[Federal Register Volume 62, Number 216 (Friday, November 7, 1997)]
[Notices]
[Pages 60228-60232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29497]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-501]
Natural Bristle Paintbrushes and Brush Heads From The People's
Republic of China; Preliminary Results of Antidumping Duty
Administrative Review
AGENCY: Import Administration, International Trade Administration, U.S.
Department of Commerce.
ACTION: Notice of preliminary results of the antidumping duty
administrative review of natural bristle paintbrushes and brush heads
from the People's Republic of China.
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SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on natural bristle
paintbrushes and brush heads (paintbrushes) from the People's Republic
of China (PRC) in response to a request by petitioner, the Paint
Applicator Division of the American Brush Manufacturers Association
(the Paint Applicator Division). This review covers shipments of this
merchandise to the United States during the period of February 1, 1996,
through January 31, 1997.
We have preliminarily determined that sales have been made below
normal value (NV). If these preliminary results are adopted in our
final results, we will instruct the U.S. Customs Service to assess
antidumping duties equal to the difference between export price and NV.
Interested parties are invited to comment on these preliminary
results. Parties who submit argument are requested to submit with each
argument (1) a statement of the issue and (2) a brief summary of the
argument.
EFFECTIVE DATE: November 7, 1997.
FOR FURTHER INFORMATION CONTACT: Eric Scheier, Elisabeth Urfer, or
Maureen Flannery, Antidumping/Countervailing Duty Enforcement, 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.
[[Page 60229]]
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. In addition, unless otherwise indicated,
all citations to the Department's regulations are to the provisions
codified at 19 CFR part 353, as of April 1, 1996.
Background
The Department published in the Federal Register an antidumping
duty order on paintbrushes from the PRC on February 16, 1986 (51 FR
5580). On February 3, 1997, the Department published in the Federal
Register (62 FR 4978) a notice of opportunity to request an
administrative review of the antidumping order on paint brushes from
the PRC covering the period February 1, 1996, through January 31, 1997.
On January 29, 1997, in accordance with 19 CFR 353.2(k)(1), Brenner
Associates, a U.S. importer of the subject merchandise, requested that
we conduct an administrative review of Hebei Animal By-Products I/E
Corporation (Hebei). On February 24, 1997, the Hunan Provincial Native
Produce & Animal By-Products I/E Corporation (Hunan) submitted a
request for a review. We published a notice of initiation of this
antidumping duty administrative review on March 18, 1997 (62 FR 12793).
The Department is conducting this administrative review in accordance
with section 751 of the Act.
Scope of Review
Imports covered by this review are shipments of natural bristle
paint brushes and brush heads from the PRC. Excluded from the order are
paint brushes and brush heads with a blend of 40% natural bristles and
60% synthetic filaments. The merchandise under review is currently
classifiable under item 9603.40.40.40 of the Harmonized tariff Schedule
of the United States (HTSUS). Although the HTSUS subheading is provided
for convenience and customs purposes, the written description of the
merchandise is dispositive.
This review covers the period February 1, 1996, through January 31,
1997.
Verification
As provided in section 782(i) of the Act, we verified information
provided by Hunan and its supplier by using standard verification
procedures, including on-site inspection of the manufacturer's
facilities, the examination of relevant sales and financial records,
and the selection of original documentation containing relevant
information. Our verification results are outlined in the public
version of the verification report.
Facts Available
We premliinarily determine that, in accordance with section 776(a)
of the Act, the use of facts available is appropriate for Hebei because
this firm did not respond to the Department's antidumping
questionnaire. Hebei had requested and was granted an extension to file
its questionnaire response with the Department. Hebei requested a
second extension after the response was due, and was denied its
request. (See letter from Edward Yang to Perry Gartner, June 10, 1997.)
Because necessary information is not available on the record with
regard to sales by Hebei, the use of facts available is warranted.
Where a respondent has failed to cooperate to the best of its
ability, Section 776(b) of the Act authorizes the Department to use
facts available that are adverse to the interests of that respondent,
which include information derived from the petition, the final
determination, a previous administrative review, or other information
placed on the record. As facts available, we are using the rate
calculated the Hebei in the review covering the period from February 1,
1994, through January 31, 1995 (1994-1995 review), 351.92 percent.
Because information from prior proceedings constitutes secondary
information, section 776(b) provides that the Department shall, to the
extent practicable, corroborate that secondary information from
independent sources reasonably at its disposal. The Statement of
Administration Action (SAA) provides that ``corroborate'' means simply
that the Department will satisfy itself that the secondary information
to be used has probative value.
To corroborate secondary information, the Department examines, to
the extent practicable, the reliability and relevance of the
information to be used. However, unlike other types of information,
such as surrogate values, there are no independent sources for
calculated dumping margins. The only source for calculated margins is
administrative determinations. Thus, in an administrative review, if
the Department chooses as total adverse facts available a calculated
dumping margin from a prior segment of the proceeding, it is not
necessary to question the reliability of the margin for that time
period. With respect to the relevance aspect of corroboration, however,
the Department will consider information reasonably at its disposal as
to whether there are circumstances that would render a margin not
relevant. Where circumstances indicate that the selected margin is not
appropriate as adverse facts available, the Department will disregard
the margin and determine an appropriate margin. (See, e.g., Fresh Cut
Flowers from Mexico; Preliminary Results of Antidumping Duty
Administrative Review, 60 FR 49567 (September 26, 1995), where the
Department disregarded the highest margin as best information available
because that margin was based on an uncharacteristic business expense,
which resulted in the high margin.) In this case, we have used the
highest rate from any prior segment of the proceeding, 351.92 percent,
which was the rate calculated for Hebei in the 1994-1995 review. There
is no information that indicates that this rate is not appropriate.
Because Hebei is a part of the PRC entity, this rate becomes the PRC
rate (see Separate Rates below).
Separate Rates
To establish whether a company operating in a state-controlled
economy is sufficiently independent to be entitled to a separate rate,
the Department analyzes each exporting entity 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 non-market economies (NMEs) are entitled to separate,
company-specific margins when they can demonstrate an absence of
government control, both in law and in fact, with respect to export
activities. Evidence supporting, though not requiring, a finding of de
jure absence of government control over export activities 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 over exports is based on four factors: (1)
Whether each exporter sets its own export prices independently of the
government and without the approval of
[[Page 60230]]
a government authority; (2) whether each exporter retains the proceeds
from its sales and makes independent decisions regarding the
disposition of profits or financing of losses; (3) whether each
exporter has the authority to negotiate and sign contracts and other
agreements; and (4) whether each exporter has autonomy from the
government regarding the selection of management.
With respect to the absence of de jure government control over
export activities, evidence on the record indicates that Hunan is a
collectively-owned enterprise. The ``law of the People's Republic of
China on Industrial Enterprises Owned by the Whole People'' identify
rules and regulations pertaining to collectively-owned enterprises
which give rural collective enterprise such rights as the right to act
on their own behalf, adopt independent accounting, assume the sole
responsibility for their profits and losses, and elect their own
management. (See Exhibit 3 of Hunan's May 21, 1997, questionnaire
response.) Additionally, paintbrushes do not appear on the ``Temporary
Provisions for Administration of Export Commodities,'' approved on
December 21, 1992, and are not, therefore, subject to the constraints
of this provision. (See Questionnaire Response of May 21, 1997, at A-6
and Memorandum to the File dated October 10, 1997, ``Natural Bristle
Paintbrushes and Brush Heads: Laws and Regulations Governing Exports
from the PRC''.) At verification we confirmed that paintbrushes are not
subject to export controls. See public version of Verification Repot of
Sales for Hunan Provincial Native Produce & Animal By-Products Corp.
dated September 25, 1997.
With respect to the absence of de facto control over export
activities, Hunan's management is elected by Hunan's staff, and is
responsible for all decisions such as the determination of its export
prices, profit distribution to employee distributions, employee welfare
funds and investments, employment policy, marketing strategy, and for
negotiating contracts. At verification we found that the department
heads negotiated sales of paint brushes, that Hunan planned to
distribute unallocated profit, and that employees could be fired or
reassigned, and salaries could be reduced. See Separate Rate for Hunan
Provincial Native Produce and Animal By-Products Im/Ex Corp. in the
1996-1997 Administrative Review of Paintbrushes and Brush Heads from
the People's Republic of China dated October 31, 1997, (Separate Rates
Memorandum) and public version of Verificaiton Report dated September
25, 1997, which is on file in the Central Records Unit (room B099 of
the Main Commerce Building).
Because evidence on the record demonstrates an absence of
government control, both in law and in fact, over Hunan's export
activities, the Department preliminarily grants Hunan a separate rate.
For further discussion of the Department's preliminary determination
that Hunan is entitled to a separate rate, see Separate Rates
Memorandum.
In the administrative review covering the period from February 1,
1994 through January 31, 1995 (1994-95 review), we determined that
Hebei merited a separate rate. However, because Hebei did not respond
to the questionnaire in the present (1996-97) review, it will not be
considered for a separate rate in this review.
United States Price
For sales made by Hunan, we based United States Price on export
price, in accordance with section 772(a) of the Act, because the
subject merchandise was sold to unrelated purchasers in the United
States prior to importation into the United States.
We calculated export price based on the price to unrelated
purchasers. We deducted an amount for foreign inland freight,
insurance, and brokerage and handling. We selected Indonesia for all
surrogate values with the exception of inland insurance, for the
reasons explained in the ``Normal Value'' section of this notice.
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) 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) of the Act, 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 have applied
surrogate values to the factors of production to determine NV.
We calculated NV based on factors of production in accordance with
section 773(c)(4) of the Act and section 353.52(c) of our regulations.
We determined that Indonesia (1) is comparable to the PRC in terms of
level of economic development, and (2) is a significant producer of
comparable merchandise. See Memorandum to the File dated October 24,
1997, ``Natural Bristle Paint Brushes from the People's Republic of
China--Significant Production in Indonesia of Comparable Merchandise.''
Therefore, for this review, we used publicly available information
relating to Indonesia to value the various factors of production.
Additionally, we used publicly available information relating to
India to value inland insurance, where Indonesian surrogate values for
insurance were not available. See Memorandum to the File from Eric
Scheier, dated October 24, 1997, ``Factor Values Used for the Final
Results of the 1996-1997 Administrative Review of Natural Bristle
Paintbrushes and Brush Heads from the People's Republic of China.''
We valued the factors of production as follows:
For brush handles, bristles, epoxy, wood, and packing
materials, we used a per kilogram value obtained from the Foreign Trade
Statistical Bulletin (Indonesian Import Statistics). Adjustments for
inflation with respect to these four factors of production and with
respect to packing materials were not necessary, as statistics were
available for the entire POR. For transportation distances used for the
calculation of freight expenses on raw materials, we added to surrogate
values from Indonesia a surrogate freight cost using the shorter of (a)
the distances between the closest PRC port and the factory, or (b) the
distance between the domestic supplier and the factory. See Notice of
Final Determination of Sales at Less Than Fair Value: Collated Roofing
Nails From the People's Republic of China, 62 FR 51410 (October 1,
1997) (Roofing Nails).
It is the Department's current policy to value an input
purchased from a market economy in a market-economy currency by using
the actual price paid for that input. Because the purchase of ferrule
was made from a market-economy supplier and paid for in a market-
economy currency, we have used the actual price paid by Hunan for
ferrule to value ferrule inputs.
We do not have information on Indonesian insurance rates,
nor do we have information on inland insurance rates from any of our
five possible surrogate countries. We have therefore
[[Page 60231]]
used the most recent figure available for Indian marine insurance, in
place of inland insurance, as we did in Final Determination of Sales at
Less Than Fair Value: Freshwater Crawfish Tail Meat from the People's
Republic of China, 62 FR 41347 (August 1, 1997). We adjusted this rate
to reflect inflation through the end of the period of review (POR)
using the Indian Wholesale Price Index (WPI) inflator derived from
wholesale price indices published by the International Monetary Fund
(IMF).
For brokerage and handling, we used the publicly available
information from a United States shipper that was used in the Final
Determination of Sales at Less Than Fair Value: Saccharin from People's
Republic of China, 59 FR 58818 (November 15, 1994). This value was
adjusted to reflect inflation through the end of the POR using the
Indonesian WPI published by the IMF.
For unskilled, skilled and indirect labor, as well as for
packing labor, we used the labor rates reported in the 1995 Statistical
Yearbook of Indonesia. This source provides weekly labor rates and
hours worked per week for unskilled labor only. Indonesian skilled
labor rates were unavailable. We used this source to value unskilled,
skilled and indirect labor. We used unskilled labor rates to value
skilled labor in the 1994-1995 administrative review of this case. We
adjusted these rates to reflect inflation through the end of the POR
using Indonesian WPI published by the IMF.
For factory overhead, selling, general and administrative
expenses (SG&A), and profit, we used data provided by the respondent,
from the Large and Medium Manufacturing Statistics: 1995, Vol. II,
published by the Indonesian Bureau of Statistics. (See Hunan's
submission dated July 28, 1997.) This source provides a cost breakdown
for large and medium sized manufacturers of hand tools and cutlery, and
was used in Roofing Nails. Petitioner did not contest the use of this
data, but argued that we should add certain categories to our
calculations, such as ``New and Second-Hand Purchases,'' and
``Construction Undertaken by the Establishment and by Others,'' and
that we replace ``Value of Gross Output'' with ``Total Value of Gross
Output.'' We made the petitioner's suggested adjustments because each
of these items represent part of the costs incurred to produce the
subject merchandise. We also subtracted ``Sale of Used Items'' from
SG&A and ``Increase in Stock of Semifinished Goods'' from ``Total Value
of Gross Output.'' We calculated factory overhead as a percentage of
the total cost of manufacture. We calculated an SG&A rate by dividing
SG&A expenses by the cost of manufacture. Lastly, we calculated a
profit rate by dividing profit by the cost of production.
To value electricity, we used a value found in A Brief
Guide for Investors: 1995, published by the Indonesian Government's
Investment Coordinating Board. We adjusted this value to reflect
inflation through the end of the POR using Indonesian WPI published by
the IMF. We then converted that figure to dollars using the exchange
rate on the date of sale certified by the Federal Reserve Bank.
To value truck and rail freight, we used the rates
reported in a September 1991 cable from the U.S. Consulate in Indonesia
submitted for the Final Determination of Sales at Less Than Fair Value:
Certain Carbon Steel Butt-Weld Pipe Fittings from the People's Republic
of China, 58 FR 47859 (September 20, 1993). More recent information was
not available in this review. We adjusted the rates to reflect
inflation through the end of the POR using Indonesian WPI published by
the IMF.
Currency Conversion
We made currency conversions pursuant to section 353.60 of the
Department's regulations at the rates certified by the Federal Reserve
Bank.
Preliminary Results of Review
We preliminarily determine that the following dumping margins
exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Hunan Provincial Native Produce &
Animal By-Products I/E Corp......... 02/01/96-01/31/97 0.01
PRC rate............................. 02/01/96-01/31/97 351.92
------------------------------------------------------------------------
Parties to the proceeding may request disclosure within 5 days of
the date of publication of this notice in accordance with 19 CFR
353.22(c)(6). Any interested party may request a hearing within 10 days
of publication in accordance with 19 CFR 353.38(b). 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 in
accordance with 19 CFR 353.38(c). 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. 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.
The Department shall determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between export price and NV may vary from the percentage
stated above. The Department will issue appraisement instructions
directly to the U.S. Customs Service.
Furthermore, the following deposit rate will be effective upon
publication of the final results of this administrative review for all
shipments of paintbrushes 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) For Hunan, which
has a separate rate, the cash deposit rate will be zero, because the
company-specific rate established in the final results of this
administrative review is, in accordance with 19 CFR 353.6, de minimis,
i.e., less than 0.5 percent; (2) for all other PRC exporters, the rate
will be the PRC country-wide rate; and (3) for non-PRC exporters of
subject merchandise from the PRC, the cash deposit rate will be the
rate applicable to the PRC supplier of that exporter.
These deposit rates, when imposed, shall remain in effect until
publication of the final results of the next administrative review.
This notice also serves as a preliminary 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 administrative review and notice are in accordance with
section 751(a)(1)
[[Page 60232]]
of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: October 31, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-29497 Filed 11-6-97; 8:45 am]
BILLING CODE 3510-DS-M