[Federal Register Volume 67, Number 91 (Friday, May 10, 2002)]
[Notices]
[Pages 31770-31774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11770]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-815]


Sulfanilic Acid From the People's Republic of China; Preliminary 
Results and Preliminary Partial Rescission of Antidumping Duty 
Administrative Review

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

EFFECTIVE DATE: May 10, 2002.

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on sulfanilic acid 
from the People's Republic of China. The review covers exports of this 
merchandise to the United States for the period August 1, 2000 through 
July 31, 2001, and two firms: Zhenxing Chemical Industry Company 
(Zhenxing) (also known as Baoding Mancheng Zhenxing Chemical Plant) and 
Xinyu Chemical Plant (Xinyu) (formerly known as Yude Chemical Industry 
Company). The preliminary results of this review indicate that there 
are dumping margins only for Zhenxing. We are preliminarily rescinding 
the review with respect to Xinyu because Xinyu did not export the 
subject merchandise to the United States during the period of review 
(POR). Interested parties are invited to comment on these preliminary 
results. See ``Public Comment'' section of this notice. The dumping 
margins are listed below in the ``Preliminary Results of the Review'' 
section of this notice.

FOR FURTHER INFORMATION CONTACT: Sean Carey or Dana Mermelstein, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue N.W., Washington, DC 
20230 at (202) 482-3964 or (202) 482-1391, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations:

    Unless otherwise indicated, all citations to the statute are 
references to the Tariff Act of 1930 (the Act), as amended. In 
addition, unless otherwise indicated, all citations to the 
Department's.32 regulations are to the regulations codified at 19 CFR 
Part 351 (2001).

Background:

    On August 1, 2001, the Department published in the Federal Register 
(66 FR 39729) a notice of ``Opportunity to Request Administrative 
Review'' of the antidumping duty order on sulfanilic acid from the 
People's Republic of China, for the August 1, 2000 through July 31, 
2001 period of review (POR). In accordance with 19 CFR 351.213(b), 
Zhenxing requested an administrative review for the aforementioned 
period on August 27, 2001. Petitioner, Nation Ford Chemical Company, 
also requested an administrative review of Zhenxing and Xinyu on August 
30, 2001. On October 1, 2001, we published a notice of ``Initiation of 
Antidumping Review'' that included Zhenxing and Xinyu as part of this 
administrative review. See 66 FR 49924, which is being conducting 
pursuant to section 751(a) of the Act.
    Zhenxing, a Chinese manufacturer described as a joint venture with 
U.S.-

[[Page 31771]]

based importer PHT, reported sales of subject merchandise to the United 
States during the POR in its December 21, 2001 response to Section A of 
the Department's questionnaire. On January 14, 2002, Zhenxing submitted 
its response to Sections C and D of this questionnaire. Corrections to 
sections C and D were filed by Zhenxing on the following day, January 
15, 2002.
    Zhenxing submitted its response to the Department's first 
supplemental questionnaire on March 6, 2002. On April 15, 2002, 
Zhenxing responded to the Department's second supplemental 
questionnaire.

Partial Rescission:

    The Department conducted a query of U.S. Customs Service data on 
entries of sulfanilic acid from the People's Republic of China made 
during the POR, and confirmed that Xinyu made no entries during the 
review period. Therefore, we preliminarily determine to rescind the 
review with respect to Xinyu.

Scope of Review:

    Imports covered by this review 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 with 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, classifiable under the 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 
classifiable under the subheading 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), classifiable under the 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, our written description of the scope of this 
proceeding is dispositive.

Period of Review:

    The review period is August 1, 2000 through July 31, 2001.

Separate Rate Analysis:

    It is the Department's standard policy to assign to all exporters 
of the merchandise subject to review in non-market economy countries a 
single rate, unless an exporter can affirmatively demonstrate an 
absence of government control, both in law (de jure) and in fact (de 
facto), with respect to exports. See Mitsubishi Heavy Industries, Ltd., 
v. U.S., 54 F. Supp. 2d 1183 (CIT 1999). To establish whether a company 
is sufficiently independent to be entitled to a separate, company-
specific rate, the Department analyzes each exporting entity in a non-
market economy (``NME'') country 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) 
(``Sparklers''), as amplified by the Final Determination of Sales at 
Less Than Fair Value: Silicon Carbide from the People's Republic of 
China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide''). Evidence 
supporting, though not requiring, a finding of de jure absence of 
government control 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; or 
(3) any other formal measures by the government decentralizing control 
of companies. De facto absence of government control with respect to 
exports is based on four criteria: (1) whether the export prices are 
set by or subject to 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 and 
financing of losses; (3) whether each exporter has autonomy in making 
decisions regarding the selection of management; and (4) whether each 
exporter has the authority to sign contracts and other agreements.
1. Absence of De Jure Control
    With respect to the absence of de jure government control over the 
export activities of Zhenxing, evidence on the record indicates that 
Zhenxing's export activities are not controlled by the government. In 
its questionnaire response, Zhenxing stated that it is an independent 
legal entity. Zhenxing submitted evidence of its legal right to set 
prices independent of all government oversight. Our review of 
Zhenxing's joint venture and business licenses indicates that it is 
permitted to engage in the exportation of sulfanilic acid. We 
preliminarily find no evidence of de jure government control 
restricting Zhenxing from the exportation of sulfanilic acid.
2. Absence of De Facto Control
    With respect to the absence of de facto control over export 
activities, the information provided and reviewed at verification 
indicates that the management of Zhenxing, itself, 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 
the review or approval of any outside entity, and that there are no 
governmental policy directives that affect these decisions.
    There are no restrictions on Zhenxing's use of its export earnings. 
The company's management has the right to negotiate and enter into 
contracts and may delegate this authority to other company employees. 
There is no evidence that this authority is subject to any level of 
governmental approval. According to Zhenxing, the general manager is 
appointed by the Board of Directors, and management is selected by the 
general manager in consultation with the board of directors. Zhenxing 
stated that there is no government involvement in this selection 
process.
    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 a separate rate should be 
applied to Zhenxing. For further discussion of the Department's 
preliminary determination regarding the issuance of separate rates, see 
Separate Rates Decision Memorandum for Barbara Tillman, Director, 
Office of AD/CVD Enforcement VII, dated May 3, 2002. A public version 
of this memorandum is on file in the Department's Central Record Unit 
(CRU).

United States Price:

    Zhenxing reported as constructed export price (``CEP'') the U.S. 
sales made by PHT on behalf of Zhenxing. We calculated CEP based on FOB 
prices to unaffiliated purchasers in the United States. In past 
reviews, we have found Zhenxing and PHT to be affiliated, and

[[Page 31772]]

there has been no change in their affiliation during this review 
period. We made deductions for foreign inland freight, ocean freight, 
marine insurance, U.S. customs duties, U.S. transportation, credit, 
repacking in the United States, indirect selling expenses, inventory 
carrying costs, and constructed export price profit, as appropriate, in 
accordance with sections 772(c) and (d) of the Act. See Preliminary 
Analysis Memorandum dated May 3, 2002, a pubic version of which is on 
file in the CRU.
    For foreign inland freight and ocean freight, respondent reported 
that these services were provided by NME companies. We valued these 
expenses using surrogate rates from India. Where appropriate, we 
calculated expenses which were incurred in U.S. dollars based on the 
actual U.S. dollar amounts paid for such expenses.

Normal Value:

    Section 773(c)(1) of the Act provides that the Department shall 
determine normal value (``NV'') using a factors of production 
methodology if (1) the merchandise is exported from a non-market 
economy (NME) country, and (2) the 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), any determination that a foreign country is an NME 
country shall remain in effect until revoked by the administering 
authority. None of the parties to this proceeding has contested such 
treatment in this review. Accordingly, we treated the PRC as an NME 
country for purposes of this review and we calculated NV by valuing the 
factors of production as set forth in section 773(c)(3) of the Act in a 
comparable market economy country which is a significant producer of 
comparable merchandise. Pursuant to section 773(c)(4) of the Act, we 
determined that India is comparable to the PRC in terms of per capita 
gross national product (``GNP''), the growth rate in per capita GNP, 
and the national distribution of labor; and that India is a significant 
producer of comparable merchandise. The Department has selected India 
as the surrogate country in the investigation and all prior 
administrative reviews of this order. See Final Determination of Sales 
at Less Than Fair Value: Sulfanilic Acid from the People's Republic of 
China, 57 FR 9409, 9412 (March 18, 1992). For further discussion of the 
Department's selection of India as the primary surrogate country, see 
Memorandum from Jeffrey May, Director, Office of Policy, to Dana 
Mermelstein, Program Manager, Office of AD/CVD Enforcement VII, dated 
March 8, 2002, and the ``Surrogate Values Memorandum,'' dated May 3, 
2002.
    For purposes of calculating NV, we valued PRC factors of production 
in accordance with section 773(c)(1) of the Act. In examining surrogate 
values, we selected, where possible, the publicly available value which 
was: (1) an average non-export value; (2) representative of a range of 
prices within the POR or most contemporaneous with the POR; (3) 
product-specific; and (4) tax-exclusive. For factor values where we 
used Indian import statistics, we did not include data pertaining to 
imports from non-market economy countries. See e.g., Notice of Final 
Results of the Antidumping Duty Administrative Review of Chrome-Plated 
Lug Nuts from the People's Republic of China, 63 FR 53872 (October 7, 
1998). We also did not include imports from Indonesia, Korea, and 
Thailand because these countries maintain non-specific export 
subsidies. See Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Automotive Replacement Glass Windshields From the 
People's Republic of China, 67 FR 6482 (February 12, 2002).
    For those surrogate values not contemporaneous with the POR, we 
adjusted for inflation where appropriate, using the Indian wholesale 
price indices (WPI) and U.S. producer price indices (PPI) published in 
the IMF's International Financial Statistics. When necessary, we 
adjusted the values for certain inputs reported in Chemical Weekly to 
exclude sales and excise taxes. In accordance with our practice, we 
added to CIF import values from India a surrogate inland freight cost 
using a simple average of the reported distances from either the 
closest PRC port to the factory, or from the domestic input supplier to 
the factory. See Final Determination of Sales at Less that Fair Value: 
Certain Cut-to-Length Carbon Steel Plate from the People's Republic of 
China, 62 FR 61964, 61977 (November 20, 1997). In accordance with this 
methodology, we valued the factors of production as follows:
    Consistent with our final results in the 1999-2000 administrative 
review (see Sulfanilic Acid from the People's Republic of China; Final 
Results of Administrative Review, 66 FR 1962 (January 15, 2001)), we 
used public price quotes to value aniline, sulfuric acid, sodium 
bicarbonate, and activated carbon. To value aniline used in the 
production of sulfanilic acid, we used the rupee per kilogram value for 
sales in India during the POR as reported in Chemical Weekly, excluding 
any amounts assessed for the Indian excise tax and sales tax. We made 
adjustments to include costs incurred for freight between the Chinese 
aniline suppliers and the Zhenxing factory. This price was adjusted for 
inflation to be concurrent with the POR.
    The surrogate freight rates used in the calculation of 
transportation costs for material inputs and subject merchandise were 
based on price quotes for truck freight rates from six different Indian 
trucking companies which were used in the in the Final Determination of 
Sales at Less than Fair Value: Bulk Aspirin from the People's Republic 
of China, 65 FR 33805
    (May 25, 2000) (Bulk Aspirin). We also used rail freight rates from 
Bulk Aspirin that were quoted by two Indian rail freight transporters. 
Both the trucking and rail freight rates were adjusted for inflation to 
be concurrent with the POR.
    To value sulfuric acid used in the production of sulfanilic acid, 
we used the rupee per kilogram value for sales in India during the POR 
as reported in ChemicalWeekly, excluding the amounts assessed for the 
Indian excise tax and sales tax. We made additional adjustments to 
include costs incurred for freight between the Chinese sulfuric acid 
supplier and the Zhenxing factory in the PRC. This price was adjusted 
for inflation to be concurrent with the POR.
    To value sodium bicarbonate used in the production of sodium 
sulfanilate, we used the rupee per kilogram value for sales in India 
during the POR as reported in Chemical Weekly, excluding the amounts 
assessed for the Indian excise tax and sales tax. We made additional 
adjustments to include costs incurred for freight between the Chinese 
sodium bicarbonate supplier and Zhenxing factory in the PRC. This price 
was adjusted for inflation to be concurrent with the POR.
    We averaged public price quotes from two Indian chemical 
corporations to value activated carbon. These price quotes are specific 
to the type and grade of activated carbon used in the production of 
sulfanilic acid. We made adjustments to include costs incurred for 
inland freight between the Chinese activated carbon supplier and 
Zhenxing's factory in the PRC. This price was adjusted for inflation to 
be concurrent with the POR.
    To value plastic bags used as packing materials, we used import 
information

[[Page 31773]]

from Indian Import Statistics that accounted for the period August 2000 
through January 2001.
    We adjusted these values to include freight costs incurred between 
the Chinese plastic bag suppliers and Zhenxing's factory in the PRC. 
This price was contemporaneous with the POR and therefore, not 
inflated.
    Zhenxing reported its energy usage associated with steam coal and 
electricity. To value coal, we used import information from Indian 
Import Statistics that accounted for the period August 2000 through 
January 2001. We adjusted this value to include freight costs incurred 
between the coal supplier and Zhenxing's factory in the PRC. This price 
was contemporaneous with the POR and, therefore, not inflated. To value 
electricity, we used the price of industrial electricity in India in 
1997 reported in Energy, Prices, and Taxes, First Quarter 1999 
published by the International Energy Agency. This price was adjusted 
for inflation to be concurrent with the POR.
    The Department's regulations, at 19 CFR 351.408(c)(3), state that 
``[f]or labor, the Secretary will use regression-based wage rates 
reflective of the observed relationship between wages and national 
income in market economy countries. The Secretary will calculate the 
wage rate to be applied in nonmarket economy proceedings each year. The 
calculation will be based on current data, and will be made available 
to the public.'' To value the factor inputs for labor, we used the wage 
rates calculated for the PRC in the Department's ``Expected Wages of 
Selected Non-Market Economy Countries-1999 Income Data'' as updated in 
September 2001, and made public by the Department on its world-wide web 
site for Import Administration at www.ia.ita.doc.gov.
    Following our practice from prior administrative reviews of 
sulfanilic acid from the PRC, for factory overhead, we used information 
reported in the Reserve Bank of India Bulletin (``Bulletin'') for 
Indian public companies in the chemical industry. We used updated 
information from the September 2001 Bulletin. From this information, we 
were able to determine factory overhead as a percentage of total cost 
of manufacturing.
    To value ocean freight, we used a value provided by the Federal 
Maritime Commission used in the Final Determination of the Antidumping 
Administrative Review of Sebacic Acid from the PRC, 62 FR 65674 
(December 15, 1997). We adjusted the value for ocean freight for 
inflation during the POR using the U.S. dollar PPI data published by 
the IMF.
    For selling, general and administrative (SG&A) expenses, we used 
information reported in the September 2001 Bulletin for Indian public 
companies in the chemical industry. We calculated an SG&A rate by 
dividing SG&A expenses as reported in the Bulletin by the cost of 
manufacturing.
    Finally, to calculate a profit rate, we used information reported 
in the September 2001 Bulletin for Indian public companies in the 
chemical industry. We calculated a profit rate by dividing the before-
tax profit by the sum of those components pertaining to the cost of 
manufacturing plus SG&A as reported in the Bulletin.
    For a complete discussion of the Department's selection of 
surrogate values and copies of source documents relating to their 
valuation, see the Department's ``Surrogate Values Memorandum,'' dated 
May 3, 2002.

Preliminary Results of Review:

    We preliminarily determine the weighted average dumping margin for 
Zhenxing for the period August 1, 2000 through July 31, 2001 to be 
46.27 percent.

Public Comment:

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five days after the date of 
publication of this notice. Pursuant to 19 CFR 351.309, interested 
parties may submit written comments in response to these preliminary 
results. Normally, case briefs are to be submitted within 30 days after 
the date of publication of this notice, and rebuttal briefs, limited to 
arguments raised in case briefs, are to be submitted no later than five 
days after the time limit for filing case briefs. Parties who submit 
arguments in this proceeding are requested to submit with the argument: 
(1) a statement of the issues, and (2) a brief summary of the argument. 
Case and rebuttal briefs must be served on interested parties in 
accordance with 19 CFR 351.303(f).
    Also, pursuant to 19 CFR 351.310, within 30 days of the date of 
publication of this notice, interested parties may request a public 
hearing on arguments to be raised in the case and rebuttal briefs. 
Unless the Secretary specifies otherwise, the hearing, if requested, 
will be held two days after the date for submission of rebuttal briefs. 
Representatives of parties to the proceeding may request disclosure of 
proprietary information under administrative protective order no later 
than ten days after the representative's client or employer becomes a 
party to the proceeding, but in no event later than the date case 
briefs are due. The Department will publish the final results of this 
administrative review, including the results of its analysis of issues 
raised in any case or rebuttal brief, not later than 120 days, unless 
extended, after publication of these preliminary results.

Duty Assessments and Cash Deposit Requirements:

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Upon completion 
of this review, the Department will issue liquidation instructions 
directly to the Customs Service. Since the reported sales are CEP sales 
through a single affiliated importer, the liquidation instructions will 
recalculate the dumping margin on an entered value basis. Furthermore, 
the following deposit rates will be effective with respect to all 
shipments of sulfanilic acid from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this review, as provided for by section 751(a)(2)(C) 
of the Act: (1) the cash deposit rate for the reviewed company listed 
above will be the rate for that firm established in the final results 
of this review; (2) for companies previously found to be entitled to a 
separate rate and for which no review was requested, the cash deposit 
rate will be the rate established in the most recent review of that 
company; (3) for all other PRC exporters of subject merchandise, the 
cash deposit rate will be the PRC-wide rate of 85.20 percent; and (4) 
the cash deposit rate for non-PRC exporters of subject merchandise from 
the PRC will be the rate applicable to the PRC supplier of that 
exporter. These deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.

Notification of Interested Parties:

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f)(2) 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

[[Page 31774]]

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: May 3, 2002
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-11770 Filed 5-9-02; 8:45 am]
BILLING CODE 3510-DS-S