[Federal Register Volume 67, Number 249 (Friday, December 27, 2002)]
[Notices]
[Pages 79049-79056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32784]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-878]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Saccharin From the People's Republic of China

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

EFFECTIVE DATE:  December 27, 2002.

FOR FURTHER INFORMATION CONTACT: Mark Hoadley or Brett Royce (Suzhou 
Fine Chemicals Group Co., Ltd.) at (202) 482-3148 or (202) 482-4106, 
Javier Barrientos or Jessica Burdick (Shanghai Fortune Chemical Co., 
Ltd.) at (202) 482-2243 or (202) 482-0666, or Sally C. Gannon at (202) 
482-0162; Office of AD/CVD Enforcement VII, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington D.C. 20230.

SUPPLEMENTARY INFORMATION:

[[Page 79050]]

Preliminary Determination

    We preliminarily determine that saccharin from the People's 
Republic of China (PRC) is being, or is likely to be, sold in the 
United States at less than fair value (LTFV), as provided in section 
733 of the Tariff Act of 1930, as amended (the Act). The estimated 
margins of sales at LTFV are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    On July 31, 2002, the Department initiated an investigation to 
determine whether imports of saccharin are being, or are likely to be, 
sold in the United States at LTFV (67 FR 51536(August 8, 2002)). Since 
the initiation of this investigation, the following events have 
occurred. On August 30, 2002, the International Trade Commission (ITC) 
published its preliminary determination that there is a reasonable 
indication that an industry in the United States is materially injured 
by reason of imports of saccharin from the PRC. See Saccharin from 
China, 67 FR 55872 (August 30, 2002).
    On August 14, 2002, the Department requested quantity and value 
(Q&V) information from a total of five Chinese companies, which were 
identified in the Petition for the Imposition of Antidumping Duties: 
Saccharin from the People's Republic of China (PRC), dated July 11, 
2002 (Petition). These five companies were: Suzhou Fine Chemical Group 
Co., Ltd. (Suzhou), Shanghai Fortune Chemical Co., Ltd. (Shanghai 
Fortune), Kaifeng Xinghua Fine Chemical Factory (Kaifeng No. 3 Chemical 
Plant) (Kaifeng), Taijin Changhie (Taijin) and Taijin North Food (North 
Food). On August 14, 2002, the Department also sent the government of 
the PRC a letter requesting assistance locating all known Chinese 
producers/exporters of saccharin who exported saccharin to the United 
States during the period of investigation (POI). On August 20, 2002, we 
received a letter from Suzhou, requesting a one-week extension (from 
August 23, 2002 to August 30, 2002) of the filing deadline for the 
August 14, 2002 Q&V questionnaire. The Department granted this request.
    On August 23, 2002, we received responses to our Q&V information 
request from Shanghai Fortune and Kaifeng. On August 30, 2002, we 
received a response from Suzhou. We did not receive responses from 
Taijin or North Food, nor did we receive a response from the PRC 
government regarding other producers/exporters of saccharin. Based on 
the information submitted for the record, the Department selected the 
following two mandatory respondents: Suzhou and Shanghai Fortune. See 
Selection of Respondents for Antidumping Duty Investigation of 
Saccharin from the People's Republic of China (A-570-878), Memorandum 
from Javier Barrientos, Case Analyst, through Sally C. Gannon, Program 
Manager, Office VII, to Barbara E. Tillman, Director, Office VII, AD/
CVD Enforcement Group III (September 10, 2002) (Respondent Selection 
Memorandum). On September 10, 2002, the Department issued its 
antidumping duty questionnaire to Suzhou and Shanghai Fortune.
    On October 7, 2002, petitioner, PMC Specialties Group, Inc., 
alleged that critical circumstances exist with respect to imports of 
saccharin from the PRC, requesting that the Department issue a 
preliminary determination of critical circumstances at the earliest 
practicable time. Respondents filed responses to the allegation on 
October 16, 2002, October 22, 2002, and November 1, 2002. Petitioner 
filed additional submissions supporting its allegation on October 18, 
2002 and November 7, 2002.
    In accordance with 19 CFR 351.206(c)(2)(I), because petitioner 
submitted a critical circumstances allegation more than 20 days before 
the scheduled date of the preliminary determination, the Department 
must issue a preliminary critical circumstances determination not later 
than the date of the preliminary determination. On November 15, 2002, 
the Department issued a memorandum recommending that petitioner's 
argument that the comparison periods used in determining whether 
``massive imports'' have taken place be shifted back to April 2002 be 
rejected, and, thus, determining that there was not a sufficient basis 
on which to examine critical circumstances in this investigation. See 
Saccharin from the People's Republic of China: Critical Circumstances 
Allegation and Determination of ``Massive Imports,'' Memorandum from 
Mark Hoadley, Analyst, through Barbara E. Tillman, Director, Office 
VII, AD/CVD Enforcement Group III, and Sally C. Gannon, Program 
Manager, Office VII, to Joseph A. Spetrini, Deputy Assistant Secretary 
for Import Administration, Group III (November 15, 2002). On December 
11, 2002, the Department denied petitioner's request that the 
Department request entry information from the U.S. Customs Service 
(Customs) pursuant to section 732(e) of the Act. See Saccharin from the 
People's Republic of China: Denial of Request to U.S. Customs for Entry 
Information, Memorandum from Mark Hoadley, Senior Analyst, through 
Sally Gannon, Program Manager, Group III, Office VII, to the File 
(December 10, 2002).
    On October 18, 2002, the Department received Section A responses 
from Suzhou and Shanghai Fortune. Additionally, on October 18, 2002, 
the Department received an unsolicited Section A response from Kaifeng. 
On October 23, 2002, petitioner filed comments regarding Suzhou's and 
Shanghai Fortune's Section A questionnaire responses. On October 25, 
2002, the Department issued a supplemental Section A questionnaire to 
Suzhou and Shanghai Fortune. Additionally, on October 25, 2002, the 
Department received Sections C & D responses from Suzhou and Shanghai 
Fortune. On November 1, 2002, the Department issued a supplemental 
Section A questionnaire to Kaifeng. On November 4, 2002, the Department 
issued a Section C & D supplemental antidumping duty questionnaire to 
Suzhou and Shanghai Fortune. On November 8, 2002, petitioner filed 
comments regarding Suzhou's and Shanghai Fortune's Section C & D 
questionnaire responses. On November 14, 2002, the Department received 
Section A supplemental responses from Suzhou, Shanghai Fortune, and 
Kaifeng. On November 25, 2002, petitioner filed comments regarding 
Suzhou's Section A supplemental response. On November 25, 2002, the 
Department received Section C & D supplemental responses from Suzhou 
and Shanghai Fortune. On November 25, 2002, petitioner submitted timely 
comments and public data regarding appropriate choices for surrogate 
market, production factors, and values for the PRC. On December 4, 
2002, petitioner filed comments for consideration in the preliminary 
determination.
    On November 29, 2002 and December 4, 2002, the Department sent 
additional supplemental questionnaires to Shanghai Fortune. On December 
11, 2002 and December 16, 2002, the Department received responses to 
these requests from Shanghai Fortune. On December 6, 2002, Department 
officials met with petitioner to discuss issues and concerns regarding 
the date of sale methodology. See Meeting with Petitioner's Counsel 
Regarding the Investigation of Saccharin from the People's Republic of 
China, Memorandum to the File from Jessica Burdick through Sally C. 
Gannon (December 6, 2002). On December 12, 2002, the petitioner 
submitted further comments on the record with regard to this issue. The 
Department intends to send a supplemental questionnaire to

[[Page 79051]]

Suzhou on this issue following this preliminary determination.

Period of Investigation

    The POI is January 1, 2002 through June 30, 2002. This period 
corresponds to the two most recent fiscal quarters prior to the month 
of the filing of the Petition (i.e., July 2002), and is in accordance 
with our regulations. See 19 CFR 351.204(b)(1).

Scope of the Investigation

    The product covered by this investigation is saccharin. Saccharin 
is defined as a non-nutritive sweetener used in beverages and foods, 
personal care products such as toothpaste, table top sweeteners, and 
animal feeds. It is also used in metalworking fluids. There are four 
primary chemical compositions of saccharin: (1) sodium saccharin 
(American Chemical Society Chemical Abstract Service (CAS) Registry 
128-44-9); (2) calcium saccharin (CAS Registry 6485-
34-3); (3) acid (or insoluble) saccharin (CAS Registry 81-07-
2); and (4) research grade saccharin. Most of the U.S.-produced and 
imported grades of saccharin from the PRC are sodium and calcium 
saccharin, which are available in granular, powder, spray-dried powder, 
and liquid forms.
    The merchandise subject to this investigation is classifiable under 
subheading 2925.11.00 of the Harmonized Tariff Schedule of the United 
States (HTSUS) and includes all types of saccharin imported under this 
HTSUS subheading, including research and specialized grades. Although 
the HTSUS subheading is provided for convenience and Customs purposes, 
the Department's written description of the scope of this investigation 
remains dispositive.

Non-Market Economy Country Status

    The Department has treated the PRC as a non-market economy (NME) 
country in all past antidumping investigations. See, e.g., Notice of 
Final Determination of Sales at Less Than Fair Value: Ferrovanadium 
from the People's Republic of China, 67 FR 71137 (November 29, 2002); 
Notice of Final Determination of Sales at Less Than Fair Value: Cold-
Rolled Carbon Steel Flat Products from the People's Republic of China, 
67 FR 62107 (October 3, 2002). A designation as an NME remains in 
effect until it is revoked by the Department (see section 771(18)(c)) 
of the Act). No party to this investigation has requested a revocation 
of the PRC's NME status. We have, therefore, preliminarily determined 
to continue to treat the PRC as an NME country. When the Department is 
investigating imports from an NME, section 773(c)(1) of the Act directs 
us 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 ``Factor Valuations'' section, below. 
Furthermore, no interested party has requested that the saccharin 
industry in the PRC be treated as a market-oriented industry, and no 
information has been provided that would lead to such a determination. 
Therefore, we have not treated the saccharin industry in the PRC as a 
market-oriented industry in this investigation.

Separate Rates

    In proceedings involving NME countries, the Department begins with 
a rebuttable presumption that all companies within the country are 
subject to government control, and, thus, should be assessed a single 
antidumping duty deposit rate. It is the Department's policy to assign 
all exporters of merchandise subject to investigation in an NME country 
this single rate, unless an exporter can demonstrate that it is 
sufficiently independent so as to be eligible for a separate rate. The 
two respondents selected in this investigation, Suzhou and Shanghai 
Fortune, as well as Kaifeng, have provided company-specific separate 
rates information and have each stated that they meet the standards for 
the assignment of separate rates.
    We considered whether each of these three PRC companies is eligible 
for a separate rate. The Department's separate rate 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 investment, pricing, and output decision-making 
process at the individual firm level. See, e.g., Certain Cut-to-Length 
Carbon Steel Plate from Ukraine: Final Determination of Sales at Less 
than Fair Value, 62 FR 61754, 61757 (November 19, 1997); and 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).
    To establish whether a firm is sufficiently independent from 
government control of its export activities to be entitled to a 
separate rate, the Department analyzes each entity exporting the 
subject merchandise 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) (Sparklers), as amplified by 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). In accordance with the separate rates criteria, the 
Department assigns separate rates in NME cases only if respondents can 
demonstrate the absence of both de jure and de facto governmental 
control over export activities.
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. See 
Sparklers, 56 FR at 20589.
    The three PRC companies seeking separate rates reported that the 
subject merchandise was not subject to any government export 
provisions\1\ or export licensing, and was not subject to export quotas 
during the POI. Each company also submitted copies of its respective 
business license. We found no inconsistencies with the exporters' 
claims of the absence of restrictive stipulations associated with the 
exporters' business licenses. Each exporter submitted copies of 
statutory and regulatory authority establishing the de jure absence of 
government control over the companies. More specifically, the 
Administrative Regulations of the People's Republic of China Governing 
the Registration of Legal Corporations, issued on June 13, 1988 by the 
State Council of the PRC, and the Law of the People's Republic of China 
of Industrial Enterprises Owned by the Whole People, effective August 
1, 1998, all placed on the record of this investigation, provide that, 
to qualify as legal persons,

[[Page 79052]]

companies must have the ``ability to bear civil liability 
independently'' and the right to control and manage their businesses. 
These regulations also state that, as an independent legal entity, a 
company is responsible for its own profits and losses. In prior cases, 
the Department has analyzed these laws and regulations and found that 
they establish an absence of de jure control. See Notice of Final 
Determination of Sales at Less Than Fair Value: Manganese Metal from 
the People's Republic of China, 60 FR 56045, 56046 (November 6, 1995). 
Thus, we believe that the evidence on the record supports a preliminary 
finding of an absence of de jure governmental control based on: (1) an 
absence of restrictive stipulations associated with the exporters' 
business licenses; and (2) the legal authority on the record 
decentralizing control over respondents.
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    \1\ Although the respondents state that the Chamber of Commerce 
for Medicines and Health Products Importers and Exporters has 
attempted to prevent dumping through a program that sets a price 
floor and other conditions for exports of saccharin, the Department 
preliminarily determines that this program does not require us to 
deny a separate rate to members of the saccharin industry. As stated 
above, the Department's separate rate test does not consider, in 
general, macroeconomic/border-type controls, e.g., export licenses, 
quotas, and minimum export prices, particularly if these controls 
are imposed to prevent dumping.
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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 are 
subject to the approval of a governmental agency; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses. See Silicon Carbide, 59 FR at 22586-87; and 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). As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Silicon Carbide, 56 FR at 22587. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether respondents are, in fact, subject to a degree of 
governmental control which would preclude the Department from assigning 
separate rates.
    Regarding whether each exporter sets its own export prices 
independent of the government and without the approval of a government 
authority, each exporter reported that it determines its prices for 
sales of the subject merchandise. Each exporter stated that it 
negotiates prices directly with its customers. Also, each exporter 
claimed that its prices are not subject to review or guidance from any 
governmental organization. Regarding whether each exporter has 
authority to negotiate and sign contracts and other agreements, each 
exporter reported that it has the authority to negotiate and sign 
contracts and other agreements. Also, each exporter stated that its 
negotiations are not subject to review or guidance from any 
governmental organization. There is no evidence on the record to 
suggest that there is any governmental involvement in the negotiation 
of contracts.
    Regarding whether each exporter has autonomy in making decisions 
regarding the selection of management, our examination of the record 
indicates that each exporter reported that it has autonomy in making 
decisions regarding the selection of management. Also, each exporter 
claimed that its selection of management is not subject to review or 
guidance from any governmental organization. There is no evidence on 
the record to suggest that there is any governmental involvement in the 
selection of management by the exporters.
    Regarding whether each exporter retains the proceeds from its sales 
and makes independent decisions regarding its disposition of profits or 
financing of losses, our examination of the record indicates that each 
exporter reported that it retains the proceeds of its export sales, 
using profits according to its business needs. Also, each exporter 
reported that the allocation of profits is determined by its top 
management. There is no evidence on the record to suggest that there is
    any governmental involvement in the decisions regarding disposition 
of profits or financing of losses.
    Therefore, we preliminarily determine that the evidence on the 
record supports a preliminary finding of de facto absence of 
governmental control based on record statements and supporting 
documentation showing that: (1) each exporter sets its own export 
prices independent of the government and without the approval of a 
government authority; (2) each exporter retains the proceeds from its 
sales and makes independent decisions regarding disposition of profits 
or financing of losses; (3) each exporter has the authority to 
negotiate and sign contracts and other agreements; and, (4) each 
exporter has autonomy from the government regarding the selection of 
management.
    The evidence placed on the record of this investigation by Suzhou, 
Shanghai Fortune, and Kaifeng demonstrates an absence of government 
control, both in law and in fact, with respect to each of the 
exporter's exports of the merchandise under investigation, in 
accordance with the criteria identified in Sparklers and Silicon 
Carbide. Therefore, for the purposes of this preliminary determination, 
we are granting separate, company-specific rates to each of these three 
exporters. The Department will verify information pertaining to our 
separate rates determinations in the course of verifying the 
questionnaire responses.

PRC-Wide Rate

    As discussed above (see ``Separate Rates''), all PRC exporters that 
do not qualify for a separate rate are treated as a single enterprise; 
e.g., the PRC-wide entity. As noted above in ``Case History,'' all 
exporters were given the opportunity to respond to the Department's 
August 14, 2002, Q&V questionnaire. As explained above, we received 
timely responses from Suzhou, Shanghai Fortune, and Kaifeng. As noted 
above in the ``Background'' section, after choosing Suzhou and Shanghai 
Fortune as mandatory respondents, the Department then provided them 
with the opportunity to respond to the separate rates portion of the 
antidumping questionnaire. Subsequently, Suzhou, Shanghai Fortune and, 
additionally, Kaifeng, responded to this portion of the Department's 
questionnaire. The Department did not receive Q&V responses, or 
separate rates information, from Taijin and North Food, the only other 
companies identified in the Petition.
    Since these companies did not respond to our August 14, 2002, Q&V 
questionnaire, and since information on the record indicates that the 
value and volume of sales to the United States by the three exporters 
that did respond to the Department's Q&V is substantially less than the 
total value and volume of imports from the PRC indicated by Customs 
data (see Respondent Selection Memorandum), we preliminarily determine 
that subject merchandise is being imported into the United States that 
is produced by the PRC-wide entity. Because there is no information on 
the record allowing the calculation of a rate for this entity, the 
application of facts available is warranted.
    Section 776(a)(2) of the Act provides that, if an interested party 
(A) withholds information requested by the Department, (B) fails to 
provide such information by the deadline, or in the form or manner 
requested, (C) significantly impedes a proceeding, or (D) provides 
information that cannot be verified, the Department shall use,

[[Page 79053]]

subject to sections 782(d) and (e) of the Act, facts otherwise 
available in reaching the applicable determination. Pursuant to this 
section of the Act, in reaching our preliminary determination, we have 
used total facts available for the PRC-wide rate because two entities 
did not respond at all to our questionnaire, nor did the PRC government 
respond on their behalf, thus failing to provide information and 
significantly impeding our investigation.
    Section 776(b) of the Act provides that, in selecting from among 
the facts available, the Department may employ adverse inferences if an 
interested party fails to cooperate by not acting to the best of its 
ability to comply with requests for information. See also, Statement of 
Administrative Action (SAA), accompanying the URAA, H.R. Doc. No. 316, 
103rd Cong., 2d. Sess., at 870 (1994). The Department finds that the 
producers/exporters who did not respond to our request for information 
(i.e., the PRC-wide entity) have failed to cooperate to the best of 
their ability. Therefore, the Department preliminarily determines that, 
in selecting from among the facts available, an adverse inference is 
appropriate. Consistent with Department practice in cases where a 
respondent is considered uncooperative, as adverse facts available, we 
have preliminarily applied 340.80 percent, an average of the highest 
rates for both products calculated in the Petition, to the PRC-wide 
entity, including Taijin and North Food. See, e.g., Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Ferrovanadium from the People's 
Republic of China Monday, 67 FR 45088, 45091 (July 8, 2002) (PRC 
Ferrovanadium).
    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 as facts available, it must, to the extent 
practicable, corroborate that information from independent sources 
reasonably at its disposal. Secondary information is described in the 
SAA as ``information derived from the Petition that gave rise to the 
investigation or review, the final determination concerning subject 
merchandise, or any previous review under section 751 concerning the 
subject merchandise.'' See SAA at 870. The SAA provides that to 
``corroborate'' means simply that the Department will satisfy itself 
that the secondary information to be used has probative value. See id. 
The SAA also states that independent sources used to corroborate may 
include, for example, published price lists, official import statistics 
and Customs data, and information obtained from interested parties 
during the particular investigation. See 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. See 
also, PRC Ferrovanadium, 67 FR at 45091.
    In order to determine the probative value of the initiation margins 
for use as facts otherwise available for the purposes of this 
determination, we examined evidence supporting the initiation 
calculations. Petitioner calculated a range of export prices (EP) for 
two products, sodium saccharin and calcium saccharin, using an average 
unit value (AUV) of saccharin imports reported by Customs and price 
quotes. It subtracted from the price quotes amounts for ocean freight, 
insurance, brokerage and handling charges and foreign inland freight. 
See Petition at Exhibit 6; and Letter from Petitioner to the 
Department: Response to Petition Clarifications Questions (July 26, 
2002), at Exhibits 1 and 2, for a detailed calculation of these EPs.
    We compared the AUV, which is publicly available data, with the 
price quotes, net expense deductions. For calcium saccharin, the lowest 
EP was the AUV.\2\ For sodium saccharin, the price quotes, before 
deductions, were lower than the AUV, but the difference was not 
substantial. See Preliminary Determination of Saccharin from the 
People's Republic of China: Analysis and Corroboration of Adverse Facts 
Available Rate, Memorandum from Mark Hoadley to the File (December 18, 
2002) (Corroboration Analysis Memorandum) for specific facts about the 
comparison. Moreover, the price quotes for sodium saccharin were within 
the range, even after deductions, of the port-specific AUVs included in 
the Petition (which were not used in calculating the initiation rates), 
and the lowest price quote was higher than the lowest AUV. Therefore, 
we determine that the EP starting prices and deductions submitted in 
the Petition are corroborated by the fact of their consistency with 
Customs data.
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    \2\ Petitioner calculated only one AUV, which it applied to both 
products, presumably because Customs does not have separate tariff 
classifications for different types of saccharin (e.g., sodium and 
calcium), and, thus, information on sub-types of saccharin cannot be 
obtained from the Customs website.
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    In calculating NV in the Petition, usage rates were based on 
public, certified production information submitted by PRC producers in 
the 1994 investigation. Petitioner provided an affidavit from one of 
its employees stating his qualifications to perform the calculations, 
the relevancy to the PRC industry of the type of production process 
assumed for the calculations, and the reasonableness of the results. We 
asked petitioner to clarify certain issues regarding its calculations 
and the usage rates, which it did. See Letter from Sally Gannon to 
petitioner regarding Petition on Saccharin from the People's Republic 
of China, dated July 23, 2002 and July 26, 2002 submission from 
petitioner. We compared the usage rates in the Petition to the usage 
rates reported by both respondents. See Corroboration Analysis 
Memorandum, Attachment 1, for a chart comparing these rates. While 
there were differences, we did not notice a pattern of figures in the 
Petition being higher than those reported by respondents. The usage 
rates in the Petition appear to be comparable to those reported by 
respondents. For the final determination, we will recheck the usage 
rates in the Petition in light of any new material timely placed on the 
record and any information reviewed at verification regarding the 
production of saccharin in the PRC.
    In valuing factors of production for Shanghai and Suzhou, we chose 
information somewhat different from that used in the Petition. While 
much of the information is the same (e.g., most values are still taken 
from Indian import statistics), where this information differed from 
the information used in the Petition, we used the newer information for 
purposes of calculating the PRC-wide rate. See Corroboration Analysis 
Memorandum, Attachment 2. Because all of this information is publicly 
available, and taken from sources used in numerous previous 
investigations of PRC exports, we determine that it has been 
corroborated for use in calculating the adverse facts available margin.
    This PRC-wide rate applies to all entries of subject merchandise 
except for entries from Suzhou, Shanghai Fortune, and Kaifeng. Because 
this is a preliminary margin, 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

[[Page 79054]]

PRC-wide margin. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value: Solid Fertilizer Grade Ammonium Nitrate From the 
Russian Federation, 65 FR 1139 (January 7, 2000).

Margins for Cooperative Exporters Not Selected

    The exporter who responded to Section A of the Department's 
antidumping questionnaire but was not selected as a respondent in this 
investigation, Kaifeng, has applied for a separate rate and provided 
information for the Department to make this determination. Although it 
is not practicable for the Department to calculate a separate rate for 
Kaifeng in addition to Suzhou and Shanghai Fortune (see Respondent 
Selection Memorandum, explaining the Department's decision to limit the 
investigation to two exporters), the company did cooperate in providing 
all information that the Department requested. For Kaifeng, we have 
calculated a weighted-average margin based on the rates calculated for 
those exporters that were selected to participate in this 
investigation, excluding any rates that are zero, de minimis, or based 
entirely on adverse facts available. See Notice of Preliminary 
Determination of Sales at Less Than Fair Value; Honey from the People's 
Republic of China, 66 FR 24101, 24104 (May 11, 2001).

Surrogate Country

    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs it to base NV, in most 
circumstances, on the NME producer's factors of production, valued in a 
surrogate market economy country or countries considered to be 
appropriate by the Department. In accordance with section 773(c)(4) of 
the Act, the Department, in valuing the factors of production, shall 
utilize, to the extent possible, the prices or costs of factors of 
production in one or more market economy countries that: (1) are at a 
level of economic development comparable to that of the NME country; 
and, (2) are significant producers of comparable merchandise. The 
sources of the surrogate factor values are discussed under the NV 
section below and in Antidumping Duty Investigation of Saccharin from 
the People's Republic of China: Factor Valuation, Memorandum from Brett 
L. Royce, Case Analyst, through Sally C. Gannon, Program Manager, 
Office VII, to the File (December 18, 2002) (Factor Valuation 
Memorandum).
    The Department has determined that India, Pakistan, Indonesia, Sri 
Lanka, and the Philippines are countries comparable to the PRC in terms 
of economic development. See Antidumping Duty Investigation on 
Saccharin from the People's Republic of China, Memorandum from Jeffrey 
May, Director, Office of Policy, to Sally C. Gannon, Program Manager, 
Office VII (September 12, 2002). Customarily, we select an appropriate 
surrogate country based on the availability and reliability of data 
from the countries that are significant producers of comparable 
merchandise. For PRC cases, the primary surrogate country has often 
been India if it is a significant producer of comparable merchandise. 
In this case, we have found that India is a significant producer of 
comparable merchandise. See Antidumping Duty Investigation of Saccharin 
from the People's Republic of China: Selection of a Surrogate Country, 
Memorandum from Brett L. Royce, Case Analyst, through Barbara E. 
Tillman, Director, Office VII, AD/CVD Enforcement Group III, and, Sally 
C. Gannon, Program Manager, Office VII, to the File (December 18, 2002) 
(Surrogate Country Memorandum).
    We used India as the primary surrogate country, and, accordingly, 
we have calculated NV using Indian prices to value the PRC producers' 
factors of production, when available and appropriate. See Surrogate 
Country Memorandum. We have obtained and relied upon publicly available 
information wherever possible. See Factor Valuation Memorandum.
    In accordance with section 351.301(c)(3)(I) of the Department's 
regulations, for the final determination in an antidumping 
investigation, interested parties may submit publicly available 
information to value factors of production within 40 days after the 
date of publication of this preliminary determination.

Date of Sale

    Respondents reported contract date, purchase order date, and 
invoice date as dates of sale. Although the Department maintains a 
presumption that invoice date is the date of sale (19 CFR Sec.  
351.401(I)), ``[i]f the Department is presented with satisfactory 
evidence that the material terms of sale are finally established on a 
date other than the date of invoice, the Department will use that 
alternative date as the date of sale.'' Antidumping Duties; 
Countervailing Duties: Final Rule, 62 FR 27296, 27349 (May 19, 1997) 
(Preamble). After examining the sales documentation placed on the 
record by respondents, we preliminarily determine that invoice date is 
the date of sale for all sales by both respondents. These documents, 
while mentioning at least the proposed transaction price for sales, do 
not reflect the ``formal negotiation and contracting procedures'' 
mentioned by the Preamble to the Department's regulations as creating 
an exception to the invoice date presumption. Preamble at 27349. 
Regarding sales made pursuant to contracts in particular, while the 
Preamble states that ``date of invoice normally would not be an 
appropriate date of sale for [long-term] contracts'', there is not 
enough evidence on the record at this point in time to determine 
whether the contracts used by respondents in this case establish the 
material terms of sale to the extent required by our regulations in 
order to rebut the presumption that invoice date is the proper date of 
sale. Id. at 27350. Specifically, we cannot conclude at this time 
whether these contracts are actually binding contracts or merely non-
binding sales offers. We note that, even in the case of long-term 
contracts, the Preamble rejects a bright-line rule for date of sale, 
stating that ``[b]ecause of the unusual nature of long-term contracts, 
whereby merchandise may not enter the United States until long after 
the date of contract, the Department will continue to review these 
situations carefully on a case-by-case basis.Sec.  Id. As noted above 
in the ``Background Section,'' the Department has sent supplemental 
questionnaires to Suzhou and Shanghai Fortune regarding the issue of 
date of sale, and we will review more information at verification 
regarding this issue for both exporters. We will review information 
regarding the nature and implementation of the contracts, how sales 
transactions might differ in practice from the written words of the 
contracts, and how these contracts might have been amended. We will 
reexamine this issue for the final determination.

Fair Value Comparisons

    To determine whether sales of saccharin to the United States by 
Suzhou and Shanghai Fortune were made at less than fair value, we 
compared the EP, for Shanghai Fortune, and the constructed export price 
(CEP), for Suzhou, to NV, as described in the ``Export Price,'' 
``Constructed Export Price,'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(1)(A)(I) of the Act, we 
calculated weighted-average EPs and CEPs. With regard to Suzhou, in 
accordance with section 777A(d)(1)(A)(ii) of the Act, we calculated 
weighted-average CEPs.

[[Page 79055]]

Export Price

    For Shanghai Fortune, we based United States price on EP, in 
accordance with section 772(a) of the Act, because the first sale to an 
unaffiliated purchaser was made prior to importation, and CEP was not 
otherwise warranted by the facts on the record. We calculated EP based 
on prices to the first 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 foreign inland freight from the 
plant to the port of exportation, brokerage and handling, ocean freight 
and marine insurance.
    While Shanghai Fortune has reported its sales on an EP basis, we 
are examining a potential affiliation issue which could result in 
treating certain sales as CEP sales. For further details, see Letter 
from Barbara E. Tillman to Shanghai Fortune regarding Antidumping Duty 
Investigation of Saccharin from the People's Republic of China: Request 
for Additional Information, dated November 29, 2002; and Letter from 
Sally Gannon to Shanghai Fortune regarding Antidumping Duty 
Investigation of Saccharin from the People's Republic of China, dated 
December 4, 2002. See also, Investigation of Saccharin from the 
People's Republic of China for the period of January 1, 2002 through 
June 30, 2002; Analysis of Affiliation for Shanghai Fortune Chemical 
Co., Ltd. (December 18, 2002) (Affiliation Memorandum).

Constructed Export Price

    For Suzhou, we based United States price on CEP in accordance with 
section 772(b) of the Act, because the first sale to an unaffiliated 
purchaser was made after importation into the United States. We 
calculated CEP based on prices from the U.S. affiliate to the first 
unaffiliated purchasers in the United States. We deducted the following 
expenses from the starting price (gross unit price), where applicable: 
PRC inland freight, international (ocean) freight and insurance, U.S. 
customs duty, U.S. brokerage and handling, U.S. freight and 
warehousing, the affiliated purchaser's U.S. credit expenses, and the 
affiliated purchaser's indirect selling expenses. See sections 772(c) 
and (d) of the Act. Because U.S. customs duty, U.S. brokerage and 
handling, some freight expenses, credit expenses, and indirect selling 
expenses are market-economy costs incurred in U.S. dollars, we used 
actual costs rather than surrogate values when deducting these expenses 
from gross unit price.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the NV using a factors-of-production methodology if: (1) the 
merchandise is exported from an NME country; and, (2) the information 
does not permit the calculation of NV using home-market prices, third-
country prices, or constructed value under section 773(a) of the Act.
    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. We 
calculated NV based on factors of production, reported by each 
respondent, for materials, energy, labor, by-products, and packing. 
Where applicable, we deducted from each respondent's NV the cost of by-
products sold during the POI. We valued the majority of input factors 
using publicly available information as discussed in the ``Surrogate 
Country'' and ``Factor Valuations'' sections of this notice.

Factor Valuations

    The Department normally uses publicly available information to 
value factors of production. However, in accordance with 19 CFR 
351.408(c)(1), 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 may employ the actual price 
paid for the input to calculate the factors-based NV. See also, 
Shakeproof Assembly v. United States, 268 F. 3d 1376,1379-80 (Fed. Cir. 
2001). Suzhou and Shanghai Fortune reported that some of their inputs 
were purchased from market economies and paid for in a market economy 
currency. See Memorandum from Javier Barrientos to the File: Analysis 
for the Preliminary Determination of Saccharin from the People's 
Republic of China: Shanghai Fortune (December 18, 2002) (Shanghai 
Fortune Analysis Memorandum) and Memorandum from Mark Hoadley to the 
File: Analysis for the Preliminary Determination of Saccharin from the 
People's Republic of China: Suzhou (December 18, 2002) (Suzhou Analysis 
Memorandum).
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by respondents for the POI. To 
calculate NV, the reported per-unit factor quantities were multiplied 
by publicly available Indian surrogate values. In selecting the 
surrogate values, we considered the quality, specificity, and 
contemporaneity of the data. As appropriate, we adjusted input prices 
by including freight costs to make them delivered prices. Specifically, 
we added surrogate freight costs to Indian import surrogate values 
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 United States Court of 
Appeals for the Federal Circuit's decision in Sigma Corp. v. United 
States, 117 F. 3d 1401 (Fed. Cir. 1997). For a detailed description of 
all surrogate values used for respondents, refer to the Factor 
Valuation Memorandum.
    Except as noted below, we calculated raw material inputs using the 
data obtained from the following sources: the Monthly Trade Statistics 
of Foreign Trade of India - Volume II - Imports (Indian Import 
Statistics); the Indian trade publication Chemical Weekly; U.S. 
Department of Commerce data; the Second Water Utilities Data Book; 
International Energy Agency data; and annual reports from National 
Peroxide Ltd., Calibre Chemicals Pvt. Ltd., and Hindustan Lever Ltd. As 
appropriate, we adjusted rupee denominated values for inflation using 
price indices published in the International Monetary Fund's 
International Financial Statistics and excluded taxes. See Factor 
Valuation Memorandum.
    We valued some factors depending on the respondent of methanol, 
sulfur, phthalic anhydride, and freight at the average of the market 
economy prices actually paid, because these were purchased from market 
economy countries in meaningful quantities. We disregarded purchase 
prices of methanol and sulfur from market economy countries that 
benefitted from non-industry specific export subsidies. For further 
discussion, please see Shanghai Fortune Analysis Memorandum and Suzhou 
Analysis Memorandum.
    To value water, we used the average water tariff rate in the Asian 
Development Bank's Second Water Utilities Data Book: Asian and Pacific 
Region, published in 1997. Because this data was not contemporaneous 
with the POI, we adjusted the rate for inflation. See Factor Valuation 
Memorandum.
    To value electricity, we used the annual report of an Indian 
chemical producer, National Peroxide Ltd. Because this data was not 
contemporaneous with the POI, we adjusted the rate for inflation. See 
Factor Valuation Memorandum.
    For labor, consistent with section 351.408(c)(3) of the 
Department's regulations, we used the PRC regression-based wage rate at 
Import Administration's home page, Import

[[Page 79056]]

Library, Expected Wages of Selected NME Countries, revised September 
2002 (see http://ia.ita.doc.gov/wages). The source of the wage rate 
data on the Import Administration's web site can be found in the 
Yearbook of Labour Statistics 2001, International Labor Office (Geneva: 
2001), Chapter 5B: Wages in Manufacturing, and GNP data as reported in 
World Development Indicators, The World Bank, (Washington, DC (2002)).
    To value foreign inland truck freight, we used the seventeen price 
quotes from six different Indian trucking companies that were used in 
the Final Determination of the Antidumping Duty Investigation of Bulk 
Aspirin From the People's Republic of China, 65 FR 33805 (May 25, 
2000). We then adjusted this value to reflect inflation through the 
POI. See Factor Valuation Memorandum.
    To value factory overhead, selling, general and administrative 
expenses, and profit, we calculated average rates based on financial 
information from the most recent financial statements of two Indian 
chemical producers: Calibre Chemicals Pvt. Ltd. and National Peroxide 
Ltd. See Factor Valuation Memorandum.

Currency Conversions

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales, as certified by the Federal Reserve Bank.

Verification

    As provided in section 782(I)(1) of the Act, we intend to verify 
all company information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing 
Customs to suspend liquidation of all entries of saccharin from the PRC 
that are entered, or withdrawn from warehouse, for consumption, on or 
after the date of publication of this notice in the Federal Register. 
We will instruct 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 or CEP, as indicated below. These suspension-of-liquidation 
instructions will remain in effect until further notice. The weighted-
average dumping margins are as follows:

------------------------------------------------------------------------
                Manufacturer/Exporter                   Margin (percent)
------------------------------------------------------------------------
Suzhou Fine Chemical Group Co., Ltd..................            231.62%
Shanghai Fortune [chyph]Chemical Co., Ltd............             74.96%
Kaifeng Xinhua Fine Chemical Factory.................            197.55%
PRC-Wide.............................................            363.22%
------------------------------------------------------------------------

Disclosure

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of the 
proceedings in this investigation in accordance with 19 CFR 351.224(b).

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination of sales at LTFV. If our final determination 
is affirmative, the ITC will determine before the later of 120 days 
after the date of this preliminary determination or 45 days after our 
final determination whether these imports are materially injuring, or 
threatening material injury to, the U.S. industry.

Public Comment

    Unless otherwise notified by the Department, case briefs or other 
written comments may be submitted to the Assistant Secretary for Import 
Administration no later than fifty days after the date of publication 
of this notice, and rebuttal briefs, limited to issues raised in case 
briefs, no later than fifty-five days after the date of publication of 
this preliminary determination. See 19 CFR 351.309(c)(1)(I); 19 CFR 
351.309(d)(1). A list of authorities used and an executive summary of 
issues should accompany any briefs submitted to the Department. This 
summary should be limited to five pages total, including footnotes. 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. Tentatively, any hearing 
will be held fifty-seven days after publication of this notice at the 
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230, at a time and location to be determined. 
Parties should confirm by telephone the date, time, and location of the 
hearing two days before the scheduled date. Interested parties who wish 
to request a hearing, or to participate if one is requested, must 
submit a written request to the Assistant Secretary for Import 
Administration, U.S. Department of Commerce, Room 1870, within 30 days 
of the date of publication of this notice. See 19 CFR 351.310(c). 
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, each party may make an affirmative 
presentation only on issues raised in that party's case brief, and may 
make rebuttal presentations only on arguments included in that party's 
rebuttal brief. See 19 CFR 351.310(c). Unless postponed, we will make 
our final determination no later than 75 days after the date of the 
preliminary determination.
    This determination is issued and published in accordance with 
sections 733(f) and 777(I)(1) of the Act.

    Dated: December 18, 2002.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 02-32784 Filed 12-26-02; 8:45 am]
BILLING CODE 3510-DS-S