[Federal Register Volume 63, Number 212 (Tuesday, November 3, 1998)]
[Notices]
[Pages 59279-59282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29441]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-560-803]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Extruded Rubber Thread 
From Indonesia

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: November 3, 1998.

FOR FURTHER INFORMATION CONTACT: Russell Morris or Eric B. Greynolds, 
Office of AD/CVD Enforcement VI, Import Administration, U.S. Department 
of Commerce, Room 4012, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone (202) 482-2786.

SUPPLEMENTARY INFORMATION:

The Applicable Statue

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``the 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 (``URAA''). In addition, 
unless otherwise indicated, all citations to the Department's 
regulations are to the regulations at 19 CFR part 351 (April 1, 1998).

Preliminary Determination

    We preliminarily determine that extruded rubber thread (``ERT'') 
from Indonesia is being, or is likely to be, sold in the United States 
at less than fair value (``LTFV''), as provided in section 733 of the 
Act. The estimated margins of sales at LTFV are shown in the 
``Suspension of Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on April 20, 1998 (see 
Notice of Initiation of Antidumping and Countervailing Duty 
Investigations: Extruded Rubber Thread from Indonesia (63 FR 23267) 
(``Notice of Initiation'')), the following events have occurred:
    On April 22, 1998, the Department of Commerce (``Department'') 
requested information from the U.S. Embassy in Indonesia to identify 
producers/exporters of the subject merchandise.
    On May 28, 1998, the International Trade Commission (``ITC'') 
published its preliminary determination that there is a reasonable 
indication that an industry in the United States is being materially 
injured, or threatened with material injury, by reason of imports from 
Indonesia of the subject merchandise (63 FR 29250).
    On May 28, 1998, the Department issued the antidumping duty 
questionnaire to the following producers/exporters of ERT: P.T. Bakrie 
Rubber Industry (``Bakrie''), P.T. Swasthi Parama Mulya (``Swasthi''), 
P.T. Perkebunan Nusantara III (``Persero''), Cilatexindo Graha Alam 
P.T. (``Cilatexindo''). The questionnaire is divided into four 
sections. Section A requests general information concerning a company's 
corporate structure and business practices, the merchandise under 
investigation that it sells, and the sales of the merchandise in all of 
its markets. Sections B and C request home market sales listings and 
U.S. sales listings, respectively. Section D requests information on 
the cost of production (``COP'') of the foreign like product and 
constructed value (``CV'') of the subject merchandise.
    On June 8, 1998 and July 27, 1998, Cilatexindo and Persero, 
respectively, stated that it has never directly or indirectly sold ERT 
to the U.S. market during the period of investigation. Upon receipt of 
Cilatexindo and Persero's statements, the Department consulted with 
U.S. Customs to verify each party's respective claim as it pertains to 
the period of investigation. The Department was able to confirm that 
both Cilatexindo and Persero did not ship the subject merchandise to 
the United States. (See Memorandum from Russell Morris to the File, 
``Shipments of Subject Merchandise,'' dated August 24, 1998. The public 
version is on file in Room B-099, the Central Records Unit, of the 
Department of Commerce).
    On July 8, 1998, Bakrie and Swasthi submitted their respective 
responses to Section A of the questionnaire. On July 21, 1998, Bakrie 
submitted Sections B and C of the questionnaire. On July 24, 1998, 
Swasthi submitted Sections B and C of the questionnaire. On August 17, 
1998, we issued supplemental questionnaires to Bakrie and its 
affiliated U.S. reseller, Globe Manufacturing Co. (``Globe'') and 
Swasthi. On September 14, 1998, Swasthi submitted its response to the 
Department's Section C supplemental questionnaire. On September 25, 
1998, Bakrie submitted its response to the Department's supplemental 
questionnaire for Sections A, B and C. On September 25, 1998, Bakrie 
also submitted its revised Section C questionnaire response which 
contained a separate submission of Globe's selling expenses and prices 
to its first unaffiliated customer.
    On August 3, 1998, the petitioner made a timely request that the 
Department postpone the preliminary determination in this 
investigation. We did so on August 14, 1998, in accordance with section 
733(c)(1)(A) of the Act (see Notice of Postponement of Time Limit for 
Antidumping Investigation: Extruded Rubber Thread from Indonesia, 63 FR 
43674).

Date of Sale

    On September 3, 1998, the petitioner objected to Swasthi's use of 
date of invoice as the date of sale. Petitioner argued that given the 
actual sales processes of Swasthi, the appropriate date of sale is set 
on the purchase order date for U.S. sales, not the date on which the 
sale is invoiced as Swasthi has reported. Petitioner noted that there 
are no changes in the basic terms of each sale after the negotiation of 
the purchase order. The petitioner noted

[[Page 59280]]

that its comment pertaining to the proper date of sale applies to 
Bakrie, as well. After a review of the petitioner's comments and the 
method by which sales are made in both the home market and U.S. market 
by both respondents, we determined that the date of invoice is the 
appropriate date of sale in this investigation.
    Section 351.401(i) of the Department's regulations states that the 
Department will normally use the date of invoice, as recorded in the 
exporter's or producer's records kept in the ordinary course of 
business, as the date of sale. The preamble to the Final Rules (the 
``Preamble'') provides an explanation of this policy and examples of 
when the Department may choose to base the date of sale on a date other 
than the date of invoice. See 62 FR at 27348-49 (May 19, 1997). 
According to Swasthi's response, the product mix, the price, and the 
quantity of a customer's original order can change until the date of 
shipment which is the same as the company's date of invoice. Based upon 
Swasthi's representation, we preliminarily determine that the 
appropriate date of sale for Swasthi is the date of shipment. In 
determining the date of sale for Bakrie and its affiliated reseller 
Globe, the Department is relying on Globe's reported invoice date as 
the date of sale and shipment date. (For further discussion see 
memorandum to the file, ``Clarification of Globe Manufacturing's 
Section C submission,'' dated October, 15, 1998.) We intend to verify 
respondents' claims concerning changes between the date of shipment and 
the date of invoice. Based upon the outcome of our verification, we 
will determine whether it is appropriate to continue to use the date of 
invoice as the date of sale. We will consider, among other things, 
whether, in fact, there were any changes to the contracted terms 
between the original order and the date of invoice. See e.g. Notice of 
Final Results of Antidumping Duty Administrative Review: Canned 
Pineapple Fruit from Thailand, 63 FR 7392 at 7394-7395 (February 13, 
1998).

Cost Investigation

    On August 17, 1998, pursuant to section 773(b) of the Act, 
petitioner submitted a timely allegation that Bakrie and Swasthi had 
made sales in the home market at less than the cost of production. Our 
analysis of the allegation indicated that there were reasonable grounds 
to believe or suspect that Bakrie and Swasthi both sold ERT in the home 
market at prices at less than COP. Accordingly, we initiated COP 
investigations with respect to Bakrie and Swasthi pursuant to section 
773(b) of the Act on September 10, 1998 (see Memorandum from Team to 
David Mueller, Office Director, dated September 10, 1998. The public 
version is on file in Room B-099 of the Central Records Unit). As a 
result of the Department's COP investigation, the Department requested 
that both Bakrie and Swasthi answer Section D of the original 
questionnaire; both parties submitted their respective responses to the 
Section D questionnaire on October 23, 1998. Because of the timing of 
the COP initiation and the receipt of the COP responses, we are unable 
to include a COP analysis in this preliminary determination. We intend 
to issue COP analysis memoranda for Bakrie and Swasthi prior to 
verification and will conduct cost verifications for both respondents. 
Parties should include comments, if any, on our COP methodology in 
their case briefs.

Scope of the Investigation

    For purposes of this investigation, the product covered is ERT from 
Indonesia. ERT is defined as vulcanized rubber thread obtained by 
extrusion of stable or concentrated natural rubber latex of any cross 
sectional shape, measuring from 0.18 mm, which is 0.007 inches or 140 
gauge, to 1.42 mm, which is 0.056 inch or 18 gauge, in diameter.
    ERT is currently classified under subheadings 4007.00.00 of the 
Harmonized Tariff Schedule (``HTS''). Although the HTS subheadings are 
provided for convenience and customs purposes, the written description 
of the scope of this investigation is dispositive.

Period of Investigation

    The period of investigation (``POI'') is January 1, 1997, through 
December 31, 1997.

Postponement of Final Determination and Extension of Provisional 
Measures

    In October 1998, pursuant to section 735(a)(2) of the Act, both 
respondents requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of the 
publication of an affirmative preliminary determination in the Federal 
Register. On October 27, 1998, respondents amended their request to 
include a request to extend the provisional measures to not more than 
six months. In accordance with 19 CFR 351.210(b), because (1) our 
preliminary determination is affirmative, (2) both Bakrie and Swasthi 
account for a significant proportion of exports of the subject 
merchandise, (3) no compelling reasons for denial exist, we are 
granting the respondents' request and are postponing the final 
determination until no later than 135 days after the publication of 
this notice in the Federal Register. In addition, we are extending the 
provisional measures by not more than six months. Suspension of 
liquidation will be extended accordingly.

Fair Value Comparisons

    To determine whether sales of ERT from Indonesia to the United 
States were made at less than fair value, we compared the export price 
(``EP'') or the constructed export price (``CEP'') to the normal value 
(``NV''), as described below in the ``Export Price,'' ``Constructed 
Export Price,'' and ``Normal Value'' sections of this notice. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we calculated 
weighted-average EPs and CEPs for comparison to weighted-average NVs.

Physical Characteristics

    In accordance with section 771(16) of the Act, we considered all 
products covered by the description in the ``Scope of Investigation'' 
section of this notice, produced in Indonesia by the respondents and 
sold in the home market during the POI, to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
Where there were no sales of identical merchandise in the home market 
to compare to U.S. sales, we compared U.S. sales to the most similar 
foreign like product on the basis of the characteristics listed in the 
Department's antidumping questionnaire. In making the product 
comparisons, we relied on the following criteria (listed in order of 
preference): gauge, color, and ends. (For further explanation of the 
product comparisons, see Memorandum from Anne D'Alauro dated May 22, 
1998, on file in the Central Records Unit, Room B-099 of the Department 
of Commerce.)

Level of Trade

    While neither Swasthi nor Bakrie claimed a difference in level of 
trade, Bakrie requested that the Department evaluate whether Bakrie 
qualified for a level of trade adjustment. Based upon our review of the 
responses submitted by each of the companies, we detected no sales 
activities that would differ from the home market to U.S. market, and 
therefore determine that each company performed essentially the same 
selling activities for all reported home market and U.S. sales. 
Accordingly, we find that no level of trade differences exist between 
any sales in either the home

[[Page 59281]]

market or U.S. market for either company. Therefore, all price 
comparisons are at the same level of trade and an adjustment pursuant 
to section 773(a)(7)(A) of the Act is unwarranted.

Export Price

    For Swasthi, we used EP methodology, in accordance with section 
772(a) of the Act, because the subject merchandise was sold directly to 
the first unaffiliated purchaser in the United States prior to 
importation and because CEP methodology was not otherwise indicated. We 
based EP on the packed prices to unaffiliated purchasers in the United 
States. In accordance with section 772(c)(2)(A) of the Act, we made 
deductions, where appropriate, from the starting price for foreign 
inland freight, international freight, marine insurance, U.S. customs 
duty, and brokerage and handling. We also made a deduction, where 
appropriate, for rebates.

Constructed Export Price

    For Bakrie, we used CEP methodology, in accordance with section 
772(b) of the Act, because the first sale of subject merchandise to an 
unaffiliated purchaser took place after importation into the United 
States. We based CEP on the packed delivered prices to unaffiliated 
purchasers in the United States. We made deductions, where appropriate, 
for discounts. We also made deductions for the following movement 
expenses, where appropriate, in accordance with section 772(c)(2)(A) of 
the Act: foreign inland freight, containerization expenses (expenses 
for loading the merchandise into the container), foreign brokerage and 
handling, international freight (including marine insurance, U.S. 
inland insurance, U.S. freight to the affiliated reseller), U.S. 
customs duties, letter of credit fees, and freight to U.S. customer. In 
accordance with 772(d)(1) of the Act, we deducted selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (credit cost and technical services), 
inventory carrying costs, and other indirect selling expenses. Bakrie 
did not make a profit during the POI, therefore, profit was not 
deducted in accordance with sections 772(d)(3) and 772(f) of the Act.
    In its response, Bakrie converted certain expenses originally 
incurred in Rupiah into U.S. dollars using an average exchange rate for 
the POI which was reported in its response. Because the company should 
have reported the charges in the currency of the transactions, we 
reconverted these expenses back into Rupiah using the average exchange 
rate used by the company.
    In addition, in its initial questionnaire response, Bakrie and 
Globe failed to submit to the Department a single integrated Section C 
response. On August 17, 1998, we sent a supplemental questionnaire to 
both Bakrie and Globe, requesting that they submit a revised Section C 
response that integrated Bakrie's transfers of ERT to Globe and Globe's 
sales of ERT to its first unaffiliated customer in the United States. 
On September 25, 1998, Bakrie submitted a revised Section C 
questionnaire response. However, Bakrie's revised Section C response 
did not integrate its movement and other expenses associated with its 
shipments of ERT to Globe with that of Globe's sales of ERT to its 
first unaffiliated customer. The lack of an integrated response created 
gaps for which we did not have data.
    Section 776(a)(2) of the Act provides that ``if an interested party 
or any other person fails to provide such information by the deadlines 
for submission of the information or in the form and manner requested, 
subject to subsections (c)(1) and (e) of section 782, the administering 
authority shall, subject to section 782(d), use the facts otherwise 
available in reaching the applicable determination under this title.'' 
In its August 17, 1998 supplemental questionnaire, the Department 
specifically requested that both Bakrie and its affiliated reseller, 
Globe, provide ``one integrated response.'' See the Department's 
Supplemental Questionnaire dated August 11, 1998, page 5. Both Bakrie 
and Globe failed to comply with the Department's request for an 
integrated response. On this basis, we determined that use of facts 
available is appropriate for certain expenses reported by Bakrie and 
Globe. The Department relied on facts available to integrate and adjust 
certain selling expenses incurred by both Bakrie and Globe. Therefore, 
as facts available, we weight-averaged Bakrie's reported U.S. expenses 
for CEP sales and integrated them into Globe's reported response. See 
Memorandum from Team to the File ``Normal Value and Constructed Export 
Price Adjustments for the Preliminary Determination,'' dated October 
27, 1998.
    In addition, according to Bakrie, Globe provided some technical 
services to its U.S. customers. However, Globe reported these expenses 
as part of its indirect selling expenses. Because we are unable to 
segregate these technical service expenses from other indirect selling 
expenses incurred in the United States as reported by Globe, we are 
treating, as facts available, the entire amount as direct selling 
expenses.

Normal Value

    After testing for home market viability, we calculated NV as noted 
in the ``Price-to-Price Comparisons'' section of this notice.

Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared the respondents' volume of home market sales 
of the foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act. As 
respondents' aggregate volume of home market sales of the foreign like 
product exceeded five percent of their aggregate volume of U.S. sales 
for the subject merchandise, we have determined that the home market is 
viable for both of the respondents.

Bakrie

    We based NV on packed, delivered prices to unaffiliated customers. 
We made deductions, where appropriate, from the starting price for 
inland freight, inland insurance, and direct selling expenses (credit 
expenses and commissions), pursuant to sections 773(a)(6)(B) and 
773(a)(6)(C)(iii) of the Act. We also made deductions, where 
appropriate, for discounts. In addition, pursuant to sections 773(a)(6) 
(A) and (B) of the Act, we deducted home market packing costs and added 
U.S. packing costs.
    While Bakrie reported in its response that it sold identical 
products in both its home and U.S. markets, identical product sales 
were not made during the POI. Thus, we had to match U.S. products to 
the most similar product sold in the home market based upon the 
matching criteria noted in the ``Physical Characteristics'' section of 
this notice. Bakrie, however, failed to provide information which could 
be used to make adjustments for physical differences in merchandise 
pursuant to section 773(a)(6)(C)(ii) of the Act. Therefore, we compared 
Bakrie's sales in the U.S. market to sales in the home market of 
products at the next highest gauge, as facts available, because the 
prices and costs per unit of weight are higher for the higher gauged 
ERT products.

[[Page 59282]]

Swasthi

    We based NV on packed, delivered prices to unaffiliated customers. 
We made deductions, where appropriate, from the starting price for 
inland freight in accordance with section 773(a)(6)(B)(ii) of the Act. 
We also adjusted for differences in circumstances of sale for credit 
expenses pursuant to section 773(a)(6)(C)(iii) of the Act. In addition, 
pursuant to sections 773(a)(6) (A) and (B) of the Act, we deducted home 
market packing costs and added U.S. packing costs.
    Swasthi reported that it had returns of subject merchandise during 
the POI. On certain specific home market sales, it reported the 
quantity of the merchandise returned by the customer. Swasthi did not, 
however, report any additional expenses it incurred as a result of the 
return of defected and rejected merchandise. Therefore, we were unable 
to make any adjustments for any expenses incurred under this claim. We 
did, however, adjust the reported quantity of the home market sale 
based upon the quantity of the merchandise returned by the customer.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank, in accordance with section 773(A) of the Act.
    In the recently completed preliminary determination of Mushrooms 
from Indonesia, an issue was raised regarding the use of two averaging 
periods for the margin calculations to account for the effect of the 
devaluation of the Indonesian Rupiah. See Notice of Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination: Certain Preserved Mushrooms From Indonesia, 63 FR 
41783 (August 5, 1998) (Mushrooms from Indonesia). The petitioners in 
Mushrooms from Indonesia stated that the Department should calculate 
the weighted-average export price for two averaging periods--January 
through June 1997, and July through December 1997--in order to avoid 
distorting dumping margins. In Mushrooms from Indonesia, we 
preliminarily found no basis to depart from our practice of calculating 
the weighted-average export prices for the entire POI. Although the 
issue of using two different averaging periods has not been raised in 
the instant investigation, the effect, if any, of the devaluation of 
the Rupiah on margin calculations could also be relevant to this 
investigation because its POI, calendar year 1997, is identical to that 
in Mushrooms from Indonesia. Therefore, we will continue to examine 
this issue for our final determination in this instant investigation. 
We invite comments from the interested parties on this issue.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all imports of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. Swasthi is excluded from suspension of liquidation 
because its rate is de minimis under section 733(b)(3) of the Act. We 
will instruct the Customs Service to require a cash deposit or the 
posting of a bond equal to the weighted-average amount by which the NV 
exceeds the export or constructed export price, as indicated in the 
chart below for companies other than Swasthi. These suspension-of-
liquidation instructions will remain in effect until further notice. 
The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/Manufacturer                        margin
                                                              Percentage
------------------------------------------------------------------------
Bakrie Rubber Industry.....................................        13.07
P.T. Swasthi Parama Mulya..................................         0.09
All Others Rate............................................        13.07
------------------------------------------------------------------------

    Pursuant to section 735(c)(5)(A) of the Act, the Department has 
excluded all zero and de minimis weighted-average dumping margins from 
the calculation of the ``All Others'' rate. Under section 733(b)(3) of 
the Act, a weighted-average dumping margin is de minimis if it is less 
than two percent ad valorem.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threatening material 
injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments in at least ten copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than February 3, 1999, and rebuttal briefs no later than February 
10, 1999. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, the hearing 
will be held on February 16, 1999, time and room to be determined, at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 20230. Parties should confirm by telephone the 
time, date, and place of the hearing 48 hours before the scheduled 
time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistance 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination by no later than 135 days after the publication of this 
notice in the Federal Register.
    This determination is issued and published in accordance with 
sections 733(d) and 777(i)(1) of the Act.

    Dated: October 27, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-29441 Filed 11-2-98; 8:45 am]
BILLING CODE 3510-DS-P