[Federal Register Volume 64, Number 161 (Friday, August 20, 1999)]
[Notices]
[Pages 45511-45514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21716]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-601]


Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, From the People's Republic of China; Preliminary Results of 
New Shipper Review

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

ACTION: Notice of preliminary results of new shipper review of tapered 
roller bearings and parts thereof, finished and unfinished, from the 
People's Republic of China.

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SUMMARY: In response to requests from Zhejiang Changshan Changhe 
Bearing Company and Weihai Machinery Holding (Group) Corporation 
Limited, the Department of Commerce is conducting a new shipper review 
of the antidumping duty order on tapered roller bearings and parts 
thereof, finished and unfinished, from the People's Republic of China. 
This review covers these companies' entries of tapered roller bearings 
and parts thereof, finished and unfinished, to the United States during 
the period June 1, 1998, through November 30, 1998.
    We have preliminarily found that, during the period of review, 
Zhejiang Changshan Changhe Bearing Company and Weihai Machinery Holding 
(Group) Corporation Limited have not made sales of subject merchandise 
below normal value. If these preliminary results are adopted in our 
final results, we will instruct the Customs Service not to assess 
antidumping duties.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: August 20, 1999.

FOR FURTHER INFORMATION CONTACT: James Breeden or Zak Smith, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington DC 20230; 
telephone (202) 482-1174 and (202) 482-0189, respectively.

Applicable Statute

    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. In addition, all 
references to the Department of Commerce's (``Department's'') 
regulations are to 19 CFR 351 (April 1998).

Background

    On November 30, 1998, Zhejiang Changshan Changhe Bearing Company 
(``ZCCBC''), a producer and exporter, requested that we conduct a new 
shipper review. ZCCBC's request was followed by a similar request on 
December 30, 1998, by Weihai Machinery Holding (Group) Corporation 
Limited (``Weihai''), an exporter. We published the notice of 
initiation for this new shipper review on February 19, 1999 (64 FR 
8312).

Scope of Review

    Merchandise covered by this review includes tapered roller bearings 
(``TRBs'') and parts thereof, finished and unfinished, from the 
People's Republic of China (``PRC''); flange, take up cartridge, and 
hanger units incorporating tapered roller bearings; and tapered roller 
housings (except pillow blocks) incorporating tapered rollers, with or 
without spindles, whether or not for automotive use. This merchandise 
is classifiable under the Harmonized Tariff Schedule of the United 
States (``HTSUS'') item numbers 8482.20.00, 8482.91.00.50, 8482.99.30, 
8483.20.40, 8483.20.80, 8483.30.80, 8483.90.20, 8483.90.30, 8483.90.80, 
8708.99.80.15, and 8708.99.80.80. Although the HTSUS item numbers are 
provided for convenience and customs purposes, the written description 
of the scope of the order and this review is dispositive.

Separate Rates Determination

    To establish whether a company operating in a state-controlled 
economy is sufficiently independent to be entitled to a separate rate, 
the Department analyzes each exporting entity under the test 
established in the Final Determination of Sales at Less Than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991) (``Sparklers''), as amplified by the Final Determination of 
Sales at Less Than Fair Value: Silicon Carbide from the People's 
Republic of China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide''). 
Under this policy, exporters in nonmarket economies (``NMEs'') are 
entitled to separate, company-specific margins if they can demonstrate 
an absence of government control, both in law and in fact, with respect 
to export activities. Evidence supporting, though not requiring, a 
finding of de jure absence of government control over export activities 
includes: (1) an absence of restrictive stipulations associated with 
the 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. De facto absence of government control over exports is based 
on four factors: (1) whether each exporter sets its own export prices 
independently of the government and without the approval of a 
government authority; (2) whether each exporter retains the proceeds 
from its sales and makes independent decisions regarding the 
disposition of profits or financing of losses; (3) whether each 
exporter has the authority to negotiate and sign contracts and other 
agreements; and (4) whether each exporter has autonomy from the 
government regarding the selection of management (see Silicon Carbide, 
59 FR at 22587 and Sparklers, 56 FR at 20589).
    With respect to Weihai, information submitted during this review 
indicates that Weihai is owned by its shareholders. These shareholders 
consist of the companies Weihai Machinery Industries Co. Ltd. (``MIC'') 
and United Collective Enterprises of Weihai (``UCE''). Record evidence 
indicates that MIC is owned ``by all the people of the People's 
Republic of China'' and that UCE is collectively owned by its 
employees.
    An analysis performed by the CIA, which has been put on the record 
of this proceeding, states that although collectively owned enterprises 
(``collectives'') are theoretically owned by the company's workers 
rather than

[[Page 45512]]

``all the people,'' the Chinese consider collectives to be another form 
of public ownership. See 1992 Central Intelligence Agency Report to the 
Joint Economic Committee, Hearings on Global Economic and Technological 
Change: Former Soviet Union and Eastern Europe and China, Pt. 2 (102 
Cong., 2d Sess.). Thus, similar to companies that are owned ``by all 
the people,'' UCE belongs to the community of its employees who are 
``entrusted with the management of the company.'' (See Silicon Carbide, 
59 FR at 22586-7.) Based on these facts, the Department preliminary 
determines that Weihai is eligible to be considered for a separate 
rate.
    As discussed below, Weihai and ZCCBC meet both the de jure and de 
facto criteria. Accordingly, we preliminarily determine to apply 
separate rates to Weihai and ZCCBC.

De Jure Analysis: Weihai and ZCCBC

    The following laws indicate a lack of de jure government control 
over these companies, and establish that the responsibility for 
managing companies owned by ``all of the people'' and collectives has 
been transferred from the government to the enterprises themselves. 
These laws include: ``Law of the PRC on Industrial Enterprises Owned by 
the Whole People,'' adopted on April 13, 1988 (``1988 Law''); 
``Regulations for Transformation of Operational Mechanism of State-
Owned Industrial Enterprises,'' approved on August 23, 1992 (``1992 
Regulations''); and the ``Temporary Provisions for Administration of 
Export Commodities,'' approved on December 21, 1992 (``Export 
Provisions''). The 1988 Law states that enterprises have the right to 
set their own prices (see Article 26). This principle was restated in 
the 1992 Regulations (see Article IX). Finally, the 1992 ``Temporary 
Provisions for Administration of Export Commodities'' list those 
products subject to direct government control. TRBs do not appear on 
this list and are not subject, therefore, to the constraints of these 
provisions.
    With respect to ZCCBC, information submitted during this review 
indicates that it is a joint venture company formed under the laws of 
the PRC. The Chinese company participating in this joint venture is 
controlled by private shareholders and independent from national, 
provincial and local Chinese government entities (see ZCCBC 
questionnaire response dated June 22, 1999). Furthermore, the following 
laws, which have been placed on the record in this case, indicate a 
lack of de jure government control over joint venture companies, and 
establish that these companies are responsible for managing themselves. 
These laws include the ``Law of the PRC on Chinese-Foreign Cooperative 
Joint Ventures,'' adopted on April 13, 1988 (``Joint Venture Law'') and 
the ``Foreign Trade Law of the PRC,'' approved on May 12, 1994 
(``Foreign Trade Law''). The Joint Venture Law states that a 
cooperative venture is to conduct its operations and management in 
accordance with its approved articles of association and that no 
interference with regard to the management autonomy of these 
enterprises is allowed (see Article 11). In addition, the Foreign Trade 
Law states that enterprises engaged in international trade shall enjoy 
full autonomy in their business operation and be responsible for their 
own profits and losses (see Article 11).
    Therefore, consistent with Silicon Carbide, we preliminarily 
determine that the existence of these laws demonstrates that Weihai and 
ZCCBC are not subject to de jure government control with respect to 
export activities.
    In light of reports indicating that laws shifting control from the 
government to the enterprises themselves have not been implemented 
uniformly,1 an analysis of de facto control is critical in 
determining whether respondents are, in fact, subject to government 
control with respect to export activities.
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    \1\ ``PRC Government Findings on Enterprise Autonomy,'' in 
Foreign Broadcast Information Service--China--93-133 (July 14, 
1993), and 1992 Central Intelligence Agency Report to the Joint 
Economic Committee, Hearings on Global Economic and Technological 
Change: Former Soviet Union and Eastern Europe and China, Pt. 2 (102 
Cong., 2d Sess.).
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De facto Analysis: Weihai and ZCCBC

    The following record evidence, which is contained in Weihai's and 
ZCCBC's questionnaire responses, indicates a lack of de facto 
government control over the export activities of these companies.
    Weihai's chairman and sales representatives authorized by the 
chairman, and ZCCBC's general manager have the right to contractually 
bind their respective companies concerning the sale of TRBs. Both 
Weihai and ZCCBC have stated that export decisions are not subject to 
any government review or approval and there are no government policy 
directives that affect these decisions.
    Weihai's senior management is selected by the company's board of 
directors. The remaining managers are appointed by the general manager. 
The results of Weihai's senior management selections are recorded with 
the State Administration for Industry and Commerce. There is no 
evidence that this government authority controls the selection process 
or that it has rejected senior managers selected through the election 
process. The general manager of ZCCBC is appointed by the company's 
stockholders and ZCCBC does not notify the government of its management 
selections. Accordingly, there is no evidence that the government 
controls the selection process or that it has rejected a general 
manager selected.
    Weihai's and ZCCBC's sources of funds are their own respective 
revenues or bank loans. They have sole control over, and access to, 
their bank accounts, which are held in Weihai's and ZCCBC's own names, 
respectively.
    Furthermore, there are no restrictions on the use of the 
respondents' revenues or profits, including export earnings.
    Based on the foregoing analysis of the evidence on the record, we 
find neither de jure nor de facto government control over the export 
activities of Weihai or ZCCBC. Accordingly, we preliminarily determine 
that Weihai and ZCCBC are not part of any ``PRC enterprise'' and are 
entitled to separate rates.

United States Sales

    For sales made by Weihai and ZCCBC, we based the U.S. sales on 
export price (``EP''), in accordance with section 772(a) of the Act, 
because the subject merchandise was sold to unaffiliated purchasers in 
the United States prior to importation into the United States and 
because the constructed export price methodology was not indicated by 
other circumstances.
    We calculated EP based on, as appropriate, the FOB or CIF port 
price to unaffiliated purchasers. From this amount we deducted amounts, 
where appropriate, for foreign inland freight, ocean freight, and 
marine insurance. We valued the deduction for foreign inland freight 
using Indian freight costs (see the Normal Value section of this notice 
for a discussion of our surrogate selection). Marine insurance and 
ocean freight were provided by PRC-owned companies. Therefore, we 
valued the deductions using amounts charged by international providers.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine normal value (``NV'') using a factors-of-production (``FOP'') 
methodology if: (1) The merchandise is exported from an NME, and (2) 
the information does not permit the calculation of NV under section 
773(a) of the Act. The Department has treated the PRC as an NME in all 
previous antidumping cases. In accordance with section 771(18)(C)(i)

[[Page 45513]]

of the Act, any determination that a foreign country is an NME shall 
remain in effect until revoked by the administering authority. None of 
the parties to this proceeding has contested such treatment in this 
review. Moreover, parties to this proceeding have not argued that the 
PRC tapered roller bearing industry is a market-oriented industry. 
Consequently, we have no basis to determine that the information would 
permit the calculation of NV using PRC prices or costs. Therefore, 
except as noted below, we calculated NV based on factors of production 
in accordance with sections 773(c)(3) and (4) of the Act and section 
351.408(c) of our regulations.
    Under the FOP methodology, we are required to value the NME 
producer's inputs in a comparable market economy country that is a 
significant producer of comparable merchandise. We have relied on India 
as the primary surrogate for valuing the PRC producers' inputs. We have 
used Indonesia as a secondary source of values (see Memorandum to Susan 
Kuhbach from Jeff May: ``Tapered Roller Bearings (``TRBs'') from the 
People's Republic of China (``PRC''): Nonmarket Economy Status and 
Surrogate Country Selection,'' dated June 4, 1999, and Memorandum to 
Susan Kuhbach: ``Selection of a Surrogate Country and Steel Value 
Sources,'' dated August 10, 1999 (``Steel Values Memorandum''), for a 
further discussion of our surrogate selection). We note that, in past 
reviews of this order, we have found that both India and Indonesia are 
economically comparable to the PRC and are significant producers of 
TRBs (see Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, From the People's Republic of China; Preliminary Results of 
1997-1998 Antidumping Duty Administrative Review and Partial Rescission 
of Antidumping Duty Administrative Review, 64 FR 36853 (July 8, 1999) 
(``Preliminary TRBs XI'')).
    We used Indian data to value the various factors of production with 
the exception of the following: hot-rolled alloy steel bars for the 
production of cups and cones, cold-rolled steel rods used in the 
production of rollers, and steel scrap from the production of cups, 
cones, and rollers. To value hot-rolled alloy steel bars for the 
production of cups and cones, we used data on imports into Indonesia. 
Specifically, we used Japanese export prices of cup and cone quality 
steel to Indonesia. Use of Japanese export data allowed us to identify 
bearing quality steel. To value cold-rolled steel rods used in the 
production of rollers, we used Indonesian import data. We valued scrap 
using information from the same country we used to value steel. In 
these instances where we used Indonesian data, we did so because we 
found the Indian data for those inputs to be unreliable. (See Steel 
Values Memorandum.)
    All valuations were made using publicly available information, as 
described below. For a complete description of the factor values used, 
see the ``Memorandum to Susan Kuhbach: Factors of Production Values 
Used for the Preliminary Results,'' dated August 10, 1999.
    1. Steel Inputs. For hot-rolled alloy steel bars used in the 
production of cups and cones, we used a weighted average of Japanese 
export values to Indonesia from the Harmonized Tariff Schedule 
(``HTS'') category 7228.30.900 obtained from Official Japan Ministry of 
Finance statistics. This is consistent with the approach followed in 
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, 
From the People's Republic of China; Final Results of 1996-1997 
Antidumping Duty Administrative Review and New Shipper Review and 
Determination Not to Revoke Order in Part, 63 FR 63842, 63845 (November 
17, 1998) (``TRBs X''). For cold-rolled steel rods used in the 
production of rollers, we used Indonesian import data for Indonesian 
tariff subheading 7228.50000, as reported in Biro Pusat Statistik, 
Republik Indonesia. For cold-rolled steel sheet for the production of 
cages, we used Indian import data for Indian tariff subheading 
7209.4200, as reported in the Monthly Statistics of the Foreign Trade 
of India, Vol. II--Imports. (For further discussion of selection of 
steel value sources, see Steel Values Memorandum).
    As in previous administrative reviews, we eliminated from our 
calculation steel imports from NME countries and imports from market 
economy countries that were made in small quantities. For steel used in 
the production of cups, cones, and rollers, we also excluded imports 
from countries that do not produce bearing-quality steel (see, e.g., 
TRBs X).
    We made adjustments to include freight costs incurred using the 
shorter of the reported distances from either the closest PRC port to 
the TRBs factory or the domestic supplier to the TRBs factory (see 
Notice of Final Determination of Sales at Less Than Fair Value: 
Collated Roofing Nails From the People's Republic of China, 62 FR 51410 
(October 1, 1997), and Sigma Corporation versus United States, 117 F. 
3d 1401 (Fed. Cir. 1997)). We also made adjustments to include freight 
costs incurred between primary producers and their subcontractors.
    One producer in this review purchased steel sheet from a market 
economy supplier and paid for the steel with market economy currency. 
Thus, in accordance with section 351.408(c)(1) of our regulations, we 
valued this steel input using the actual price reported for directly 
imported inputs from a market economy.
    To be consistent with the valuation of steel for cups, cones, and 
rollers, we valued scrap recovered from the production of cups, cones, 
and rollers using official Japanese government statistics on Japanese 
scrap exports to Indonesia from HTS category 7204.29.000. Similarly, 
scrap recovered from the production of cages was valued using import 
data from the Indian tariff subheading 7204.4100.
    2. Labor. Section 351.408(c)(3) of our regulations requires the use 
of a regression-based wage rate. We have used the regression-based wage 
rate on Import Administration's internet website at www.ita.doc.gov/
import__admin/records/wages.
    3. Overhead, SG&A Expenses, and Profit. For factory overhead, we 
used information obtained from the fiscal year 1997-98 annual reports 
of six Indian bearing producers. We calculated factory overhead and 
selling, general and administrative (``SG&A'') expenses (exclusive of 
labor and electricity) as percentages of direct inputs (also exclusive 
of labor) and applied these ratios to each producer's direct input 
costs (exclusive of labor). For profit, we totaled the reported profit 
before taxes for the six Indian bearing producers and divided it by the 
total calculated cost of production (``COP'') of goods sold. This 
percentage was applied to each respondent's total COP to derive a 
company-specific profit value.
    4. Packing. We used surrogate values for each packing material 
reported using values obtained from the Monthly Statistics of the 
Foreign Trade of India, Vol. II--Imports by Commodity (April 1997 
through December 1997). We adjusted the values to reflect inflation 
using the Indian wholesale price index (``Indian WPI'').
    5. Electricity. We used a simple average of 1995 regional 
electricity prices in India for large industries as reported in India's 
Energy Sector, published by the Centre for Monitoring Indian Economy 
Pvt. Ltd. (September 1996). We adjusted the value to reflect inflation 
using the Indian WPI.
    6. Inland Freight. We valued truck freight using a rate derived 
from the April 20, 1994 issue of The Times of

[[Page 45514]]

India. We adjusted the rate to reflect inflation through the POR using 
the Indian WPI. We valued rail freight using rates published by the 
Indian Railway Conference Association in 1995. We calculated an average 
rate per kilometer and adjusted the rate to reflect inflation through 
the POR using the Indian WPI.
    7. Ocean Freight. We calculated a value for ocean freight based on 
1996 rate quotes from Maersk Inc. We adjusted the rate to the POR using 
the United States producer price index.
    8. Marine Insurance. We calculated a value for marine insurance 
based on the CIF value of the TRBs shipped. We obtained the rate used 
through queries we made directly to an international marine insurance 
provider. Because the information obtained was from a period 
contemporaneous with the POR, no further adjustments were necessary.

Preliminary Results of the Review

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

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Weihai.....................................................         0.00
ZCCBC......................................................         0.00
------------------------------------------------------------------------

    Any interested party may request a hearing within 30 days of 
publication. A hearing, if requested, will be held 42 days after the 
publication of this notice, or the first workday thereafter.
    Issues raised in the hearing will be limited to those raised in the 
respective case and rebuttal briefs. Interested parties may submit case 
briefs within 30 days of 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 35 days after the date of 
publication of this notice. 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 
with an electronic version included.
    The Department will publish the final results within 90 days after 
the date on which these results were issued. The final results will 
include our analysis of issues raised in the briefs or hearing.
    If these preliminary results are adopted in the final results, we 
will instruct the Customs Service to liquidate the entries of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption during the POR, without regard to antidumping duties. 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 for by 
section 751(a)(1) of the Act: (1) for the PRC companies named above, 
the cash deposit rates will be the rates for these firms established in 
the final results of this review, except that, for exporters with de 
minimis rates, i.e., less than 0.50 percent, no deposit will be 
required; (2) for previously-reviewed PRC and non-PRC exporters with 
separate rates, the cash deposit rate will be the company-specific rate 
established for the most recent period; (3) for all other PRC 
exporters, the rate will be the PRC country-wide rate, which is 33.12 
percent; and (4) for all other 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 requirements, when 
imposed, shall remain in effect until publication of the final results 
of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under section 351.402(f) of our 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.
    We are issuing and publishing these results in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 10, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-21716 Filed 8-19-99; 8:45 am]
BILLING CODE 3510-DS-P