[Federal Register Volume 68, Number 8 (Monday, January 13, 2003)]
[Notices]
[Pages 1591-1597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-631]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-827]


Certain Cased Pencils from the People's Republic of China; 
Preliminary Results and Rescission in Part of Antidumping Duty 
Administrative Review

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

ACTION: Notice of Preliminary Results and Rescission in Part of the 
Antidumping Duty Administrative Review of Certain Cased Pencils from 
the People's Republic of China.

-----------------------------------------------------------------------

SUMMARY: The Department of Commerce (the Department) has preliminarily 
determined that sales by the respondents in this review, covering the 
period December 1, 2000, through November 30, 2001, have been made 
below normal value (NV). In addition, pursuant to their requests, we 
are rescinding this review with respect to Orient International Holding 
Shanghai Foreign Trade Co., Ltd. (SFTC) and China First Pencil Co., 
Ltd. (CFP). Furthermore, we are preliminarily rescinding this review 
with respect to Kaiyuan Group Corporation (Kaiyuan) and Laizhou City 
Guangming Pencil-Making Co., Ltd. (Laizhou), because these companies 
reported that they made no shipments of subject merchandise to the 
United States during the period of review (POR). If these preliminary 
results are adopted in the final results of this review, we will 
instruct the U.S. Customs Service (Customs) to assess antidumping 
duties on all appropriate entries. The Department invites interested 
parties to comment on these preliminary results.

EFFECTIVE DATE:  January 13, 2003.

FOR FURTHER INFORMATION CONTACT: Paul Stolz or Crystal Crittenden, AD/
CVD Enforcement, Office 4, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone 
(202) 482-4474 and (202) 482-0989, respectively.

SUPPLEMENTARY INFORMATION:

[[Page 1592]]

Period of Review

    The POR is December 1, 2000 through November 30, 2001.

Background

    On December 3, 2001, the Department published in the Federal 
Register a notice of ``Opportunity to Request an Administrative 
Review'' of the antidumping duty order on certain cased pencils from 
the People's Republic of China (PRC), covering the period December 1, 
2000 through November 30, 2001. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 66 FR 60183-84 (December 3, 2001).
    On December 26, 2001, in accordance with 19 CFR 351.213(b), a U.S. 
importer, Simmons Rennolds Associates, LLC, a PRC exporter, Kaiyuan/
Shandong Rongxin Import and Export Co., Ltd., and a PRC producer of 
pencils, Laizhou, requested an administrative review of the order on 
certain cased pencils from the PRC. On December 31, 2001, CFP and SFTC 
requested an administrative review of their exports of subject 
merchandise to the United States. In addition, on December 31, 2001, 
Tianjin Custom Wood Processing Co., Ltd. (TCW) requested a review of 
its exports of subject merchandise to the United States.\1\
---------------------------------------------------------------------------

    \1\ TCW is wholly-owned by California Cedar Products Company 
(CalCedar). CalCedar is a privately held U.S. company incorporated 
in the State of California. Hereinafter we have referred to the 
entity CalCedar, including its subsidiary TCW, as CalCedar-Tianjin.
---------------------------------------------------------------------------

    The Department published a notice of initiation of an antidumping 
duty administrative review covering CFP's, SFTC's and CalCedar-
Tianjin's exports on January 29, 2002. See Initiation of Antidumping 
and Countervailing Duty Administrative Reviews, 67 FR 4236-37 (January 
29, 2002). In that notice, the Department inadvertently omitted Kaiyuan 
Group Corporation /Shandong Rongxin Import and Export Co., Ltd. and 
Laizhou from the list of companies to be reviewed. The Department 
published a notice of initiation of an antidumping duty administrative 
review covering Kaiyuan Group Corporation (Kaiyuan) and Laizhou on 
February 26, 2002. See Initiation of Antidumping and Countervailing 
Duty Administrative Reviews, 67 FR 8780-81 (February 26, 2002). We 
initiated the review on Kaiyuan believing that the names Kaiyuan and 
Shandong Rongxin Import and Export Co., Ltd. (Shandong), refer to the 
same company. Subsequent to our initiation of the review, we learned 
that Kaiyuan and Shandong are different companies which should have 
been listed separately in the initiation notice. Shandong, which is 
owned in part by Kaiyuan, was the exporter of subject merchandise 
during the POR while Kaiyuan had no business operations during the POR. 
Thus, as noted below, we are preliminarily rescinding this review with 
respect to Kaiyuan. Therefore, we are conducting a review of Shandong's 
exports of subject merchandise and will preliminarily assign the 
appropriate dumping margin to Shandong, if it qualifies for a separate 
rate. However, we will continue to examine the relationship between 
Kaiyuan and Shandong in assigning dumping margins for the final results 
of review.
    On January 11, 2002, we issued antidumping duty questionnaires to 
CFP, SFTC, and CalCedar-Tianjin. On February 20, 2002, we issued an 
antidumping duty questionnaire to Shandong and Laizhou. In its March 
26, 2002 response to the Department's questionnaire, Laizhou stated 
that it did not export subject merchandise to the United States during 
the POR. On April 24, 2002, within 90 days of publication of the 
initiation notice for this review, SFTC withdrew its request for an 
administrative review. On July 31, 2002, CFP withdrew its request for 
an administrative review. Pursuant to section 751(a)(3)(A) of the 
Tariff Act of 1930, as amended (the Act), the Department may extend the 
deadline for completion of the preliminary results of an administrative 
review if it determines that it is not practicable to complete the 
preliminary results of a review within the statutory time limit of 245 
days. On August 16, 2002, in accordance with the Act, the Department 
extended the time limit for the preliminary results of this review 
until December 31, 2002 (see Certain Cased Pencils from the People's 
Republic of China: Extension of Time Limit for Preliminary Results of 
Antidumping Duty Administrative Review, 67 FR 55197 (August 28, 2002)).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of the Review

    Imports covered by this order are shipments of certain cased 
pencils of any shape or dimension which are writing and/or drawing 
instruments that feature cores of graphite or other materials, encased 
in wood and/or man-made materials, whether or not decorated and whether 
or not tipped (e.g., with erasers, etc.) in any fashion, and either 
sharpened or unsharpened. The pencils subject to the order are 
classified under subheading 9609.10.00 of the Harmonized Tariff 
Schedules of the United States (HTSUS). Specifically excluded from the 
scope of the order are mechanical pencils, cosmetic pencils, pens, non-
cased crayons (wax), pastels, charcoals, and chalks.
    Although the HTSUS subheading is provided for convenience and 
customs purposes our written description of the scope of the order is 
dispositive.

Preliminary Partial Rescission of Review

    We are preliminarily rescinding this review with respect to Kaiyuan 
and Laizhou because they reported that they made no shipments of 
subject merchandise to the United States during the POR. The Department 
reviewed Customs data which supports the claims that these companies 
did not export subject merchandise to the United States during the POR.

Final Partial Rescission of Review

    In addition, we are rescinding this review with respect to CFP and 
SFTC because these companies withdrew their requests for review and no 
other interested party requested a review of either company. Pursuant 
to 19 CFR 351.213(d)(1), the Department will rescind an administrative 
review, in whole or in part, if a party that requested a review 
withdraws the request within 90 days of the date of publication of the 
notice of initiation of the requested review. SFTC withdrew its request 
for review within the 90 day time limit. Accordingly, we are rescinding 
the administrative review of SFTC's exports of subject merchandise for 
the period December 1, 2000 through November 30, 2001, and will issue 
appropriate assessment instructions to Customs. On July 31, 2002, CFP 
withdrew its request for review. Although this withdrawal came after 
the 90-day period for withdrawing a review request, there were no other 
requests to review CFP and it is otherwise reasonable to rescind the 
review. See 19 CFR 351.213 which provides the Secretary the authority 
to extend the deadline for companies to withdraw requests for review. 
Further, this action is consistent with the Department's practice. See 
e.g., Frozen Concentrated Orange Juice From Brazil; Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 67 FR 
40913 (June 14, 2002) where, pursuant to a request filed after the 90 
day deadline, the Department rescinded the review with respect to one 
respondent. Therefore, the Department has decided

[[Page 1593]]

that it is reasonable to accept CFP's withdrawal of its request for 
review.

Separate Rates Determination

    In proceedings involving nonmarket economy (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 a NME country this single rate, unless an exporter can demonstrate 
that it is sufficiently independent so as to be entitled to a separate 
rate. Shandong and CalCedar-Tianjin provided the separate rates 
information requested by the Department and reported that their export 
activities are not subject to government control.
    We examined the separate rates information provided by Shandong and 
CalCedar-Tianjin in order to determine whether the companies are 
eligible for a separate rate. The Department's separate rates test, 
which is used to determine whether an exporter is independent from 
government control, 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. 
The test focuses, rather, on controls over the investment, pricing, and 
output decision-making process at the individual firm level. See 
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); 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 so as 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 the 
Final Determination of Sales at Less Than Fair Value: Silicon Carbide 
from the People's Republic of China, 59 FR 22585 (May 2, 1994) (Silicon 
Carbide). In accordance with the separate rates criteria, the 
Department assigns separate rates in NME cases only if the 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 20508 (May 6, 1991).
    Shandong and CalCedar-Tianjin reported that the merchandise under 
review was not subject to restrictive stipulations associated with 
their export licenses (e.g., pencils were not on any government list of 
products subject to export restrictions or subject to special export 
licensing requirements). Shandong and CalCedar-Tianjin submitted copies 
of their business licenses in their questionnaire responses. We found 
no inconsistencies with their statements regarding the absence of 
restrictive stipulations associated with their business licenses. 
Furthermore, Shandong and CalCedar-Tianjin submitted copies of PRC 
legislation demonstrating the statutory authority for establishing the 
de jure absence of government control over the companies. Thus, we 
believe that the evidence on the record supports a preliminary finding 
of absence of de jure governmental control based on: (1) an absence of 
restrictive stipulations associated with the business licenses of 
CalCedar-Tianjin and Shandong; and (2) the applicable legislative 
enactments decentralizing control of PRC companies.
2. Absence of De Facto Control
    The Department typically considers four factors in evaluating 
whether a 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 the disposition of profits or 
financing of losses. See Silicon Carbide, 59 FR at 22586-87 (May 2, 
1994); see also 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 (May 2, 1994). 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.
    Shandong and CalCedar-Tianjin reported that they determine prices 
for sales of the subject merchandise based on market principles, the 
cost of the merchandise, and profit. Moreover, Shandong and CalCedar-
Tianjin stated that they negotiated the price directly with their 
customers. Also, Shandong and CalCedar-Tianjin claimed that their 
prices are not subject to review or guidance from any governmental 
organization. In addition, the record indicates that Shandong and 
CalCedar-Tianjin have the authority to negotiate and sign contracts and 
other agreements. Further, Shandong and CalCedar-Tianjin claimed that 
their negotiations are not subject to review or guidance from any 
governmental organization. Finally, there is no evidence on the record 
to suggest that there is any governmental involvement in the 
negotiation of their contracts.
    Furthermore, Shandong and CalCedar-Tianjin reported that they have 
autonomy in making decisions regarding the selection of management. 
Shandong and CalCedar-Tianjin indicated that their selection of 
management is not subject to review or guidance from any governmental 
organization and there is no evidence on the record to suggest that 
there is any governmental involvement in the selection of the 
management of Shandong and CalCedar-Tianjin.
    Finally, Shandong reported that it retains the proceeds of its 
export sales, and its management determines how to use profits. 
CalCedar-Tianjin stated that it operates in accordance with market 
principles and calculates profits and losses in a normal commercial 
manner. There is no evidence on the record with respect to Shandong or 
CalCedar-Tianjin to suggest that there is any governmental involvement 
in decisions regarding disposition of profits or financing of losses.
    Therefore, we find that the evidence on the record supports a 
preliminary finding of absence of de facto

[[Page 1594]]

governmental control based on record statements and supporting 
documentation showing that: (1) Shandong and CalCedar-Tianjin set their 
own export prices independent of the government and without the 
approval of a government authority; (2) Shandong and CalCedar-Tianjin 
have the authority to negotiate and sign contracts and other 
agreements; (3) Shandong and CalCedar-Tianjin have adequate autonomy 
from the government regarding the selection of management; and (4) 
Shandong and CalCedar-Tianjin retain the proceeds from their sales and 
make independent decisions regarding the disposition of profits or 
financing of losses.
    The evidence placed on the record of this review by Shandong and 
CalCedar-Tianjin demonstrates an absence of government control, both in 
law and in fact, with respect to their exports of the merchandise under 
review, in accordance with the criteria identified in Sparklers and 
Silicon Carbide. Therefore, for the purposes of these preliminary 
results, we are granting a separate rate to both Shandong and CalCedar-
Tianjin.

Fair Value Comparisons

    To determine whether the respondents' sales of subject merchandise 
were made at less than NV, for Shandong, we compared the export price 
(EP) to NV, as described in the Export Price and Normal Value sections 
of this notice, below. For CalCedar-Tianjin, we compared the 
constructed export price (CEP) to NV, as described in the Constructed 
Export Price and Normal Value sections of this notice, below.

Export Price

    In accordance with section 772(a) of the Act, the Department 
calculated an EP for sales by Shandong to the United States because the 
subject merchandise was sold directly to an unaffiliated customer in 
the United States prior to importation and CEP methodology was not 
otherwise indicated. We made deductions from the sales price for 
foreign inland freight, foreign brokerage and handling, and domestic 
inland insurance. Each of these services was provided by a NME vendor, 
and thus, we based the deductions for these movement charges on 
surrogate values.
    We valued foreign brokerage and handling using Indian values that 
were reported in the public version of the questionnaire response 
placed on the record in Certain Stainless Steel Wire Rod from India; 
Preliminary Results of Antidumping Duty Administrative and New Shipper 
Review, 63 FR 48184 (September 9, 1998) (India Wire Rod). We valued 
domestic inland insurance using the Department's recently revised Index 
of Factor Values for Use in Antidumping Duty Investigations Involving 
Products from the PRC (available on the Department's website at http://ia.ita.doc.gov/factorv/prc/). We identify the source used to value 
foreign inland freight in the Normal Value section of this notice, 
below. We adjusted these values, as appropriate, to account for 
inflation or deflation between the effective period and the POR. We 
calculated the inflation or deflation adjustments for all factor 
values, except labor, using the wholesale price indices (WPI) for India 
as published in the International Monetary Fund's (IMF's) publication, 
International Financial Statistics.

Constructed Export Price

    In accordance with section 772(b) of the Act, the Department 
calculated a CEP for sales by CalCedar-Tianjin to the United States 
because the first sale to unaffiliated purchasers occurred after 
importation of the merchandise into the United States. CalCedar-Tianjin 
sold the subject merchandise to unaffiliated U.S. customers through its 
U.S. operations. We calculated CEP based on FOB and delivered prices 
from the respondent's U.S. parent company to unaffiliated customers. In 
accordance with section 772(c) of the Act, we deducted from the 
starting price movement charges including foreign inland freight, 
international freight, marine insurance, U.S. inland freight, U.S. 
customs duties, and U.S. warehousing expenses. In accordance with 
section 772(d)(1) of the Act, as applicable, we made deductions for the 
following selling expenses that related to economic activity occurring 
in the United States: indirect selling expenses, inventory carrying 
costs, and direct selling expenses (imputed credit expenses). In 
accordance with section 772(d)(3) of the Act, we deducted from the 
starting price an amount for profit.
    Because all of the subject merchandise exported by CalCedar-Tianjin 
during the POR was shipped to the United States using a market-economy 
shipper and the shipper was paid using a market-economy currency, we 
used the reported cost of international freight to calculate CEP rather 
than a surrogate value. Additionally, all shipments of CalCedar-
Tianjin's subject merchandise were insured through a market-economy 
marine insurance provider and the provider was paid using a market-
economy currency. Therefore we used the actual price paid for marine 
insurance for all of CalCedar-Tianjin's sales. See Non-Frozen Apple 
Juice Concentrate from the People's Republic of China; Preliminary 
Results of 1999-2001 Administrative Review and Partial Rescission of 
Review, 67 FR 45451, 45466 (July 9, 2002), where the Department noted 
that when some or all of a specific company's ocean freight or marine 
insurance was provided directly by market economy companies and paid 
for in a market economy currency, it is appropriate to use the reported 
market economy ocean freight or marine insurance cost for all U.S. 
sales made by that company. Also, see 19 CFR 351.408(c)(1).
    As noted in the EP section above, we valued foreign brokerage and 
handling using an Indian value for brokerage and handling identified in 
India Wire Rod. Because this value was in effect during a period that 
is not contemporaneous with the POR, we inflated the value using the 
Indian WPI. We identify the source used to value foreign inland freight 
in the Normal Value section of this notice, below.

Normal Value

    For exports from NME countries, section 773(c)(1) of the Act 
provides that the Department shall determine NV using a factors of 
production (FOP) methodology if: (1) the subject merchandise is 
exported from a NME country, and (2) available 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. Section 
351.408 of the Department's regulations sets forth the methodology used 
by the Department to calculate the NV of merchandise exported from NME 
countries. In every case conducted by the Department involving the PRC, 
the PRC has been treated as a NME. Since none of the parties to this 
proceeding contested such treatment, we calculated NV in accordance 
with section 773(c)(3) and (4) of the Act and section 351.408(c) of the 
Department's regulations.
    In accordance with section 773(c)(3) of the Act, the FOPs utilized 
in producing pencils include, but are not limited to: (1) hours of 
labor required; (2) quantities of raw materials employed; (3) amounts 
of energy and other utilities consumed; and (4) representative capital 
costs, including depreciation. In accordance with section 773(c)(4) of 
the Act, the Department valued the FOPs, to the extent possible, using 
the costs of the FOP in a market economy that is (1) at a level of 
economic development comparable to the PRC, and (2) a significant 
producer of comparable merchandise. We determined that India is 
comparable to

[[Page 1595]]

the PRC in terms of per capita gross national product and the national 
distribution of labor. Furthermore, India is a significant producer of 
comparable merchandise. In instances where Indian surrogate value 
information was not available, we relied on Indonesian, Philippine, and 
U.S. values as noted below. Indonesia and the Philippines are also 
comparable to the PRC in terms of per capita gross national product and 
the national distribution of labor, and are significant producers of 
comparable merchandise. See Memorandum From Jeffrey May, Director, 
Office of Policy, to Holly Kuga, Senior Office Director, AD/CVD 
Enforcement, dated July 31, 2002, and Memorandum from Paul Stolz to 
File, dated December 16, 2002, which are on file in the Central Records 
Unit (CRU), room B-099 of the main Commerce building. We valued Chinese 
Lindenwood, the wood product used to produce pencils in the PRC, using 
publicly available, published U.S. prices for American Basswood because 
price information for Chinese Lindenwood and American Basswood is not 
available elsewhere.\2\
---------------------------------------------------------------------------

    \2\ Chinese Lindenwood and American Basswood are virtually the 
same type of wood. U.S. prices for American Basswood were used to 
value Chinese Lindenwood in the less than fair value investigation. 
See Notice of Final Determination of Sales at Less Than Fair Value; 
Certain Cased Pencils from the People's Republic of China, 59 FR 
55625, 55632 (1994). This methodology was upheld by the Court of 
International Trade. See Writing Instrument Manufacturers 
Association, Pencil Section, et al. v. United States, Slip Op. 97-
151 (Ct. Int'l. Trade, Nov. 13, 1997) at 16.
---------------------------------------------------------------------------

    In accordance with section 773(c)(1) of the Act, for purposes of 
calculating NV, we attempted to value the FOPs using surrogate values 
that were in effect during the POR. However, when we were unable to 
obtain the surrogate values in effect during the POR, we adjusted the 
values, as appropriate, to account for inflation or deflation between 
the effective period and the POR. We calculated the inflation or 
deflation adjustments for all factor values, except labor, using the 
WPI for India as published in International Financial Statistics. We 
valued the FOP as follows:
1) We calculated a surrogate value for Chinese Lindenwood Pencil Slats 
using publicly available U.S. lumber prices for Basswood published in 
the 2002 Hardwood Market Report for the period December 2000 to 
November 2001.
2) We valued the following material inputs using Indian import data 
from the Monthly Statistics of the Foreign Trade of India (MSFTI) for 
December 2000 November 2001: erasers, ferrules, wax, glue, foil, color 
leads/cores and scrap wood.
3) We valued black cores/leads using Indian import data from the 
Eximkey.com database, operated by the Asis Group, Asis Infotech Pvt. 
Ltd.
4) In accordance with section 351.408 (c)(1) of the Department's 
regulations, for CalCedar-Tianjin, we valued cedar pencil stock and 
stain at their actual acquisition cost because these inputs were 
purchased from a market economy supplier in a market economy currency. 
Specifically, CalCedar-Tianjin, purchased these inputs using U.S. 
dollars. Furthermore, we valued cedar pencil stock that was produced by 
CalCedar-Tianjin, in the United States and used in the PRC to produce 
subject merchandise using CalCedar-Tianjin's cost of production in the 
United States.
5) We valued the following packing materials using Indian import data 
from the MSFTI for December 2000 November 2001: plastic straps, plastic 
bags, cartons, packing boxes, packing tape, labels, corrugated 
cardboard, and pallets.
6) We valued energy inputs as follows: we valued natural gas using the 
Indonesian value reported in the publication Energy Prices and Taxes, 
Quarterly Statistics (Third Quarter 2001), published by the 
International Energy Agency. We valued electricity using the 2002 
industry/commercial category-wise average tariff for electricity (U.S. 
dollars/kWh) used by Indian industrial enterprises from the publicly 
available Key World Energy Statistics (2002) (Energy Statistics), 
published by the International Energy Agency. We also valued diesel 
fuel using the Indian value reported in the publication Energy 
Statistics.
7) We valued water using the Indian value reported in the publication 
Second Water Utilities Data Book (1997), published by the Asian 
Development Bank.
8) In accordance with 19 CFR 351.408(c)(3), we valued labor using a 
regression-based wage rate for the PRC listed in the Import 
Administration web site under ``Expected Wages of Selected NME 
Countries.'' See http://ia.ita.doc.gov/wages.
9) We derived ratios for factory overhead, selling, general and 
administrative (SG&A) expenses, and profit using the financial 
statements of Asia Wood International Corporation, a Philippine wood 
products producer. From this information, we were able to calculate 
factory overhead as a percentage of direct materials, labor, and energy 
expenses; SG&A expenses as a percentage of the total cost of 
manufacturing; and profit as a percentage of the sum of the total cost 
of manufacturing and SG&A expenses.
10) We used the following sources to value truck and rail freight 
services incurred to transport the finished product to the port and 
direct materials, packing materials, and coal from the suppliers of the 
inputs to the producers. We valued truck freight services using the 
1999 rate quotes reported by Indian freight companies and used in the 
less than fair value investigation of bulk aspirin from the PRC. See 
Notice of Final Determination of Sales at Less Than Fair Value: Bulk 
Aspirin From the People's Republic of China, 65 FR 33805 (May 25, 
2000). We valued rail freight services using the April 1995 rates 
published by the Indian Railway Conference Association. We adjusted 
these values, as appropriate, to account for inflation or deflation 
between the effective period and the POR.
    For further discussion of the surrogate values used in this review, 
see the Memorandum From The Team Regarding Selection of Surrogate 
Values for Factors of Production for the Preliminary Results of the 
Administrative Review of Certain Cased Pencils from the People's 
Republic of China, (December 31, 2002), which is on file in the CRU-
Public File.

Use of Partial Facts Available

    Section 776(a)(1) of the Act provides for the use of facts 
available if information needed by the Department to make a 
determination is not on the record. In this review, one of the pencil 
producers that supplied Shandong with pencils refused to report any 
information regarding its FOP. Because the necessary information 
regarding this producer's FOP is not on the record, the Department has 
resorted to the use of facts available in order to calculate the margin 
on Shandong's sales of the uncooperative producer's pencils.
    Pursuant to section 776(b) of the Act, when the Department uses 
facts available in reaching its determination, it may apply adverse 
inferences, if an interested party has failed to cooperate by not 
acting to the best of its ability to comply with a request for 
information. Section 771(9) of the Act defines an interested party as 
``a foreign manufacturer, producer, or exporter ... of subject 
merchandise ... .'' Because the producer in question is an interested 
party within the meaning of section 776(b) of the Act, and it is the 
party who failed to supply the requested information, we believe it is 
appropriate to consider the producer's actions in this matter when 
determining whether it is appropriate to apply an adverse inference 
with respect to the use of partial facts available.

[[Page 1596]]

    The record in this review indicates that the interested party at 
issue here, the uncooperative producer, failed to act to the best of 
its ability to comply with a request for information. The record 
contains correspondence between Shandong and the uncooperative producer 
in which the producer conveyed its intention not to participate in the 
review. The uncooperative producer stated that it would not supply the 
requested information because the quantity of pencils it supplied to 
Shandong was ``very small.'' This interested party producer never 
offered to supply even a limited amount of the requested information 
nor did it suggest any alternatives which might satisfy the 
Department's requirements. Therefore, we find that the use of an 
adverse inference in selecting from among the facts otherwise available 
is warranted. This position is consistent with that taken by the 
Department in Ferrovanadium and Nitrided Vanadium From the Russian 
Federation: Notice of Final Results of Antidumping Duty Administrative 
Review, 62 FR 65656, 65658 (December 15, 1997) wherein the Department 
stated that ``by failing to respond Chusovoy {the producer{time}  is an 
interested party which has not cooperated to the best of its ability 
under section 776 (b) of the Act. Therefore, we have continued to use 
an adverse inference in selecting from the facts available to determine 
the margins for Galt's sales of Chusovoy-produced merchandise ...''.
    In making an adverse inference, section 776(b) of the Act states 
that the Department may rely upon information derived from (1) the 
petition, (2) the final determination in the investigation under this 
title, (3) any previous review under section 751 or determination under 
section 753, or (4) any other information placed on the record. As 
partial adverse facts available, we have assigned the highest margin 
calculated for any of Shandong's sales, to its sales of subject 
merchandise manufactured by the uncooperative producer. We believe that 
this margin will create the proper deterrent to non-cooperation with 
the Department in future reviews. In addition, it serves as a 
reasonable estimate of Shandong's dumping margin on these sales because 
it is based on Shandong's own reported information.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following margins exist for the period December 1, 2000 through 
November 30, 2001:

------------------------------------------------------------------------
                Manufacturer/exporter                   Margin (percent)
------------------------------------------------------------------------
Shandong Rongxin [chyph]Import and Export Co., Ltd...              27.22
California Cedar [chyph]Products Company/............
Tianjin Custom Wood Processing Co., Ltd..............               2.02
------------------------------------------------------------------------

    The Department will disclose to parties to this proceeding the 
calculations performed in reaching the preliminary results within ten 
days of the date of announcement of the preliminary results. An 
interested party may request a hearing within 30 days of publication of 
the preliminary results. See 19 CFR 351.310(c). Interested parties may 
submit written comments (case briefs) in accordance with 19 CFR 
351.309(c)(1)(ii) and rebuttal comments (rebuttal briefs), which must 
be limited to issues raised in the case briefs in accordance with 19 
CFR 351.309(d). Parties who submit arguments are requested to submit 
with the argument (1) a statement of the issue, (2) a brief summary of 
the argument and (3) a table of authorities. Further, the Department 
requests that parties submitting written comments provide the 
Department with a diskette containing the public version of those 
comments. We will issue a memorandum identifying the date of a hearing, 
if one is requested, and deadlines for the submission of case briefs 
and rebuttal briefs. The Department will issue the final results of 
this administrative review, including the results of our analysis of 
the issues raised by the parties in their comments, within 120 days of 
publication of the preliminary results.
    The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
this review and for future deposits of estimated duties.

Assessment Rates

    Upon completion of this administrative review, the Department will 
determine, and Customs shall assess, antidumping duties on all 
appropriate entries. In accordance with 19 CFR 351.212(b)(1), for 
CalCedar-Tianjin we have calculated importer-specific assessment rates 
for merchandise subject to this review. We divided the total dumping 
margin (calculated as the difference between NV and CEP) for the 
importer by the entered value of the reviewed sale. Where the importer-
specific assessment rate is above de minimis, we will direct Customs to 
assess the resulting ad valorem rate against the entered value of the 
entry of the subject merchandise by that importer during the POR. For 
Shandong, we have calculated exporter-specific duty assessment rates 
for subject merchandise based on the ratio of the total amount of 
antidumping duties calculated for the examined sales during the POR to 
the total quantity of sales examined during the POR. We calculated 
exporter-specific assessment rates for Shandong because there was no 
information on the record which identified the importers of record. The 
Department will issue appropriate assessment instructions directly to 
the Customs within 15 days of publication of the final results of 
review. If these preliminary results are adopted in the final results 
of review, we will direct Customs to assess the resulting assessment 
rates, calculated as described above, on each of the importer's entries 
during the review period.

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of pencils from the PRC entered, or withdrawn from warehouse, 
for consumption on or after the publication date of the final results 
of this administrative review, as provided by section 751(a)(1) of the 
Act: (1) the cash deposit rates for the reviewed companies named above 
will be the rates for those firms established in the final results of 
this administrative review; (2) for any previously reviewed PRC or non-
PRC exporter with a separate rate not covered in this review, the cash 
deposit rate will be the company-specific rates established for the 
most recent period; (3) for all other PRC exporters, the cash deposit 
rates will be the PRC-wide rates established in the final results of 
this review; and (4) the cash deposit rates for non-PRC exporters of 
subject merchandise from the PRC will be the rates applicable to the 
PRC supplier of that exporter. These deposit requirements, when 
imposed, shall remain in effect until publication of the final results 
of the next administrative review.

Notification to Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f)(2) of the Department's 
regulations to file a certificate regarding the reimbursement of 
antidumping duties prior to liquidation of the relevant entries during 
this review period. Failure to comply with this requirement could 
result in the Secretary's presumption that reimbursement of antidumping 
duties

[[Page 1597]]

occurred and the subsequent assessment of double antidumping duties.
    We are issuing and publishing this determination in accordance with 
sections section 751(a)(1) and 777(i)(1) of the Act.

    Dated: December 31, 2002.
Susan H. Kuhbach,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-631 Filed 1-10-03; 8:45 am]
BILLING CODE 3510-DS-S