[Federal Register Volume 62, Number 153 (Friday, August 8, 1997)]
[Notices]
[Pages 42747-42749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20938]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-802]


Industrial Nitrocellulose 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: In response to a request by the respondent, China North 
Industries Guangzhou Corp. (CNIGC), the Department of Commerce (the 
Department) is conducting an administrative review of the antidumping 
duty order on industrial nitrocellulose from the People's Republic of 
China (PRC). The review covers one exporter of the subject merchandise 
to the United States and the period July 1, 1995 through June 30, 1996. 
The review indicates the existence of dumping margins during the period 
of review.
    We have preliminarily determined that sales have been made below 
normal value (NV). If these preliminary results are adopted in our 
final results of administrative review, we will instruct the U.S. 
Customs Service to assess antidumping duties equal to the difference 
between United States price (U.S. price) and NV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: August 8, 1997.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor or Maureen Flannery, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington D.C. 20230; telephone: (202) 482-4733.

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to 19 CFR 
Part 353 (1997).

SUPPLEMENTARY INFORMATION:

Background

    On July 10, 1990, the Department published in the Federal Register 
(55 FR 28267) the antidumping duty order on industrial nitrocellulose 
(INC) from the PRC. On July 8, 1996, the Department published in the 
Federal Register (61 FR 35712) a notice of opportunity to request an 
administrative review of this antidumping duty order. On July 31, 1996, 
in accordance with 19 CFR 353.22(a), one exporter of the subject 
merchandise to the United States, CNIGC, requested that the Department 
conduct an administrative review of its exports of subject merchandise 
to the United States. We published the notice of initiation of this 
review on August 15, 1996 (61 FR 42416).

Scope of the Review

    Imports covered by this review are shipments of INC from the PRC. 
INC is a dry, white, amorphous synthetic chemical with a nitrogen 
content between 10.8 and 12.2 percent, and is produced from the 
reaction of cellulose with nitric acid. INC is used as a film-former in 
coatings, lacquers, furniture finishes, and printing inks. The scope of 
this order does not include explosive grade nitrocellulose, which has a 
nitrogen content of greater than 12.2 percent.
    INC is currently classified under Harmonized Tariff System (HTS) 
subheading 3912.20.00. While the HTS item number is provided for 
convenience and Customs purposes, the written description remains 
dispositive as to the scope of the product coverage.
    The review period is July 1, 1995 through June 30, 1996.

Separate Rates

    CNIGC claims to be eligible for a separate antidumping rate, as an 
independent trading company owned by ``all the people.'' As stated in 
the Final Determination of Sales at Less than Fair Value: Silicon 
Carbide from the People's Republic of China (Silicon Carbide), 59 FR 
22585, 22586 (May 2, 1994), and Final Determination of Sales at Less 
than Fair Value: Furfuryl Alcohol from the People's Republic of China 
(Furfuryl Alcohol) 60 FR 22544 (May 8, 1995), ownership of a company by 
all the people does not require the application of a single rate. 
Therefore, CNIGC is eligible for consideration for a separate rate.
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under the test originally established in 
the Final Determination of Sales at Less Than Fair Value: Sparklers 
from the People's Republic of China (Sparklers), 56 FR 20588 (May 6, 
1991), and amplified in Silicon Carbide. Under this test, the 
Department assigns separate rates in nonmarket-economy (NME) cases only 
if an exporter can affirmatively demonstrate the absence of both (1) de 
jure and (2) de facto governmental control over export activities. See 
Silicon Carbide and Furfuryl Alcohol.

[[Page 42748]]

1. De Jure Control

    CNIGC has placed on the administrative record documents to 
demonstrate absence of de jure control. CNIGC submitted the ``Law of 
the People's Republic of China on Industrial Enterprises Owned by the 
Whole People,'' adopted on April 13, 1988 (the Industrial Enterprises 
Law), and the 1992 regulations that supplemented it, ``Provisions on 
Changing the System of Business Operation for State Owned Enterprises'' 
(Business Operation Provisions). We have analyzed these laws in 
previous cases and have found them to sufficiently establish an absence 
of de jure control of companies ``owned by the whole people,'' such as 
CNIGC. (See Notice of Preliminary Determination of Sales at Less Than 
Fair Value and Postponement of Final Determination: Certain Partial-
Extension Steel Drawer Slides with Rollers from the People's Republic 
of China, 60 FR 29571, 29573 (June 5, 1995); and Furfuryl Alcohol. The 
Industrial Enterprises Law provides that enterprises owned by ``the 
whole people'' shall make their own management decisions, be 
responsible for their own profits and losses, choose their own 
suppliers, and purchase their own goods and materials. The Business 
Operation Provisions confer upon state-owned enterprises the 
responsibility for making investment decisions, the right to dispose of 
retained capital and assets, and the authority to form joint ventures 
and to merge with other enterprises. CNIGC states that INC does not 
appear on any government lists regarding export provisions or export 
licensing, and that no quotas are imposed on INC.
    In sum, in prior cases, the Department has analyzed the Chinese 
laws on the record in this case, and found that it establishes an 
absence of de jure control. We have no new information in these 
proceedings which would cause us to reconsider this determination.

2. De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by or are 
subject to the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses. See, e.g., Silicon Carbide and Furfuryl Alcohol. 
These factors are not necessarily exhaustive, and other relevant 
indicia of government control may be considered.
    In the Final Determinations of Sales at Less Than Fair Value: Brake 
Drums and Brake Rotors from the People's Republic of China (Brake Drums 
and Rotors), 62 FR 9160 (February 28, 1997), we found that this 
respondent, CNIGC, could not affirmatively demonstrate an absence of de 
facto government control. In Brake Drums and Rotors we found that CNIGC 
remains a branch of China North Industries Corporation (NORINCO), and 
that NORINCO is controlled by the PRC government. As there are no facts 
on the record of this administrative review to contradict our findings 
in Brake Drums and Rotors, we have not granted a separate rate to CNIGC 
in this review. We have placed on the record of this review documents 
used to reach the separate rates determination in Brake Drums and 
Rotors and which form the basis for our determination not to grant a 
separate rate to CNIGC in this review. See Memorandum to the file from 
Leah Schwartz dated March 26, 1997, on file in Room B-099 of the 
Commerce Department.

PRC-Wide Rate

    Because we have not granted a separate rate to CNIGC, we are 
preliminarily applying a single antidumping rate--the PRC-wide rate--to 
all exporters in the PRC. We have preliminarily based the PRC-wide rate 
on the information submitted by CNIGC for this review because we have 
reason to believe that CNIGC was the only exporter of INC from the PRC 
to the United States during the POR. See the proprietary memorandum to 
the file from Rebecca Trainor, dated July 23, 1997, on file in Room B-
099 of the Commerce Department.

United States Price

    The Department used export price (EP), in accordance with section 
772(a) of the Act, in calculating U.S. price, because the subject 
merchandise was sold to unrelated purchasers prior to importation into 
the United States and the constructed export price methodology was not 
warranted based on the facts of record. We calculated EP based on the 
price to unrelated purchasers. We deducted amounts for inland freight 
from the factory to the port and for brokerage and handling. We valued 
foreign inland freight using data on Indonesian freight rates. See the 
proprietary analysis memo dated July 23, 1997, on file in Room B-099, 
for discussion of our treatment of brokerage and handling expenses. We 
selected Indonesia as the primary surrogate country for reasons 
explained in the ``Normal Value'' section below.

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 subject merchandise is exported from 
an NME country, and (2) available information does not permit the 
calculation of NV using home market prices or third country prices, in 
accordance with 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. None of the parties to this 
proceeding has contested such treatment. Accordingly, we calculated NV 
in accordance with section 773(c) of the Act. We valued the factors of 
production using prices or costs in one or more surrogate market 
economy countries. We first determined that India, Pakistan, Egypt, Sri 
Lanka and Indonesia are each at a level of economic development 
comparable to the PRC in terms of per capita gross national product, 
the growth rate in per capita income, and the national distribution of 
labor. Of these potential surrogate countries, we determined that both 
Indonesia and India are significant producers of INC. However, price 
data for one of the major inputs used in the production of INC was 
unavailable from Indian sources, whereas price data for all of the 
principal production inputs is available from Indonesian sources. 
Therefore, we used Indonesia as the primary surrogate country. We 
valued one of the packing materials, steel drums, using publicly 
available data from India, because Indonesian data was not available 
for this factor. See Memorandum to Maureen Flannery from David Mueller, 
dated January 29, 1997, ``Industrial Nitrocellulose from the People's 
Republic of China: Non-market Economy Status and Surrogate Country 
Selection,'' and Memorandum to the File dated March 24, 1997: 
``Industrial Nitrocellulose from the People's Republic of China: 
Significant Production in Indonesia and India of Comparable 
Merchandise,'' which are on file in room B-099 of the Commerce 
Department.
    Petitioner and respondent submitted publicly available information 
on surrogate values for the Department's consideration. For purposes of

[[Page 42749]]

calculating NV, we valued PRC factors of production as follows, in 
accordance with section 773(c) of the Act:
    To value cotton linters, nitric acid, sulphuric acid, chlorine, 
caustic soda, rosin, and ethyl alcohol, we used a per kilogram value 
obtained from the Foreign Trade Statistical Bulletin of Indonesia: 
Imports (Indonesian Import Statistics). We adjusted these values to 
reflect inflation through the period of review (POR). We included 
freight costs incurred between the supplier and CNIGC, valued using the 
Indonesian freight rates.
    For direct labor, we used the unskilled labor rate published by the 
U.S. Department of Labor, Bureau of International Labor Affairs in its 
1992 publication, Foreign Labor Trends: Indonesia. This source shows 
the number of hours worked per week. We adjusted the labor rate to 
reflect inflation through the POR using the wholesale price index (WPI) 
published by the International Monetary Fund.
    For factory overhead, we used information reported in a December 2, 
1994 fax from the U.S. Foreign Commercial Service of the American 
Embassy in Jakarta, Indonesia. This data was received for the less-
than-fair-value (LTFV) investigation of furfuryl alcohol from the PRC, 
and provides an estimated range of factory overhead in Indonesia. This 
information was used in the LTFV investigation of disposable pocket 
lighters from the PRC. From this information, we were able to determine 
factory overhead as a percentage of materials and labor. The surrogate 
overhead rate included energy; therefore, we did not include CNIGC's 
reported energy factors in the margin calculation.
    For selling, general and administrative (SG&A) expenses and profit, 
we used information obtained from a September 1991 cable from the U.S. 
Embassy in Jakarta. This cable was received for the LTFV investigation 
of certain carbon steel butt-weld pipe fittings from the PRC, and 
provides estimated ranges of SG&A expenses and profit margins.
    To value plastic bags used in packing, we used the Indonesian 
Import Statistics. To value steel drums, we used a per kilogram value 
obtained from the Monthly Statistics of the Foreign Trade of India 
(Indian Import Statistics), as these values were unavailable for 
Indonesia. We adjusted these values to reflect inflation through the 
POR. We also adjusted these values to include freight costs incurred 
between the suppliers and the INC factory. Because CNIGC did not report 
the distances between its INC factory and the packing materials 
suppliers, we relied on the facts otherwise available. We used the 
average distance between the INC factory and the factory's raw 
materials suppliers.
    To value truck freight, we used the rates reported in a September 
1991 cable from the U.S. Embassy in Jakarta, Indonesia. This cable was 
received for the LTFV investigation of certain carbon steel butt-weld 
pipe fittings from the PRC. We adjusted the rates to reflect inflation 
using the WPI published by the IMF.

Currency Conversion

    We made currency conversions pursuant to section 773A(a) of the Act 
and section 353.60 of the Department's regulations based on the rates 
certified by the Federal Reserve Bank.

Preliminary Results of the Review

    As a result of our review, we preliminarily determine that the 
following margin exists for the period July 1, 1995 through June 30, 
1996:

------------------------------------------------------------------------
                                                                 Margin 
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
PRC-Wide Rate................................................      48.91
------------------------------------------------------------------------

    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 within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. See 19 CFR 353.38(d). Parties who submit argument in this 
proceeding are requested to submit with the argument (1) a statement of 
the issue and (2) a brief summary of the argument. The Department will 
publish a notice of final results of this administrative review, which 
will include the results of its analysis of issues raised in any such 
comments, not later than 120 days after the date of publication of this 
notice.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and NV may vary from the percentages 
stated above. The Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this administrative review for 
all shipments of INC from the PRC entered, or withdrawn from warehouse, 
for consumption on or after the publication date, as provided for by 
section 751(a)(1) of the Act: (1) for all PRC exporters, the cash 
deposit rate will be the PRC-wide rate established in the final results 
of this review; and (2) the cash deposit rates for non-PRC exporters of 
subject merchandise from the PRC will be the rates 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.

Notification of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 353.26 of the Department's regulations 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 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22 
of the Department's regulations.

    Dated: July 31, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-20938 Filed 8-7-97; 8:45 am]
BILLING CODE 3510-DS-P