[Federal Register Volume 68, Number 45 (Friday, March 7, 2003)]
[Notices]
[Pages 11041-11044]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5494]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-501]


Notice of Preliminary Results of Administrative Review: Natural 
Bristle Paintbrushes and Brush Heads From the People's Republic of 
China

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

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on natural bristle 
paintbrushes and brush heads (natural paintbrushes) from the People's 
Republic of China (PRC) in response to a request from the Paint 
Applicator Division of the American Brush Manufacturers Association 
(``Paint Applicator Division''), the petitioner, for the company Hunan 
Provincial Produce & Animal By-Products Import & Export Corporation 
(``Hunan''). Hunan's period of review (POR) is February 1, 2001, 
through January 31, 2002.
    We preliminarily determine that sales by Hunan have not been made 
below normal value (NV). The preliminary results are listed below in 
the section titled ``Preliminary Results of Reviews.'' If these 
preliminary results are adopted in our final results, for entries made 
by Hunan, we will instruct the U.S. Customs Service to not assess 
antidumping duties on the exports subject to this review. Interested 
parties are invited to comment on these preliminary results. (See the 
``Preliminary Results of Review'' section of this notice.)

EFFECTIVE DATE: March 7, 2003.

FOR FURTHER INFORMATION CONTACT: Douglas Kirby or Sean Carey, AD/CVD 
Enforcement, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington DC 20230; telephone: (202) 482-3782 or (202) 482-3964, 
respectively.

SUPPLEMENTARY INFORMATION:

[[Page 11042]]

Background

    On February 1, 2002, the Department published a notice of 
opportunity to request an administrative review of the antidumping duty 
order on natural paintbrushes from the People's Republic of China (PRC) 
(67 FR 4945). On February 28, 2002, the Department received a timely 
request from the Paint Applicator Division of the American Brush 
Manufacturers Association, the petitioner, for administrative reviews 
of Hunan and Hebei Founder Import and Export Company (Hebei). On March 
27, 2002, the Department initiated an administrative review of the 
antidumping duty order on natural paintbrushes, for the period from 
February 1, 2001, through January 31, 2002, in order to determine 
whether merchandise imported into the United States is being sold at 
less than fair value with respect to these two companies. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocations in Part, 67 FR 14696 (March 27, 
2002).
    On May 1, 2002, the Department issued antidumping questionnaires to 
Hunan and Hebei. In its reply to section A of the questionnaire, Hebei 
stated that it had made no sales or shipments of subject merchandise to 
the United States during the POR. The Department also performed a U.S. 
Customs Service (Customs) data query for entries of paintbrushes from 
the PRC classified under the Harmonized Tariff Schedule of the United 
States (HTSUS) item number 9603.40.40.40 during the POR. We found no 
entries or shipments from Hebei during the POR. Thus, the Department 
rescinded the review with respect to Hebei. See Natural Bristle 
Paintbrushes From the People's Republic of China; Notice of Rescission, 
In Part, of Antidumping Administrative Review, 67 FR 58018 (September 
13, 2002). On November 1, the Department extended the deadline for the 
preliminary results of review of Hunan until January 23, 2003 (67 FR 
66614). This deadline was then fully extended, in accordance with 
751(a)(3)(A) of the Tariff Act of 1930 (``The Act'') by another 36 days 
(68 FR 4761).

Scope of the Antidumping Duty Order

    The products covered by the order are natural paintbrushes from the 
PRC. Excluded from the order are paintbrushes and brush heads with a 
blend of 40 percent natural bristles and 60 percent synthetic 
filaments. The merchandise under review is currently classifiable under 
item 9603.40.40.40 of the Harmonized Tariff Schedule of the United 
States (HTSUS). Although the HTSUS subheading is provided for 
convenience and customs purposes, the Department's written description 
of the merchandise is dispositive.

Separate Rates

    The Department's standard policy is to assign to all exporters of 
the merchandise subject to review in non-market economy (``NME'') 
countries a single rate, unless an exporter can affirmatively 
demonstrate an absence of government control, both in law (de jure) and 
in fact (de facto), with respect to exports. Hunan stated in its 
questionnaire response that it is an autonomous legal entity that is 
completely independent of any government control. In order to establish 
whether a company operating in a non-market economy (``NME'') country 
is sufficiently independent to be entitled to a separate, company-
specific rate, the Department analyzes each exporting entity in a NME 
country under the test established in 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'').
    Evidence supporting, though not requiring, a finding of de jure 
absence of government control includes: (1) An absence of restrictive 
stipulations associated with an individual exporter's business and 
export licenses; (2) any legislative enactments decentralizing control 
of companies; or (3) any other formal measures by the government 
decentralizing control of companies. De facto absence of government 
control with respect to exports is based on four criteria: (1) Whether 
the export prices are set by or subject to the approval of a government 
authority; (2) whether each exporter retains the proceeds from its 
sales and makes independent decisions regarding the disposition of 
profits and financing of losses; (3) whether each exporter has autonomy 
in making decisions regarding the selection of management; and (4) 
whether each exporter has the authority to sign contracts and other 
agreements.

1. Absence of De Jure Control

    With respect to the absence of de jure government control over the 
export activities of the company reviewed, evidence on the record 
supports the claim made by Hunan that its export activities are not 
controlled by the government. Hunan submitted evidence of its legal 
right to set prices independently of all government oversight. In its 
questionnaire response, Hunan submitted several legislative enactments 
that have decentralized control of business enterprises and their 
business activites. Hunan's business license also indicates that the 
company is permitted to engage in the exportation of natural bristle 
paintbrushes. We have not found any evidence of de jure government 
control that either restricts Hunan's exportation of natural bristle 
paintbrushes, or limits its ability to enter contracts and account for 
its own profits and losses. Therefore, we preliminarily determine that 
there is an absence of de jure control over export activity with 
respect to Hunan.

2. Absence of De Facto Control

    With respect to the absence of de facto control over export 
activities, the information submitted on the record indicates that the 
general manager of Hunan is elected by company personnel and has the 
authority to appoint Hunan's senior management. Our analysis indicates 
that there is no government involvement in Hunan's daily operations or 
the selection of its management. In addition, Hunan's questionnaire 
response states that the company sets its own export prices, determines 
its own use of export revenues, and independently negotiates sales 
contracts free from government interference. Finally, decisions made by 
Hunan concerning its choice of suppliers and customers are not subject 
to government approval.
    Consequently, because evidence on the record indicates an absence 
of government control, both in law and in fact, over its export 
activities, we preliminarily determine that a separate rate should be 
applied to Hunan. For further discussion of the Department's 
preliminary determination regarding the issuance of separate rates, see 
Separate Rates Decision Memorandum to Dana Mermelstein, Program 
Manager, Office of AD/CVD Enforcement VII, dated February 28, 2003. A 
public version of this memorandum is on file in the Department's 
Central Record Unit (CRU).

Normal Value Comparisons

    To determine whether the respondent's sale of the subject 
merchandise to the United States was made at prices below NV, we 
compared its U.S. prices to NV, as described below in the ``United 
States Price'' and ``Normal Value'' sections of this notice.

[[Page 11043]]

United States Price

    For Hunan, we based the United States price on export price (EP) in 
accordance with section 772(a) of the Act, because the first sale to an 
unaffiliated purchaser was made prior to importation, and constructed 
export price (CEP) was not otherwise warranted by the facts on the 
record. We calculated EP based on the packed price from the exporter to 
the first unaffiliated purchaser in the United States. We deducted 
foreign inland freight from the starting price (gross unit price) in 
accordance with section 772(c) of the Act. According to the 
questionnaire response, the U.S. customer was responsible for all other 
movement expenses incurred in both the PRC and the United States and 
therefore, we made no other deductions for movement expenses.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine NV using a factors-of-production methodology if (1) The 
merchandise is exported from an 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.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. Pursuant to section 
771(18)(C)(i) of the Act, any determination that a foreign country is 
an NME country shall remain in effect until revoked by the 
administering authority. Hunan did not contest such treatment in this 
review. Accordingly, we have applied surrogate values to the factors of 
production to determine NV. See Factor Values Memo for the Preliminary 
Results of the Antidumping Duty Administrative Review of Natural 
Bristle Paintbrushes from the People's Republic of China, February 28, 
2003 (Factor Values Memo).
    We calculated NV based on factors of production in accordance with 
section 773(c)(4) of the Act and section 351.408(c) of our regulations. 
Consistent with the original investigation and the subsequent 
administrative reviews of this order, we determined that Indonesia (1) 
Is comparable to the PRC in level of economic development, and (2) is a 
significant producer of comparable merchandise. See Memorandum to Dana 
Mermelstein from Jeffrey May: Natural Bristle Paintbrushes from the 
People's Republic of China: Non-market Economy Status and Surrogate 
Country Selection, dated October 22, 2002. We valued the factors of 
production using publicly available information from Indonesia. We 
adjusted the Indonesian import prices by adding freight expenses to 
make them delivered prices.
    We valued the factors of productions for material inputs and 
packing materials as follows. For brush handles, bristles, epoxy, 
nails, ferrules, plastic bags, cartons and plastic strips, we used per 
kilogram Indonesian import values reported in U.S. dollars and obtained 
from Indonesia's Foreign Trade Statistical Bulletin (Biro Pusat 
Statistik). For wooden core, we used the same information source based 
on a U.S. dollar per cubic meter value that was subsequently converted 
to kilograms. Since all these statistics were contemporaneous with the 
POR, we did not need to make any adjustments for inflation. We 
calculated surrogate freight costs for these factors using the shorter 
of (a) the distance between the closest PRC port and the factory, or 
(b) the distance between the domestic supplier and the factory. See 
Notice of Final Determination of Sales at Less Than Fair Value: 
Collated Roofing Nails From the People's Republic of China, 62 FR 51410 
(October 1, 1997) (Roofing Nails).
    For electricity rates, we used a published Indonesian value for the 
average cost of electricity supplied to industries in 1999. This value 
is reported by the International Energy Agency on a rupiahs per 
kilowatt hour basis in its publication, Energy Prices and Taxes, First 
Quarter 2000. We converted the rupiah to U.S. dollars using the average 
exchange rate during the POR. We adjusted this value for inflation 
using the Consumer Price Indices for Indonesia as published in selected 
issues of the IFS.
    For labor, we used the PRC regression-based wage rate at Import 
Administration's home page, Import Library, Expected Wages of Selected 
NME Countries, revised in September 2002. Because of the variability of 
wage rates in countries with similar per capita gross domestic 
products, Sec.  351.408(c)(3) of the Department's regulations requires 
the use of a regression-based wage rate. The source of these wage rate 
data on the Import Administration's web site is the Year Book of Labour 
Statistics 2001, International Labour Office (Geneva: 2001), Chapter 
5B: Wages in Manufacturing.
    We valued movement expenses as follows: To value truck freight 
expenses, we used a USD price quote from August 1999 listed by an 
Indonesian trucking company on a kilogram per-kilometer basis, that was 
used in the antidumping investigation of certain small diameter carbon 
and alloy seamless standard line and pressure pipe from Romania. See 
Factors of Production Valuation Memorandum for Preliminary 
Determination from David Goodman, Case Analyst, through Charles Riggle, 
Program Manager, to Gary Taverman, Director, Office 5 (January 28, 
2000). To value inland rail freight expenses, we used a USD rate 
provided in a December 1994 cable from the American Embassy in Jakarta, 
Indonesia, which was likewise, used in the antidumping investigation of 
certain small diameter carbon and alloy seamless standard line and 
pressure pipe from Romania noted above. We adjusted both rates to 
reflect inflation using the Producer Price Indices (``PPI'') for the 
United States from the IFS.
    For factory overhead, selling, general and administrative expenses 
(SG&A), and profit, we used data from the Large and Medium 
Manufacturing Statistics: 1995, Vol. III, published by the Government 
of Indonesia. This source provides a cost breakdown for large and 
medium sized manufacturers in Indonesia of 122 products, including 
paintbrushes, that are classified under Indonesia's industrial code 
390390. We calculated factory overhead as a percentage of total fixed 
and variable overhead over total materials, labor, and energy (cost of 
manufacture). We calculated an SG&A rate by dividing SG&A expenses by 
the cost of manufacture. Lastly, we calculated a profit rate by 
dividing profit by the cost of production. For more information, see 
Memorandum to Dana S. Mermelstein, Program Manager, from Dougls Kirby 
and Sean Carey, Case Analysts; 2001-2002 Antidumping Administrative 
Review of Natural Bristle Paintbrushes and Brush Heads from the 
People's Republic of China: Factors Values Memorandum, dated February 
28, 2003.

Preliminary Results of Review

    We preliminarily determine the weighted average dumping margin for 
Hunan for the period February 1, 2001, through January 31, 2002, to be 
0.00 percent.

Duty Assessments and Cash Deposit Requirements

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. The Department 
will issue appropriate appraisement instructions directly to the 
Customs Service within 15 days of publication of the final results of 
review. Furthermore, the following deposit rates will be effective

[[Page 11044]]

with respect to all shipments of paintbrushes from the PRC entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this review, as provided for by section 
751(a)(2)(C) of the Act: (1) The cash deposit rate for the reviewed 
company listed above will be the rate for that firm established in the 
final results of this review except that, for firms whose weighted-
average margins are less than 0.5 percent and therefore de minimis, the 
Department shall require no deposit of estimated antidumping duties; 
(2) for companies previously found to be entitled to a separate rate 
and for which no review was requested, the cash deposit rate will be 
the rate established in the most recent review of that company; (3) for 
all other PRC exporters of subject merchandise, the cash deposit rate 
will be the PRC-wide rate of 351.92 percent; and (4) the cash deposit 
rate for non-PRC exporters of subject merchandise from the PRC will be 
the rate 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.

Public Comment

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five days after the date of 
publication of this notice. Pursuant to 19 CFR 351.309, interested 
parties may submit written comments in response to these preliminary 
results. Normally, case briefs are to be submitted within 30 days after 
the date of publication of this notice, and rebuttal briefs, limited to 
arguments raised in case briefs, are to be submitted no later than five 
days after the time limit for filing case briefs. Parties who submit 
arguments in this proceeding are requested to submit with the argument: 
(1) A statement of the issues, and (2) a brief summary of the argument. 
Case and rebuttal briefs must be served on interested parties in 
accordance with 19 CFR 351.303(f).
    Also, pursuant to 19 CFR 351.310, within 30 days of the date of 
publication of this notice, interested parties may request a public 
hearing on arguments to be raised in the case and rebuttal briefs. 
Unless the Secretary specifies otherwise, the hearing, if requested, 
will be held two days after the date for submission of rebuttal briefs. 
Parties will be notified of the time and location. The Department will 
publish the final results of this administrative review, including the 
results of its analysis of issues raised in any case or rebuttal brief, 
not later than 120 days, unless extended, after publication of these 
preliminary results.

Notification of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under Sec.  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 occurred and the subsequent assessment of double antidumping 
duties.
    This administrative review and notice are in accordance with 
sections 751(a)(3)(A) and 777(i)(1) of the Act.

    Dated: February 28, 2003.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 03-5494 Filed 3-6-03; 8:45 am]
BILLING CODE 3510-DS-P