[Federal Register Volume 64, Number 8 (Wednesday, January 13, 1999)]
[Notices]
[Pages 2192-2195]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-692]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-501]


Natural Bristle Paintbrushes and Brush Heads From The People's 
Republic of China; Preliminary Results and Partial Recission of 
Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results and partial recission of the 
antidumping duty administrative review of natural bristle paintbrushes 
and brush heads from the People's Republic of China.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on natural bristle 
paintbrushes and brush heads (paintbrushes) from the People's Republic 
of China (PRC) in response to a request by petitioner, the Paint 
Applicator Division of the American Brush Manufacturers Association 
(the Paint Applicator Division) and by a PRC exporter of subject 
merchandise, the Hebei Animal By-Products Import & Export Corp. (HACO). 
This review covers shipments of this merchandise to the United States 
during the period February 1, 1997 through January 31, 1998. We are now 
rescinding this review in part with respect to the respondent who had 
no shipments of the subject merchandise during the period of review 
(POR).
    We have preliminarily determined that sales by HACO have been made 
below normal value (NV). If these preliminary results are adopted in 
our final results, we will instruct the U.S. Customs Service to assess 
antidumping duties equal to the difference between export price and NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments are requested to submit with each 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

EFFECTIVE DATE: January 13, 1999.

FOR FURTHER INFORMATION CONTACT: Eric Scheier, Laurel LaCivita, or 
Maureen Flannery, Antidumping/Countervailing Duty Enforcement, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC. 
20230; telephone (202) 482-4052, 482-4236, or 482-3020, respectively.

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations refer to the 
regulations codified at 19 CFR part 351 (April 1998).

Background

    On February 18, 1986, the Department published in the Federal 
Register an antidumping duty order on paintbrushes from the PRC. See 51 
FR 5580. On February 4, 1998, the Department published in the Federal 
Register (63 FR 5930) a notice of opportunity to request an 
administrative review of the antidumping order on paintbrushes from the 
PRC covering the period February 1, 1997, through January 31, 1998.
    On February 27, 1998, in accordance with 19 CFR 351.213(b)(1), 
petitioner, the Paint Applicator Division, requested that we conduct an 
administrative review of Hunan Provincial Native Produce & Animal By-
Products I/E Corporation (Hunan). On February 27, 1998, HACO submitted 
a request for a review. We published a notice of initiation of this 
antidumping duty administrative review on March 23, 1998 (63 FR 13837). 
The Department is conducting this administrative review in accordance 
with section 751 of the Act.

Partial Rescission

    We initiated a review of HACO and Hunan. However, on March 5, 1998, 
Hunan informed the Department that it had no shipments of the subject 
merchandise to the United States during the POR. We have independently 
confirmed with the United States Customs Service that there were no 
shipments from Hunan during the POR. Therefore, in accordance with 
Sec. 351.213(d)(3) of the Department's regulations and consistent with 
Department practice, we are rescinding our review of Hunan (see, e.g., 
Certain Welded Carbon Steel Pipe and Tube

[[Page 2193]]

from Turkey: Final Results and Partial Rescission of Antidumping 
Administrative Review, 63 FR 35191 (June 29, 1998) and Certain Fresh 
Cut Flowers From Colombia; Final Results and Partial Rescission of 
Antidumping Duty Administrative Review, 62 FR 53287, 53288 (October 14, 
1997).

Scope of Review

    Imports covered by this review are shipments of natural bristle 
paint brushes and brush heads from the PRC. Excluded from the order are 
paint brushes and brush heads with a blend of 40% natural bristles and 
60% synthetic filaments. The merchandise under review is currently 
classifiable under item 9603.40.40.40 of the Harmonized Tariff Schedule 
of the United States (HTSUS). Although the HTSUS subheading is provided 
for convenience and customs purposes, the Department's written 
description of the merchandise is dispositive.
    This review covers the period February 1, 1997, through January 31, 
1998.

Verification

    As provided in section 782(i) of the Act, we conducted a 
verification of information provided by HACO and its supplier by using 
standard verification procedures, including on-site inspection of the 
manufacturer's facilities, the examination of relevant sales and 
financial records, and the seclection of original documentation 
containing relevant information. Our verification results are outlined 
in the public version of the verification report.

Adverse Facts Available

    We preliminarily determine, in accordance with sections 776(b) and 
(c) of the Act, that the use of adverse facts available (FA) is 
appropriate for HACO. See Determination of Adverse Facts Available 
Based on Verification Failure in the Administrative Review of Natural 
Bristle Paintbrushes and Brush Heads from the People's Republic of 
China (Adverse Facts Available Memorandum), dated December 30, 1998.
    From September 28 through September 30, 1998, the Department 
conducted a verification of HACO's questionaire response at HACO's 
sales office and its supplier's factory in the PRC. We were unable to 
verify substantial sections of the questionnaire response at HACO's 
supplier, including the statutorily required factors of production 
information, such as the number of labor hours worked and the per unit 
quantities consumed of primary material inputs. These discrepancies are 
detailed in HACO's verification report, dated December 30, 1998. These 
discrepancies are so significant as to constitute a failure of 
verification.
    Where a party provides information requested by the Department but 
the information cannot be verified as required by section 782(i) of the 
Act, section 776(a)(2)(D) of the Act requires the Department to use 
facts otherwise available in reaching the applicable determination. 
Therefore, in accordance with section 776(a) of the Act, the use of FA 
is appropriate for HACO. See Extruded Rubber Thread from Malaysia, 
Final Results of Antidumping Duty Administrative Review, 62 FR 33588 
(June 9, 1997).
    Section 776(b) of the Act authorizes the Department to use adverse 
FA whenever it finds that an interested party has failed to cooperate 
by not acting to the best of its ability to comply with the 
Department's requests for information. Because HACO failed to 
substantiate large portions of its questionnaire response, including 
the statutorily required factors of production information, such as the 
number of labor hours worked and the per unit quantities consumed of 
primary material inputs, we determine that HACO did not cooperate to 
the best of its ability with our requests for information. See Adverse 
Facts Available Memorandum. Therefore, pursuant to section 776(b) of 
the Act, we are using adverse FA to determine HACO's margin. Under 
section 776(b) of the Act, adverse facts available may include reliance 
on information derived from : (1) The petition, (2) a final 
determination in the investigation, (3) any previous review under 
section 751 of the Act or determination under section 753 of the Act, 
or (4) any other information placed on the record. We have found that 
the adverse FA rate appropriate for HACO is the highest rate from a 
previous review or the original LTFV investigation, which in this case 
is 351.92 percent, the rate calculated for HACO in the review covering 
the period February 1, 1994 through January 31, 1995 (the 1994-1995 
review).
    Section 776(c) of the Act provides that the Department shall, to 
the extent practicable, corroborate secondary information from 
independent sources reasonably at its disposal. The Statement of 
Administrative Action, H.R. Doc. 316, Vol. 1, 103d Cong., 2d Sess. 870 
(1994) (SAA) provides that ``corroborate'' means simply that the 
Department will satisfy itself that the secondary information to be 
used has probative value. See SAA at 870.
    To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. However, unlike other types of information, 
such as surrogate values, there are no independent sources for 
calculated dumping margins. The only source for calculated margins is 
an administrative determination. Thus, in an administrative review, if 
the Department chooses as adverse FA a calculated dumping margin from a 
prior segment of the proceeding, it is not necessary to question the 
reliability of the margin for that time period. With respect to the 
relevance aspect of corroboration, however, the Department will 
consider information reasonably at its disposal as to whether there are 
circumstances that would render a margin not relevant. Where 
circumstances indicate that the selected margin is not appropriate as 
adverse facts available, the Department will disregard the margin and 
determine an appropriate margin. (See e.g., Fresh Cut Flowers from 
Mexico; Preliminary Results of Antidumping Duty Administrative Review, 
60 FR 49567, 49568 (September 26, 1995), where the Department 
disregarded the highest margin as best information available because 
that margin was based on an extraordinarily high business expense 
resulting from uncharacteristic investment activities, which resulted 
in the high margin.)
    In this case, we have used the highest rate from any prior segment 
of the proceeding, 351.92 percent, which was the rate calculated for 
HACO in the 1994-1995 review. Because this margin is based on the rate 
calculated for the relatively recent 1994-95 review using HACO's own 
price data, and because there is no information that indicates that 
this rate is not appropriate, we have determined that a margin of 
351.92 percent is appropriate to use as facts available.

Separate Rates

    We have conducted a separate rate analysis of HACO despite its 
overall verification failure for the following reasons: (1) The 
separate rate test is exporter-specific; (2) the verification failure 
as described above resulted from the Department's inability to verify 
the information provided by HACO's supplier, the producer of the 
subject merchandise imported into the U.S. during the POR, and not from 
any discrepancies in the information provided by HACO, the exporter of 
the subject merchandise imported into the U.S. during the POR; (3) our 
verification of the separate rate information provided in HACO's 
responses revealed that a separate rate is warranted and; (4) the 
Department granted HACO a

[[Page 2194]]

separate rate for the 1994-95 review of paintbrushes from the PRC, 
which is the most recent review in which HACO participated. See Natural 
Bristle Paint Brushes and Brush Heads From the People's Republic of 
China; Final Results of Antidumping Duty Administrative Review, 61 FR 
52917 (October 1, 1996). See also Verification of Sales for Hebei 
Animal By-Products Import and Export Corporation (HACO) in the 
Antidumping Administrative Review of Natural Bristle Paintbrushes and 
Brush Heads from the People's Republic of China (PRC) (Verification 
Report).
    To establish whether a company operating in a state-controlled 
economy is sufficiently independent to be entitled to a separate rate, 
the Department analyzes each exporting entity under the test 
established in the Final Determination of Sales at Less Than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991) (Sparklers), as amplified by the Final Determination of Sales 
at Less Than Fair Value: Silicon Carbide from the People's Republic of 
China, 59 FR 22585 (May 2, 1994) (Silicon Carbide). Under this policy, 
exporters in non-market economies (NMEs) are entitled to separate, 
company-specific margins when they can demonstrate an absence of 
government control, both in law and in fact, with respect to export 
activities. Evidence supporting, though not requiring, a finding of de 
jure absence of government control over export activities includes: (1) 
An absence of restrictive stipulations associated with an individual 
exporter's business and export licenses; (2) any legislative enactments 
decentralizing control of companies; and (3) any other formal measures 
by the government decentralizing control of companies. See Sparklers at 
20589. A de facto analysis of absence of government control over 
exports is based on four factors: (1) Whether each exporter sets its 
own export prices independently of the government or without the 
approval of a government authority; (2) whether each exporter retains 
the proceeds from its export sales and makes independent decisions 
regarding the disposition of profits or financing of losses; (3) 
whether each exporter has the authority to negotiate and sign contracts 
and other agreements; and (4) whether each exporter has autonomy from 
the government regarding the selection of management. See Silicon 
Carbide at 22587, and Sparklers at 20589.
    With respect to the absence of de jure government control over 
export activities, evidence on the record indicates that HACO is a 
collectively-owned enterprise. The ``All People's Ownership Business 
Law'' of the PRC identifies rules and regulations pertaining to 
collectively-owned enterprises, and gives collective enterprises the 
right to sell the subject merchandise for export without any 
restrictive stipulations. (See Exhibits 3 and 4 of HACO's August 27, 
1998, questionnaire response.)
    Additionally, HACO has reported in its May 13, 1998 questionnaire 
response that the subject merchandise does not appear on any government 
list regarding export provisions or export licensing, and that there 
are no export quotas on the subject merchandise or export licenses 
required to export subject merchandise. (See Questionnaire Response of 
May 13, 1998, at A-5.)
    With respect to the absence of de facto control over export 
activities, HACO's management is elected by HACO's staff, and is 
responsible for all decisions, such as the determination of its export 
prices, profit distribution, employment policy, marketing strategy, and 
contract negotiations. HACO has also reported that it maintains an 
independent foreign exchange account at the Bank of China. At 
verification we found that the provincial government has no control 
over pricing, business practices, salary, payroll, or bonuses. At 
verification we also found that HACO's relevant department head 
negotiated sales of paintbrushes, that HACO did not coordinate prices 
with other exporters, and that employees could be fired and salaries 
could be reduced. See Separate Rate Analysis in the Administrative 
Review of Natural Bristle Paintbrushes and Brush Heads from the 
People's Republic of China dated December 30, 1998 (Separate Rate 
Memorandum), and the public version of Verification Report dated 
December 30, 1998, which is on file in the Central Records Unit (room 
B099 of the Main Commerce Building).
    Because evidence on the record demonstrates an absence of 
government control, both in law and in fact, over HACO's export 
activities, the Department preliminarily grants HACO a separate rate. 
For further discussion of the Department's preliminary determination 
that HACO is entitled to a separate rate, see Separate Rate Memorandum.

Preliminary Results of Review

    We preliminarily determine that the following dumping margin 
exists:

------------------------------------------------------------------------
                                                                Margin
        Manufacturer/exporter               Time period       (percent)
------------------------------------------------------------------------
Hebei Native, Product & Animal By-
 Products I/E Corp...................     02/01/97-01/31/98       351.92
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice in accordance with 19 CFR 
351.224(b). Any interested party may request a hearing within 30 days 
of publication in accordance with 19 CFR 351.310(c). Any hearing, if 
requested, will be held 37 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice in 
accordance with 19 CFR 351.309(c)(2). Rebuttal briefs, which must be 
limited to issues raised in the case briefs, may be filed not later 
than 35 days after the date of publication. The Department will publish 
a notice of final results of this administrative review, which will 
include the results of its analysis of issues raised in any such 
comments, within 120 days from the publication of these preliminary 
results.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. For assessment 
purposes, we intend to instruct Customs to collect duties equal to 
351.92 percent of the entered value of the subject merchandise. 
Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of paintbrushes from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(2)(C) of the Act: (1) For HACO, which 
has a separate rate, the cash deposit rate will be 351.92 percent; (2) 
for previously-reviewed PRC and non-PRC exporters with separate rates, 
the cash deposit rate will be the company-specific rate established for 
the most recent period; (3) for all other PRC exporters, the rate will 
be the PRC country-wide rate, which is 351.92 percent; and (4) for all 
other non-PRC exporters of subject merchandise from the PRC, the cash 
deposit rate will be

[[Page 2195]]

the rate applicable to the PRC supplier of that exporter.
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.401(f) of the Department's 
regulations to file a certificate regarding the reimbursement of 
antidumping duties prior to liquidation of the relevant entries during 
this review period. Failure to comply with this requirement could 
result in the Secretary's presumption that reimbursement of antidumping 
duties occurred and the subsequent assessment of double antidumping 
duties.
    This administrative review and notice are published in accordance 
with section 751(a)(1) of the Act and Secs. 351.213 and 351.221 of the 
Department's regulations.

    Dated: December 30, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-692 Filed 1-12-99; 8:45 am]
BILLING CODE 3510-DS-M