[Federal Register Volume 64, Number 151 (Friday, August 6, 1999)]
[Notices]
[Pages 42916-42920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20338]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-825]


Sebacic Acid From the People's Republic of China: 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 Sebacic Acid from the People's Republic of 
China.

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SUMMARY: The Department of Commerce is conducting an administrative 
review of the antidumping duty order on sebacic acid from the People's 
Republic of China in response to requests from the petitioner, Union 
Camp Corporation, and the following three respondents: Tianjin 
Chemicals Import and Export Corporation, Guangdong Chemicals Import and 
Export Corporation, and Sinochem International Chemicals Company, Ltd. 
In addition to these three respondents, the petitioner also requested a 
review of Sinochem Jiangsu Import and Export Corporation. This review 
covers four exporters of the subject merchandise. The period of review 
is July 1, 1997, through June 30, 1998.
    We preliminarily determine that sales have been made below normal 
value. Interested parties are invited to

[[Page 42917]]

comment on these preliminary results. If these preliminary results are 
adopted in our final results of administrative review, we will instruct 
the Customs Service to assess antidumping duties on entries subject to 
this review.

EFFECTIVE DATE: August 6, 1999.

FOR FURTHER INFORMATION CONTACT: Sunkyu Kim or Christopher Priddy, 
Office 2, AD/CVD Enforcement Group I, Import Administration'Room B099, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-2613 or (202) 482-1130, respectively.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all 
citations to the Tariff Act of 1930, as amended (the Act) are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Act by the Uruguay Round Agreements 
Act (URAA). In addition, unless otherwise indicated, all citations to 
the Department of Commerce's (the Department's) regulations are to the 
current regulations at 19 CFR part 351 (April 1998).

SUPPLEMENTARY INFORMATION:

Background

    On July 21, 1998, the Department published in the Federal Register 
at 63 FR 35909 a notice of ``Opportunity to Request an Administrative 
Review'' of the antidumping duty order on sebacic acid from the 
People's Republic of China (PRC) covering the period July 1, 1997, 
through June 30, 1998.
    On July 30, 1998, in accordance with 19 CFR 351.213(b), the 
petitioner requested that we conduct an administrative review of 
Tianjin Chemicals Import and Export Corporation (Tianjin), Guangdong 
Chemicals Import and Export Corporation (Guangdong), Sinochem 
International Chemicals Company, Ltd. (SICC) and Sinochem Jiangsu 
Import and Export Corporation (Jiangsu). On July 29, 1998, Tianjin, 
Guangdong, and SICC also requested that we conduct an administrative 
review. We published a notice of initiation of this antidumping duty 
administrative review on August 27, 1998, at 63 FR 45796. On September 
1, 1998, we issued questionnaires to the four respondents. Tianjin, 
SICC, and Guangdong submitted responses to sections A, C, and D of the 
antidumping questionnaire on October 9, 1998, and November 2, 1998. The 
Department issued its supplemental questionnaires on January 8, 1999, 
and received responses to the questionnaires in February and March 
1999. Jiangsu did not respond to the Department's questionnaire.
    On December 29, 1998, the Department invited interested parties to 
provide publicly available information (PAI) for valuing the factors of 
production and for surrogate country selection. We received responses 
from the interested parties on January 25, 1999, and February 18, 1999, 
and additional comments on March 1, 1999. On March 12, 1999, in 
accordance with section 751(a)(3)(A) of the Act, the Department 
postponed the deadline for issuing the preliminary results of this 
review. See Sebacic Acid from the People's Republic of China: 
Postponement of Preliminary Results of Antidumping Duty Administrative 
Review, 64 FR 13771 (March 22, 1999).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of Review

    The products covered by this order are all grades of sebacic acid, 
a dicarboxylic acid with the formula (CH2)8(COOH)2, which include but 
are not limited to CP Grade (500ppm maximum ash, 25 maximum APHA 
color), Purified Grade (1000ppm maximum ash, 50 maximum APHA color), 
and Nylon Grade (500ppm maximum ash, 70 maximum ICV color). The 
principal difference between the grades is the quantity of ash and 
color. Sebacic acid contains a minimum of 85 percent dibasic acids of 
which the predominant species is the C10 dibasic acid. Sebacic acid is 
sold generally as a free-flowing powder/flake.
    Sebacic acid has numerous industrial uses, including the production 
of nylon 6/10 (a polymer used for paintbrush and toothbrush bristles 
and paper machine felts), plasticizers, esters, automotive coolants, 
polyamides, polyester castings and films, inks and adhesives, 
lubricants, and polyurethane castings and coatings.
    Sebacic acid is currently classifiable under subheading 
2917.13.00.30 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheading is provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding remains dispositive.

Separate Rates

    It is the Department's standard policy to assign all exporters of 
the merchandise subject to review in non-market-economy (NME) countries 
a single rate, unless an exporter can demonstrate an absence of 
government control, both in law and in fact, with respect to exports. 
To establish whether an exporter is sufficiently independent of 
government control to be entitled to a separate rate, the Department 
analyzes the exporter in light of the criteria established in the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991) (Sparklers), and 
amplified in the Final Determination of Sales at Less Than Fair Value: 
Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 
2, 1994) (Silicon Carbide). Evidence supporting, though not requiring, 
a finding of de jure absence of government control over export 
activities includes: (1) An absence of restrictive stipulations 
associated with an individual exporter's business and export licenses; 
(2) any legislative enactments decentralizing control of companies; and 
(3) any other formal measures by the government decentralizing control 
of companies. Evidence relevant to a de facto absence of government 
control with respect to exports is based on the four factors of whether 
the respondent: (1) Sets its own export prices independently from the 
government and other exporters; (2) can retain the proceeds from its 
export sales; (3) has the authority to negotiate and sign contracts; 
and (4) has autonomy from the government regarding the selection of 
management. See Silicon Carbide at 22587 and Sparklers at 20589.
    With respect to SICC, Tianjin, and Guangdong, in our final results 
for the period of review (POR) covering July 1, 1996, through June 30, 
1997, the Department determined there was both de jure and de facto 
absence of government control of each company's export activities and 
determined that each company warranted a company-specific dumping 
margin. See Final Results of Antidumping Administrative Review: Sebacic 
Acid From the People's Republic of China, 63 FR 43373 (August 13, 1998) 
(Sebacic Acid Third Review). For this review, SICC, Tianjin, and 
Guangdong have responded to the Department's request for information 
regarding separate rates. We have found that the evidence on the record 
is consistent with the final results in the previous administrative 
review and continues to demonstrate an absence of both de jure and de 
facto government control with respect to their exports in accordance 
with the criteria identified in Sparklers and Silicon Carbide.
    With respect to Jiangsu, which did not respond to the 
questionnaire, we preliminarily determine that this company does not 
merit a separate rate. Because the Department assigns a single

[[Page 42918]]

rate to companies in an NME country unless an exporter can demonstrate 
absence of government control, we preliminarily determine that Jiangsu 
is subject to the country-wide rate for this case.

Export Price

    For SICC, Tianjin, and Guangdong, we calculated export price (EP), 
in accordance with section 772(a) of the Act, because the subject 
merchandise was sold directly to unaffiliated customers in the United 
States prior to importation and because constructed export price (CEP) 
methodology was not otherwise warranted based on the facts of record. 
We calculated EP based on packed CIF prices to the first unaffiliated 
purchaser in the United States. Where appropriate, we made deductions 
from the starting price for foreign inland freight, foreign brokerage 
and handling, ocean freight, and marine insurance. Because all reported 
movement services were provided by NME companies, we based the charges 
associated with these services on surrogate rates from India. See 
``Normal Value'' section for further discussion.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the normal value (NV) using a factors-of-production 
methodology if: (1) The merchandise is exported from an NME country, 
and (2) the information does not permit the calculation of NV using 
home-market prices, third-country prices, or constructed value (CV) 
under section 773(a) of the Act.
    The Department has treated the PRC as an NME country in all 
previous antidumping cases. Furthermore, available information does not 
permit the calculation of NV using home market prices, third country 
prices, or CV under section 773(a) of the Act. In accordance with 
section 771(18)(C)(i) of the Act, any determination that a foreign 
country is an NME country shall remain in effect until revoked by the 
administering authority. None of the parties to this proceeding has 
contested such treatment in this review. Therefore, we treated the PRC 
as an NME country for purposes of this review and calculated NV by 
valuing the factors of production in a comparable market economy 
country which is a significant producer of comparable merchandise.
    Section 773(c)(4) of the Act and 19 CFR 351.408 direct us to select 
a surrogate country that is economically comparable to the PRC. On the 
basis of per capita gross domestic product (GDP), the growth rate in 
per capita GDP, and the national distribution of labor, we find that 
India is a comparable economy to the PRC. See ``Memorandum from 
Director, Office of Policy, to Office Director, AD/CVD Group I, Office 
2,'' dated December 21, 1998.
    Section 773(c)(4) of the Act also requires that, to the extent 
possible, the Department use a surrogate country that is a significant 
producer of merchandise comparable to sebacic acid. Although we do not 
have information about the quantity of sebacic acid produced in India, 
we found that information contained in the respondents' February 18, 
1999, submission indicates that India was a producer of sebacic acid 
during the POR. In addition, we determined in prior reviews of this 
order that India was a significant producer of comparable merchandise 
(i.e., oxalic acid). See Sebacic Acid Third Review. We find that India 
fulfills both statutory requirements for use of a surrogate country and 
continue to use India as the surrogate country in this administrative 
review. We have used publicly available information relating to India, 
unless otherwise noted, to value the various factors of production.
    For purposes of calculating NV, we valued PRC factors of production 
in accordance with section 773(c)(1) of the Act. Factors of production 
include, but are not limited to: (1) Hours of labor required; (2) 
quantities of raw materials employed; (3) amounts of energy and other 
utilities consumed; and (4) representative capital cost, including 
depreciation. In examining surrogate values, we selected, where 
possible, the publicly available value which was: (1) an average non-
export value; (2) representative of a range of prices either within the 
POR or most contemporaneous with the POR; (3) product-specific; and (4) 
tax-exclusive. For a more detailed explanation of the methodology used 
in calculating the various surrogate values, see ``Memorandum to the 
File from Case Analyst: Calculations for the Preliminary Results,'' 
dated August 2, 1999. In accordance with this methodology, we valued 
the factors of production as follows:
    We valued castor oil and castor seed using 1998 price data from the 
Solvent Extractors Association of India provided by the petitioner in 
its January 25, 1999, submission. For the castor oil that Hengshui 
Dongfeng Chemical Factory purchased from a market economy and paid for 
in market economy currency, we used the actual price paid for the input 
to calculate the factors-based NV in accordance with 19 CFR 
351.408(a)(1). Handan Fuyang Sebacic Acid Factory (Handan) claimed it 
obtained castor oil from a market economy source and paid market 
economy prices for this factor, but Handan did not provide the 
necessary price data. Therefore, we have valued Handan's castor oil 
consumption based on the Indian surrogate value for castor oil.
    For macropore resin, we used the value for activated carbon. 
Consistent with our methodology used in the third review of this 
proceeding, we valued activated carbon using export prices as quoted in 
the Chemical Weekly. For caustic soda, cresol, phenol, sulfuric acid, 
and zinc oxide, we used published market prices reported in the 
Chemical Weekly. For caustic soda and sulfuric acid, because price 
quotes reported in the Chemical Weekly are for chemicals with a 100 
percent concentration level, we made chemical purity adjustments 
according to the particular concentration levels of caustic soda and 
sulfuric acid used by the respondents. For sodium chloride (also 
referred to as sodium chlorite or vacuum salt), we used Indian import 
values from the Monthly Statistics of the Foreign Trade of India 
(Monthly Statistics) for the period April 1996 though February 1997.
    Where appropriate, we adjusted the values reported in the Chemical 
Weekly to exclude sales and excise taxes. For those values not 
contemporaneous with the POR, we adjusted for inflation using the 
wholesale price indices (WPI) published by the International Monetary 
Fund (IMF). We made further adjustments to account for freight costs 
between the suppliers' buildings and the respondents' sebacic acid 
manufacturing facilities.
    In accordance with our practice, we added to CIF import values from 
India a surrogate freight cost using the shorter of the reported 
distances from either the closest PRC port to the factory or from the 
domestic supplier to the factory. See Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From the 
People's Republic of China, 62 FR 61964, 61977 (November 20, 1997).
    We valued labor based on a regression-based wage rate in accordance 
with 19 CFR 351.408(c)(3).
    To value electricity, we used the average rate applicable to medium 
industrial users throughout India as obtained from the ``Our India'' 
website compiled by the Indian Industrial and Management Services. We 
adjusted the values to reflect inflation up to the POR using the WPI 
factors published by the IMF. We based the value of steam coal on April 
1996 through February 1997

[[Page 42919]]

import values from the Monthly Statistics. We adjusted the steam coal 
values for inflation using the WPI factors published by the IMF.
    We based our calculation of factory overhead, selling, general and 
administrative (SG&A) expenses, and profit on data contained in the 
April 1995 Reserve Bank of India Bulletin for the Indian metals and 
chemicals industries. To value factory overhead, we summed those 
components which pertain to overhead expenses and divided them by the 
sum of those components pertaining to the cost of manufacturing. We 
multiplied this factory overhead rate by the cost of manufacture 
divided by one minus the factory overhead rate. Using the same source, 
we also calculated the SG&A rate as a percentage of the cost of 
manufacturing. We calculated profit as a percentage of the cost of 
production (i.e., materials, energy, labor, factory overhead, and 
SG&A).
    To value plastic and woven bags, we used import values from the 
Monthly Statistics. For jumbo bag valuation, we used a value from 
Monthly Statistics as found in the Department's Index of Factor Values 
for Use in Antidumping Duty Investigations Involving Products from the 
People's Republic of China (Index of Factor Values). We adjusted these 
three values to reflect inflation up to the POR using the WPI published 
by the IMF. Additionally, we adjusted these values to account for 
freight costs incurred between the suppliers and sebacic acid 
producers.
    In valuing foreign inland trucking freight, the Department relied 
upon data from the Times of India as found in the Department's Index of 
Factor Values; for foreign inland rail rates the Department relied upon 
data from Certain Helical Spring Lock Washers from the People's 
Republic of China: Final Results of Antidumping Duty Administrative 
Review, 64 FR 13401 (March 18, 1999). To value ocean freight, we used a 
price quote from Sealand Shipping, Inc., for merchandise comparable to 
sebacic acid (i.e., oxalic acid). For marine insurance and foreign 
brokerage and handling expenses, we used public information reported in 
the antidumping duty investigations of sulfur dyes and stainless steel 
bar from India, respectively. See Final Determination of Sales at Less 
Than Fair Value: Sulfur Dyes, Including Vat Dyes from India, 58 FR 
11835 (March 1, 1993); Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Bar from India, 59 FR 66915 (December 28, 1994).
    Consistent with the methodology employed in the previous 
administrative review for sebacic acid, we have determined that fatty 
acid, glycerine, and castor seed cake (when castor oil is self-
produced) are by-products. Because they are by-products, we subtracted 
the sales revenue of fatty acid, glycerine, and, where applicable, 
castor seed cake, from the estimated production costs of sebacic acid. 
This treatment of by-products is also consistent with generally 
accepted accounting principles. See Cost Accounting: A Managerial 
Emphasis (1991) at pages 539-544. To value fatty acid and glycerine, we 
used prices published in Chemical Weekly. We valued castor seed cake 
using market prices quoted in The Economic Times of India (Mumbai) for 
certain months within the POR.
    We also allocated a by-product credit for glycerine to the 
production cost for the co-product capryl alcohol. We deducted a by-
product credit for glycerine from both sebacic acid and capryl alcohol 
based on the ratio of the value of sebacic acid to the total value of 
both sebacic acid and capryl alcohol.
    Consistent with the methodology employed in the previous 
administrative review, we have determined that capryl alcohol is a co-
product and have allocated the factor inputs based on the relative 
quantity of output of this product and sebacic acid. Additionally, we 
have used the production times necessary to complete each production 
stage of sebacic acid as a basis for allocating the amount of labor, 
energy usage, and factory overhead among the co-product(s). This 
treatment of co-products is consistent with generally accepted 
accounting principles. See Cost Accounting: A Managerial Emphasis 
(1991) at pages 528-533. To value capryl alcohol, consistent with our 
methodology from the previous administrative review, we used market 
prices reported in the Chemical Weekly for November 1997 and January 
1998 and adjusted the prices for sales and excise taxes.

Preliminary Results of Review

    We preliminarily determine that the following dumping margins exist 
for the period July 1, 1997, through June 30, 1998:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/Exporter                      (percent)
------------------------------------------------------------------------
Tianjin Chemicals I/E Corp.................................         6.16
Sinochem International Chemicals Corp......................         0.00
Guangdong Chemicals I/E Corp...............................        15.01
Country-Wide Rate..........................................       243.40
------------------------------------------------------------------------

    Interested parties may request a hearing within 30 days of the 
publication of this notice. See 19 CFR 351.310(c). Any hearing, if 
requested, will be held 44 days after the date of the publication of 
this notice or the first workday thereafter. Interested parties may 
submit case briefs within 30 days of publication. Rebuttal briefs, 
limited to issues raised in the case briefs, may be filed no later than 
35 days after the date of publication. Parties who submit case briefs 
or rebuttal briefs in this proceeding are requested to submit with each 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. Parties are also encouraged to provide a summary of the 
arguments not to exceed five pages and a table of statutes, 
regulations, and cases cited.
    The Department will subsequently 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 written briefs no later than 
120 days after the date of publication of this notice.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. We have 
calculated an importer-specific 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 examined sales. This rate will 
be assessed uniformly on all entries of that particular importer made 
during the POR. The Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following cash deposit requirements will be 
effective upon publication of the final results of this administrative 
review for all shipments of the subject merchandise entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date, as provided by section 751(a)(1) of the Act: (1) For the reviewed 
companies named above which have separate rates (SICC, Tianjin, and 
Guangdong), the cash deposit rates will be the rates for those firms 
established in the final results of this administrative review; (2) for 
companies previously found to be entitled to a separate rate and for 
which no review was requested, the cash deposit rates will be the rate 
established in the most recent review of that company; (3) for all 
other PRC exporters of subject merchandise, the cash deposit rates will 
be the PRC country-wide rate indicated above; 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 
rates, when imposed, shall remain in effect until publication of the

[[Page 42920]]

final results of the next administrative review.

Notification of Interested Parties

    This notice also serves as a preliminary 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 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 30, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-20338 Filed 8-5-99; 8:45 am]
BILLING CODE 3510-DS-P