[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