[Federal Register Volume 63, Number 188 (Tuesday, September 29, 1998)]
[Notices]
[Pages 51895-51899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26062]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-846]
Brake Rotors From the People's Republic of China: Preliminary
Results of Antidumping Duty New Shipper Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from six exporters,1 the
Department of Commerce is conducting a new shipper administrative
review of the antidumping duty order of brake rotors from the People's
Republic of China (``PRC'') published on April 17, 1997 (see 62 FR
18740). The review covers the period April 1, 1997, through September
30, 1997.
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\1\ The six exporters are China National Industrial Machinery
Import & Export Company (``CNIM''), Lai Zhou Auto Brake Equipments
Factory (``LABEF''), Longkou Haimeng Machinery Co., Ltd.
(``Haimeng''), Qingdao Gren Co. (``GREN''), Yantai Winhere Auto-Part
Manufacturing Co., Ltd. (``Winhere''), and Zibo Luzhou Automobile
Parts Co., Ltd. (``ZLAP'').
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We have preliminarily determined that U.S. sales have not been made
below normal value. If these preliminary results are adopted in our
final results of administrative review, we will instruct the U.S.
Customs Service to assess no antidumping duties for the six PRC
exporters subject to this review.
Interested parties are invited to comment on these preliminary
results. Parties who submit case briefs in this proceeding should
provide a summary of the arguments not to exceed five pages and a table
of statutes, regulations, and cases cited.
EFFECTIVE DATE: September 29, 1998.
FOR FURTHER INFORMATION CONTACT: Brian Smith, Everett Kelly, or Barbara
Wojcik-Betancourt, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1766, (202) 482-4194, or (202) 482-0629 respectively.
SUPPLEMENTARY INFORMATION: Unless otherwise indicated, all citations to
the Tariff Act of 1930, as amended (``the
[[Page 51896]]
Act''), are references to the provisions effective January 1, 1995, the
effective date of the amendments made to the Act by the Uruguay Round
Agreements Act. In addition, unless otherwise indicated, all citations
to the Department of Commerce (``the Department'') regulations are to
the regulations at 19 CFR part 351, 62 FR 27296 (May 19, 1997).
Background
On November 3, 1997, the Department received requests from CNIM,
GREN, Haimeng, LABEF, Winhere and ZLAP (hereafter referred to as ``the
six respondents'') for a new shipper review pursuant to section
751(a)(2)(B) of the Act and Sec. 351.214(b) of the Department's
regulations.
Section 751(a)(2) of the Act and Sec. 351.214(b)(2)(i) of the
Department's regulations govern determinations of antidumping duties
for new shippers. These provisions state that, if the Department
receives a request for review from an exporter or producer of the
subject merchandise stating that it did not export the merchandise to
the United States during the period covered by the original less-than-
fair-value (``LTFV'') investigation (the ``POI'') and that such
exporter or producer is not affiliated with any exporter or producer
who exported the subject merchandise during that period, the Department
shall conduct a new shipper review to establish an individual weighted-
average dumping margin for such exporter or producer, if the Department
has not previously established such a margin for the exporter or
producer. The regulations require that the exporter or producer shall
include in its request, with appropriate certifications: (i) The date
on which the merchandise was first entered, or withdrawn from
warehouse, for consumption, or, if it cannot certify as to the date of
first entry, the date on which it first shipped the merchandise for
export to the United States or if the merchandise has not yet been
shipped or entered, the date of sale; (ii) a list of the firms with
which it is affiliated; (iii) a statement from such exporter or
producer, and from each affiliated firm, that it did not, under its
current or a former name, export the merchandise during the POI, and
(iv) in an antidumping proceeding involving inputs from a nonmarket
economy country, a certification that the export activities of such
exporter or producer are not controlled by the central government. 19
CFR 351.214(b) (ii) and (iii).
The six respondents' requests were accompanied by information and
certifications establishing the effective date on which they first
shipped and entered brake rotors. Each of the six respondents also
claims it has no affiliated companies which exported brake rotors from
the People's Republic of China (``PRC'') during the POI. In addition,
each of the six respondents also certified that its export activities
are not controlled by the central government. Based on the above
information, the Department initiated a new shipper review covering the
six respondents (Brake Rotors from the People's Republic of China:
Initiation of New Shipper Antidumping Duty Administrative Reviews (62
FR 64206, December 4, 1997)). The Department is now conducting this
review in accordance with section 751 of the Act and 19 CFR 351.214.
In January 1998, the six respondents submitted responses to the
Department's antidumping questionnaire. In March and April 1998, the
six respondents and the petitioner submitted publicly available
information and comments for consideration in valuing the factors of
production. Also, the Department issued supplemental questionnaires to
the six respondents, each of which submitted responses to those
questionnaires in April 1998. On May 4, 1998, we postponed the
preliminary results until no later than September 24, 1998. (See 63 FR
25821, May 11, 1998).
On July 31, 1998, the respondents and petitioners submitted
additional comments on publicly available information submitted for use
in the preliminary results.
Scope of Review
The products covered by this review are brake rotors made of gray
cast iron, whether finished, semifinished, or unfinished, ranging in
diameter from 8 to 16 inches (20.32 to 40.64 centimeters) and in weight
from 8 to 45 pounds (3.63 to 20.41 kilograms). The size parameters
(weight and dimension) of the brake rotors limit their use to the
following types of motor vehicles: Automobiles, all-terrain vehicles,
vans and recreational vehicles under ``one ton and a half,'' and light
trucks designated as ``one ton and a half.''
Finished brake rotors are those that are ready for sale and
installation without any further operations. Semi-finished rotors are
those on which the surface is not entirely smooth, and have undergone
some drilling. Unfinished rotors are those which have undergone some
grinding or turning.
These brake rotors are for motor vehicles, and do not contain in
the casting a logo of an original equipment manufacturer (``OEM'')
which produces vehicles sold in the United States (e.g., General
Motors, Ford, Chrysler, Honda, Toyota, Volvo). Brake rotors covered in
this investigation are not certified by OEM producers of vehicles sold
in the United States. The scope also includes composite brake rotors
that are made of gray cast iron, which contain a steel plate, but
otherwise meet the above criteria. Excluded from the scope of the
review are brake rotors made of gray cast iron, whether finished,
semifinished, or unfinished, with a diameter less than 8 inches or
greater than 16 inches (less than 20.32 centimeters or greater than
40.64 centimeters) and a weight less than 8 pounds or greater than 45
pounds (less than 3.63 kilograms or greater than 20.41 kilograms).
Brake rotors are classifiable under subheading 8708.39.5010 of the
HTSUS. Although the HTSUS subheading is provided for convenience and
customs purposes, our written description of the scope of this review
is dispositive.
Period of Review
The period of review (``POR'') covers the period April 1, 1997,
through September 30, 1997.
Separate Rates
In proceedings involving non-market-economy (``NME'') countries,
the Department begins with a rebuttable presumption that all companies
within the country are subject to government control and thus should be
assessed a single antidumping duty deposit rate. One of the respondents
(i.e., Winhere), although wholly-owned by Hong Kong individuals, is
located within the PRC. Two respondents (i.e., Haimeng, ZLAP) are joint
ventures between Chinese and foreign companies. The three other
respondents are either wholly owned by all the people (i.e., CNIM) or
collectively owned (i.e., GREN, LABEF). Thus, for all six respondents,
a separate rates analysis is necessary to determine whether the
exporters are independent from government control (see Notice of Final
Determination of Sales at Less Than Fair Value: Bicycles From the
People's Republic of China (Bicycles) 61 FR 56570 (April 30, 1996)).
To establish whether a firm is sufficiently independent from
government control to be entitled to a separate rate, the Department
analyzes each exporting entity under a test arising out of the Final
Determination of Sales at Less Than Fair Value: Sparklers from the
People's Republic of China (56 FR 20588, May 6, 1991) and amplified in
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
[[Page 51897]]
Carbide). Under the separate rates criteria, the Department assigns
separate rates in NME cases only if the respondent can demonstrate the
absence of both de jure and de facto governmental control over export
activities.
1. De Jure Control
Each respondent has placed on the administrative record documents
to demonstrate absence of de jure control, including the ``Law of the
People's Republic of China on Industrial Enterprises Owned by the Whole
People,'' adopted on April 13, 1988, (the Industrial Enterprises Law),
``The Enterprise Legal Person Registration Administrative
Regulations,'' promulgated on June 13, 1988, the 1990 ``Regulation
Governing Rural Collectively-Owned Enterprises of PRC,'' the 1992
``Regulations for Transformation of Operational Mechanisms of State-
Owned Industrial Enterprises' (Business Operation Provisions), and the
1994 ``Foreign Trade Law of the People's Republic of China.''
In prior cases, we have analyzed these laws and have found them to
sufficiently establish an absence of de jure control of companies
``owned by the whole people,'' joint ventures, or collectively owned
enterprises. See, e.g., Final Determination of Sales at Less than Fair
Value: Furfuryl Alcohol from the People's Republic of China (Furfuryl
Alcohol) 60 FR 22544 (May 8, 1995), and Preliminary Determination of
Sales at Less Than Fair Value: Certain Partial-Extension Steel Drawer
Slides with Rollers from the People's Republic of China (Drawer Slides)
60 FR 29571-29576 (June 5, 1995). We have no new information in this
proceeding which would cause us to reconsider this determination with
regard to the six respondents mentioned above.
2. De Facto Control
As stated in previous cases, there is some evidence that certain
enactments of the PRC central government have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC. See
Silicon Carbide and Furfuryl Alcohol. Therefore, the Department has
determined that an analysis of de facto control is critical in
determining whether the respondents are, in fact, subject to a degree
of governmental control which would preclude the Department from
assigning separate rates.
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) Whether the export prices (``EPs'') are set
by or subject to the approval of a governmental authority; (2) whether
the respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses (see Silicon Carbide and Furfuryl Alcohol).
Each respondent asserted the following: (1) It establishes its own
EPs; (2) it negotiates contracts, without guidance from any
governmental entities or organizations; (3) it makes its own personnel
decisions; and (4) it retains the proceeds of its export sales, uses
profits according to its business needs, and has the authority to sell
its assets and to obtain loans. Additionally, the respondents'
questionnaire responses indicate that company-specific pricing during
the POI does not suggest coordination among exporters. This information
supports a preliminary finding that there is de facto absence of
governmental control of the export functions of these respondents.
Consequently, we have preliminarily determined that each entity has met
the criteria for the application of separate rates (see Pure Magnesium
from the People's Republic of China: Preliminary Results of Antidumping
Duty New Shipper Administrative Review, 62 FR 55215, October 23, 1997).
Fair Value Comparisons
To determine whether sales of the subject merchandise by each
respondent to the United States were made at LTFV, we compared the EP
to the normal value (``NV''), as described in the ``Export Price'' and
``Normal Value'' sections of this notice, below.
Export Price
We used EP methodology in accordance with section 772(a) of the
Act, because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to importation and constructed
export price methodology was not otherwise indicated.
1. CNIM
We calculated EP based on packed, FOB foreign port prices to the
first unaffiliated purchaser in the United States. Where appropriate,
we made deductions from the starting price (gross unit price) for
foreign inland freight and foreign brokerage and handling in the PRC in
accordance with section 772(c) of the Act. Because foreign inland
freight and foreign brokerage and handling fees were provided by NME
companies, we based those charges on surrogate rates from India. (See
Surrogate Country section below). To value foreign inland freight, we
used the average truck freight rate contained in the Indian periodical
The Times of India. We have used this same rate in numerous NME cases
in which India has been selected as the primary surrogate. See Final
Determinations of Sales at Less Than Fair Value: Brake Drums and Brake
Rotors from the People's Republic of China, 62 FR 9164 (February 28,
1997) (Brake Rotors). To value foreign brokerage and handling expenses,
we relied on public information reported in the antidumping
investigation of stainless steel bar from India.
2. GREN
We calculated EP based on packed, CIF U.S. port prices to the first
unaffiliated purchaser in the United States. Where appropriate, we made
deductions from the starting price for foreign inland freight and
foreign brokerage and handling in the PRC, marine insurance and
international freight, in accordance with section 772(c) of the Act. As
all foreign inland freight and handling fees were provided by NME
suppliers or paid for in a NME currency, we valued these services using
the Indian surrogate values discussed above. For marine insurance, we
used public information reported in the antidumping investigation of
sulfur dyes, including sulfur vat dyes, from India. For ocean freight,
we used rates from the U.S. Federal Maritime Commission because GREN
used NME freight carriers.
3-6. Haimeng, LABEF, Winhere, and Zlap
We calculated EP based on packed, FOB foreign port prices to the
first unaffiliated purchaser in the United States. Where appropriate,
we made deductions from the starting price for foreign inland freight
and foreign brokerage and handling. As all foreign inland freight and
handling fees were provided by NME suppliers or paid for in a NME
currency, we valued these services using the Indian surrogate values
discussed above.
Normal Value
A. Non-Market Economy Status
In every case conducted by the Department involving the PRC, the
PRC has been treated as a NME country.
[[Page 51898]]
None of the parties to this proceeding has contested such treatment.
Accordingly, we calculated NV in accordance with section 773(c) of the
Act, which applies to NME countries.
B. Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
NME producer's factors of production, to the extent possible, in one or
more market economy countries that (1) are at a level of economic
development comparable to that of the NME country, and (2) are
significant producers of comparable merchandise. We determined that
India is a country comparable to the PRC in terms of overall economic
development (see Memorandum to Louis Apple, dated January 22, 1998). In
addition, based on publicly available information placed on the record,
we have determined that India is a significant producer of the subject
merchandise. Accordingly, we considered India the primary surrogate
country for purposes of valuing the factors of production as the basis
for NV because it meets the Department's criteria for surrogate country
selection. Where we could not find surrogate values from India, we
valued those factors using values from Indonesia.
C. Factors of Production
In accordance with section 773(c) of the Act, we calculated NV
based on the factors of production reported by the companies in the PRC
which produced the subject merchandise for the exporters which sold the
subject merchandise to the United States during POR. To calculate NV,
the reported unit factor quantities were multiplied by publicly
available Indian or Indonesian values.
The selection of the surrogate values applied in this determination
was based on the quality, specificity, and contemporaneity of the data.
As appropriate, we adjusted input prices to make them delivered prices.
For those values not contemporaneous with the POR and quoted in a
foreign currency, we adjusted for inflation using wholesale price
indices published in the International Monetary Fund's International
Financial Statistics. For a complete analysis of surrogate values, see
the Preliminary Results Valuation Memorandum from the Team to the File,
dated September 24, 1998.
To value pig iron and iron scrap, we used domestic price data from
the April 1996-March 1997 financial report of Lamina Foundries (Lamina)
because the prices reported therein are most contemporaneous to the POR
and best represent the costs of those inputs. We removed excise and
sales taxes from the pig iron and scrap values because the financial
report indicated that these taxes were included in the values. For
steel scrap, lubrication oil and limestone, we used the April 1996-
March 1997 import value from Monthly Statistics of the Foreign Trade of
India (Monthly Statistics). For ferrosilicon and ferromanganese, we
used the March-May 1997 import value from Monthly Statistics.
For coking coal, we used a 1996-1997 price from the publication
Federation of Indian Chambers of Commerce. To value firewood, we used a
1990 domestic value from the USAID publication, Marketing Opportunities
for Social Forestry in Uttar Pradesh. To value electricity, we used an
April 1996-July 1996 average price for electricity from Business World.
We valued labor based on a regression-based wage rate, in
accordance with 19 CFR 351.408(c)(3).
To value selling, general and administrative (SG&A) expenses,
factory overhead and profit, we calculated simple averages based on
financial data from only five Indian producers. We used only those
producers' financial reports because they were most contemporaneous
with the POR and because we have publicly available information that
demonstrates that these companies are producers of the subject
merchandise (i.e., Jayaswals Neco Limited (``Jayaswals''), Kalyani
Brakes Limited (``Kalyani''), Krishna Engineering Works (``Krishna''),
Nagpur Alloy Castings Ltd. (``Nagpur''), and Rico Auto Industries
Limited (``Rico'')). Where appropriate, we have removed from the
surrogate overhead and SG&A calculations the excise duty amount listed
in the financial reports (see Brake Rotors at 9160). We also made
certain adjustments to the percentages calculated as a result of
reclassifying expenses contained in the financial reports.
In utilizing the financial data of the Indian companies, we treated
the line item labeled ``stores and spares consumed'' as part of factory
overhead because stores and spares are not direct materials consumed in
the production process. Based on publicly available information, we
have considered the molding materials (i.e., sand, bentonite, coal
powder, steel pellets, lead powder, waste oil) to be indirect materials
included in the stores and spares consumed category of the financial
statements. We based our factory overhead calculation on the cost of
goods manufactured rather than on the cost of goods sold. We also
included interest and/or financial expenses in the SG&A calculation. In
addition, we only reduced interest and financial expenses by amounts
for interest income if the Indian financial report noted that the
income was short-term in nature. Where a company did not distinguish
interest income as a line item within total ``other income,'' we used
the relative ratio of interest income to total other income as reported
for the Indian metals industry in the Reserve Bank of India Bulletin.
For a further discussion of other adjustments made, see the Preliminary
Results Valuation Memorandum.
To value PRC inland freight, we used the April 1994 truck rate from
the Times of India.
In accordance with, the decision of the Court of Appeals for the
Federal Circuit in Sigma Corp. v. United States, 117 F. 3d 1401 (1997)
we revised our methodology for calculating source-to-factory surrogate
freight for those material inputs that are valued based on CIF import
values in the surrogate country. Therefore, we have added to CIF
surrogate values from India a surrogate freight cost using the shorter
of the reported distances from either the closest PRC port of
exportation to the factory, or from the domestic supplier to the
factory on an import-specific basis.
To value adhesive tape, corrugated cartons, pallet wood, nails,
polyethylene material for bags, plastic straps and steel strips, we
used April 1996-March 1997 import values from Monthly Statistics of
India.
Currency Conversion
We made currency conversions pursuant to section 773A(a) of the Act
and Sec. 351.415 of the Department's regulations based on the rates
certified by the Federal Reserve Bank.
Preliminary Results of the Review
We preliminarily determine that the following margins exist for the
six respondents during the period April 1, 1997, through September 30,
1997:
------------------------------------------------------------------------
Percent
Manufacturer/producer/exporter margin
------------------------------------------------------------------------
China National Industry Machinery, Import & Export Company
(CNIM)...................................................... 0.00
Lai Zhou Auto Brake Equipments Factory (LABEF)............... 0.00
Longkou Haimeng Machinery Co., Ltd. (Haimeng)................ 0.00
Qingdao Gren Co. (GREN)...................................... 0.00
Yantai Winhere Auto-Part Manufacturing Co., Ltd. (Winhere)... 0.00
Zibo Luzhou Automobile Parts Co., Ltd. (ZLAP)................ 0.00
------------------------------------------------------------------------
Interested parties may request disclosure within 5 days of the date
of publication of this notice and may
[[Page 51899]]
request a hearing within 10 days of publication. Any hearing, if
requested, will be held at the earliest convenience of the parties.
Case briefs from interested parties may be submitted not later than 63
days after the date of publication. Rebuttal briefs, limited to issues
raised in the case briefs, may be filed not later than 70 days after
the date of publication. The Department will issue the final results of
this new shipper administrative review, including the results of its
analysis of issues raised in any such written comments or at a hearing,
within 90 days of issuance of these preliminary results. Upon
completion of this new shipper review, the Department will issue
appraisement instructions directly to the Customs Service. The results
of this review shall be the basis for the assessment of antidumping
duties on entries of merchandise covered by this review and for future
deposits of estimated duties.
Furthermore, upon completion of this review, the posting of a bond
or security in lieu of a cash deposit, pursuant to section
751(a)(2)(B)(iii) of the Act and Sec. 351.214(e) of the Department's
regulations, will no longer be permitted and, should the final results
yield a margin of dumping, a cash deposit will be required for each
entry of the merchandise.
If the final results should yield no margin of dumping for the six
respondents noted above, then the Department will instruct the Customs
Service to liquidate all entries of the subject merchandise during the
POR both produced and exported by GREN, Haimeng, LABEF, Winhere and
ZLAP, and subject merchandise exported by CNIM but manufactured by
Hanting Casting Factory without regard to antidumping duties.
The following deposit requirements will be effective upon
publication of the final results of this new shipper antidumping duty
administrative review for all shipments of brake rotors from the PRC
entered, or withdrawn from warehouse, for consumption on or after the
publication date, as provided by section 751(a)(1) of the Act: (1) The
cash deposit rate for each reviewed company will be that established in
the final results of this new shipper administrative review; (2) the
cash deposit rate for PRC exporters who received a separate rate in the
LTFV investigation will continue to be the rate assigned in that
investigation; and (3) the cash deposit rate for all other PRC
exporters will continue to be 43.32 percent, the PRC-wide rate
established in the LTFV investigation.
These requirements, when imposed, shall remain in effect until
publication of the final results of the next administrative review.
This notice serves as a preliminary reminder to importers of their
responsibility under 19 CFR 351.402(f)(2) 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 new shipper administrative review and notice are in accordance
with section 751(a)(2)(B) of the Act (19 U.S.C. 1675(a)(2)(B)) and 19
CFR 351.214(d).
Dated: September 23, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-26062 Filed 9-28-98; 8:45 am]
BILLING CODE 3510-DS-P