[Federal Register Volume 67, Number 16 (Thursday, January 24, 2002)]
[Notices]
[Pages 3478-3482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1791]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

A-570-504


Notice of Preliminary Results of Antidumping Duty New Shipper 
Review: Petroleum Wax Candles from the People's Republic of China

ACTION: Import Administration, International Trade Administration, 
Department of Commerce

-----------------------------------------------------------------------

SUMMARY: The Department of Commerce (the Department) is conducting a 
new shipper review of the antidumping duty order on petroleum wax 
candles from the People's Republic of China (PRC) in response to a 
request from Shanghai New Star Im/Ex Co., Ltd. (New Star). The review 
covers the period August 1, 2000 through January 31, 2001.
    We preliminarily determine that sales have been made below normal 
value (NV). The preliminary results are listed below in the section 
titled ``Preliminary Results of Review.'' If these preliminary results 
are adopted in our final results, we will instruct the U.S. Customs 
Service to assess antidumping duties based on the difference between 
the export price (EP) and NV. Interested parties are invited to comment 
on these preliminary results. (See the ``Preliminary Results of 
Review'' section of this notice.)

EFFECTIVE DATE: January 24, 2002.

FOR FURTHER INFORMATION CONTACT: Matthew Renkey or Javier Barrientos, 
Office of AD/CVD Enforcement VII, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
2312 or (202) 482-2243, respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are to the provisions

[[Page 3479]]

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 (2000).

Background

    The Department published in the Federal Register an antidumping 
duty order on petroleum wax candles from the PRC on August 28, 1986 (51 
FR 30686). On February 28, 2001 the Department received, in accordance 
with section 751(a)(2)(B) of the Act and section 351.214(c) of the 
Department's regulations, a timely request from New Star to conduct a 
new shipper review of the antidumping duty order on petroleum wax 
candles from the PRC. On March 28, 2001 the Department published its 
initiation of this new shipper review for the period August 1, 2000 
through January 31, 2001 (66 FR 16903). On August 27, 2001 the 
Department published an extension of the deadline for completion of the 
preliminary results of this new shipper review until January 15, 2002 
(66 FR 45005).
    This new shipper 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 (the 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 shall 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 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 section 351.214(b)(2) 
of the Department's regulations.
    New Star submitted the information and certifications establishing 
the effective date on which this company first shipped and entered 
petroleum wax candles for consumption in the United States, the volume 
of its shipment, and the date of first sale to an unaffiliated customer 
in the United States. New Star certified that it was not affiliated 
with any company which exported petroleum wax candles from the PRC 
during the POI. In addition, New Star certified that its export 
activities are not controlled by the central government.

Scope of Review

    The products covered by this order are certain scented or unscented 
petroleum wax candles made from petroleum wax and having fiber or 
paper-cored wicks. They are sold in the following shapes: tapers, 
spirals, and straight-sided dinner candles; rounds, columns, pillars, 
votives; and various wax-filled containers. The products were 
classified under the Tariff Schedules of the United States (TSUS) item 
755.25, Candles and Tapers. The products are currently classified under 
the Harmonized Tariff Schedule of the United States (HTSUS) item 
3406.00.00. Although the HTSUS subheading is provided for convenience 
and customs purposes, our written description of the scope of this 
proceeding remains dispositive.

Verification

    As provided in section 782(i) of the Act, we conducted 
verifications of the questionnaire responses of both New Star and its 
U.S. importer, Peak Candles, LLC (Peak Candle). We used standard 
verification procedures, including on-site inspection of the 
manufacturer's facilities and the examination of relevant sales and 
financial records. Our verification results are outlined in the public 
versions of the verification reports, which are on file in the Central 
Records Unit (room B099 of the Main Commerce Building).

New Shipper Status

    Based on the questionnaire responses received from New Star and 
Peak Candle, and our verifications thereof, we preliminarily determine 
that New Star has met the requirements to qualify as a new shipper 
during the POR. We have determined that the company made its first sale 
or shipment of subject merchandise to the United States during the POR, 
that this sale was a bona fide sale, and that this company was not 
affiliated with any exporter or producer that previously shipped to the 
United States during the POI.

Separate Rates

    New Star has requested a separate, company-specific rate. In its 
questionnaire responses, the company states that it is an independent 
legal entity.
    To establish whether a company operating in a non-market economy 
(NME) country is sufficiently independent to be entitled to a separate 
rate, the Department analyzes each exporting entity 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), 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 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.

De Jure Control

    With respect to the absence of de jure government control over the 
export activities of the company reviewed, evidence on the record 
indicates that New Star's export activities are not controlled by the 
government. New Star

[[Page 3480]]

submitted evidence of its legal right to set prices independently of 
all government oversight. The business license of the company indicates 
that it is permitted to engage in the exportation of candles. We find 
no evidence of de jure government control restricting this company's 
exportation of candles.
    The following laws, which have been placed on the record of this 
review, indicate a lack of de jure government control over privately-
owned companies, such as New Star, and that control over these 
enterprises rests with the enterprises themselves. The Administrative 
Regulations of the People's Republic of China Governing the 
Registration of Enterprises as Legal Persons, issued on June 3, 1988 by 
the State Council of the PRC, the Company Law of the People's Republic 
of China, issued on December 29, 1993 by the National People's 
Congress, the Regulations of the People's Republic of China for 
Controlling the Registration of Enterprises as Legal Persons, 
promulgated by the State Administration for Industry and Commerce on 
June 13, 1988, and the General Principles of the Civil Law of the 
People's Republic of China, effective on January 1, 1987, all placed on 
the record of this review, provide that, to qualify as legal persons, 
companies must have the ``ability to bear civil liability 
independently'' and the right to control and manage their businesses. 
These regulations also state that, as an independent legal entity, a 
company is responsible for its own profits and losses. See Notice of 
Final Determination of Sales at Less Than Fair Value: Manganese Metal 
from the People's Republic of China, 60 FR 56045 (November 6, 1995) 
(Manganese Metal). At verification, we saw that the business license 
for New Star was granted in accordance with these laws. Therefore, we 
preliminarily determine that there is an absence of de jure control 
over export activity with respect to this firm.

De Facto Control

    With respect to the absence of de facto control over export 
activities, the information provided in the questionnaire responses, 
and reviewed at verification, indicates that the management of New Star 
is responsible for the determination of export prices, profit 
distribution, marketing strategy, and contract negotiations. Our 
analysis indicates that there is no government involvement in the daily 
operations or the selection of management for this company. In 
addition, we have found that the respondent'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.
    There are no restrictions on the use of export earnings. The 
company's general manager has the right to negotiate and enter into 
contracts, and may delegate this authority to employees within the 
company. There is no evidence that this authority is subject to any 
level of governmental approval. New Star has stated that its management 
is selected by its board of directors and/or its employees and that 
there is no government involvement in the selection process. Lastly, 
decisions made by respondent concerning purchases of subject 
merchandise from other suppliers are not subject to government 
approval. Consequently, because evidence on the record indicates an 
absence of government control, both in law and in fact, over its export 
activities, we preliminarily determine that New Star is eligible for a 
separate rate for purposes of this review.

Normal Value Comparisons

    To determine whether respondent's sales of the subject merchandise 
to the United States were made at prices below NV, we compared the 
United States prices to NV, as described in the ``United States Price'' 
and ``Normal Value'' sections of this notice.

United States Price

    For New Star, we based United States price on EP, in accordance 
with section 772(a) of the Act, because the first sale to an 
unaffiliated purchaser was made prior to importation, and constructed 
export price (CEP) was not otherwise warranted by the facts on the 
record. See, the memorandum entitled Analysis of the Relationship and 
Treatment of Sale between Shanghai New Star Im/Ex Co., Ltd. (New Star) 
and Peak Candles, LLC (Peak Candle), January 15, 2002. We calculated EP 
based on the packed price from the exporter to the first unaffiliated 
purchaser in the United States. We deducted foreign inland freight, 
foreign inland insurance, and international freight expenses from the 
starting price (gross unit price) in accordance with section 772(c) of 
the Act.

Normal Value

    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 companies contested such treatment 
in this review. Accordingly, we have applied surrogate values to the 
factors of production to determine NV. See Factor Values Memo for the 
Preliminary Results of the Antidumping Duty New Shipper Review of 
Petroleum Wax Candles from the People's Republic of China, January 15, 
2002 (Factor Values Memo).
    We calculated NV based on factors of production in accordance with 
section 773(c)(4) of the Act and section 351.408(c) of our regulations. 
Consistent with numerous other cases involving the PRC, we determined 
that India (1) is comparable to the PRC in level of economic 
development, and (2) is a significant producer of comparable 
merchandise. See the November 27, 2001 memo from the Office of Policy 
regarding surrogate country selection for this review and the Factor 
Values Memo. We valued the factors of production using publicly 
available information from India. We adjusted the Indian input prices 
by adding freight expenses to reflect delivered prices. At verification 
we found that New Star had not reported in its questionnaire responses 
factor information for several factors, including water, scent, 
additive and plaster. Because these factors are a relatively minor part 
of the production process for candles, we gathered information at 
verification to use as the basis for including these factors in the 
calculation of NV. Thus, the information gathered at verification for 
these factors is being used as facts available (FA) in accordance with 
section 776(a) of the Act and section 351.308 of the Department's 
regulations.
    We valued the factors of production as follows:
    To value petroleum wax, we used the average Indian price for 
paraffin wax derived from rates published in Chemical Weekly for the 
second quarter 2000 (IIQ00), as found in petitioner's August 17, 2001 
Surrogate Value Submission in the 1999-2000 administrative review of 
Sulfanilic Acid from the PRC. We selected the price quotes from the 
IIQ00 because that period represents the most recent complete quarter 
available from that submission. This price was adjusted on a tax-
exclusive basis to account for the

[[Page 3481]]

Indian excise tax of 16 percent and has been inflated through the POR.
    To value wicks, we used the average Indian import price for HTS 
number 5908 from the February 2001 issue of the Monthly Statistics of 
Foreign Trade of India (Monthly Statistics), which includes data for 
the period April 2000-February 2001. For this unit value, we divided 
the total import value, less the value of imports from NME countries, 
by the total import quantity, less the quantity from NME countries. 
Since most months from this period overlap with the POR, we did not 
adjust for inflation or deflation.
    To value color, we used the average Indian import price for HTS 
numbers 3204.1121 and 3204.1129 from the February 2001 issue of the 
Monthly Statistics, which includes data for the period April 2000-
February 2001. These HTS numbers are for red and pink dyes, which were 
the colors used by New Star's producer. For this unit value, we divided 
the total import value, less the value of imports from NME countries, 
by the total import quantity, less the quantity from NME countries. 
Since most months from this period overlap with the POR, we did not 
adjust for inflation or deflation.
    To value additive (stearic acid), we used the average Indian import 
price for HTS number 2915.7003 from the February 2001 issue of the 
Monthly Statistics of Foreign Trade of India (Monthly Statistics), 
which includes data for the period April 2000-February 2001. For this 
unit value, we divided the total import value, less the value of 
imports from NME countries, by the total import quantity, less the 
quantity from NME countries. Since most months from this period overlap 
with the POR, we did not adjust for inflation or deflation.
    To value scent, we used the average Indian import price for HTS 
number 3302.9002 from the February 2001 issue of the Monthly Statistics 
of Foreign Trade of India (Monthly Statistics), which includes data for 
the period April 2000-February 2001. For this unit value, we divided 
the total import value, less the value of imports from NME countries, 
by the total import quantity, less the quantity from NME countries. 
Since most months from this period overlap with the POR, we did not 
adjust for inflation or deflation.
    To value plaster, we used the average Indian import price for HTS 
number 2520.2001 from the February 2001 issue of the Monthly Statistics 
of Foreign Trade of India (Monthly Statistics), which includes data for 
the period April 2000-February 2001. For this unit value, we divided 
the total import value, less the value of imports from NME countries, 
by the total import quantity, less the quantity from NME countries. 
Since most months from this period overlap with the POR, we did not 
adjust for inflation or deflation.
    To value coal and electricity, we used data reported as the average 
Indian domestic prices within the categories of ``Steam Coal for 
Industry'' and ``Electricity for Industry,'' published in the 
International Energy Agency's publication, Energy Prices and Taxes, 
First Quarter, 2000. We adjusted the cost of coal to include an amount 
for transportation. For water, we relied upon public information from 
the October 1997 Second Water Utilities Data Book: Asian and Pacific 
Region, published by the Asian Development Bank.
    To achieve comparability of energy and water prices to the factors 
reported for the company under review, we adjusted these factor values 
to reflect inflation through the POR using the Wholesale Price Index 
(WPI) for India, as published in the 2001 International Financial 
Statistics (IFS) by the International Monetary Fund (IMF).
    To value packing materials (plastic bags, cardboard boxes and 
adhesive tape), we relied upon Indian import data from the April 2000 
through February 2001 issues of Monthly Statistics of the Foreign Trade 
of India (Monthly Statistics). We did not adjust these prices to 
reflect inflation to the candles processing season during the POR 
because most months from this period overlap with the POR. We adjusted 
the values of packing materials to include freight costs incurred 
between the supplier of the packing materials and the factory. For 
transportation distances used in the calculation of freight expenses on 
packing materials, we added, to surrogate values from India, a 
surrogate freight cost using 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).
    To value factory overhead, selling, general, and administrative 
expenses (SG&A), and profit, we used information reported in the 
January, 1997 Reserve Bank of India Bulletin, ``Statement 1 - Combined 
Income, Value of Production, Expenditure and Appropriation Accounts, 
Industry Group-wise'' of that report for the Indian metals and 
chemicals (and products thereof) industries.
    For labor, we used the PRC regression-based wage rate at Import 
Administration's home page, Import Library, Expected Wages of Selected 
NME Countries, revised in September 2001. See http://ia.ita.doc.gov/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 site is the Yearbook of Labour Statistics 2000, 
International Labour Office (Geneva: 2000), Chapter 5B: Wages in 
Manufacturing.
    We valued movement expenses as follows:
    To value truck freight expenses, we used the average of seventeen 
price quotes from six different Indian trucking companies which were 
used in the antidumping investigation of Bulk Aspirin from the People's 
Republic of China, 65 FR 33805 (May 25, 2000). We adjusted the rates to 
reflect inflation to the month of sale of the finished product using 
the WPI for India from the IFS.
    To value inland insurance, we used data available on our website's 
index of factor values at http://ia.ita.doc.gov/factorv/prc/insuranc.htm. The published rate of Rs. 133.75/mt was inflated through 
the POR and converted to a per kilogram rate.
    To value domestic ocean freight, we used data available on our 
website's index of factor values at http://ia.ita.doc.gov/factorv/prc/freight.htm. The published rate of $0.17/kg was inflated through the 
POR.
    To value international ocean freight, we used freight quotes from 
the first administrative and new shipper reviews of crawfish tail meat 
from the PRC (See Memorandum to the File from Mike Strollo to Maureen 
Flannery: Ocean Freight Rates for the New Shipper and Administrative 
Reviews of Freshwater Crawfish Tail Meat from the People's Republic of 
China, dated September 29, 1999). These quotes were the most 
contemporaneous to the POR that we were able to locate. For additional 
values, we used freight quotes from Maersk/Sea Land and Transoceanic 
Shipping Co., Inc. See Memorandum to the File from Scott Lindsay to 
Maureen Flannery: Ocean Freight Rates for the New Shipper and 
Administrative Reviews of Freshwater Crawfish Tail Meat from the 
People's Republic of China, dated September 29, 2000). Ocean freight 
rates from Sea Land Services have been obtained and applied in previous 
investigations, such as Saccharin from the People's Republic of China, 
59 FR 58818 (November 15, 1994), Coumarin from the People's

[[Page 3482]]

Republic of China, 59 FR 66895 (December 2, 1994) and Persulfates. All 
ocean freight surrogate values have been adjusted for inflation through 
the POR.

Currency Conversion

    We made currency conversions pursuant to Sec. 351.415 of the 
Department's regulations at the rates certified by the Federal Reserve 
Bank. See http://ia.ita.doc.gov/exchange/index.html.

Preliminary Results of Review

    We preliminarily determine that the following dumping margin 
exists:

------------------------------------------------------------------------
                                                              Margin (ad
           Manufacturer/ Exporter              Time Period     valorem)
------------------------------------------------------------------------
New Star...................................  8/1/00-1/31/01       74.20%
------------------------------------------------------------------------

    Any interested party may request a hearing within 30 days of 
publication of this notice in accordance with Sec. 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 section 351.309(c)(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. If a hearing is held, an 
interested party may make an affirmative presentation only on arguments 
included in that party's case brief and may make a rebuttal 
presentation only on arguments included in that party's rebuttal brief. 
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 assessment 
instructions directly to the U.S. Customs Service upon completion of 
this review. For assessment purposes, we intend to calculate importer-
specific assessment rates for petroleum wax candles from the PRC. We 
will divide the total dumping margins (calculated as the difference 
between NV and the United States price) for each importer by the 
entered value of the merchandise. Upon the completion of this review, 
we will direct Customs to assess the resulting ad valorem rate against 
the entered quantity of each entry of the subject merchandise by the 
importer during the POR.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of petroleum wax candles 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, which is 
currently 54.21 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.
    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 this notice are published in accordance 
with sections 751(a)(2)(B) and 777 (i)(1) of the Act.

    January 15, 2002
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-1791 Filed 1-23-02; 8:45 am]
BILLING CODE 3510-DS-S