[Federal Register Volume 65, Number 89 (Monday, May 8, 2000)]
[Notices]
[Pages 26570-26573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11462]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-806]


Electrolytic Manganese Dioxide From Japan: Preliminary Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: Based on a request by a Japanese producer, Tosoh Corporation, 
the Department of Commerce is conducting an administrative review of 
the antidumping duty order on electrolytic manganese dioxide from 
Japan.
    We have preliminarily determined that sales by Tosoh Corporation 
have not been made below normal value. If these preliminary results are 
adopted in our final results of administrative review, we will instruct 
Customs to liquidate without regard to antidumping duties all entries 
of EMD from Tosoh Corporation during the period of review.
    We invite interested parties to comment on these preliminary 
results. Parties who submit comments in this proceeding are requested 
to submit with each argument (1) a statement of the issue and (2) a 
brief summary of the argument.

EFFECTIVE DATE: May 8, 2000.

FOR FURTHER INFORMATION CONTACT: Larry Tabash or Richard Rimlinger, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, Washington, D.C. 20230; telephone: (202) 482-
5047 or (202) 482-4477, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    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's (the 
Department's) regulations are to 19 CFR Part 351 (1999).

Background

    On April 17, 1989, the Department published in the Federal Register 
(54 FR 15243) the antidumping duty order on electrolytic manganese 
dioxide (EMD) from Japan. On June 30, 1999, the Department published a 
notice of initiation of administrative review in accordance with 19 CFR 
351.213(b). The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of Review

    Imports covered by this review are sales of EMD from Japan. EMD is 
manganese dioxide (MnO2) that has been refined in an electrolysis 
process. The subject merchandise is an intermediate product used in the 
production of dry-cell batteries. EMD is sold in three physical forms, 
powder, chip or plate, and two grades, alkaline and zinc-chloride. EMD 
in all three forms and both grades is included in the scope of the 
order. This merchandise is currently classifiable under item number 
2820.10.0000 of the Harmonized Tariff Schedule (HTSUS) of the United 
States. The HTSUS number is provided for convenience and customs 
purposes. It is not determinative of the products subject to the order. 
The written product description remains dispositive.

Period of Review

    The period of review (POR) is April 1, 1998, through March 31, 
1999.

Product Comparisons

    Two product-comparison issues arose prior to the completion of 
these preliminary results. First, the sub-types of alkaline-grade EMD 
Tosoh sold in the home market and a sub-type of alkaline-grade EMD 
Tosoh sold to the United States varied by physical characteristics such 
as moisture, mesh, and particle size.
    Tosoh provided in its questionnaire response a product-matching 
table identifying the various sub-types of alkaline-grade EMD it sold 
in the home market and to the United States. In its July 21, 1999, 
submission, the respondent stated that the sub-type of alkaline-grade 
EMD it sold to the United States was not sold in the home market during 
the POR and that the Department should match the sub-type sold in the 
United States to the closest sub-type of alkaline-grade EMD sold in the 
home market. Kerr-McGee Chemical LLC and Chemetals Inc. (collectively 
``the petitioners'') responded that the Department should disregard the 
respondent's proposed product-matching criteria and base normal value 
of EMD exported to the United States on all sales of alkaline-grade EMD 
in the home market because, they argue, it is the Department's practice 
to base model-matching schemes only on

[[Page 26571]]

physical differences that are shown to be ``commercially meaningful.''
    In the original less-than-fair-value (LTFV) investigation and 
previous administrative reviews of this order, we grouped EMD into the 
following three categories for purposes of model-matching: (1) 
Alkaline-grade EMD in powdered form, (2) zinc-chloride-grade EMD in 
powdered form, and (3) EMD in chip or plate form. See Appendix V in the 
Department's questionnaire dated June 7, 1999, for a complete 
description of the product. Our decision to do this was based on our 
analysis of comments that we received from all interested parties at 
the beginning of this proceeding. The respondent has provided no 
information regarding the commercial significance of the different sub-
types. We are not convinced by the respondent's assertion that a more 
refined product-matching methodology is appropriate because the record 
indicates that any differences in either price or cost attributable to 
physical differences among the sub-types of alkaline grade EMD are 
small. Therefore, for these preliminary results, we have continued to 
match EMD based on the criteria outlined in the LTFV investigation.
    Second, in an August 27, 1999, and in subsequent submissions, the 
petitioners allege that the respondent should have reported and 
accounted for home-market sales during the POR of EMD containing both 
gamma crystalline structure and other crystalline structure. The 
petitioners state that the Department's regulations for reporting the 
subject merchandise do not make any distinction between the gamma 
crystalline and other gamma crystalline structure EMD. The respondent 
argues that the product covered by this administrative review is EMD 
with a gamma crystalline structure, and that there is no basis to 
require Tosoh to provide information relating to other crystalline 
structure manganese dioxide which, according to Tosoh, is non-subject 
merchandise.
    Section 771(16) of the Act directs the Department to compare U.S. 
sales to sales in the home market of identical merchandise prior to 
making comparisons to non-identical merchandise sold in the home 
market. As discussed above, under the definition of comparable 
merchandise which has been in place since the beginning of this 
proceeding, we consider all alkaline-grade EMD to be identical for 
product-comparison purposes. Since we were able to compare U.S. sales 
to sales of identical merchandise in the home market, we have not 
required Tosoh to report its home-market sales of non-identical EMD.

Affiliated Party

    On August 27, 1999, the petitioners alleged that Tosoh and the 
Japanese trading company that Tosoh used to make sales of EMD to the 
United States may be affiliated because the two companies own two other 
companies jointly. (The identity of the Japanese trading company and 
the two joint ventures is business proprietary information and can not 
be disclosed in this public notice.) One of these joint ventures is a 
producer of EMD in another country. On September 9, 1999, and in 
subsequent submissions, Tosoh stated that it does not consider itself 
to be affiliated with the trading company in question, and it reported 
its sale to the trading company as the U.S. transaction. Tosoh argues 
that the trading company is not legally or operationally able to 
exercise any control or direction over Tosoh, and the fact that the 
trading company and Tosoh participate in the ownership of two other 
companies is irrelevant to this review. Tosoh also argues, citing 19 
CFR 351.102(b), that its mere participation in a joint venture does not 
support a finding of affiliation absent a showing pursuant to the 
Department's regulations that ``the relationship has the potential to 
impact decisions concerning the production, pricing, or cost of the 
subject merchandise or foreign like product.'' Furthermore, Tosoh 
asserts that affiliation between joint-venture partners can not be 
found under section 771(33)(F) of the Act unless there is sufficient 
evidence of ``control'' over decisions concerning the production, 
pricing, or cost of the subject merchandise. Tosoh cites Certain Cold-
Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea, 
63 FR 13170, 13185 (March 18, 1998), where the Department found that 
two joint-venture partners were not affiliated under section 771(33)(F) 
of the Act because of the absence of evidence of control.
    On November 29, 1999, after reviewing the information Tosoh 
presented in response to our original and supplemental questionnaires, 
we requested that Tosoh report the ``downstream'' sale information 
between the trading company's U.S. affiliate and its unaffiliated U.S. 
customer. See November 29, 1999, memorandum from Richard Rimlinger to 
Laurie Parkhill. (All memoranda to which we refer in this notice can be 
found in the public reading room, located in the Central Records Unit, 
room B-099 of the main Department of Commerce building.)
    Pursuant to section 771(33)(F) of the Act, affiliation exists where 
there are ``(t)wo or more persons directly or indirectly controlling, 
controlled by, or under common control with, any person.'' However, we 
recognize the regulatory guidance indicating that a control 
relationship will not establish affiliation unless the relationship 
``has the potential to impact decisions concerning the production, 
pricing, or cost of the subject merchandise or foreign like product,'' 
19 CFR 351.102(b) (emphasis added). Regarding Tosoh's control of one of 
the joint ventures, we are persuaded that potential control exists due 
to the fact that this joint venture manufactures EMD for sale in a 
variety of markets, including the United States. Thus, Tosoh is in a 
position that requires it to coordinate production and sales activities 
for its EMD production facilities. With respect to the trading 
company's control of the same joint venture, the record indicates that 
its wholly owned U.S. subsidiary negotiates the prices and terms of the 
U.S. sales for both Tosoh and the third-country joint venture. Because 
the subsidiary negotiates the prices and terms of the sales for both 
Tosoh and the joint venture, we find that the trading company, through 
its U.S. subsidiary, is able or at least has the potential to impact 
decisions concerning the production, pricing, or cost of the subject 
merchandise. Accordingly, we have preliminarily determined that Tosoh 
and the trading company commonly control the joint venture within the 
meaning of section 771(33)(F) of the Act and the Department's 
regulations. See Affiliation Memorandum from Laurie Parkhill to Richard 
W. Moreland, dated May 1, 2000. Accordingly, we conclude that Tosoh and 
the trading company are affiliated and that the appropriate sale for 
use in our analysis is the sale by the U.S. affiliate of the Japanese 
trading company to the unaffiliated U.S. customer. That sale is a 
constructed export price (CEP) transaction because it was made in the 
United States.

Constructed Export Price

    In calculating the price to the United States, we used CEP as 
defined in section 772(b) of the Act. We calculated CEP based on the 
delivered price to an unaffiliated purchaser in the United States. We 
made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act.
    In accordance with section 772(d)(1) of the Act and the Statement 
of Administrative Action (SAA), H. Doc. 103-316, vol. 1, 822-824 
(1994), we calculated the CEP by deducting selling

[[Page 26572]]

expenses associated with economic activities occurring in the United 
States, including direct selling expenses and indirect selling expenses 
incurred in the United States.
    With respect to CEP profit, section 772(d)(3) of the Act requires 
the Department, in determining CEP, to identify and deduct from the 
starting price in the U.S. market an amount for profit allocable to 
selling and further-manufacturing activities in the United States. 
Section 772(f) of the Act provides the rule for determining the amount 
of CEP profit to deduct from the CEP starting price. Pursuant to 
subsection 772(f)(2)(C), we determined that the best available sources 
of profit information are the 1998 financial statements which the 
respondent and the Japanese trading company's U.S. affiliate submitted 
in their responses to our questionnaires. See Electrolytic Manganese 
Dioxide from Japan--Tosoh Corporation, Analysis Memo dated April 28, 
2000. We made adjustments, where appropriate, for domestic inland 
freight, warehousing expenses, international freight, and brokerage and 
handling in accordance with section 772(c)(2)(A) of the Act. In 
accordance with 19 CFR 351.401(i), we used the invoice date as the date 
of sale for the U.S. market. We made deductions for any movement 
expenses in accordance with section 772(c)(2)(A) of the Act.
    Finally, in accordance with section 772(d)(1)(B) of the Act, we 
made an additional adjustment to CEP. Because of the business-
proprietary nature of the adjustment, please see our Analysis Memo.

Normal Value

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a basis for calculating normal value, we 
compare the respondent's volume of home-market sales of the foreign 
like product to the volume of U.S. sales of the subject merchandise in 
accordance with section 773(a) of the Act. Because the aggregate volume 
of home-market sales of the foreign like product was greater than five 
percent of the aggregate volume of U.S. sales of the subject 
merchandise, we determined that the home market provides a viable basis 
for calculating normal value. Therefore, in accordance with section 
773(a)(1)(B)(i) of the Act, we based normal value on the price at which 
the foreign like product was first sold to unaffiliated customers for 
consumption in the exporting country in the usual commercial quantities 
and in the ordinary course of trade. We matched CEP to normal value at 
the same level of trade in the home market and made no level-of-trade 
adjustment (see discussion below).
    We compared CEP to the monthly weighted-average price of sales of 
the identical foreign like product. We based normal value on delivered 
prices to unaffiliated purchasers in the home market. We made 
adjustments to home-market price for inland freight, warehousing 
expenses, discounts, and rebates. Home-market prices were based on 
packed, delivered prices to the unaffiliated purchasers in the home 
market. Where applicable, we made adjustments for differences in 
packing and for movement expenses in accordance with sections 
773(a)(6)(A) and (B) of the Act. We also made adjustments for 
differences in costs attributable to differences in circumstances of 
sale (COS) in accordance with section 773(a)(6)(C)(iii) of the Act and 
19 CFR 351.410. With respect to our comparisons to CEP, we made COS 
adjustments by deducting home-market direct selling expenses from 
normal value.

Level of Trade

    To the extent practicable, we determine normal value for sales at 
the same level of trade as that in the United States in accordance with 
section 773(a)(1)(B) of the Act. The normal value level of trade is 
that of the starting-price sales in the home market. See 19 CFR 
351.412(c)(iii).
    To determine whether home-market sales were at a different level of 
trade than that in the United States, we examined stages in the 
marketing process and selling functions along the chain of distribution 
between the producer and the unaffiliated customer. Tosoh reported two 
channels of distribution in the home market. We examined the 
differences in selling functions Tosoh reported in its responses to our 
requests for information. We found that the selling activities 
associated with sales to trading companies/distributors did not differ 
from activities associated with sales to end-users in terms of various 
selling activities. For example, there were no differences between the 
two channels in terms of strategic planning/marketing, production 
planning/order evaluation, technical service, and freight/delivery to 
customer. Based on these sales activities and our overall analysis, we 
found that the two home-market channels constitute one level of trade.
    Because Tosoh made CEP sales in the United States, we identified 
the level of trade based on the price after the deduction of expenses 
and profit under section 772(d) of the Act and pursuant to 19 CFR 
351.412(c)(ii). Based on our analysis, we considered CEP to constitute 
a single level of trade.
    As a result of our examination of the record, we found that the 
respondent did not provide us with sufficient information to determine 
whether there were significant differences or similarities between the 
selling activities associated with the home-market level of trade and 
those associated with the CEP level of trade. Moreover, the respondent 
indicated in its July 21, 1999, and December 17, 1999, submissions that 
it was not requesting a level-of-trade adjustment. Therefore, we have 
determined that the U.S. sale was made at the same level of trade as 
the home-market level of trade and, therefore, no level-of-trade 
adjustment was necessary.

Preliminary Results of Review

    As a result of our review, we preliminarily determine a weighted-
average dumping margin of 0.00 percent for the period April 1, 1998, 
through March 31, 1999, for Tosoh.
    Any interested party may request a hearing within 30 days of 
publication of this notice. Any hearing, if requested, will be held 40 
days after the date of publication of this notice, or the first workday 
thereafter. Requests should specify the number of participants and 
provide a list of the issues to be discussed. Oral presentations will 
be limited to issues raised in the briefs. Any hearing, if requested, 
will be held three days after the scheduled date for submission of 
rebuttal briefs. Issues raised in hearings will be limited to those 
raised in the respective case and rebuttal briefs. Interested parties 
may submit case briefs within 30 days of the date of publication of 
this notice. Rebuttal briefs, which must be limited to issues raised in 
the case briefs, may be filed not later than 35 days after the date of 
publication of this notice.
    Parties who submit arguments are requested to submit with the 
arguments (1) a table of contents, (2) a statement of the issue, (3) a 
list of authorities used, and (4) an executive summary of issues. 
Executive summaries should be limited to five pages total, including 
footnotes.
    The Department will publish the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written briefs or hearing. The Department will issue 
final results of this review within 120 days of publication of these 
preliminary results.
    Upon completion of the final results of this administrative review, 
if there is no change from our preliminary results, we will instruct 
the Customs Service to

[[Page 26573]]

liquidate all appropriate entries without regard to antidumping duties.
    On April 20, 2000, the International Trade Commission (ITC) 
determined that revoking the existing antidumping duty orders on EMD 
from Greece and Japan would not be likely to lead to continuation or 
recurrence of material injury within a reasonably foreseeable time. 
Therefore, because the order will be revoked as a result of the ITC's 
determination with an effective date of January 1, 2000, no deposit 
requirements will be effective for shipments of the subject merchandise 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date of the final results of this administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) 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: May 1, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-11462 Filed 5-5-00; 8:45 am]
BILLING CODE 3510-DS-P