[Federal Register Volume 68, Number 106 (Tuesday, June 3, 2003)]
[Notices]
[Pages 33095-33098]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13878]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-846]


Brake Rotors From the People's Republic of China: Preliminary 
Results of the Eighth New Shipper Review

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

ACTION: Notice of preliminary results of the eighth new shipper review.

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SUMMARY: The Department of Commerce is currently conducting the eighth 
new shipper review of the antidumping duty order on brake rotors from 
the People's Republic of China covering the period April 1, 2002, 
through September 30, 2002. This review covers two exporters. We have 
preliminarily determined that sales have not been made at less than 
normal value with respect to the exporters subject to this review. If 
these preliminary results are adopted in our final results of this 
review, we will instruct the U.S. Bureau of Customs and Border 
Protection\1\ (``BCBP'') to assess antidumping duties on entries of 
subject merchandise during the period of review (``POR''), for which 
the importer-specific assessment rates are above de minimis.
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    \1\ As of March 1, 2003, the U.S. Customs Service has been 
renamed the U.S. Bureau of Customs and Border Protection.
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    Interested parties are invited to comment on these preliminary 
results. We will issue the final results no later than 90 days from the 
date of issuance of these preliminary results.

EFFECTIVE DATE: June 3, 2003.

FOR FURTHER INFORMATION CONTACT: Brian Smith, Terre Keaton or Margarita 
Panayi, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-1766, (202) 482-1280 or 
(202) 482-0049, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On October 31, 2002, the Department received timely requests from 
Xiangfen Hengtai Brake System Co., Ltd (``Hengtai'') and Xianghe 
Xumingyuan Auto Parts Co., Ltd. (``Xumingyuan'') for a new shipper 
review of this antidumping duty order in accordance with 19 CFR 
351.214(c). In their requests for a new shipper review and in 
accordance with 19 CFR 351.214(b)(2)(i) and (iii)(A), Hengtai and 
Xumingyuan each certified that it did not export the subject 
merchandise to the United States during the period covered by the 
original less-than-fair-value (``LTFV'') investigation and that it is 
not affiliated with any company which exported the subject merchandise 
to the United States during the period of investigation (``POI''). 
Hengtai and Xumingyuan also certified that their export activities are 
not controlled by the central government of the People's Republic of 
China (``PRC''). Pursuant to 19 CFR 351.214(b)(2)(iv), Hengtai and 
Xumingyuan submitted documentation establishing the date on which the 
merchandise was first shipped for export to the United States, the 
volume of that first shipment, and the date of the first sale to an 
unaffiliated customer in the United States.
    On December 3, 2002, the Department published a notice of 
initiation of a new shipper review of Hengtai and Xumingyuan (see Brake 
Rotors from the People's Republic of China: Initiation of New Shipper 
Antidumping Duty Review, 67 FR 71934 (December 3, 2002)). On December 
4, 2002, the Department issued a questionnaire to each company.
    On December 19, 2002, the Department provided the parties an 
opportunity to submit publicly available information for consideration 
in the preliminary results. In January and February 2003, we received 
responses to the Department's questionnaires, and granted an extension 
until March 10, 2003, for all interested parties to submit publicly 
available information for consideration in the preliminary results.
    On February 27, 2003, we notified the respondents of our intent to 
conduct verification of their responses to the antidumping duty 
questionnaire and provided each respondent with a verification outline 
for purposes of familiarizing each company with the verification 
process. On March 10, 2003, the respondents submitted publicly 
available information, and on March 14, 2003, the petitioner\2\ 
submitted rebuttal comments to the publicly available information 
provided by the respondents. From March 10 through March 21, 2003, we 
conducted verification of the information submitted by each respondent, 
in accordance with 19 CFR 351.307. On April 16, 2003, we issued 
verification reports.
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    \2\ The petitioner is the Coalition for the Preservation of 
American Brake Drum and Rotor Aftermarket Manufacturers.
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Scope of the Order

    The products covered by this order are brake rotors made of gray 
cast iron, whether finished, semifinished, or unfinished, ranging in 
diameter from 8 to 16 inches (20.32 to 40.64 centimeters) and in weight 
from 8 to 45 pounds (3.63 to 20.41 kilograms). The size parameters 
(weight and dimension) of the brake rotors limit their use to the 
following types of motor vehicles: automobiles, all-terrain vehicles, 
vans and recreational vehicles under ``one ton and a half,'' and light 
trucks designated as ``one ton and a half.''
    Finished brake rotors are those that are ready for sale and 
installation without any further operations. Semi-finished rotors are 
those on which the surface is not entirely smooth, and have undergone 
some drilling. Unfinished rotors are those which have undergone some 
grinding or turning.
    These brake rotors are for motor vehicles, and do not contain in 
the casting a logo of an original equipment manufacturer (``OEM'') 
which produces vehicles sold in the United States (e.g., General 
Motors, Ford, Chrysler, Honda, Toyota, Volvo). Brake rotors covered in 
this order are not certified by OEM producers of vehicles sold in the 
United States. The scope also includes composite brake rotors that are 
made of gray cast iron, which contain a steel plate, but otherwise meet 
the above criteria. Excluded from the scope of this order are brake 
rotors made of gray cast iron, whether finished, semifinished, or 
unfinished, with a diameter less than 8 inches or greater than 16 
inches (less than 20.32 centimeters or greater than 40.64 centimeters) 
and a weight less than 8 pounds or greater than 45 pounds (less than 
3.63 kilograms or greater than 20.41 kilograms).
    Brake rotors are currently classifiable under subheading 
8708.39.5010 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 scope of this 
order is dispositive.

Period of Review

    The POR covers April 1, 2002, through September 30, 2002.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by each respondent. We used standard

[[Page 33096]]

verification procedures, including on-site inspection of the 
manufacturer's facilities and examination of relevant sales and 
financial records. Our verification results are outlined in the 
verification report for each company (see April 16, 2003, verification 
reports for Hengtai and Xumingyuan for further discussion).

Separate Rates

    In proceedings involving non-market-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 (i.e., a PRC-wide 
rate).
    Hengtai claims that it is a limited liability company in the PRC, 
and Xumingyuan claims that it is a joint venture between a PRC and a 
foreign company. Thus, for these respondents, a separate rates analysis 
is necessary to determine whether the exporters are independent from 
government control (see Notice of Final Determination of Sales at Less 
Than Fair Value: Bicycles From the People's Republic of China 
(``Bicycles'') 61 FR 56570 (April 30, 1996)).
    To establish whether a firm is sufficiently independent in its 
export activities from government control to be entitled to a separate 
rate, the Department utilizes a test arising from 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''), 
and amplified in 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''). Under the separate-rates criteria, 
the Department assigns separate rates in NME cases only if the 
respondent can demonstrate the absence of both de jure and de facto 
governmental control over export activities.
1. De Jure Control
    Hengtai and Xumingyuan have placed on the administrative record 
documents to demonstrate absence of de jure control, including the 
PRC's Enterprise Legal Person Registration Administrative Regulations 
promulgated on June 13, 1988, and the 1994 ``Foreign Trade Law of the 
People's Republic of China.''
    As in prior cases, we have analyzed these laws and have found them 
to establish sufficiently an absence of de jure control of joint 
ventures between PRC and foreign companies and limited liability 
companies in the PRC. See, e.g., Final Determination of Sales at Less 
than Fair Value: Furfuryl Alcohol from the People's Republic of China 
(``Furfuryl Alcohol'') 60 FR 22544 (May 8, 1995), and Preliminary 
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 29571 (June 5, 1995). We have no new information in 
this proceeding which would cause us to reconsider this determination 
with regard to Hengtai and Xumingyuan.
2. 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 
Silicon Carbide and Furfuryl Alcohol. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether the 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 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 and Furfuryl Alcohol).
    Hengtai and Xumingyuan each 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, uses profits according to its business needs, and has the 
authority to sell its assets and to obtain loans. Additionally, each of 
these companies' questionnaire responses indicates that its pricing 
during the POR does not suggest coordination among exporters.
    For Hengtai and Xumingyuan, the Department found no evidence at 
verification of government involvement in their business operations. 
Specifically, Department officials examined sales documents that showed 
that each of these respondents negotiated its contracts and set its own 
sales prices with its customers. In addition, the Department reviewed 
sales documentation, bank statements and accounting documentation that 
demonstrated that each of these respondents received payment from its 
U.S. customers via bank wire transfer, which was deposited into its own 
bank account without government intervention. Finally, the Department 
examined internal company memoranda such as appointment notices, which 
demonstrated that each of these companies selected its own management. 
See pages four through eight of the Department's verification report 
for Hengtai, and pages five through seven of the Department's 
verification report for Xumingyuan. This information, taken in its 
entirety, supports a finding that there is a de facto absence of 
governmental control of each of these companies' export functions.
    Consequently, we have determined that Hengtai and Xumingyuan have 
each met the criteria for the application of separate rates based on 
our verification findings.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by Hengtai 
and Xumingyuan to the United States were made at prices below normal 
value (``NV''), we compared each company's export prices to NV, as 
described in the ``Export Price'' and ``Normal Value'' sections of this 
notice, below.

Export Price

    For both respondents, we used export price methodology in 
accordance with section 772(a) of the Tariff Act of 1930, as amended 
(``the Act'') because the subject merchandise was first sold prior to 
importation by the exporter outside the United States directly to an 
unaffiliated purchaser in the United States, and constructed export 
price was not otherwise indicated.
    For both respondents, we calculated export price based on packed, 
FOB foreign port prices 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 and foreign 
brokerage and handling charges in the PRC, in accordance with section 
772(c) of the Act. Because foreign inland freight and foreign brokerage 
and handling fees were provided by PRC service providers or paid for in 
renminbi, we based those charges on surrogate rates from India (see 
``Surrogate Country'' section below for

[[Page 33097]]

further discussion of our surrogate-country selection). To value 
foreign inland trucking charges, we used truck freight rates published 
in Indian Chemical Weekly and distance information obtained from the 
following websites: http://www.infreight.com, http://www.sitaindia.com/Packages/CityDistance.php, and http://www.abcindia.com. Based on our 
verification findings, we revised the reported distance from Xumingyuan 
to the port of exportation (see page 10 of Xumingyuan's verification 
report). To value foreign brokerage and handling expenses, we relied on 
public information reported in the 1998 - 1999 new shipper and 
administrative reviews of the antidumping order on stainless steel bar 
from India (See Stainless Steel Bar from India: Final Results of 
Antidumping Duty Administrative Review and New Shipper Review and 
Partial Rescission of Administrative Review, 65 FR 48965 (August 10, 
2000)).

Normal Value

A. Non-Market-Economy Status
    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 (see Notice of Preliminary Results of 
Antidumping Duty Administrative Review and Preliminary Partial 
Rescission of Antidumping Duty Administrative Review: Freshwater 
Crawfish Tail Meat From the People's Republic of China, 66 FR 52100, 
52103 (October 12, 2001)). None of the parties to this proceeding has 
contested such treatment. Accordingly, we calculated normal value in 
accordance with section 773(c) of the Act, which applies to NME 
countries.
B. Surrogate Country
    Section 773(c)(4) of the Act requires the Department to value a 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. India was among the 
countries comparable to the PRC in terms of overall economic 
development (see December 11, 2002, Memorandum from the Office of 
Policy to Irene Darzenta Tzafolias). In addition, based on publicly 
available information placed on the record (e.g., Indian producer 
financial statements), India is a significant producer of the subject 
merchandise. Accordingly, we considered India the surrogate country for 
purposes of valuing the factors of production because it meets the 
Department's criteria for surrogate-country selection.
C. Factors of Production
    In accordance with section 773(c) of the Act, we calculated normal 
value based on the factors of production which included, but were not 
limited to: (A) hours of labor required; (B) quantities of raw 
materials employed; (C) amounts of energy and other utilities consumed; 
and (D) representative capital costs, including depreciation. We used 
the factors reported by each of the respondents which produced the 
brake rotors it exported to the United States during the POR. To 
calculate normal value, we multiplied the reported unit factor 
quantities by publicly available Indian values.
    Based on our verification findings at Hengtai, we revised the per-
unit weight reported for adhesive tape (see page 14 of the Hengtai's 
verification report). Based on our verification findings at Xumingyuan, 
we revised the reported per-unit weight for three of its packing 
materials (i.e., corrugated paper cartons, wood pallet and steel 
pallet), and the distance reported from Xumingyuan to its plywood 
supplier. (See pages 13 and 15 of Xumingyuan's verification report).
    The Department's selection of the surrogate values applied in this 
determination was based on the quality, specificity, and 
contemporaneity of the data. As appropriate, we adjusted input prices 
by including freight costs to make them delivered prices. We added to 
Indian surrogate values surrogate freight costs using the shorter of 
the reported distance from the domestic supplier to the factory or the 
distance from the nearest seaport to the factory. This adjustment is in 
accordance with the Court of Appeals for the Federal Circuit's decision 
in Sigma Corporation v. United States, 117 F. 3d 1401, 1407-08 (Fed. 
Cir. 1997). For those values not contemporaneous with the POR and 
quoted in a foreign currency, we adjusted for inflation using wholesale 
price indices published in the International Monetary Fund's 
International Financial Statistics. (See Preliminary Results Valuation 
Memorandum dated May 27, 2003, for a detailed explanation of the 
methodology used to calculate surrogate values.)
    To value pig iron, steel scrap, ferrosilicon, ferromanganese, 
limestone, lubrication oil, coking coal, and firewood, we used April 
2002-August 2002 average import values from Monthly Statistics of the 
Foreign Trade of India (``Monthly Statistics''). We relied on the 
factor specification data submitted by the respondents for the above-
mentioned inputs in their questionnaire and supplemental questionnaire 
responses, as verified by the Department, for purposes of selecting 
surrogate values from Monthly Statistics.
    We also added an amount for loading and additional transportation 
charges associated with delivering coal to the factory based on June 
1999 Indian price data contained in the periodical Business Line.
    We based our surrogate value for electricity on 2000-2001 data from 
the Government of India's Planning Commission report entitled The 
Working of State Electricity Boards & Electricity Departments Annual 
Report (2001-2002).
    We valued labor based on a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3).
    To value selling, general, and administrative (``SG&A'') expenses, 
factory overhead and profit, we used the 2000-2001 financial data of 
Kalyani Brakes Limited (``Kalyani''), Mando Brake Systems India Limited 
(``Mando''), and Rico Auto Industries Limited (``Rico'').
    Where appropriate, we removed from the surrogate overhead and SG&A 
calculations the excise duty amount listed in the financial reports. We 
made certain adjustments to the ratios calculated as a result of 
reclassifying certain expenses contained in the financial reports. For 
further discussion of the adjustments made, see the Preliminary Results 
Valuation Memorandum, dated May 27, 2003.
    To value corrugated paper cartons, nails, plastic bags and sheets/
covers, steel strip and straps/buckles, tape, pallet wood, plywood, and 
hot-rolled carbon steel for pallet construction, we used April 2002-
August 2002 average import values from Monthly Statistics. Both 
respondents included the weight of the straps/buckles in their reported 
steel strip weights. Because the material of the straps/buckles and 
steel strip was the same for both inputs, we valued these factors using 
the combined weight reported by the respondents.
    All inputs were shipped by truck. Therefore, to value PRC inland 
freight, we used a freight rates published in Indian Chemical Weekly 
and distance information obtained from the following websites: http://www.infreight.com, http://www.sitaindia.com/Packages/CityDistance.php,and http://www.abcindia.com.

[[Page 33098]]

Preliminary Results of the Review

    We preliminarily determine that the following margins exist for 
Hengtai and Xumingyuan during the period April 1, 2002, through 
September 30, 2002:

------------------------------------------------------------------------
                                                              Margin
          Manufacturer/producer/[chyph]exporter           [chyph]Percent
------------------------------------------------------------------------
Xiangfen Hengtai Brake [chyph]System Co., Ltd...........            0.00
Xianghe Xumingyuan Auto Parts Co., Ltd..................            0.00
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the date of publication of this 
notice. Any interested party may request a hearing within 30 days of 
publication of this notice. Any hearing, if requested, will be held on 
July 14, 2003.
    Interested parties who wish to request a hearing or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, within 30 days of the 
date of publication of this notice. Requests should contain: (1) the 
party's name, address, and telephone number; (2) the number of 
participants; and (3) a list of issues to be discussed. See 19 CFR 
351.310(c).
    Issues raised in the hearing will be limited to those raised in 
case briefs and rebuttal briefs. Case briefs from interested parties 
may be submitted not later than June 30, 2003. Rebuttal briefs, limited 
to issues raised in the case briefs, will be due not later than July 7, 
2003. Parties who submit case briefs or rebuttal briefs in this 
proceeding are requested to submit with each argument (1) a statement 
of the issue and (2) a brief summary of the argument. Parties are also 
encouraged to provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited.
    The Department will issue the final results of this new shipper 
review, including the results of its analysis of issues raised in any 
such written briefs or at the hearing, if held, not later than 90 days 
after the date of issuance of these preliminary results.

Assessment Rates

    The Department shall determine, and the BCBP shall assess, 
antidumping duties on all appropriate entries. The Department will 
issue appropriate appraisement instructions for the companies subject 
to this review directly to the BCBP within 15 days of publication of 
the final results of this review. For assessment purposes, we do not 
have the actual entered value for either respondent for which we 
calculated a margin because it is not the importer of record for the 
subject merchandise. Therefore, we calculated individual importer- or 
customer-specific assessment rates by aggregating the dumping margins 
calculated for all of the U.S. sales examined and dividing that amount 
by the total quantity of the sales examined. To determine whether the 
duty assessment rates are de minimis (i.e., at or above 0.50 percent), 
in accordance with the requirement set forth in 19 CFR 351.106(c)(2), 
we have calculated importer- or customer-specific ad valorem ratios 
based on export prices. We will instruct the BCBP to assess antidumping 
duties on all appropriate entries covered by this review if any 
importer or customer-specific assessment rate calculated in the final 
results of this review is above de minimis.

Cash Deposit Requirements

    Bonding will no longer be permitted to fulfill security 
requirements for shipments from Hengtai or Xumingyuan of brake rotors 
from the PRC entered, or withdrawn from warehouse, for consumption on 
or after the publication date of the final results of the new shipper 
review. Furthermore, the following cash deposit requirements will be 
effective upon publication of the final results of the new shipper 
review for all shipments of subject merchandise from Hengtai or 
Xumingyuan entered, or withdrawn from warehouse, for consumption on or 
after the publication date: (1) for subject merchandise manufactured 
and exported by Hengtai or Xumingyuan, no cash deposit will be required 
if the cash deposit rates calculated in the final results are zero or 
de minimis; and (2) for subject merchandise exported by Hengtai or 
Xumingyuan but not manufactured by them, the cash deposit will continue 
to be the PRC countrywide rate (i.e., 43.32 percent) made effective by 
the LTFV investigation. These requirements, when imposed, shall remain 
in effect until publication of the final results of the next 
administrative review.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) 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 new shipper administrative review and notice are in accordance 
with section 751(a)(2)(B) of the Act and 19 CFR 351.214.

    Dated: May 27, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-13878 Filed 6-2-03; 8:45 am]
BILLING CODE 3510-DS-S