[Federal Register Volume 63, Number 156 (Thursday, August 13, 1998)]
[Notices]
[Pages 43373-43379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21790]


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DEPARTMENT OF COMMERCE

International Trade Administration
A-570-825


Sebacic Acid From the People's Republic of China; 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 of sebacic acid from the People's Republic of China

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SUMMARY: On April 9, 1998, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order on sebacic acid from the People's Republic of 
China (PRC) (63 FR 17367). This review covers shipments of this 
merchandise to the United States during the period of July 1, 1996, 
through June 30, 1997. We gave interested parties an opportunity to 
comment on our preliminary results. Based upon our analysis of the 
comments received we have changed the results from those presented in 
the preliminary results of the review.

EFFECTIVE DATE: August 13, 1998.

FOR FURTHER INFORMATION CONTACT: Brandon Farlander or Stephen Jacques, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th and Constitution Avenue, N.W., Washington, 
D.C. 20230; telephone: (202) 482-0182 or (202) 482-1391, respectively.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all 
citations to the statute are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the 
Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act 
(URAA). In addition, unless otherwise indicated, all citations to the 
Department's regulations are in reference to the regulations, codified 
at 19 CFR Part 351 (62 FR 27295, May 19, 1997).

SUPPLEMENTARY INFORMATION:

Background

    The Department published in the Federal Register an antidumping 
duty

[[Page 43374]]

order on sebacic acid from the PRC on July 14, 1994 (59 FR 35909). On 
July 21, 1997, the Department published in the Federal Register (62 FR 
38973) a notice of opportunity to request an administrative review of 
the antidumping duty order on sebacic acid from the PRC covering the 
period July 1, 1996, through June 30, 1997. On July 29, 1997, Tianjin 
Chemicals Import and Export Corporation (``Tianjin''), Guangdong 
Chemicals Import and Export Corporation (``Guangdong''), and Sinochem 
International Chemicals Company, Ltd. (``SICC'') requested that we 
conduct an administrative review. Also, on July 29, 1997, Tianjin 
requested partial revocation of the antidumping duty order on sebacic 
acid from the PRC. On July 30, 1997, in accordance with 19 CFR 
351.213(b), Union Camp requested that we conduct an administrative 
review of Tianjin, Guangdong, SICC, and Sinochem Jiangsu Import and 
Export Corporation. We published a notice of initiation of this 
antidumping duty administrative review on August 28, 1997 (62 FR 
45621). The Department is conducting this administrative review in 
accordance with section 751 of the Act. Sinochem Jiangsu was mailed a 
questionnaire on August 30, 1997 but did not respond.
    On April 9, 1998, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order on sebacic acid from the PRC (63 FR 17367, April 
9, 1998). We received written comments from three exporters of the 
subject merchandise: Tianjin, Guangdong, and SICC (collectively, 
respondents). We also received comments from the petitioner, Union Camp 
Corporation.
    On May 28, 1998, the Department informed parties that respondents' 
May 11, 1998 case brief, and petitioner's May 11, 1998 case brief and 
May 18, 1998 rebuttal brief, contained untimely new information, 
pursuant to 19 CFR 351.301(b)(2), which requires that factual 
information be submitted not later than 140 days after the last day of 
the anniversary month. This untimely new factual information was 
stricken from the record of this review. On June 12, 1998, the 
Department informed parties that respondents' May 29, 1998 case brief, 
May 18, 1998 rebuttal brief, and petitioner's June 1, 1998 rebuttal 
brief contained untimely new information that was stricken from the 
record of this review. On July 31, 1998, the Department informed 
parties that presentations in the June 10, 1998 public hearing 
contained untimely new factual information that was stricken from the 
record of this review.
    Tianjin requested partial revocation of the antidumping duty order 
on sebacic acid from the PRC pursuant to 19 CFR 351.222(b). However, we 
have determined in these final results a margin of 1.09 percent for 
Tianjin, which is above the Department's de minimis standard of 0.5 
percent. Therefore, we determine that Tianjin has not met the 
requirements for revocation.

Scope of Review

    The products covered by this order are all grades of sebacic acid, 
a dicarboxylic acid with the formula (CH2)8(COOH)2, which 
include but are not limited to CP Grade (500ppm maximum ash, 25 maximum 
APHA color), Purified Grade (1000ppm maximum ash, 50 maximum APHA 
color), and Nylon Grade (500ppm maximum ash, 70 maximum ICV color). The 
principal difference between the grades is the quantity of ash and 
color. Sebacic acid contains a minimum of 85 percent dibasic acids of 
which the predominant species is the C10 dibasic acid. Sebacic acid is 
sold generally as a free-flowing powder/flake.
    Sebacic acid has numerous industrial uses, including the production 
of nylon 6/10 (a polymer used for paintbrush and toothbrush bristles 
and paper machine felts), plasticizers, esters, automotive coolants, 
polyamides, polyester castings and films, inks and adhesives, 
lubricants, and polyurethane castings and coatings.
    Sebacic acid is currently classifiable under subheading 
2917.13.00.00 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheading is provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding remains dispositive.
    This review covers the period July 1, 1996, through June 30, 1997, 
and four exporters of Chinese sebacic acid.

Analysis of Comments Received

    Comment 1: Surrogate value for 2-octanol (capryl alcohol). 1 (A) 
Octanol value in Chemical Weekly (Bombay, India). Petitioner argues 
that the octanol value in Chemical Weekly is for 1-octanol and not 2-
octanol or 2-ethylhexanol. Petitioner questions the reliability of the 
letter from the editor of Chemical Weekly which was submitted by 
respondents and used by the Department for the preliminary results. The 
letter states that ``the octanol price referred by you corresponds to 
the more common 2-octanol (2 ethylhexanol).'' See Preliminary Results 
of Antidumping Duty Administrative Review; Sebacic Acid from the PRC 63 
FR 17371 (April 9, 1998) and Analysis Memorandum for the Preliminary 
Results of the 1996/1997 Review, April 2, 1998, at Attachment 5. 
Petitioner contends that because respondents failed to provide for the 
record the original inquiry letter sent to the editor of Chemical 
Weekly, there is no evidence on the record to indicate whether the 
octanol price referred to in the inquiry letter to the editor 
corresponds to the octanol price in the Chemical Weekly. In addition, 
petitioner argues that there is no evidence on the record to indicate 
that the Chemical Weekly editor is sufficiently familiar with the 
chemical composition of the octanol product published in Chemical 
Weekly to declare that it is 2-octanol (2-ethylhexanol).
    Respondents maintain that the Department correctly did not use a 
surrogate value for 1-octanol for the margin calculations (as suggested 
by petitioner), because the octanol value from the Chemical Weekly is 
for 2-ethylhexanol, which is another type of octanol, is the best 
available information.
    Respondents argue that it is clear that the editor of Chemical 
Weekly was referring in his letter to the price quote for octanol in 
his own publication, and that the editor is knowledgeable about the 
price quotes for the various chemicals found in the Indian market. 
Respondents contend that the Chemical Weekly octanol price quote is for 
2-ethylhexanol, which they assert is comparable in use and in value to 
2-octanol. (See (B) below.)
    Department's Position: 1 (A) Octanol value in Chemical Weekly 
(Bombay, India). We disagree with petitioner. Respondents submitted a 
letter written by the editor of Chemical Weekly stating that the 
reference to the octanol value in Chemical Weekly refers to 2-
ethylhexanol, which is a type of octanol. See Attachment V of 
respondent's December 4, 1997 PAPI submission and Analysis Memorandum 
for the Preliminary Results of the 1996/1997 Review, April 2, 1998, at 
Attachment 5. Furthermore, contrary to petitioner's argument, 
respondents have placed a copy of the inquiry letter to the editor of 
Chemical Weekly on the record as an attachment to its rebuttal brief 
pursuant to the Department's request for this information. See 
Attachment to respondents' June 16, 1998 rebuttal brief. Finally, there 
is no evidence on the record suggesting that the editor of Chemical 
Weekly is unfamiliar with the basis of the values reported in his own 
publication. Therefore, based on the

[[Page 43375]]

above information, and absent any substantiated record evidence to the 
contrary, the Department determines that the octanol value from 
Chemical Weekly is for 2-ethylhexanol.
    1 (B) Comparability between 1-octanol, 2-octanol, and 2-
ethylhexanol. Petitioner argues that 2-ethylhexanol, which the 
Department used as a surrogate value for 2-octanol, is not a comparable 
product to 2-octanol based on evidence on the record. Petitioner 
asserts that the Court of International Trade (``CIT''), in both Union 
Camp Corp. v. United States, 941 F. Supp. 108, 113 (1996) and Union 
Camp Corp. v. United States, No. 97-03-00483, Slip Op. 98-38, (Ct. 
Int'l Trade, March 27, 1998), held that the Department's use of 1-
octanol to value 2-octanol, based on its determination that 1-octanol 
was comparable to 2-octanol, was ``unsupported by substantial evidence 
on the record and not in accordance with law.'' See petitioner's June 
1, 1998 case brief at 2-3. Also, petitioner argues that there is no 
substantial evidence on the record to indicate that 2-ethylhexanol is 
comparable to 2-octanol, which is a subsidiary product produced as a 
result of the Chinese sebacic acid production process. In addition, 
petitioner asserts that 2-ethylhexanol is a form of 1-octanol with a 
chemical formula of CH3(CH2)6CH2OH, which is different from 2-octanol's 
chemical formula of CH3(CH2)5CH2OCH3. Petitioner further alleges that 
the uses for 2-ethylhexanol and 2-octanol differ. In this point, 
petitioner notes that Hawley's Condensed Chemical Dictionary, 12th ed. 
(``Hawley's'') lists the following uses for 1-octanol: ``perfumery, 
cosmetics, organic synthesis, solvent manufacture of high-boiling 
esters, antifoaming agent, flavoring agent,'' page 848. Hawley's lists 
the following uses for 2-octanol: ``solvent, manufacture of 
plasticizers, wetting agents, foam control agents, hydraulic oils, 
petroleum additives, perfume intermediaries, masking of industrial 
odors.'' Id. at 848. Therefore, petitioner's argue that 2-ethylhexanol 
is not comparable to 2-octanol.
    Respondents contend that the Chemical Weekly octanol price quote is 
for 2-ethylhexanol, and it is comparable in use and in value to 2-
octanol. Respondents argue that 2-ethylhexanol and 2-octanol are both 
plasticizer-range alcohol chemicals that can be used interchangeably 
for certain applications and thus have some of the same uses. 
Respondents argue that an article (in their June 16, 1998 case brief, 
Exhibit 1) entitled, ``Alcohols, Higher Aliphatic,'' from Kirk-Othmer 
Encyclopedia of Chemical Technology (``Kirk-Othmer'') (1991), refers to 
all octanols as plasticizer-range alcohols and to 2-octanol as octanol. 
Respondents maintain that Hawley's indicates that all octanols, 
including 2-octanol and 2-ethylhexanol, are used interchangeably to 
produce esters which are used to produce plastics. Respondents also 
assert that the octanol price from Chemical Weekly, which respondents 
claim is 2-ethylhexanol, is priced lower in world markets than 2-
octanol. Therefore, using the value of 2-ethylhexanol would not result 
in granting respondents an overstated by-product credit.
    Respondents argue that the Department has not considered evidence 
on the record that 1-octanol and 2-octanol are interchangeable for 
certain uses and are used in the production of plasticizers, lube oils, 
and perfumes. Respondents request that the Department, in making its 
determination about which surrogate value to use in the final results, 
consider the uses and values of 1-octanol and 2-octanol, in light of 
the CIT's previous ruling that Commerce's determination that 1-octanol 
and 2-octanol were not comparable products solely because they have the 
same molecular structure. See Union Camp Corp. v. United States, No. 
97-03-00483, Slip Op. 98-38, (Ct. Int'l Trade, March 27, 1998). 
Respondents contend that if the Department uses the petitioner's 
internal cost as the surrogate value, the petitioner, rather than the 
Department, will be controlling the dumping margins. Moreover, 
respondents will not know in the future whether a particular U.S. price 
will be considered a dumped price, because the petitioner's internal 
cost is not publicly available.
    Petitioner asserts that there is no common usage for 1-octanol and 
2-octanol listed in Hawley's. Petitioner argues that the Kirk-Othmer 
citation (the Alcohols, Higher Aliphatic article) submitted by 
respondents does not state that 2-octanol is referred to as an octanol 
or that all octanols are plasticizer range alcohols.
    Department's Position: 1 (B) Comparability of 1-octanol, 2-octanol, 
and 2-ethylhexanol. We disagree with petitioner's contention that the 
CIT held in Union Camp Corp. v. United States, No. 97-03-00483, Slip 
Op. 98-38 (March 27, 1998), that 1-octanol and 2-octanol are not 
comparable. The CIT held that the Department's determination that 1-
octanol and 2-octanol are comparable merchandise based solely on the 
fact the fact that the two chemicals have similar molecular structure 
was contrary to law because it was not based on a reasonable 
interpretation of the statute.
    For the record of this review, however, we have substantial 
evidence on the record establishing that 2-ethylhexanol (also known as 
2-ethylhexanol alcohol and octyl alcohol) and 2-octanol are comparable 
merchandise based on similar uses.
    Respondents cite the Kirk-Othmer article, which states that 
chemical family members with 6-11 carbon atoms are known as 
plasticizer-range alcohols. See ``Alcohols, Higher Aliphatic,'' Kirk-
Othmer Encyclopedia of Chemical Technology (``Kirk-Othmer'') at 865 
(1991). All of the octanols, including 1-octanol, 2-octanol and 2-
ethylhexanol, are plasticizer range alcohols with eight carbon atoms. 
Therefore, 1-octanol, 2-octanol and 2-ethylhexanol are physically 
similar.
    Further, according to Kirk-Othmer, plasticizer-range alcohols are 
used primarily as ester derivatives in plasticizers and lubricants. Id. 
at 865. Respondents also submitted excerpts from Hawley's in their June 
16, 1998 case brief demonstrating that 2-ethylhexanol, 1-octanol, and 
2-octanol are comparable products with similar uses. Hawley's states 
that di(2-ethylhexyl) phthalate is created by mixing 2-ethylhexanol and 
phthalic anhydride and is used as a plasticizer for many resins and 
elastomers; thus, 2-ethylhexanol, when mixed with another chemical, is 
used as a plasticizer for many resins and elastomers. In addition, 
other data in Hawley's indicates that 1-octanol, 2-ethylhexanol and 2-
octanol have similar uses.
    Finally, in respondents' December 4, 1997 PAPI submission, 
Attachment 4, the Chemical Marketing Reporter (U.S.) (June 30, 1997) 
lists the following U.S. prices, in cents per pound: 2-ethylhexanol, 
$0.56; and 2-octanol, $0.68. These prices are evidence that 2-
ethylhexanol may be priced lower than 2-octanol. Therefore, 
petitioner's argument that respondents are getting a higher co-product 
allocation with the use of the octanol value in Chemical Weekly is 
unfounded.
    Based on the above information, we find that 2-ethylhexanol, 2-
octanol, and 1-octanol are all comparable products. Therefore, given 
the Department's preference for publicly available surrogate values, we 
have concluded that the Chemical Weekly value for 2-ethylhexanol is the 
most appropriate surrogate value. Because the octanol value in Chemical 
Weekly is reported inclusive of taxes, we deducted taxes from the 
octanol value.
    1 (C) Crude versus refined 2-octanol surrogate value. Petitioner 
asserts that

[[Page 43376]]

instead of the value from the Chemical Weekly used by the Department 
for the preliminary results, the Department should use the U.S. value 
for 2-octanol and deduct the inputs used to convert crude 2-octanol to 
refined 2-octanol. Petitioner argues that using the U.S. value for 
refined 2-octanol is consistent with the Department's practice of using 
a U.S. surrogate value, citing Final Determination of Sales at Less 
Than Fair Value: Certain Cased Pencils from the People's Republic of 
China, 59 FR 55625, 55630 (November 8, 1994) (``Cased Pencils''). 
Respondents allege that the petitioner is selling crude 2-octanol at a 
much higher value than the value reported to the Department. Petitioner 
counters that the source of this information is suspect, because the 
respondent's source is not a qualified expert nor are his opinions 
objective, since he is employed by a firm which imports subject 
merchandise.
    Next, respondents argue that the Department should grant a by-
product credit for refined 2-octanol because the Chinese sebacic acid 
producers only sell refined 2-octanol and the additional factors of 
production for the refining of the subsidiary product have been 
reported to the Department. Therefore if the Department decides not to 
use the octanol value from Chemical Weekly, the Department should use a 
refined price for 2-octanol, because the Chinese producers sell refined 
2-octanol not crude 2-octanol. Also, respondents state that the 
additional factors for converting crude 2-octanol into refined 2-
octanol are already included in the sebacic acid factors of production. 
Respondents maintain that the Department requires that the additional 
factors of production for refining a by-product or co-product must be 
included in the factors of production reported to the Department before 
a subsidiary by-product credit(s) can be granted.
    Respondents argue that, in past cases, the Department has granted a 
by-product or co-product credit when: (1) the foreign producer proves 
that the by-product or co-product was sold, and (2) the additional 
factors of production for the refining of the subsidiary product are 
reported to the Department, citing: Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from the 
People's Republic of China, 62 FR 61964, 61997 (November 20, 1997); 
Final Results of Antidumping Duty Administrative Review and 
Determination Not to Revoke in Part: Silicon Metal from Brazil, 62 FR 
1954, 1964 (January 14, 1997); and Final Determination of Sales at Less 
Than Fair Value: Strontium Nitrate from Italy, 46 FR 25496 (May 7, 
1981). Respondents also argue that the Department has used the sales 
price of the subsidiary product to determine whether it is a by-product 
or a co-product, citing: Final Determination of Sales at Less Than Fair 
Value: Coumarin from the People's Republic of China, 59 FR 66895, 66901 
(December 28, 1994); Final Determination of Sales at Less Than Fair 
Value: Brake Drums and Brake Rotors from the People's Republic of 
China, 62 FR 9160, 9172 (February 28, 1997); Magnesium Corp. of America 
v. United States, 938 F. Supp. 885 (Ct. Int'l Trade, 1996). Respondents 
argue, that based on the above arguments, the Department should grant a 
by-product credit for refined 2-octanol and not crude 2-octanol.
    Petitioner asserts that respondent should not receive a by-product 
credit for refined 2-octanol because respondents did not state in their 
submissions to the Department that the additional factors of production 
to convert crude 2-octanol to refined 2-octanol have already been 
included in the sebacic acid factors of production. Petitioner notes 
that there was no cite to the record and their review of respondents's 
Section D questionnaire response found no discussion of additional 
factors for refining 2-octanol. Therefore, petitioner maintains that, 
in the event that the Department uses the octanol value from Chemical 
Weekly, the Department should reduce the surrogate value by the purity 
levels at which each firm produces 2-octanol.
    Department's Position: 1 (C) Crude versus refined 2-octanol 
surrogate value. We disagree with petitioner. Petitioner cites Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Plate from the People's Republic of China, 62 FR 61964 (November 
20, 1997), which states, ``(i)t is the Department's policy to only 
grant by-product credits for by-products actually produced directly as 
a result of the production process. A respondent must report the 
factors associated with the further refining of a by-product if it 
wishes to receive a credit for the further refined by-product.'' Id. at 
61997. We note that, in contrast to petitioner's assertion, the sebacic 
acid factors of production used to calculate normal value (``NV'') 
already incorporate the relatively few factors of production (labor and 
energy) necessary to convert crude 2-octanol to refined 2-octanol. 
Production of sebacic acid results in the production of crude 2-octanol 
as a subsidiary product. The sebacic acid factors of production already 
include the factors of production used to refine 2-octanol and the 
other subsidiary products because the Chinese sebacic acid producers 
are unable to separate the additional factors of production used to 
convert crude subsidiary products into refined subsidiary products. For 
example, respondents state that, for producer Tianjin Zhong He, any 
additional factors of production to process crude 2-octanol to refine 
2-octanol have already been reported to the Department and are included 
in the sebacic acid factors of production, because these additional 
factors of production cannot be separated from the sebacic acid factors 
of production. See respondents' January 20, 1998 supplemental 
questionnaire response at page 7. Moreover, at verification, we made 
certain that the additional factors of production to convert the crude 
subsidiary products into refined subsidiary products had either been 
reported to the Department or, if these additional factors of 
production had not been reported to the Department, we added these 
additional factors of production used to convert crude subsidiary 
products into refined subsidiary products to the reported sebacic acid 
factors of production. For example, we discovered at verification that 
the electricity used to convert crude glycerine into refined glycerine 
was not reported to the Department, but we added this additional 
electricity used to the reported sebacic acid factors of production. 
See Verification report to the File, page 13 (March 24, 1998).
    Also, a more accurate by-product/co-product analysis results by 
using the refined value of 2-octanol rather than a crude value for 2-
octanol. The Department's practice is to use the subsidiary product's 
sales value and factories' material yield amounts for determining the 
by-product/co-product analysis. In Preliminary Determination of Sales 
at Less Than Fair Value and Postponement of Final Determination: 
Sebacic Acid from the People's Republic of China, 59 FR 565, 569 
(January 5, 1994), the Department ``used surrogate values from India 
for sebacic acid, glycerine, caproyl (sic) alcohol, and fatty acid to 
determine the relative value of each product based on the production on 
one metric ton of sebacic acid, as well as to determine the total value 
of one metric ton of sebacic acid.'' Since the Chinese producers sell 
refined 2-octanol, as confirmed at verification, and they do not sell 
crude 2-octanol, we believe that it is more appropriate to apply the 
surrogate value of refined 2-octanol in conducting the by-product/co-
product analysis. Moreover, there is a publicly published sales price 
on which we can base a surrogate value for

[[Page 43377]]

refined 2-octanol, which is the octanol value (2-ethylhexanol) from 
Chemical Weekly.
    1 (D) Treatment of 2-octanol by Chinese producers. Petitioner 
contends that both it and respondent producers Handan Fuyan Sebacic 
Acid Factory, Tianjin Zhong He, and Hengshui Dongfeng Chemical Factory 
all treat 2-octanol as a by-product in their respective accounting 
systems. Therefore, petitioner argues that the Department should also 
treat 2-octanol as a by-product, rather than a co-product. Petitioner 
asked the Department to verify how the Chinese producers treat 2-
octanol but the Department chose not verify how the Chinese producers 
treat 2-octanol. Petitioner claims that because the Department used 
what petitioner suggests to be the value of 1-octanol to value 2-
octanol in the preliminary results, the Department incorrectly 
determined 2-octanol to be a co-product rather than a by-product of the 
sebacic acid production process. Petitioner cites to Preliminary 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate from the People's Republic of China (``Carbon Steel 
Plate''), 62 FR 31972, 31977 (June 11, 1997), where the Department 
determined that slag is a by-product and not a co-product, using a U.S. 
value for slag when surrogate values for slag in India or Indonesia 
were aberrationally high.
    Respondents argue that the Chinese producers do not view 2-octanol 
as a by-product and such characterization was made by their counsel and 
not by the producers themselves. Whether Chinese producers classify 2-
octanol as a by-product or a co-product, respondents argue, is only 
relevant in the context of the Chinese accounting system and the 
relationship of the costs of 2-octanol to the actual Chinese sebacic 
acid production costs. Respondents contend that the Department 
determines whether 2-octanol is a by-product or co-product based on the 
surrogate values used and not based on recorded Chinese costs. 
Respondents dismiss petitioner's citation of the Carbon Steel Plate 
case because it addresses a specific by-product and provides no 
guidance as to whether a specific subsidiary product is either a by-
product or a co-product.
    Department's Position: 1 (D) Treatment of 2-octanol by Chinese 
producers. We disagree with petitioner. Petitioner cited Carbon Steel 
Plate to support their position that the Department should use the U.S. 
2-octanol value instead of the allegedly high octanol value from 
Chemical Weekly, which petitioner suggests is 1-octanol. We disagree 
with petitioner's reliance on the above case because the evidence on 
the record confirms that the octanol value in Chemical Weekly is for 2-
ethylhexanol.
    We determine whether a subsidiary product is either a by-product or 
a co-product by comparing the subsidiary products' surrogate value to 
the value of the subject merchandise. If we determine that the 
surrogate value of the subsidiary product was significant relative to 
the surrogate value of subject merchandise, we treat the subsidiary 
product as a co-product; otherwise, we treat it as a by-product. We do 
not determine if a subsidiary product is a by-product or co-product 
based on how a particular company classifies the subsidiary product in 
its accounting records. Therefore, the treatment of 2-octanol by 
Chinese producers or by the U.S. producer of sebacic acid is irrelevant 
to the Department's analysis. This is precisely why the Department did 
not verify how the Chinese producer Hengshui classifies 2-octanol. In 
this case, the Department determines that 2-octanol is a co-product, 
because its value is significant relative to the surrogate value of 
sebacic acid.
    1 (E) Use of an exact match. Petitioner argues that the Department 
should use the U.S. value of 2-octanol because it is an exact product 
match, instead of the octanol value (2-ethylhexanol) from the Chemical 
Weekly. Petitioner contends that past Department practice supports the 
use of a U.S. value for 2-octanol, in accordance with Final 
Determination of Sales at Less Than Fair Value: Certain Cased Pencils 
from the People's Republic of China, 59 FR 55625, 55630 (November 8, 
1994) (``Cased Pencils''); Union Camp Corp. v. United States, 941 F. 
Supp. 108, 113 (1996) (``Union Camp I''); Union Camp Corp. v. United 
States, No. 97-03-00483, Slip Op. 98-38 (1998)(``Union Camp II''); and 
Writing Instruments Mfrs. Assoc. v. United States, 984 F. Supp. 629 
(Ct. Int'l Trade, 1997), appeal docketed, Nos. 981178, 981292 (Fed. 
Cir., January 9, 1998 and January 21, 1998). In contrast, petitioner 
asserts that the product associated with the Chemical Weekly value 
(which petitioner suggests may be 1-octanol) is ``not even `quite 
similar' to 2-octanol either chemically or commercially.''
    Respondents argue that 2-ethylhexanol (which respondents contend to 
be the product with which the Chemical Weekly value is associated) and 
2-octanol are comparable in both use and value and, therefore, the 
Department should use the surrogate value 2-ethylhexanol. Respondents 
note that 2-ethylhexanol is produced in the surrogate country. 
Respondents state that the Department should not use an identical 
surrogate value match from the U.S. for 2-octanol when a surrogate 
value for a comparable product is available from India, the chosen 
surrogate country used in this review.
    Department's Position: 1 (E) Use of an exact match. We disagree 
with petitioner. In valuing factors of production, the Department used 
surrogate values from India. In accordance with section 773(c)(4) of 
the Act, the Department chose India as its surrogate, because it was 
most comparable to the PRC in terms of overall economic development 
based on per capita gross national product (GNP), the national 
distribution of labor, growth rate in per capita GNP, and because it 
was a significant producer of comparable merchandise (oxalic acid). As 
noted in Comment 4 below, both petitioner and respondent do not object 
to the Department's use of India as the surrogate country.
    Section 773(c)(4) of the statute and 19 CFR 351.408 of the 
Department's regulations instruct the Department to value factors of 
production in an appropriate surrogate country. The Department rarely 
departs from use of a surrogate value from a country comparable to the 
NME in terms of overall economic development. See Final Determination 
of Sales at Less Than Fair Value: Beryllium Metal and High Beryllium 
Alloys from the Republic of Kazakstan, 62 FR 2648 (January 17, 1997). 
Surrogate values from countries at a similar level of development are 
considered to be the most appropriate and comparable for valuation of 
the factors in the similarly situated nonmarket economy country. While 
the Department may use values from the United States or other countries 
not at a comparable level of development for individual factors, its 
practice is to do so only if it cannot find those values in a 
comparable economy that produce comparable merchandise. See Memorandum 
from David Mueller to Laurie Parkhill, Serbacic (sic) Acid from the 
People's Republic of China: Nonmarket Economy Status and Surrogate 
Country Selection, March 4, 1996.
    In this review, the Department was unable to locate an Indian value 
for 2-octanol in India, the surrogate country. Additionally, neither 
the petitioner nor the respondents were able to locate a specific 
Indian value for 2-octanol.
    Petitioner cites Cased Pencils and the Union Camp I and Union Camp 
II court decisions to support their position that the Department should 
use the U.S. 2-octanol value instead of the octanol

[[Page 43378]]

value from Chemical Weekly for a surrogate value for 2-octanol. In 
Cased Pencils, the Department used a U.S. value (basswood) as the 
surrogate value that was ``most similar'' (Id. at 55630) instead of an 
Indian value (a basket category of woods which included jelutong) which 
was ``quite similar'' to the Chinese product (lindenwood) (Id. at 
55629). In the Cased Pencils case, wood is the most significant input, 
and jelutong, which was in the basket category of Indian import values, 
was priced ``much higher than the most comparable wood.'' Id. at 55630. 
Because of these case specific reasons, the Department selected a U.S. 
surrogate value instead of a surrogate value from a country that is at 
a comparable level of economic development. We disagree with petitioner 
that the situation here is the same for selecting a surrogate value for 
2-octanol. For the valuation of 2-octanol, India has been determined to 
be a significant producer of comparable merchandise and India is 
economically comparable to the People's Republic of China in the 
following: per capita gross domestic product (GDP), growth rate in per 
capita GDP, and the national distribution of labor. See Analysis 
Memorandum for the Preliminary Results of the 1996/1997 Review, April 
2, 1998, page 2. Also, the octanol in Chemical Weekly (2-ethylhexanol) 
and 2-octanol are comparable merchandise. See Department's Position 
(B). Because we have a suitable value from India, the Department need 
not, and, indeed, should not, use a U.S. surrogate value.
    Comment 2: Ministerial errors alleged by petitioner. Petitioner 
maintains that the Department should correct certain alleged 
ministerial errors discussed in the Department's Analysis Memorandum 
for the Preliminary Results of the 1996/1997 Review, April 2, 1998, 
namely: (1) for both Tianjin/Hengshui and SICC/Hengshui, profit was 
incorrectly calculated by multiplying profit by COM and not COP; (2) 
for the caustic soda surrogate value, taxes were incorrectly deducted 
twice; (3) for the method of allocation--coal sections, the amount of 
coal used was misallocated; (4) for ocean freight rates, the rates for 
sales 5, 6, 7, 9, and 10 for Tianjin were miscalculated; (5) for the 
glycerine and fatty acid by-products, by-product credits need to be 
adjusted by each producers respective purity level; (6) for the truck 
freight inflator, the WPI inflator used is incorrect; (7) for the 
surrogate value for castor seed cake, use the castor seed cake 
surrogate value from the Economic Times; (8) for water, include it as a 
factor of production; (9) for the coal inflator, correct the WPI 
inflator used to calculate coal and use the WPI inflator for the SICC/
Hengshui coal calculation.
    Respondents disagree with petitioner's assertions concerning the 
following alleged ministerial errors: (1) the profit calculation for 
SICC/Hengshui and Tianjin/Hengshui is calculated correctly; (5) use an 
average of the crude and refined glycerine values because the 
Department has already included the factors of production to convert 
crude glycerine to refined glycerine in the sebacic acid factors of 
production; and (8) water is not a separate factor of production since 
water is already included in the factory overhead calculations from the 
Reserve Bank of India for the chemical industry.
    Department's Position: We agree with petitioner concerning alleged 
errors #2, 3, 4, 6, 7, 9 and have corrected these errors. We disagree 
with petitioner concerning alleged errors #1, 5, and 8. With respect to 
the calculation of profit as a percentage of COP (alleged error #1), 
profit was calculated as a percentage of COP for both Tianjin/Hengshui 
and SICC/Hengshui. See Analysis Memorandum for the Preliminary Results 
of the 1996/1997 Review, April 2, 1998, page 19i. With respect to the 
subsidiary products' surrogate value (alleged error #5), as mentioned 
in the Comment 1, (C) above, any additional factors of production to 
convert crude subsidiary products into refined subsidiary products are 
already included in the sebacic acid factors of production. Therefore, 
we are granting either by-product credits or co-product allocations 
based on the refined value and not a crude value of the subsidiary 
products. With respect to water being considered as a separate factor 
of production (alleged error #8), as we have established in many 
Chinese chemical dumping cases, such as in Final Determination of Sales 
at Less Than Fair Value, Polyvinyl Alcohol from the People's Republic 
of China, 61 FR 14058 (March 29, 1996); Final Results of Antidumping 
Review for Sebacic Acid from the People's Republic of China, 62 FR 
65674 (December 15, 1997); Final Results of Antidumping Review for 
Sebacic Acid from the People's Republic of China, 62 FR 10530 (March 7, 
1997), Final Determination of Sales at Less Than Fair Value, Sulfur 
Dyes, Including Sulfur Vat Dyes from the People's Republic of China, 58 
FR 7537 (February 8, 1993); and Final Results of Antidumping Review for 
Sulfanilic Acid from the People's Republic of China, 62 FR 48597 
(September 16, 1997), we did not value water as a separate factor of 
production but relied instead on factory overhead data that reflected 
water costs. In Preliminary Determination of Sales at Less Than Fair 
Value: Freshwater Crawfish Tail Meat, 62 FR 14392 (March 26, 1997), 
water was considered a separate factor of production because it is an 
agricultural product that uses a large amount of water to clean and 
boil the crawfish to extract the tail meat and to operate the freezer. 
For sebacic acid, as in the other Chinese chemical case mentioned 
above, water is considered part of the factory overhead data in the 
Reserve Bank of India. Therefore, we determine that, in this case, 
water is not a separate factor of production. While we agree with 
petitioner that, for Hengshui, taxes were incorrectly deducted twice 
for caustic soda (alleged error #2), we note that the result of this 
correction is a value of 5.5 Rs/kg and not the 4.43 Rs/kg value 
submitted by petitioner.
    Comment 3: Ministerial errors alleged by respondents. Respondents 
maintain that the Department should correct certain ministerial errors 
discussed in the Department's Analysis Memorandum for the Preliminary 
Results of the 1996/1997 Review, April 2, 1998, namely: (1) for 
Hengshui, the plastic inner bag consumption per sebacic acid metric ton 
was overstated; (2) for Tianjin, the weighted-average margin was 
calculated incorrectly; and (3) ocean freight charge was calculated 
incorrectly by dividing by 17.5 metric tons instead of 18 metric tons 
for most of the shipments via a NME carrier.
    Petitioner did not comment on respondents' ministerial error 
allegations.
    Department's Position: We agree with respondents' allegations with 
regard to errors # 2, and 3, and have corrected these errors. With 
respect to the calculation of the amount of plastic bags consumed at 
Tianjin/Hengshui (alleged error #1), we disagree. We discovered at 
verification at Tianjin/Hengshui that sale #8 did not use any plastic 
bags but instead used only woven bags. Consequently, we divided the 
total plastic inner bag weight for all sales except sale #8 by the 
total weight of the sebacic acid shipped in plastic bags. Then, we 
added the weight of the woven bags used for shipment for sale #8 to the 
total weight of woven bags used for the shipment for all other sales 
except sale #8 and divided the total weight of the woven bags used by 
the total amount of sebacic acid shipped for all sales. See Analysis 
Memorandum for the Preliminary Results of the 1996/1997 Review, April 
2, 1998, pages 2-3. Therefore, for the final results, we have made no 
further adjustment to

[[Page 43379]]

Hengshui's reported plastic inner bag consumption figure.
    Comment 4: Use of India as the surrogate country. Respondent argues 
that petitioner has stated that India is not an appropriate surrogate 
country and that the Department should use either Japan or the United 
States as an appropriate surrogate country.
    Petitioner states that it does not object to use of India as the 
surrogate country for this administrative review.
    Department's Position: Since there is no argument as to which 
surrogate country to use, the Department will continue to use India as 
the surrogate country for this administrative review.

Final Results of Review

    For Sinochem Jiangsu, which failed to respond to the questionnaire, 
we have not granted a separate rate and the country-wide rate will 
apply to all of its sales.
    As a result of our review of the comments received, we have changed 
the results from those presented in our preliminary results of the 
review. Therefore, we determine that the following margins exists as a 
result of our review:

------------------------------------------------------------------------
                                                                Margin  
         Manufacturer/exporter               Time period      (percent) 
------------------------------------------------------------------------
Tianjin Chemicals I/E Corp.............     7/01/96-6/30/97         1.09
Sinochem International Chemicals Corp..     7/01/96-6/30/97         0.11
Guangdong Chemicals I/E Corp...........     7/01/96-6/30/97        10.18
Country-Wide Rate......................     7/01/96-6/30/97       243.40
Sinochem Jiangsu I/E Corp..............     7/01/96-6/30/97       243.40
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. The Department 
will issue appraisement instructions on each exporter directly to the 
Customs Service. For assessment purposes, we have calculated importer 
specific duty assessment rates for the merchandise based on the ratio 
of the total amount of antidumping duties calculated for the examined 
sales during the POR to the total entered value of sales examined 
during the POR.
    Furthermore, the following cash deposit requirements will be 
effective upon publication of the final results of this administrative 
review for all shipments of the subject 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) for the 
reviewed companies named above which have separate rates (SICC, 
Tianjin, and Guangdong), the cash deposit rates will be the rates for 
those firms established in the final results of this administrative 
review; (2) for companies previously found to be entitled to a separate 
rate and for which no review was requested, the cash deposit rates will 
be the rate established in the most recent review of that company; (3) 
for all other PRC exporters of subject merchandise, the cash deposit 
rates will be the PRC country-wide rate indicated above; and (4) the 
cash deposit rate for non-PRC exporters of subject merchandise from the 
PRC will be the rate applicable to the PRC supplier of that exporter. 
These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.

Notification of Interested Parties

    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 351.402(f) 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 determination is issued and published in accordance with 
section 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 7, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-21790 Filed 8-12-98; 8:45 am]
BILLING CODE 3510-DS-P