[Federal Register Volume 64, Number 215 (Monday, November 8, 1999)]
[Notices]
[Pages 60784-60787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29203]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-828]


Silicomanganese From the People's Republic of China: Preliminary 
Results of Antidumping Duty Administrative Review

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

SUMMARY: The Department of Commerce (``the Department'') is conducting 
the first administrative review of the antidumping duty order on 
silicomanganese from the People's Republic of China (``PRC'') in 
response to requests by the respondents, Guangxi Bayi Ferroalloy Works 
(``Bayi''), and Sichuan Emei Ferroalloy Import and Export Co., Ltd 
(``Emei''). The period of review (``POR'') is December 1, 1997 through 
November 30, 1998.
    We have preliminarily determined that U.S. sales of subject 
merchandise by Bayi and Emei have been made below normal value 
(``NV''). Since both Bayi and Emei submitted full responses to the 
antidumping questionnaires and it has been established that they are 
sufficiently independent, they are entitled to separate rates. If these 
preliminary results are adopted in our final results of administrative 
review, we will instruct the U.S. Customs Service to assess antidumping 
duties on entries from Bayi and Emei.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: November 8, 1999.

FOR FURTHER INFORMATION CONTACT: Timothy Finn or Paige Rivas, 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) 
482-0065 or (202) 482-0651 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 as of January 1, 1995, the effective date 
of the amendments made to the Act by the Uruguay Round Agreements Act. 
In addition, unless otherwise indicated, all citations to the 
Department's regulations are to the regulations at 19 CFR part 351 
(1998).

SUPPLEMENTARY INFORMATION:

Background

    The Department received a request for administrative review from 
Bayi and Emei on December 17, 1998. We published a notice of initiation 
of this review on January 25, 1999 (64 FR 3682).
    On January 29, 1999, we issued antidumping questionnaires to Bayi 
and Emei. The Department received responses from both Bayi and Emei to 
Section A on March 5, 1999 and Sections C and D on March 22, 1999.
    We issued supplemental questionnaires to Bayi and Emei on April 12, 
1999. The responses to these supplemental questionnaires were received 
on May 5, 1999. On July 12, 1999, the Department issued additional 
supplemental questionnaires to Bayi and Emei. The responses to the 
second supplemental questionnaires were received on August 2, 1999.
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for issuing a preliminary determination in an 
administrative review if it determines that it is not practicable to 
complete the preliminary review within the statutory time limit of 245 
days. On August 25, 1999, the Department published a notice of 
extension of the time limit for the preliminary results in this case to 
November 1, 1999 (64 FR 46350).
    On October 12, 1999, Bayi and Emei and petitioner, Eramet Marietta 
Inc. (``Eramet''), submitted publicly available information and 
comments for consideration in valuing the factors of production used in 
our NV calculations.

Scope of Review

    The merchandise covered by this order is silicomanganese. 
Silicomanganese, which is sometimes called ferrosilicon manganese, is a 
ferroalloy composed principally of manganese, silicon, and iron, and 
normally containing much smaller proportions of minor elements, such as 
carbon, phosphorous and sulfur. Silicomanganese generally contains by 
weight not less than 4 percent iron, more than 30 percent manganese, 
more than 8 percent silicon and not more than 3 percent phosphorous. 
All compositions, forms and sizes of silicomanganese are included 
within the scope of this investigation, including silicomanganese slag, 
fines and briquettes. Silicomanganese is used primarily in steel 
production as a source of both silicon and manganese. This 
investigation covers all silicomanganese, regardless of its tariff 
classification. Most silicomanganese is currently classifiable under 
subheading 7202.30.0000 of the Harmonized Tariff Schedule of the United 
States (``HTS''). Some silicomanganese may also currently be 
classifiable under HTS subheading 7202.99.5040. Although the

[[Page 60785]]

HTS subheadings are provided for convenience and customs purposes, our 
written description of the scope is dispositive.

Separate Rates

    It is the Department's 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), as 
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 four factors concerning 
whether the respondent: (1) Sets its own export prices independent 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, 59 FR at 22587; see also 
Sparklers, 56 FR at 20589.
    In prior cases, the Department has analyzed the laws which the 
respondents have submitted in this record and found that they 
established an absence of de jure control. See Notice of Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination; Certain Partial-Extension Steel Drawer Slides With 
Rollers From the People's Republic of China, 60 FR 29572, 29573 (June 
5, 1995); see also Notice of Final Determination of Sales at Less Than 
Fair Value: Furfuryl Alcohol From the People's Republic of China, 60 FR 
22544 (May 8, 1995). We have no new information in this proceeding 
which would cause us to reconsider this determination.
    Evidence relevant to a de facto absence of government control with 
respect to exports is based on whether the respondent: (1) Sets its own 
export prices independent 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, 59 FR at 
22587; see also, Sparklers, 56 FR at 20589. In the instant review, each 
respondent has asserted the following: (1) It establishes its own 
export prices; (2) it negotiates contracts, without guidance from any 
governmental entities or organizations; (3) it makes its own personnel 
decisions and, according to respondents, there is no information on the 
record suggesting central government control over selection of 
management; and (4) it retains the proceeds of its export sales, uses 
profits according to its business needs and has the authority to sell 
its assets and to obtain loans. In addition, respondents' questionnaire 
responses indicate that company-specific pricing during the POR does 
not suggest coordination among exporters. This information supports a 
preliminary finding that there is a de facto absence of governmental 
control of export functions.
    Consequently, we preliminarily determine that both of the 
respondents have met the criteria for the application of separate 
rates.

Export Price

    We calculated export price (``EP'') in accordance with section 
772(a) of the Act, because the subject merchandise was sold directly to 
the first unaffiliated purchaser in the United States prior to 
importation and constructed export price (``CEP'') methodology was not 
otherwise warranted, based on the facts of record. We calculated EP 
based on packed, CIF U.S. port, or FOB PRC port, prices to unaffiliated 
purchasers in the United States, as appropriate. We also deducted from 
the starting price, where appropriate, an amount for foreign inland 
freight and foreign brokerage and handling. As these movement services 
were provided by NME suppliers, we valued them using Indian rates. See 
``Normal Value'' section below for further discussion.

Normal Value

1. Non-Market Economy Status

    Section 773(c)(1) of the Act provides that the Department shall 
determine the 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 under section 773(a) of the Act.
    The Department has treated the PRC as an NME country in all 
previous antidumping cases. 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. Furthermore, available information does not 
permit the calculation of NV using home market prices, third country 
prices, or constructed value under section 773(a) of the Act. As a 
result, we calculated NV by valuing the factors of production in a 
comparable market economy country which is a significant producer of 
comparable merchandise.

2. Surrogate Country

    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 II, Office IV, dated 
June 24, 1999.
    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 Silicomanganese. For purposes of 
the LTFV investigation, we found that India was a significant producer 
of comparable merchandise. See Preliminary Results Factors of 
Production Memorandum from the Team to the File, dated October 20, 1999 
(Factors Memorandum). Accordingly, absent evidence to the contrary we 
continue to find India is a significant producer of silicomanganese 
based on information submitted by the respondents in their October 1999 
submission. Therefore, we have continued to use India as the surrogate 
country and have used publicly available information relating to India, 
unless otherwise noted, to value the various factors of production used 
in our calculations.

[[Page 60786]]

3. 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: hours of labor employed; quantities of 
raw materials required; amounts of energy and other utilities consumed; 
and representative capital cost, including depreciation. In examining 
surrogate values, we selected, where possible, publicly available 
published information on imports of materials into the surrogate 
country within the POR or most contemporaneous with the POR. Where 
possible, we calculated the average of these import prices exclusive of 
taxes for use as the surrogate value. For a more detailed explanation 
of the methodology used in calculating various surrogate values, see 
the Factors Memorandum. In accordance with this methodology, we valued 
the raw materials and inputs as follows:
    Respondents have stated that they import manganese ore and purchase 
domestically produced manganese ore. Imported manganese ore was 
purchased from a market economy supplier and paid for in a market 
economy currency. Therefore, we used the market economy price paid to 
the supplier in accordance with section 351.408(c)(1) of the 
Department's regulations. For domestic manganese ore with a reported 30 
percent purity and manganese rich slag, we used a price quote from an 
Indian supplier from 1997 for the lowest available grade of manganese 
ore because 30 percent purity and slag are regarded as low grade 
manganese.
    For dolomite, we relied on 1997 Indian import prices for limestone, 
a comparable material contained in the September and November issues of 
Indian Import Statistics.
    To value coke, we relied on India import prices contained in the 
September and November 1997, as well as the March 1998, issues of 
Indian Import Statistics.
    For certain minor miscellaneous materials (e.g., silicon ore) we 
were unable to find usable factor values. For purposes of the 
preliminary results we have not assigned a value for these factors of 
production. We will continue to search for appropriate factor values 
for use in the final results and will provide notice and opportunity to 
comment on such values. See Factors Memorandum.
    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 and Bayi's and Emei's 
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 61977 (November 20, 1997).
    We valued labor based on a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3).
    For electricity, we relied upon public information from the 1995 
edition of IEA Energy Prices and Taxes to obtain an average of prices 
for electricity provided to all industries in India. We adjusted the 
values to reflect inflation up to the POR using the WPI published by 
the IMF.
    For the reported packing materials (i.e., woven plastic bags), we 
relied upon Indian import data in the April 1997 through March 1998 
issues of Indian Import Statistics. We adjusted the 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 Bayi and Emei.
    For foreign inland freight, we used the August 1998 truck and rail 
rates from Rahul Roadlines, an Indian inland freight supplier.
    For foreign brokerage and handling, we used the average of the 
rates reported in the public questionnaire response in the Antidumping 
Duty Investigation. See Certain Stainless Steel Wire Rod from India; 
Preliminary Results of Antidumping Duty Administrative and New Shipper 
Review, 63 FR 48184 (September 9, 1998); See also Factors Memorandum. 
We adjusted the values to reflect inflation up to the POR using the WPI 
published by the IMF.
    For factory overhead (``FOH''), selling, general, and 
administrative expenses (``SG&A''), and profit, we used information 
reported for 1992-1993 in the Reserve Bank of India Bulletin. From this 
information, we were able to calculate factory overhead as a percentage 
of direct material, labor, and energy expenses; SG&A as a percentage of 
the total cost of manufacturing; and profit as a percentage of the sum 
of the total cost of manufacturing and SG&A.

Interested Party Comments on Factor Valuation

    In their October 16, 1999, factor value submissions, interested 
parties also provided comment on how certain factor inputs should be 
valued. For electricity, Bayi and Emei argued that Indian electricity 
rates are aberrationally high and should be rejected in favor of 
Indonesian electricity rates. Bayi and Emei argue that Indian 
electricity rates are controlled by the state, which sets artificially 
high rates for industrial users in order to subsidize low rates for 
residential users. As evidence of the aberrational nature of Indian 
industrial rates, Bayi and Emei present the ratio of residential to 
industrial rates for India, China, the United States and other 
countries. They argue that this ratio, 0.34 for India compared with 
1.66 for Brazil and 1.69 for the United States, among others, 
demonstrates the aberrationally high nature of Indian rates. Bayi and 
Emei also submitted press reports showing the deleterious effect of 
increases in electricity rates on Indian silicomanganese producers.
    We are not persuaded by Bayi and Emei's submission that Indian 
rates should be rejected in favor of Indonesian rates. We have used 
Indian electricity rates consistently for many PRC cases, including 
products for which electricity is a major input, see e.g., Manganese 
Metal. The fact that the state controls electricity rates is not a 
basis to reject Indian rates as some degree of state control is common 
in many countries. In addition, a comparison of the ratio of industrial 
to residential rates between India and other countries is not 
necessarily meaningful for purposes of selecting sources for factor 
valuation. Each country has a unique mix of sources of electrical 
supply (e.g., Hydroelectric, Nuclear, Industrial Self-Generated) as 
well as a unique mix of users (e.g., residential, agricultural). 
Moreover, electricity is not generally a traded good. Thus, cross-
country comparisons are inappropriate for purposes of factor valuation. 
Furthermore, unless the record convincingly demonstrates that factor 
values are unreliable, the Department generally prefers to stay within 
the same country for factor valuation wherever possible because it 
leads to more consistent results than picking and choosing factor 
values from different countries. Accordingly, we continue to value 
electricity based on Indian data.
    For manganese rich slag, Eramet argued that we should consider it a 
by-product rather than a co-product. Bayi and Emei both produce 
ferromanganese (in addition to silicomanganese); this

[[Page 60787]]

production process generates manganese rich slag as a subsidiary 
product. Eramet provided invoices from a market-economy producer and a 
U.S producer showing that manganese rich slag has a significant market 
value. However, relative to the market value of ferromanganese, it 
should be considered a by-product and valued in accordance with GAAP. 
Eramet proposes valuing manganese rich slag by adjusting the price of 
manganese ore by a ratio to account for differences in manganese 
content. Eramet calculates this ratio using the above referenced 
invoices. Bayi and Emei argue that manganese rich slag is a waste 
product with no commercial value, and as such, no factor input value 
should be used for it in the NV calculations.
    We preliminarily disagree with both parties on this point. 
Manganese rich slag, used in conjunction with manganese ore, is clearly 
a major input into the production process of silicomanganese and we 
have valued it using Indian values. Moreover, the above-mentioned ratio 
is not a reliable basis for adjusting Indian Import values of manganese 
ore. See Factor Memorandum.

Preliminary Results of the Review

    We preliminarily determine that the following margins exists for 
the period December 1, 1997 through November 30, 1998:

------------------------------------------------------------------------
                                                              Margin
                  Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Guangxi Bayi Ferroalloy Works...........................           57.71
Sichuan Emei Ferroalloy Import and Export Co., Ltd......           67.97
------------------------------------------------------------------------

    Interested parties may request a hearing within 30 days of 
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 the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written briefs or at a hearing, not later than 120 
days after the date of publication of this notice.
    Upon issuance of the final results, the Department will determine, 
and Customs shall assess, antidumping duties on all appropriate entries 
for assessment purposes. Pursuant to 19 CFR 351.212(b)(1), where we 
analyze and use a company's response, we intend to calculate an 
importer-specific duty assessment rate by dividing the total amount of 
dumping margins calculated for sales to each importer by the total 
number of units of those same sales sold to that importer. The unit 
dollar amount will be assessed uniformly against each unit of 
merchandise of that specific importer's entries during the POR.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this antidumping duty 
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 
Bayi and Emei, which both have separate rates, the cash deposit rate 
will be 57.71 percent and 67.97 percent, respectively; (2) for any 
previously reviewed PRC and non-PRC exporter with a separate rate, the 
cash deposit rate will be the company- and product-specific rate 
established for the most recent period; (3) 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; and (4) the cash 
deposit rate for all other PRC exporters will continue to be 150.00 
percent, the PRC-wide rate established in the LTFV investigation. These 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.
    This notice 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 administrative review is issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: November 1, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-29203 Filed 11-5-99; 8:45 am]
BILLING CODE 3510-DS-P