[Federal Register Volume 64, Number 88 (Friday, May 7, 1999)]
[Notices]
[Pages 24574-24576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11574]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-423-602]


Industrial Phosphoric Acid From Belgium; Preliminary Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review of industrial phosphoric acid from Belgium.

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SUMMARY: In response to requests from petitioner and one domestic 
producer, the Department of Commerce is conducting an administrative 
review of the antidumping duty order on industrial phosphoric acid from 
Belgium. The period of review is August 1, 1997 through July 31, 1998. 
This review covers imports of industrial phosphoric acid from one 
producer, Societe Chimique Prayon-Rupel S.A. (``Prayon'').
    We have preliminarily found that sales of subject merchandise have 
been made below normal value. If these preliminary results are adopted 
in our final results, we will instruct the Customs Service to assess 
antidumping duties based on the difference between the export price and 
normal value.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

EFFECTIVE DATE: May 7, 1999.

FOR FURTHER INFORMATION CONTACT: Frank Thomson or Jim Terpstra, AD/CVD 
Enforcement, Group II Office IV, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
4793, and 482-3965, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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

Background

    On August 20, 1987, the Department published in the Federal 
Register (52 FR 31439) the antidumping duty order on industrial 
phosphoric acid (``IPA'') from Belgium. On August 11, 1998, the 
Department published in the Federal Register (63 FR 42821) a notice of 
opportunity to request an administrative review of this antidumping 
duty order. On August 27, 1998, in accordance with 19 CFR 
351.213(b)(1), the petitioner FMC Corporation (``FMC''), and Albright & 
Wilson Americas Inc. (``Wilson''), a domestic producer of the subject 
merchandise, requested that the Department conduct an administrative 
review of Prayon's exports of subject merchandise to the United States. 
We published the notice of initiation of this review on September 29, 
1998 (63 FR 51893).

Scope of the Review

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

Product Comparisons

    We calculated monthly, weighted-average normal values (NVs). The 
industrial phosphoric acid exported by Prayon to the United States is 
PRAYPHOS P5, a refined industrial phosphoric acid, and is the identical 
merchandise sold by Prayon in its home market in Belgium. Therefore, we 
have compared U.S. sales to contemporaneous sales of identical 
merchandise in Belgium.

Export Price

    Prayon sells to end-users in the United States through its 
affiliated sales agent. For these sales, we used export price (EP). In 
accordance with sections 772(a) and (c) of the Act, we calculated an EP 
because Prayon sold the merchandise directly to the first unaffiliated 
purchaser in the United States prior to importation. Additional factors 
used to determine EP include: (1) whether the merchandise was shipped 
directly from the manufacturer to the unaffiliated U.S. customer; (2) 
whether this was the customary commercial channel between the parties 
involved; and (3) whether the function of the U.S. affiliate was 
limited to that of a processor of sales-related documentation and a 
communications link with the unrelated buyer. Where the facts indicate 
that the activities of the U.S. affiliate were ancillary to the sale 
(e.g., arranging transportation or customs clearance, invoicing), we 
treat the transactions as EP sales. See, e.g., Certain Corrosion 
Resistant Steel Flat Products From Canada: Final Results of Antidumping 
Duty Administrative Review, 63 FR 12725, 12738 (March 16, 1998). The 
record in this case indicates that Prayon has correctly classified its 
U.S. sales as EP sales. Prayon's affiliated sales agent in the United 
States, Quadra Corporation (USA) (``Quadra''), served only as a 
processor of sales-related documentation.
    EP was based on the delivered price to unaffiliated purchasers in, 
or for exportation to, the United States. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act; 
these included foreign inland freight, foreign brokerage and handling, 
ocean freight, marine insurance, U.S. customs brokerage fees, 
merchandise processing fees, and U.S. inland freight expenses.

Normal Value

    We compared the aggregate quantity of home market and U.S. sales 
and determined that the quantity of the company's sales in its home 
market was more than five percent of the quantity of its sales to the 
U.S. market. Consequently, in accordance with section 773(a)(1)(B) of 
the Act, we based NV on home market sales.

[[Page 24575]]

    We also excluded from our NV analysis sales to affiliated home 
market customers where the weighted-average sales prices to the 
affiliated parties were less than 99.5 percent of the weighted-average 
sales prices to unaffiliated parties. See Usinor Sacilor v. United 
States, 872 F. Supp. 1000, 1004 (CIT 1994).
    We made adjustments, consistent with section 773(a)(6)(B) of the 
Act, for inland freight. In addition, we made adjustments for 
differences in circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410.
    In calculating the credit expense on its home market sales, Prayon 
reported the discount on accounts receivable sold to its affiliated 
coordination center. Because Prayon did not submit any information 
which could serve as a benchmark to determine whether these affiliated 
party transactions were conducted at arm's-length, we must assume that 
they are not arm's-length transactions. Accordingly, we have used the 
standard credit calculation when calculating the amount of credit to 
deduct from normal value. We used the monthly home market short-term 
rates provided by Prayon for borrowing from unaffiliated entities in 
calculating inventory carrying costs as the basis for the monthly home 
market short-term interest rates used in the credit calculation. See 
Import Administration Policy Bulletin 98-2.
    In calculating the credit expense on its U.S. sales, Prayon 
reported the discount on accounts receivable sold to its affiliated 
coordination center in Belgian francs. Because Prayon did not submit 
any information which could serve as a benchmark to determine whether 
these affiliated party transactions were conducted at arm's-length, we 
must assume that they are not arm's-length transactions. Therefore, we 
have disregarded the credit expenses reported by Prayon. Instead, we 
have utilized the weighted-average short-term dollar lending rates 
calculated by the Federal Reserve in calculating Prayon's imputed 
credit expense. See Import Administration Policy Bulletin 98-2.
    No other adjustments were claimed or allowed.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the export price (EP) or the 
constructed export price (CEP) transaction. The NV LOT is that of the 
starting-price sales in the comparison market or, when NV is based on 
constructed value, that of the sales from which we derive selling, 
general and administrative expenses and profit. For EP, the U.S. LOT is 
also the level of the starting-price sale, which is usually from 
exporter to importer. For CEP, it is the level of the constructed sale 
from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make an LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). See Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate From South Africa, 62 FR 61731, 61732 (November 19, 1997).
    Prayon did not claim an LOT adjustment; however, we requested 
information concerning Prayon's distribution system, including selling 
functions, to determine whether such an adjustment was necessary. 
Prayon reported that all sales during the period of review (POR), in 
both the comparison market (the home market in this case) and the 
United States, were to end-users and distributors. In the U.S. market, 
Prayon sells to end-users through its affiliated sales agent. The 
subject merchandise is shipped from tankage in a storage facility in 
Canada directly to the customer. In the home market, Prayon sells 
through several channels of distribution. The first channel includes 
direct sales made to end-users. For the other channels, Prayon sells to 
either end-users or distributors through its affiliated sales agent. 
For all home market customers, Prayon ships the subject merchandise via 
independent carriers directly to the customer from its storage 
facilities at the plant. We have examined information provided by 
Prayon concerning these sales and determined that the selling functions 
are the same in the home market and U.S. market. Prayon negotiates all 
final prices and quantities, and bears the cost of storage and 
handling, surveys and delivery to customer. Prayon does not maintain 
inventories for its customers, provide after-sales service, or offer 
advertising or other sales support activities to its customers in 
either market. Therefore, we preliminarily determine that sales in the 
home market and sales in the United States are at the same LOT and that 
no adjustment is warranted.

Commissions

    The Department operates under the assumption that commission 
payments to affiliated parties (in either the United States or home 
market) are not at arm's length. The Court of International Trade has 
held that this is a reasonable assumption. See Outokumpu Copper Rolled 
Products AB v. United States, 850 F. Supp. 16, 22 (CIT 1994).
    Accordingly, the Department has established guidelines to determine 
whether affiliated party commissions are paid on an arm's-length basis 
such that an adjustment for such commissions can be made. See Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan 
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, 
and Components Thereof, From Japan, 61 FR 57629 (November 7, 1996). 
First, we compare the commissions paid to affiliated and unaffiliated 
sales agents in the same market. If there are no commissions paid to 
unaffiliated parties, we then compare the commissions earned by the 
affiliated selling agent on sales of merchandise produced by the 
respondent to commissions earned on sales of merchandise produced by 
unaffiliated sellers or manufacturers. If there is no benchmark which 
can be used to determine whether the affiliated party commission is an 
arm's-length value (i.e., the producer does not use an unaffiliated 
selling agent and the affiliated selling agent does not sell subject 
merchandise for an unaffiliated producer), the Department assumes that 
the affiliated party commissions are not paid on an arm's-length basis.
    In this case, Prayon used an affiliated sales agent in the home 
market and a different affiliated sales agent in the United States. In 
its December 16, 1998 response, Prayon submitted its commission rates 
with its affiliated sales agents in both the home and U.S. market. We 
issued a supplemental questionnaire to Prayon, requesting that it 
indicate whether the commissions were paid at arm's length by reference 
to commission payments to unaffiliated parties in the foreign market 
and other markets, and to submit evidence

[[Page 24576]]

demonstrating the arm's-length nature of the commissions. Prayon then 
submitted documentation indicating that its commission rates with 
unaffiliated parties in the foreign market and in other markets are 
comparable to its affiliated party commission rates.
    Our preliminary analysis of the submitted documentation indicates 
that the affiliated commissions in both the home and U.S. market are 
made at arm's-length. Therefore, for purposes of the preliminary 
determination, we are accepting Prayon's reported home and U.S. market 
commissions. Accordingly, we preliminarily determine to make a 
circumstance of sale adjustment for commissions in both the home and 
U.S. market. However, we have asked for certain additional information 
in order to clarify the submitted documentation. This information will 
not be readily available for the preliminary determination. For further 
explanation of this issue, see Memorandum from Analyst to Holly A. Kuga 
(``Arm's Length Commission Memorandum''), dated May 3, 1999.

Currency Conversion

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

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period August 1, 1997 through July 31, 
1998:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Prayon.....................................................         4.27
------------------------------------------------------------------------

    The Department will disclose calculations made in connection with 
its preliminary determination within five days of the date of 
publication of this notice. Interested parties may also request a 
hearing within 30 days of publication. If requested, a hearing will be 
held two days after the date of filing of rebuttal briefs, or the first 
work day thereafter. Interested parties may submit case briefs not 
later than 30 days after the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than five days after the date of filing 
of case briefs. The Department will issue a notice of the final results 
of this administrative review, which will include the results of its 
analysis of issues raised in any such briefs, within 120 days from the 
publication of these preliminary results.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b), we have calculated an importer-specific duty 
assessment rate based on the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
the same sales. The rate will be assessed uniformly on all entries of 
that particular company made during the POR. The Department will issue 
appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of industrial phosphoric acid from Belgium entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided by 
section 751(a)(2)(c) of the Act: (1) The cash deposit rate for the 
reviewed company will be the rate established in the final results of 
this administrative review (except no cash deposit will be required 
where the weighted-average margin is de minimis, i.e., less than 0.5 
percent); (2) for merchandise exported by manufacturers or exporters 
not covered in this review but covered in the original less-than-fair-
value (LTFV) investigation or a previous review, the cash deposit will 
continue to be the most recent rate published in the final 
determination or final results for which the manufacturer or exporter 
received an individual rate; (3) if the exporter is not a firm covered 
in this review, a previous review, or the original investigation, but 
the manufacturer is, the cash deposit rate will be the rate established 
for the most recent period for the manufacturer of the merchandise; and 
(4) if neither the exporter nor the manufacturer is a firm covered in 
this or any previous reviews or the original investigation, the cash 
deposit rate will be 14.67 percent, the ``all others'' rate established 
in the LTFV investigation.
    This notice serves as a preliminary reminder to importers of their 
responsibility 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 in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: May 3, 1999.
Robert S. LaRussa,
Assistant Secretary, Import Administration.
[FR Doc. 99-11574 Filed 5-6-99; 8:45 am]
BILLING CODE 3510-DS-P