[Federal Register Volume 67, Number 186 (Wednesday, September 25, 2002)]
[Notices]
[Pages 60214-60219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24359]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-875]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Non-Malleable Cast Iron 
Pipe Fittings From the People's Republic of China

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

EFFECTIVE DATE: September 25, 2002.

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

The Applicable Statute and Regulations

    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 (the 
Department) regulations are to the regulations codified at 19 CFR part 
351 (April 2002).

Preliminary Determination

    We preliminarily determine that non-malleable cast iron pipe 
fittings (pipe fittings) from the People's Republic of China (PRC) are 
being sold, or are likely to be sold, in the United States at less than 
fair value (LTFV), as provided in section 773 of the Act. The estimated 
margins of sales at LTFV are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    This investigation was initiated on March 13, 2002. See Notice of 
Initiation of Antidumping Duty Investigation: Non-Malleable Cast Iron 
Pipe Fittings From the People's Republic of China, 67 FR 12966 (March 
20, 2002) (Initiation Notice).\1\ Since the initiation of the 
investigation, the following events have occurred.
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    \1\ The petitioners in this investigation are Anvil 
International, Inc. and Ward Manufacturing, Inc.
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    On April 9, 2002, the United States International Trade Commission 
(ITC) preliminarily determined that there is a reasonable indication 
that an industry in the United States is materially injured by reason 
of pipe fitting imports from the PRC. See Non-Malleable Cast Iron Pipe 
Fittings From China, 67 FR 18635 (April 16, 2002). During March and 
April 2002, the Department provided participating parties with an 
opportunity to comment on scope and product characteristics.
    The Department issued its non-market economy (NME) antidumping 
questionnaire \2\ to the companies Beijing Metals & Minerals, Beijing 
Tongxian Yongxin Shop, China Unicom, Jinan Meide Casting Co., Ltd. 
(JMC), and Shanghai Foreign Trade Enterprises Co., Ltd. (SFTEC), the 
PRC Ministry of Foreign Trade & Economic Cooperation (MOFTEC), and the 
Embassy of the PRC in Washington, DC, on May 7, May 14, and May 20, 
respectively. The Department requested that MOFTEC send the 
questionnaire to the companies who manufacture and export non-malleable 
cast iron pipe fittings to the United States, as well as manufacturers 
who produce non-malleable cast iron pipe fittings for companies who 
were engaged in exporting subject merchandise to the United States 
during the period of investigation (POI). Only JMC and SFTEC responded 
to the Department's questionnaire. The Department issued supplemental 
questionnaires to JMC and SFTEC, where appropriate.
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    \2\ In NME instances, Section A of the questionnaire requests 
general information concerning a company's corporate structure and 
business practices, the merchandise under investigation that it 
sells, and the manner in which it sells that merchandise in all of 
its markets. Section C requests a complete listing of U.S. sales. 
Section D requests information on the factors of production of the 
merchandise sold in or to the United States. Section E requests 
information on further manufacturing.
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    On July 11, 2002, pursuant to section 733(c)(1)(B) of the Act, the 
Department postponed the preliminary determination of this 
investigation until September 19, 2002. See Non-Malleable Cast Iron 
Pipe Fittings From the People's Republic of China: Postponement of 
Preliminary Determination of Antidumping Duty Investigation, 67 FR 
50866 (August 6, 2002).

Postponement of the Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioners. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for an extension of the 
provisional measures from a four-month period to not more than six 
months.
    On September 13, 2002, JMC requested that, in the event of an 
affirmative preliminary determination in this investigation, the 
Department postpone its final determination until 135 days after the 
publication of the

[[Page 60215]]

preliminary determination. JMC also included a request to extend the 
provisional measures to not more than six months after the publication 
of the preliminary determination. Accordingly, in accordance with 
section 351.210(e) of the Department's Regulations, because we have 
made an affirmative preliminary determination, the requesting party 
accounts for a significant proportion of exports of the subject 
merchandise, and no compelling reasons exist to deny the request, we 
have postponed the final determination until not later than 135 days 
after the date of the publication of the preliminary determination, and 
are extending the provisional measures accordingly. See JMC's letter to 
the Assistant Secretary, dated September 13, 2002.

Period of Investigation

    The POI is July 1, 2001, through December 31, 2001. This period 
corresponds to the two most recent fiscal quarters prior to the month 
of the filing of the petition (i.e., February 2002). See 19 CFR 
351.204(b)(1).

Scope of Investigation

    For purposes of this investigation, the products covered are 
finished and unfinished non-malleable cast iron pipe fittings with an 
inside diameter ranging from \1/4\ inch to 6 inches, whether threaded 
or un-threaded, regardless of industry or proprietary specifications. 
The subject fittings include elbows, ells, tees, crosses, and reducers 
as well as flanged fittings. These pipe fittings are also known as cast 
iron pipe fittings or gray iron pipe fittings. These cast iron pipe 
fittings are normally produced to ASTM A-126 and ASME B.16.4 
specifications and are threaded to ASME B1.20.1 specifications. Most 
building codes require that these products are Underwriters 
Laboratories (UL) certified. The scope does not include cast iron soil 
pipe fittings or grooved fittings or grooved couplings.
    Fittings that are made out of ductile iron that have the same 
physical characteristics as the gray or cast iron fittings subject to 
the scope above or which have the same physical characteristics and are 
produced to ASME B.16.3, ASME B.16.4, or ASTM A-395 specifications, 
threaded to ASME B1.20.1 specifications and UL certified, regardless of 
metallurgical differences between gray and ductile iron, are also 
included in the scope of this petition. These ductile fittings do not 
include grooved fittings or grooved couplings. Ductile cast iron 
fittings with mechanical joint ends (MJ), or push on ends (PO), or 
flanged ends and produced to the American Water Works Association 
(AWWA) specifications AWWA C110 or AWWA C153 are not included.
    Imports of covered merchandise are classifiable in the Harmonized 
Tariff Schedule of the United States (HTSUS) under item numbers 
7307.11.00.30, 7307.11.00.60, 7307.19.30.60 and 7307.19.30.85. HTSUS 
subheadings are provided for convenience and Customs purposes. The 
written description of the scope of this proceeding is dispositive.

Class or Kind of Merchandise

    In accordance with the preamble to our regulations (see Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR 27295, 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 days from the publication of the Initiation Notice. 
See Initiation Notice, 67 FR at 12966. Interested parties submitted 
such comments by April 9, 2002.
    On April 9, 2002, JDH Pacific, Inc. (JDH), a U.S. importer of 
ductile iron pipe fittings from the PRC and an interested party, under 
section 771(9)(A) of the Act, requested that the Department determine 
that there are two separate classes or kinds of merchandise under 
investigation: gray iron pipe fittings and ductile iron pipe fittings. 
JDH further requested that the Department establish a separate 
antidumping investigation with respect to ductile iron pipe fittings 
and then terminate the investigation because the petitioners do not 
produce ductile iron pipe fittings and, thus, do not qualify as 
interested parties under section 771(9)(C) with respect to an 
antidumping investigation of ductile fittings from the PRC. For the 
reasons outlined below, we determine that ductile iron pipe fittings 
and gray iron pipe fittings do not constitute separate classes or kinds 
of merchandise.
    In past cases where the Department has been called upon to 
determine the number of classes or kinds of merchandise under 
investigation, we have based our analysis on the criteria set forth by 
the Court of International Trade in Diversified Products v. United 
States, 6 CIT 155, 572 F. Supp. 883 (1983) (Diversified Products). See 
Final Determination of Sales at Less Than Fair Value: Sulfer Dyes, 
Including Vat Dyes, From the United Kingdom, 58 FR 3253 (January 8, 
1993) (Sulfer Dyes). According to Diversified Products, the Department 
may rely upon the following factors in determining whether products 
belong to the same class or kind of merchandise: (1) The physical 
characteristics of the merchandise; (2) the ultimate use of the 
merchandise; (3) the expectations of the ultimate user; (4) the 
channels of trade in which the product is sold; (5) the manner in which 
the product is advertised.
    Regarding four of the five Diversified Products criteria (i.e., 
ultimate use, expectations of the ultimate user, channels of trade, and 
manner of advertising), we find that there are no differences between 
the two types of pipe fittings. Both ductile iron pipe fittings and 
gray iron pipe fittings have the same uses and the expectations of the 
ultimate users are the same for both products. Further, both products 
move through the same channels of distribution and are advertised and 
displayed in the same manner.
    With respect to the remaining Diversified Products criterion (the 
physical characteristics of the merchandise), we note that, when 
examining differences in physical characteristics in the context of 
class or kind analysis, the Department looks for clear dividing lines 
between product groups, not merely the presence or absence of physical 
differences between certain products. In this specific instance, 
although there are physical differences between ductile iron pipe 
fittings and gray fittings (elasticity, impact resistance, and 
strength/weight), ductile iron pipe fittings and gray iron pipe 
fittings are comparable in castability, ease of machining, vibration 
damping, surface hardenability, corrosion resistance, and wear 
resistance. Therefore, while there are physical differences between 
ductile iron pipe fittings and gray iron pipe fittings, we find that 
these physical differences are not so great or so clearly delineated as 
to form the sole basis for determining that these products constitute 
separate classes or kinds of merchandise. In other words, the physical 
differences among these products are not by themselves proof of 
different classes or kinds of merchandise. See Sulfer Dyes 58 FR 3253.
    In light of the Diversified Products criteria, our analysis of 
ductile iron pipe fittings and gray iron pipe fittings supports a 
finding that these products constitute a single class or kind of 
merchandise. (For a more detailed discussion of this issue, see 
Memorandum regarding class or kind determination, from Holly A. Kuga, 
Senior Director, to Bernard T. Carreau, Deputy Assistant Secretary, 
dated concurrently with this notice.)

[[Page 60216]]

Non-Market Economy Country Status

    The Department has treated the PRC as an NME country in all its 
past antidumping investigations. See Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Circular Welded Carbon-Quality 
Steel Pipe From the People's Republic of China, 67 FR 36570, 36571 (May 
24, 2002); and Notice of Final Determination of Sales at Less Than Fair 
Value: Structured Steel Beams From the People's Republic of China, 67 
FR 35479, 35480 (May 20, 2000); and Notice of Final Determination of 
Sales at Less Than Fair Value Certain: Folding Metal Tables and Chairs 
From the People's Republic of China, 67 FR 20090 (April 24, 2002). In 
accordance with section 771(18)(C) of the Act, any determination that a 
foreign country is an NME country shall remain in effect until revoked. 
No party to this investigation has sought revocation of the NME status 
of the PRC. Therefore, pursuant to section 771(18)(C) of the Act, the 
Department will continue to treat the PRC as an NME country.
    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs the Department to base normal 
value (NV) on the NME producer's factors of production, valued in a 
comparable market economy that is a significant producer of comparable 
merchandise. The sources of individual factor prices are discussed 
under the ``Normal Value'' section, below.

Separate Rates

    In an NME proceeding, the Department presumes that all companies 
within the country are subject to governmental control and should be 
assigned a single antidumping duty rate unless the respondent 
demonstrates the absence of both de jure and de facto governmental 
control over its export activities. See Notice of Final Determination 
of Sales at Less Than Fair Value: Bicycles From the People's Republic 
of China, 61 FR 19026, 19027 (April 30, 1996). JMC and SFTEC have 
provided the requested company-specific separate rates information and 
have indicated that there is no element of government ownership or 
control over their operations. We have considered whether JMC and SFTEC 
are eligible for a separate rate as discussed below.
    The Department's separate-rates test is not concerned, in general, 
with macroeconomic/border-type controls (e.g., export licenses, quotas, 
and minimum export prices), particularly if these controls are imposed 
to prevent dumping. Rather, the test focuses on controls over the 
export-related investment, pricing, and output decision-making process 
at the individual firm level. See Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate 
From Ukraine, 62 FR 61754, 61757 (November 19, 1997); Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished, From the People's 
Republic of China: Final Results of Antidumping Duty Administrative 
Review, 62 FR 61276, 61279 (November 17, 1997); and Notice of 
Preliminary Determination of Sales at Less Than Fair Value: Honey From 
the People's Republic of China, 60 FR 14725, 14727 (March 20, 1995).
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of the Final 
Determination of Sales at Less Than Fair Value: Sparklers From the 
People's Republic of China, 56 FR 20588 (May 6, 1991), as modified in 
the Final Determination of Sales at Less Than Fair Value: Silicon 
Carbide From the People's Republic of China, 59 FR 22585, 22587 (May 2, 
1994) (Silicon Carbide). Under this test, the Department assigns 
separate rates in NME cases only if an exporter can demonstrate the 
absence of both de jure and de facto governmental control over its 
export activities. See Silicon Carbide and the Notice of Final 
Determination of Sales at Less Than Fair Value: Furfuryl Alcohol From 
the People's Republic of China, 60 FR 22544, 22545 (May 8, 1995).
1. Absence of De Jure Control
    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (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.
    JMC and SFTEC have placed on the record a number of documents to 
demonstrate the absence of de jure control, including their business 
licenses, and the ``Company Law of the People's Republic of China'' of 
December 29, 1993. Other than limiting JMC's and SFTEC's operations to 
the activities referenced in the license, we noted no restrictive 
stipulations associated with the license. In addition, in previous 
cases, the Department has analyzed the ``Company Law of the People's 
Republic of China'' and found that it establishes an absence of de jure 
control. See, e.g., Notice of Final 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 54472, 54474 (October 24, 
1995). We have no information in this proceeding which would cause us 
to reconsider this determination. Therefore, based on the foregoing, we 
have preliminarily found an absence of de jure control.
2. Absence of De Facto Control
    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 its management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses.
    With regard to the issue of de facto control, JMC and SFTEC have 
reported the following: (1) There is no government participation in 
setting export prices; (2) their managers have authority to bind sales 
contracts; (3) they do not have to notify any government authorities of 
their management selection, and (4) there are no restrictions on the 
use of their export revenue and they are responsible for financing 
their own losses. Additionally, JMC's and SFTEC's questionnaire 
responses do not suggest that pricing is coordinated among exporters. 
Furthermore, our analysis of JMC's and SFTEC's questionnaire responses 
reveals no other information indicating governmental control of export 
activities. Therefore, based on the information provided, we 
preliminarily determine that there is an absence of de facto government 
control over JMC's and SFTEC's export functions. Consequently, we 
preliminarily determine that JMC and SFTEC have met the criteria for 
the application of separate rates. (For a more detailed discussion of 
this issue, see Memorandum to Holly A. Kuga, Senior Director, Re 
Separate Rates Analysis for Preliminary Determination, dated 
concurrently with this notice.)

[[Page 60217]]

The PRC-Wide Rate

    In all NME cases, the Department makes a rebuttable presumption 
that all exporters located in the NME country comprise a single 
exporter under common government control, the ``NME entity.'' Although 
the Department provided all PRC exporters of the subject merchandise, 
including Beijing Metals & Minerals, Beijing Tongxian Yongxin Shop, 
China Unicom, Jinan Meide Casting Co., Ltd. (JMC), and Shanghai Foreign 
Trade Enterprises Co., Ltd. (SFTEC), the PRC Ministry of Foreign Trade 
& Economic Cooperation (MOFTEC), and the Embassy of the PRC in 
Washington, DC, with the opportunity to respond to its questionnaire, 
only JMC and SFTEC submitted responses thereto. However, our review of 
U.S. import statistics reveals that there are other PRC companies, in 
addition to JMC and SFTEC, that exported pipe fittings to the United 
States during the POI. Because these exporters did not submit a 
response to the Department's questionnaire, and thus did not 
demonstrate their entitlement to a separate rate, we have implemented 
the Department's rebuttable presumption that these exporters constitute 
a single enterprise under common control by the PRC government, and we 
are applying adverse facts available to determine the single 
antidumping duty rate, the PRC-wide rate, applicable to all other PRC 
exporters comprising this single enterprise. See, e.g., Final 
Determination of Sales at Less Than Fair Value: Synthetic Indigo From 
the People's Republic of China, 65 FR 25706, 25707 (May 3, 2000).

Use of Facts Otherwise Available

    Section 776(a)(2) of the Act provides that, if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information in a timely manner or in the form or manner 
requested, significantly impedes a proceeding under the antidumping 
statute, or provides information which cannot be verified, the 
Department shall use, subject to sections 782(d) and (e) of the Act, 
facts otherwise available in reaching the applicable determination. As 
explained above, some exporters of the subject merchandise failed to 
respond to the Department's request for information. The failure of 
these exporters to respond significantly impedes this proceeding. Thus, 
pursuant to section 776(a) of the Act, in reaching our preliminary 
determination, we have based the PRC-wide rate on total facts 
available.
    In applying facts otherwise available, section 776(b) of the Act 
provides that, if the Department finds that an interested party ``has 
failed to cooperate by not acting to the best of its ability to comply 
with a request for information,'' the Department may use information 
that is adverse to the interests of that party as facts otherwise 
available. Adverse inferences are appropriate ``to ensure that the 
party does not obtain a more favorable result by failing to cooperate 
than if it had cooperated fully.'' See Statement of Administrative 
Action SAA accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d 
Session at 870 (1994). Furthermore, ``affirmative evidence of bad faith 
on the part of the respondent is not required before the Department may 
make an adverse inference.'' See Antidumping Countervailing Duties; 
Final Rule, 62 FR 27296, 27340 (May 19, 1997). In this case, the 
complete failure of these exporters to respond to the Department's 
requests for information constitutes a failure to cooperate to the best 
of their ability.
    An adverse inference may include reliance on information derived 
from the petition, the final determination in the investigation, any 
previous review, or any other information placed on the record. See 
section 776(b) of the Act. However, section 776(c) of the Act provides 
that, when the Department relies on secondary information rather than 
on information obtained in the course of an investigation or review, 
the Department shall, to the extent practicable, corroborate that 
information from independent sources that are reasonably at its 
disposal. Independent sources may include published price lists, 
official import statistics and customs data, and information obtained 
from interested parties during the particular investigation or review. 
See SAA at 870 and 19 C.F.R. 351.308(d). ``Corroborate'' means that the 
Department will satisfy itself that the secondary information to be 
used has probative value. Id. To corroborate secondary information, the 
Department will, to the extent practicable, examine the reliability and 
relevance of the information used. See Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, from Japan, and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, from Japan; Preliminary Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 57391, 57392 (November 6, 1996).
    For our preliminary determination, as adverse facts available, we 
have used as the PRC-wide rate the recalculated dumping margin from the 
petition (see below). In the petition, the petitioners based export 
price (EP) on import values submitted to the U.S. Customs Service. For 
the NV calculation, the petitioners based the factors of production, as 
defined by section 773(c)(3) of the Act (raw materials, labor, energy, 
and representative capital costs) on the quantities of inputs used by 
the petitioners.
    With regard to the EP calculation in the petition, the information 
relied upon was based on publicly available sources, that is, official 
U.S. government statistics; therefore, we find that the U.S. price from 
the petition margin is sufficiently corroborated. To corroborate the 
petitioners' NV calculations, we compared the petitioners' factor 
consumption data to that data on the record of this investigation. As 
discussed in a separate memorandum to the file, we found that the 
factors consumption data in the petition were reasonable and of 
probative value. See the Memorandum to the File Regarding Corroboration 
of the Petition Data for the PRC-Wide Entity, dated September 19, 2002. 
The values for the factors of production in the petition were based on 
publicly available information for comparable inputs; therefore, we 
find that these Indian surrogate values are sufficiently corroborated.
    As a result of this calculation, the PRC-wide rate, for the 
preliminary determination, is 55.13 percent. For the final 
determination, the Department will consider all information on the 
record at the time of the final determination for the purpose of 
determining the most appropriate final PRC-wide margin.

Fair Value Comparison

    To determine whether JMC's and SFTEC's sales of pipe fittings to 
customers in the United States were made at LTFV, we compared EP to NV, 
calculated using our NME methodology, 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 calculated 
weighted-average EPs.

Export Price

    We used an EP methodology in accordance with section 772(a) of the 
Act because JMC and SFTEC sold subject merchandise to unaffiliated U.S. 
customers prior to importation and because a constructed export price 
methodology was not otherwise warranted. At the time of sale, JMC and 
SFTEC knew that its reported sales of the subject merchandise were 
destined for the United States.

[[Page 60218]]

    We calculated EP based on the packed, delivered prices charged to 
the first unaffiliated customer for exportation to the United States. 
Where appropriate, we made deductions from the starting price (gross 
unit price) for foreign inland freight, brokerage and handling, 
international freight, and marine insurance. Where foreign inland 
freight, marine insurance, and brokerage and handling were provided by 
NME companies, we used surrogate values from India to value these 
expenses (see the Factors of Production Valuation Memorandum dated 
September 19, 2002, on file in the Central Records Unit (CRU) located 
in B-099 of the main Department of Commerce building). For sales with 
international freight provided by NME shipping companies we used as the 
surrogate value a freight cost obtained from U.S. customs import 
statistics (see the Factors of Production Valuation Memorandum).

Normal Value

1. Surrogate Country
    Section 773(c)(4) of the Act requires that the Department value the 
NME producer's factors of production, to the extent possible, on the 
prices or costs of factors of production in one or more market economy 
countries that are: (1) At a level of economic development comparable 
to that of the NME country; and (2) significant producers of comparable 
merchandise. The Department's Office of Policy initially identified 
five countries that are at a level of economic development comparable 
to the PRC in terms of per capita GNP and the national distribution of 
labor. Those countries are India, Pakistan, Indonesia, Sri Lanka and 
the Philippines (see the Memorandum From Jeffrey May to Holly Kuga 
dated May 17, 2002, on file in the CRU). Furthermore, based on import 
statistics, India was the most significant producer of comparable 
merchandise. Therefore, we have preliminarily calculated NV by applying 
Indian values to JMC's and SFTEC's factors of production.
2. Factors of Production
    In their questionnaire responses, JMC and SFTEC reported factors of 
production for the manufacturers of the subject merchandise during the 
POI. The factors of production include: (1) Hours of labor required; 
(2) quantities of raw materials employed; (3) amounts of energy and 
other utilities consumed; and (4) representative capital costs. See 
section 773(c)(3) of the Act. To calculate NV, we multiplied the 
reported per-unit quantities by publicly available surrogate values 
from India.
    The surrogate values employed for the production of non-malleable 
cast iron pipe fittings were used because of their quality, 
specificity, and contemporaneity. For those values not contemporaneous 
with the POI, we adjusted the values to account for inflation using 
wholesale price indices published in the International Monetary Fund's 
International Financial Statistics. As appropriate, we included freight 
costs in input prices to make them delivered prices. Specifically, we 
added to the surrogate values a surrogate freight cost calculated using 
the shorter of the reported distance from the domestic input supplier 
to the factory processing subject merchandise or the distance from the 
nearest seaport to the relevant factory. This adjustment is in 
accordance with the Court of Appeals for the Federal Circuit's decision 
in Sigma Corp. v. United States, 117 F. 3d 1401, 1407-1408 (Fed. Cir. 
1997).
    We valued material inputs and packing materials (including steel 
scrap, pig iron, limestone, ferrosilicon, ferromanganese, cast iron 
scrap, protective cover, innoculant, nodulizer, lubricating oil, 
cartons, wooden crates, woven bags, anti-rusting oil, plastic sheet, 
adhesive tape, wood, and nails) using publicly available 2001 Indian 
import statistics from the appropriate Indian Trade Classification 
categories, based on the Harmonized Commodity Description and Coding 
System (HS), published by the Monthly Statistics of the Foreign Trade 
of India. Volume II: Imports (Indian Import Statistics).
    For energy, we valued foundry coke, coal, and firewood using Indian 
Import Statistics. We valued electricity using the 1997 Indian 
Industrial rate as reported by the International Energy Agency (IEA) in 
Energy, Prices, and Taxes, 2nd Quarter 2000 (EPT 2000) multiplied by an 
inflator to make the value contemporaneous with the POI. This method 
was used in the notice of Final Results of Antidumping Duty 
Administrative Review, Silicomanganese From the People's Republic of 
China (Silicomanganese), 65 FR 31514 (May 18, 2000).
    We valued labor using the latest regression-based wage rate for 
China found on Import Administration's Web page (http://ia.ita.doc.gov/wages/) as described in 19 CFR 351.408(c)(3).
    To value foreign inland truck freight costs, we relied upon per 
kilometer price quotes used by the Department in the Notice of Final 
Determination of Sales at Less Than Fair Value: Bulk Aspirin From the 
People's Republic of China, 65 FR 33805 (May 25, 2000), multiplied by 
an inflator to make the value contemporaneous with the POI. To value 
foreign inland rail freight costs, we relied upon per kilometer price 
quotes from the July 2001 Reserve Bank of India Bulletin, multiplied by 
an inflator to make the value contemporaneous with the POI. To value 
foreign inland boat freight costs, we relied upon per kilometer price 
quotes cabled to the Department from the U.S. consulate in Bombay, 
India, during the Antidumping Duty Investigation of Certain Helical 
Spring Lock Washers from the People's Republic of China, 58 FR 48833 
(September 20, 1993), multiplied by an inflator to make the value 
contemporaneous with the POI. We valued ocean freight, marine 
insurance, and brokerage and handling using the rates in effect in 
India, for these expenses, which were reported in the public version of 
the questionnaire response placed on the record in Certain Stainless 
Steel Wire Rod From India: Final Results of Administrative and New 
Shipper Review, 64 FR 856 (January 6, 1999), multiplied by an inflator 
to make the values contemporaneous with the POI.
    Because the Department did not find industry specific data to 
calculate selling, general and administrative (SG&A) expenses, factory 
overhead, and profit, we used the ``1999-2000 combined income, value of 
production, expenditure and appropriation account'' for a sample of 
1,914 public limited companies in India that were reported in the June 
2001 Reserve Bank of India Bulletin, as previously used in Potassium 
Permanganate From the PRC: Preliminary Results of Antidumping New 
Shipper Review, 67 FR 303 (January 3, 2001).
    For a complete analysis of surrogate values used in the preliminary 
determination, see the Factors of Production Valuation Memorandum.

Verification

    In the instant case, both respondents assert that the use of 
average input quantities across products (both across subject and non-
subject and between subject products) does not distort the factors of 
production data and, therefore, that their data should be used in the 
calculation of NV. Their assertions are based on technical factors, 
such as the fact that, for castings (low yield or otherwise), while 
more iron is required than the net raw castings weigh, that extra iron 
is virtually all recovered and reused. The petitioner asserts that 
because the subject pipe fittings experience greater yield loss than 
other types of castings, the use of averages inherently distorts 
product-

[[Page 60219]]

specific factors of production data. Because the question of whether or 
not the use of average factors of production data distorts the 
calculated NV is a factual one and can be verified by the Department, 
we will verify the respondents' data to determine whether their 
assertions are correct. Therefore, after verification in accordance 
with section 782(i) of the Act, we will reconsider this issue for the 
final determination after we have a clearer understanding of the facts 
and verify all information relied upon in making our final 
determination.

Suspension of Liquidation

    We are directing the U.S. Customs Service (Customs Service) to 
suspend liquidation of all entries of pipe fittings from the PRC 
entered, or withdrawn from warehouse, for consumption on or after the 
date on which this notice is published in the Federal Register. In 
addition, we are instructing 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, as indicated in the chart below. These 
instructions suspending liquidation will remain in effect until further 
notice.
    We determine that the following percentage weighted-average margins 
exist for the POI:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Manufacturer/exporter                        margin
                                                              (percent)
------------------------------------------------------------------------
Jinan Meide Casting Co., Ltd...............................        12.55
Shanghai Foreign Trade Enterprises Co., Ltd................        18.97
PRC-Wide Rate..............................................        55.13
------------------------------------------------------------------------

The PRC-wide rate applies to all entries of the subject merchandise 
except for entries from JMC and SFTEC.

Disclosure

    In accordance with 19 CFR 351.224(b), the Department will disclose 
the calculations performed in the preliminary determination to 
interested parties within five days of the date of publication of this 
notice.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of the Department's preliminary affirmative determination. If the 
final determination in this proceeding is affirmative, the ITC will 
determine before the later of 120 days after the date of this 
preliminary determination or 45 days after the final determination 
whether imports of non-malleable cast iron pipe fittings from the PRC 
are materially injuring, or threaten material injury to, the U.S. 
industry.

Public Comment

    In accordance with 19 CFR 351.301(c)(3)(i), interested parties may 
submit publicly available information to value the factors of 
production for purposes of the final determination within 40 days after 
the date of publication of this preliminary determination. Case briefs 
or other written comments must be submitted to the Assistant Secretary 
for Import Administration no later than one week after issuance of the 
verification reports. Rebuttal briefs, the content of which is limited 
to the issues raised in the case briefs, must be filed within five days 
after the deadline for the submission of case briefs. 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. Further, we request that parties submitting briefs and 
rebuttal briefs provide the Department with a copy of the public 
version of such briefs on diskette.
    In accordance with section 774 of the Act, we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs. If a request 
for a hearing is made, we will tentatively hold the hearing two days 
after the deadline for submission of rebuttal briefs at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230, at a time and in a room to be determined. Parties 
should confirm by telephone the date, time, and location of the hearing 
48 hours before the scheduled date.
    Interested parties who wish to request a hearing, or to participate 
in a hearing 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 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 the 
issues to be discussed. At the hearing, oral presentations will be 
limited to issues raised in the briefs. See 19 CFR 351.310(c). The 
Department will make its final determination no later than 135 days 
after the date of publication of this preliminary determination.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: September 19, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-24359 Filed 9-24-02; 8:45 am]
BILLING CODE 3510-DS-P