[Federal Register Volume 64, Number 52 (Thursday, March 18, 1999)]
[Notices]
[Pages 13401-13405]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6535]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-822]
Certain Helical Spring Lock Washers from the People's Republic of
China; Final Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Antidumping Duty Administrative
Review.
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SUMMARY: The Department of Commerce published the preliminary results
of the administrative review of the antidumping duty order on certain
helical spring lock washers from the People's Republic of China in the
Federal Register on November 9, 1998 (63 FR 60299). This review covers
sales of this merchandise to the United States during the period
October 1, 1996 through September 30, 1997. We gave interested parties
an opportunity to comment on our preliminary results. Based upon our
analysis of the comments received, we have made changes to the margin
calculations presented in the preliminary results of the review. The
final weighted-average dumping margins are listed below in the section
entitled Final Results of Review.
[[Page 13402]]
We have determined that sales have been made below normal value
during the period of review. Accordingly, we will instruct the Customs
Service to assess antidumping duties based on the difference between
export price and normal value.
EFFECTIVE DATE: March 18, 1999.
FOR FURTHER INFORMATION CONTACT: Sally Hastings or Vince Kane, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone: (202) 482-3464 or (202) 482-2815, respectively.
Applicable Statute and Regulations
Unless otherwise stated, 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, as amended (the
Act) by the Uruguay Round of Agreements Act (URAA). In addition, unless
otherwise stated, all citations to the Department of Commerce's ( the
Department's) regulations are to 19 CFR Part 351 (1998).
Background
The Department published the preliminary results of this review of
the antidumping duty order on Helical Spring Lock Washers (HSLWs) from
the People's Republic of China (PRC) in the Federal Register on
November 9, 1998 (63 FR 60299). On December 9, 1998, the petitioner,
Shakeproof Assembly Components Division of Illinois Tool Works,
submitted comments on the Department's preliminary results and on
December 18, 1998, the respondent, Zhejiang Wanxin Group, Co., Ltd.
(ZWG), submitted a rebuttal to the petitioner's comments. We held a
hearing on January 13, 1999. The Department has now completed this
review in accordance with section 751 of the Act.
Scope of Review
The products covered by this review are HSLWs of carbon steel, of
carbon alloy steel, or of stainless steel, heat-treated or non-heat-
treated, plated or non-plated, with ends that are off-line. HSLWs are
designed to: (1) Function as a spring to compensate for developed
looseness between the component parts of a fastened assembly; (2)
distribute the load over the larger area for screws or bolts; and, (3)
provide a hardened bearing surface. The scope does not include internal
or external tooth washers, nor does it include spring lock washers made
of other metals, such as copper.
HSLWs subject to this review are currently classifiable under
subheading 7318.21.0030 of the Harmonized Tariff Schedule of the United
States (HTSUS). Although the HTSUS subheading is provided for
convenience and customs purposes, the written description of the scope
of this proceeding is dispositive.
This review covers one exporter of HSLWs from the PRC, ZWG, and the
period October 1, 1996 through September 30, 1997.
Comparisons
We calculated export price and normal value (NV) based on the same
methodology used in the Preliminary Results, with the following
exceptions:
(1) Based on the petitioner's comments, we have recalculated
factory overhead (FOH), selling, general and administrative (SG&A)
expenses and profit in plating costs as in the second and third
administrative reviews of this case, and revised the inland freight
expense for imported steel (see Comments 2 and 3, respectively.);
(2) We have updated the surrogate value for brokerage and handling
based on a submission in Stainless Steel Wire Rod From India for the
POR 97-98 dated May 12, 1998;
(3) At verification, we learned of a recalculation of a supplier
distance which resulted in a change in freight expenses (see Factors
Memorandum dated March 9, 1999 and verification exhibit 14).
Analysis of Comments Received
Comment 1: Use of Market Economy Import Prices to Value Non-Imported
Steel Wire Rod
The petitioner argues that the Department's use of imported steel
prices to value ZWG's domestically sourced steel wire rod (SWR) is
contrary to the statute. In addition, the petitioner contends that the
decision in Lasko Metal Products, Inc. v. United States, 810 F.Supp.
314, 316 (1992), aff'd 43 F.3d 1442 (Fed. Cir. 1994) (Lasko) does not
apply to materials obtained in a nonmarket economy (NME) country from a
NME supplier. Therefore, the petitioner reasons that the Department
should have used Indian surrogate values to value ZWG's domestically
sourced steel.
Though the petitioner recognizes and cites section 351.408(c)(1) of
the Department's regulations, which states that:
The Secretary normally will use publicly available information to
value factors. However, where a factor is purchased from a market
economy supplier and paid for in a market economy currency, the
Secretary normally will use the price paid to a market economy
supplier. In those instances where a portion of the factor is
purchased from a market economy supplier and the remainder from a
nonmarket economy supplier, the Secretary normally will value the
factor using the price paid to the market economy supplier.
as governing the information used to value factors of production (FOP)
in NME cases, the petitioner states that neither the antidumping
statute nor court precedent(s) sanctions the Department's use of import
prices to value inputs obtained from a NME supplier in NME currency.
The petitioner argues that Congress has addressed the issue of
factor valuation in the instant case. In addition, the petitioner
quotes the Act which states that ``when insufficient information exists
to determine dumping margins by normal methods, * * * (1) normal value
shall be determined on the basis of the value of the FOP utilized and
(2) the valuation of the FOP shall be based on the best available
information regarding the values of such factors in a market economy
country or countries to be considered appropriate.'' (19 U.S.C.
1677b(c)(1)). See Lasko at 1445.
The petitioner notes that only if the Department determines that
``available information is inadequate for the purpose of determining NV
on the basis of FOP,'' does the statute allow the Department to rely on
market economy prices. Moreover, citing the legislative history of the
NME section of the statute, the petitioner asserts that Congress
rejected the use of market prices in favor of FOPs and intended that
the Department should avoid using prices ``which it has reason to
believe or suspect may be dumped or subsidized'' when determining FOPs.
See Conference Report, Omnibus Trade & Competitiveness Act of 1998,
H.R. 3 at 590 (HR Rep. 100-576).
The petitioner acknowledges that Lasko allows the Department to use
market economy prices to value an input when the NME manufacturer
directly obtains the input from a market economy country, pays for it
in market economy currency, and uses the input in the production of
subject merchandise. However, the petitioner states that Lasko does not
apply to materials obtained in a NME from NME suppliers and cannot be
used to give the Department unbridled discretion to use the import
prices of a factor as a ``short-cut'' to determine the value of all
non-imported materials. The petitioner alleges that this short-cut
methodology conflicts with the statute and Congressional intent.
Congress has
[[Page 13403]]
expressed a preference for surrogate country values methodology and
that preference will be eviscerated by the imputation of import prices
even if it advances the goal of accuracy.
The petitioner also argues that, even assuming that the Act and the
Department's regulations grant the Department discretion to use the
prices of imports to value non-imported inputs, the Department has
abused its discretion in this case. The petitioner asserts that
accuracy is not gained by the use of import prices and prices of small
quantities of imported goods may be aberrational. The petitioner argues
that the Department is required to examine the criteria adopted in
Olympia Industrial Inc. v. United States (Olympia), Slip Op. 98-49
(April 17, 1998), wherein the Department examined ``(1) the volume and
value of steel imports, (2) the type and quality of the imported steel,
and (3) consumption of imported steel by the NME producers' to
determine the reliability of steel import prices as alternative
surrogate values. The petitioner asserts that the Department's failure
to apply the Olympia criteria constitutes an abuse of discretion.
The respondent, on the other hand, argues that the Department
correctly used ZWG's imported SWR prices to value all of its SWR
production inputs in the preliminary results. Moreover, the respondent
states that this valuation methodology is supported by the Department's
prior practice, the Department's regulations, court decisions and the
Act. The respondent also states that ZWG's purchase of imported SWR
satisfies all the conditions of section 351.408(c)(1) of the
Department's regulations. Thus, the respondent asserts that the
Department is obligated by that provision of the regulations to use the
price paid for imported SWR to value all the SWR consumed by ZWG. The
respondent adds that this regulation codifies the decision of the
United States Court of Appeals for the Federal Circuit (CAFC) in Lasko,
and Departmental practice in a number of recent NME cases such as
Collated Roofing Nails from the PRC, 62 FR 51410, 51416 (October 1,
1997), Helical Spring Lock Washers from the PRC, 62 FR 61794, 61795
(November 19, 1997) and Melamine Institutional Dinnerware from the PRC,
62 FR 1707, 1710 (January 13, 1997). In support of this argument, the
respondent cited the following section from Lasko:
[T]he purpose of the Act is to prevent dumping, an activity defined
in terms of the market-place. The Act sets forth procedures in an
effort to determine margins ``as accurately as possible.'' * * *
Where we can determine that an NME producer's input prices are
market determined accuracy, fairness and predictability are enhanced
by using those prices. Therefore, using surrogate values when
market-based values are available would, in fact be contrary to the
intent of the law.
Id. at 1446. The CAFC in Lasko also stated that the Departmental
practice is a legitimate policy choice in interpreting and applying the
statute. Id.
The respondent asserts that it demonstrated at verification that
the price it paid for the SWR imported from the United Kingdom through
a market economy trading company was paid for in a market economy
currency (U.S. dollars). These purchases accounted for almost one-half
of its total SWR purchases during the period of review (POR). Thus, the
amount of imported SWR purchased during the POR was not insignificant.
(The respondent notes that the Department considered the amount of
imported SWR purchased by ZWG during the third administrative review to
be meaningful. This amount was less than that imported by ZWG during
the current POR.) Moreover, based on the Department's verification
report and exhibits, the respondent states that the imported SWR is the
same, and has the same range of sizes, as the SWR sourced domestically
by ZWG. In addition, the respondent argues that because the prices paid
by ZWG (for imported SWR) deviated from the average price by less than
one percent, they cannot be considered aberrational.
With regard to Olympia, the respondent asserts that the case is
distinguishable from the situation in this review. In Olympia, the
issue was whether the prices charged by a NME (PRC) trading company,
which imported market economy steel and resold it to PRC producers in
renmimbi, were reliable. The respondent argues that even if Olympia was
applicable, the Department should determine that ZWG's import prices
are reliable because verification demonstrated that (1) ZWG imported
SWR from market economy suppliers and paid for the SWR in a market
economy currency, (2) the imported SWR was used in the production of
HSLWs, and (3) the deviation in price among the producers of imported
SWR was not more than one percent.
Department's Position: We have continued to use the price of the
imported input to value SWR for ZWG in accordance with 19 CFR
351.408(c)(1). In our view, this is consistent with the purpose of the
antidumping statute identified in Rhone Poulenc, Inc. v. United States,
899 F.2d 1185 (Fed. Cir. 1991), i.e., to determine antidumping margins
as accurately as possible. It is also consistent with the CAFC's ruling
in Lasko. As discussed in Lasko, the Department has developed practices
which emphasize accuracy, fairness, and predictability in establishing
NV for NME producers. Clearly, because the input imported by ZWG is the
same material as that domestically purchased by ZWG and ZWG's imports
of this input were not insignificant, the import price is the most
accurate price for valuing this factor. Moreover, because use of this
import price does not involve selecting among several possible
surrogate values for the input in question, it also enhances the
predictability of the valuation methodology.
We disagree with the petitioner that use of import prices for
valuing domestically sourced inputs in this situation is inconsistent
with the Act. First, although we agree that Lasko addressed the use of
import prices only for the portion of the input that was imported,
Lasko did not prohibit the Department from using the import prices for
the remaining domestically sourced portion. Indeed, for the reasons
discussed above, we believe the use of the import price for the SWR
domestically sourced by ZWG achieves the goals articulated in Lasko. We
also believe that reliable import prices for the same input are a
better means of valuing an input than surrogate values. This position
is reflected in section 351.408(c)(1) of the Department's regulations
acknowledged by the petitioner. Second, there is no information in the
instant case that the imports were dumped or subsidized and, hence, to
be avoided as the legislative history of section 773(c) of the Act
directs. (Omnibus Trade and Competitiveness Act of 1988, H.R. Conf.
Rep. No. 100-576, at 590 (1988), reprinted in 1988 U.S.C.C.A.N. 1547,
1623-1624.)
Further, we disagree with the petitioner's characterization that
import data can only be used when ``available information is
inadequate'' for valuing a factor. When ``available information is
inadequate'' for using the factors methodology, section 773(c)(2) of
the Act directs the Department to base NV on the price of merchandise
that is comparable to the subject merchandise and is sold by a market
economy country at a comparable level of economic development. In
deciding to use the import price of the NME input rather than a
surrogate value for the input, the Department relies instead upon the
language in section 773(c)(1) of the Act regarding the use of ``best
available information'' to value factors
[[Page 13404]]
of production. See Lasko, 43 F. 3d at 1446.
Regarding the petitioner's argument that the Department has abused
its authority in this case even if it has the discretion to use import
prices, we disagree. The quantity of imported SWR is not small in
relation to ZWG's requirements for production of the subject
merchandise. As ZWG has noted, imported SWR supplied nearly one-half of
the company's SWR requirements for producing the subject merchandise.
In addition, the petitioner has not pointed to any other fact
surrounding the importation of SWR which would lead us to question the
import transactions.
Finally, we agree with the respondent's characterization of Olympia
and find that it is not applicable in this review. In the instant case,
SWR was purchased from a market economy supplier through a market
economy trading company and paid for in a market economy currency. In
Olympia, the imports in question were made through an NME trading
company. In a remand, the Court of International Trade (CIT) in Olympia
requested the Department to explain why the prices paid by the NME
trading company could not be used instead of resorting to a value in a
surrogate country. In that case, the CIT simply required the Department
to test the reliability of the prices paid due to the involvement of an
NME trading company. (Olympia, Slip Op. 99-18 (February 17, 1999).)
Because we are not dealing with an NME trading company in this case,
there is no need to test the reliability of the price actually paid for
the SWR used by ZWG.
Therefore, in accordance with section 351.408(c)(1) of the
Department's regulations and Department's practice, we continue to use
the actual imported steel prices to value ZWG's steel inputs because
these prices represent the actual market-based prices incurred by ZWG
in producing the subject merchandise and, as such, are the most
accurate and appropriate values for this particular factor for the
purpose of calculating NV.
Comment 2: Factory Overhead, SG&A Expenses In Plating Costs
The petitioner asserts that the Department erred in the preliminary
results by failing to include FOH, SG&A, and profit for the plating
operation. The Department's calculations for NV should reflect that the
plating company and lock washer facility are separate, non-integrated
entities. The petitioner argues that because the Department did not use
a surrogate value for plating, but rather calculated surrogate values
for the factor inputs used in plating, the Department is required to
value separately the plating company's FOP and to include FOH, SG&A,
and profit for plating. This CV should then be included as a ``cost''
to the lock washer producer. Moreover, the petitioner alleges that the
Department included these costs separately in previous proceedings and
did not explain its change in methodology in its preliminary results of
review.
ZWG contends that the Department correctly calculated NV by
computing FOH, SG&A and profit for total factors to produce HSLWs. ZWG
states that the petitioner's suggestion to include FOH, SG&A, and
profit in the calculation of ZWG's plating costs and then to calculate
FOH, SG&A, and profit again for total factors to produce HSLWs,
(including the plating materials, plating energy and plating labor)
would double-count FOH, SG&A, and profit for the plating portion of
production. To illustrate that point, the respondent notes that,
although ZWG does not have plating equipment, the cost of depreciation
for plating equipment would be included in NV twice: once as a part of
plating operations and again as part of total production.
ZWG disagrees with the petitioner that the Department has changed
its methodology from earlier reviews. Although the calculation was set
up differently, the respondent states that the methodology used in the
preliminary results of this review is mathematically identical to the
methodology used in all previous reviews.
Department's Position: The respondent is correct that the
methodology used for calculating NV in the preliminary results is
mathematically identical with the result that would have been obtained
had we applied the methodology used in previous reviews. Nevertheless,
we have decided, for purposes of clarity, to set up the calculation in
the same manner as in the second (1994-95) and third (1995-96) reviews
of this case. Thus, in these final results, we have calculated NV in
the following manner: (1) we added ZWG's costs of direct materials
(including transportation), labor, and factory overhead in order to
obtain ZWG's cost of manufacturing; (2) we calculated ZWG's SG&A and
profit and added these to the cost of manufacturing in order to obtain
ZWG's cost of production; (3) we performed the same calculation to
obtain the plating company's cost of production; and, (4) we calculated
the NV of the subject merchandise by adding ZWG's and the plating
company's costs of production.
This calculation does not result in treating the cost of production
for plating as an input into ZWG's production process, in the sense
that the SG&A and profit calculated for ZWG does not include SG&A and
profit calculated for the plating activity. Since the Department does
not accord any significance to transactions between NME enterprises
(e.g., we do not consider using prices between NME producers and NME
trading companies), we do not attempt to construct the price that would
exist between an NME supplier (the plating company) and the NME
producer of the subject merchandise (the HSLW producer).
Comment 3: Inland Freight Expense for Imported Steel
The petitioner argues that the Department incorrectly calculated
freight expenses for domestically sourced SWR. The petitioner
acknowledges that under Sigma Corporation v. United States, 117 F.3d
1401 (Fed. Cir. 1997) (Sigma), where surrogate values are based on CIF
imports in the surrogate country, the Department must not ``double
count'' in determining the freight amount assigned to the FOP. However,
the petitioner argues that in this case Sigma does not apply because
the Department is using the price at which the PRC producer actually
imports SWR. Thus, for domestically sourced SWR, the Department should
use the distance between the supplier and ZWG. This does not violate
the principles of the Sigma case because ZWG had a choice between
domestic and foreign sourcing of its SWR and made a voluntary business
decision to purchase SWR from both sources.
The respondent asserts that Sigma should apply to all situations
where the Department uses actual CIF import prices to value
domestically sourced inputs. The respondent contends that the
Department's methodology reflects the reasoning of the CAFC in Sigma as
it recognizes that market economy producers would tend to purchase
inputs from the closer of an import source or domestic source and
treats the actual CIF price of SWR as a ``surrogate value'' for SWR in
determining freight costs. Thus, because surrogate values are merely
the best approximation of what a PRC producer would pay if the producer
were operating in a market economy, the respondent states that the
Department should continue to apply Sigma to all distances to ZWG's
material input suppliers in China.
Department's Position: We agree with the petitioner that Sigma does
not apply in a situation where the Department
[[Page 13405]]
values an input using the price actually paid by the NME producer.
However, we do not agree that we should assign a freight value based on
the distance to the NME supplier for that portion of the input that is
domestically sourced. Because we are using an actual import value and
have the actual distance that the imported merchandise had to be
shipped, we are using that import value and that freight amount to
value SWR, whether the SWR is imported or not.
Comment 4: Surrogate Truck Value
The petitioner contends that the Department incorrectly used a rate
for foreign inland truck freight from a Times of India article
published on April 20, 1994 (Times of India rate). Instead, the
petitioner suggests that the Department use the truck freight rates
listed in the U.S. Embassy cable dated August, 1993. The petitioner
argues that the Times of India rate applies only to company-owned
trucks and, since the Department has found that the trucks used by the
respondent ZWG during the POR were not company-owned, the Department
should use a different freight rate. The petitioner states that the
Embassy cable rate was used as the truck rate by the Department in both
the final determination of the HSLWs investigation and the most recent
HSLWs administrative review. Furthermore, in Heavy Forged Hand Tools,
Finished or Unfinished, With or Without Handles, From the People's
Republic of China: Preliminary Results of Antidumping Duty
Administrative Reviews, 62 FR 60684, (November 12, 1997), (Hand Tools),
the Department distinguished between company and non-company owned
trucks. In Hand Tools, the non-company-owned trucks were assigned a
truck rate based on the Embassy cable.
The respondent maintains that the petitioner has misread the Times
of India article and that the freight rates quoted therein do not apply
only to company-owned trucks. The respondent believes that a
distinction between freight rates incurred by company-owned and non-
company-owned trucks is irrelevant and urges the Department to continue
to use the rates published in Times of India.
Department's Position: We disagree with the petitioner. The Times
of India rate is solely for trucks and provides a specific foreign
inland truck rate, whereas the Embassy cable rate is for all modes of
transportation in the surrogate country and provides a less specific
rate for foreign inland trucks. The Department stated in its Final
Determination of Sales at Less Than Fair Value: Certain Helical Spring
Lock Washers from the People's Republic of China, 58 FR 48833
(September 20, 1993), that the August 3, 1993 cable from India (Embassy
cable) appears to be an aggregate of various rates: trucking, shipping
and rail. We note that in Hand Tools and Hand Tools, Final Results
Antidumping Duty Administrative Reviews for 1996-1997, 63 FR 16758
(April 6, 1998), the Department did not consider the aggregate nature
of the Embassy cable rate.
Also, it should be noted that the Times of India rate was used by
the Department in the last two HSLWs administrative reviews.
Final Results of the Review
As a result of our analysis of the comments received, we determine
that the following weighted-average margins exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Zhejiang Wanxin Group Co., Ltd.... 10/01/96-09/30/97 3.85
PRC Rate.......................... 10/01/96-09/30/97 128.63
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Pursuant to
section 351.212(b)(1) of the Department's regulations, we have
calculated an importer-specific duty assessment rate based on the ratio
of the total amount of antidumping duties calculated for the examined
sales to the total entered value of those sales. In order to estimate
the entered value, we subtracted international movement expenses from
the gross sales value. This rate will be assessed uniformly on all
entries of that specific importer made during the POR. The Department
will issue appraisement instructions directly to the U.S. Customs
Service.
Furthermore, the following deposit rates will be effective upon
publication of these final results for all shipments of HSLWs from the
PRC entered, or withdrawn from warehouse, for consumption on or after
the publication date, as provided for by section 751(a)(1) of the Act:
(1) for ZWG, which has a separate rate, and all ZWG exports through
market-economy trading companies, the cash deposit rate will be the
company-specific rate established in these final results of review; (2)
for all other PRC exporters, the cash deposit rate will be the PRC rate
which is 128.63 percent, which is the All Other PRC Manufacturers,
Producers and Exporters rate from the Final Determination of Sales at
Less Than Fair Value: Certain Helical Spring Lock Washers from the PRC,
58 FR 48833 (September 20, 1993); and (3) for non-PRC exporters of
subject merchandise from the PRC, the cash deposit rate will be the
rate applicable to the PRC supplier of that exporter. These deposit
rates shall remain in effect until publication of the final results of
the next administrative review.
This notice also serves as a final reminder to importers of their
responsibility under section 351.402(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 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 section 351.305(a)(3) of the Department's
regulations. Timely written notification of the return/destruction of
APO materials or conversion to judicial protective order is hereby
requested. Failure to comply with the regulations and the terms of an
APO is a sanctionable violation.
This administrative review and notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: March 9, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-6535 Filed 3-17-99; 8:45 am]
BILLING CODE 3510-DS-P