[Federal Register Volume 67, Number 233 (Wednesday, December 4, 2002)]
[Notices]
[Pages 72141-72146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30770]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-877]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Lawn and Garden Steel 
Fence Posts From the People's Republic of China

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

EFFECTIVE DATE: December 4, 2002.

FOR FURTHER INFORMATION CONTACT: Salim Bhabhrawala or Christopher Smith 
at (202) 482-1784 or (202) 482-1442, respectively; AD/CVD Enforcement, 
Office 5, Group II, Import Administration, Room 1870, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (the Department) 
regulations refer to the regulations codified at 19 CFR part 351 (April 
2002).

Preliminary Determination

    We preliminarily determine that lawn and garden steel fence posts 
(fence posts) 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 May 21, 2002.\1\ See Initiation 
of Antidumping Duty Investigation: Lawn and Garden Steel Fence Posts 
from the People's Republic of China, 67 FR 37388 (May 29, 2002) 
(Initiation Notice). Since the initiation of this investigation, the 
following events have occurred.
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    \1\ The petitioner in this investigation is the Steel City 
Corporation.
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    On June 17, 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 fence post imports from the PRC. See Lawn and Garden Steel Fence 
Posts from the People's Republic of China, 67 FR 42581 (June 24, 2002).
    On July 29, 2002, the Department issued its antidumping 
questionnaire \2\ to the PRC Bureau of Fair Trade for Imports and 
Exports (BOFT), through the Embassy of the PRC in Washington, D.C. The 
Department requested that BOFT send the questionnaire to the companies 
who manufacture and export fence posts to the United States, as well as 
manufacturers who produce fence posts for companies who were engaged in 
exporting subject merchandise to the United States during the period of 
investigation (POI). In addition, we sent the questionnaire to BaoSteel 
Group International Trade Corporation (BaoSteel), Hebei Metals and 
Minerals Import and Export Corporation (Hebei), and China Nanyang 
Import & Export Corporation (Nanyang), which had contacted us through 
counsel. Only BaoSteel, Hebei, and Nanyang responded to the 
Department's questionnaire. The Department issued supplemental 
questionnaires to BaoSteel, Hebei, and Nanyang, where appropriate.
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    \2\ Section of A of the questionnaire requests general 
information concerning a company's corporate structure and business 
practices, the merchandise under this 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 of the merchandise under investigation. 
Section E requests information on further manufacturing.
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    On August 26, 2002, the petitioner requested a postponement of the 
preliminary determination in this investigation. On September 10, 2002, 
the Department published a Federal Register notice postponing the 
deadline for the preliminary determination until November 27, 2002. See 
Notice of Postponement of Preliminary Antidumping Duty Determination: 
Lawn and Garden Steel Fence Posts from the People's Republic of China, 
67 FR 57384 (September 10, 2002).
    On August 27, 2002, we invited interested parties to provide 
comments on the surrogate country selection and publicly available 
information for valuing the factors of production. We received comments 
from BaoSteel on October 29, 2002, Hebei and Nanyang on September 18, 
2002, and October 10, 2002, and from the petitioner on September 30, 
2002, and October 23, 2002.
    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 November 1, 2002, BaoSteel 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. On November 5, 2002, 
Hebei and Nanyang made the same request. All three respondents included 
a request to extend the provisional measures to not more than six 
months after the publication of the preliminary determination. In 
accordance with section 351.210(e) of the Department's regulations, 
because we have made an affirmative preliminary determination, the 
requesting parties account for a significant proportion of exports of 
the subject merchandise, and no compelling reasons exist to deny the 
request, we

[[Page 72142]]

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.

Period of Investigation

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

Scope of Investigation

    For purposes of this investigation, the products covered include 
all lawn and garden fence posts produced in the PRC, regardless of 
form, shape, or size. The fence posts included within the scope of this 
investigation weigh up to 1 pound per foot and are made of steel and/or 
any other metal. Imports of these products are classified under the 
following categories: fence posts, studded with corrugations, knobs, 
studs, notches or similar protrusions with or without anchor posts. 
These posts are normally ``U'' shaped or ``hat'' shaped or any other 
similar shape excluding round or square tubing or pipes.
    These posts are normally made in two different classes, light and 
heavy duty. Light duty lawn and garden fence posts are normally made of 
14 gauge steel (0.068 inches-0.082 inches thick), 1.75 inches wide, in 
3, 4, 5, or 6 foot lengths. These posts normally weigh approximately 
0.45 pounds per foot and are packaged in mini-bundles of 10 posts and 
master bundles of 400 posts. Heavy duty lawn and garden steel fence 
posts are normally made of 13 gauge steel (0.082 inches-0.095 inches 
thick), 3 inches wide, in 5, 6, 7, and 8 foot lengths. Heavy duty posts 
normally weigh approximately 0.90 pounds per foot and are packaged in 
mini-bundles of 5 and master bundles of 200. Both light duty and heavy 
duty posts are included within the scope of the investigation.
    Imports of these products are classified under the following 
Harmonized Tariff Schedules of the United States (HTSUS) subheading: 
7326.90.85.35. Fence posts classified under subheading 7308.90 are also 
included within the scope of the investigation if the fence posts are 
made of steel and/or metal.
    Specifically excluded from the scope are ``tee'' posts, farm posts, 
and sign posts, provided that the posts weigh over 1 pound per foot.\3\ 
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.
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    \3\ Tee posts are made by rolling red hot steel into a ``T'' 
shape. These posts do not have tabs or holes to help secure fencing 
to them and have primarily farm and industrial uses.
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Non-Market Economy Country Status

    The Department has treated the PRC as a non-market economy (NME) 
country in all its past antidumping investigations. See, e.g., 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 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). BaoSteel, Hebei, and 
Nanyang 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 
BaoSteel, Hebei, and Nanyang 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, 14726-27 (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).

A. 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.
    BaoSteel, Hebei, and Nanyang 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

[[Page 72143]]

limiting BaoSteel's, Hebei's, and Nanyang'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.

B. 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, BaoSteel, Hebei, and 
Nanyang 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, BaoSteel's, 
Hebei's, and Nanyang's questionnaire responses do not suggest that 
pricing is coordinated among exporters. Furthermore, our analysis of 
BaoSteel's, Hebei's, and Nanyang'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 
BaoSteel's, Hebei's, and Nanyang's export functions. Consequently, we 
preliminarily determine that BaoSteel, Hebei, and Nanyang have met the 
criteria for the application of separate rates. Since BaoSteel, Hebei, 
and Nanyang are the only responding producers/exporters, we 
preliminarily determine, as facts available, that all other non-
responsive producers/exporters have not met the criteria for 
application of separate rates.
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 BaoSteel, Hebei, Nanyang, and BOFT, through the Embassy of 
the PRC in Washington, D.C., with the opportunity to respond to its 
questionnaire, only BaoSteel, Hebei, and Nanyang submitted responses 
thereto. However, our review of U.S. import statistics reveals that 
there are other PRC companies, in addition to BaoSteel, Hebei, and 
Nanyang, that exported fence posts 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 CFR 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)

[[Page 72144]]

    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, the petitioner based 
export price (EP) on the actual prices of fence posts, which were 
produced in the PRC, offered by a U.S. importer.\4\ For the NV 
calculation, the petitioner 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 
petitioner.
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    \4\ In calculating export price, the petitioner adjusted for 
importer/distributor mark-up, unloading & handling fees, foreign 
brokerage & handling, foreign inland freight, repacking costs, U.S. 
inland freight, ocean freight, and U.S. Customs duties & fees.
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    With regard to the EP calculation in the petition, the petitioner 
obtained price quotes offered by a U.S. importer who sold subject 
merchandise. We corroborated the petitioners' price quotations with 
data submitted by BaoSteel, Hebei, and Nanyang in its questionnaire 
responses. The price quotations fell within the range of export prices 
reported by the respondents in this proceeding and are therefore 
reliable and relevant. Therefore, we find that the U.S. price used in 
the petition margin calculation is sufficiently corroborated.
    To corroborate the petitioners' NV calculations, we compared the 
petitioner's 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 
corroborated. See the Memorandum to the File Regarding Corroboration of 
the Petition Data for the PRC-Wide Entity (Corroboration Memo), dated 
November 27, 2002.
    The surrogate values for the factors of production in the petition 
were based on publicly available information for comparable inputs in 
India. Where significant differences exist between surrogate values 
used in the petition and those used in deriving the calculated margins 
in this preliminary determination, we replaced the values used in the 
petition and revised the NV calculation accordingly. Therefore, we find 
that the surrogate values used to calculate the PRC-wide rate are 
sufficiently corroborated.
    Because all elements of NV have been corroborated, we consider this 
revised NV to be reasonable and of probative value. As a result of this 
recalculation, the PRC-wide rate is, for the preliminary determination, 
32.73 percent. See Corroboration Memo; see also the May 14, 2002, and 
May 21, 2002, supplements to the petition. 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 Comparisons
    To determine whether BaoSteel's, Hebei's, and Nanyang's sales of 
fence posts 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
    In accordance with section 772(a) of the Act, export price is the 
price at which the subject merchandise is first sold (or agreed to be 
sold) before the date of importation by the producer or exporter of the 
subject merchandise outside of the United States to an unaffiliated 
purchaser in the United States or to an unaffiliated purchaser for 
exportation to the United States, as adjusted under subsection (c). In 
accordance with section 772(a) of the Act, we used EP for BaoSteel, 
Hebei, and Nanyang because the subject merchandise was sold directly to 
unaffiliated customers in the United States prior to importation and 
because CEP was not otherwise indicated.
BaoSteel
    We calculated EP for BaoSteel based on packed F.O.B. prices to 
unaffiliated purchasers in the United States. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act. 
These included domestic inland freight and brokerage and handling 
charges. Because transportation for all sales was provided by a NME 
company, we based movement expenses associated with these sales on 
surrogate values. See the Factors of Production Valuation Memorandum 
dated November 27, 2002 (FOP Memo), on file in the Central Records Unit 
(CRU) located in B-099 of the main Department of Commerce building.
Hebei
    We calculated EP from Hebei based on packed F.O.B. prices to 
unaffiliated purchasers in the United States. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act. 
These included domestic inland freight and brokerage and handling 
charges for all sales. For certain sales, international freight and 
marine insurance expenses have also been deducted. Because 
transportation for all sales was provided by a NME company, we based 
movement expenses associated with these sales on surrogate values. See 
the FOP Memo.
Nanyang
    We calculated EP for Nanyang based on packed F.O.B. prices to 
unaffiliated purchasers in the United States. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act. 
These included domestic inland freight and brokerage and handling 
charges. Because transportation for all sales was provided by a NME 
company, we based movement expenses associated with these sales on 
surrogate values. See the FOP Memo.
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 Gary Taverman 
dated August 15, 2002, on file in the CRU). According to the available 
information based on the United Nations Trade Statistics, of the five 
economically comparable countries, we have found that India was the 
only significant producer of comparable merchandise during the POI, 
including merchandise under HTSUS subheadings 7308.90 and 7326.90, 
which include steel pipes, tubes, plates, rods, pillars, and columns. 
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. We have preliminarily calculated NV by applying 
Indian values to BaoSteel's, Hebei's, and Nanyang's factors of 
production.

[[Page 72145]]

2. Factors of Production

    In their questionnaire responses, BaoSteel, Hebei, and Nanyang 
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 quantities by publicly available surrogate per-
unit values from India.
    In accordance with 19 CFR 351.408(c)(1) of the Department's 
regulations, we will normally use publicly available information to 
value factors of production. However, the Department's regulations also 
provide that where a producer sources an input from a market economy 
and pays for it in market-economy currency, the Department normally 
will use the actual price paid for the input in the market economy to 
calculate the factors-based NV. See Shakeproof Assembly Components 
Division of Illinois Tool Works v. United States, 268 F. 3d 1376, 1381-
83 (Fed. Cir. 2001). Respondent BaoSteel reported that some of its 
inputs were sourced from market economies and paid for in a market-
economy currency. See the FOP Memo for a listing of these inputs.
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. 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 
coil, steel anchors, hot-rolled steel strip, pre-treated chemicals, 
acid washes, powder coating, wood pallets, steel screws, steel banding, 
rivets, blocks, plastic strips, plastic sheets, cardboard/corrugated 
paper, labels, plastic ties, and plastic twine) 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 coal using Indian Import Statistics. We 
calculated our surrogate value for electricity based on electricity 
rate data from the Energy Data Directory and Yearbook (2000/2001) 
published by Tata Energy Research Institute. We calculated a simple 
average of the rates for the ``industrial'' category listed for 18 
Indian states or electricity boards. This method was used in Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, from the 
People's Republic of China: Final Results of 2000-2001 Administrative 
Review, Partial Rescission of Review, and Determination to Revoke 
Order, in Part, 67 FR 68990 (November 14, 2002).
    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).
    As noted above, respondent BaoSteel sourced certain raw material 
inputs from market-economy suppliers and paid for them in market-
economy currencies. Specifically, BaoSteel sourced hot-rolled steel 
strip and powder coating from market-economy suppliers. For this 
preliminary determination, the Department has used the market-economy 
prices for the inputs listed above, in accordance with 19 CFR 
351.408(c)(1). We added to the weighted-average price for each input 
the Indian surrogate value for transporting the input to the factory, 
where appropriate (i.e., where the sales terms for the market-economy 
inputs were not delivered to the factory).
    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: Creatine Monohydrate 
From the People's Republic of China, 67 FR 10892 (March 11, 2002), 
multiplied by an inflator to make the value contemporaneous with the 
POI. We valued 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.
    To value factory overhead, selling, general and administrative 
expenses (SG&A) and profit, we used the audited financial statements 
for the year ended March 31, 2001, from an Indian producer of circular 
welded steel pipe, Surya Roshni (Surya). See FOP Memo for the 
calculation of these ratios from Surya's financial statements. As noted 
above, section 773(c)(4) of the Act requires that the Department value 
the NME producer's factors of production, to the extent possible, based 
on the prices or costs of factors of production in one or more market 
economy countries that are significant producers of comparable 
merchandise. The Department was unable to locate publicly available 
financial statements for an Indian fence post producer, and therefore, 
we looked for a producer of comparable merchandise. The production of 
fence posts and circular welded steel pipe have similar production 
processes and material inputs, in that the production of these products 
use steel sheets or strips in coil form as the major input, and the 
respective products inceptively use the process of roll forming to 
create the desired shape of the steel. See the U.S. International Trade 
Commission Preliminary Determination of Lawn and Garden Steel Fence 
Posts from China at I-7 (June 2002, Publication 3521) and the U.S. 
International Trade Commission Final Determination of Circular Welded 
Non-Alloy Steel Pipe from China at I-5 (July 2002, Publication 3523).
    The petitioner argued that the Department should use 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). While we recognize that the Department has used the 
Reserve Bank of India Bulletin in past cases, in the current case, we 
have access to the publicly available financial statements of a 
producer of comparable merchandise. Therefore, we find it is more 
appropriate to use the financial statements of Surya, which are the 
best information for a producer of comparable merchandise, rather than 
the Reserve Bank of India Bulletin, which calculates factory overhead, 
SG&A, and profit from an index that does not reflect the experience of 
a comparable industry.

[[Page 72146]]

    For a complete analysis of surrogate values used in the preliminary 
determination, see the FOP Memo.
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
    We are directing Customs to suspend liquidation of all entries of 
fence posts from the PRC, with the exception of merchandise produced by 
Hangzhou Hongyuan Sporting Goods Company, Ltd. and exported by Shanghai 
BaoSteel Group International Trade Corporation, that are entered 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 Customs 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)
------------------------------------------------------------------------
Shanghai BaoSteel Group International Trade Corporation....         0.00
Hebei Metals and Minerals Imports and Export Corporation...        16.53
China Nanyang Import & Export Corporation..................        14.69
PRC-Wide Rate..............................................        32.73
------------------------------------------------------------------------

    The PRC-wide rate applies to all entries of the subject merchandise 
except for entries from BaoSteel, Hebei, and Nanyang.
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 fence posts 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: November 27, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-30770 Filed 12-3-02; 8:45 am]
BILLING CODE 3510-DS-P