[Federal Register Volume 65, Number 123 (Monday, June 26, 2000)]
[Notices]
[Pages 39355-39358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16105]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-423-602]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review: Industrial Phosphoric Acid From Belgium

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

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

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SUMMARY: In response to requests from petitioner and one domestic 
producer, the Department of Commerce (``the Department'') is conducting 
an administrative review of the antidumping duty order on industrial 
phosphoric acid (``IPA'') from Belgium. The period of review (``POR'') 
is August 1, 1998, through July 31, 1999. This review covers imports of 
IPA from one producer, Societe Chimique Prayon-Rupel S.A. (``Prayon'').
    We have preliminarily determined the dumping margin for Prayon to 
be 1.82 percent during the period August 1, 1998, through July 31, 
1999. Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

EFFECTIVE DATE: June 26, 2000.

FOR FURTHER INFORMATION CONTACT: Frank Thomson or Jim Terpstra, AD/CVD 
Enforcement, Group II, Office IV, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
4793, and 482-3965, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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

Background

    On August 20, 1987, the Department published in the Federal 
Register (52 FR 31439) the antidumping duty order on IPA from Belgium. 
On August 11, 1999, the Department published in the Federal Register 
(64 FR 43649) a notice of opportunity to request an administrative 
review of this antidumping duty order. On August 30, 1999, in 
accordance with 19 CFR 351.213(b)(1), the petitioner FMC Corporation 
(``FMC''), and Albright & Wilson Americas Inc. (``Wilson''), a domestic 
producer of the subject merchandise, requested that the Department 
conduct an administrative review of Prayon's exports of subject 
merchandise to the United States. We published the notice of initiation 
of this

[[Page 39356]]

review on October 1, 1999 (64 FR 53318).

Scope of the Review

    The products covered by this review include shipments of IPA from 
Belgium. This merchandise is currently classifiable under the 
Harmonized Tariff Schedule (``HTS'') item numbers 2809.2000 and 
4163.0000. The HTS item numbers are provided for convenience and 
Customs purposes. The written description remains dispositive.

Verification

    As provided in section 782(i) of the Act, we conducted verification 
of the information provided by Prayon. We used standard verification 
procedures, including examination of relevant sales and financial 
records and selection of relevant source documentation as exhibits. Our 
verification findings are detailed in the memoranda dated June 16, 
2000, the public versions of which are on file in the Central Records 
Unit, Room B-099 of the Main Commerce building (``CRU-Public File'').

Product Comparisons

    The IPA exported by Prayon to the United States is PRAYPHOS P5, a 
refined IPA, and is the identical merchandise sold by Prayon in its 
home market in Belgium. Therefore, we have compared U.S. sales to 
contemporaneous sales of identical merchandise in Belgium.

Constructed Export Price

    Prayon sells to end-users in the United States through its 
affiliated sales agent, Quadra Corporation (``Quadra''). The sales 
documentation on the record in this proceeding indicates that Prayon's 
U.S. sales occurred in the United States between Quadra and the 
unaffiliated U.S. purchaser. Specifically, we have found the following 
facts: (1) Quadra contacts the U.S. customer and discusses prices, (2) 
there is a contract between Quadra and the U.S. customers, (3) Quadra 
arranges for shipping and other services, (4) Quadra issues the invoice 
to the U.S. customer, and (5) Quadra accepts payment from the U.S. 
customer. Given these facts, we preliminarily determine that these 
sales were made in the United States by a seller affiliated with the 
producer and, thus, should be treated as constructed export price 
(``CEP'') transactions (see Cold-Rolled and Corrosion-Resistant Carbon 
Steel Flat Products from Korea, Final Results of Administrative Review, 
65 FR 13359 (March 13, 2000) and accompanying Decision Memorandum at 
Comment 12; and Porcelain-on-Steel Cookware from Mexico, Final Results 
of Administrative Review, 65 FR 30068 (May 10, 2000) and accompanying 
Decision Memorandum at Comment 2) (``Porcelain-on-Steel Cookware from 
Mexico'').
    We based CEP on the delivered prices to unaffiliated purchasers in 
the United States. We made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Act; these included, where 
appropriate, inland insurance, foreign brokerage and handling, cost of 
wharfage, storing and handling in Canada, ocean freight, U.S. customs 
duties (including brokerage and merchandise processing fees), and U.S. 
inland freight expenses (freight from warehouse to the customer). In 
accordance with section 772(d)(1) of the Act, we deducted those selling 
expenses associated with economic activities occurring in the United 
States, including direct selling expenses (commissions and credit 
expenses), inventory carrying costs, and other indirect selling 
expenses. We also made an adjustment for profit in accordance with 
section 772(d)(3) of the Act.

Normal Value

    We compared the aggregate quantity of home market and U.S. sales 
and determined that the quantity of the company's sales in its home 
market was more than five percent of the quantity of its sales to the 
U.S. market. Consequently, in accordance with section 773(a)(1)(B) of 
the Act, we based normal value (``NV'') on home market sales.
    However, we excluded from our NV analysis sales to affiliated home 
market customers where the weighted-average sales prices to the 
affiliated party was less than 99.5 percent of the weighted-average 
sales price to unaffiliated parties. See Usinor Sacilor v. United 
States, 872 F. Supp. 1000, 1004 (CIT 1994).
    We calculated monthly weighted-average NVs based on ex-works or 
delivered prices to unaffiliated customers or prices to affiliated 
customers that we determined to be at arm's-length prices. We made 
adjustments to the starting price, where appropriate, for billing 
adjustments. We made deductions, where appropriate, from the starting 
price for early payment discounts, inland insurance, and inland 
freight. We made circumstance of sale (``COS'') adjustments, in 
accordance with section 773(a)(6)(c)(iii) of the Act, for direct 
selling expenses, including credit expenses.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the export price (``EP'') or CEP 
transaction. The NV LOT is that of the starting-price sales in the 
comparison market or, when NV is based on constructed value (``CV''), 
that of the sales from which we derive selling, general and 
administrative (``SG&A'') expenses and profit. With respect to U.S. 
price and CEP transactions, the LOT is the level of the constructed 
sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level, and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP-offset provision). See Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate from South Africa, 62 FR 61731 (November 19, 1997). 
    Prayon reported two customer categories (i.e., end-users and 
distributors) and three channels of distribution in the home market 
(i.e., sales made by Prayon directly to end-users (Channel 1), sales 
from Prayon through its affiliated sales agent, Zinchem Benelux, to 
end-users (Channel 2), and sales from Prayon through Zinchem Benelux, 
to distributors (Channel 3)).
    Based upon an analysis of the information provided on the record, 
we conclude that there is no difference in the selling functions 
performed by Prayon in making sales through these three channels of 
distribution. Therefore, using the information on the record, the 
Department preliminarily determines that Prayon makes all sales at the 
same LOT in the home market (see Preliminary Determination: Level of 
Trade Analysis. (``Preliminary LOT Memorandum'') from Frank Thomson,

[[Page 39357]]

Import Compliance Specialist, through James Terpstra, Program Manager, 
to the File, dated June 19, 2000, on file in the CRU).
    Prayon reported only one LOT in the United States during the POR. 
This LOT involved one channel of distribution: sales made by Prayon 
through its affiliated sales agent, Quadra, to end-users (Channel 1).
    In order to determine whether sales in the United States are at a 
different LOT than sales in the home market, we reviewed the selling 
activities associated with each channel of distribution. We compared 
the selling activities between Prayon and Quadra on U.S. CEP 
transactions, after all relevant deductions under section 772(d) of the 
Act, to the selling activities performed for the home market LOT sales 
by Prayon. We found that fewer and different selling functions were 
performed for Prayon's CEP sales than for sales at the home market LOT, 
and that the totality of these differences constitutes a difference in 
LOT. See the Preliminary LOT Memorandum for a detailed explanation of 
the above.
    Therefore, we examined whether a LOT adjustment was appropriate. 
The Department makes this adjustment when it is demonstrated that a 
difference in LOTs affects price comparability. See Statement of 
Administrative Action accompanying the URAA, H.R. Doc. No. 103-316 at 
829-830 (1994) (hereinafter, the ``SAA''). However, where the available 
data do not provide an appropriate basis upon which to determine a LOT 
adjustment, and where the NV is established at a LOT that is at a more 
advanced stage of distribution than the LOT of the CEP transactions, we 
adjust NV under section 773(a)(7)(B) of the Act (the CEP offset 
provision).
    As discussed above, we preliminarily find that all respondent's 
home market sales are made at the same LOT. Further, we find that the 
home market LOT is different from the U.S. LOT. Finally, because of the 
significantly larger amount of selling activities performed, we found 
that the home market sales were at a more advanced stage of 
distribution compared to sales made at the U.S. LOT. Further, the data 
available do not provide an appropriate basis upon which to determine a 
LOT adjustment. Accordingly, we granted a CEP offset for all sales by 
Prayon in Belgium which are compared with CEP sales in the United 
States. We applied the CEP offset to NV, as appropriate. See the 
Preliminary LOT Memorandum for a detailed explanation of the above.

Commissions

    The Department operates under the assumption that commission 
payments to affiliated parties (in either the United States or home 
market) are not at arm's length. The Court of International Trade has 
held that this is a reasonable assumption. See Outokumpu Copper Rolled 
Products AB v. United States, 850 F. Supp. 16, 22 (CIT 1994). 
Accordingly, the Department has established guidelines to determine 
whether affiliated party commissions are paid on an arm's-length basis 
such that an adjustment for such commissions can be made. See Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan 
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, 
and Components Thereof, From Japan, 61 FR 57629 (November 7, 1996).
    First, we compare the commissions paid to affiliated and 
unaffiliated sales agents in the same market. If there are no 
commissions paid to unaffiliated parties, we then compare the 
commissions earned by the affiliated selling agent on sales of 
merchandise produced by the respondent to commissions earned on sales 
of merchandise produced by unaffiliated sellers or manufacturers. If 
there is no benchmark which can be used to determine whether the 
affiliated party commission is an arm's-length value (i.e., the 
producer does not use an unaffiliated selling agent and the affiliated 
selling agent does not sell subject merchandise for an unaffiliated 
producer), the Department assumes that the affiliated party commissions 
are not paid on an arm's-length basis.
    In this case, Prayon used an affiliated sales agent in the home 
market. In its January 20, 2000, response, Prayon submitted its 
commission rates paid to its affiliated sales agent in the home market. 
We issued a supplemental questionnaire to Prayon, requesting that it 
indicate whether the commissions were paid at arm's length by reference 
to commission payments to unaffiliated parties in the foreign market 
and other markets, and to submit evidence demonstrating the arm's-
length nature of the commissions. Prayon then submitted documentation 
illustrating its commission rates with unaffiliated parties in other 
markets, including Europe, North America, and South America. We 
examined Prayon's submitted rates with its unaffiliated agents 
throughout Europe to compare its affiliated commission rate in Belgium. 
Our examination of Prayon's unaffiliated European market commission 
rates indicate that these rates are comparable to its affiliated party 
commission rate.
    As a consequence, our preliminary analysis of the submitted 
documentation indicates that the affiliated commissions in the home 
market are made at arm's length. Therefore, for purposes of the 
preliminary determination, we are accepting Prayon's reported home 
market commissions. Accordingly, we preliminarily determine to make a 
COS adjustment for commissions in the home market.

Currency Conversion

    Pursuant to section 773A(a) of the Act, we made currency 
conversions into U.S. dollars based on the exchange rates in effect on 
the dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that a 0.60 
percent dumping margin exists for Prayon for the period August 1, 1998, 
through July 31, 1999.
    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR 351.224(b). An interested party 
may request a hearing within 30 days of publication of these 
preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, 
will be held 44 days after the date of publication, or the first 
working day thereafter. Interested parties may submit case briefs and/
or written comments no later than 30 days after the date of publication 
of these preliminary results of review. Rebuttal briefs and rebuttals 
to written comments, limited to issues raised in such briefs or 
comments, may be filed no later than 37 days after the date of 
publication. Further, we would appreciate it if parties submitting 
written comments also provide the Department with an additional copy of 
those comments on diskette. The Department will issue the final results 
of this administrative review, which will include the results of its 
analysis of issues raised in any such comments, within 120 days of 
publication of these preliminary results.
    Upon completion of this administrative review, the Department shall 
determine, and the Customs Service shall assess, antidumping duties on 
all appropriate entries. We have calculated Prayon's duty assessment 
rate based on the ratio of the total amount of antidumping duties 
calculated for the examined sales to the total entered value of 
examined sales. The rate will be assessed uniformly on

[[Page 39358]]

all entries made during the POR. The Department will issue appraisement 
instructions directly to Customs.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of IPA from Belgium entered, or withdrawn from warehouse, 
for consumption on or after the publication date of the final results 
of this administrative review, as provided by section 751(a)(1) of the 
Act: (1) The cash deposit rate for Prayon will be the rate established 
in the final results of this administrative review; (2) for merchandise 
exported by manufacturers or exporters not covered in this review but 
covered in the original less-than-fair-value (``LTFV'') investigation 
or a previous review, the cash deposit will continue to be the company-
specific rate published for the most recent period; (3) if the exporter 
is not a firm covered in this review, or the original LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) if neither the exporter nor the manufacturer 
is a firm covered in this or any previous review, the cash deposit rate 
will be 14.67 percent, the ``all-others'' rate established in the LTFV 
investigation.
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of administrative review for a 
subsequent review period.
    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 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 19, 2000.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-16105 Filed 6-23-00; 8:45 am]
BILLING CODE 3510-DS-U