[Federal Register Volume 67, Number 199 (Tuesday, October 15, 2002)]
[Notices]
[Pages 63609-63616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26114]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-874]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Certain Ball Bearings 
and Parts Thereof from the People's Republic of China

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

ACTION: Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination.

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EFFECTIVE DATE: October 15, 2002.

FOR FURTHER INFORMATION CONTACT: James Terpstra or Cindy Lai Robinson, 
AD/CVD Enforcement, Office 6, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-3965, and (202) 482-3797, respectively.

SUPPLEMENTARY INFORMATION:

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's (the 
Department) regulations are to the regulations codified at 19 CFR part 
351 (2001).

Preliminary Determination

    We preliminarily determine that ball bearings and parts thereof 
(ball bearings) 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 733 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 25, 2002. See Notice of 
Initiation of Antidumping Duty Investigation: Certain Ball Bearings and 
Parts Thereof From the People's Republic of China, 67 FR 15787 (April 
3, 2002) (Initiation Notice).\1\ Since the initiation of the 
investigation, the following events have occurred.
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    \1\ The petitioner in this case is the American Bearing 
Manufacturers Association (ABMA).
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    On April 10, 2002, the Department requested the PRC's Ministry of 
Foreign Trade and Economic Cooperation (MOFTEC) to distribute a mini-
section A questionnaire to the top 10 exporters and/or producers, based 
on their export sales volume or value, who manufactured and exported 
subject merchandise to the United States, or who manufactured the 
subject merchandise that was exported to the United States through an 
another company, during the period of investigation (POI). We received 
no reply to this letter from MOFTEC.
    Between April 16 and April 25, 2002, we received mini-section A 
responses from 21 producers and exporters of ball bearings in the PRC.
    On April 26, 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 ball bearings imports from the PRC. See Ball Bearings From China, 67 
FR 22449 (May 3, 2002).
    On May 6, 2002, pursuant to section 777A(c) of the Act, the 
Department determined that, due to the large number of exporters/
producers of the subject merchandise, it would limit the number of 
mandatory respondents in this investigation. See ``Respondent 
Selection'' section below.
    On May 7, 2002, the Department issued its antidumping 
questionnaire\2\ to MOFTEC. The Department requested that MOFTEC send 
the questionnaire to Xinchang Peer Bearing Company Ltd. (Peer) and 
Wanxiang Group Corporation (Wanxiang), the two mandatory respondent 
companies selected by the Department. In addition, the Department also 
sent a separate memorandum to MOFTEC concerning those producers and 
exporters who submitted a complete response to section A of the 
questionnaire and whether they may be considered for treatment other 
than inclusion under the rate applicable to the government-controlled 
enterprise. See Memorandum from James Terpstra to Melissa Skinner

[[Page 63610]]

Re: Selection of Respondents (respondent selection memo), dated May 6, 
2002, on file in the Central Records Unit (CRU) located in Room B-099, 
main Commerce Building. Also see the ``Margins for Exporters Whose 
Responses Were Not Analyzed'' section below.
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    \2\ Section A of the questionnaire requests general information 
concerning a company[quot]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 B requests a complete listing of all home market sales, or, 
if the home market is not viable, of sales in the most appropriate 
third-country market (this section is not applicable to respondents 
in non-market economy (NME) cases). Section C requests a complete 
listing of U.S. sales. Section D requests information on the factors 
of production (FOP) of the subject merchandise under investigation. 
Section E requests information on further manufacturing.
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    On May 7, May 13, and May 14, 2002, we received comments from 
respondents and petitioner urging the Department to select additional 
mandatory respondents. Based on these comments, on May 15, 2002, the 
Department added an additional mandatory respondent, Ningbo Cixing 
Group Corp. and its U.S. affiliate, CW Bearings USA, Inc. 
(collectively, ``Cixing'').
    On April 22, April 23, and May 28, 2002, the Department received 
scope inquiries from the following parties: Caterpillar Inc., Nippon 
Pillow Block Sales Company Limited, Nippon Pillow Block Manufacturing 
Company Limited and FYH Bearing Units USA, Inc. (collectively, 
``NPBS''), the ABMA, and Wanxiang. See the ``Scope Clarification'' 
section below.
    The Department received responses to sections A, C, D, and E, where 
applicable, from the three mandatory respondents on June 13, July 11, 
and July 15, 2002. In addition, 45 exporters submitted section A 
responses. The Department issued supplemental questionnaires to all 
three mandatory respondents and the 45 exporters that submitted section 
A responses in July and August, where appropriate. The supplemental 
responses were received in August and September.
    On July 16, 2002, the petitioner made a request pursuant to 19 CFR 
351.205(e) for a 50-day postponement of the preliminary determination, 
pursuant to section 733(c)(1)(A) of the Act. On July 26, 2002, pursuant 
to section 733(c)(1)(B) of the Act, the Department postponed the 
preliminary determination of this investigation 50 days, from August 
12, 2002, to October 1, 2002. See Certain Ball Bearings and Parts 
Thereof from the People's Republic of China: Notice of Extension of 
Preliminary Antidumping Duty Determination, 67 FR 48878 (July 26, 
2002).
    On September 13, 2002, we received untimely section A responses 
from Fuzhou YongShunDa Machinery & Electrical Co. Ltd., Fuzhou Yongdong 
Xinxing Machinery & Hardware Co. Ltd., and Fuzhou Fujia Machinery & 
Electrical Mfg. Co. Ltd. Due to the fact that these responses were 
submitted in an untimely manner, we returned them to the submitters. 
See September 30, 2002, letter from James Terpstra to Fuzhou 
YongShunDa, et. al.
    The petitioner and the three mandatory respondents submitted their 
comments on factors of production in September 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 petitioner. 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 20, 2002, the three mandatory respondents 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 preliminary determination. 
Accordingly, since we have made an affirmative preliminary 
determination, and the parties requesting postponement account for a 
significant proportion of exports of the subject merchandise, 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.

Scope of Investigation

    The scope of the investigation includes all antifriction bearings, 
regardless of size, precision grade or use, that employ balls as the 
rolling element (whether ground or unground) and parts thereof (inner 
ring, outer ring, cage, balls, seals, shields, etc.) that are produced 
in China. Imports of these products are classified under the following 
categories: antifriction balls, ball bearings with integral shafts and 
parts thereof, ball bearings (including thrust, angular contact, and 
radial ball bearings) and parts thereof, and housed or mounted ball 
bearing units and parts thereof. The scope includes ball bearing type 
pillow blocks and parts thereof; and wheel hub units incorporating 
balls as the rolling element. With regard to finished parts, all such 
parts are included in the scope of the petition. With regard to 
unfinished parts, such parts are included if (1) they have been heat-
treated, or (2) heat treatment is not required to be performed on the 
part. Thus, the only unfinished parts that are not covered by the 
petition are those that will be subject to heat treatment after 
importation.
    Imports of these products are classified under the following 
Harmonized Tariff Schedules of the United States (HTSUS) subheadings:
    3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 
8431.20.00, 8431.39.0010, 8482.10.10, 8482.10.50, 8482.80.00, 
8482.91.00, 8482.99.05, 8482.99.2580, 8482.99.35, 8482.99.6595, 
8483.20.40, 8483.20.80, 8483.30.40, 8483.30.80, 8483.50.90, 8483.90.20, 
8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.60.80, 
8708.70.6060, 8708.93.30, 8708.93.6000, 8708.93.75, 8708.99.06, 
8708.99.31, 8708.99.4000, 8708.99.4960, 8708.99.5800, 8708.99.8080, 
8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 8803.90.90.
    Specifically excluded from the scope are unfinished parts that are 
subject to heat treatment after importation. Also excluded from the 
scope are cylindrical roller bearings, mounted or unmounted, and parts 
thereof (CRB) and spherical plain bearings, mounted and unmounted, and 
parts thereof (SPB). CRB products include all antifriction bearings 
that employ cylindrical rollers as the rolling element. SPB products 
include all spherical plain bearings that employ a spherically shaped 
sliding element and include spherical plain rod ends. Although the 
HTSUS subheadings are provided for convenience and U.S. Customs Service 
(Customs) purposes, the written description of the merchandise under 
investigation is dispositive.

Scope Clarification

    On April 22, 2002, Caterpillar Inc. requested that XLS (English) 
series ball bearings and pin-lock slot XLS (English) series ball 
bearings having an inside diameter of between 1 3/4 inches and 5 1/2 
inches be excluded from the scope of the investigation. Caterpillar 
Inc. also claimed that there is an insufficient domestic supply of XLS 
series ball bearings and parts. On May 6, 2002, the petitioner 
responded that these bearings are within the scope. Petitioner also 
contends that at least four domestic producers manufacture and sell XLS 
series ball bearings in the U.S. market, and, therefore, there is not 
an insufficient domestic supply of XLS series ball bearings.
    On April 23, 2002, NPBS requested that the Department clarify 
whether

[[Page 63611]]

split pillow block housings and non-split pillow block housings, which 
are imported separately from ball bearings, are excluded from the scope 
of the investigation. On May 6, 2002, petitioner stated that non-split 
pillow blocks, even when imported separately, are used primarily as a 
housing for ball bearings, and are rightly included in the scope.
    On May 28, 2002, Wanxiang, one of the three mandatory respondents, 
requested guidance as to whether the language in the scope stating that 
the investigation covers ``wheel hub units incorporating balls as the 
rolling element'' also includes wheel hub units that do not contain 
ball bearings or any other type of rolling element at the time of 
importation. Wanxiang pointed out that every HTSUS subheading in the 
scope as applicable to subject wheel hub units describes articles 
either directly as ``bearings'' or indirectly as ``incorporating ball 
bearings.'' In addition, Wanxiang claimed that the empty wheel hub 
units that it produces are designed to be used with either ball 
bearings or tapered roller bearings. On May 29 and May 30, 2002, 
petitioner stated that both complete wheel hub units incorporating 
balls as the rolling element and empty wheel hub units capable of 
incorporating balls as the rolling elements are covered by the 
investigation.
    The scope of the investigation includes all antifriction bearings, 
regardless of size, precision grade or use. Therefore, XLS (English) 
series ball bearings and pin-lock slot XLS (English) series ball 
bearings are clearly within the scope.
    With respect to NPBS's request for clarification of whether split 
pillow block housings and non-split pillow block housings that are 
imported separately from ball bearings are excluded from the scope of 
this investigation, the Department previously determined in Final 
Determinations of Sales at Less Than Fair Value: Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof from the 
Republic of Germany, 54 FR 18992, 19015 (May 3, 1989) (Antifriction 
Bearings). to exclude split pillow block housings (not containing 
antifriction bearings) from the order. The Department stated that 
pillow block housings were not mentioned in the petition, and based on 
the factual information available, determined that pillow block 
housings are not bearings, do not contain bearings, and are not parts 
or subassemblies of bearings. See id. Therefore, consistent with that 
determination and the facts of this investigation, we find that split 
pillow block housings (not containing antifriction bearings) are 
excluded from the scope of this investigation. However, the scope of 
the current investigation includes ball bearing type pillow blocks and 
parts thereof. Thus, non-split pillow blocks, even when imported 
separately, are included in the scope.
    The scope covers all antifriction bearings that employ balls as the 
rolling element (whether ground or unground) and parts thereof. Wheel 
hub units are designed to use either ball bearings or tapered roller 
bearings. Empty wheel units that are designed to employ balls as the 
rolling elements have characteristic raceways that are dedicated to 
ball bearings. Therefore, for purposes of the preliminary 
determination, empty wheel hub units are included in the scope. 
However, we will address this issue further to determine whether the 
empty wheel hub units produced by Wanxiang use balls or tapered roller 
bearings interchangeably.

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).

Respondent Selection

    The Department determined that the resources available to it for 
this investigation limited its ability to analyze any more than the 
responses of the three largest exporters/producers of the subject 
merchandise in this investigation. Based on mini-section A 
questionnaire responses, the Department originally selected the two 
largest exporters, Peer and Wanxiang, to be the mandatory respondents 
in this proceeding. (See the respondent selection memo.) On May 7, May 
13, and May 14, 2002, we received comments from respondents and 
petitioner urging the Department to select additional mandatory 
respondents. Subsequently, based on these comments, on May 15, 2002, 
the Department added a third mandatory respondent, Cixing. (See May 15, 
2002, Letter to Cixing from James Terpstra on file in the CRU.)

Nonmarket Economy Country Status

    The Department has treated the PRC as a nonmarket economy (NME) 
country in previous antidumping investigations (see, e.g., 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); Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Non-
Frozen Apple Juice Concentrate from the People's Republic of China, 65 
FR 19873 (April 13, 2000); and the Notice of Final Determination of 
Sales at Less Than Fair Value Certain: Hot-Rolled Carbon Steel Flat 
Products from the People's Republic of China, 66 FR 49632 (September 
28, 2001)). 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. See the ``Surrogate Country'' section below. 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). Peer, Wanxiang, Cixing, 
and the cooperative nonselected exporters named in the ``Suspension of 
Liquidation'' section below 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 the mandatory respondents 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

[[Page 63612]]

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, 14726 (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 (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 22545 (May 8, 1995) (Furfuryl Alcohol).
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.
    The mandatory respondents 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.'' Other than limiting the mandatory respondents' operations 
to the activities referenced in the respective licenses, we noted no 
restrictive stipulations associated with these licenses. 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); and Furfuryl Alcohol. 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, the 
mandatory respondents have reported the following: (1) There is no 
government participation in setting export prices; (2) its managers 
have authority to bind sales contracts; (3) it does not have to notify 
any government authorities of its management selection; and (4) there 
are no restrictions on the use of its export revenue and it is 
responsible for financing its own losses. Additionally, the mandatory 
respondents' questionnaire responses do not suggest that pricing is 
coordinated among exporters. Furthermore, our analysis of the mandatory 
respondents' 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 the mandatory 
respondents' export functions. Consequently, we preliminarily determine 
that the mandatory respondents have met the criteria for the 
application of a separate rate.

Margins for Cooperative Exporters Not Selected

    For those exporters: (1) who submitted a timely response to Section 
A of the Department's questionnaire, but were not selected as mandatory 
respondents, and (2) for whom the Section A response indicates that the 
exporter is eligible for a separate rate, we assigned a weighted-
average of the rates of the fully analyzed companies excluding any 
rates that were zero, de minimis or based entirely on facts available. 
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 (May 24, 2002) (Welded Steel Pipe). 
Companies receiving this rate are identified by name in the 
``Suspension of Liquidation'' section of this notice.

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.''
    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, MOFTEC and some exporters of the subject merchandise 
failed to respond to the Department's request for information. The 
failure of these exporters to respond also has significantly impeded 
this proceeding. Thus, pursuant to section 776(a) of the Act, in 
reaching our preliminary determination, we have based the PRC-wide rate 
on adverse 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 Duties; Countervailing 
Duties; Final Rule, 62 FR 27296, 27340 (May 19, 1997). 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.

[[Page 63613]]

    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. The SAA states that the 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. The SAA clarifies that 
``corroborate'' means that the Department will satisfy itself that the 
secondary information to be used has probative value. Id. As noted in 
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), to 
corroborate secondary information, the Department will, to the extent 
practicable, examine the reliability and relevance of the information 
used.
    For our preliminary determination, as adverse facts available, we 
have used as the PRC-wide rate the highest recalculated dumping margin 
from the petition (see below). In the petition, for the normal value 
calculation, the petitioner based the factors of production, as defined 
by section 773(c)(3) of the Act, on the quantities of inputs used to 
produce four representative ball bearings (6201-2RS, 6201ZZ, 6203-2RS, 
and 6203ZZ) reported by one of its major member companies. The 
petitioner used the actual usage rates of a U.S. production facility in 
accordance with 19 CFR Sec.  351.202(b)(7)(B) because information on 
actual usage rates of representative Chinese bearing producers is not 
reasonably available to the petitioner. The petitioner based export 
price (EP) on price lists and quotes of four representative sample 
products from Chinese distributors of Chinese ball bearings and U.S. 
distributors of Chinese ball bearings for the period October to 
December 2001. For further discussion, see Initiation Notice.
    To corroborate the petitioner's EP calculations, we compared the 
prices in the petition to the average unit values from import 
statistics released by the Census Bureau. To corroborate the 
petitioner's NV calculations, we compared the petitioner's factor 
consumption and surrogate value data for those same four products to 
the data reported by the respondents for the most significant factors 
(steel, factory overhead, and selling, general, and administrative 
expenses), and the surrogate values for these factors in the petition 
to the values selected for the preliminary determination, as discussed 
below.
    Our analysis shows that, with the exception of the steel value, the 
petitioner's data was either reasonably close to the data submitted by 
the respondents and the surrogate values chosen by the Department, or 
conservative. For the steel value we found that the information in the 
petition did not have probative value. In valuing the steel input, 
petitioner relied on an Indian Harmonized Tariff Schedule (HTS) 
category for finished bearing parts, not unfinished steel used to 
produce bearings parts. Petitioner alleged that this value was 
conservative because it was lower than the actual purchase price of 
these components by certain U.S. producers. In contrast to this 
assertion, the record of this case is abundantly clear that ball 
bearing manufacturers in the PRC purchase unfinished steel to make 
finished bearing parts. The steel value used by petitioner is 
significantly higher than the value we are using in our calculations. 
Thus, we find that this information has no probative value regarding 
the normal value of the subject merchandise. Therefore, we recalculated 
the petition margins using other steel factor values on the record. The 
recalculated petition margins range from 6.00 to 59.30 percent. For a 
more detailed discussion, see Memorandum From David Salkeld to James 
Terpstra Re: Corroboration of Secondary Information dated October 1, 
2002, on file in the CRU.

Fair Value Comparison

    To determine whether the mandatory respondents' sales of ball 
bearings to customers in the United States were made at LTFV, we 
compared EP or constructed export price (CEP), as appropriate, to NV, 
calculated using our NME methodology, as described in the ``Export 
Price and Constructed 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 or CEPs.

Export Price and Constructed Export Price

    During the POI, of the three mandatory respondents, Peer and 
Wanxiang made only CEP sales, while Cixing made both EP and CEP sales 
during the POI. In accordance with section 772(a) of the Act, for 
Cixing, we used EP where the subject merchandise was sold directly to 
unaffiliated customers in the United States prior to importation. As 
explained below, for Peer, Wanxiang, and Cixing, we used CEP, where 
appropriate.
    We calculated EP in accordance with section 772(a) of the Act. 
Specifically, we calculated Cixing's EP based on the FOB, CIF, or C&F 
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, domestic inland insurance, and 
marine insurance. Where foreign inland freight, marine insurance, 
domestic inland insurance, and brokerage and handling were provided by 
NME companies, we used surrogate values from India to value these 
expenses (see Factors of Production Valuation Memorandum dated October 
1, 2002, on file in the CRU).
    For Peer, Wanxiang, and Cixing, where appropriate, we used CEP in 
accordance with section 772(b) of the Act, because the first sales to 
unaffiliated purchasers were made after importation. We calculated CEP 
based on packed prices from the U.S. affiliate's warehouse to the first 
unaffiliated purchaser in the United States. We made the following 
deductions from the starting price (gross unit price), where 
applicable: discounts and rebates, foreign inland freight and brokerage 
and handling, international (ocean) freight, marine insurance, U.S. 
customs duty, U.S. brokerage and handling expenses, and U.S. movement 
expenses. In accordance with section 772(d)(1) of the Act, we deducted 
from CEP direct and indirect selling expenses (i.e., commissions, 
credit and indirect selling expenses) that were associated with the 
respondents' economic activities occurring in the United States. For 
Peer, we also deducted further manufacturing and re-packing costs. See 
sections 772(c) and (d) of the Act.
    To calculate foreign inland freight expenses, we multiplied the 
reported distance from the plant to the port of exit by a surrogate 
rail or truck rate from India. Because U.S. customs duty, brokerage and 
handling expenses, credit expenses, and selling expenses are

[[Page 63614]]

market-economy costs incurred in U.S. dollars, we used actual costs 
rather than surrogate values for these deductions to gross unit price.

Normal Value

1. Surrogate Country
    Section 773(c)(4) of the Act requires that the Department value the 
NME producers' 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 June 13, 2002, memorandum from Jeffrey May to 
Melissa Skinner). According to the information available on the record, 
we have determined that India meets the statutory requirements for an 
appropriate surrogate country for the PRC and is the largest producer, 
among the countries listed above, of like merchandise. In addition, for 
most factors of production, India has quantifiable, contemporaneous, 
and publicly available data. Therefore, for purposes of the preliminary 
determination, we have selected India as the surrogate country, based 
on the quality and contemporaneity of the currently available data. 
Accordingly, we have calculated NV using Indian values for the PRC 
producers' factors of production, except, as noted below, in certain 
instances where an input was sourced from a market economy and paid for 
in a market economy currency. We have obtained and relied upon publicly 
available information wherever possible.
2. Factors of Production
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by the companies in the PRC who 
produced ball bearings for the exporters who sold ball bearings to the 
United States during the POI. 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) of the Act. To calculate NV, the 
reported unit factor quantities were multiplied by publicly available 
Indian values, where possible.
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the surrogate values. 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 using the shorter of the reported distance from 
the domestic supplier to the factory or the distance from the nearest 
seaport to the 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 (Fed. Cir. 1997).
    We valued material inputs and packing materials (including steel 
bar, steel tube, steel balls, steel sheets, steel plates, grease, paper 
boxes, plastic bags, tape, and pallets) using values from the 
appropriate Harmonized Tariff Schedule (HTS) number for contemporaneous 
Indian imports statistics reported in the Indian Import Statistics. In 
accordance with the Department's practice, we used export values to 
calculate NV when import values for like products were not available. 
See Sebacic Acid from the People's Republic of China: Final Results of 
Antidumping Duty Administrative Review, 64 FR 69503 (December 13, 
1999).
    Certain producers in this investigation purchased material inputs 
from market economy suppliers and paid for the inputs with market 
economy currency. In accordance with 19 CFR 351.408(c)(1), we generally 
valued these material inputs using the actual price reported. However, 
consistent with Department practice concerning subsidized inputs, we 
have not used the actual prices paid by PRC producers of material 
inputs which we have reason to believe or suspect are subsidized. 
Instead, we have relied on surrogate values. See Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished from the People's 
Republic of China: Preliminary Results of 2000-2001 Administrative 
Review, Partial Rescission of Review, and Notice of Intent to Revoke 
Order In Part (TRB Review), 67 FR 45451, 45454 (July 9, 2002). See also 
Calculation Memoranda for Peer, Wanxiang, and Cixing, on file in the 
CRU, dated October 1, 2002, for further discussion of company-specific 
issues.
    As appropriate, for these imported materials, we calculated PRC 
brokerage and inland freight from the port to the factory using 
surrogate rates from India. We valued the remaining factors using 
publicly available information from India. Where a producer did not 
report the distance between the material supplier and the factory, as 
facts available, we used either the distance to the nearest seaport (if 
an import value was used as the surrogate value for the factor) or the 
farthest distance reported for a supplier, as facts available.
    In addition, certain producers used market economy carriers to ship 
subject merchandise to the United States. Because the majority of their 
shipments were provided by market economy entities and the entities 
were paid in market economy currencies, we applied the market economy 
price for these transactions to calculate all ocean freight expenses, 
in accordance with 19 CFR 351.408(a)(1).
    We valued labor based on a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3).
    To value electricity, we calculated our surrogate value for 
electricity based on electricity rate data from the Energy Data 
Directory & Yearbook (1999/2000) published by Tata Energy Research 
Institute.
    To value truck freight rates, we used a collection of seventeen 
November 1999 price quotes from six different Indian trucking companies 
which were obtained by the Department in India and used 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). We valued rail 
freight using the average of two November 1999 rail freight price 
quotes for domestic bearing quality steel shipments within India. These 
quotes were obtained by the Department from two Indian rail freight 
transporters. See id. See also, TRB Review, 67 FR at 45454-5.
    We based our calculation of selling, general and administrative 
(SG&A) expenses, overhead, and profit on the 2001 annual reports of 
five Indian bearings producers.
    For a complete analysis of surrogate values used in the preliminary 
determination, see the Factors of Production Valuation Memorandum.

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
U.S. Customs Service (Customs Service) to suspend liquidation of all 
entries of ball

[[Page 63615]]

bearings from the PRC, that are 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 or CEP, 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               [chyph]Margin (percent)
------------------------------------------------------------------------
Xinchang Peer Bearing Company Ltd..............                     2.39
Wanxiang Group Corporation.....................                    39.93
CW Bearings USA, Inc. and Ningbo Cixing Group                      32.69
 Corp..........................................
B&R Bearing Co.................................                    22.99
Changshan Import & Export Company, Ltd.........                    22.99
Changzhou Daya Import and Export Corporation                       22.99
 Limited.......................................
China Huanchi Bearing Group Corp. AND Ningbo                       22.99
 Huanchi Import & Export Co. Ltd...............
China National Automobile Industry Guizhou                         22.99
 Import & Export Corp..........................
China National Machinery & Equipment Import &                      22.99
 Export Wuxi Co., Ltd..........................
Chongqing Changjiang Bearing Industrial                            22.99
 Corporation...................................
CSC Bearing Company Limited....................                    22.99
Dongguan TR Bearing Corporation, Ltd...........                    22.99
Fujian Nanan Fushan Hardware Machinery Electric                    22.99
 Co., Ltd......................................
Guangdong Agricultural Machinery Import &                          22.99
 Export Company................................
Harbin Bearing Group AND Heilongjiang Machinery                    22.99
 and Equipment Import and Export Corporation...
Jiangsu CTD Imports & Exports Co., Ltd.........                    22.99
Jiangsu General Ball & Roller Co., Ltd.........                    22.99
Jiangsu Hongye Intl. Group Industrial                              22.99
 Development Co., Ltd..........................
Jinrun Group Ltd. Haining......................                    22.99
Ningbo Cixi Import Export Co...................                    22.99
Ningbo Economic and Technological Development                      22.99
 Zone AND Tiansheng Bearing Co. Ltd AND TSB
 Group USA Inc. AND TSB Bearing Group America,
 Co. (TSB Group)...............................
Ningbo General Bearing Co., Ltd................                    22.99
Ningbo Jinpeng Bearing Co., Ltd. AND Ningbo                        22.99
 Mikasa Bearing Co. Ltd. AND Ningbo Cizhuang
 Bearing Co. Tahsleh Development Zone..........
Ningbo MOS Group Corporation, Ltd..............                    22.99
Norin Optech Co., Ltd..........................                    22.99
Premier Bearing & Equipment, Ltd...............                    22.99
Sapporo Precision Inc./Shanghai Precision                          22.99
 Bearing Co., Ltd..............................
Shaanxi Machinery & Equipment Import & Export                      22.99
 Corp..........................................
Shandong Machinery Import & Export Group Corp..                    22.99
Shanghai Bearing (Group) Company Limited.......                    22.99
Shanghai Foreign Service and Economic                              22.99
 Cooperation Co. Ltd...........................
Shanghai General Pudong Bearing Co., Ltd.......                    22.99
Shanghai Hydraulics & Pneumatics Corp..........                    22.99
Shanghai Nanshi Foreign Economic Cooperation &                     22.99
 Trading Co., Ltd..............................
Shanghai SNZ Bearings Co., Ltd.................                    22.99
Shanghai Zhong Ding I/E Trading Co., Ltd. AND                      22.99
 Shanghai Li Chen Bearings.....................
Shaoguan Southeast Bearing Co. Ltd.............                    22.99
Sin NanHwa Bearings Co. Ltd. AND Sin NanHwa Co.                    22.99
 Ltd...........................................
TC Bearing Manufacturing Co. Ltd...............                    22.99
Wafangdian Bearing Company Ltd.................                    22.99
Wholelucks Industrial Limited..................                    22.99
Wuxi New-way Machinery Co., Ltd................                    22.99
Zhejiang Rolling Bearing Co. Ltd...............                    22.99
Zhejiang Shenlong Bearing Co. Ltd..............                    22.99
Zhejiang Wanbang Industrial Co., Ltd...........                    22.99
Zhejiang Xinchang Xinzhou Industrial Co. Ltd...                    22.99
Zhejiang Xinchun Bearing Co. Ltd...............                    22.99
Zhejiang ZITIC Import & Export Co. Ltd.........                    22.99
PRC-Wide Rate..................................                    59.30
------------------------------------------------------------------------

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 ball bearings 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

[[Page 63616]]

within 30 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 report. Rebuttal briefs, whose 
content 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. 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(d) and 777(i)(1) of the Act.

    Dated: October 1, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-26114 Filed 10-11-02; 8:45 am]
BILLING CODE 3510-DS-S