary support to their claim that the scrap price was
aberrant, or in any way out of line with hot-rolled scrap prices for
that time period. Petitioner also cited Timken Co. v. United States,
699 F. Supp. 300 (CIT 1988) in that review, claiming that the Court of
International Trade's (CIT) decision upheld the proposition that the
Department must correct unreasonably high scrap values. However, for
the 1993-94 final results, we rejected petitioner's interpretation of
the CIT ruling, noting that the basis of the CIT ruling was due to the
unexplained inconsistency with regard to information presented in two
embassy telexes. Thus, the Department found in the 1993-94 final
results that ``if all the information in the two telexes had indicated
that a high scrap value relative to material cost was appropriate, no
inconsistency would have existed.''
For this review, petitioner has cited to the Federal Circuit appeal
894 F.2d 385 (Fed. Circ. 1990) in the above referenced Timkin case. The
Court of Appeals agreed with the CIT's finding that Commerce erred in
failing to reconcile the calculated ratio with other ratios in the
record:
these values must be contrasted not only with the 20 percent ratio
mentioned in the second telex, but also with evidence in the record
that the scrap steel/raw steel ratio in other countries is also much
lower * * *
See Timken Co. v. United States at 894 F.2d at 388.
By contrast, in this review, petitioner has not identified any such
differing record evidence with regard to non-alloy scrap/cold-rolled
sheet ratios. Thus, the Federal Circuit's ruling in Timken does not
require the Department to reject the scrap ratio used in the
preliminary results of this review.
We note that petitioner has proposed that the ratio should not be
higher than the ratio of almost 26 percent between alloy scrap and
alloy bar for cups and cones used by the Department in the preliminary
results. However, petitioner has provided no justification for the
proposition that using the alloy scrap to alloy bar ratio is in any way
representative of the non-alloy scrap to cold-rolled sheet ratio.
Furthermore, contrary to petitioner's assertion, we do not find that
the 20 percent value used in the redetermination on remand in TRBs from
the PRC would be a reasonable alternative, because that figure applies
to 1987 data from India.
Comment 3: Petitioner argues that the Department has applied
minimum labor wages to value labor, and therefore has not accounted for
the full cost to the employer, as petitioner states is required by
Departmental practice. Second, petitioner contends that the Department
applied wages from the wrong industry because wages for ``laborers in
the iron and steel basic industries'' are not within the same industry
category as laborers in the industry producing bearings. Third,
petitioner asserts that the same shortcoming exists for the surrogate
value used for wages for indirect labor, since the Department used data
for supervisors and general foremen from the ``crude petroleum and
natural gas production industry.'' Petitioner also argues that the
Department should not use this data because it is from the year 1992.
Petitioner contends that the Department's preference is to use data
concurrent with the period of review whenever possible.
Finally, petitioner argues that the Department was mistaken to
assume an eight-hour workday for Indonesian labor. Petitioner notes
that, according to two publications, Investing, Licensing & Trade
Conditions Abroad: Indonesia and Doing Business in Indonesia, a seven-
hour working day is the norm for Indonesia.
In light of the alleged deficiencies of the data used by the
Department, petitioner proposes that the Department utilize data for
unskilled and skilled labor and factory supervisors in Indonesia based
on data from Investing, Licensing & Trade Conditions Abroad: Indonesia.
Respondent contends that petitioner's proposed labor wage
calculation is flawed. First, respondent argues that the wage rates
reported by petitioner are for generic classifications and, thus, are
inherently less accurate or reliable than those relied upon by the
Department (which were for the iron and steel industry). Respondent
notes that the Department has rejected, in its Final Antidumping Duty
Determination: Disposable Pocket Lighters from the People's Republic of
China (1995) wage rates from Doing Business in Indonesia ``because
these wages were specific to Jakarta.'' See Calculation Memorandum at
page 3.
Second, respondent contends that the unskilled labor rate put
forward by petitioner is the rate for Jakarta, ``the most expensive
city in Indonesia.'' Respondent states that there are ``several''
bearing producers in Indonesia, not all of whom are located in or near
Jakarta. Further, respondent claims that petitioner has acknowledged
that ``the only Indonesian bearing producer known to the Department * *
* is located close to Jakarta,'' and thus is not in Jakarta.
Respondent notes that petitioner's calculation of labor assumes
4.15 working weeks per month. Respondent claims that it is Department
practice to use 4.33 weeks/month in its surrogate labor calculations.
Respondent notes that the Department applied a 4.33 weeks per month and
42 hour work week to calculate labor costs for the 1994-95 review of
this proceeding. Therefore, if the Department chooses to use the labor
data provided by petitioner, respondent claims that 4.33 weeks per
month should be employed.
Respondent disputes petitioner's statement that there is a maximum
of seven working hours per day in Indonesia, noting that the Price
Waterhouse report states that the labor law provides for a six-day, 40
hour week. Respondent notes that the Department applied an eight hour
per day wage in Disposable Pocket Lighters from the PRC.
In response to petitioner's criticism of the rates used by the
Department in the preliminary results of review as minimum rates,
respondent notes that the Department has relied on this data in
previous cases, such as in the Final Antidumping Duty Determination:
Disposable Pocket Lighters from the PRC, Calculation Memorandum at
Exhibits B-1 and B-4 (1995). Respondent argues that it is unclear
whether added benefits such as accident, health and retirement
insurance, as well as a ``bonus'' wage, are appropriate for application
to unskilled laborers. Even if they are, respondent argues that
petitioner has overstated the appropriate allotment for such benefits.
Department's Position: We agree with petitioner that the source
from which the Department took the labor values indicates that these
values are ``minimum'' daily wage or salary rates. However, the
unskilled labor value is the only labor value on the record of this
review pertaining to an industry in Indonesia comparable to the
bearings industry, and petitioner has suggested no methodology for
adjusting this
[[Page 37197]]
figure. Moreover, there is no indication on the record that the
``minimum'' rate for the industry excludes any employee benefit costs
normally considered by the Department.
With regard to the utilization of wage rates for laborers in the
iron and steel basic industries, we agree with petitioner's argument
that the iron and basic steel industry is not the same as the bearings
industry. The Department's clear preference is to use data from the
same industry, when that is possible from the information placed on the
record. However, we note that, for this review, there is no information
on the record which pertains specifically to the bearings industry.
Furthermore, as the Department indicated in its surrogate country
selection memorandum (at attachment 4), when the Department cannot
locate information from the same industry, the Department attempts to
find producers of ``comparable'' products in selecting surrogate
countries. In the surrogate country selection memorandum, the
Department noted that countries with ``significant producers of any
steel products'' may enable the Department to choose that country as a
surrogate (emphasis added). See Memorandum to the File: Antidumping
Administrative Review of Tapered Roller Bearings from Romania:
Selection of a Surrogate Country in the 1995/96 Review, February 25,
1997. Therefore, we find that applying labor rates from the iron and
basic steel industry as a surrogate value for the bearings industry is
appropriate.
Finally, we agree with respondent that the data proposed by
petitioner from the publications Investing, Licensing & Trade
Conditions Abroad: Indonesia and Doing Business in Indonesia are in
fact less preferable than the information used by the Department in the
preliminary results with respect to valuing unskilled labor, since
those data are not specific to any industry, but instead are generic
classifications. In fact, the guide for Doing Business in Indonesia
specifically notes that ``wages vary significantly according to
industry and location within Indonesia.'' See Attachment 8, page 104 of
petitioner's April 2, 1997 submission of factual information.
The Department recognizes that the use of indirect labor costs and
wages and salaries for non-production workers from the ``crude
petroleum and natural gas production industry'' suffers from the
limitation of not being derived from either the bearings industry or an
industry comparable to the bearings industry. However, we note that
none of the information on this issue placed on the record by
petitioner (or respondent) is applicable to an industry equivalent or
comparable to the bearing industry. Section 776(a)(1) of the Act
stipulates that if the ``necessary information is not available on the
record * * * the administering authority * * * shall, subject to
section 782(d), use the facts otherwise available in reaching the
applicable determination under this title.'' In this case, in
determining facts otherwise available, we have no reason to employ an
adverse inference under Section 776(b). Therefore, for the final
results of review, we determined the ratio between the average wage
rate for unskilled laborers and the average wage rate for factory
supervisors reported in the 1996 publication of Investing, Licensing &
Trade Conditions Abroad: Indonesia. Then, we used this ratio to
calculate an estimated indirect labor rate by applying this ratio to
the direct labor rate for the iron and basic steel industry. Thus, the
resulting figure estimates the wage rates for non-production workers in
the iron and basic steel industry, which we determine to be comparable
to the bearing industry. See Attachment 2 of the Analysis Memorandum
for the Final Results of Review.
With regard to petitioner's statement that the Department's ``clear
preference'' is to use data concurrent with the period of review
whenever possible, we agree. However, in this case we do not have any
useable labor data that is concurrent with the period of review.
Moreover, as we discuss in response to Comment 6 below in agreeing with
petitioner regarding the use of data from the dinnerware industry, when
data derives from an industry not comparable to the industry under
review, the time period from which the data is derived is a moot issue.
We note that respondent's discussion of the appropriate figure to
use for the number of weeks per month is moot, as we have calculated
labor rates based on daily rates, and not based on monthly figures.
With regard to the appropriate number of hours in a work day in
Indonesia, we agree with petitioner that record evidence indicates that
the maximum number of hours in each work day, according to Indonesian
labor law, is seven hours. See petitioner's April 2, 1997 submission of
factual information, Attachment 8, page 105. Since the figure utilized
by the Department for the preliminary results is a daily rate,
respondent's comment that a 40 hour work week is spread over six days
may become relevant only if it can be proven that the daily wage rate
reported by the Bulletin of Labor Statistics is derived from a weekly
wage rate. While the document reporting the daily wage rate also
indicates that a 40 hour work week is the norm in Indonesia, there is
no evidence that the daily rate is derived from the number of hours
worked each week. Absent such record evidence, the Department finds no
basis for assuming an 8 hour work day for Indonesia. Therefore, for the
final results of review, we have recalculated the labor values based on
a 40 hour, six day work week. See Attachment 2 of the Analysis
Memorandum for the Final Results of Review.
Finally, with regard to information provided by Investing,
Licensing & Trade Conditions Abroad: Indonesia and Doing Business in
Indonesia concerning bonus payments, insurance and other contributions
paid by the employer, vacations, etc., as we discuss above, there is no
indication that the values employed by the Department for the
preliminary results do not already represent these amounts. Thus, it
would not be appropriate to apply any additional values to these wage
rates, since it may result in double-counting.
Comment 4: Petitioner argues that the Department should use SG&A
and profit data from the financial statements of a manufacturer of
industrial and commercial machinery and service equipment, instead of
data pertaining to the pipe fitting industry. Petitioner claims that
the industrial and commercial machinery and service equipment industry
is more closely related to the bearing industry.
Petitioner also argues against using the information on SG&A,
profit, and factory overhead placed on the record by respondent,
because that information pertains to products that are more remote from
the bearing industry than the pipe fitting industry used by the
Department in the preliminary results.
Respondent notes that petitioner has argued for the use of SG&A and
profit data from another source, while asserting at the same time that
the factory overhead rate from the embassy cable should continue to be
used for the final results. However, respondent claims that the
Department has traditionally tried to utilize overhead, SG&A, and
profit information from a single source. Respondent states that the
issue has been specifically addressed in the Notice of Proposed
Rulemaking and Request for Public Comment, 61 FR 7308, 7374 (February
27, 1996), in which the Department stated that ``particularly for
manufacturing overhead, general expenses and profit, the Department
prefers to use a single surrogate.'' Further, respondent argues that
petitioners has advocated the use of
[[Page 37198]]
a single source in another proceeding (TRBs from the PRC, 61 FR 65527,
65528 (December 13, 1996).
Respondent argues that the company information provided by
petitioner is flawed, as parties do not know the components which
comprise SG&A, and some elements, such as ``distribution costs'' and
petitioner's proposed calculation of interest expense, are of doubtful
use.
Respondent also claims that petitioner's characterization of the
company as a manufacturer of machinery and equipment and from the
industry most closely related to the bearings industry is misleading.
Respondent notes that the company in question is a manufacturer of
office and hospital equipment and high security products. As such,
respondent contends that there is no indication that its distribution
costs and administrative expenses resemble those of a bearing company.
Respondent concludes by noting that, using petitioner's proposed
surrogates, raw material and labor would constitute only 43 percent of
the constructed value of TRBs. Respondent argues that such a result is
contradicted by evidence from other cases before the Department, in
which raw materials and labor constitute greater percentages of the
constructed value of TRBs.
Department's Position: For the preliminary results of review, the
Department used factory overhead, SG&A, and profit percentages provided
in 1991 by the U.S. Embassy in Jakarta from the pipe fitting industry,
a similar metal manufacturing industry. Because interested parties
first learned of the Department's choice of primary surrogate country
for this review at the time of publication of the preliminary results,
we sent letters to interested parties after publication of the
preliminary results allowing parties the opportunity to place further
information regarding Indonesian factors of production on the record of
this review. See letters from the Department to interested parties The
Timken Company, Tehnoimportexport, and Universal Automotive Trading
Company Ltd., dated March 25, 1997, soliciting information on
Indonesian factors of production. See also Comment 6 below.
In response to our request for information, Timken submitted
financial information for the year 1995 from PT Lion Metal Works, an
Indonesian manufacturer of office equipment, ``C'' channel, building
construction equipment, hospital equipment, and high security products.
PT Lion Metal Works is classified in the International Standard
Industrial Classification of All Economic Activities (ISIC) Major group
382, which is the same major group as subject merchandise (``ball and
roller bearings''). The pipe fitting industry falls in the ISIC
category 381. Additionally, under the Harmonized Tariff Schedule of the
United States (1995), pipe fittings fall within Section XV (Base Metals
and Articles of Base Metal), in the category 7307; roller bearings are
in Section XVI (Machinery and Mechanical Appliances; Electrical
Equipment; Parts Thereof; Sound Recorders and Reproducers, Television
Image and Sound Recorders and Reproducers, and parts and Accessories of
Such Articles), in the categories 8482 and 8483; and ``industrial and
commercial machinery and service equipment'' appears to fall within
Section XVI. Therefore, the record evidence suggests that PT Lion Metal
Works produces products which more closely approximate the bearing
industry than the pipe fitting industry.
Additionally, we note that the PT Lion Metal Works data is from
1995, which partially coincides with the period of review. The pipe
fitting industry data, in contrast, was provided in a 1991 Embassy
cable. As the Department noted in final results notice of 1990-93 TRBs
from the PRC (at 65530), ``it is preferable, for the sake of accuracy,
to apply surrogate values coincident with the POR whenever possible.''
With regard to respondent's comment that the Department prefers to
use a single surrogate, particularly for manufacturing overhead,
general expenses and profit, we agree with respondent that, ceteris
paribus, single-sourcing is desirable. However, as respondent itself
has noted in its case brief, the Department has stated that, compared
with cable data obtained from various embassies and consulates, ``it is
more appropriate in any NME cases to rely, to the extent possible, on
public, published statistics from the first choice surrogate country *
* * Thus, for the factors for which public statistical information is
not available (typically, SG&A, factory overhead and profit), the
Department will continue to rely on information from U.S. embassies and
consulates from the first choice country when necessary.'' See Final
Determination of Sales at Less Than Fair Value: Certain Carbon Steel
Butt-Weld Pipe Fittings from the People's Republic of China, 57 FR
21058, 21062 (May 18, 1992) (emphasis added).
Section 773(c)(1) of the Act states that, for purposes of
determining normal value in a non-market economy, ``the valuation of
the factors of production shall be based on the best available
information regarding the values of such factors.'' Therefore, for the
purposes of the final results of review, we believe it is more
appropriate to utilize the PT Lion Metal Works data because: 1) it is
coincident with the POR; 2) it relates to an industry which appears to
more closely relate to the bearings industry; and 3) as a source of
data, it is preferable to U.S. Embassy cable information. Such factors
supporting the use of the PT Lion Metal Works information outweigh the
benefit of extracting overhead, profit, and SG&A data from a single
source.
With regard to the actual calculation of SG&A and profit from the
PT Lion Metal Works data, we agree with respondent that the inclusion
of the amount associated with ``distribution costs'' would double-count
movement expenses. Therefore, we have calculated SG&A without including
``distribution costs.'' Additionally, we agree with respondent that
interest income, as well as interest expenses, should be included in
the calculation of SG&A. We do not agree with respondent that the
inclusion of ``interest payable'' for interest expense is
inappropriate, since it is highly improbable from the financial figures
that interest expenses would be reported anywhere else in these
financial reports. For the exact calculations of SG&A and profit,
please see Attachment 3 of the Analysis Memorandum for the Final
Results of Review.
Comment 5: Petitioner asserts that the Department improperly based
freight costs on the net weight of bearings packed for shipment,
instead of basing freight costs on gross weight. Petitioner asserts
that, as packaging does not ``travel free of charge,'' the Department
should make an allowance for the weight of packaging materials in
calculating freight rates. Petitioner suggests that the Department
should employ the same adjustment in this case as it made in certain
administrative reviews of TRBs from the PRC.
Petitioner also states that the same adjustment may apply for ocean
freight, but that the record is not clear regarding whether the
Department accepted rates based on weight or number of bearings.
Respondent did not comment on this issue.
Department's Position: We agree with petitioner that a cost is
incurred with respect to shipment of packing materials. Therefore, to
account for the additional packing weight, we have calculated foreign
inland freight by multiplying the net weights by 1.08. The Department
used this figure, based on
[[Page 37199]]
its determination that it was an independent and reliable source of
information, in Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, from the People's Republic of China; Final Results of
Antidumping Duty Administrative Review (1993-94), 62 FR 6189, 6203
(February 11, 1997), and the 1994-95 segment of the same proceeding (62
FR 6173, 6184 (February 11, 1997)).
With regard to TIE's reported ocean freight, we noted in the
verification report that TIE calculated its international freight
values by dividing ``Total Shipping Expense (from freight invoice)'' by
``Total Invoice Value (from invoice),'' and then multiplying that
figure by the unit price. Additionally, the TIE verification sales
trace exhibits support the conclusion that ocean freight expenses have
not been reported on a per weight basis. Thus, TIE accurately reported
its actual ocean freight expense, and no adjustment for packing
materials is warranted.
Comment 6: Respondent argues that the Department should not have
used a 1991 cable from the U.S. Embassy in Jakarta as the source of
factory overhead, SG&A, and profit data in this case. Specifically,
respondent argues that the information is not substantiated in any
respect, and is six years old.
Respondent argues that the Department has established a preference
for the use of publicly-available information over cable data obtained
from U.S. embassies, citing Final Determination of Sales at Less Than
Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings from the
People's Republic of China. For this review, respondent contends that
it would be more appropriate to use information from Melamine
Institutional Dinnerware from the People's Republic of China
(``Dinnerware''). While respondent acknowledges that the industry is
different than bearings, respondent notes that they are both
manufactured products which involve a basic raw material. Furthermore,
according to respondent, there is no other data on the record which
would allow the Department to obtain overhead, SG&A, and profit data
from a single source. Because this data is transparent, verified, and
pertains to a more recent period, respondent maintains that it is
superior to the data used in the preliminary results.
Petitioner argues that, while it believes there are problems with
the use of the pipe fittings data (see Comment 4), respondent has
proposed the utilization of information from proceedings involving
products which petitioner argues bear ``no relationship at all'' to the
TRBs under review. While petitioner notes that the degree of
specificity acceptable in surrogate value selection depends to a
``considerable'' extent upon what information is available on the
record, petitioner argues that there is no reason to accept the data
proposed by TIE on the basis of the record in this review.
First, petitioner claims that while the Dinnerware information is
more recent and closer in time to the review period than the
information used by the Department, that is irrelevant. Specifically,
petitioner claims that the timeliness of data only becomes relevant
when the data themselves are relevant. In this case, no matter how
contemporaneous, petitioner asserts that plastic dishes are not
comparable to bearings. Additionally, as the figures used by the
Department are percentage rates, petitioner argues that, while actual
prices may vary considerably over time, it is less likely that the
overall cost structure of an industry would change drastically over a
few years. Petitioner concludes that it is reasonable to assume that an
industry's cost structure, and its overhead, SG&A, and profit ratios,
would remain basically the same between 1991 and 1995-96.
Finally, petitioner claims that the materials and production
process for pipe fittings are more similar to bearing production than
the melamine dinnerware materials and production process. Pipe fittings
are made of steel, like bearings, and the production process involves
heating and forging, or cold-forming, and machining to final size.
Department's Position: We disagree with respondent that it would be
more appropriate to utilize overhead, SG&A, and profit data from
Dinnerware. Most importantly, we note that the statute, at 19 U.S.C.
1677b(c) (1)(B) and (2)(A), requires use of surrogate values for
production of comparable merchandise. As the Department noted in
Comment One of the final results of review of the 1993-94 segment of
this proceeding, in defending the use of data from the Turkish pipe and
tube industry, ``the term `comparable' encompasses a larger set of
products than `such or similar.' '' Thus, we have supported the use of
pipe industry data in earlier reviews of this proceeding as being
sufficiently ``comparable'' to tapered roller bearings.
In contrast, there is no Departmental precedent for the application
of data pertaining to the production of melamine dinnerware to the
tapered roller bearing industry. This is not surprising, based on the
fact that, other than respondent's observation that they are both
manufactured products which involve a basic raw material, there is
nothing comparable about these two types of merchandise. Additionally,
the Department offered guidance in determining the potential universe
of comparable products for this review period. Specifically, in
Attachment 4 of the Department's surrogate country selection
memorandum, the Department stated that ``if any of the listed possible
surrogates are significant producers of any steel products they may be
appropriate surrogates.'' See February 25, 1997 Memorandum to the File:
Antidumping Administrative Review of Tapered Roller Bearings from
Romania: Selection of a Surrogate Country in the 1995/96 Review.
Dinnerware, of course, does not fall within this category.
Because the melamine dinnerware data pertains to an industry which
is not comparable to the merchandise under review, we agree with
petitioner that the time period for which the dinnerware data is
applicable is a moot issue.
Comment 7: Respondent contends that the SG&A rate used in the
preliminary results is unreasonably high, both compared to rates used
in other bearings reviews, as well as compared to any other instances
in which the Department has used actual data.
Petitioner responds that the SG&A rate is not abnormally high. For
example, petitioner notes that the SG&A rate from the only Indonesian
company on the record in this review that petitioner believes can be
regarded as a producer of merchandise reasonably similar to bearings is
higher than the rate used by the Department in the preliminary results.
Department's Position: Respondent's contention that the SG&A rate
used in the preliminary results is unreasonably high, both compared to
rates used in other bearings reviews, as well as compared to any other
instances in which the Department has used actual data, is not
sufficient grounds to lower the SG&A figure for the final results of
review in the absence of preferable data. As discussed above in Comment
6, respondent's suggested use of data from the Dinnerware case is
unacceptable, as dinnerware is not comparable to tapered roller
bearings. Therefore, the only possible alternative data on the record
of this review for use as surrogate SG&A data is the PT Lion Metal
Works data. As petitioner has suggested, this data supports the
conclusion that the SG&A figure from the embassy cable is not
aberrational compared to the SG&A expenses of an industry comparable to
the bearing industry.
[[Page 37200]]
Comment 8: Respondent argues that, while it believes that the
Department should employ overhead data from Dinnerware, it has provided
additional information on the record which it contends is ``clearly as
reasonable'' as the embassy cable used in the preliminary results.
Department's Position: Respondent's proposals to employ overhead
data from Notice of Final Determination of Sales at Less than Fair
Value: Disposable Pocket Lighters from the People's Republic of China,
60 FR 22359 (May 5, 1995) and Notice of Final Determination of Sales at
Less than Fair Value: Furfuryl Alcohol from the People's Republic of
China, 60 FR 22544 (May 8, 1995) antidumping duty investigations suffer
the same limitation as respondent's proposal to utilize data from
Dinnerware. That is, the data from these cases pertain to industries
that are not comparable to the bearing industry and therefore, we are
not using them in these final results.
Comment 9: Respondent objects to the Department's utilization of a
foreign inland freight rate based on information from Dinnerware.
First, respondent argues that the rate used by the Department results
in a deduction of 2 percent to 8 percent from gross unit price for most
models, when the rate used in the previous review resulted in a
deduction of far less than 1 percent from gross unit price. Second,
respondent notes that the rate is almost 20 times more than the rate
used the 1994-95 TRBs from the PRC review. Third, respondent states
that the Department's selection of this rate suggests that it is three
times more expensive to ship bearings from Brasov to Constanta, Romania
than to send the bearings from Constanta to Baltimore, USA.
Respondent alleges that the reason for this high price is either a
mathematical error on the Department's part, or the fact that the short
distance between the factory and the port (40 km) make the cost per
kilometer abnormally high. Respondent asserts that the Department has
taken the position in Final Determination of Sales at Less than Fair
Value: Certain Cased Pencils from the People's Republic of China
(``Pencils from the PRC''), 59 FR 55625, 55629 (November 8, 1994) that
it will examine surrogate values for reasonableness. Where the
Department find that the surrogate values are unreasonable or
aberrational, respondent maintains that the Department has stated it
will compare the questionable data with other data to determine its
reliability and to use other more reliable data, if necessary.
Petitioner argues that respondent has made no attempt to
demonstrate that the rate used by the Department in the preliminary
results is objectively too high. In the absence of such demonstration,
petitioner claims that there is no evidence that the rate is actually
too high and, in fact, petitioner suggests that it can be argued just
as persuasively that the rates used in the other instances were too
low.
Furthermore, petitioner maintains that the lack of an objective
basis for TIE's complaint is highlighted by its use of a hypothetical
example (in which respondent argues that, if the bearing factories were
1500 km from the port, the freight cost would be 27 percent of the cost
of the bearings). In fact, according to petitioner, the factories are
not 1500 km from the port. The actual distances (350 and 380 km),
according to petitioner, are more comparable to the 40 km used as the
basis for the Department's calculation.
Department's Position: In the preliminary results of review, the
Department used information submitted on the record for the 1995
antidumping investigation on Dinnerware. However, as we noted above in
Comment 4, interested parties were provided the opportunity to submit
information regarding Indonesian factors of production after
publication of the preliminary results of review notice. In response to
the Department's letter, TIE submitted freight data used in Disposable
Pocket Lighters from the PRC. We note that this data, which includes
freight values for truck and rail separately, is based on the same U.S.
Embassy cable from which the Department took the SG&A, profit, and
overhead values.
Because the cable data pertains to the pipe fitting industry (an
industry comparable to the bearing industry), it is inherently
preferable to the Dinnerware data. Additionally, in comparison with
actual data used in other cases involving tapered roller bearings, the
cable data appears to more reasonably approximate the true cost of
freight for producers of tapered roller bearings. We agree with
respondent that the Department has taken the position in Pencils from
the PRC that it will examine surrogate values for reasonableness. Thus,
the rate used in the preliminary results of review, when contrasted
with rates from the Romanian TRBs cases for 1993-94 and 1994-95, and
the Chinese TRB case for 1994-95, does not appear to reasonably
approximate the true cost of freight.
Therefore, for the final results of review, we have revised freight
based on the values for truck and rail appearing in the 1991 Embassy
cable. See Analysis Memorandum for the Final Results of Review (July 7,
1997).
Comment 10: Respondent argues that the Department should utilize
the former statutory minimum of 8 percent or rely upon the rate in
Dinnerware to calculate profit.
Petitioner claims that the Department has rejected the use of the
former statutory minimum for profit as contrary to law, for example, in
the 1994-95 segment of this proceeding. Furthermore, use of the rate in
Dinnerware should be rejected as not applying to an industry producing
similar merchandise, as discussed by petitioner in Comment 6 above.
Department's Position: We disagree with respondent. Under the
controlling statute, the statutory minimum of 8 percent for profit is
invalid, and the Department must use actual rates when possible. See 19
U.S.C. 1677b(e)(2). Additionally, as discussed above, Dinnerware is not
comparable merchandise to the merchandise under review. Therefore, the
Department cannot consider the profit rate from that case. Hence, the
Department has continued to use the actual profit rate reported for the
Indonesian pipe fitting industry, as this rate applies to producers of
comparable merchandise from a qualifying surrogate country.
Comment 11: Respondent alleges ministerial errors for certain
observations in the database, caused by incorrect labor costs, which
should be corrected for the final results of review.
Petitioner argues that the reporting errors were made by TIE, not
the Department. Thus, petitioner notes that it is ``just as possible''
that the error, if one exists, lies in the values used for the other
observations TIE alleges are correct, or that the labor costs for the
observation cited are correct and the model number listed is incorrect.
Petitioner argues that post hoc changes in data submitted ``long ago''
cannot reasonably be accepted now.
In the event the Department changes these values, petitioner
asserts that, under the adverse inference rule, the Department should
use, as facts otherwise available, the highest normal value information
for that part number in all cases.
Department's Position: We agree with respondent. The Department has
corrected these ministerial errors, which were cell referencing errors
in the spreadsheet program written by the Department, for the final
results of review.
[[Page 37201]]
Final Results of the Review
As a result of our review, we determine that the following margin
exists:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
TIE....................................... 6/1/95-5/31/96 2.70
------------------------------------------------------------------------
The Department will instruct the Customs Service to assess
antidumping duties on all appropriate entries. The Department will
issue appraisement instructions directly to the Customs Service.
Furthermore, the following cash deposit requirements will be effective
upon publication of these final results for all shipments of this
merchandise, 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) The cash deposit rates for TIE will be the rate stated above
(except that if the rate is de minimis, i.e., less than 0.5 percent, a
cash deposit rate of zero will be required); (2) the cash deposit rate
for all other Romanian exporters will be the Romania-wide rate made
effective by the amended final results of the 1994-95 administrative
review. See Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, from Romania; Amendment of Final Results of Antidumping
Duty Administrative Review, 61 FR 59416 (November 22, 1996); (3) for
non-Romanian exporters of subject merchandise from Romania, the cash
deposit rate will be the rate applicable to the Romanian supplier of
that exporter. These deposit requirements shall remain in effect until
publication of the final results of the next administrative review.
This notice serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d)(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 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: July 7, 1997.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18286 Filed 7-10-97; 8:45 am]
BILLING CODE 3510-DS-P