[Federal Register Volume 67, Number 106 (Monday, June 3, 2002)]
[Notices]
[Pages 38251-38254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13845]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-846]


Brake Rotors From the People's Republic of China: Preliminary 
Results of the Sixth Antidumping Duty New Shipper Review

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

ACTION: Notice of preliminary results of sixth antidumping duty new 
shipper review.

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SUMMARY: In response to a request from one exporter, Longkou TLC 
Machinery Co., Ltd., the Department of Commerce is conducting a new 
shipper administrative review of the antidumping duty order on brake 
rotors from the People's Republic of China. The review covers the 
period April 1, 2001, through September 30, 2001.
    We have preliminarily determined that U.S. sales have not been made 
below normal value. If these preliminary results are adopted in our 
final results, we will instruct the U.S. Customs Service to assess no 
antidumping duties on the exports subject to this review.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: June 3, 2002.

FOR FURTHER INFORMATION CONTACT: Brian Smith or Terre Keaton, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone: (202) 482-1766 or (202) 482-1280, respectively.

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. In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to 19 CFR Part 351 (2001).

SUPPLEMENTARY INFORMATION:

Background

    On October 30, 2001, the Department received a request from Longkou 
TLC Machinery Co., Ltd. (``Longkou TLC''), for a new shipper review 
pursuant to section 751(a)(2)(B) of the Act and 19 CFR 351.214(b).
    Section 751(a)(2) of the Act and 19 CFR 351.214(b)(2)(i) govern 
determinations of antidumping duties for new shippers. These provisions 
state that, in requesting a review, an exporter or producer of the 
subject merchandise must meet the following conditions: (1) It did not 
export the merchandise to the United States during the period covered 
by the original less-than-fair-value (``LTFV'') investigation; and (2) 
it is not affiliated with any exporter or producer who exported the 
subject merchandise during that period. If these provisions are met, 
the Department will 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, the following information: (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 the exporter or producer, and from 
each affiliated firm, that it did not, under its current or a former 
name, export the merchandise during the period of investigation 
(``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 19 CFR 351.214(b)(ii) and (iii).
    Longkou TLC's request was accompanied by information and 
certifications establishing the effective date on which it first 
shipped and entered brake rotors. The respondent also claims that it is 
not affiliated with companies which exported brake rotors from the 
People's Republic of China (``PRC'') during the POI and has certified 
that its export activities are not controlled by the central 
government. Based on the above information, the Department initiated a 
new shipper review covering Longkou TLC (see Brake Rotors from the 
People's Republic of China: Initiation of Sixth New Shipper Antidumping 
Duty Review (66 FR 63362, December 6, 2001)). The Department is now 
conducting this review in accordance with section 751 of the Act and 19 
CFR 351.214.
    On December 5, 2001, we issued the antidumping duty questionnaire 
to Longkou TLC. On December 17, 2001, the Department provided the 
parties an opportunity to submit publicly available information for 
consideration in these preliminary results.
    On January 15, 2002, Longkou TLC submitted its questionnaire 
response.
    On February 20 and 27, 2002, the petitioner and Longkou TLC 
submitted publicly available information and rebuttal comments, 
respectively.
    On March 6, 2002, the Department issued a supplemental 
questionnaire to Longkou TLC, to which it received a response on April 
5, 2002.

[[Page 38252]]

    On March 12, 2002, the petitioner submitted a letter requesting 
that the Department conduct a verification of the response submitted by 
Longkou TLC.

Scope of Order

    The products covered by this order are brake rotors made of gray 
cast iron, whether finished, semifinished, or unfinished, ranging in 
diameter from 8 to 16 inches (20.32 to 40.64 centimeters) and in weight 
from 8 to 45 pounds (3.63 to 20.41 kilograms). The size parameters 
(weight and dimension) of the brake rotors limit their use to the 
following types of motor vehicles: automobiles, all-terrain vehicles, 
vans and recreational vehicles under ``one ton and a half,'' and light 
trucks designated as ``one ton and a half.''
    Finished brake rotors are those that are ready for sale and 
installation without any further operations. Semi-finished rotors are 
those on which the surface is not entirely smooth, and have undergone 
some drilling. Unfinished rotors are those which have undergone some 
grinding or turning.
    These brake rotors are for motor vehicles, and do not contain in 
the casting a logo of an original equipment manufacturer (``OEM'') 
which produces vehicles sold in the United States (e.g., General 
Motors, Ford, Chrysler, Honda, Toyota, Volvo). Brake rotors covered in 
the order are not certified by OEM producers of vehicles sold in the 
United States. The scope also includes composite brake rotors that are 
made of gray cast iron, which contain a steel plate, but otherwise meet 
the above criteria. Excluded from the scope of the order are brake 
rotors made of gray cast iron, whether finished, semifinished, or 
unfinished, with a diameter less than 8 inches or greater than 16 
inches (less than 20.32 centimeters or greater than 40.64 centimeters) 
and a weight less than 8 pounds or greater than 45 pounds (less than 
3.63 kilograms or greater than 20.41 kilograms).
    Brake rotors are currently classifiable under subheading 
8708.39.5010 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the HTSUS subheading is provided for convenience 
and customs purposes, the written description of the scope of this 
order is dispositive.

Period of Review

    The period of review (``POR'') is from April 1, 2001, through 
September 30, 2001.

Verification

    As provided in section 782(i)(2) of the Act and 19 CFR 351.307, we 
intend to verify Longkou TLC's information.

Separate Rates

    In proceedings involving NME countries, the Department begins with 
a rebuttable presumption that all companies within the country are 
subject to government control and thus should be assessed a single 
antidumping duty deposit rate (i.e., a PRC-wide rate).
    The respondent in this review, Longkou TLC, is a joint venture. 
Thus, a separate-rates analysis is necessary to determine whether this 
exporter is independent from government control (see Notice of Final 
Determination of Sales at Less Than Fair Value: Bicycles From the 
People's Republic of China (``Bicycles'') 61 FR 56570 (April 30, 
1996)).
    To establish whether a firm is sufficiently independent in its 
export activities from government control to be entitled to a separate 
rate, the Department utilizes a test arising from 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''), 
and amplified in 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''). Under the separate-rates criteria, 
the Department assigns separate rates in NME cases only if the 
respondent can demonstrate the absence of both de jure and de facto 
governmental control over export activities.

1. De Jure Control

    Longkou TLC has placed on the administrative record documents to 
demonstrate absence of de jure control, including the ``The Enterprise 
Legal Person Registration Administrative Regulations,'' promulgated on 
June 3, 1988, the 1990 ``Regulation Governing Rural Collectively-Owned 
Enterprises of PRC,'' and the 1994 ``Foreign Trade Law of the People's 
Republic of China.''
    As in prior cases, we have analyzed these laws and have found that 
they establish a sufficient absence of de jure control of collectively 
owned enterprises. See, e.g., Final Determination of Sales at Less than 
Fair Value: Furfuryl Alcohol from the People's Republic of China 
(``Furfuryl Alcohol''), 60 FR 22544 (May 8, 1995), and Preliminary 
Determination of Sales at Less Than Fair Value: Certain Partial-
Extension Steel Drawer Slides with Rollers from the People's Republic 
of China, 60 FR 29571 (June 5, 1995). We have no new information in 
this proceeding which would cause us to reconsider this determination 
with regard to Longkou TLC.

2. De Facto Control

    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Silicon Carbide and Furfuryl Alcohol. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether the respondents are, in fact, subject to a degree 
of governmental control which would preclude the Department from 
assigning separate rates.
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by, or 
subject to the approval of, a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding the disposition of profits or 
financing of losses (see Silicon Carbide and Furfuryl Alcohol).
    Longkou TLC has asserted the following: (1) It establishes its own 
export prices; (2) it negotiates contracts without guidance from any 
governmental entities or organizations; (3) it makes its own personnel 
decisions; and (4) it retains the proceeds of its export sales, uses 
profits according to its business needs, and has the authority to sell 
its assets and to obtain loans. Additionally, Longkou TLC's 
questionnaire responses indicate that its pricing during the POR does 
not suggest coordination among exporters. This information supports a 
preliminary finding that there is absence of de facto governmental 
control of export functions performed by Longkou TLC. See Pure 
Magnesium from the People's Republic of China: Preliminary Results of 
Antidumping Duty New Shipper Administrative Review, 62 FR 55215 
(October 23, 1997). Consequently, we have preliminarily determined that 
Longkou TLC has met the criteria for the application of separate rates.

Normal Value Comparisons

    To determine whether sales of the subject merchandise by Longkou 
TLC to the United States were made at prices below normal value 
(``NV''), we compared its export prices to NV, as described in the 
``Export Price'' and

[[Page 38253]]

``Normal Value'' sections of this notice, below.

Export Price

    We used export price methodology in accordance with section 772(a) 
of the Act because the subject merchandise was sold by the exporter 
directly to an unaffiliated customer in the United States prior to 
importation and constructed export price was not otherwise indicated.
    For Longkou TLC, we calculated export price based on an FOB foreign 
port price to the first unaffiliated purchaser in the United States. 
Where appropriate, we made deductions from the starting price (gross 
unit price) for foreign inland freight and foreign brokerage and 
handling charges in the PRC in accordance with section 772(c) of the 
Act. Because foreign inland freight and brokerage and handling fees 
were provided by PRC service providers or paid for in an NME currency 
(i.e., renminbi), we based those charges on surrogate rates from India 
(see ``Surrogate Country'' section below for further discussion of our 
surrogate-country selection). To value foreign inland trucking charges, 
we used a November 1999 average truck freight value based on price 
quotes from Indian trucking companies. To value foreign brokerage and 
handling expenses, we relied on public information reported in the 
1997-1998 new shipper review of the antidumping duty order on stainless 
steel wire rod from India.

Normal Value

A. Non-Market-Economy Status

    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 (see Notice of Preliminary Results of 
Antidumping Duty Administrative Review and Preliminary Partial 
Rescission of Antidumping Duty Administrative Review: Freshwater 
Crawfish Tail Meat From the People's Republic of China, 66 FR 52100, 
52103 (October 12, 2001)). None of the parties to this proceeding has 
contested such treatment. Accordingly, we calculated NV in accordance 
with section 773(c) of the Act, which applies to NME countries.

B. Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value an 
NME producer's factors of production, to the extent possible, in one or 
more market-economy countries that (1) are at a level of economic 
development comparable to that of the NME country, and (2) are 
significant producers of comparable merchandise. India and Indonesia 
are among the countries comparable to the PRC in terms of overall 
economic development (see Memorandum from the Office of Policy to Irene 
Darzenta Tzafolias, Program Manager, dated December 6, 2001). In 
addition, based on publicly available information placed on the record, 
India is a significant producer of the subject merchandise. 
Accordingly, we considered India the primary surrogate country for 
purposes of valuing the factors of production because it meets the 
Department's criteria for surrogate-country selection. Where we could 
not find surrogate values from India, we used values into Indonesia.

C. Factors of Production

    In accordance with section 773(c) of the Act, we calculated NV 
based on the factors of production which included, but were not limited 
to the following elements: (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. 
We used the factors reported by Longkou TLC which produced the brake 
rotors it exported to the United States during the POR. To calculate 
NV, we multiplied the reported unit factor quantities by publicly 
available Indian or Indonesian values.
    The Department's selection of the surrogate values applied in this 
determination was based on the quality, specificity, and 
contemporaneity of the data. As appropriate, we adjusted input prices 
to make them delivered prices.
    To value pig iron, steel scrap, ferrosilicon, ferromanganese, 
limestone, lubrication oil, firewood, and coking coal, we used April 
2001-July 2001 average import values from Monthly Statistics of the 
Foreign Trade of India. We relied on the factor specification data 
submitted by the respondent for the above-mentioned inputs in its April 
5, 2002, submission for purposes of selecting surrogate values from 
Monthly Statistics. We also added an amount for loading and additional 
transportation charges associated with delivering coal to the factory 
based on June 1999 Indian price data contained in the periodical 
Business Line.
    We based our surrogate value for electricity on data obtained from 
Conference of Indian Industries: Handbook of Statistics (``CII 
Handbook'') and from the Centre for Monitoring Indian Economy (``CMIE 
data'').
    We valued labor based on a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3).
    To value selling, general, and administrative (``SG&A'') expenses, 
factory overhead and profit, we used the 1998 financial data of 
Jayaswals Neco Limited (``Jayaswals''), the 1998-1999 financial data of 
Rico Auto Industries Limited (``Rico''), and the 2000-2001 financial 
data of Kalyani Brakes Limited (``Kalyani''). We have relied on fiscal 
data for three companies rather than just one company's fiscal data for 
purposes of calculating the surrogate-value percentages. In this case, 
Jayaswals' 1998 fiscal data and Rico's 1998-1999 fiscal data are 
reasonably contemporaneous with the POR and otherwise as suitable as 
Kalyani's data. Accordingly, we find it more reliable to use data of 
three companies than to use data of a single company. We have not used 
the 1999-2000 fiscal data suggested by the respondent from Rico's 
internet website because the data provided by its website is incomplete 
for purposes of calculating ratios for SG&A, factory overhead, and 
profit. Specifically, the website data provided only expense data based 
on general categories of expenses and not on the basis of specific 
expenses. Specific expense data (i.e., line-item expense categories 
such as advertising, repair and maintenance, etc.) is necessary for 
determining whether a particular expense should be considered an 
overhead or selling expense and for calculating accurate surrogate-
value percentages.
    Where appropriate, we removed from the surrogate overhead and SG&A 
calculations the excise duty amount listed in the financial reports. We 
made certain adjustments to the ratios calculated as a result of 
reclassifying certain expenses contained in the financial reports. For 
further discussion of the adjustments made, see the Preliminary Results 
Valuation Memorandum, dated May 29, 2002.
    All inputs were shipped by truck. Therefore, to value PRC inland 
freight, we used a November 1999 average truck freight value based on 
price quotes from Indian trucking companies.
    In accordance with the decision of the Court of Appeals for the 
Federal Circuit in Sigma Corp. v. United States, 117 F. 3d 1401 (1997), 
we revised our methodology for calculating source-to-factory surrogate 
freight for those material inputs that are valued based on CIF import 
values in the surrogate country. We have added to CIF surrogate values 
from India a surrogate

[[Page 38254]]

freight cost using the shorter of the reported distances from either 
the closest PRC port of importation to the factory or from the domestic 
supplier to the factory on an input-specific basis.
    To value corrugated cartons, nails, paper cartons, paper cover, 
plastic bags, steel strip, tape, and clamps, we used April-July 2001 
average import values from Monthly Statistics. To value pallet wood, we 
used a 2000 pallet-wood value from the Indonesian publication Indonesia 
Foreign Trade Statistics which the Department has used to value pallet 
wood in two recent antidumping duty proceedings (see Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished, From the PRC: 
Final Results of 1998-1999 Administrative Review, Partial Rescission of 
Review, and Determination Not To Revoke Order in Part, 66 FR 1953, 1955 
(January 10, 2001) (``TRBs''), and accompanying decision memorandum at 
Comment 10, and Persulfates from the PRC: Final Results of Antidumping 
Duty Administrative Review and Partial Rescission of Administrative 
Review, 65 FR 46691 (July 31, 2000)).

Preliminary Results of the Review

    We preliminarily determine that the following margin exists for 
Longkou TLC during the period April 1, 2001, through September 30, 
2001:

------------------------------------------------------------------------
                                                                Margin
               Manufacturer/producer/exporter                  percent
------------------------------------------------------------------------
Longkou TLC Machinery Co., Ltd.............................         0.00
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to the 
parties to this proceeding within five days of the date of publication 
of this notice. Any interested party may request a hearing within 30 
days of publication of this notice. Any hearing, if requested, will be 
held on July 30, 2002.
    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, Room B-099, within 30 days of the 
date of 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 issues to be discussed. See 19 CFR 
351.310(c).
    Issues raised in the hearing will be limited to those raised in 
case briefs and rebuttal briefs. Case briefs from interested parties 
may be submitted not later than July 19, 2002. Rebuttal briefs, limited 
to issues raised in the case briefs, will be due not later than July 
26, 2002. Parties who submit case briefs or rebuttal briefs are 
requested to submit with each argument (1) a statement of the issue and 
(2) a brief summary of the argument. Parties are also encouraged to 
provide a summary of the arguments not to exceed five pages and a table 
of statutes, regulations, and cases cited.
    The Department will issue the final results of this new shipper 
review, including the results of its analysis of issues raised in any 
such written briefs or at the hearing, if held, not later than 90 days 
after the date of issuance of this notice.

Assessment Rates

    In accordance with 19 CFR 351.106(c)(2), we will instruct the 
Customs Service to liquidate without regard to antidumping duties all 
entries of subject merchandise during the POR for which the importer-
specific assessment rate is zero. The Department will issue appropriate 
appraisement instructions directly to the Customs Service upon 
completion of this review.

Cash Deposit Requirements

    Upon completion of this review, for entries from Longkou TLC, we 
will require cash deposits at the rate established in the final results 
pursuant to 19 CFR 351.214(e) and as further described below.
    The following deposit requirements will be effective upon 
publication of the final results of this new shipper review for all 
shipments of brake rotors from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(1) of the Act: (1) The cash deposit rate for 
Longkou TLC will be the rate determined in the final results of review 
(except that, if the rate is de minimis, i.e., less than 0.50 percent, 
a cash deposit rate of zero will be required); (2) the cash deposit 
rate for PRC exporters who received a separate rate in a prior segment 
of the proceeding will continue to be the rate assigned in that segment 
of the proceeding; (3) the cash deposit rate for the PRC NME entity 
will continue to be 43.32 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 requirements, 
when imposed, shall remain in effect until publication of the final 
results of the next administrative review.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) 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 in accordance with section 
751(a)(2)(B) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.213.

    Dated: May 28, 2002.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 02-13845 Filed 5-31-02; 8:45 am]
BILLING CODE 3510-DS-P