[Federal Register Volume 64, Number 39 (Monday, March 1, 1999)]
[Notices]
[Pages 9972-9979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5014]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-846]


Brake Rotors From the People's Republic of China: Final Results 
of Antidumping Duty New Shipper Administrative Review

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

SUMMARY: On September 29, 1998, the U.S. Department of Commerce 
published the preliminary results of the new shipper administrative 
review of the antidumping duty order on brake rotors from the People's 
Republic of China (``PRC'') (``preliminary results'') (63 FR 51895). 
This review covers six exporters 1 of the subject 
merchandise to the United States. The period of review is April 1, 
1997, through September 30, 1997. We gave interested parties an 
opportunity to comment on our preliminary results.
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    \1\ The six exporters are China National Machinery Import & 
Export Company (CNIM), Laizhou 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 determined that U.S. sales of brake rotors have not been 
made below the normal value, and we will instruct the U.S. Customs 
Service not to assess antidumping duties for the six PRC exporters 
subject to this review.

EFFECTIVE DATE: March 1, 1999.

FOR FURTHER INFORMATION CONTACT: Brian C. Smith or Barbara Wojcik-
Betancourt, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-1766 or (202) 482-0629, 
respectively.

SUPPLEMENTARY INFORMATION: 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 U.S. Department of Commerce (``the Department'') regulations are to 
the regulations at 19 CFR part 351 (1998).

Background

    On September 29, 1998, the Department published in the Federal 
Register the preliminary results of its new shipper administrative 
review of the antidumping duty order on brake rotors from the PRC (see 
preliminary results). In October and November 1998, the Department 
conducted verification of the questionnaire responses of the six 
respondents. On November 10, 1998, the Department published in the 
Federal Register a notice of postponement of the final results until no 
later than February 23, 1999 (63 FR 63025). On December 1, 1998, the 
petitioner 2 withdrew its request for a hearing in this 
proceeding. Since the six respondents never requested a hearing and the 
petitioner withdrew its original request for one, no hearing was held 
in this case. From December 4, 1998, through January 7, 1999, the 
Department issued its verification reports. On January 21, 1999, the 
petitioner submitted its case brief. CNIM, LABEF, Haimeng, GREN, 
Winhere, and ZLAP (hereafter referred to as the six respondents) did 
not submit case briefs. On January 28, 1999, the six respondents 
submitted rebuttal briefs.
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    \2\ The petitioner is the Coalition for the Preservation of 
American Brake Drum and Rotor Aftermarket Manufacturers.
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Scope of Order

    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, Winhere, is located in the PRC and is wholly-owned by 
private individuals. Two respondents (i.e., Haimeng, ZLAP) are joint 
ventures between PRC 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

[[Page 9973]]

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 
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 the separate rates criteria, the 
Department assigns separate rates in nonmarket economy 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 Enterprise 
Registration Regulations;'' 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, privately owned 
enterprises 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. See Comment 1 in the ``Interested Party 
Comments'' section of this notice for further discussion.

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.
    As explained below, at verification, the Department found no 
evidence of government involvement in each respondent's business 
operations. See Comment 2 in the ``Interested Party Comments'' section 
of this notice for further discussion.
    Specifically, at verification, Department officials examined sales 
documents that showed that each respondent negotiated its contracts and 
set its own sales prices with its customers. In addition, the 
Department reviewed sales payments, bank statements and accounting 
documentation that demonstrated that each respondent received payment 
from its U.S. customers via bank wire transfer, which was deposited 
into its own bank account without government intervention. Finally, the 
Department examined internal company memoranda such as appointment 
notices and notes on company meetings which demonstrated that each 
respondent selected its own management. See Department verification 
reports for CNIM at pages 5-7 and exhibits 1-6 and 16; for LABEF at 
pages 6-7 and exhibits 2-5; for Haimeng at pages 5-6 and exhibits 1-5, 
7 and 17; for GREN at pages 5-6 and exhibits 3-4, 6, 9 and 19; for 
Winhere at pages 4-6 and exhibits 1-6 and 16; and for ZLAP at pages 5-7 
and exhibits 18, 19 and 24. This information, taken in its entirety, 
supports a finding that there is a de facto absence of governmental 
control of export functions. Consequently, we have determined that the 
six respondents have each met the criteria for the application of 
separate rates. See Notice of Final Determination at Less Than Fair 
Value: Persulfates from the Peoples Republic of China, 62 FR 27222 (May 
19, 1997).

Fair Value Comparisons

    To determine whether sales of the subject merchandise by each 
respondent to the United States were made at less than fair value 
(``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 calculated EP in accordance with section 772(a) of the Act, 
because the subject merchandise was sold directly by the PRC exporter 
to unaffiliated parties in the United States prior to importation into 
the United States and constructed export price methodology was not 
warranted based on the facts of record. We calculated EP based on the 
same methodology used in the preliminary results with the following 
exceptions: (1) we revised our surrogate value calculations for marine 
insurance and foreign brokerage and handling fees to reflect correction 
of mathematical errors (see Comment 4 in the ``Interested Party 
Comments'' section of this notice for further discussion); and (2) we 
used the verified foreign inland freight distances to value freight 
expenses incurred for transporting the subject merchandise to the port 
of exportation (see Comment 5 in the ``Interested Party Comments'' 
section of this notice for further discussion).

[[Page 9974]]

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. 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 from Office of Policy to Louis Apple, dated 
January 22, 1998). In addition, based on publicly available information 
placed on the record, we 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.

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 the 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 Final Results Valuation Memorandum from the Team to the File, dated 
February 23, 1999 (``Final Results Valuation Memorandum'').
    We calculated surrogate values based on the same methodology used 
in the preliminary results with the following exceptions: (1) we 
revised our calculation for factory overhead, selling, general and 
administration expenses (``SG&A''), and profit to correct for 
mathematical errors (see Comment 4 in the ``Interested Party Comments'' 
section of this notice for further discussion); (2) we corrected, where 
appropriate, clerical errors found at verification; (3) we assigned an 
additional freight amount to ZLAP for using an unaffiliated 
transportation company to move the unfinished castings from the casting 
workshop to the processing workshop which had not been accounted for in 
our preliminary results; and (4) we used the verified supplier 
distances to value freight expenses incurred for the transportation of 
materials to the factory (see Comment 5 in the ``Interested Party 
Comments'' section of this notice for further discussion).

Currency Conversion

    We made currency conversions pursuant to section 773A(a) of the Act 
and section 351.415 of the Department's regulations based on the rates 
certified by the Federal Reserve Bank.

Interested Party Comments

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments only from the petitioner. We 
received rebuttal comments only from the six respondents.

General Issues

Comment 1: Procedure for Renewing Business Licenses As Evidence of PRC 
Government Control
    The petitioner contends that the six respondents have not met the 
de jure and de facto absence of government control criteria because the 
procedure by which PRC companies renew their business licenses with 
provincial administrations for industry and commerce in the PRC 
(``administration bureaus'') is evidence of de jure control. 
Specifically, the petitioner argues that the record shows that the 
renewal of each respondent's business license is conditioned on 
providing the administration bureau in each respondent's respective 
province relevant documentation such as balance sheets, profit and loss 
statement, articles of association and feasibility reports. For 
example, the petitioner alleges that both Haimeng and Winhere are 
controlled by the PRC government because each respondent provided the 
administration bureau a copy of its feasibility report and/or articles 
of association. Specifically, the petitioner contends that Winhere's 
articles of association state that in order for the articles to take 
effect, they must be approved by the Administrative Committee of Yantai 
Economic and Technical Development Zone (``YETDZ''). The petitioner 
contends that because YETDZ is a PRC government agency, the need for it 
to approve Winhere's articles of association or review Winhere's 
feasibility report is evidence of government control over the operation 
and management of Winhere. With regard to Haimeng, the petitioner 
contends that because Haimeng filed a feasibility report with the 
Longkou Foreign Economics and Trade Committee (``LFETC'') (i.e., a PRC 
government entity), this act is further evidence of government control 
over the operations and management of Haimeng. The petitioner maintains 
that although the respondents did not specify in their submissions or 
questionnaire responses all of the documentation they provided to 
provincial administration bureaus, the Department should consider the 
existence of this PRC government requirement for business license 
issuance or renewal to indicate PRC government de jure control.
    The six respondents maintain that the submission of financial data 
to PRC administration bureaus is not proof of PRC government control. 
Citing the Department's verification reports, the respondents maintain 
that the Department reviewed the documents submitted by all respondents 
at verification and that these documents establish an absence of de 
jure control. The respondents further state that under the Enterprise 
Registration Regulations, PRC companies are required to submit annual 
financial data and to report the list of names of the company board of 
directors to PRC administration bureaus in order to maintain their 
business licenses. According to the respondents, providing such 
information is a regulatory requirement and by no means indicates 
government control of a PRC company's export activities. The 
respondents also state that the petitioner has provided no rational 
explanation for why the Department should suspect that there is hidden 
PRC government control behind each respondent's basic regulatory filing 
requirement. Finally, the respondents state that the Court of 
International Trade (``CIT'') has approved of the Department's separate 
rate analysis, particularly the Department's review of PRC exporters' 
business licenses, articles of association, and other corporate 
documentation as

[[Page 9975]]

evidence of de jure independence from government control. Therefore, 
the respondents contend that in light of the substantial evidence on 
the record of this proceeding demonstrating each respondent's de jure 
independence from government control, the Department should reject the 
petitioner's argument. In support of their arguments, the respondents 
cite to Writing Instrument Mfrs Ass'n. v. United States Department of 
Commerce, 984 F. Supp. 629, 642-43 (CIT 1997); Sigma Corp. v. United 
States, 841 F. Supp. 1255, 1266 (CIT 1993); and Tianjin Machinery 
Import & Export Corp. v. United States, 806 F. Supp.1088, 1014 (CIT 
1992). DOC Position.
    We agree with the six respondents based on the Department's past 
practice in analyzing the existence or absence of de jure government 
control over PRC exporters' business activities. We find that the 
petitioner has misapplied the separate rates test as articulated in 
Silicon Carbide. With regard to the issue of business licenses, in 
prior cases, we have analyzed the Enterprise Registration Regulations, 
which outlines the requirements PRC companies must follow in order to 
receive or renew a business license. Specifically, articles 5 and 15 of 
this PRC law state that a PRC company applying for a business license 
with a state or provincial industrial and commercial bureau must 
provide a copy of its organizational rules and regulations, capital 
credits certificate, capital verification certificate and capital 
guarantee, and other related documents and proofs. Since Silicon 
Carbide, we have interpreted this article to mean that PRC companies, 
upon applying or renewing their business license, must demonstrate to 
the business license issuing authority that they are incorporated and 
have the capital to conduct business within the scope of their 
operation. See, e.g., Silicon Carbide, 61 FR 22588, 22589. For some 
companies, the documents they have been required to provide to 
administration bureaus to show that they qualify for a business license 
have included a copy of the financial statement (which shows the 
company's capital) and articles of association or feasibility report 
(i.e., business plan) (especially if the company is a start-up 
company). See, e.g., article 15 of the Enterprise Registration 
Regulations.
    With regard to Winhere, verification exhibits (i.e., exhibits 1, 3 
and 4) show that the feasibility report and articles of association are 
documents which note the company's investment capital situation, 
business plan, organizational structure, and general profit 
projections. This type of documentation, which Winhere provided YETDZ 
for receiving its business license, is consistent with article 15 of 
the Enterprise Registration Regulations and, as such, is a routine 
regulatory requirement and not evidence of de jure government control 
over export activities. With regard to Haimeng, verification exhibits 
(i.e., exhibits 1 through 3) show that Haimeng's feasibility report 
notes the investment capital, scope of production, foreign and domestic 
investment equipment, joint-venture agreement, general sales and market 
plan, organizational structure, and general profit projections. This 
feasibility report along with the articles of incorporation, provided 
by Haimeng to the LFETC for receiving its business license, is 
consistent with article 15 of the Enterprise Registration Regulations 
and, as such, is a routine regulatory requirement and not evidence of 
de jure government control over export activities. We have also found 
that this business license requirement applies not only to PRC 
companies that are ``owned by the whole people,'' but also to other 
types of ownership such as joint ventures or collectively owned 
enterprises. See, e.g., article 2 of the Enterprise Registration 
Regulations.
    Based on the foregoing discussion, we find the petitioner's claim 
that the procedure by which PRC companies must renew their business 
licenses is evidence of de jure control over export activities to be 
without merit and inconsistent with our analysis of this issue in 
previous PRC cases. As stated in the ``Separate Rates'' section above, 
we have found the PRC law referred to above, along with other PRC laws 
such as the Industrial Enterprises Law, the 1990 Regulation Governing 
Rural Collectively-Owned Enterprises of PRC, the 1992 Business 
Operation Provisions, and the 1994 Foreign Trade Law of the People's 
Republic of China, to sufficiently establish an absence of de jure 
control of companies ``owned by the whole people,'' joint ventures, 
privately owned enterprises or collectively owned enterprises.
Comment 2: Lack of Detail Contained in the Verification Reports
    The petitioner claims that the Department's verification reports 
are not sufficiently detailed in order for the petitioner to evaluate 
the comprehensiveness and accuracy of the verification process, and 
whether the respondents have demonstrated de jure and de facto absence 
of government control over their export activities. The petitioner 
states, among other things, that the verification reports in general 
contain vague, broad statements and conclusions. Specifically, the 
petitioner points to the sections of each respondent's verification 
report where the Department discusses its examination of (1) the 
business licenses and articles of incorporation; (2) the restrictions 
on how export revenue is used; and (3) the sales terms, prices and 
contractual correspondence for pre-selected sales, in particular, as 
sections lacking detail. The petitioner states that the lack of detail 
in the verification reports indicates that the Department did not 
sufficiently examine the separate rates issue at verification. Finally, 
the petitioner contends that the lack of content in the verification 
reports has injured petitioner's right to a fair administrative 
procedure and sets a poor precedent for future cases.
    The six respondents contend that the Department's verification 
procedures were consistent with the verification procedures conducted 
in other PRC antidumping cases. Furthermore, the respondents suggest 
that the petitioner's complaints about the vagueness of and lack of 
detail in the Department's verification reports result from the 
petitioner's unfamiliarity with the respondents' submissions and the 
procedures described in the Department's verification outlines. 
Finally, the six respondents contend that the petitioner has offered no 
record evidence and only speculative theories to contradict the 
substantial evidence supporting a finding of de jure and de facto 
absence of government control. Therefore, the six respondents maintain 
that the Department should reject all of the petitioner's arguments 
challenging the Department's verification procedures.
DOC Position
    We agree with the six respondents. In conducting our verification 
of each respondent's response, we examined substantial documentation 
the respondent maintained in the ordinary course of business such as 
financial statements, sales records, sales negotiation documentation, 
payment and bank deposit documentation, and bank account activity 
records to determine if the respondent met the criteria for de jure and 
de facto absence of government control based on the separate rates 
criteria specified in the verification outline. The petitioner claims 
that because the Department did not provide a detailed description in 
the verification reports of all information contained in the documents 
examined at verification that the Department did not sufficiently 
examine the separate rates issue at verification. The petitioner's 
claim is without merit. We

[[Page 9976]]

examined each respondent's available documentation and specifically 
requested copies of all examined documentation as verification exhibits 
on the separate rates issue. See verification reports for the six 
respondents at sections entitled ``De Jure Absence of Government 
Control,'' and ``De Facto Absence of Government Control.'' Based on our 
corroboration of the statements each respondent made regarding an 
absence of de jure and de facto government control in its questionnaire 
response with information contained in the relevant verification 
exhibits for each respondent, and based on the Department's review of 
the applicable PRC laws regarding separate rates in previous NME cases, 
we find that there is substantial evidence supporting a finding of de 
jure and de facto absence of government control for each respondent in 
this proceeding.
Comment 3: Visit to PRC Ministry of Machinery Industry (``MMI'') and 
Ministry of Foreign Trade and Economic Cooperation (``MOFTEC'')
    The petitioner contends that the Department should have visited the 
PRC government offices of MMI and MOFTEC as requested in its December 
23, 1998, letter for purposes of examining the separate rates issue. 
The petitioner contends that the Department's failure to visit MMI and 
MOFTEC has made it impossible to verify completely the extent of PRC 
government control over the export activities of each respondent. The 
petitioner asserts that when Department officials visited these two PRC 
government entities in the LTFV investigation, the Department was 
denied access to important information and, as a result, the Department 
used facts available in the final determination for certain companies. 
The petitioner alleges that in this review, all six respondents have 
withheld information demonstrating that the PRC government, through MMI 
and MOFTEC, exercise control over their operations. Therefore, the 
petitioner contends that none of the six respondents should be entitled 
to a separate rate. As evidence that at least one respondent is 
controlled by PRC government entities, the petitioner points to a 
Department official's handwritten note on CNIM's articles of 
association, claiming that this notation indicates that CNIM is 
required by MOFTEC to furnish its sales volumes to MOFTEC and thus is 
controlled by MOFTEC. In addition, the petitioner suggests that 
evidence gathered during the LTFV proceeding indicates that dealings 
with trading companies were handled by MOFTEC and that this connection 
is evidence of PRC government control. The petitioner states that 
because the Department did not and does not plan to conduct a visit of 
MMI and MOFTEC in the context of this review, the Department should 
resort to the use of facts available in the final results.
    The six respondents argue that the petitioner's allegations 
concerning the relationship of the respondents with MOFTEC and the MMI 
are based on unsubstantiated speculation. The six respondents also 
contend that the petitioner's allegation that the respondents withheld 
relevant and material information about their relationship with MMI and 
MOFTEC is unfounded. The six respondents assert they have had no 
communications or relationship with MMI and MOFTEC officials. With 
regard to the petitioner's specific allegation that CNIM furnished 
MOFTEC with its sales volumes, CNIM states that the handwritten note in 
CNIM's articles of association is the reply of CNIM officials to the 
Department official's question concerning the reference to MOFTEC in 
CNIM's articles of association. Specifically, CNIM's reply reflects 
that CNIM furnished MOFTEC with this information for statistical 
purposes (see exhibit 20A of the verification report). The respondent 
also states that the Department examined relevant documents and asked 
probative questions of CNIM personnel regarding all aspects of the 
issue of government control and found no evidence of such control. 
Therefore, the respondents maintain that based on a thorough 
examination by Department officials of documentation and statements 
furnished by the respondents at verification, the Department should 
find an absence of de jure and de facto government control for all six 
respondents.
DOC Position
    We agree with the six respondents. There is nothing on the record 
of this proceeding that suggests that a Department visit to MMI or 
MOFTEC is warranted. In the LTFV investigation, the petitioner provided 
us with documentary evidence in support of its claim that two 
respondents were still controlled by the PRC government, which prompted 
the Department to visit MMI. Thus, in the LTFV investigation, 
documentation submitted by the petitioner justified the Department's 
visit to MMI in order to examine in greater depth the relationship 
between MMI and two respondents in the LTFV proceeding. However, on the 
record of this administrative review, we have no evidence of a similar 
relationship between any of the six respondents and MMI or MOFTEC. 
Therefore, we determined that there was no basis on which to visit MMI 
or MOFTEC.
    Furthermore, the petitioner incorrectly claims that the same 
situation with regard to the two respondents in the LTFV investigation 
applies to all six respondents in this review by placing on the record 
from the LTFV proceeding the Department's verification report at MMI. 
We find that the information in that report has no bearing on our 
findings in this segment of the proceeding. Specifically, the 
information in the MMI verification report from the LTFV investigation 
contained information on government control specific to two PRC 
companies which are not part of this review. In contrast, in this 
review, there is substantial evidence on the record which indicates 
that none of the six respondents are subject to government control. 
There is no evidence on this record to the contrary, and we find that 
the petitioner's claim that the six respondents have withheld 
information on the separate rates issue to be without merit. With 
regard to the petitioner's specific allegation that CNIM furnished 
MOFTEC with its sales volumes and that this event constitutes 
government control, we find that CNIM's explanation contained in the 
verification exhibit in response to our question on this matter is 
acceptable and does not indicate government control over export 
activities. Moreover, it is not unusual for CNIM or any other PRC 
company to provide MOFTEC with sales statistics. For example, in 
numerous antidumping cases involving products from the PRC, the 
Department has sent initial antidumping questionnaire surveys (i.e., 
mini-section A questionnaires) to MOFTEC to gather information from 
which we could select mandatory respondents, and these questionnaires 
have requested total sales quantity and value data from each PRC 
exporter of the subject merchandise. See, e.g., Notice of Preliminary 
Determinations of Sales at Less Than Fair Value and Postponement of 
Final Determinations: Brake Drums and Brake Rotors from the People's 
Republic of China, 61 FR 53190, 53192 (October 10, 1996).
Comment 4: Calculation of Foreign Brokerage and Handling and Marine 
Insurance Values, and Factory Overhead, SG&A and Profit Percentages
    The petitioner contends that in the preliminary results, the 
Department made mathematical errors in calculating

[[Page 9977]]

the foreign brokerage and handling and marine insurance values. 
Specifically, the petitioner contends that since the Department used 
the financial data of five Indian producers of the subject merchandise 
to calculate the surrogate value percentages for factory overhead, SG&A 
and profit, the Department erred in calculating the surrogate 
percentages because it calculated average percentages using a 
denominator of seven instead of a denominator of five. The petitioner 
requests that the Department correct these errors for the final 
results.
    The six respondents agree that the arithmetic errors made in the 
Department's calculation of the surrogate values mentioned above should 
be corrected for the final results.
Doc Position
    We agree with both the petitioner and the respondents and have made 
the appropriate corrections in our final results. See Final Results 
Valuation Memorandum for further details.
Comment 5: Application of Facts Available to Respondents' Reported 
Distances For Foreign Inland Freight and Suppliers
    The petitioner maintains that at verification the Department did 
not examine all of the transportation distances (i.e., foreign inland 
freight and supplier distances) reported by the respondents because the 
Department's verification reports did not note that all reported 
distances were examined. Therefore, the petitioner contends that 
because the Department's verification reports noted errors in the 
transportation distances that five respondents (i.e., CNIM, LABEF, 
GREN, Winhere, and ZLAP) reported in their responses, the Department 
should find the distances reported by the companies to be unreliable 
and thus resort to facts available.
    The six respondents state that there is no basis for the 
application of either facts available or adverse inferences to the 
reported transportation distances. Specifically, the six respondents 
maintain that the petitioner has failed to demonstrate that application 
of facts available is warranted under the statute, because (1) all 
necessary information for transportation distances is on the record; 
(2) no respondent withheld or failed to provide information requested 
in a timely manner and in the form required; (3) no respondent impeded 
the review proceeding; and (4) the Department was able to verify all of 
the respondent's submitted transportation distances. With regard to the 
petitioner's allegation that because the Department's verification 
reports did not state that all distances reported by each respondent 
were examined even though some errors in reported transportation 
distances were noted in the reports, the six respondents assert that 
the Department clearly noted in the verification reports for all 
respondents that it checked all of the distances reported by the 
respondents. Moreover, the six respondents state that if the petitioner 
had compared the distances reported in the Department's verification 
reports with the distances reported in each respondent's Section D 
submission, the petitioner would discover that the Department did in 
fact verify all of the reported distance information. Additionally, the 
six respondents assert that even if the Department had elected not to 
examine all of the reported distances, the Department has the 
discretion not to verify all reported information. Furthermore, the six 
respondents note, contrary to the petitioner's assertions, that the 
errors in the reported transportation distances noted in the 
verification reports were either minor in nature or were to the 
detriment of the affected respondent. Finally, the six respondents 
point out that the Department verified the correct distances and thus 
should use them in the final results.
Doc Position
    We agree with the six respondents. At verification, we examined all 
of the distances reported by each respondent using maps to check each 
respondent's reported distances (see ``Distances'' section of 
verification reports for the six respondents). As noted in the 
verification reports, we found several minor errors. In addition, the 
respondents informed the Department of some minor clerical errors they 
found in preparation for verification at the commencement of 
verification. However, these errors did not affect the overall 
integrity of each respondent's data. Hence, we find the application of 
facts available is unwarranted in this case and have used the corrected 
transportation distance information noted in the verification reports 
for each respondent in the final results.

Company-Specific Issues

Comment 6: Duties and Responsibilities of GREN's General Manager
    The petitioner argues that verification exhibit documentation does 
not support a finding that GREN's general manager has autonomy from the 
government in making decisions regarding the selection of management. 
Therefore, because the respondent did not demonstrate de facto absence 
of government control, the petitioner argues that the Department should 
use facts available and deny GREN a separate rate.
    GREN states that the petitioner's argument is without merit. First, 
the respondent points out that a specific verification exhibit (i.e., 
exhibit four referred to in the GREN verification report) explains the 
selection process for GREN's factory general manager. In addition, the 
respondent maintains that all responses to the Department's questions 
and all documents reviewed at verification concerning personnel and 
management selection were consistent with information provided in 
GREN's questionnaire responses and fully support a determination that 
GREN's personnel and management selection decisions are free from 
government involvement. The respondent contends that the petitioner is 
merely asserting that the absence of additional documentation renders 
the findings of the Department's verification report and exhibits 
insufficient to prove the absence of government control over management 
regarding the hiring or firing of employees. Because, in its opinion, 
the petitioner's conclusory allegation is illogical and contradicted by 
the substantial evidence in the GREN verification reports and exhibits, 
the respondent maintains that the Department should reject petitioner's 
argument and conclude that substantial record evidence supports a 
finding of GREN's independence from government control.
DOC Position
    We agree with the respondent. In conducting our verification of 
this issue at GREN, we examined all documentation such as management 
appointment notices issued and approved by GREN's board of directors 
and meeting minutes for the election of the general manager (see 
verification exhibit 4 and exhibit 2 of GREN's April 7, 1998, 
submission). We discussed with GREN the selection process for the 
general manager. Based on our examination of statements in GREN's 
response and documentation provided by GREN at verification, we found 
no evidence that refuted or contradicted GREN's statements in its 
response regarding whether its management selected its personnel 
without government interference. Therefore, we find that the 
petitioner's claim of de facto government control in the case of GREN 
is unsubstantiated by any evidence on the record.

[[Page 9978]]

Comment 7: Relationship Between CNIM and its Supplier of the Subject 
Merchandise and the PRC Government
    The petitioner argues that the Department's verification report did 
not provide sufficient information on whether CNIM met the separate 
rates criteria. First, the petitioner claims that the separate rate 
test should apply to CNIM's supplier of the subject merchandise, 
Hanting, because Hanting did not provide sufficient evidence that it is 
unaffiliated with CNIM. The petitioner further adds that there is a 
reason to suspect that CNIM and Hanting are affiliated parties because 
CNIM supplied control numbers in its sales response which are identical 
to the control numbers Hanting provided in its factors of production 
(``FOP'') response. Second, the petitioner argues that there is no 
documentary evidence in the verification report that supports a finding 
that CNIM does not coordinate its selling and pricing activities with 
other PRC exporters of the subject merchandise or with the China 
Chamber of Commerce (``CCC''). Moreover, the petitioner adds that the 
items the Department routinely examines to determine whether a 
respondent meets the separate rates criteria (i.e., sales records, bank 
records and accounting ledgers) are not likely to reveal activities of 
price or selling coordination among PRC entities and the government or 
the PRC government's role in setting prices. Furthermore, the 
petitioner argues that the Department did not fully examine this issue 
at verification because there is no mention in the verification report 
that documentation such as letters, facsimiles, emails, phone logs, 
memoranda of phone conversations, and travel and expense records were 
examined, or that the Department officials visited the CCC. Finally, 
the petitioner argues that there is no documentary evidence in the 
verification report that supports a finding that no PRC government 
entity had a role in setting prices for CNIM. To determine whether CNIM 
was subject to PRC government control, the petitioner argues that the 
Department should have examined letters, facsimiles, emails, phone 
logs, memoranda of phone conversations, and travel and expense records 
of CNIM.
    The respondent states that the fact that CNIM and Hanting reported 
the same control numbers simply reflects good communication between the 
two companies in preparing their antidumping response, which is 
consistent with the Department's questionnaire requirements, and has 
nothing to do with the affiliation issue or the separate rates issue. 
With regard to the sales documentation which the Department examined at 
verification, the respondent states that the Department's thorough 
examination of such documentation demonstrated that CNIM personnel 
were, in fact, solely involved in the sales and pricing activities, and 
that the sales records did not identify any other PRC exporter or the 
CCC as a party to CNIM's sales transactions. Finally, the respondent 
maintains that all documentation reviewed by the Department at 
verification represents substantial evidence which supports a finding 
that there is no coordination of selling or pricing activities between 
CNIM and other PRC exporters or the CCC.
DOC Position
    We agree with the respondent. The petitioner's claim that CNIM and 
Hanting are affiliated parties is without merit. At verification, we 
examined CNIM's long-term and short-term investments in its affiliates 
by examining investment entries in CNIM's short-term and long-term 
investment subledgers (see verification exhibit 19 of the Department's 
verification report for CNIM). We also tied these subledgers to CNIM's 
financial statements. We also examined at verification Hanting's short-
term and long-term investments. As a result of our examination, we 
found no evidence that CNIM made investments in Hanting (or vice versa) 
or that CNIM is otherwise affiliated with Hanting. The petitioner 
erroneously concludes that, because CNIM supplied the same control 
numbers as Hanting supplied in its FOP response, CNIM and Hanting must 
be affiliated parties. In issuing the antidumping questionnaire, the 
Department instructed CNIM to furnish, by control number, for each of 
its sales to the U.S. market, the factors used by its supplier to 
produce the merchandise sold by CNIM. This reporting requirement 
applies to both affiliated and unaffiliated suppliers of the subject 
merchandise and is separate from the affiliation issue.
    We also disagree with the petitioner's claim that CNIM coordinated 
its selling and pricing activities with other PRC exporters of the 
subject merchandise or with the CCC, and that a PRC government entity 
had a role in setting prices for CNIM. At verification, we extensively 
examined CNIM's accounting records and sales documentation and found no 
evidence to support these claims. Although we did not examine the 
additional types of documentation suggested by the petitioner for the 
first time in its case brief (i.e., letters, facsimiles, emails, phone 
logs, memoranda of phone conversations, and travel and expense 
records), we did examine the type of documentary evidence (including 
sales documentation and records, bank records and accounting ledgers) 
that we normally rely on in NME cases. The Department considers such 
evidence to be sufficient to establish whether there is a de facto 
absence of government control in selling and pricing activities of the 
respondent or whether the respondent is coordinating with other PRC 
exporters in selling the subject merchandise. In this case, we find 
that the substantial evidence on this record supports a finding that 
CNIM did not coordinate its selling and pricing activities with other 
PRC exporters of the subject merchandise or with the CCC, and that no 
PRC government entity had a role in setting prices for CNIM.

Final Results of the Review

    As a result of our comparison of EP and NV, we determine that the 
following weighted-average margins exist for the period April 1, 1997, 
through September 30, 1997:

------------------------------------------------------------------------
                                                                Margin
               Manufacturer/producer/exporter                 (percent)
------------------------------------------------------------------------
China National Machinery Import & Export Company (CNIM)....         0.00
Laizhou 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
------------------------------------------------------------------------


[[Page 9979]]

    We will instruct the U.S. Customs Service not to assess antidumping 
duties on entries of the subject merchandise from the above-referenced 
PRC exporters made during the POR.
    Furthermore, the following deposit rates shall be required for 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after the publication date of these final results of administrative 
review, as provided for by section 751(a)(1) of the Act: (1) The cash 
deposit rates for CNIM, LABEF, Haimeng, GREN, Winhere, and ZLAP will be 
the rates indicated above; (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; (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; and (4) the cash 
deposit rate for non-PRC exporters of subject merchandise from the PRC 
will be the rate applicable to the PRC supplier of that exporter. These 
deposit requirements shall remain in effect until publication of the 
final results of the next administrative review.
    This notice serves as the 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 the 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 notice also serves as a reminder to parties subject to 
administrative protective order (``APO'') of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and terms of the APO is a sanctionable 
violation.
    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: February 23, 1999.
Holly A. Kuga,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-5014 Filed 2-26-99; 8:45 am]
BILLING CODE 3510-DS-P