[Federal Register Volume 68, Number 87 (Tuesday, May 6, 2003)]
[Notices]
[Pages 23966-23972]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-11171]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-882]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Refined Brown Aluminum Oxide (Otherwise known as Refined Brown 
Artificial Corundum or Brown Fused Alumina) from the People's Republic 
of China

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

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

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SUMMARY: We preliminarily determine that refined brown aluminum oxide 
from the People's Republic of China is being, or is likely to be, sold 
in the United States at less than fair value, as provided in section 
733(b) of the Tariff Act of 1930, as amended. In addition, we 
preliminarily determine that there is a reasonable basis to believe or 
suspect that critical circumstances exist with respect to RBAO from the 
respondent in this investigation as well as all other producers/
exporters.
    Interested parties are invited to comment on this preliminary 
determination. We will make our final determination not later than 135 
days after the date of publication of this preliminary determination.

EFFECTIVE DATE:  May 6, 2003.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger, Jim Mathews or 
Tinna E. Beldin, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-
4136, (202) 482-2778 or (202) 482-1655, respectively.

SUPPLEMENTARY INFORMATION:

[[Page 23967]]

Preliminary Determination

    We preliminarily determine that refined brown aluminum oxide (RBAO) 
from the People's Republic of China (PRC) is being sold, 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. In addition, we 
preliminarily determine that there is a reasonable basis to believe or 
suspect that critical circumstances exist with respect to RBAO from the 
respondent in this investigation as well as all other producers/
exporters. The critical circumstances analysis for the preliminary 
determination is discussed below under ``Critical Circumstances.''

Case History

    Since the initiation of this investigation (Initiation of 
Antidumping Duty Investigation: Refined Brown Aluminum Oxide (Otherwise 
known as Refined Brown Artificial Corundum or Brown Fused Alumina) from 
the People's Republic of China, 67 FR 77223 (December 17, 2002) 
(Initiation Notice), the following events have occurred:
    On January 6, 2003, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that imports of RBAO from the PRC are materially injuring 
the United States industry. See ITC Investigation Nos. 731-TA-1022 
(Publication No. 3572 Refined Brown Aluminum Oxide from China, 68 FR 
3266 (January 23, 2003)).
    On January 7, 2003, we issued an antidumping questionnaire to the 
PRC Ministry of Foreign Trade and Economic Cooperation (MOFTEC) with a 
letter requesting that it forward the questionnaire to PRC producers/
exporters accounting for all known exports of subject merchandise from 
the PRC during the period of investigation (POI). We also sent courtesy 
copies of the antidumping questionnaire to the China Chamber of 
Commerce of Metals, Minerals, and Chemicals Importers and Exporters, 
and to all companies identified in the petition as exporters of RBAO 
for which we had complete addresses. These companies were: Zhengzhou 
Abrasives Factory; Guangzhou Grinding Wheel Factory; China No. 7 
Grinding Wheel Co., Ltd.; China National Machinery and Equipment Import 
and Export Wuxi Co., Ltd.; Zibo Jinjingchuan Abrasives Co., Ltd.; ZYR 
Abrasives Company (New Name: Sunway Industries Co., Ltd.); Zhengzhou 
Zhongyue Abrasive & Abrasive Tools Co., Ltd.; Zhengzhou U&D Industrial 
Ceramics Co., Ltd.; Shenzhen Kaida Industry Co., Ltd.; Shenzhen Light 
Industry Imp. & Exp. Corp.; Guiyang Yungan Sanhaun Enterprises, Ltd.; 
Guiyang Baiyun Abrasives Co. Ltd.; Guangxi Abrasives Factory; Taiyuan 
Twin Tower Aluminum Oxide Co., Ltd.; White Dove (Group) Co., Ltd.; 
Guizhou No. 7 Grinding Wheel Co., Ltd.; Mount Tai Company; Nanchuan 
Minerals Group Co., Ltd.(Nanchuan); Baiyun Abrasives Factory; China 
Abrasives Import and Export Corporation (China Abrasives); and Guizhou 
Provincial Metals and Minerals Import and Export Corporation. The 
letters sent to MOFTEC and individual exporters provided deadlines for 
responses to the different sections of the questionnaire.
    On January 28, 2003, Guiyang Baiyun Abrasives Co. Ltd. (Guiyang) 
informed the Department by fax that it did not export PRC-produced RBAO 
to the United States during the POI and, therefore, it did not intend 
to respond to the Department's questionnaire in this investigation.
    During the period January through March 2003, the Department 
received responses to sections A, C, and D of the Department's original 
and supplemental questionnaires from Zibo Jinyu Abrasive Co. (Jinyu). 
No other responses to our questionnaires were submitted and properly 
filed from any of the other exporters noted above. While we received 
information from Nanchuan and China Abrasives during January and 
February 2003, neither party was able to provide the information in the 
format required by the statute and regulations despite the Department's 
attempts to assist both parties. See the Department's correspondence 
with each of these companies between January and February 2003. 
Subsequently, both parties advised the Department that they would not 
participate in this investigation. See February 24, 2003, fax from 
Nanchuan and March 7, 2003, fax from China Abrasives to the Department.
    On February 18, 2003, the Department invited interested parties to 
comment on surrogate country selection and to provide publicly 
available information for valuing the factors of production. We 
received information from the petitioners (Washington Mills Company, 
Inc., C-E Minerals and Treibacher Schleifmittel Corporation), Jinyu, 
and Allied Minerals Products, Inc. (Allied), an importer and interested 
party, on March 20, 2003, and comments on March 27, 2003.
    On March 14, 2003, the petitioners alleged that critical 
circumstances exist with respect to imports of RBAO from the PRC. 
Accordingly, pursuant to section 732(e) of the Act, on March 18, 2003, 
the Department requested information from Jinyu regarding monthly 
shipments of RBAO to the United States during the period January 2001 
to March 2003. We received the requested information in April 2003. The 
petitioners supplemented their critical circumstances allegation with 
revised import data on April 11, 2003, pursuant to comments filed by 
Allied on April 1, 2003. Allied submitted additional comments on April 
18, 2003. A non-petitioning U.S. producer of refined brown aluminum 
oxide, Great Lakes Minerals, LLC, submitted comments on April 22, 2003. 
The critical circumstances analysis for the preliminary determination 
is discussed below under ``Critical Circumstances.''

Postponement of Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    On April 16, 2003, the sole respondent in this investigation, 
Jinyu, requested that the Department postpone its final determination 
until 135 days after the publication of the preliminary determination. 
Jinyu also included a request to extend the provisional measures to not 
more than six months. Accordingly, since we have made an affirmative 
preliminary determination and no compelling reasons for denial exist, 
we have postponed the final determination until not later than 135 days 
after the publication of the preliminary determination.

Period of Investigation

    Pursuant to 19 CFR 351.204(b)(1), the POI for an investigation 
involving merchandise from a nonmarket economy (NME) is the two most 
recent fiscal quarters prior to the month of the filing of the petition 
(i.e., October 2002). Therefore, in this case, the POI is April 1, 
2002, through September 30, 2002.

[[Page 23968]]

Scope of Investigation

    The merchandise covered by this investigation is ground, pulverized 
or refined brown artificial corundum, also known as refined brown 
aluminum oxide or brown fused alumina, in grit size of 3/8 inch or 
less. Excluded from the scope of the investigation is crude artificial 
corundum in which particles with a diameter greater than 3/8 inch 
constitute at least 50 percent of the total weight of the entire batch. 
The scope includes brown artificial corundum in which particles with a 
diameter greater than 3/8 inch constitute less than 50 percent of the 
total weight of the batch. The merchandise under investigation is 
currently classifiable under subheading 2818.10.20.00 of the Harmonized 
Tariff Schedule of the United States (HTSUS). Although the HTSUS 
subheading is provided for convenience and customs purposes, the 
written description of the merchandise under investigation is 
dispositive.

Nonmarket Economy Country Status

    The Department has treated the PRC as an NME country in all past 
antidumping investigations. See, e.g., Final Determination of Sales at 
Less Than Fair Value: Certain Preserved Mushrooms from the People's 
Republic of China, 63 FR 72255, 72256 (December 31, 1998) (Mushrooms). 
A designation as an NME remains in effect until it is revoked by the 
Department. See section 771(18)(C) of the Act.
    When the Department is investigating imports from an NME country, 
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 ``Normal 
Value'' section of the notice, below.
    No party in this investigation has requested a revocation of the 
PRC's NME status. We have, therefore, preliminarily continued to treat 
the PRC as an NME.

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. Jinyu is a joint venture between a PRC 
entity and a Singapore trading company. As the Singapore company owns a 
minority interest in the joint venture, a separate-rates analysis is 
necessary to determine whether Jinyu is independent from government 
control and 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. The test focuses, rather, 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, 61758 (November 19, 1997); Tapered Roller Bearings 
and Parts Thereof, Finished and Unfinished, from the People's Republic 
of China; Final Results of Antidumping Duty Administrative Review, 62 
FR 61276, 61279 (November 17, 1997); and Honey from the People's 
Republic of China: Preliminary Determination of Sales at Less than Fair 
Value, 60 FR 14725, 14727 (March 20, 1995).
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588, 20589 (May 6, 1991), as 
modified by Notice of Final Determination of Sales at Less Than Fair 
Value: Silicon Carbide from the People's Republic of China, 59 FR 
22585, 22587 (May 2, 1994) (Silicon Carbide). Under 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. See Silicon Carbide 
and Notice of Final Determination of Sales at Less Than Fair Value: 
Furfuryl Alcohol from the People's Republic of China, 60 FR 22544 (May 
8, 1995) (Furfuryl Alcohol).
1. Absence of De Jure Control
    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) an absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies. 
See e.g., Silicon Carbide and Furfuryl Alcohol.
    Jinyu has placed on the record the following document to 
demonstrate absence of de jure control: ``Law of the People's Republic 
of China on Sino-foreign Equity Joint Ventures.''
    In prior cases, the Department has analyzed this law and other, 
similar laws, and found that they establish an absence of de jure 
control. See, e.g., Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination: Certain 
Partial-Extension Steel Drawer Slides With Rollers From the People's 
Republic of China, 60 FR 29571, 29573 (June 5, 1995);\1\ 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). We have no new information in this proceeding which would cause 
us to reconsider this determination.
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    \1\ This determination was unchanged in the final determination. 
See Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Partial-Extension Steel Drawer Slides with Rollers from the 
People's Republic of China, 60 FR 54472, 54474 (October 24, 1995).
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    According to Jinyu, RBAO exports are not affected by export 
licensing provisions or export quotas. Jinyu claims to have autonomy in 
setting the contract prices for sales of RBAO through independent price 
negotiations with its foreign customers without interference from the 
PRC government. Based on the assertions of Jinyu, we preliminarily 
determine that there is an absence of de jure government control over 
the pricing and marketing decisions of Jinyu with respect to its RBAO 
export sales.
2. Absence of De Facto Control
    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 
Mushrooms, 63 FR at 72257. 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.
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) whether the export prices are set by, or 
subject to, the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts, and other 
agreements; (3) whether the respondent has autonomy from the government 
in

[[Page 23969]]

making decisions regarding the selection of its management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses. Id.
    Jinyu has asserted the following: (1) it establishes its own export 
prices; (2) it negotiates contracts without guidance from any 
governmental entities or organizations; (3) it makes its own personnel 
decisions; and (4) it retains the proceeds of its export sales and uses 
profits according to its business needs. Additionally, Jinyu's 
questionnaire responses indicate that it does not coordinate with other 
exporters in setting prices or in determining which companies will sell 
to which markets. This information supports a preliminary finding that 
there is an absence of de facto governmental control of the export 
functions of this company. Consequently, we preliminarily determine 
that Jinyu has met the criteria for the application of separate rates.

PRC-Wide Rate and Use of Facts Otherwise Available

    As in all NME cases, the Department implements a policy whereby 
there is a rebuttable presumption that all exporters or producers 
located in the NME comprise a single exporter under common government 
control, the ``NME entity.'' The Department assigns a single NME rate 
to the NME entity unless an exporter can demonstrate eligibility for a 
separate rate.
    Section 776(a)(2) of the Act provides that if an interested party 
or any other person (A) withholds information that has been requested 
by the administering authority; (B) fails to provide such information 
by the deadline, or in the form or manner requested; (C) significantly 
impedes a proceeding; or (D) provides such information that cannot be 
verified, the Department shall use, subject to sections 782(d) and (e) 
of the Act, facts otherwise available in reaching the applicable 
determination.
    Pursuant to section 782(e) of the Act, the Department shall not 
decline to consider submitted information if all of the following 
requirements are met: (1) the information is submitted by the 
established deadline; (2) the information can be verified; (3) the 
information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties.
    Information on the record of this investigation indicates that 
there are numerous producers/exporters of the subject merchandise in 
the PRC. As noted in the ``Case History'' section above, all exporters 
were given the opportunity to respond to the Department's 
questionnaire. Based upon our knowledge of these PRC exporters, 
including correspondence received in this proceeding, and the fact that 
U.S. import statistics show that the responding company, Jinyu, did not 
account for all imports into the United States from the PRC during the 
POI, we have preliminarily determined that PRC exporters of RBAO failed 
to respond to our questionnaire. As a result, use of facts available 
(FA), pursuant to section 776(a)(2)(A) of the Act, is appropriate.
    In selecting among the facts otherwise available, section 776(b) of 
the Act authorizes the Department to use adverse facts available (AFA) 
if the Department finds that an interested party failed to cooperate by 
not acting to the best of its ability to comply with the request for 
information. See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Bicycles from the People's Republic of China, 61 FR 
19026, 19028 (April 30, 1996); Notice of Final Determination of Sales 
at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality 
Steel Products From the Russian Federation, 65 FR 5510, 5518 (February 
4, 2000). MOFTEC was notified in the Department's questionnaire that 
failure to submit the requested information by the date specified might 
result in use of FA. The producers/exporters that decided not to 
respond to the Department's questionnaire failed to act to the best of 
their ability in this investigation. Absent a response, we must presume 
government control of these companies. The Department has determined, 
therefore, that in selecting from among the facts otherwise available 
an adverse inference pursuant to section 776(b) of the Act is 
warranted.
    In accordance with our standard practice, as AFA, we are assigning 
as the PRC-wide rate the higher of: (1) the highest margin stated in 
the notice of initiation; or (2) the highest margin calculated for any 
respondent in this investigation. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Quality Steel Products from the People's Republic of China, 65 
FR 34660 (May 31, 2000) and accompanying decision memorandum at Comment 
1. In this case, the preliminary AFA margin is 218.93 percent, which is 
the margin calculated for the respondent in this investigation (Jinyu).
    Section 776(c) of the Act provides that where the Department 
selects from among the facts otherwise available and relies on 
``secondary information,'' such as the petition, the Department shall, 
to the extent practicable, corroborate that information from 
independent sources reasonably at the Department's disposal. The 
Statement of Administrative Action accompanying the URAA, H.R. Doc. No. 
103-316 (1994) (SAA), states that ``corroborate'' means to determine 
that the information used has probative value. See SAA at 870; 19 CFR 
351.308(d).
    To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. However, in an investigation, if the Department 
chooses as facts available a calculated dumping margin of another 
respondent, it is not necessary to question the reliability of that 
calculated margin. With respect to relevance, however, the Department 
will consider information reasonably at its disposal as to whether 
there are circumstances that would render a margin not relevant. Where 
circumstances indicate that the selected margin may not be appropriate, 
the Department will attempt to find a more appropriate basis for facts 
available. See, e.g., Fresh Cut Flowers from Mexico; Final Results of 
Antidumping Duty Administrative Review, 61 FR 6812, 6814 (February 22, 
1996) (where the Department disregarded the highest margin as adverse 
best information available because the margin was based on another 
company's uncharacteristic business expense resulting in an unusually 
high margin). In this investigation, there is no indication that the 
highest calculated margin is unreliable or irrelevant and, hence, 
inappropriate to use as adverse facts available. Thus, the Department 
has preliminarily determined the PRC-wide rate to be 218.93 percent.

Fair Value Comparisons

    To determine whether sales of RBAO from the PRC were made at LTFV, 
we compared the EP to the NV, as described in the ``Export Price,'' and 
``Normal Value'' sections of this notice, below. In accordance with 
section 777A(d)(1)(A)(i) of the Act and 19 CFR 351.414(c), we compared 
POI weighted-average EPs by product to the appropriate product-specific 
NV.

Export Price

    In accordance with section 772(a) of the Act, we based our 
calculations on EP for Jinyu because the subject merchandise was sold 
by the producer/exporter outside of the United States directly to the 
first unaffiliated

[[Page 23970]]

purchaser in the United States prior to importation. We based EP on the 
packed, FOB PRC port or CIF price to the first unaffiliated purchaser 
in the United States. Where appropriate, we made deductions from the 
starting price (gross unit price) for foreign inland freight, foreign 
brokerage and handling, international freight, and marine insurance, in 
accordance with section 772(c) of the Act. Because these movement 
services were provided by NME service providers or paid for in an NME 
currency, we based these expenses on surrogate values from India or 
other market economy rates. For further discussion of our use of 
surrogate value data in this proceeding, as well as the selection of 
India as the appropriate surrogate country, see the ``Normal Value'' 
section of this notice, below.
    To value foreign inland trucking charges, we relied on Indian 
freight rates published in February through June 2000 editions of 
Chemical Weekly, as compiled and applied in the preliminary results of 
the 2001 - 2002 administrative review of bulk aspirin from the PRC. 
Foreign brokerage and handling expenses were based on November 1999 
price quotes from Indian freight forwarders, as originally obtained in 
the antidumping duty investigation of bulk aspirin from the PRC. Ocean 
freight was based on the market economy ocean freight expenses reported 
in the public version response of a respondent in the 2000 - 2001 
administrative review of persulfates from the PRC. For marine 
insurance, we used a rate quote that was originally obtained in the 
1996 - 1997 administrative review of the antidumping duty order on 
tapered roller bearings and parts thereof, finished and unfinished, 
from the PRC. A more detailed discussion of the valuation methodology 
for these expenses is described in Preliminary Determination Valuation 
Memorandum, Memorandum to the File dated April 29, 2003 (Valuation 
Memo).
    Where appropriate, we adjusted the values in Indian rupees to 
reflect inflation up to the POI using the wholesale price indices (WPI) 
for India published by the International Monetary Fund (IMF).

Normal Value

A. Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value an 
NME producer's factors of production, to the extent possible, 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 Department has 
determined that India, Pakistan, Indonesia, Sri Lanka, and the 
Philippines are countries comparable to the PRC in terms of overall 
economic development. See the January 13, 2002{sic{time} , memorandum 
from Jeffrey May to Louis Apple entitled ``Antidumping Duty 
Investigation of Refined Brown Aluminum Oxide (Otherwise known as 
Refined Brown Artificial Corundum or Brown Fused Alumina) from the 
People's Republic of China (PRC): Request for a List of Surrogate 
Countries.''
    According to the available information on the record, we have 
determined that India is the only country among the countries mentioned 
above that is at a level of economic development comparable to the PRC 
and is a significant producer of RBAO. Therefore, we have selected 
India as the surrogate country. Accordingly, we have calculated NV 
using Indian values for the PRC producer's factors of production 
wherever possible. We have obtained and relied upon publicly available 
information wherever possible.

B. Factors of Production

    For purposes of calculating NV, we valued the PRC producer's 
factors of production, in accordance with section 773(c)(1) of the Act. 
Factors of production 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 
cost, including depreciation. In examining surrogate values, we 
selected, where possible, the publicly available value which was: (1) 
an average non-export value; (2) representative of a range of prices 
within the POI or most contemporaneous with the POI; (3) product-
specific; and (4) tax-exclusive. For a more detailed explanation of the 
methodology used in calculating various surrogate values, see the 
Valuation Memo.
    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. In accordance with the decision in Sigma Corporation v. United 
States, 117 F. 3d 1401, 1407-08 (Fed. Cir. 1997), when using an import 
surrogate value, we have added to the CIF surrogate value freight cost 
using the shorter of the reported distances from the domestic supplier 
to the factory or the nearest seaport to the factory. For a discussion 
of the valuation of Jinyu's freight costs, see the ``Export Price'' 
section of this notice, above.
    To value crude brown aluminum oxide (CBAO), the only raw material 
consumed by Jinyu in its production process, we used the POI average 
unit value derived from U.S. import statistics of CBAO imported from 
Canada into the United States. We relied on this value because we were 
unable to identify a suitable surrogate value for CBAO from India or 
any other comparable economy. Indian import statistics do not 
differentiate between crude and refined aluminum oxide products and, 
thus, we could not rely on this information. We were also unable to 
obtain any Indian domestic price information on CBAO.
    As we were unable to identify a suitable value from the surrogate 
country or other comparable economies, we considered data from other 
countries. The Mexican and South African import data suggested by the 
parties to the proceeding also did not differentiate between crude and 
refined aluminum oxide and, thus, were unsuitable for use as a value 
for CBAO. The only reliable data for CBAO available for the preliminary 
determination was the information from U.S. import statistics, which 
distinguishes between refined and crude aluminum oxide.
    U.S. imports of crude aluminum oxide originate almost entirely from 
three countries: the PRC, Venezuela, and Canada. We excluded the PRC 
imports, as Department practice is to exclude import data from NME 
countries. As reported in attachment 2 of the December 2, 2002, 
Supplement to the Petition (Supplement), all crude imports from 
Venezuela are of white aluminum oxide. Because white aluminum oxide 
commands a higher price than brown aluminum oxide, we excluded import 
data from Venezuela. Based on information on the record (i.e., 
Supplement at page 9 and attachments 2 and 6) and our own visit to a 
petitioner's Canadian production facility (See the January 14, 2003, 
memorandum to the file Re: Plant Tours and Product Characteristics 
Discussion), U.S. imports from Canada consist largely or entirely of 
CBAO. All other sources of U.S. crude aluminum oxide imports are in 
small quantities and of uncertain composition. Therefore, in order to 
insure that the surrogate value is limited to CBAO, we have relied only 
on the U.S. imports from Canada to value CBAO. For further discussion 
of this surrogate value selection, see the Valuation Memo.

[[Page 23971]]

     In accordance with 19 CFR 351.408(c)(3), we valued labor based on 
a regression-based wage rate.
    To value electricity, we used the 2000-2001 ``revised estimate'' 
average rate for industrial consumption as published in the Government 
of India's Planning Commission report, The Working of State Electricity 
Boards & Electricity Departments Annual Report (2001-02).
    To determine factory overhead, depreciation, SG&A expenses, 
interest expenses, and profit for the finished product, we relied on 
rates derived from the 2001-2002 annual report of Carborundum Universal 
Ltd. (CUMI), an Indian producer of RBAO.
    Jinyu reported that it generated certain by-products (semi-abrasive 
iron and dust removing powder) as a result of the production of RBAO. 
We valued semi-abrasive iron based on the average unit value derived 
from Monthly Statistics of the Foreign Trade of India (Indian Import 
Statistics). We were unable to obtain an appropriate surrogate value 
for dust removing powder. Therefore, given the small quantity, we did 
not value this by-product for the preliminary determination.
    To value reported packing materials, we used average unit values 
during the POI derived from Indian Import Statistics.

Critical Circumstances

    On March 13, 2003, the petitioners alleged that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to imports of RBAO from the PRC. Following Allied's 
April 1, 2003, comments, the petitioners supplemented this allegation 
with revised import data on the subject merchandise in an April 11, 
2003, submission. Allied filed additional comments on April 18, 2003. 
Because the petitioners' allegation was filed at least 20 days before 
the deadline for the Department's preliminary determination, we must 
issue, in accordance with 19 CFR 351.206(c)(2)(i), our preliminary 
critical circumstances determination no later than the preliminary 
determination of sales at LTFV.
    Section 733(e)(1) of the Act provides that if a petitioner alleges 
critical circumstances, the Department will determine whether there is 
a reasonable basis to believe or suspect that:
    (A)(i) there is a history of dumping and material injury by reason 
of dumped imports in the United States or elsewhere of the subject 
merchandise, or
    (ii) the person by whom, or for whose account, the merchandise was 
imported knew or should have known that the exporter was selling the 
subject merchandise at less than its fair value and that there was 
likely to be material injury by reason of such sales, and
    (B) there have been massive imports of the subject merchandise over 
a relatively short period.
    With respect to the first criterion, i.e., a history of dumping and 
material injury in the United States or elsewhere, the European Union 
(EU) imposed antidumping duty measures on artificial corundum, which 
included the merchandise under investigation in the instant case, 
beginning in1984. These antidumping duty measures expired on October 
10, 2002. Based on the recent existence of antidumping duty measures, 
there is sufficient evidence to determine that there is a history of 
dumping of the subject merchandise and material injury as a result 
thereof. Because there is a history of dumping and material injury by 
reason of dumped imports in the EU of the subject merchandise, the 
first statutory criterion of the test for finding critical 
circumstances is met.
    Because we have preliminarily found that section 733(e)(1)(A) is 
met, we must consider whether under section 733(e)(1)(B) imports of the 
merchandise have been massive over a relatively short period. According 
to 19 CFR 351.206(h), we consider the following to determine whether 
imports have been massive over a relatively short period of time: 1) 
volume and value of the imports; 2) seasonal trends (if applicable); 
and 3) the share of domestic consumption accounted for by the imports.
    When examining volume and value data, the Department typically 
compares the export volume for equal periods immediately preceding and 
following the filing of the petition. Unless the imports in the 
comparison period have increased by at least 15 percent over the 
imports during the base period, we will not consider, under 19 CFR 
351.206(h), the imports to have been ``massive.''
    To determine whether or not imports of subject merchandise have 
been massive over a relatively short period, we compared the 
respondent's export volume for the four months after the filing of the 
petition (December-March 2003) to that during the four months before 
the filing of the petition (August-November 2002). These periods were 
selected based on the Department's practice of using the longest period 
for which information is available from the month that the petition was 
submitted through the effective date of the preliminary determination.
    Based on our analysis, we preliminarily find that the increase in 
imports was significantly greater than 15 percent with respect to the 
respondent, Jinyu (see April 29, 2003, Memorandum to the File, entitled 
Jinyu Shipment Data Analysis). As discussed above, no other party 
responded to the Department's request for information and thus we 
relied on AFA for the rate applicable to the ``PRC entity'' (i.e., the 
PRC-wide rate). Therefore, the use of AFA is also warranted in the 
critical circumstances analysis for the PRC entity. As AFA in this 
case, we relied on the import statistics through February 2003 (the 
latest month for which such data was available for the preliminary 
determination), after adjusting for HTSUS classification errors 
acknowledged by the petitioners (see the petitioners' April 14, 2003, 
letter). The adjusted import statistics showed an increase in imports 
that was significantly greater than 15 percent. Even if we were to 
subtract the shipment data provided by Jinyu from the adjusted 
aggregate import data and to compare the remaining volume of imports in 
the base period to the remaining imports in the comparison period, this 
comparison would indicate that massive imports occurred (see April 29, 
2003, Memorandum to the file entitled Preliminary Determination Import 
Statistics Analysis for Critical Circumstances).
    We have no information on the record that seasonal trends apply to 
either Jinyu's shipment history or the aggregate imports. Allied claims 
in its April 18, 2003, letter that imports under the HTSUS subheading 
for refined aluminum oxide follow a seasonal pattern, which includes an 
increase of December imports over November imports. Allied offers no 
additional information or support that the basis for the increase is 
related to seasonal patterns. Accordingly, we have an insufficient 
basis to conclude that the increase in imports for producers/exporters 
subject to the PRC-wide rate is solely or largely due to seasonal 
trends. With regard to the share of domestic consumption accounted for 
by imports, we were unable, pursuant to 19 CFR 351.206(h)(iii), to 
consider the share of domestic consumption accounted for by the imports 
because the available data did not permit such analysis.
    Based on the foregoing analysis, we preliminarily determine that 
there is a reasonable basis to believe or suspect that critical 
circumstances exist with respect to RBAO from the respondent in

[[Page 23972]]

this investigation as well as all other producers/exporters.
    We will make a final determination concerning critical 
circumstances when we make our final determination of sales at LTFV in 
this investigation.

Verification

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

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of all imports of subject 
merchandise from the PRC entered, or withdrawn from warehouse, for 
consumption on or after 90 days prior to the date of publication of 
this notice in the Federal Register. We are also instructing the 
Customs Service to require a cash deposit or the posting of a bond 
equal to the weighted-average dumping margin for all entries of RBAO 
from the PRC. These suspension of liquidation instructions will remain 
in effect until further notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                               Weighted-average margin
           Manufacturer/Exporter                 [chyph](in percent)
------------------------------------------------------------------------
Zibo Jinyu Abrasive Co....................                        218.93
PRC-wide..................................                        218.93
------------------------------------------------------------------------

    The PRC-wide rate applies to all entries of the subject merchandise 
except for entries from the exporter/producer that is identified 
individually above.

Disclosure

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

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine whether these imports are materially injuring, 
or threaten material injury to, the U.S. industry. The deadline for 
that ITC determination would be the later of 120 days after the date of 
this preliminary determination or 45 days after the date of our final 
determination.

Public Comment

    Case briefs for this investigation must be submitted no later than 
seven days after the date of the verification report issued in this 
proceeding. Rebuttal briefs must be filed five days from the deadline 
date for case briefs. A list of authorities used, a table of contents, 
and an executive summary of issues should accompany any briefs 
submitted to the Department. Executive summaries should be limited to 
five pages total, including footnotes. See 19 CFR 351.309.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case briefs, provided that such a hearing is 
requested by any interested party. If a request for a hearing is made 
in this investigation, the hearing will tentatively be held two days 
after the deadline for submission of the rebuttal briefs at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230. Parties should confirm by telephone the time, 
date, and place of the hearing 48 hours before the scheduled time. 
Interested parties who wish to request a hearing, or to participate if 
one is requested, must submit a written request within 30 days of the 
publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs. See 19 
CFR 351.310.
    We will make our final determination by 135 days after the date of 
publication of this preliminary determination, pursuant to section 
735(a)(2) of the Act.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    Dated: April 29, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-11171 Filed 5-5-03; 8:45 am]
BILLING CODE 3510-DS-S