[Federal Register Volume 68, Number 229 (Friday, November 28, 2003)]
[Notices]
[Pages 66810-66816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29722]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-557-812]


Notice of Negative Preliminary Determination of Sales at Less 
Than Fair Value, Postponement of Final Determination, and Negative 
Preliminary Determination of Critical Circumstances: Certain Color 
Televisions From Malaysia

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 certain color televisions from 
Malaysia are not being, nor are 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 no reasonable basis to believe or suspect that critical 
circumstances exist with respect to subject merchandise exported from 
Malaysia.
    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 this preliminary determination.

EFFECTIVE DATE: November 28, 2003.

FOR FURTHER INFORMATION CONTACT: Mike Strollo or Gregory E. Kalbaugh, 
Office of AD/CVD Enforcement, Office 2, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-0629 or (202) 482-3693, respectively.

Preliminary Determination

    We preliminarily determine that certain color televisions (CTVs) 
from Malaysia are not being sold, nor are 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

[[Page 66811]]

preliminarily determine that there is no reasonable basis to believe or 
suspect that critical circumstances exist with respect to CTVs produced 
in and exported from Malaysia. The critical circumstances analysis for 
the preliminary determination is discussed below under the section 
``Critical Circumstances.''

Case History

    Since the initiation of this investigation ((Notice of Initiation 
of Antidumping Duty Investigations: Certain Color Television Receivers 
From Malaysia and the People's Republic of China, 68 FR 32013 (May 29, 
2003)) (Initiation Notice), the following events have occurred:
    On June 13, 2003, Algert Co., Inc., and Panasonic AVC Networks 
Kuala Lumpur Malaysia Sdn. Bhd (collectively, Algert/Panasonic) 
requested that Panasonic multi-system, dual/auto voltage CTVs be 
excluded from the scope of this investigation.
    On June 16, 2003, the United States International Trade Commission 
(ITC) preliminarily determined that there is a reasonable indication 
that imports of CTVs from Malaysia are materially injuring the United 
States industry. See ITC Investigation Nos. 731-TA-1034 and 1035 
(Certain Color Television Receivers from China and Malaysia, 68 FR 
38089 (June 26, 2003)).
    Also on June 16, 2003, we issued an antidumping questionnaire to 
Funai Electric (Malaysia) Sdn. Bhd. (Funai Malaysia), the producer/
exporter accounting for the largest volume of known exports of subject 
merchandise from Malaysia during the period of investigation (POI). For 
further discussion, see the memorandum to Louis Apple, Director, Office 
2, from the Team entitled ``Antidumping Duty Investigation of Certain 
Color Televisions from Malaysia--Selection of Respondents,'' dated May 
30, 2003.
    On July 8, 2003, Funai Malaysia submitted information stating that 
it had no viable home market or third country market during the POI. On 
July 21, 2003, Funai Malaysia submitted a response to section A of the 
Department's questionnaire.
    On July 30, 2003, the Department issued a section A supplemental 
questionnaire to Funai Malaysia.
    On August 6, 2003, Funai Malaysia submitted responses to sections C 
and D of the Department's questionnaire.
    On August 19, 2003, the Department issued its first section C 
supplemental questionnaire to Funai Malaysia.
    On August 20, 2003, Funai Malaysia submitted its response to the 
Department's section A supplemental questionnaire.
    On August 22, 2003, the Department issued its first section D 
supplemental questionnaire to Funai Malaysia. On September 4, 2003, 
Funai Malaysia responded to this supplemental questionnaire.
    On September 9, 2003, Funai Malaysia submitted its response to the 
Department's August 19, 2003, section C supplemental questionnaire.
    On September 11 and September 16, 2003, the Department issued 
section D supplemental questionnaires.
    On September 23, 2003, the petitioners submitted comments opposing 
Algert/Panasonic's June 13, 2003, scope exclusion request.
    On September 24, 2003, the Department issued an additional sections 
A and C supplemental questionnaire to Funai Malaysia.
    On September 17, 2003, pursuant to section 733(c)(2) of the Act and 
19 CFR 351.205(f), the Department determined that the case was 
extraordinarily complicated and postponed the preliminary determination 
until no later than November 21, 2003. See Postponement of Preliminary 
Determinations of Antidumping Duty Investigations: Certain Color 
Television Receivers From Malaysia (A-557-812) and the People's 
Republic of China (A-570-884), 68 FR 55372 (Sept. 25, 2003).
    On October 3, 2003, Funai Malaysia submitted its response to the 
questions pertaining to section A of the Department's September 24, 
2003, supplemental questionnaire.
    On October 9, 2003, Funai Malaysia submitted its response to the 
Department's September 11 and September 16, 2003, supplemental 
questionnaires.
    On October 14, 2003, Funai Malaysia submitted its response to the 
questions pertaining to section C of the Department's September 24, 
2003, supplemental questionnaire.
    On October 16, 2003, the petitioners alleged that critical 
circumstances exist with respect to imports of CTVs from Malaysia. 
Accordingly, pursuant to section 732(e) of the Act, on October 17, 
2003, we requested information from Funai Malaysia regarding monthly 
shipments to the United States during the period January 2001 through 
October 2003. We received the requested information on October 31, 
2003. The critical circumstances analysis for the preliminary 
determination is discussed below under ``Critical Circumstances.''
    On November 17, 2003, Funai Malaysia requested that, in the event 
of an affirmative preliminary determination in this investigation, the 
Department postpone its final determination until not later than 135 
days after the the date of the publication of the preliminary 
determination in the Federal Register. In addition, in Funai Malaysia's 
request for a postponement, it also requested an extension of 
provisional measures from a four-month period to not more than six 
months in accordance with 19 CFR 351.210(e)(2). On November 18, 2003, 
the petitioners requested that, in the event of a negative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of the 
publication of the preliminary determination in the Federal Register.

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.
    Pursuant to section 735(a)(2) of the Act, the petitioners requested 
that, in the event of a negative preliminary determination in this 
investigation, the Department postpone its final determination until 
not later than 135 days after the date of the publication of the 
preliminary determination in the Federal Register. In accordance with 
19 CFR 351.210(b), because our preliminary determination is negative 
and no compelling reasons for denial exist, we are granting the 
petitioners' request and are postponing the final determination until 
no later than 135 days after the publication of this notice in the 
Federal Register.

Period of Investigation

    The POI is April 1, 2002, through March 31, 2003. This period 
corresponds to the four most recent fiscal quarters prior to the month 
of the filing of the petition (i.e., May 2003).

Scope of Investigation

    For purposes of this investigation, the term ``certain color 
television receivers''

[[Page 66812]]

includes complete and incomplete direct-view or projection-type 
cathode-ray tube color television receivers, with a video display 
diagonal exceeding 52 centimeters, whether or not combined with video 
recording or reproducing apparatus, which are capable of receiving a 
broadcast television signal and producing a video image. Specifically 
excluded from this investigation are computer monitors or other video 
display devices that are not capable of receiving a broadcast 
television signal.
    The color television receivers subject to this investigation are 
currently classifiable under subheadings 8528.12.2800, 8528.12.3250, 
8528.12.3290, 8528.12.4000, 8528.12.5600, 8528.12.3600, 8528.12.4400, 
8528.12.4800, and 8528.12.5200 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 the merchandise under investigation is dispositive.

Scope Comments

    In accordance with the preamble to our regulations (see Antidumping 
Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997)), we 
set aside a period of time for parties to raise issues regarding 
product coverage and encouraged all parties to submit comments within 
20 calendar days of publication of the Initiation Notice (see 68 FR at 
32013). Interested parties submitted such comments by June 13, 2003.
    Pursuant to the Department's solicitation of scope comments in the 
Initiation Notice, Algert/Panasonic requested that Panasonic multi-
system, dual/auto voltage CTVs be excluded from the scope of this 
investigation because: (1) These CTVs are not produced domestically; 
and (2) they do not compete in any meaningful way with CTVs that are 
produced in the United States. On September 23, 2003, the petitioners 
opposed this request.
    After considering the interested party comments and the 
petitioners' objections to the exclusion request regarding the 
Panasonic multi-system, dual/auto voltage CTVs, we find that the CTVs 
in question fall within the scope of this investigation. All CTVs, 
including the CTVs in question, have the same fundamental 
characteristics--that is they are capable of receiving a broadcast 
signal and displaying a video image. Therefore, we conclude that all 
CTVs, whether having multiple signal capability or dual/auto voltage, 
including the multi-system, dual/auto voltage CTVs produced by PAVCKM 
and sold by Algert, are appropriately included in the scope of this 
investigation. For a further discussion, see the memorandum to Louis 
Apple, Director, Office 2 from Michael Strollo entitled ``Scope 
Exclusion Request,'' dated November 21, 2003.

Class or Kind

    As part of its scope request, Algert/Panasonic argued that the 
Panasonic multi-system, dual/auto voltage CTVs fall into a separate 
class or kind of merchandise from other color televisions. In 
considering whether this product should be considered a separate class 
or kind, we analyzed the arguments submitted by all of the interested 
parties in the context of the criteria enumerated in the court decision 
Diversified Products Corp. v. United States, 572 F. Supp. 883, 889 (CIT 
1983) (Diversified). For this analysis, we relied upon the petition, 
the submissions by all interested parties, the preliminary 
determination made by the ITC, and other information.
    The criteria set forth in Diversified to examine whether 
differences in class or kind exist are as follows: (1) The general 
physical characteristics of the merchandise; (2) the expectations of 
the ultimate purchaser; (3) the ultimate use of the merchandise; (4) 
the channels of trade in which the merchandise moves, and; (5) the 
manner in which the product is advertised or displayed. Based upon the 
evaluation of these criteria, we preliminarily find that Panasonic 
multi-system, dual/auto voltage CTVs are the same class or kind of 
merchandise as the other CTVs included within the scope of this 
investigation. Specifically, we note that the essential physical 
characteristics of a Panasonic multi-system, dual/auto voltage CTV and 
a standard CTV are the same (i.e., an electronic product capable of 
receiving a broadcast television signal and producing a video image); 
the ultimate use of the product (i.e., the receipt of a broadcast 
television signal and the production of a video image) and as such, the 
expectations of the ultimate purchasers, are the same for all CTVs; 
channels of distribution (i.e., retail outlets) are the same; and 
finally, the CTVs in question are clearly advertised and displayed as 
CTVs. Consequently, we preliminarily find that the CTVs in question do 
not constitute a separate class or kind of merchandise.

Fair Value Comparisons

    To determine whether sales of certain color televisions from 
Malaysia to the United States were made at LTFV, we compared the export 
price (EP) or constructed export price (CEP) to the Normal Value (NV), 
as described in the ``Export Price/Constructed Export Price'' and 
``Normal Value'' sections of this notice, below. In accordance with 
section 777A(d)(1)(A)(i) of the Act, we compared POI weighted-average 
EPs and CEPs to NVs.
    For this preliminary determination, we have determined that Funai 
Malaysia did not have a viable home or third country market. Therefore, 
as the basis for NV, we used constructed value (CV) when making 
comparisons in accordance with section 773(a)(4) of the Act.

Export Price/Constructed Export Price

    In accordance with section 772(a) of the Act, we calculated EP for 
those sales where the merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation by the exporter or 
producer outside the United States. We based EP on the packed price to 
unaffiliated purchasers in the United States. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act; 
these included, where appropriate, foreign warehousing, foreign inland 
freight, foreign inland insurance, and foreign brokerage and handling 
expenses.
    In accordance with section 772(b) of the Act, we calculated CEP for 
those sales where the merchandise was sold (or agreed to be sold) in 
the United States before or after the date of importation by or for the 
account of the producer or exporter, or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter.
    We based CEP on the packed delivered prices to unaffiliated 
purchasers in the United States. We made deductions for movement 
expenses, in accordance with section 772(c)(2)(A) of the Act; these 
included, where appropriate, foreign inland freight, foreign 
warehousing expenses, foreign inland insurance, foreign brokerage and 
handling expenses, ocean freight, marine insurance, U.S. brokerage and 
handling, U.S. customs duties (including harbor maintenance fees and 
merchandise processing fees), U.S. inland insurance, U.S. inland 
freight expenses (i.e., freight from port to warehouse and freight from 
warehouse to the customer), post-sale warehousing expenses, and intra-
warehousing transfer expenses. In accordance with section 772(d)(1) of 
the Act and 19 CFR 351.402(b), we deducted those selling expenses 
associated with economic activities

[[Page 66813]]

occurring in the United States, including direct selling expenses 
(i.e., bank charges and imputed credit expenses), and indirect selling 
expenses (including inventory carrying costs and other indirect selling 
expenses).
    We note that, in their November 6, 2003, comments on the 
preliminary determination, the petitioners argued that the Department 
should deduct from CEP the indirect selling expenses incurred by Funai 
Electric Co., Ltd. (Funai Electric) in Japan on sales to the United 
States. The petitioners claim that these indirect expenses incurred by 
Funai Electric are associated with sales to unaffiliated customers made 
by Funai Corporation, Inc. (Funai Corporation), Funai Malaysia's 
affiliated reseller in the United States.
    As noted above, pursuant to 19 CFR 351.402(b), we deduct from CEP 
those selling expenses associated with commercial activities occurring 
in the United States that relate to the sale to an unaffiliated 
purchaser, no matter where or when paid. This regulation also states 
that the Department will not make any adjustment to CEP for any expense 
that is related solely to the sale to an affiliated importer in the 
United States. The information on the record indicates that Funai 
Electric's selling functions are limited to: (1) Inputting and 
processing of orders of Funai Malaysia's merchandise made by Funai 
Corporation; (2) customer interaction (i.e., with Funai Corporation); 
and (3) sales logistics associated with transporting the merchandise 
from Malaysia to Funai Corporation's designated place of delivery. None 
of these selling functions indicate that Funai Electric incurred 
selling expenses associated with economic activities occurring in the 
United States on the sale to unaffiliated customers. Rather, the 
selling functions performed, and the selling expenses incurred, appear 
to be associated only with Funai Electric's sales to Funai Corporation. 
Therefore, because the evidence on the record does not support the 
petitioners' contention that Funai Electric's indirect selling expenses 
incurred in Japan are: (1) Associated with commercial activities in the 
United States; and (2) related to the sale to an unaffiliated 
purchaser, we have not deducted these expenses from CEP.
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by Funai Malaysia and its affiliate on their 
sales of the subject merchandise in the United States and the profit 
associated with those sales.

Normal Value

A. Home Market Viability

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV 
(i.e., the aggregate volume of home market sales of the foreign like 
product is equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared the respondent's volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with section 773(a)(1)(C) of the 
Act.
    Funai Malaysia reported that during the POI it made no home market 
sales of foreign like product. Sales to Funai Malaysia's largest third-
country market, Japan, were not greater than five percent of the 
aggregate volume of U.S. sales of the subject merchandise. Therefore, 
we determined that neither the home market nor any third country market 
was a viable basis for calculating NV. As a result, we used CV as the 
basis for calculating NV, in accordance with section 773(a)(4) of the 
Act.

B. Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade as the EP or CEP. The NV level of trade (LOT) 
is that of the starting-price sales in the comparison market or, when 
NV is based on CV, that of the sales from which we derive selling, 
general and administrative expenses (SG&A) and profit. For EP, the U.S. 
LOT is also the level of the starting-price sale, which is usually from 
exporter to importer. For CEP, it is the level of the constructed sale 
from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the level of 
trade of the export transaction, we make an LOT adjustment under 
section 773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV 
level is more remote from the factory than the CEP level and there is 
no basis for determining whether the difference in levels between NV 
and CEP affects price comparability, we adjust NV under section 
773(a)(7)(B) of the Act (the CEP-offset provision). See Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate from South Africa, 62 FR 61731, 23761 (Nov. 19, 
1997).
    In this investigation, we found that Funai Malaysia had no viable 
home or third country market. When NV is based on CV, the NV LOT is 
that of the sales from which we derive SG&A expenses and profit (see 
Notice of Preliminary Determination of Sales at Less Than Fair Value 
and Postponement of Final Determination: Fresh Atlantic Salmon from 
Chile, 63 FR 2664 (Jan. 16, 1998)). In accordance with 19 CFR 
351.412(d), the Department will make its LOT determination under 
paragraph (d)(1) of this section on the basis of sales of the foreign 
like product by the producer or exporter. Because it is not possible in 
the instant case to make an LOT determination on the basis of sales of 
the foreign like product in the home or third country market, the 
Department may use sales of different or broader product lines, sales 
by other companies, or any other reasonable basis. Because we based the 
selling expenses and profit for Funai Malaysia on the weighted average 
selling expenses incurred and profits earned by another Malaysian 
producer of comparable merchandise who was not party to this 
investigation, there is insufficient information on the record in this 
investigation to allow the Department to make an LOT adjustment or 
grant a CEP offset to the CVs reported by Funai Malaysia.

Calculation of Constructed Value

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of Funai's cost of materials and fabrication for the 
foreign like product, plus amounts for SG&A, profit, and U.S. packing 
costs. We relied on the submitted CV information for Funai Malaysia, 
except in the following instances where the reported costs were not 
appropriately quantified or valued.
    [sbull] We revised the company's reported general and 
administrative (G&A) expenses to include Funai Malaysia's net G&A 
expenses.
    [sbull] We calculated the company's CV profit and domestic selling 
expense ratios using the financial statements of a surrogate Malaysian 
company that sold merchandise that is in the same general category of 
products as the subject merchandise, using data that was 
contemporaneous to the POI.
    For further discussion of these adjustments, see the memorandum 
from Mark Todd to Neal Halper, entitled

[[Page 66814]]

``Cost of Production and Constructed Value Calculation Adjustments for 
the Preliminary Determination,'' dated November 21, 2003.
    During the POI, Funai Malaysia purchased a major input, printed 
circuit boards (PCBs), from an affiliated PCB-board producer in Hong 
Kong. This affiliate purchased the raw materials necessary to produce 
the PCB from both market and NME suppliers, and then it subcontracted 
the assembly operations with an entity located in the People's Republic 
of China (PRC). In order to demonstrate that the affiliate's purchases 
from its PRC suppliers reasonably reflect the costs associated with the 
production and sale of the merchandise, Funai Malaysia provided quotes 
from various market economy suppliers of the same parts which showed 
that the prices recorded in the normal books and records closely 
approximated market values.
    The petitioners have requested that, in applying the major input 
rule under section 773(f)(3) of the Act, the Department disregard the 
Hong Kong affiliate's actual costs as recorded in its books and records 
and instead determine the costs incurred in the PRC using a factors of 
production approach. Specifically, the petitioners assert that the Hong 
Kong affiliate and its subcontractor are themselves affiliated by 
virtue of an exclusive supply relationship between the two entities, 
and thus the Department is required to rely on surrogate values for 
labor and overhead incurred by the Chinese subcontractor, as well as 
for those transactions where raw material inputs are transferred from 
Chinese suppliers to the Chinese subcontractor through Funai Hong Kong.
    We find that there is no legal basis to adopt the petitioner's 
approach, given that the Act directs the Department to employ a factors 
of production methodology only in cases involving non-market economy 
producers. In contrast, in cases involving market economy producers, 
section 773(f)(1)(A) of the Act requires the Department to calculate 
costs on the basis of a company's financial records, provided that such 
records are maintained in accordance with generally accepted accounting 
principles (GAAP) and reasonably reflect the costs associated with the 
production and sale of the merchandise. See Certain Welded Carbon Steel 
Pipes and Tubes From Thailand: Final Results of Antidumping Duty 
Administrative Review, 64 FR 56759-02 (Oct. 21, 1999); see also Notice 
of Final Results of Antidumping Duty Administrative Review and 
Determination Not To Revoke the Antidumping Duty Order: Brass Sheet and 
Strip From the Netherlands, 65 FR 742 (Jan. 6, 2000).
    In accordance with our practice and 19 CFR 351.401(h), in this case 
we find that the Hong Kong company is the producer of the PCBs in 
question because it provides the design of the PCB, purchases all of 
the raw materials necessary to produce it, arranges for the conversion 
of these materials into the finished product, and then controls the 
relevant sale to Funai Malaysia. See, e.g., Remand Redetermination: 
Static Random Access Memory Semiconductors from Taiwan (June 30, 2000); 
Notice of Final Determination of Sales at Less Than Fair Value: 
Polyvinyl Alcohol From Taiwan, 61 FR 14064, 14070 (Mar. 29, 1996); 
Notice of Final Determination of Sales at Less Than Fair Value. Certain 
Forged Stainless Steel Flanges from India, 58 FR 68853, 68855 (Dec. 29, 
1993). Therefore, we have looked to the books and records of the Hong 
Kong affiliate to determine the cost of the PCB, rather than to the 
books and records of the PRC subcontractor.
    In addition, we have examined the information on the record 
regarding the relationship between Funai Malaysia and its subcontractor 
and preliminarily find that these companies are not affiliated within 
the meaning of section 771(33) of the Act. Specifically, we find that 
there is no cross-ownership in these entities, and that neither Funai 
Malaysia nor Funai Hong Kong is in a position to exercise control or 
restraint over the subcontractor. Rather, the subcontractor has 
numerous manufacturing facilities in the PRC, not all of which assemble 
PCBs, and it makes a variety of other products. See Funai Malaysia's 
October 14, 2003, submission at pages 10-11 and Exhibit 1. 
Additionally, we find that the subcontractor is not in a position to 
exercise control or restraint over Funai Hong Kong, as the technical 
know-how, designs, and equipment needed to manufacture the PCBs are all 
owned and controlled by Funai Hong Kong. Moreover, Funai Hong Kong and 
the subcontractor have not entered into formal exclusive supplier 
arrangements which would prohibit this company from sourcing its PCB 
assembly elsewhere or the subcontractor from assembling merchandise for 
other producers. Thus, we find that the indicia of control necessary to 
find these parties affiliated are not present here.
    Given these factual conclusions, we disagree with the petitioners 
that it would be appropriate to determine the cost of producing the 
PCBs using a factors of production methodology based on the production 
experience of the subcontractor because the Chinese subcontractor is 
not the ``producer'' of the PCB and, thus, the subcontracting services 
provided by this entity merely represents one of the inputs into the 
final PCB product. In any event, we disagree with the petitioners that, 
even assuming that these parties were deemed to be affiliated, it would 
be appropriate to collect factors data from the subcontractor because 
the assembly operations constitute a minor portion of the total cost of 
the CTV (and thus the major input rule does not apply to the assembly 
operations).
    Because the Hong Kong company is the producer of the PCB and the 
Department treats Hong Kong as a market economy, the statute directs us 
to use the company's recorded costs unless they are not consistent with 
GAAP or do not reasonably reflect the costs of production or sale. The 
Department may find that a respondent's costs recorded in its normal 
books and records do not reasonably reflect the costs of the 
merchandise where the costs are allocated to the merchandise under 
consideration in a manner which distort the dumping analysis. See, 
e.g., Final Determination of Sales at Less Than Fair Value: Oil Country 
Tubular Goods From Argentina, 60 FR 33539, 33547 (June 28, 1995); and 
Elemental Sulphur From Canada; Final Results of Antidumping Finding 
Administrative Review, 61 FR 8239, 8241-8243 (Mar. 4, 1996). While the 
Hong Kong company made purchases from unaffiliated PRC suppliers, these 
purchases were made in a market economy (i.e., Hong Kong) by a market-
economy entity which maintains that its books and records are kept in 
accordance with Hong Kong GAAP. Thus, we preliminarily find that its 
purchases from PRC entities reasonably reflect the costs associated 
with the production and sale of a PCB. Therefore, in determining the 
cost of the PCBs under the major input rule for purposes of the 
preliminary determination, we have relied upon the costs stated in this 
company's normal books and records.

Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Tariff Act, we based NV 
on CV because there was no viable home or third-country market.
    For comparisons to EP, we made circumstances-of-sale adjustments by 
deducting home market direct selling expenses and adding U.S. direct 
selling expenses. We made no adjustment for differences in credit 
expenses between markets because we had inadequate information to do 
so.

[[Page 66815]]

    When we compared CV to CEP, we deducted from CV the weighted-
average home market direct selling expenses. For a discussion of the 
calculation of these expenses, see the memorandum from Michael Strollo 
to the File entitled: Calculations Performed for Funai Electric 
(Malaysia) Sdn. Bhd. (Funai Malaysia) for the Preliminary Determination 
in the 2002-2003 Antidumping Duty Investigation of Certain Color 
Television Receivers from Malaysia, dated November 21, 2003.

Currency Conversion

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

Critical Circumstances

    On October 16, 2003, the petitioners alleged that there is a 
reasonable basis to believe or suspect critical circumstances exist 
with respect to the antidumping investigation of CTVs from Malaysia. In 
accordance with 19 CFR 351.206(c)(2)(i), because petitioners submitted 
a critical circumstances allegation more than 20 days before the 
scheduled date of the preliminary determination, the Department must 
issue its preliminary critical circumstances determination not later 
than the date of the preliminary determination.
    Section 733(e)(1) of the Act provides that the Department, upon 
receipt of a timely allegation of critical circumstances, 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 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.
    According to 19 CFR 351.206(h)(1), in determining whether imports 
of the subject merchandise have been ``massive,'' the Department 
normally will examine: (i) The volume and value of the imports; (ii) 
seasonal trends; and (iii) the share of domestic consumption accounted 
for by the imports. In addition, 19 CFR 351.206(h)(2) provides that 
``unless the imports during a ``relatively short period'' have 
increased by at least 15 percent over the imports during an immediately 
preceding period of comparable duration, the Secretary will not 
consider the imports massive.''
    In accordance with 19 CFR 351.206(i), the Department defines 
``relatively short period'' as generally the period beginning on the 
date the proceeding begins (i.e., the date the petition is filed) and 
ending at least three months later.
    In determining whether the above statutory criteria have been 
satisfied, we examined: (1) the evidence presented in the petitioners' 
submission of October 16, 2003; (2) exporter-specific shipment data 
requested by the Department; and (3) the ITC preliminary injury 
determination.
    To determine whether a history of dumping and material injury 
exists, the Department generally considers current or previous 
antidumping duty orders on the subject merchandise from the country in 
question in the United States and current orders in any other country. 
The Department will normally not consider the initiation of a case, or 
a preliminary or final determination of sales at LTFV in the absence of 
an affirmative finding of material injury by the ITC, as indicative of 
a history sufficient to satisfy this criterion. See Preliminary 
Determination of Critical Circumstances: Steel Concrete Reinforcing 
Bars From Ukraine and Moldova, 65 FR 70696 (Nov. 27, 2000). With regard 
to imports of CTVs from Malaysia, the European Union (EU) imposed 
antidumping duty measures on CTVs from Malaysia in 1995. Because there 
is a history of dumping and material injury by reason of dumped imports 
in the EU of the subject merchandise, the first criterion of the test 
for finding critical circumstances is met.
    Because we have preliminarily found that section 733(e)(1)(A) of 
the Act is met, we must consider whether under section 733(e)(1)(B) of 
the Act 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) The 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 an 
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 imports of subject merchandise have been 
massive over a relatively short period, we compared the respondent's 
export volumes for the four months before the filing of the petition 
(i.e., January through April 2003) to that during the four months after 
the filing of the petition (i.e., May through August 2003). 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 filed through the effective date of the preliminary 
determination.
    The Department requested and obtained from Funai Malaysia monthly 
shipment data for 2001, 2002, and 2003. According to its monthly 
shipment information, we found the volume of shipments of CTVs 
increased by more than 15 percent. However, in comparing the time 
series data for the two years prior to the petition (i.e., 2001 and 
2002), we note that there have also been significant surges in imports 
from Funai Malaysia between those same base and comparison periods. In 
Certain Color Television Receivers from China and Malaysia, 
Investigations Nos. 731-TA-1034 and 1035 (Preliminary), USITC Pub. No. 
3607 (ITC Prelim), the ITC indicated that subject imports of CTVs: (1) 
Account for only a small percentage of everyday sales; (2) represent 
the bulk of product advertised and sold during the holiday season; and 
(3) arrive in containers months before in preparation for the holiday 
season. See ITC Prelim at 17-18. Therefore, based on the time series 
data and the information contained in the ITC Prelim, we conclude that 
imports of CTVs are subject to seasonal trends. Moreover, our analysis 
shows that these seasonal trends account for the increase in imports 
during the time periods examined. Consequently, despite the greater 
than 15 percent increase in imports from Funai Malaysia between the 
base and comparison periods, we find that subject imports are not 
considered ``massive'' pursuant to 19 CFR 351.206(h)(1)(ii). See the 
memorandum from The CTVs Team to Louis Apple, Director, entitled: 
``Antidumping Duty Investigation of Certain Color Televisions from 
Malaysia--Preliminary Negative Determination of Critical 
Circumstances,'' (Critical Circumstances Memo) dated November 21, 2003.
    It is also the Department's practice to conduct its critical 
circumstances analysis of companies in the ``All Others'' category 
based on the experience of the investigated companies. Because we are 
determining

[[Page 66816]]

that critical circumstances do not exist for Funai Malaysia, and Funai 
Malaysia is the only respondent in this investigation, we are 
concluding that critical circumstances do not exist for companies 
covered by the ``All Others'' rate.
    In summary, we find that there is a reasonable basis to believe or 
suspect importers had knowledge of dumping and the likelihood of 
material injury with respect to CTVs from the PRC. We, however, do not 
find that there have been massive imports of CTVs over a relatively 
short period from Funai Malaysia due to seasonality. Given the analysis 
summarized above, and described in more detail in the Critical 
Circumstances Memo, we preliminarily determine that critical 
circumstances do not exist for imports of CTVs produced in and exported 
from Malaysia.

Verification

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

Suspension of Liquidation

------------------------------------------------------------------------
                                      Weighted-
                                       average
       Exporter/manufacturer            margin    Critical circumstances
                                      percentage
------------------------------------------------------------------------
Funai Electric (Malaysia) Sdn. Bhd.         0.03  No.
------------------------------------------------------------------------

    Because the estimated weighted-average dumping margin for the 
examined company is de minimis, we are not directing Customs and Border 
Protection to suspend liquidation of entries of certain color 
television receivers from Malaysia.

Disclosure

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the 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, 
pursuant to section 735(b)(3) of the Act, the ITC will determine within 
135 days after our final determination whether these imports are 
materially injuring, or threaten material injury to, the U.S. industry.

Public Comment

    Case briefs for this investigation must be submitted no later than 
seven days after the date of the final 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 10 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 no later than 135 days after 
the date of this preliminary determination, pursuant to section 
735(a)(1) of the Act.
    This determination is issued and published pursuant to sections 
733(f) and 777(i) of the Act.

    Dated: November 21, 2003.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 03-29722 Filed 11-26-03; 8:45 am]
BILLING CODE 3510-DS-P