[Federal Register Volume 63, Number 198 (Wednesday, October 14, 1998)]
[Notices]
[Pages 55087-55090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27568]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-423-602]


Industrial Phosphoric Acid From Belgium; 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 industrial phosphoric acid from Belgium.

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SUMMARY: On May 11, 1998, The Department of Commerce (``the 
Department'') published the preliminary results of its administrative 
review of the antidumping order on industrial phosphoric acid from 
Belgium. This review covers imports of industrial phosphoric acid from 
one producer, Societe Chimique Prayon-Rupel S.A. (``Prayon'') and the 
period August 1, 1996, through July 31, 1997.
    We gave interested parties an opportunity to comment on our 
preliminary results. Based on our analysis of the comments received, we 
have revised the results from those presented in preliminary results of 
review.

EFFECTIVE DATE: October 14, 1998.

FOR FURTHER INFORMATION CONTACT:
Todd Peterson or Thomas Futtner, AD/CVD Enforcement Office 4, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230; telephone (202) 482-4195, and 482-3814, respectively.


[[Page 55088]]


SUPPLEMENTARY INFORMATION:

The 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 of Commerce's 
(``the Department's'') regulations refer to the regulations codified at 
19 CFR Part 351, 62 FR 27296 (May 19, 1997).

Background

    On August 20,1 987, the Department published in the Federal 
Register (52 FR 31439) the antidumping duty order on industrial 
phosphoric acid (``IPA'') from Belgium. On August 4, 1997, the 
Department published in the Federal Register (62 FR 41925) a notice of 
opportunity to request an administrative review of this antidumping 
duty order. On August 29, 1997, in accordance with 19 CFR 351.213(b), 
Prayon, the petitioner FMC Corporation (``FMC''), and Albright & Wilson 
Americas Inc. (``Wilson''), a domestic producer of the subject 
merchandise, requested that the Department conduct an administrative 
review of Prayon's exports of subject merchandise to the United States. 
We published the notice of initiation of this review on September 25, 
1997 (62 FR 50292). On May 11, 1998, the Department published the 
preliminary results of review (63 FR 25830). The Department has now 
completed this review in accordance with section 751 of the Act.

Scope of the Review

    The products covered by this review include shipments of IPA from 
Belgium. This merchandise is currently classifiable under the 
Harmonized Tariff Schedule (``HTS'') item numbers 2809.2000 and 
4163.0000. The HTS item numbers are provided for convenience and 
Customs purposes. The written description remains dispositive.

Analysis of the Comment Received

    We gave interested parties an opportunity to comment on the 
preliminary results of review. We received comments from respondent and 
petitioner.
    Comment 1: Sale comparisons. According to petitioner, the 
Department erroneously compared Prayon's U.S. sales made in one channel 
of distribution with the home market sales made in three channels of 
distribution. For the U.S. channel, Prayon sold only through its 
related sales agent to end-users. In Belgium, Prayon made sales through 
three channels: (1) Direct to end-users; (2) through its related sales 
agent to end-users; and (3) through its related sales agent to 
distributors. Petitioner maintains there are selling, quantity and 
price differences between sales made in the second channel and sales 
made in the first and third channels. As a result of these differences, 
petitioner requests that the Department exclude from its antidumping 
calculation sales made through the first and third channels in the home 
market. Petitioner argues that the level of trade (``LOT'') provision 
of the regulations requires comparing sales transactions which are as 
nearly identical as possible, such that the Department must match only 
sales made to end-users through its related sales agent in Belgium with 
sales made to end-users through its related sales agent in the United 
States.
    Prayon argues there is only one channel of distribution in the home 
market. Prayon maintains that the selling functions performed for all 
of its home market sales are the same, whether or not its related sales 
agent is involved, and whether or not the purchaser is an end-user or a 
distributor. Moreover, since the commission paid to the related sales 
agents was disregarded in the dumping calculation, there are no 
significant differences between sales to end-users made by Prayon and 
sales made by Prayon through its related sales agents. For these sales 
to end-users in the home market, there are not two different 
distribution channels but only identical selling functions performed by 
two different offices in the home market. Moreover, these home market 
end-user sales are identical in all respects to the sales to end-users 
in the United States. These functions include communications with 
customers, taking orders, directing shipments and receiving payment. 
Finally, Prayon asserts that the Department in previous cases has not 
used channels of distribution as an appropriate basis for grouping 
sales for comparison purposes.
    DOC position: We disagree with petitioner. Before evaluating and 
excluding any sales transactions to alleged home market customer 
groups, the Department first matches Prayon's U.S. sales to Prayon's 
home market sales. Only after Commerce has determined the most 
physically similar model match for a U.S. sale does the Department 
determine whether or not that sale has been matched to a home market 
sale at the same LOT. See Import Administration Policy Bulletin Number 
92/1 July 29, 1992) (``Matching at Levels of Trade''). If not, the U.S. 
sale may be matched to a home market sale of that most similar model at 
a different LOT. In this case, however, all home market sales are at 
the same LOT.
    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine normal value (``NV'') based on sales in the 
comparison market at the same LOT as the export price (``EP'') or 
constructed export price (``CEP'') transaction. The NV LOT is that of 
the starting price of the comparison sale in the foreign market or, 
when NV is based on constructed value (``CV''), that of the sales from 
which we derive selling, general and administrative (``SG&A'') expenses 
and profit. For EP, the U.S. LOT is also the level of the starting-
price sale, which is usually from exporter to importer. See Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Cut-to-
Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 
1997). All of the U.S. sales in this review are EP sales. See 
Industrial Phosphoric Acid From Belgium; Preliminary Results of 
Antidumping Duty Administrative Review, 63 FR 25830 (May 11, 1998). To 
determine whether NV sale are at a different LOT than U.S. sales, we 
examine stages in the marketing process and selling functions along the 
chain of distribution between producer and the unaffiliated customer.
    Customers categories such as distributors, retailers, or end-users 
are commonly used by petitioners respondents to describe different 
LOTs, but without substantiation, they are insufficient to establish 
that a claimed LOT is valid. An analysis of the chain of distribution 
and of the selling functions substantiates or invalidates the claimed 
LOTs.
    The marketing process in both markets begins with goods being sold 
by the producer and extends to the sale to the final user. The chain of 
distribution between the producer and the final user may have many or 
few links, and each respondent's sales occur somewhere along this 
chain. In the United States, the respondent's sales are generally to an 
importer, whether independent or affiliated. We review and compare the 
distribution systems in the home market and the United States, 
including selling functions, class of customer, and the extent and 
level of selling expenses for each claimed LOT. Unless the sales being 
compared are at different stages in the marketing process, the 
Department will not find that a difference in LOT exists, even if 
selling functions are different.

[[Page 55089]]

    If the claimed LOTs are different, the selling functions performed 
in selling to each level should also be different. Therefore, unless we 
find that there are different selling functions for sales to the U.S. 
and HM sales, we will not determine that there are separate LOTs. 
Different LOTs necessarily involve differences in selling functions, 
but differences in selling functions, even substantial ones, are not 
alone sufficient to establish a difference in the LOTs. Differences in 
LOTs are characterized by purchasers at different stages of marketing 
or their equivalent.
    Because the existence of different channels of distribution 
suggested that differences in LOT might possibly be present in this 
case, the Department analyzed the selling functions associated with 
Prayon's U.S. sales with Prayon's home market sales through the three 
channels of distribution described above. As Prayon has noted, all four 
of these groups of sales involve substantially the same selling 
functions. Specifically, for all of these sales Prayon communicates 
with customers, takes orders, directs shipments and receives payment 
and we found no differences in selling functions. The Department has 
stated in the preamble to its LOT regulation that, in order to find a 
level of trade difference ``each more remote level must be 
characterized by an additional layer of selling activities, amounting 
in the aggregate to a substantially different selling function.'' 62 FR 
27296, 27371 (May 19, 1997) (emphasis added).
    Because there are no substantially different selling functions 
associated with the home market sales through any of the home market 
channels of distribution, we determined that there are no LOT 
differences between Prayon's U.S. sales and any of its home market 
sales, regardless of the differences in channel of distribution. 
Because none of Prayon's home market sales are at an LOT that is 
different from that of the U.S. states, there is no reason to eliminate 
any of Prayon's home market sales from the matching pool or from the 
model-specific price averaging groups based on an LOT rationale. 
Further, it is not our practice to limit price-averaging groups based 
solely on channels of distribution. See Final Determination of Sales at 
Less Than Fair Value: Certain Pasta From Turkey, 61 FR 30309 (June 14, 
1996) (``channels are not an appropriate basis for creating product 
average groups * * *. The SAA does not contemplate the use of channels 
of distribution as a basis for creating an averaging group''). 
Therefore, we have compared U.S. sale prices, properly adjusted, to a 
model-specific average of all of Prayon's home market sales.
    Comment 2: Credit expenses. Petitioner claims that the Department 
should have used the same methodology it used for home market credit 
expense to calculate U.S. credit expenses. In the preliminary results, 
the Department determined that the discount transactions for home 
market credit expenses between Prayon and its affiliated coordination 
center were not made at arm's length. As a result, the Department 
deducted from the price to the first unaffiliated customer in the home 
market an imputed credit expense, rather than using the home market 
credit expense reported by Prayon. According to petitioner, the 
discount transactions for the U.S. credit expense between Prayon and 
its affiliates, Quadra and Prayon Services and Finance, also were not 
made at arm's length. Therefore, the Department should reject these 
reported credit expense values and calculate an imputed U.S. credit 
expense. For the purposes of the final results, the imputed credit 
expense must be incorporated in the antidumping margin calculation. 
Petitioner also argues that Prayon erroneously reported its credit 
expense on these U.S. transactions in Belgian francs, and that the 
Department must calculate the imputed credit expense using the interest 
rate of the currency in which Prayon incurred credit expense on U.S. 
sales, i.e., U.S. dollars.
    Prayon argues that the Department should use the actual credit cost 
incurred by Prayon and reported in Prayon's questionnaire response. 
Although Prayon's actual cost is the cost incurred in factoring 
invoices for U.S. sales with a related company, the related company 
operates as a ``coordination center'' under Belgian law and is legally 
required to charge an arms's length interest rate. This rate is based 
on the prevailing Belgian interbank rate plus a premium to reflect a 
commercial loan. If, however, the Department disregards Prayon's actual 
credit expense and uses an imputed expense, then a Belgian franc-
denominated rate should be used in the calculation.
    DOC position: We agree with petitioner. In the preliminary results, 
we determined that Prayon's home market credit expense paid to its 
affiliates was not incurred on an arm's length basis. Therefore, we 
calculated an imputed home market credit value using our standard 
credit calculation, i.e., (date of payment less date of shipment/365)* 
monthly home market short term rate interest rate* gross price. We also 
determined that Prayon's U.S. credit expense paid to its affiliates was 
not incurred at arm's length and intended to calculate an imputed U.S. 
credit value using the standard credit calculation. For these Final 
Results, we have made this change.
    In our calculation, we have used the prevailing U.S. dollar prime 
rate in effect during the period of review See Federal Reserve Bulletin 
``Prime Rate Charged By Banks,'' June 28, 1998, p.A 22, Number 1.33. 
For this instant review, the application of the prime rate is 
consistent with the Department's policy of calculating an imputed 
credit expense using the interest rate of the currency of sale. As we 
stated in a recent Import Administration Policy Bulletin, ``for the 
purposes of calculating imputed credit expenses, we will use a short-
term interest rate tied to the currency in which the sales are 
denominated. We will base this interest rate on the respondent's 
weighted-average short-term borrowing experience in the currency of the 
transaction.'' See Import Administration Policy Bulletin Number 98.2 at 
3 (February 23, 1998). Further, our use of the prime rate in the 
calculation of an imputed credit expense for this review adheres to the 
Department's standard policy as outlined in the Bulletin cited above: 
``(1) The surrogate rate should be reasonable; (2) it should be readily 
obtainable and predictable; and (3) it should be a short-term interest 
rate actually realized by borrowers in the course of the usual 
commercial behavior in the United States.'' The U.S. dollar prime rate 
meets this standard.
    We disagree that any imputed credit expense should be calculated 
using Belgian francs. In our Section C questionnaire, we explicitly 
stated that it is our practice to calculate imputed credit expense in 
U.S. dollars when the U.S. sales are denominated in dollars. We stated 
that, if Prayon did not borrow in U.S. dollars, then it should use a 
U.S. published commercial bank prime rate short-term lending rate in 
reporting credit expense. Therefore, we have calculated the imputed 
U.S. credit expense in U.S. dollars.
    Finally, we find that Prayon's assertion that its affiliate, Prayon 
Services, is required, under Belgian law, to charge an arm's length 
interest rate to an affiliated company provides insufficient indication 
that these credit transactions are in fact made at arm's length. Since 
the arm's length standard established by Belgian law is not 
sufficiently similar to the practice established by the Department, we 
cannot rely on Prayon's compliance with the law as evidence that the 
rate

[[Page 55090]]

charged by Prayon Services to Prayon is at arm's length. See Industrial 
Phosphoric Acid from Belgium; Final Results of Antidumping 
Administrative Review, 61 FR 20227 (May 6, 1996).

Currency Conversion

    We made currency conversions in accordance with section 773A of the 
Act based on rates certified by the Federal Reserve Bank in effect on 
the dates of the U.S. sales. See Change in Policy Regarding Currency 
Conversions, 61 FR 9434 (March 8, 1996).

Final Results of the Review

    As a result of our review, we determine that the following margin 
exists for the period August 1, 1996 through July 31, 1997:

------------------------------------------------------------------------
                                                               Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Prayon....................................................         4.35
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between normal value and export price may vary from the 
percentage stated above. We have calculated an importer-specific duty 
assessment rate based on the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
the same sales. The rate will be assessed uniformly on all entries of 
that particular company made during the POR. The Department will issue 
appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of amended final results of review for 
all shipments of IPA from Belgium entered, or withdrawn from warehouse, 
for consumption on or after the publication date, as provided for by 
section 751(a) of the Act: (1) For the companies named above, the cash 
deposit rate will be the rate listed above (2) for merchandise exported 
by manufacturers or exporters not covered in this review but covered in 
a previous segment of this proceeding, the cash deposit rate will 
continue to be the company-specific rate published in the most recent 
final results which covered that manufacturer or exporter; (3) if the 
exporter is not a firm covered in this review or in any previous 
segment of this proceeding, but the manufacturer is, the cash deposit 
rate will be that established for the manufacturer of the merchandise 
in these final results of review or in the most recent final results 
which covered that manufacturer; and (4) if neither the exporter nor 
the manufacturer is a firm covered in this review or in any previous 
segment of this proceeding, the cash deposit rate will be 14.67 
percent, the ``all others'' rate established in the LFTV investigation. 
These deposit requirements shall remain in effect until publication of 
the final results of the next administrative review.
    This notice 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 doubled antidumping duties.
    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with section 351.306 of the Department's regulations. 
Timely notification of return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and the terms of an APO is a sanctionable 
violation.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: October 7, 1998.
Robert S. LaRussa,
Assistant Secretary, Import Administration.
[FR Doc. 98-27568 Filed 10-13-98; 8:45 am]
BILLING CODE 3510-DS-M