[Federal Register Volume 67, Number 87 (Monday, May 6, 2002)]
[Notices]
[Pages 30362-30365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11076]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-471-806]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Sulfanilic Acid from 
Portugal

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

ACTION: Notice of Preliminary Determination of Sales at Less Than Fair 
Value

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SUMMARY: We preliminarily determine that sulfanilic acid from Portugal 
is being, or is likely to be, sold in the United States at less than 
fair value, as provided in section 733(b) of the Tariff Act of 1930, as 
amended. Interested parties are invited to comment on this preliminary 
determination (see the ``Public Comment'' section of this notice).

EFFECTIVE DATE: May 6, 2002.

FOR FURTHER INFORMATION CONTACT: S. Anthony Grasso, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230; telephone: (202) 482-3853.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    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 
(``Department'') regulations are to 19 CFR Part 351 (April 2001).

Background

    Since the initiation of this investigation (Notice of Initiation of 
Antidumping Duty Investigations: Sulfanilic Acid from Hungary and 
Portugal, 66 FR 54214, 54218 (October 26, 2001) (``Initiation 
Notice'')), the following events have occurred:
    On October 25, 2001, we solicited comments from interested parties 
regarding the criteria to be used for model-matching purposes. We 
received these comments on October 30, 2001.
    On November 20, 2001, the United States International Trade 
Commission (``ITC'') preliminarily determined that there is a 
reasonable indication that imports of sulfanilic acid from Portugal are 
materially injuring the United States industry (see ITC Investigation 
No. 731-TA-984-985 (Publication No. 3472)).
    We issued an antidumping questionnaire to Quimigal - Quimica de 
Portugal S.A. (``Quimigal'') on November 19, 2001. We received 
responses to the questionnaire from Quimigal on December 10, 2001, and 
on January 14, 2002. We issued supplemental questionnaires to Quimigal 
on January 31, 2002, and March 5, 2002, to which we received responses 
on February 25, 2002, and March 19, 2002, respectively.
    On February 14, 2002, the petitioner made a request to postpone the 
preliminary determination pursuant to 19 CFR 351.205(e). On February 
15, 2002, we postponed the preliminary determination until no later 
than April 8, 2002. See Notice of Postponement of Preliminary 
Antidumping Duty Determinations: Sulfanilic Acid from Hungary and 
Portugal, 67 FR 8525 (February 25, 2002).
    On April 4, 2002, the Department again postponed the preliminary 
determination until not later than April 26, 2002. For the reasons for 
the postponement,see Notice of Postponement of Preliminary Antidumping 
Duty Determinations of Antidumping Duty Investigations: Sulfanilic Acid 
from Hungary and Portugal, 67 FR 17968 (April 12, 2002).

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on April 3, 2002, 
Quimigal requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of the 
publication of the preliminary determination in the Federal Register, 
and extend the provisional measures to not more than six months. In 
accordance with 19 CFR 351.210(b), because (1) our preliminary 
determination is affirmative, (2) Quimigal accounts for a significant 
proportion of exports of the subject merchandise, and (3) no compelling 
reasons for denial exist, we are granting the respondent's request and 
are postponing the final determination until not later than 135 days 
after the publication of this notice in the Federal Register. 
Suspension of liquidation will be extended accordingly.

Scope of Investigation

    Imports covered by this investigation are all grades of sulfanilic 
acid, which include technical (or crude) sulfanilic acid, refined (or 
purified) sulfanilic acid and sodium salt of sulfanilic acid.
    Sulfanilic acid is a synthetic organic chemical produced from the 
direct sulfonation of aniline and sulfuric acid. Sulfanilic acid is 
used as a raw material in the production of optical brighteners, food 
colors, specialty dyes and concrete additives. The principal 
differences between the grades are the undesirable quantities of 
residual aniline and alkali insoluble materials present in the 
sulfanilic acid. All grades are available as dry, free-flowing powders.
    Technical sulfanilic acid, currently classifiable under subheading 
2921.42.22 of the Harmonized Tariff Schedule (``HTS''), contains 96 
percent minimum sulfanilic acid, 1.0 percent maximum aniline, and 1.0 
percent maximum alkali insoluble materials. Refined sulfanilic acid, 
also currently classifiable under 2921.42.22 of the HTS, contains 98 
percent minimum sulfanilic acid, 0.5 percent maximum aniline and 0.25 
percent maximum alkali insoluble materials.
    Sodium salt (sodium sulfanilate), currently classifiable under HTS 
subheading 2921.42.90, is a powder, granular or crystalline material 
which contains 75 percent minimum equivalent sulfanilic acid, 0.5 
percent maximum aniline based on the equivalent sulfanilic acid 
content, and 0.25 percent maximum alkali insoluble materials based on 
the equivalent sulfanilic acid content.
    Although the HTS subheadings are provided for convenience and 
customs purposes, the written description of the scope of this 
investigation is dispositive.

[[Page 30363]]

    In accordance with the preamble to the Department regulations (see 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997)), we set aside a period of time for parties to 
raise issues regarding product coverage and encouraged all parties to 
submit comments within 20 calendar days of publication of the 
Initiation Notice. We did not receive any such comments.

Period of Investigation

    The period of investigation (``POI'') is July 1, 2000, through June 
30, 2001.

Date of Sale

    We used the sale invoice date as the date of sale. Although 
Quimigal negotiated a contract with its buyer that established a fixed 
price and quantity prior to the POI, the terms of the contract 
fluctuated throughout the POI according to documented and undocumented 
agreements. Because record evidence indicates that the material terms 
of the sale contract were subject to change up until invoicing, we 
preliminarily determine that the invoice date more accurately 
represents the date of sale than the contract date.

Fair Value Comparisons

    To determine whether sales of sulfanilic acid from Portugal to the 
United States were made at less than fair value, we compared the export 
price (``EP'') to the normal value (``NV''), as described in the 
``Export Price'' and ``Normal Value'' sections of this notice, below. 
In accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI 
weighted-average EPs to POI weighted-average NVs. Any company-specific 
changes to the EP and NV calculations made by the Department are 
discussed in the company's calculation memorandum, which is on file at 
the Department's Central Records Unit in Room B-099 of the main 
Department building. See Memorandum from team to the file, 
``Preliminary Determination Calculation Memorandum for Quimigal - 
Quimica de Portugal, S.A.,'' (``Calculation Memo'') dated April 8, 
2002.

Product Comparisons

    In accordance with section 771(16)(A) of the Act, we considered all 
products produced and sold by the respondent in the third-country 
market during the POI that fit the description in the ``Scope of 
Investigation'' section of this notice to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
We compared U.S. sales to sales made in the third-country market. In 
making the product comparisons, we matched foreign like products based 
on the physical characteristics reported by the respondent in the 
following order of importance: form; product type; aniline impurity 
content; alkali insoluble impurity content; and sulfanilic content.

Export Price

    We calculated EP, in accordance with section 772(a) of the Act, for 
those sales where the merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation by the exporter or 
producer outside the United States, or to an unaffiliated purchaser for 
exportation to the United States, based on the facts of record. We 
based EP on the ex-works price to an unaffiliated purchaser/reseller. 
We made no adjustments to this price.

Normal Value

A. Home Market Viability
    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a basis for calculating NV (i.e., 
whether the aggregate volume of home market sales of the foreign like 
product is equal to or greater than five percent of the aggregate 
volume of U.S. sales), the Department compares 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)(1)(C) of the Act. We determined that Quimigal has no home market 
sales. Therefore, we have based NV for Quimigal on third-country sales 
in the usual commercial quantities and in the ordinary course of trade. 
For the reasons described in the Memorandum to Richard Moreland, 
``Selection of Third Country Comparison Market,'' dated April 26, 2002, 
we used sales to the United Kingdom (``UK'') as third-country 
comparison sales. The UK was Quimigal's largest third-country market 
for sulfanilic acid in terms of both value and quantity.
B. Cost of Production Analysis
    Based on our analysis of an allegation contained in the petition, 
we found that there were reasonable grounds to believe or suspect that 
sales of sulfanilic acid in the third-country market were made at 
prices below their cost of production (``COP''). Reasonable grounds 
exist when an interested party provides specific factual information on 
costs and prices, observed or constructed, indicating that sales in the 
comparison market in question are at below-cost prices. Accordingly, 
based on the allegation in the petition and pursuant to section 
773(b)(1) of the Act, we initiated a country-wide sales-below-cost 
investigation to determine whether sales were made at prices below 
their respective COP (see Initiation Notice, 66 FR at 54214, 54215-17).

1. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus an amount for selling, general and 
administrative expenses (``SG&A''), interest expenses, and home market 
packing costs (see ``Test of Foreign Market Sales Prices'' section 
below for treatment of third-market selling expenses). We relied on the 
COP data submitted by Quimigal, except in the following instance. To 
calculate the fixed overhead, we used Quimigal's depreciation as it is 
recorded in its financial accounts according to Portuguese GAAP (i.e., 
accelerated depreciation), rather than relying upon Quimigal's reported 
unit which was calculated using straight line depreciation. See 
Calculation Memo.

2. Test of Foreign Market Sales Prices

    We compared COP to the sales prices of the foreign like product, as 
required under section 773(b) of the Act, in order to determine whether 
these sales had been made at prices below the COP. In determining 
whether to disregard foreign market sales made at prices below the COP, 
we examined whether such sales were made (1) within an extended period 
of time in substantial quantities, and (2) at prices which permitted 
the recovery of all costs within a reasonable period of time, in 
accordance with sections 773(b)(1)(A) and (B) of the Act. On a product-
specific basis, we compared the COP to foreign market prices, less any 
applicable movement charges, discounts, and rebates.

3. Results of the COP Test

    Pursuant to section 773(b)(2)(C), where less than 20 percent of the 
respondent's sales of a given product are at prices less than the COP, 
we do not disregard any below-cost sales of that product, because we 
determine that in such instances the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product are at prices less than the COP over a period 
of at least six months, we determine that the below-cost sales 
represent ``substantial quantities'' within an extended period of time, 
in accordance with section 773(b)(1)(A) of the Act. In such cases, we 
also determine whether such sales were made at prices which

[[Page 30364]]

would not permit recovery of all costs within a reasonable period of 
time, in accordance with section 773(b)(1)(B) of the Act and, if so, we 
disregard the below-cost sales.
    We found that, for certain products, more than 20 percent of 
Quimigal's third-country market sales were at prices less than the COP 
and did not provide for the recovery of costs. Therefore we excluded 
these sales and used the remaining above-cost sales, if any, as the 
basis for determining NV, in accordance with section 773(b)(1) of the 
Act.
C. Calculation of Constructed Value
    Section 773(a)(4) of the Act provides that where normal value 
cannot be based on comparison market sales, normal value may be based 
on constructed value (``CV''). Accordingly, for Quimigal, when sales of 
comparison products could not be found, either because there were no 
sales of a comparable product or all sales of the comparable products 
failed the COP test, we based NV on CV.
    In accordance with sections 773(e)(1), (e)(2)(A), and (e)(3) of the 
Act, we calculated CV based on the sum of the cost of materials and 
fabrication for the subject merchandise, plus amounts for selling 
expenses, G&A (including interest), profit and U.S. packing costs. We 
calculated the cost of materials and fabrication based on the 
methodology described in the ``Calculation of COP'' section of this 
notice. In accordance with section 773(e)(2)(A) of the Act, we based 
selling expenses, G&A, and profit on the amounts incurred and realized 
by Quimigal in connection with the production and sale of the foreign 
like product in the ordinary course of trade for consumption in the 
foreign country.
D. Level of Trade
    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the EP or the constructed export 
price. Sales are made at different LOTs if they are made at different 
marketing stages (or their equivalent) according to 19 CFR 
351.412(c)(2). Substantial differences in selling activities are a 
necessary, but not sufficient, condition for determining that there is 
a difference in the stages of marketing. Id; see also Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate From South Africa, 62 FR 61731, 61732 (November 19, 
1997). In order to determine whether the comparison sales were at 
different stages in the marketing process than the U.S. sales, we 
reviewed the distribution system in each market (i.e., the ``chain of 
distribution''), including selling functions, class of customer 
(``customer category''), and the level of selling expenses for each 
type of sale.
    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third-country prices\1\), we consider the 
starting prices before any adjustments.
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    \1\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses, G&A, and 
profit for CV, where possible.
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    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the EP 
LOT, the Department may compare the U.S. sale to sales at a different 
LOT in the comparison market. 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 sales 
at different LOTs in the country in which NV is determined, we make a 
level of trade adjustment under section 773(a)(7)(A) of the Act. 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, 61732 
(November 19, 1997).
    We obtained information from Quimigal regarding the marketing 
stages involved in making the reported third-country market and U.S. 
sales, including a description of the selling activities performed by 
the respondent for each channel of distribution. In the comparison 
market, all sales reported by Quimigal were direct sales to a trading 
company. Sales through this single channel of distribution to the sole 
customer category were similar with respect to all selling activities 
and, therefore, Quimigal's foreign market sales constituted a single 
level of trade.
    In the U.S. market, Quimigal had only EP sales. Quimigal reported 
direct EP sales to a trading company through only one channel of 
distribution and one customer category, and therefore had only one 
level of trade for its EP sales. This EP level of trade was similar to 
the foreign market level of trade with respect to selling activities. 
Consequently, we matched the EP level of trade to sales at the same 
level of trade in the foreign market.
E. Calculation of Normal Value Based on Comparison Market Prices
    We calculated NV based on ex-works/ex-warehouse prices to 
unaffiliated customers that we determined to be at arm's-length. In 
addition, where appropriate, we made adjustments under section 
773(a)(6)(C)(iii) of the Act for differences in circumstances of sale 
for imputed credit expenses. We deducted foreign market packing costs 
and added U.S. packing costs in accordance with section 773(a)(6)(A) 
and (B) of the Act.
F. Calculation of Normal Value Based on Constructed Value
    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act. Where we compared CV to 
EP, we made circumstance-of-sale adjustments.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on the exchange rates in effect on the 
dates of the U.S. sales as reported by the Federal Reserve Bank.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of all imports of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the Customs Service to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds the EP or constructed export price, as 
indicated in the chart below. These suspension-of-liquidation 
instructions will remain in effect until further notice. The weighted-
average dumping margins are as follows:

------------------------------------------------------------------------
                                                               Weighted
                                                               Average
                   Exporter/Manufacturer                        Margin
                                                              Percentage
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Quimigal...................................................        75.52
All Others.................................................        75.52
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ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our preliminary determination is 
affirmative, the ITC will determine before the later of 120 days after 
the date of this preliminary determination or 45 days after our final 
determination whether these imports are materially injuring, or 
threaten material injury to, the U.S. industry.

[[Page 30365]]

Disclosure

    We will disclose the calculations used in our analysis to parties 
to this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department not later than August 6, 2002. Rebuttal briefs must be filed 
by August 12, 2002. See19 CFR 309(c)(1)(i). A list of authorities used, 
a table of contents, and an executive summary of issues should 
accompany any briefs submitted to the Department. Executive summaries 
should be limited to five pages total, including footnotes. Section 774 
of the Act provides that the Department will hold a public hearing to 
afford interested parties an opportunity to comment on arguments raised 
in case or rebuttal briefs, provided that such a hearing is requested 
by an interested party. If a request for a hearing is made in this 
investigation, the hearing will tentatively be scheduled for two days 
after the submission of rebuttal briefs, i.e., on August 14, 2002, at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
NW, Washington, DC 20230. Parties should confirm by telephone the time, 
date, and place of the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) the party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs.
    We will make our final determination not later than 135 days after 
the date of publication of the Department's preliminary determination. 
See 19 CFR 351.210(b).
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    DATED: April 26, 2002
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-11076 Filed 5-3-02; 8:45 am]
BILLING CODE 3510-DS-S