[Federal Register Volume 65, Number 51 (Wednesday, March 15, 2000)]
[Notices]
[Pages 13944-13947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6401]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-501]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review: Natural Bristle Paintbrushes and Brush Heads From the People's 
Republic of China

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

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on natural bristle 
paintbrushes and brush heads (paintbrushes) from the People's Republic 
of China (``PRC'') in response to requests by petitioner, the Paint 
Applicator Division of the American Brush Manufacturers Association 
(``the Paint Applicator Division''), and one of the respondents, Hebei 
Animal By-Products Import and Export Corporation (``HACO''). This 
review covers the period February 1, 1998, through January 31, 1999 
(POR).
    We have preliminarily determined that sales have been made below 
normal value (``NV'') by one of the companies subject to this review. 
If these preliminary results are adopted in our final results, we will 
instruct the U.S. Customs Service to assess antidumping duties equal to 
the difference between export price (``EP'') and NV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: March 15, 2000.

FOR FURTHER INFORMATION CONTACT: Sarah Ellerman, Mark Hoadley, or 
Maureen Flannery, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-
4106, (202) 482-0666, and (202) 482-3020, respectively.

Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``the Act''), are to the provisions effective January 
1, 1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act. In addition, unless otherwise indicated, 
all citations to the Department's regulations are to 19 CFR part 351 
(1999).

[[Page 13945]]

Background

    On February 14, 1986, the Department published in the Federal 
Register (51 FR 5580) an antidumping duty order on paintbrushes from 
the PRC. On February 11, 1999, the Department published in the Federal 
Register (64 FR 6878) a notice of opportunity to request an 
administrative review of the antidumping duty order on paintbrushes 
from the PRC covering the period February 1, 1998, through January 31, 
1999.
    On February 26, 1999, in accordance with 19 CFR 351.213(b)(1), 
petitioner, the Paint Applicator Division, requested that we conduct an 
administrative review of Hunan Provincial Native Produce and Animal By-
Products Import and Export Corporation (``Hunan''). HACO submitted a 
request on February 23, 1999, that its entries be reviewed. 
Accordingly, we published a notice of initiation of this antidumping 
duty administrative review on March 29, 1999 (64 FR 14860). The 
Department is conducting this administrative review in accordance with 
section 751 of the Act.

Scope of Review

    Imports covered by this review are shipments of natural bristle 
paint brushes and brush heads from the PRC. Excluded from the review 
are paint brushes and brush heads with a blend of 40% natural bristles 
and 60% synthetic filaments. The merchandise under review is currently 
classifiable under item 9603.40.40.40 of the Harmonized Tariff Schedule 
of the United States (HTSUS). Although the HTSUS subheading is provided 
for convenience and customs purposes, the Department's written 
description of the merchandise is dispositive.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by HACO, Hunan, and their suppliers by using standard 
verification procedures, including on-site inspection of the 
manufacturers' facilities, the examination of relevant sales and 
financial records, and the selection of original documentation 
containing relevant information. Our verification results are outlined 
in public and proprietary versions of the verification reports.

Successorship to HACO

    The record indicates that HACO has merged with two other companies 
to form Hebei Founder Import and Export Company (Founder). In 
determining whether one company is the successor to another for 
purposes of applying the antidumping duty law, the Department examines 
a number of factors including, but not limited to, changes in: (1) 
Management, (2) production facilities, (3) suppliers, and (4) customer 
base. See, e.g., Brass Sheet and Strip from Canada; Final Results of 
Antidumping Duty Administrative Review, 57 FR 20460 (May 13, 1992); 
Steel Wire Strand for Prestressed Concrete from Japan; Initiation and 
Preliminary Results of Changed Circumstances Antidumping Duty 
Administrative Review, 55 FR 7759 (March 5, 1990); and Industrial 
Phosphoric Acid From Israel; Final Results of Antidumping Duty Changed 
Circumstances Review, 59 FR 6944 (February 14, 1994).
    While examining these factors alone will not necessarily provide a 
dispositive indication of succession, the Department will generally 
consider one company to have succeeded another if its operations are 
essentially inclusive of the alleged predecessor's. See Brass Sheet and 
Strip from Canada; Final Results of Antidumping Duty Administrative 
Review, 55 FR 20460, 20461 (May 13, 1992). Thus, if the evidence 
demonstrates, with respect to the production and sale of the subject 
merchandise, that the new company operates as the same business entity 
as the former company, the Department will assign the new company the 
cash deposit rate of its predecessor.
    At verification, we confirmed that HACO had been combined with two 
other Chinese companies in December 1998 to form Founder. HACO no 
longer exists as a separate entity, and is now a department within 
Founder. We verified this fact by examining Founder's financial 
statements and paintbrush catalogs, and by discussing the matter with 
Founder personnel and former personnel of HACO. (For a more complete 
discussion, see the Memorandum to the File from Mark Hoadley and Sarah 
Ellerman; 1998-1999 Administrative Review of Natural Bristle 
Paintbrushes and Brush Heads from the People's Republic of China (A-
570-501) Sales Verification Report of Founder Import and Export 
Company, dated February 28, 2000. These former employees of HACO are 
now employed by Founder, which can be seen by comparing the verified 
organizational charts from the current review period with those of the 
previous review period. Furthermore, Founder's supplier and U.S. 
purchasers of subject merchandise are the same as HACO's, which can be 
seen by comparing the verified response of the current review with the 
verification report from the previous review period. For more 
information, see the proprietary version of Memorandum to the File from 
Sarah Ellerman; Inclusion Memo, dated February 28, 2000. Therefore, we 
preliminarily determine that Founder is the successor to HACO for 
purposes of this proceeding, and refer to the former HACO as Founder 
for the remainder of this notice.

Separate Rates

    To establish whether a respondent operating in a state-controlled 
economy is sufficiently independent to be entitled to a separate rate, 
the Department analyzes each respondent under the test established in 
Final Determination of Sales at Less Than Fair Value: Sparklers from 
the People's Republic of China, 56 FR 20588 (May 6, 1991) 
(``Sparklers''), and further defined in 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, exporters in non-market economies (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 the 
following: (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.
    De facto absence of government control over exports is based on 
four factors: (1) Whether each exporter sets its own export prices 
independently of the government and without the approval of a 
government authority; (2) whether each exporter retains the proceeds 
from its sales and makes independent decisions regarding the 
disposition of profits or financing of losses; (3) whether each 
exporter has the authority to negotiate and sign contracts and other 
agreements; and (4) whether each exporter has autonomy from the 
government regarding the selection of management.
    With respect to the absence of de jure government control over 
export activities, evidence on the record indicates that both Founder 
and Hunan operate under the ``Law of the People's Republic of China on 
Industrial Enterprises Owned by the Whole People'' (``WPE Law''). The 
WPE Law gives qualifying enterprises such rights as the right to act on 
their own behalf, adopt independent accounting methods, assume the sole 
responsibility for their

[[Page 13946]]

profits and losses, make their own managerial decisions, negotiate and 
set their own prices, and elect their own management. (See Exhibit 6B 
of Founder's July 14, 1999, questionnaire response and Exhibit 3 of 
Hunan's May 12, 1999, questionnaire response.)
    With respect to the absence of de facto control over export 
activities, the management of both Founder and Hunan is elected by 
company personnel, and we found no evidence at verification that either 
company made operating decisions under government constraint, but 
substantial evidence that the two companies make operating decisions 
regarding prices, products, and customers independently of government 
interference. See Separate Rates Analysis in the Administrative Review 
of Hebei Animal By-Products Import and Export Corporation; Natural 
Bristle Paintbrushes and Brush Heads from the People's Republic of 
China (Separate Rates Memorandum Founder) regarding Founder, and 
Separate Rates Analysis in the Administrative Review of Hunan 
Provincial Import and Export Corporation; Natual Bristle Paintbrushes 
and Brush Heads from the People's Republic of China (Separate Rates 
Memorandum Hunan) regarding Hunan, both dated February 28, 2000, and 
public versions of the verification reports, on file in the Central 
Records Unit (room B-099 of the Main Commerce Building).
    Because evidence on the record demonstrates an absence of 
government control, both in law and in fact, over respondents' export 
activities, the Department preliminarily grants Founder and Hunan 
separate rates.

Date of Sale

    Hunan reported the invoice date as the date of sale. We have 
selected a date of sale other than the invoice date for Hunan. For more 
information, see Memorandum to the File from Sarah Ellerman; Analysis 
of Hunan Provincial Product & Animal By-Product Import & Export Corp. 
(Hunan) for the Preliminary Results of Review of Natural Bristle 
Paintbrushes and Brush Heads from the People's Republic of China, dated 
February 28, 2000.

United States Price

    For sales made by Founder and Hunan, we based United States price 
on EP, in accordance with section 772(a) of the Act, because the 
subject merchandise was sold to unrelated purchasers in the United 
States prior to importation into the United States, and constructed 
export price was not otherwise warranted by the facts on the record.
    We calculated export price based on the price to these unrelated 
purchasers. For Founder, we deducted amounts for domestic inland 
freight because we were unable to verify that the U.S. customer paid 
for this expense. For Hunan, we also deducted amounts for inland 
freight.

Normal Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine NV using a factors-of-
production methodology if: (1) The 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 under section 773(a) of the Act.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. Pursuant to 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. Accordingly, we have applied 
surrogate values to factors of production to determine NV in accordance 
with section 773(c)(4) of the Act and section 351.408(c) of our 
regulations.
    We have determined that Indonesia is: (1) Comparable to the PRC in 
terms of level of economic development; and (2) is a significant 
producer of comparable merchandise. See Memorandum to the File, Natural 
Bristle Paint Brushes from the People's Republic of China--icant 
Production in Indonesia of Comparable Merchandise and Memorandum to Ed 
Yang from Jeff May, Director, Office of Policy, Natural Bristle 
Paintbrushes and Brush Heads: Nonmarket Economy Status and Surrogate 
Country Selection, dated March 26, 1999. Therefore, for this review, we 
have used publicly available information relating to Indonesia to value 
the various factors of production.
    We valued the factors of production as follows:
    For brush handles, bristles, epoxy, wood, nails, tin plate, and 
packing materials, we used per kilogram values, given in U.S. dollars, 
obtained from Indonesia's Foreign Trade Statistical Bulletin (Biro 
Pusat Statistik). Because statistics were not available for the entire 
POR, we adjusted these values for inflation. We calculated surrogate 
freight costs for these factors using the shorter of (a) the distance 
between the closest PRC port and the factory, or (b) the distance 
between the domestic supplier and the factory. See Notice of Final 
Determination of Sales at Less Than Fair Value: Collated Roofing Nails 
From the People's Republic of China, 62 FR 51410 (October 1, 1997) 
(Roofing Nails). For Founder, we used a publicly available rate for 
wooden core submitted in the current review. For more information, see 
Memorandum to Maureen Flannery from Sarah Ellerman; 1998-1999 
Antidumping Administrative Review of Natural Bristle Paintbrushes and 
Brush Heads from the People's Republic of China: Factors Values 
Memorandum, dated February 28, 2000.
    For labor, we used the PRC regression-based wage rate at Import 
Administration's homepage, Import Library, Expected Wages of Selected 
NME Countries, revised on June 2, 1997. See http://www.ita.doc.gov/
import__admin/records/wages. Because of the variability of wage rates 
in countries with similar per capita gross domestic products, section 
351.408(c)(3) of the Department's regulations requires the use of a 
regression-based wage rate. The source of these wage rate data on the 
Import Administration's web page is found in the 1996 Year Book of 
Labour Statistics, International Labour Office (Geneva: 1996), Chapter 
5B: Wages in Manufacturing.
    For factory overhead, selling, general and administrative expenses 
(SG&A), and profit, we used data provided by respondent Hunan, in a 
previous review, from the Large and Medium Manufacturing Statistics: 
1995, Vol. II, published by the Indonesian Bureau of Statistics. See 
Hunan's submission dated July 28, 1997, which was placed on the record 
of this review. This source provides a cost breakdown for large and 
medium sized manufacturers of hand tools and cutlery, and was also used 
in Roofing Nails. See 62 FR at 51410. We calculated factory overhead as 
a percentage of the total cost of manufacture. We calculated an SG&A 
rate by dividing SG&A expenses by the cost of manufacture. Lastly, we 
calculated a profit rate by dividing profit by the cost of production.
    To value electricity, we used a value from A Brief Guide for 
Investors: 1995, published by the Indonesian Government's Investment 
Coordinating Board. We adjusted this value to reflect inflation through 
the end of the POR using the Indonesian wholesale price index (WPI) 
published by the International Monetary Fund (IMF). We then converted 
this figure to dollars using the Federal Reserve Bank's certified 
exchange rate on the date of sale.

[[Page 13947]]

    To value truck freight, we used the rates reported in a September 
1991 cable from the U.S. Consulate in Indonesia submitted for the Final 
Determination of Sales at Less Than Fair Value: Certain Carbon Steel 
Butt-Weld Pipe Fittings from the People's Republic of China, 58 FR 
47859 (Sep. 20, 1993), which was placed on the record of this review. 
We adjusted these rates to reflect inflation through the end of the POR 
using Indonesian WPI published by the IMF.

Currency Conversion

    We made currency conversions in accordance with section 773A of the 
Act based on the rates certified by the Federal Reserve Bank.

Preliminary Results of Review

    We preliminarily determine that the following dumping margins 
exist:

------------------------------------------------------------------------
                                                                Margin
        Manufacturer/exporter              Time period        (percent)
------------------------------------------------------------------------
Hebei Founder Import and Export       02/01/98-01/31/99....         4.18
 Corp., also known as: Hebei Animal
 By-Products Import and Export
 Corporation.
Hunan Provincial Native Produce &     02/01/98-01/31/99....         0.00
 Animal By-Products I/E Corp.
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 10 days of 
the date of publication of this notice in accordance with 19 CFR 
351.224(b). Any interested party may request a hearing within 30 days 
of publication 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 case 
briefs within 30 days of the date of publication of this notice in 
accordance with 19 CFR 351.309(b)(2)(ii). 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. The Department will publish 
a notice of final results of this administrative review, which will 
include the results of its analysis of issues raised in any such 
comments.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b), we calculated importer-specific duty assessment 
rates based on the ratio of the total amount of antidumping duties 
calculated for the examined sales to quantity of the sales used to 
calculate those duties. This rate will be assessed uniformly on all 
entries of that particular importer for that class or kind of 
merchandise made during the POR. The Department will issue appraisement 
instructions directly to the U.S. Customs Service.
    Furthermore, the following deposit rate will be effective upon 
publication of the final results of this administrative review for all 
shipments of paintbrushes from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(2)(C) of the Act: (1) The cash deposit 
rate for the reviewed firms will be the rates established in the final 
results of this review (except that no deposit will be required for 
firms with de minimis margins, i.e., margins less than 0.5 percent); 
(2) for previously-reviewed PRC and non-PRC exporters with separate 
rates, the cash deposit rate will be the company-specific rate 
established for the most recent period; (3) for all other PRC 
exporters, the rate will be the PRC-wide rate, which is 351.92 percent; 
and (4) for all other non-PRC exporters of subject merchandise from the 
PRC, the cash deposit rate will be the rate applicable to the PRC 
supplier of that exporter.
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 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 and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.213 
and 351.221.

    Dated: February 28, 2000.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-6401 Filed 3-14-00; 8:45 am]
BILLING CODE 3510-DS-P