[Federal Register Volume 66, Number 148 (Wednesday, August 1, 2001)]
[Notices]
[Pages 39733-39736]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19203]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-803]


Notice of Preliminary Results of Antidumping Duty New Shipper 
Review: Heavy Forged Hand Tools, Finished or Unfinished, With or 
Without Handles, From the People's Republic of China

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

SUMMARY: In response to a timely request from Shandong Jinma Industrial 
Group Co., Ltd. (Jinma), on October 6, 2000, the Department of Commerce 
(the Department) published a notice of initiation of a new shipper 
review of the antidumping duty order on heavy forged hand tools, 
finished or unfinished, with or without handles (HFHTs) from the 
People's Republic of China (PRC) with respect to the above-mentioned 
exporter. The period of review is February 1, 2000, through July 31, 
2000 (POR).
    We preliminarily determine that sales of HFHTs, from the PRC, have 
been made below normal value. The preliminary results are listed below 
in ``Preliminary Results of Review.''
    We invite interested parties to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with their arguments (1) a statement of the issue(s), and (2) 
a brief summary of the arguments. Further, we would appreciate it if 
parties submitting comments would provide the Department with an 
additional copy of the public version of any such comments on diskette.

EFFECTIVE DATE: August 1, 2001.

FOR FURTHER INFORMATION CONTACT: Jeff Pedersen at (202) 482-4195 or Ron 
Trentham at (202) 482-6320; AD/CVD Enforcement, Office 4, Group II, 
Import Administration, Room 1870, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230.

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions as of 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 regulations refer to the 
regulations codified at 19 CFR part 351 (2000).

Case History

    On February 19, 1991, the Department published in the Federal 
Register (56 FR 6622) the antidumping duty orders on HFHTs from the 
PRC. On July 20, 2000, the Department received a timely request, in 
accordance with section 751(a)(2)(B) of the Act and section 351.214(c) 
of the Department's regulations, from Jinma to conduct a new shipper 
review of the antidumping duty order on hammers/sledges, one of the 
four classes or kinds of subject merchandise covered by the antidumping 
duty orders on HFHTs from the PRC. The order has a February anniversary 
month and an August semiannual anniversary month. This request was made 
pursuant to section 751(a)(2)(B) of the Act and section 351.214(b) of 
the Department's regulations, which state that, if the Department 
receives a request for review from an exporter or producer of the 
subject merchandise stating that it did not export the merchandise to 
the United States during the period covered by the original 
investigation (POI) and that such exporter or producer is not 
affiliated with any exporter or producer who exported the subject 
merchandise during that period, the Department shall conduct a new 
shipper review to establish an individual weighted-average dumping 
margin for such exporter or producer, if the Department has not 
previously established such a margin for the exporter or producer.
    The regulations require that the exporter or producer include in 
its request, with appropriate certifications: (i) The date on which the 
merchandise was first entered, or withdrawn from warehouse, for 
consumption, or, if it cannot certify as to the date of first

[[Page 39734]]

entry, the date on which it first shipped the merchandise for export to 
the United States, or if the merchandise has not yet been shipped or 
entered, the date of sale; (ii) a list of the firms with which it is 
affiliated; (iii) a statement from such exporter or producer, and from 
each affiliated firm, that it did not, under its current or a former 
name, export the merchandise during the POI; and (iv) in an antidumping 
proceeding involving inputs from a non-market-economy (NME) country, a 
certification that the export activities of such exporter or producer 
are not controlled by the central government. See 351.214(b)(2) of the 
Department's Regulations.
    The request received from Jinma was accompanied by information and 
certifications establishing the effective date on which Jinma first 
shipped and entered HFHTs for consumption in the United States, the 
volume of the shipment, and the date of first sale to an unaffiliated 
customer in the United States. Jinma certified that it was not 
affiliated with any company which exported HFHTs from the PRC during 
the POI. In addition, Jinma certified that its export activities are 
not controlled by the central government. On October 6, 2000, the 
Department published its initiation of this new shipper review for the 
period February 1, 2000 through July 31, 2000. See Heavy Forged Hand 
Tools From the People's Republic of China: Initiation of New-Shipper 
Antidumping Administrative Review, FR 59824 (October 6, 2000).
    On March 26, 2001, the Department published an extension of the 
deadline for completion of the preliminary results of this new shipper 
review until July 25, 2001. See Notice of Extension of Time Limit for 
Preliminary Results of New Shipper Antidumping Review: Heavy Forged 
Hand Tools, Finished or Unfinished, With or Without Handles From the 
People's Republic of China, 66 FR 16444 (March 26, 2001).

Scope of Review

    HFHTs from the PRC comprise 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. 
This review covers shipments of one class or kind of merchandise, 
hammers and sledges with heads over 1.5 kg (3.33 pounds).
    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.

New Shipper

    Based on the questionnaire responses received from Jinma, we 
preliminarily determine that Jinma met the requirements to qualify as a 
new shipper during the POR. We have determined that Jinma made its 
first sale or shipment of subject merchandise to the United States 
during the POR, that its sales were bona fide sales, and that Jinma was 
not affiliated with any exporter or producer that previously shipped to 
the United States.

Separate Rates

    Jinma requested a separate, company-specific rate. In its 
questionnaire responses, Jinma states that it is an independent legal 
entity. To establish whether a company operating in an NME country is 
entitled to a separate rate, the Department analyzes an 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), as amplified by, Final Determination of 
Sales at Less Than Fair Value: Silicon Carbide from the People's 
Republic of China, 59 FR 22585 (May 2, 1994). Under this policy, 
exporters in 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 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 the exporter 
sets its own export prices independently of the government and without 
the approval of a government authority; (2) whether the exporter 
retains the proceeds from its sales and makes independent decisions 
regarding the disposition of profits or financing of losses; (3) 
whether the exporter has the authority to negotiate and sign contracts 
and other agreements; and (4) whether the exporter has autonomy from 
the government regarding the selection of management.

De jure Control

    With respect to the absence of de jure government control over the 
export activities of Jinma, evidence on the record indicates that Jinma 
is not controlled by the government. Jinma submitted evidence of its 
legal right to set prices independent of all government oversight. The 
business license of Jinma indicates that it is permitted to engage in 
the exportation of tools and its export license grants Jinma permission 
to export ``self produced sledge hammer, storing hammer, crosspein 
sledge hammer * * * and varies of forged part, casting part [sic] * * 
*'' No export quotas apply to HFHTs. Prior verifications in this 
proceeding of other Chinese companies producing HFHTs covered by this 
case have confirmed that there are no commodity-specific export 
licenses required and these previous reviews and investigations have 
found no evidence of quotas for HFHTs established by the Chinese 
government. Jinma's business license categorizes it as a limited 
company, which places Jinma under the company law of the PRC, as stated 
under chapter 1, article 2 of The Company Law of the People's Republic 
of China. Further, PRC company law at Chapter 1, article 5 provides 
that a company ``shall use all of the resources to which it is entitled 
as a legal entity to achieve autonomy of company management and company 
accountability for its own profits and losses in accordance with law.'' 
We find no evidence of de jure government control restricting Jinma 
from the exportation of HFHTs. We therefore preliminarily determine 
that there is an

[[Page 39735]]

absence of de jure control over export activity with respect to Jinma.

De Facto Control

    With respect to the absence of de facto control over export 
activities, the information provided indicates that the management of 
Jinma is responsible for the determination of export prices, profit 
distribution, marketing strategy, and contract negotiations. We found 
no evidence of government involvement in the daily operations or the 
selection of management of Jinma. In addition, we have found that 
Jinma's pricing and export strategy decisions are not subject to any 
outside entity's review or approval, and that there are no governmental 
policy directives that affect these decisions.
    We found no evidence of restrictions on the use of export earnings. 
Jinma's sales department manager and senior company officials have the 
right to negotiate and enter into contracts binding the company to sell 
merchandise. There is no evidence that this authority is subject to 
governmental approval. Jinma has stated that its directors are selected 
by the shareholders of Jinma and that the directors appoint the 
officers and managers of each department and that there is no 
government involvement in the selection process. Consequently, because 
evidence on the record indicates an absence of government control, both 
in law and in fact, over their export activities, we preliminarily 
determine that separate rates should be applied to Jinma.

Export Price

    In accordance with section 772(a) of the Act, the Department 
calculated an EP for sales to the United States because the subject 
merchandise was sold directly to the first unaffiliated purchaser in 
the United States prior to importation and the use of constructed 
export price was not otherwise warranted. We made deductions from the 
selling price to unaffiliated parties for foreign brokerage and 
handling and foreign inland freight. Each of these services were 
provided by an NME vendor. 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).
    For brokerage and handling, we used price quotes from two Indian 
freight forwarders in November 1999, and adjusted them for inflation. 
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 foreign brokerage and handling and foreign inland freight 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 this review, see 
Memorandum From the Team Regarding Surrogate Values Used for the 
Preliminary Results of the New Shipper Review of Certain Heavy Forged 
Hand Tools From the People's Republic of China, (July 25, 2001), 
(Surrogate Value Memorandum), which is on file in the Central Records 
Unit (room B099 of the Main Commerce Building).

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 (FOP) 
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 this review, 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 FOP utilized 
in producing HFHTs 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 Jeff Pedersen, AD/CVD Enforcement Group 
II, dated March 16, 2001, which is on file in the CRU-Public File.
    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 price trends between the effective period and the POR. 
We made the adjustment, where appropriate, 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 
scrap, paint, anti-rust oil, wood and resin glue) and the steel scrap 
generated from the production of HFHTs using the rupee per metric ton 
or rupee per kilogram value of imports that entered India during the 
POR as published in the Monthly Statistics of the Foreign Trade of 
India--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 (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. Although this information is not contemporaneous with the 
POR, it is the most recent relevant data available. Moreover, as the 
SG&A values used are ratios rather than prices, price changes are not a 
concern.
    (4) We valued packing materials, including cartons, pallets, iron 
straps, anti-damp paper, anti-rust paper, plastic strips, iron knots, 
tape and metal clips, using the rupee per metric ton or rupee per 
kilogram value of imports that entered India during the period February 
through July 2000 as

[[Page 39736]]

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), the most recent data 
available.
    (6) We valued electricity using the 1997 Indian electricity prices 
for industrial use as reported in EPT, the most recent data available.
    (7) We used the following sources to value truck 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. Although this 
information is not contemporaneous with the POR, it is the most recent 
relevant data we could obtain. 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 price quotes obtained by the Department 
from Indian truck freight companies in November 1999.
    The United States Court of Appeals for the Federal Circuit's 
(CAFC's) decision in Sigma Corp. v. United States, 117 F. 3d 1401 (CAFC 
1997) requires that we revise our calculation of source-to-factory 
surrogate freight for those material inputs that are based on CIF 
import values in the surrogate country. Therefore, we have added to CIF 
surrogate values from India a surrogate inland freight cost based on 
the shorter of the reported distances from (1) the closest PRC port to 
the factory or (2) the domestic supplier to the factory, on an import-
specific basis.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following margin exists for the period February 1, 2000 through July 
31, 2000:

------------------------------------------------------------------------
                                                                Margin
             Manufacturer/exporter              Time period   (percent)
------------------------------------------------------------------------
Shandong Jinma Industrial Group Co., Ltd.:      2/1/00-7/31/        7.76
 Hammers/Sledges..............................           00
------------------------------------------------------------------------

    Any interested party may request a hearing in accordance with 
section 351.310(c) of the Department's regulations. Any hearing would 
normally be held 37 days after the publication of this notice, or the 
first workday thereafter, at the U.S. Department of Commerce, 14th 
Street and Constitution Avenue NW., Washington, DC 20230. Individuals 
who wish to request a hearing must submit a written request within 30 
days of the publication of this notice in the Federal Register to the 
Assistant Secretary for Import Administration, U.S. Department of 
Commerce, Room 1870, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230. Requests for a public hearing should contain: (1) 
The party's name, address, and telephone number; (2) the number of 
participants; and (3) to the extent practicable, an identification of 
the arguments to be raised at the hearing. Unless otherwise notified by 
the Department, interested parties may submit case briefs within 30 
days of the date of publication of this notice in accordance with 
351.309(c)(1)(ii) of the Department's regulations. As part of the case 
brief, parties are encouraged to provide a summary of the arguments not 
to exceed five pages and a table of statutes, regulations, and cases 
cited. Rebuttal briefs, which must be limited to issues raised in the 
case briefs, must be filed within five days after the case brief is 
filed. Parties should confirm by telephone the time, date, and place of 
the hearing 48 hours before the scheduled time.
    The Department will issue the final results of this new shipper 
review, which will include the results of its analysis of issues raised 
in the briefs, within 90 days from the date of these preliminary 
results, unless the time limit is extended.
    Upon completion of this new shipper review, the Department shall 
determine, and the U.S. Customs Service shall assess, antidumping 
duties on all appropriate entries. The Department will issue 
appraisement instructions directly to the U.S. Customs Service upon 
completion of this review. The final results of this review shall be 
the basis for the assessment of antidumping duties on entries of 
merchandise covered by the determination and for future deposits of 
estimated duties. For assessment purposes, we calculated an importer-
specific assessment rate by dividing the total dumping margins 
(calculated as the difference between NV and EP) for the importer by 
the entered value of the examined sales for the importer. Where the 
importer-specific assessment rate is above de minimis, we will direct 
Customs to assess the resulting ad valorem rate against the entered 
value of the entry of the subject merchandise by that importer during 
the POR.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this review for all shipments of 
HFHTs 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 firm will be the rate established in the final results of this 
review; (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; 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 cash deposit requirements, 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 351.402(f) 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.
    This new shipper review and notice are issued and published in 
accordance with sections 751(a)(2)(f) and 777(i)(1) of the Act.

    Dated: July 25, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-19203 Filed 7-31-01; 8:45 am]
BILLING CODE 3510-DS-P