[Federal Register Volume 65, Number 1 (Monday, January 3, 2000)]
[Notices]
[Pages 116-120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33962]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-853]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Bulk Aspirin From the People's Republic of China

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

EFFECTIVE DATE: January 3, 2000.

FOR FURTHER INFORMATION CONTACT: Blanche Ziv, Rosa Jeong or Ryan 
Langan, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4207, (202) 482-3853, and 
(202) 482-1279, respectively.

The 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 (``URAA''). In addition, 
unless otherwise indicated, all citations to the Department of Commerce 
(``Department'') regulations are to 19 CFR Part 351 (April 1, 1998).

Preliminary Determination

    We preliminarily determine that bulk aspirin (``aspirin'') from the 
People's Republic of China (``PRC'') is being, or is likely to be, sold 
in the United States at less than fair value (``LTFV''), as provided in 
section 733 of the Act. The estimated margins of sales at LTFV are 
shown in the ``Suspension of Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on June 23, 1999 (64 FR 
33463) (``Notice of Initiation''), the following events have occurred:
    On June 15, 1999, we received an entry of appearance by counsel on 
behalf of Jilin Pharmaceutical Co., Ltd. (``Jilin''), a producer/
exporter of the subject merchandise. On June 16, 1999, we received an 
entry of appearance by counsel on behalf of Shandong Xinhua 
Pharmaceutical Factory (``Shandong''), a producer/exporter of the 
subject merchandise
    On July 19, 1999, the United States International Trade Commission 
(``ITC'') notified the Department of its affirmative preliminary injury 
determination in this case.
    On July 26, 1999, the Department issued an antidumping 
questionnaire to the Ministry of Foreign Trade and Economic Cooperation 
(``MOFTEC''), the Embassy of the PRC, and the China Chamber of Commerce 
for Medicine and Health with instructions to forward the questionnaire 
to all producers/exporters of the subject merchandise. Also on July 26, 
1999, the Department issued the antidumping questionnaire to Jilin and 
Shandong.
    On September 3, 1999, the Department invited interested parties to 
provide publicly available information for valuing the factors of 
production and to comment on the surrogate country selection. We 
received responses on October 4, 1999, and additional comments on 
October 8 and 12, 1999.
    On August 24 and 30, and September 3 and 7, 1999, the Department 
received questionnaire responses from Jilin and Shandong. We issued 
supplemental questionnaires on September 10, 1999, to which we received 
responses on October 4, 1999.
    On October 8, 1999, pursuant to section 733(c)(1)(A) of the Act, 
Rhodia, Inc., the petitioner, made a timely request to postpone the 
issuance of the preliminary determination in this investigation. We 
granted this request and, on October 21, 1999, we postponed the 
preliminary determination until no later than December 21, 1999 (See 64 
FR 56738).
    On December 1, 1999, the petitioner submitted additional surrogate 
value information and preliminary determination comments. On December 
6, 1999, Jilin filed corrections to its reported factor data. In 
addition, between December 6 and 16, 1999, Jilin filed several 
submissions objecting to the petitioner's submission of new surrogate 
value information. Shandong provided clarifications to its reported 
factor data on December 6, 1999.

[[Page 117]]

Scope of Investigation

    For purposes of this investigation, the product covered is bulk 
acetylsalicylic acid, commonly referred to as bulk aspirin, whether or 
not in pharmaceutical or compound form, not put up in dosage form 
(tablet, capsule, powders or similar form for direct human 
consumption). Bulk aspirin may be imported in two forms, as pure ortho-
acetylsalicylic acid or as mixed ortho-acetylsalicylic acid. Pure 
ortho-acetylsalicylic acid can be either in crystal form or granulated 
into a fine powder (pharmaceutical form). This product has the chemical 
formula C9H8O4. It is defined by the 
official monograph of the United States Pharmacopoeia (``USP'') 23. It 
is classified under the Harmonized Tariff Schedule of the United States 
(``HTSUS'') subheading 2918.22.1000.
    Mixed ortho-acetylsalicylic acid consists of ortho-acetylsalicylic 
acid combined with other inactive substances such as starch, lactose, 
cellulose, or coloring materials and/or other active substances. The 
presence of other active substances must be in concentrations less than 
that specified for particular nonprescription drug combinations of 
aspirin and active substances as published in the Handbook of 
Nonprescription Drugs, eighth edition, American Pharmaceutical 
Association. This product is classified under HTSUS subheading 
3003.90.0000. Although the HTSUS subheadings are provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.

Period of Investigation

    The period of this investigation (``POI'') corresponds to each 
exporter's two most recent fiscal quarters prior to the filing of the 
petition, i.e., October 1, 1998, through March 31, 1999.

Nonmarket Economy Country Status

    The Department has treated the PRC as a nonmarket economy (``NME'') 
country in all past antidumping investigations (see, e.g., Final 
Determination of Sales at Less Than Fair Value: Creatine Monohydrate 
from the People's Republic of China, 64 FR 71104 (December 20, 1999) 
(``Creatine'') and Final Determination of Sales at Less Than Fair 
Value: Certain Preserved Mushrooms from the People's Republic of China, 
63 FR 72255 (December 31, 1998) (``Mushrooms'')). A designation as an 
NME remains in effect until it is revoked by the Department (see 
section 771(18)(C) of the Act).
    The respondents in this investigation have not requested a 
revocation of the PRC's NME status. We have, therefore, preliminarily 
determined to continue to treat the PRC as an NME.

Separate Rates

    Both Jilin and Shandong have requested separate company-specific 
rates. These companies have stated that they are privately owned 
companies with no element of government ownership or control.
    The Department's separate rate test is not concerned, in general, 
with macroeconomic/border-type controls, e.g., export licenses, quotas, 
and minimum export prices, particularly if these controls are imposed 
to prevent dumping. The test focuses, rather, on controls over the 
investment, pricing, and output decision-making process at the 
individual firm level. See Certain Cut-to-Length Carbon Steel Plate 
from Ukraine: Final Determination of Sales at Less than Fair Value, 62 
FR 61754, 61757 (November 19, 1997); Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, from the People's Republic of China: 
Final Results of Antidumping Duty Administrative Review, 62 FR 61276, 
61279 (November 17, 1997); and Honey from the People's Republic of 
China: Preliminary Determination of Sales at Less than Fair Value, 60 
FR 14725, 14726 (March 20, 1995) (``Honey'').
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of 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 modified by 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 the separate rates criteria, the 
Department assigns separate rates in NME cases only if the respondents 
can demonstrate the absence of both de jure and de facto governmental 
control over export activities.
1. Absence of De Jure Control
    The respondents have placed on the record a number of documents to 
demonstrate absence of de jure government control, including the 
``Foreign Trade Law of the People's Republic of China'' and the 
``Company Law of the People's Republic of China.''
    The Department has analyzed these laws in prior cases and found 
that they establish an absence of de jure control. (See, e.g., Final 
Determination of Sales at Less Than Fair Value: Certain Partial-
Extension Steel Drawer Slides with Rollers from the People's Republic 
of China, 60 FR 54472 (October 24, 1995); see also Mushrooms.) We have 
no new information in this proceeding which would cause us to 
reconsider this determination.
    Accordingly, we preliminarily determine that, within the aspirin 
industry, there is an absence of de jure government control over export 
pricing and marketing decisions of firms.
2. Absence of De Facto Control
    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. 
(See, e.g., Sparklers and Silicon Carbide) Therefore, the Department 
has determined that an analysis of de facto control is critical in 
determining whether respondents are, in fact, subject to a degree of 
governmental control which would preclude the Department from assigning 
separate rates.
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by, or 
subject to, the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of its management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses (see Mushrooms).
    Shandong and Jilin have each asserted the following: (1) They 
establish their own export prices; (2) they negotiate contracts without 
guidance from any governmental entities or organizations; (3) they make 
their own personnel decisions; and (4) they retain the proceeds of 
their export sales and use profits according to their business needs 
without any restrictions. Additionally, these two respondents have 
stated that they do not coordinate or consult with other exporters 
regarding their pricing. This information supports a preliminary 
finding that there is no de facto governmental control of the export 
functions of these companies. Consequently, we preliminarily determine 
that both responding exporters have met the criteria for the 
application of separate rates.
    We note that the petitioner has alleged that neither Jilin nor 
Shandong

[[Page 118]]

is sufficiently independent from state control to justify the 
calculation of separate rates. The petitioner makes various arguments 
in support of its claim that the respondents do not have independence 
with respect to pricing authority. The petitioner cites, for example, 
the PRC government's control of essential raw materials used in the 
production of aspirin and the fact that shareholders of Jilin and 
Shandong were shareholders in the companies' state-owned predecessor 
companies. We have considered the petitioner's various arguments and 
find that they do not direct us to reject the respondents' claims that 
they are entitled to separate rates. As stated above, our separate 
rates test is not concerned with broad-based macroeconomic concerns, 
but rather focuses on controls over pricing and decision-making at the 
individual firm level. The petitioner's arguments do not address the 
company-specific, day-to-day operations of Jilin and Shandong which we 
consider in making a separate rates determination.

Use of Facts Available

PRC-Wide Rate

    Information on the record of this investigation indicates that 
there may be producers/exporters of the subject merchandise in the PRC 
in addition to the companies participating in this investigation. Also, 
U.S. import statistics indicate that the total quantity of U.S. imports 
of aspirin from the PRC is greater than the total quantity of aspirin 
exported to the United States as reported by both PRC aspirin exporters 
that submitted responses in this investigation. Given this discrepancy, 
it appears that not all PRC exporters of aspirin responded to our 
questionnaire. Accordingly, we are applying a single antidumping 
deposit rate--the PRC-wide rate--to all exporters in the PRC, other 
than those specifically identified below in the ``Suspension of 
Liquidation'' section, based on our presumption that the export 
activities of the companies that failed to respond to the Department's 
questionnaire are controlled by the PRC government (see, e.g., Bicycles 
from the PRC).
    The PRC-wide antidumping rate is based on adverse facts available. 
Section 776(a)(2) of the Act provides that

if an interested party or any other person--(A) withholds 
information that has been requested by the administering authority 
or the Commission under this title, (B) fails to provide such 
information by the deadlines for submission of the information or in 
the form and manner requested, subject to subsections (c)(1) and (e) 
of section 782, (C) significantly impedes a proceeding under this 
title, or (D) provides such information but the information cannot 
be verified as provided in section 782(i), the administering 
authority and the Commission shall, subject to section 782(d), use 
the facts otherwise available in reaching the applicable 
determination under this title.

Only Jilin and Shandong have provided the information requested by the 
Department. Accordingly, the use of facts available is warranted with 
respect to all other PRC producers/exporters of aspirin.
    Section 776(b) of the Act provides that adverse inferences may be 
used when a party has failed to cooperate by not acting to the best of 
its ability to comply with a request for information. The exporters 
that decided not to respond in any form to the Department's 
questionnaire failed to act to the best of their ability in this 
investigation. Thus, the Department has determined that, in selecting 
from among the facts otherwise available, an adverse inference is 
warranted. As adverse facts available, we are assigning the highest 
margin in the petition, 144.02 percent, which is higher than any of the 
calculated margins.
    Section 776(c) of the Act provides that where the Department 
selects from among the facts otherwise available and relies on 
``secondary information,'' such as the petition, the Department shall, 
to the extent practicable, corroborate that information from 
independent sources reasonably at the Department's disposal. The 
Statement of Administrative Action accompanying the URAA, H.R. Doc. No. 
103-316 (1994) (SAA), states that ``corroborate'' means to determine 
that the information used has probative value. See SAA at 870.
    The petitioner's methodology for calculating export price (``EP'') 
and normal value (``NV'') is discussed in the Notice of Initiation. To 
corroborate the petitioner's EP calculations, we compared the prices in 
the petition for the product to the prices submitted by respondents for 
the same product in similar volumes. To corroborate the petitioner's NV 
calculations, we compared the petitioner's factor consumption and 
surrogate value data for the product to the data reported by the 
respondents for the most significant factors--chemical inputs, factory 
overhead, and selling, general, and administrative expenses 
(``SG&A'')--and the surrogate values for these factors in the petition 
to the values selected for the preliminary determination, as discussed 
below. Our analysis showed that, in general, the petitioner's data was 
reasonably close to the data submitted by the respondents and to the 
surrogate values chosen by the Department. (See memorandum to the file 
dated December 21, 1999 (``Corroboration Memo'').) Based on our 
analysis, we find that the figures and calculations set forth in the 
petition have probative value.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by Shandong 
and Jilin to the United States were made at LTFV, we compared the EP or 
constructed export price (``CEP'') to the NV, as described in the 
``Export Price'' and ``Normal Value'' sections of this notice, below. 
In accordance with section 777A(d)(1)(A)(i) of the Act, we compared 
POI-wide weighted-average EPs and CEPs to NVs.

Export Price

    For all sales made by Shandong and certain sales by Jilin, we used 
the EP methodology 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 CEP methodology 
was not otherwise appropriate. We calculated EP based on packed FOB, 
CIF or C&F prices to the first unaffiliated purchaser in the United 
States. Where appropriate, we made deductions from the starting price 
(gross unit price) for inland freight from the plant/warehouse to port 
of exit, brokerage and handling in the PRC, marine insurance and ocean 
freight. Because certain domestic brokerage and handling, marine 
insurance, and inland freight were provided by NME companies, we based 
those charges on surrogate rates from India. (See ``Normal Value'' 
section for further discussion.)

Constructed Export Price

    For certain sales by Jilin, we calculated CEP, in accordance with 
sections 772(b), (c) and (d) of the Act, because sales to the first 
unaffiliated purchaser in the United States took place after 
importation. We calculated CEP based on ex-dock, ex-warehouse, CIF or 
delivered prices to unaffiliated purchasers in the United States. Where 
appropriate, we made deductions for inland freight in the PRC, 
brokerage and handling in the PRC, ocean freight, marine insurance, 
U.S. duty, U.S. inland freight, U.S. brokerage and handling, and U.S. 
warehousing. Because certain domestic brokerage and handling, marine 
insurance, and inland freight were provided by NME companies, we based 
those charges on surrogate rates from India. (See ``Normal Value'' 
section for further discussion.) Also, where appropriate, we deducted 
direct and indirect selling expenses related to commercial activity in 
the United

[[Page 119]]

States. Pursuant to section 772(d)(3) of the Act, where applicable, we 
made an adjustment for CEP profit.

Normal Value

1. Surrogate Country
    Section 773(c)(4) of the Act requires the Department to value the 
NME producer's factors of production, to the extent possible, in one or 
more market economy countries that: (1) Are at a level of economic 
development comparable to that of the NME, and (2) are significant 
producers of comparable merchandise. The Department has determined that 
India, Pakistan, Sri Lanka, Egypt, Indonesia, and the Philippines are 
countries comparable to the PRC in terms of overall economic 
development (see memorandum from Jeff May, Director, Office of Policy, 
to Susan Kuhbach, Senior Director, AD/CVD Enforcement, Office 1, July 
13, 1999). We have further determined that India is a significant 
producer of comparable merchandise. Accordingly, we have calculated NV 
using mainly Indian values, and in some cases U.S. export values, for 
the PRC producers' factors of production. Where it was applicable and 
practicable, we have considered all information on the record, 
including data provided in the petitioner's December 1, 1999, comments.
2. Factors of Production
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by the companies in the PRC 
which produced aspirin and sold aspirin to the United States during the 
POI. Our NV calculation included amounts for materials, labor, energy, 
overhead, SG&A, and profit. To calculate NV, the reported unit factor 
quantities were multiplied by publicly available Indian and U.S. export 
price values.
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. As appropriate, we 
adjusted input prices to make them delivered prices. Where the distance 
between the material supplier and the factory was reported, we added to 
Indian CIF surrogate values a surrogate freight cost using the shorter 
of the reported distances from either the closest PRC port to the PRC 
factory, or from the domestic supplier to the factory. This adjustment 
is in accordance with the CAFC's decision in Sigma Corp. v. United 
States, 117 F. 3d 1401 (Fed. Cir. 1997). Where a producer did not 
report the distances between the material supplier and the factory, as 
facts available, we used the distance to the nearest PRC port to the 
PRC factory. For those values not contemporaneous with the POI and 
quoted in a foreign currency, we adjusted for inflation using wholesale 
price indices published in the International Monetary Fund's 
International Financial Statistics.
    (1) Material Inputs: To value acetic acid, sulfuric acid, and 
certain other inputs, we used public information from the Indian 
publication Indian Chemical Weekly (``ICW'') that corresponded with the 
POI. For caustic soda, ethyl phosphate, ammonia, corn starch, and 
certain other inputs, we relied on import prices contained in Monthly 
Statistics of the Foreign Trade of India (``MSFTI''). Phenol was valued 
using both ICW and MSFTI data. To value carbon dioxide, we used data 
from 1998 U.S. Census Bureau Export Statistics. We used a U.S. export 
value for this input because the value reported in the MSFTI was 
aberrational. For further discussion, see ``Factors of Production 
Valuation Memorandum'' dated December 21, 1999.
    (2) Labor: We valued labor using the method described in 19 CFR 
Sec. 351.408(c)(3).
    (3) Energy: To value electricity, coal and fuel oil, we used the 
rates reported in the publication Energy Prices and Taxes (1998).
    (4) Overhead, SG&A and Profit: We based factory overhead, SG&A, and 
profit on financial information relating to the Indian ``drugs and 
pharmaceuticals'' industry, as reported by the Indian Informer.
    (5) Inland Freight: To value truck freight rates, we used price 
quotes obtained by the Department from Indian truck freight companies 
in November 1999. With regard to rail freight, we based our calculation 
on price quotes obtained by the Department from an Indian rail freight 
company in November 1999.
    (6) Packing Materials: For packing materials, we used import values 
from the MSFTI.
    (7) Brokerage and Handling: To value foreign brokerage and 
handling, we relied on public information reported in the case record 
for a new shipper review of stainless wire rod from India. See Certain 
Stainless Steel Wire Rod From India; Preliminary Results of Antidumping 
Duty Administrative and New Shipper Reviews, 63 FR 48184 (Sept. 9, 
1998).
    (8) Marine Insurance: For marine insurance, we used public 
information collected for Tapered Roller Bearing and Parts Thereof, 
Finished and Unfinished, from the PRC; Final Results of 1996-1997 
Antidumping Administrative Review, 63 FR 63842, 63847 (Nov. 17, 1998) 
(``TRBs-10''), which was obtained through queries made directly to an 
international marine insurance provider.
    (9) Ocean Freight: Where the PRC producer/exporter used a market 
economy shipper and paid for the shipping in a market economy currency, 
we used the amount reported. Where the producer/exporter also reported 
that freight services were provided by a nonmarket economy carrier and/
or paid for in nonmarket economy currency, we used an average of the 
market economy values as the factor value.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all imports of subject 
merchandise from the PRC, except for subject merchandise produced and 
exported by Jilin (which has a zero weighted-average margin), that are 
entered, or withdrawn from warehouse, for consumption on or after the 
date of publication of this notice in the Federal Register. We will 
instruct the Customs Service to require a cash deposit or the posting 
of a bond equal to the weighted-average amount by which the NV exceeds 
the EP or CEP, as indicated in the chart below. These suspension of 
liquidation instructions will remain in effect until further notice.

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              percentage
------------------------------------------------------------------------
Shandong Xinhua Pharmaceutical Factory.....................        11.14
Jilin Pharmaceutical Co., Ltd./Jilin Pharmaceutical Import          0.00
 and Export Corporation....................................
PRC-wide Rate..............................................       144.02
------------------------------------------------------------------------

    The PRC-wide rate applies to all entries of the subject merchandise 
except for entries from exporters/producers that are identified 
individually above.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

[[Page 120]]

Public Comment

    Case briefs or other written comments in six copies must be 
submitted to the Assistant Secretary for Import Administration no later 
than February 18, 2000, and rebuttal briefs no later than February 23, 
2000. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, the hearing 
will be held on February 25, 2000, at the Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230. Parties 
should confirm by telephone the time, date, and place of the hearing 48 
hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination not later than 75 days after the date of the preliminary 
determination.
    This determination is issued and published in accordance with 
sections 733(d) and 777(i)(1) of the Act.

    Dated: December 21, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-33962 Filed 12-30-99; 8:45 am]
BILLING CODE 3510-DS-P