[Federal Register Volume 65, Number 46 (Wednesday, March 8, 2000)]
[Notices]
[Pages 12202-12209]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5648]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-803]


Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, From the People's Republic of China; Preliminary Results and 
Partial Recission of Antidumping Duty Administrative Reviews

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

ACTION: Notice of preliminary results and partial recission of 
antidumping duty administrative reviews of heavy forged hand tools, 
finished or unfinished, with or without handles, from the People's 
Republic of China.

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SUMMARY: The Department of Commerce (``the Department'') has 
preliminarily determined that sales by the respondents in these reviews 
covering the period February 1, 1998 through January 31, 1999, have 
been made below normal value (``NV''). If these preliminary results are 
adopted in our final results of reviews, we will instruct the U.S. 
Customs Service to assess antidumping duties on all appropriate 
entries.
    We invite interested parties to comment on these preliminary 
results.

EFFECTIVE DATE: March 8, 2000.

FOR FURTHER INFORMATION CONTACT: Lyman Armstrong or Paul Stolz, 
Antidumping/Countervailing Duty Enforcement, Office IV, Group II, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW, 
Washington, DC 20230; telephone (202) 482-3601 or (202) 482-4474, 
respectively.

SUPPLEMENTARY INFORMATION:

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, 
all references to the Department's regulations are to 19 CFR Part 351 
(April 1999).

Period of Review

    The period of review (``POR'') is February 1, 1998 through January 
31, 1999.

Background

    On February 19, 1991, the Department published in the Federal 
Register (56 FR 6622) the antidumping duty orders on heavy forged hand 
tools, finished or unfinished, with or without handles (``certain heavy 
forged hand tools'' or ``HFHTs''), from the People's Republic of China 
(``PRC''). On February 11, 1999, the Department published in the 
Federal Register (64 FR 6878) a notice of opportunity to request 
administrative reviews of these antidumping duty orders. On February 
25, 1999, four exporters of the subject merchandise requested that the 
Department conduct administrative reviews of their exports of the 
subject merchandise. Specifically, Fujian Machinery & Equipment Import 
& Export Corporation (``FMEC'') requested that the Department conduct 
administrative reviews of its exports of HFHTs within the following 
classes or kinds or merchandise identified in the scope: Axes/adzes; 
hammers/sledges; and picks/mattocks. Shandong Huarong General Group 
Corporation (``Shandong Huarong'') requested that the Department 
conduct an administrative review of its exports of HFHTs within the 
bars/wedges class or kind of merchandise. Liaoning Machinery Import & 
Export Corporation (``LMC'') requested that the Department conduct 
administrative reviews of its exports of HFHTs within the bars/wedges, 
hammers/sledges, and picks/mattocks classes or kinds of merchandise. 
Shandong Machinery Import & Export Corporation (``SMC'') requested that 
the Department conduct administrative reviews of its exports of HFHTs 
within the axes/adzes, bars/wedges, hammers/sledges, and picks/mattocks 
classes or kinds or merchandise.
    In addition, on March 1, 1999, the petitioner, O. Ames Co., 
requested that the Department conduct administrative reviews of exports 
within all four classes of subject merchandise by Tianjin Machinery 
Import & Export Corporation (``TMC''), FMEC, Shandong

[[Page 12203]]

Huarong, LMC, and SMC. The Department initiated these reviews on March 
19, 1999 (64 FR 14860 (March 29, 1999)).
    On October 28, 1999, the Department extended the time limits for 
completing the preliminary results in these proceedings until February 
28, 2000 (see 64 FR 58034 (October 28, 1999)). The Department is 
conducting these administrative reviews in accordance with section 751 
of the Act.

Partial Rescission

    In its May 28, 1999, Section A questionnaire response, Shandong 
Huarong stated that during the POR, it sold only subject merchandise 
within the bars/wedges and axes/adzes classes or kinds of merchandise. 
Moreover, Shandong Huarong stated that it produced only bars and did 
not have access to the information necessary for it to participate in 
the review of its sales of HFHTs within the axes/adzes class or kind of 
merchandise. Furthermore, Shandong Huarong requested that it be 
excluded from the review of the hammers/sledges and picks/mattocks 
classes or kinds of merchandise. Based on our review of U.S. import 
data obtained from the U.S. Customs Service (``Customs Service''), we 
are preliminarily rescinding our review of Shandong Huarong with 
respect to sales within the hammers/sledges and picks/mattocks classes 
or kinds of merchandise. As noted below, we have relied upon adverse 
facts available in determining the preliminary margin for Shandong 
Huarong's sales of HFHTs within the axes/adzes class or kind of 
merchandise. For details regarding our decision to resort to adverse 
facts available see the Adverse Facts Available section of this notice 
below.
    In its May 28, 1999, Section A questionnaire response, LMC noted 
that it sold only HFHTs within the bars/wedges class or kind of 
merchandise. Based upon our review of U.S. import data obtained from 
the Customs Service, we are preliminarily rescinding our review of LMC 
with respect to sales within the axes/adzes, hammers/sledges and picks/
mattocks classes or kinds of merchandise.

Scope of Reviews

    Imports covered by these reviews are shipments of HFHTs from the 
PRC comprising the following classes or kinds of merchandise: (1) 
hammers and sledges with heads over 1.5 kg (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools and wedges 
(bars/wedges); (3) picks/mattocks; and (4) axes/adzes.
    HFHTs include heads for drilling, hammers, sledges, axes, mauls, 
picks, and mattocks, which may or may not be painted, which may or may 
not be finished, or which may or may not be imported with handles; 
assorted bar products and track tools including wrecking bars, digging 
bars and tampers; and steel wood splitting wedges. HFHTs are 
manufactured through a hot forge operation in which steel is sheared to 
required length, heated to forging temperature, and formed to final 
shape on forging equipment using dies specific to the desired product 
shape and size. Depending on the product, finishing operations may 
include shot-blasting, grinding, polishing and painting, and the 
insertion of handles for handled products. HFHTs are currently 
classifiable under the following Harmonized Tariff Schedule (HTS) 
subheadings: 8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60. 
Specifically excluded are hammers and sledges with heads 1.5 kg (3.33 
pounds) in weight and under, hoes and rakes, and bars 18 inches in 
length and under. Although the HTS subheadings are provided for 
convenience and Customs purposes, our written description of the scope 
of these orders is dispositive.

Verification

    As provided in section 782(i) of the Act, we conducted 
verifications of the information provided by the trading companies SMC 
and TMC, as well as the information provided by their suppliers (the 
manufacturers of the subject merchandise). We used standard 
verification procedures including; on-site inspection of the 
manufacturers' facilities, examination of relevant sales and financial 
records, and selection of relevant source documentation as exhibits. 
Our verification findings are detailed in the memoranda dated February 
28, 2000, the public versions of which are on file in the Central 
Records Unit, Room B099 of the Main Commerce building (CRU-Public 
File).

Adverse Facts Available

    In accordance with section 776(a)(2) of the Act, the Department has 
determined that the use of adverse facts available is appropriate for 
purposes of determining the preliminary antidumping duty margins for 
one or more classes or kinds of subject merchandise sold by SMC, FMEC 
and Shandong Huarong. 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 the 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.

    Moreover, section 776(b) of the Act provides that;

    If the administering authority or the Commission (as the case 
may be) finds that an interested party has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information from the administering authority or the Commission, the 
administering authority or the Commission (as the case may be), in 
reaching the applicable determination under this title, may use an 
inference that is adverse to the interests of that party in 
selecting from among the facts otherwise available.

    In the instant review, SMC, FMEC and Shandong Huarong failed to 
provide certain information that was requested by the Department. In 
addition, the information that SMC provided regarding its sales of 
hammers/sledges could not be verified. For the reasons set forth in the 
following sections, we have determined that these failures warrant the 
use of adverse facts available.

SMC

Failure To Provide Requested Information
    Pursuant to requests for review by SMC and the petitioner, the 
Department requested that SMC provide sales and factors of production 
information regarding its sales of axes/adzes, bars/wedges, hammers/
sledges, and picks/mattocks. In its section A questionnaire response, 
SMC reported quantity and value information for hammers/sledges, axes/
adzes, and bars/wedges while making no mention of picks/mattocks. 
However, in its section C questionnaire response, SMC reported only 
sales of hammers/sledges. Moreover, in its December 13, 1999 
supplemental questionnaire response, SMC stated that it was not 
supplying financial statements for one of its suppliers because that 
supplier produced bars, but SMC was ``only participating in the review 
on hammers.'' On December 28, 1999, SMC submitted additional 
information which included a chart identifying the quantity and value 
of its U.S. sales of bars/wedges and axes/adzes. The company did not 
provide any explanation as to why it included sales of these classes or 
kinds of merchandise in the chart. At the

[[Page 12204]]

verification of SMC, the Department's verifiers found that, during the 
POR, SMC had, in fact, sold HFHTs to the United States within the axes/
adzes, bars/wedges, and picks/mattocks classes or kinds of merchandise, 
but failed to report these sales to the Department. Company officials 
told the verifiers that they were aware that these sales had not been 
reported and that the Department would resort to facts available in 
determining the margin for such sales. See the memorandum to The File, 
Verification of Shandong Machinery Import & Export Corporation's Sales 
Questionnaire Responses, dated February 28, 2000 (``SMC Sales 
Verification Report'').
    We issued to SMC a supplemental questionnaire notifying SMC of the 
deficiencies in its submissions and providing it with an opportunity to 
remedy these deficiencies. See the letter to SMC dated November 19, 
1999, transmitting the supplemental questionnaire. SMC failed to 
correct these deficiencies. After reviewing the record in this review, 
we have determined that the information submitted by SMC regarding 
axes/adzes and bars/wedges is so incomplete as to be unusable for 
calculating a margin. Accordingly, notwithstanding section 782(e) of 
the Act, as described below, pursuant to 776(a) of the Act, we are 
using the facts available to determine SMC's margins with respect to 
axes/adzes and bars/wedges. Furthermore, SMC's failure to report its 
sales of picks/mattocks warrants the use of facts available.
Verification Failure
    On January 17, 18, 19, and 22, 2000, the Department conducted a 
verification of SMC's questionnaire response at the company's 
headquarters in Qingdao, China. At the verification, the Department's 
verifiers required SMC to reconcile the total reported quantity and 
value of its U.S. sales to its financial records and to demonstrate the 
completeness of its reported U.S. sales. The Department notified SMC of 
these requirements in its verification agenda dated January 7, 2000. In 
that agenda, the Department requested that SMC prepare specific 
worksheets and have available certain records which the verifiers 
intended to use in order to ensure that SMC properly reported all of 
its U.S. sales of subject merchandise. See the Department's letter to 
TMC and SMC, dated January 7, 2000, transmitting the verification 
outline. However, prior to the start of the verification, SMC failed to 
prepare any of the material requested by the Department. Moreover, 
other than providing source documents, such as invoices, prior to the 
commencement of the verification, company officials had not prepared 
any other supporting documentation to demonstrate how the total 
reported quantity and value of sales reconciled to the company's 
records. Nevertheless, during the verification, the verifiers afforded 
SMC officials an opportunity to prepare worksheets reconciling the 
total reported quantity and value of the company's U.S. sales of 
hammers/sledges to its financial records \1\. However, the verifiers' 
efforts to work with company officials were seriously impaired for the 
following reasons: (1) They discovered that company accountants made 
unorthodox accounting entries that made it difficult to tie sales 
invoices to the monthly sales journal (for a detailed discussion of 
this topic, see the proprietary version of the SMC Sales Verification 
Report); (2) they found that for some U.S. sales, SMC had misreported 
the date of sale; and (3) at the verification, SMC failed to provide 
certain documentation requested by the verifiers. The verifiers' 
efforts to work with company officials and the difficulties that they 
encountered are detailed below.
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    \1\ SMC reported only U.S. sales of HFHTs within the hammers/
sledges class or kind of merchandise.
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    After discussions with company officials, the verifiers requested 
that the officials create three charts in order to reconcile total 
quantity and value: (1) a chart reconciling the sales revenue shown on 
the financial statements to the cumulative sales revenue listed for all 
of SMC's departments; (2) a chart listing the total sales revenue, by 
product, for the Hardware and Tools Department No. 2 (``HTD2''); and 
(3) a chart listing sales of both subject and non-subject hammers by 
HTD2 (the third chart was based on information from SMC's sales 
journal). However, the charts that company officials provided in 
response to this request failed to reconcile the total reported 
quantity and value of SMC's U.S. sales to its records. Company 
officials explained that the accountants routinely made certain monthly 
adjustments (the nature of which is proprietary) to the sales records 
of HTD2 which rendered the verifiers' attempts to reconcile total 
reported quantity and value unworkable (for a detailed discussion of 
this topic, see the proprietary version of the SMC Sales Verification 
Report). Furthermore, because some of these adjustments pertained to 
extended periods, it was not possible to isolate the portion of the 
adjustments that pertained solely to the POR; nor could the verifiers 
tie adjusted sales figures to SMC's questionnaire response. After it 
became apparent that SMC could not use the prepared charts to reconcile 
the total reported quantity and value to its financial statements, the 
verifiers attempted additional procedures to test the completeness and 
accuracy of SMC's reported U.S. sales using the books and records that 
were available.
    Specifically, the verifiers requested that company officials 
prepare a chart, similar to the third chart described above, except 
that it was to be based on SMC's inventory journal for HTD2. After 
affording company officials with ample time to respond to this request, 
officials provided a new quantity and value chart and attempted to 
demonstrate how it could be tied to SMC's reported sales by making 
certain adjustments. Officials offered no explanation as to why they 
did not provide the specific chart that the verifiers requested. The 
attempt to reconcile total reported quantity and value using the new 
chart was unsuccessful.
    Additionally, the attempts to reconcile total reported quantity and 
value were complicated by the fact that SMC inaccurately reported its 
date of sale methodology. In its questionnaire responses, SMC reported 
that it used the invoice date as the date of sale. However, at the 
verification, the verifiers found that SMC had, in fact, used both the 
invoice and, in some cases, a projected U.S. customs entry date, as the 
date of sale for reporting purposes.
    As a result of the difficulties outlined above, SMC was unable to 
demonstrate that it properly reported all of its U.S. sales of hammers/
sledges. The Department's antidumping analysis is based fundamentally 
on an evaluation of a respondent's U.S. selling practices. Thus, a 
complete and accurate reporting of U.S. sales is central to determining 
accurate dumping margins. Because SMC could not establish the 
completeness of its reported U.S. sales, we consider SMC to have failed 
verification.
Use of Adverse Facts Available
    As noted above, the record in this review demonstrates that SMC 
failed to report sales and factors of production information regarding 
its sales of axes/adzes, bars/wedges, and picks/mattocks and that it 
provided information regarding its sales of hammers/sledges that could 
not be verified. Therefore, pursuant to section 776(a)(2)(A) & (D) of 
the Act, we have relied upon facts available in reaching our 
preliminary results for SMC. Moreover, the fact that SMC was aware of 
its sales of HFHTs

[[Page 12205]]

within the axes/adzes, bars/wedges, and picks/mattocks classes or kinds 
of subject merchandise and that the Department readily obtained general 
information regarding the existence of such sales at the verification, 
supports our determination that SMC did not act to the best of its 
ability to report sales and factors of production information for such 
transactions. Furthermore, SMC failed to act to the best of its ability 
during the course of these reviews by failing to demonstrate the 
accuracy of its reported U.S. sales of hammers/sledges at the 
verification. Therefore, pursuant to section 776(b) of the Act, we have 
used an adverse inference in selecting facts available margins for SMC. 
Specifically, we have based SMC's preliminary margin on the highest 
margin from this or any prior segment of this proceeding. See Ferro 
Union v. United States 44 F. Supp. 2 1310 (CIT 1999) (Ferro Union).

FMEC

Failure to Provide Requested Information
    Pursuant to requests for review by FMEC and the petitioner, the 
Department requested that FMEC provide sales and factors of production 
information regarding its sales of axes/adzes, bars/wedges, hammers/
sledges, and picks/mattocks. FMEC submitted its responses to section A 
and to sections C and D of the Department's questionnaire on May 28, 
1999, and June 21, 1999, respectively. In order for the Department to 
adequately analyze FMEC's selling practices and accurately calculate 
margins for the company, we requested additional information from FMEC 
in a supplemental questionnaire dated November 19, 1999. FMEC did not 
submit a response to the Department's supplemental questionnaire. On 
December 15, 1999, FMEC informed the Department that it would not 
participate further in these administrative reviews.
    After reviewing the record in this review, we have determined that 
the information submitted by FMEC regarding axes/adzes, bars/wedges, 
hammers/sledges and picks/mattocks is so incomplete as to be unusable 
for calculating a margin. Accordingly, notwithstanding section 782(e) 
of the Act, as described below, pursuant to 776(a) of the Act, we are 
using the facts available to determine FMEC's margins with respect to 
all four classes or kinds or merchandise.
Use of Adverse Facts Available
    In accordance with section 776(a)(2)(A) of the Act, we have 
determined that FMEC's failure to respond to the Department's 
supplemental questionnaire warrants the use of facts available. 
Moreover, FMEC's failure to make any attempt to respond to the 
Department's supplemental questionnaire and its intentional withdrawal 
from this review, supports our determination that FMEC did not act to 
the best of its ability to comply with requests for information. 
Therefore, pursuant to section 776(b) of the Act, we preliminarily 
determine that FMEC is not entitled to a separate rate and will be 
subject to the PRC country-wide rates, which are based on adverse facts 
available. For further details, see the Separate Rates Determination, 
and the Adverse Facts Available and the Country-Wide Rates sections of 
this notice below.

Shandong Huarong

Failure to Provide Requested Information
    Pursuant to requests for review by Shandong Huarong and the 
petitioner, the Department requested that Shandong Huarong provide 
sales and factors of production information regarding its sales of 
axes/adzes, bars/wedges, hammers/sledges, and picks/mattocks. In its 
section A questionnaire response, Shandong Huarong stated that although 
it sold axes within the scope of the antidumping duty order, it ``does 
not have access to the required information to participate in the 
review on axes.'' Shandong Huarong never provided the Department with 
any sales or factors of production information with respect to its 
sales of axes. Moreover, Shandong Huarong never explained why it did 
not have access to information regarding axes.
    We issued to Shandong Huarong a supplemental questionnaire 
notifying Shandong Huarong of the deficiencies in its submissions and 
providing it with an opportunity to remedy these deficiencies. See the 
letter to Shandong Huarong, dated November 19, 1999, transmitting the 
supplemental questionnaire. Shandong Huarong failed to correct these 
deficiencies. After reviewing the record in this review, we have 
determined that the information submitted by Shandong Huarong regarding 
axes/adzes is so incomplete as to be unusable for calculating a margin. 
Accordingly, notwithstanding section 782(e) of the Act, as described 
below, pursuant to 776(a) of the Act, we are using the facts available 
to determine Shandong Huarong's margins with respect to axes/adzes.
Use of Adverse Facts Available
    As noted above, the record in this review shows that Shandong 
Huarong did not provide sales and factors of production information 
regarding its sales of axes/adzes. Although Shandong Huarong stated 
that it did not have access to this information, it never explained why 
this was the case. Therefore, pursuant to section 776(a)(2)(A) of the 
Act, we have relied upon facts available in reaching our preliminary 
results with respect to Shandong Huarong's sales of axes. Moreover, the 
fact that Shandong Huarong provided no evidence that it ever attempted 
to obtain from its suppliers any factors of production information 
regarding axes/adzes, supports our determination that Shandong Huarong 
did not act to the best of its ability to report information regarding 
axes/adzes. Therefore, pursuant to section 776(b) of the Act, we have 
used an adverse inference in selecting a facts available margin with 
respect to HFHT sales by Shandong Huarong within the axes/adzes class 
of kind of merchandise. Specifically, we have based Shandong Huarong's 
preliminary margin for axes/adzes on the highest margin from this or 
any prior segment of this proceeding. See Ferro Union.

Corroboration

    Section 776(c) of the Act provides that when the Department selects 
from among the facts otherwise available and relies on ``secondary 
information,'' the Department shall, to the extent practicable, 
corroborate that information from independent sources reasonably at the 
Department's disposal. The Statement of Administrative Action (SAA) 
(H.R. Doc. 103-316 (2nd Sess. 1994) states that ``corroborate'' means 
to determine that the information used has probative value. See SAA at 
870. To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. However, unlike other types of information, 
such as input costs or selling expenses, there are no independent 
sources for calculated dumping margins. The only source for margins is 
administrative determinations. Thus, in an administrative review, if 
the Department chooses as total adverse facts available a calculated 
dumping margin from a prior segment of the proceeding, it is not 
necessary to question the reliability of the margin for that time 
period. See Grain-Oriented Electrical Steel From Italy; Preliminary 
Results of

[[Page 12206]]

Antidumping Duty Administrative Review, 61 FR 36551, 36552 (July 11, 
1996). With respect to the relevance aspect of corroboration, however, 
the Department will consider information reasonably at its disposal to 
determine whether a margin continues to have relevance. Where 
circumstances indicate that the selected margin is not appropriate as 
adverse facts available, the Department will disregard the margin and 
determine an appropriate margin. For example, in Fresh Cut Flowers from 
Mexico: Final Results of Antidumping Administrative Review, 61 FR 6812 
(February 22, 1996), the Department disregarded the highest margin in 
that case as adverse best information available (the predecessor to 
facts available) because the margin was based on another company's 
uncharacteristic business expense resulting in an unusually high 
margin. Similarly, the Department does not apply a margin that has been 
discredited. See D & L Supply Co. v. United States, 113 F.3d 1220, 1221 
(Fed. Cir. 1997) (the Department will not use a margin that has been 
judicially invalidated); see also Borden Inc. v. United States, 4 F 
Supp 2d 1221, 1246-48 (CIT 1998) (the Department may not use an 
uncorroborated petition margin that is high when compared to calculated 
margins for the period of review). None of these unusual circumstances 
are present here. Accordingly, for each class or kind of HFHTs for 
which we have resorted to adverse facts available, we have used the 
highest margin from this or any prior segment of the proceeding as the 
margin for these preliminary results because there is no evidence on 
the record indicating that such margins are not appropriate as adverse 
facts available.

Separate Rates Determination

    To establish whether a company operating in a non-market economy 
(``NME'') 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 test, NMEs are entitled to separate, company-specific 
margins when 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 independent 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.
    In the final results of the 1997-1998 reviews of HFHTs, the 
Department granted separate rates to Shandong Huarong, LMC, and TMC. 
See Heavy Forged Hand Tools From the People's Republic of China; Final 
Results and Partial Recission of Antidumping Duty Administrative 
Reviews, 64 FR 43659 (August 11, 1999) (``Hand Tools''). While these 
three companies received separate rates in several previous segments of 
these proceedings, it is the Department's policy to evaluate separate 
rates questionnaire responses each time a respondent makes a separate 
rates claim, regardless of any separate rate the respondent received in 
the past. See Manganese Metal From the People's Republic of China, 
Final Results and Partial Recission of Antidumping Duty Administrative 
Review, 63 FR 12441 (March 13, 1998). In the instant reviews, these 
companies submitted complete responses to the separate rates section of 
the Department's questionnaire. The evidence submitted in these reviews 
by Shandong Huarong, LMC, and TMC included government laws and 
regulations on corporate ownership, business licences, and narrative 
information regarding the companies' operations and selection of 
management. This evidence is consistent with the Department's findings 
in previous reviews and supports a finding that control of companies in 
the PRC has been decentralized and that the respondent companies' 
operations are, in fact, autonomous from the PRC government. We 
therefore preliminarily determine that these companies continue to be 
entitled to separate rates.
    With respect to FMEC, since it terminated its participation in this 
review and we were not able to verify the information the company 
submitted, we preliminarily determine that FMEC did not establish its 
entitlement to a separate rate.
    SMC failed verification in the 1997-1998 administrative review and 
did not establish its entitlement to a separate rate in that review. 
See Hand Tools at 64 FR 43659. Although, as noted above, we were unable 
to verify SMC's U.S. sales information, in this review we were able to 
verify SMC's separate rates information. At the verification of SMC, we 
examined SMC's complete separate rates questionnaire response including 
provincial government documents regarding SMC's relationship with the 
PRC government, SMC's export licence, and records regarding SMC's 
owners, management selection process, price setting practices, 
disposition of corporate profits, and use of foreign currency receipts. 
We found no evidence of de facto government control. See SMC Sales 
Verification Report. Thus, based on this finding and record evidence of 
no de jure government control of export activities, we preliminarily 
determine that SMC is entitled to a separate rate.

Adverse Facts Available and the Country-Wide Rates

    The Department has determined that the use of facts available is 
appropriate for purposes of establishing the country-wide rate for 
these preliminary results of reviews, pursuant to section 776(a)(2)(B) 
of the Act. The Act provides that the administering authority shall use 
facts otherwise available when an interested party ``fails to provide 
such information by the deadlines for the submission of the information 
or in the form and manner requested.'' On April 19, 1999, the 
Department sent a questionnaire to the Ministry of Foreign Trade and 
Economic Cooperation (``MOFTEC'') in order to collect information 
relevant to the calculation of the PRC-wide rate. MOFTEC did not 
respond to our questionnaire.
    Section 776(b) of the Act authorizes the Department to use adverse 
facts available whenever it finds that an interested party has failed 
to cooperate by not acting to the best of its ability to comply with 
the Department's requests for information. Because MOFTEC did not 
respond to our questionnaire or direct us to send the questionnaire to 
any other party, and because FMEC

[[Page 12207]]

terminated its participation in this review, we determine that the PRC-
wide entity did not cooperate to the best of its ability with our 
requests for information. Because of the failure of MOFTEC to respond 
to our questionnaire and FMEC's failure to respond fully to our 
questionnaire, we lack data necessary to calculate a PRC-wide rate. 
Therefore, pursuant to section 776(b) of the Act, we are relying on 
adverse facts available to determine the margin for the PRC-wide 
entity, which includes FMEC. As outlined in section 776(b) of the Act, 
adverse facts available may include reliance on information derived 
from: (1) the petition; (2) a final determination in the investigation; 
(3) any previous review under section 751 of the Act or determination 
under section 753 of the Act; or (4) any other information placed on 
the record. When applicable, for each segment of these proceedings we 
have used as adverse facts available for the PRC-wide rate the highest 
rate from the current or previous segments of these proceedings. The 
PRC-wide rates from the most recently completed review are the highest 
rates from any segment of these proceedings for bars/wedges (47.88 
percent) and hammers/sledges (27.71 percent). The calculated rates from 
these current reviews are the highest rates from any segment of these 
proceedings for axes/adzes (51.52 percent) and picks/mattocks (138.78 
percent). As noted under the Corroboration section above, we have 
determined that these margins are appropriate to use as adverse facts 
available.

Export Price

    In accordance with section 772(a) of the Act, the Department 
calculated an export price (``EP'') for sales to the United States 
because the first sale was made before the date of importation and the 
use of constructed export price was not otherwise warranted. When 
appropriate, we made deductions from the selling price to unaffiliated 
parties for ocean freight, marine insurance, foreign brokerage and 
handling, and foreign inland freight. Each of these services, with one 
exception, was either provided by a NME vendor or paid for using a NME 
currency. Thus, we based the deduction for these movement charges on 
surrogate values (see the discussion regarding companies located in NME 
countries and the Department's selection of a surrogate country in the 
Normal Value section of this notice). The one exception referred to 
above concerns TMC and LMC, which reported that a market economy vendor 
provided ocean freight for a small portion of their U.S. sales and that 
they paid for this service using a market economy currency. Therefore, 
for these sales, we used the reported market economy ocean freight 
expense in calculating EP.
    For TMC's and LMC's other sales, and for the other respondents, we 
valued ocean freight using the official tariff rates published for hand 
tools by the Federal Maritime Commission. When possible, we used the 
rates for 20 and 40 foot container shipments between the ports reported 
in the respondents' Bills of Lading. If port-specific rates were not 
available, we used the regional rates calculated in the Final 
Determination of Sales at Less Than Fair Value: Brake Drums and Brake 
Rotors From the People's Republic of China, 62 FR 9160 (February 28, 
1997) (``Brake Drums and Brake Rotors''). In order to use these rates 
in our calculations, it was necessary to convert the per-container 
rates into per-metric ton rates by dividing the container rate by 18 
metric tons. This conversion factor was used in the two most recently 
completed reviews of HFHTs. We valued marine insurance using the rate 
in effect in India which was reported in the public version of the 
questionnaire response placed on the record in Stainless Steel Wire Rod 
From India; Final Results of Administrative Review, 63 FR 48184 
(September 9, 1998) (``India Wire Rod''). We valued foreign brokerage 
and handling using the rate reported in the questionnaire response in 
India Wire Rod. The sources used to value foreign inland freight are 
identified below in the Normal Value section of this notice.
    To account for inflation or deflation between the time period that 
the freight, brokerage, and insurance rates were in effect and the POR, 
we adjusted the rates using the wholesale price indices (``WPI'') for 
India as published in the International Monetary Fund's (``IMF'') 
publication, International Financial Statistics. For further discussion 
of the surrogate values used in these reviews, see Memorandum From the 
Team Regarding Surrogate Values Used for the Preliminary Results of the 
Eighth Administrative Reviews of Certain Heavy Forged Hand Tools From 
the People's Republic of China, (February 28, 2000), (``Surrogate Value 
Memorandum''), which is on file in the CRU-Public File.

Normal Value

    For exports from NMEs, section 773(c)(1) of the Act provides that 
the Department shall determine NV using a factors of production 
methodology if (1) the subject merchandise is exported from an NME 
country, and (2) available information does not permit the calculation 
of NV using home-market prices, third-country prices, or constructed 
value. Section 351.408 of the Department's regulations sets forth the 
Department's methodology for calculating the NV of merchandise from NME 
countries. In every case conducted by the Department involving the PRC, 
the PRC has been treated as an NME. Since none of the parties to these 
proceedings contested such treatment in these reviews, we calculated NV 
in accordance with section 773(c) of the Act and section 351.408 of the 
Department's regulations.
    In accordance with section 773(c)(3) of the Act, the factors of 
production (``FOP'') utilized in producing HFHTs \2\ include, but are 
not limited to: (A) hours of labor required; (B) quantities of raw 
materials employed; (C) amounts of energy and other utilities consumed; 
and (D) representative capital costs, including depreciation. In 
accordance with section 773(c)(4) of the Act, the Department valued the 
FOP, to the extent possible, using the costs of the FOP in a market 
economy that is (A) at a level of economic development comparable to 
the PRC, and (B) a significant producer of comparable merchandise. We 
determined that India is comparable to the PRC in terms of per capita 
gross national product, the growth rate in per capita income, and the 
national distribution of labor. Furthermore, India is a significant 
producer of comparable merchandise. For further discussion of the 
Department's selection of India as the surrogate country, see the 
Memorandum From Jeff May, Director, Office of Policy, to Thomas 
Futtner, Acting Office Director, AD/CVD Enforcement Group II, dated 
December 8, 1999, which is on file in the CRU-Public File.
---------------------------------------------------------------------------

    \2\ We adjusted the reported factors based on verification 
findings, see Calculation Memo.
---------------------------------------------------------------------------

    In accordance with section 773(c)(1) of the Act, for purposes of 
calculating NV, when possible, we valued FOP using surrogate values 
that were in effect during the POR. Surrogate values that were in 
effect during periods other than the POR were adjusted, as appropriate, 
to account for inflation or deflation between the effective period and 
the POR. We calculated the inflation or deflation adjustments for all 
factor values, except labor, using the wholesale price indices for 
India that were reported in the IMF's publication, International 
Financial Statistics. We valued the FOP as follows:
    (1) We valued direct materials used to produce HFHTs (i.e., steel, 
steel scrap, paint, and anti-rust oil) and the steel scrap generated 
from the production of

[[Page 12208]]

HFHTs using the rupee per metric ton or rupee per kilogram value of 
imports that entered India during the period February through August 
1998 as published in the Monthly Statistics of the Foreign Trade of 
India, Volume II-- Imports (``Indian Import Statistics'').
    (2) We valued labor using a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3). This rate is identified on the 
Import Administration's web site (See www.ita.doc.gov/import__admin/
records/).
    (3) We derived ratios for factory overhead, selling, general and 
administrative (``SG&A'') expenses, and profit using information 
reported for 1992-1993 in the January 1997 Reserve Bank of India 
Bulletin. From this information, we were able to calculate factory 
overhead as a percentage of direct materials, labor, and energy 
expenses; SG&A expenses 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 expenses.
    (4) We valued packing materials, including cartons, pallets, iron 
straps, anti-damp paper, anti-rust paper, plastic strips, iron knots, 
plastic bags, iron wire, and metal clips, using the rupee per metric 
ton or rupee per kilogram value of imports that entered India during 
the period February through August 1998 as published in Indian Import 
Statistics. We valued hessian cloth (a packing material) using the 
rupee per kilogram value of imports that entered India during the 
period April through July 1998 as published in Indian Import 
Statistics.
    (5) We valued coal using the price of steam coal in India in 1996 
as reported in the International Energy Agency's publication, Energy 
Prices and Taxes, Second Quarter 1999 (``EPT'').
    (6) We valued electricity using the 1997 Indian electricity prices 
for industrial use as reported in EPT.
    (7) We used the following sources to value truck and rail freight 
services incurred to transport direct materials, packing materials, and 
coal from the suppliers of the inputs to the factories producing HFHTs:
    Truck Freight: If a respondent used its own trucks to transport 
material or subject merchandise, we valued freight services using the 
average cost of operating a truck, which we calculated from information 
published in The Times of India on April 24, 1994. If a respondent did 
not use its own trucks or the respondent did not state that it used its 
own trucks, we valued freight services using the rates reported in an 
August 1993 cable from the U.S. Embassy in India to the Department. See 
Final Determination of Sales at Less Than Fair Value: Certain Helical 
Spring Lock Washers from the People's Republic of China, 58 FR 48833 
(September 20, 1993).
    Rail Freight: We valued rail freight services using the April, 1995 
rates published by the Indian Railway Conference Association. These 
rates were used in Brake Drums and Brake Rotors. For further discussion 
of the surrogate values used in these reviews, see Surrogate Value 
Memorandum, dated February 28, 2000, which is on file in the CRU-Public 
File.

Preliminary Results of the Reviews

    As a result of our reviews, we preliminarily determine that the 
following margins exist for the period February 1, 1998 through January 
31, 1999:

------------------------------------------------------------------------
                                                                 Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Shandong Huarong General Group Corporation:
    Axes/Adzes...............................................      51.52
    Bars/Wedges..............................................      27.29
Liaoning Machinery Import & Export Corporation: Bars/Wedges..      20.23
Tianjin Machinery Import & Export Corporation:
    Axes/Adzes...............................................      51.52
    Bars/Wedges..............................................      43.99
    Hammers/Sledges..........................................      26.38
    Picks/Mattocks...........................................     138.78
Shandong Machinery Import & Export Corporation:
    Axes/Adzes...............................................      51.52
    Bars/Wedges..............................................      47.88
    Hammers/Sledges..........................................      27.71
    Picks/Mattocks...........................................     138.78
PRC-wide rates:
    Axes/Adzes...............................................      51.52
    Bars/Wedges..............................................      47.88
    Hammers/Sledges..........................................      27.71
    Picks/Mattocks...........................................     138.78
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 10 days of 
the date of announcement of these preliminary results, in accordance 
with 19 CFR 351.224. Any interested party may request a hearing within 
30 days of publication of this notice, in accordance with 19 CFR 
351.310(c). Any hearing, if requested, will be held 37 days after the 
publication of this notice, or the first workday thereafter. Interested 
parties may submit written comments (case briefs) within 30 days of the 
date of publication of this notice, in accordance with 19 CFR 
351.309(c)(1)(ii). Rebuttal comments (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. The 
Department will publish a notice of the final results of these 
administrative reviews, which will include the results of its analysis 
of issues raised by the parties, within 120 days of publication of 
these preliminary results.
    The final results of these reviews shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
these reviews and for future deposits of estimated duties.

Duty Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Pursuant to 19 
CFR 351.212(b)(1), we have calculated importer-specific ad valorem duty 
assessment rates based on the ratio of the total amount of the dumping 
margins calculated for the examined sales to the total entered value of 
those same sales. In order to estimate the entered value, we subtracted 
international movement expenses from the gross sales value. For those 
respondents or classes or kinds of merchandise with margins based on 
facts available, we based the importer-specific assessment rates on the 
facts available margin percentages. These importer-specific rates will 
be assessed uniformly on all entries of each importer that were made 
during the POR. In accordance with 19 CFR 351.106(c)(2), we will 
instruct the Customs Service to liquidate without regard to antidumping 
duties any entries for which the assessment rate is de minimis, i.e., 
less than 0.5 percent. The Department will issue appraisement 
instructions directly to the Customs Service.

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
publication of the final results of these administrative reviews for 
all shipments of HFHTs from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date of this 
notice, as provided for by section 751(a)(1) of the Act: (1) The cash 
deposit rates for the reviewed companies named above which have 
separate rates (Shandong Huarong, LMC, SMC and TMC) will be the rates 
for those firms established in the final results of these 
administrative reviews for the classes or kinds of merchandise listed 
above; (2) for any previously reviewed PRC or non-PRC exporter with a 
separate rate, the cash deposit rates will be the company-specific 
rates established for the most recent period; (3) for all other PRC 
exporters, the cash deposit rates will be the PRC-wide rates 
established in the

[[Page 12209]]

final results of these reviews; and (4) the cash deposit rates for non-
PRC exporters of subject merchandise from the PRC will be the rates 
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 reviews.

Notification of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f)(2) of the Department's 
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 this determination in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: February 28, 2000.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-5648 Filed 3-7-00; 8:45 am]
BILLING CODE 3510-DS-P