[Federal Register Volume 69, Number 227 (Friday, November 26, 2004)]
[Notices]
[Pages 68879-68882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3339]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-825]


Sebacic Acid From the People's Republic of China: Preliminary 
Results of Changed Circumstances Review and Intent To Reinstate the 
Antidumping Duty Order

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

ACTION: Notice of preliminary results of changed circumstances review.

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SUMMARY: In November 2002, the Department of Commerce (the Department) 
revoked the antidumping duty order on sebacic acid from the People's 
Republic of China (PRC) in part with respect to subject merchandise 
exported by Tianjin Chemicals Import and Export Corporation (Tianjin) 
and produced by Hengshui Dongfeng Chemical Co., Ltd. (Hengshui). See 
Sebacic Acid From the People's Republic of China: Final Results of 
Antidumping Duty Administrative Review and Determination To Revoke 
Order in Part, 67 FR 69719, 69720 (Nov. 19, 2002) (2000-2001 Final 
Results). As the result of an adequate allegation from a domestic 
interested party in this proceeding, the Department, pursuant to 
section 751(b)(1) of the Tariff Act of 1930, as amended (the Act), is 
now conducting a changed circumstances review to determine whether 
Tianjin has resumed dumping and whether the antidumping order should be 
reinstated for subject merchandise exported by Tianjin and produced by 
Hengshui. See Sebacic Acid From the People's Republic of China: Notice 
of Initiation of Changed Circumstances Review, 69 FR 39906 (July 1, 
2004) (CCR Initiation). We preliminarily determine that Tianjin has 
sold subject merchandise at less than normal value (NV) and that the 
order should be reinstated on sebacic acid from the PRC related to 
subject merchandise exported by Tianjin and produced by Hengshui. We 
will instruct U.S. Customs and Border Protection (CBP) to suspend 
liquidation of all entries of subject merchandise exported by Tianjin 
and manufactured by Hengshui, entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register.

EFFECTIVE DATE: November 26, 2004.

FOR FURTHER INFORMATION CONTACT: Jennifer Moats or Brian Ledgerwood, 
China/NME Group, AD/CVD Operations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-5047 or (202) 482-3836, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 14, 1994, the Department published in the Federal Register 
the antidumping duty order on sebacic acid from the PRC. See 
Antidumping Duty Order: Sebacic Acid From the People's Republic of 
China, 59 FR 35909 (July 14, 1994). In the 2000-2001 administrative 
review of the order, we found that one of the respondent companies, 
Tianjin, and its supplier, Hengshui, met the requirements for 
revocation from the order under 19 CFR 351.222(b)(2) and (3). See 2000-
2001 Final Results. As part of its request for revocation, pursuant to 
19 CFR 351.222(b)(2)(i)(B), Tianjin agreed to the immediate 
reinstatement of the antidumping duty order if the Department concludes 
that, subsequent to the revocation, Tianjin sold the subject 
merchandise at less than NV. Id. Due to allegations of resumed dumping 
submitted by SST Materials, Inc. d/b/a Genesis Chemicals, Inc. 
(Genesis), we initiated a changed circumstance review on June 25, 2004, 
to determine whether Tianjin has resumed dumping and whether we should 
reinstate the antidumping order for subject merchandise produced by 
Hengshui and exported by Tianjin. See CCR Initiation. On June 25, 2004, 
we documented our analysis regarding the reasonableness of the data 
presented by Genesis in its allegations. See the June 25, 2004, 
Memorandum to the File from Greg Kalbaugh entitled ``Calculations 
Performed for Assessing the Reasonableness of SST Materials, Inc.'s 
Allegation of the Resumption of Dumping by Tianjin Chemicals Imports 
and Export Corporation and its Producer Hengshui Dongfeng Chemcials 
Co., Ltd. for the Changed Circumstances Review of Sebacic Acid from the 
PRC.'' On June 30, 2004, we issued a questionnaire to Tianjin; a 
response was received on August 18, 2004. Based on our review of the 
response, we preliminarily determine that Tianjin sold the subject 
merchandise at less than NV during the July 1, 2002, through June 30, 
2003, period of review.

Scope of the Review

    The products covered by this order are all grades of sebacic acid, 
a dicarboxylic acid with the formula 
(CH2)8(COOH)2, which include but are not limited 
to CP Grade (500 ppm

[[Page 68880]]

maximum ash, 25 maximum APHA color), Purified Grade (1000 ppm maximum 
ash, 50 maximum APHA color), and Nylon Grade (500 ppm maximum ash, 70 
maximum ICV color). The principle difference between the grades is the 
quantity of ash and color. Sebacic acid contains a minimum of 85 
percent dibasic acids of which the predominant species is the 
C10 dibasic acid. Sebacic acid is sold generally as a free-
flowing powder/flake.
    Sebacic acid has numerous industrial uses, including the production 
of nylon 6/10 (a polymer used for paintbrush and toothbrush bristles 
and paper machine felts), plasticizers, esters, automotive coolants, 
polyamides, polyester castings and films, inks and adhesives, 
lubricants, and polyurethane castings and coatings.
    Sebacic acid is currently classifiable under subheading 
2917.13.00.30 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheading is provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding is dispositive.

Basis for Reinstatement

    Section 351.222(b)(2) of the Department's regulations provides that 
the Department may revoke an antidumping duty order, in part, if the 
Secretary concludes, inter alia, that one or more exporters or 
producers covered by the order have sold the merchandise at not less 
than NV for a period of at least three consecutive years. To obtain a 
company-specific revocation under section 351.222(b)(2) for any 
exporter or producer which the Department determined previously to have 
sold the subject merchandise at less than NV, that exporter or producer 
must agree to immediate reinstatement in the antidumping duty order if 
the Department concludes that, subsequent to the revocation, that 
exporter or producer sold the subject merchandise at less than NV. See 
19 CFR 351.222(b)(2)(i)(B). In addition, section 351.222(b)(3) provides 
that, for any exporter that is not a producer of subject merchandise, 
the Department will normally revoke the order only with respect to 
subject merchandise produced or supplied by those companies that 
supplied the exporter. Thus, under the Department's regulations, as 
long as an antidumping duty order remains in force, an entity 
previously granted a revocation may be reinstated under that order if 
it is established that the entity has resumed the dumping of subject 
merchandise.
    In this case, because another exporter in the PRC remains subject 
to the antidumping duty order on sebacic acid from the PRC, the order 
remains in effect, and the exporter-producer combination of Tianjin and 
Hengshui can be reinstated in the order. See 2000-2001 Final Results. 
Tianjin was found to have sold the subject merchandise at less than NV 
previously. See Sebacic Acid From the People's Republic of China: Final 
Results of Antidumping Duty Administrative Review, 64 FR 69503 
(December 13, 1999) (1997-1998 Final Results). Accordingly, after the 
exporter-producer combination of Tianjin and Hengshui met the 
revocation requirements under 351.222(b) of the Department's 
regulations, the Department granted Tianjin revocation based upon its 
agreement to immediate reinstatement in the antidumping duty order if 
the Department were to find that the company resumed dumping of sebacic 
acid from the PRC. See 2000-2001 Final Results at 69720.
    As described in the ``Export Price'' and ``Normal Value'' sections, 
below, we have examined Tianjin's response and have preliminarily found 
that Tianjin's dumping margin for the review period is greater than de 
minimis.

Separate Rates

    We initiated this changed circumstance review for the sole purpose 
of determining whether Tianjin has resumed dumping of sebacic acid from 
the PRC. We did not require Tianjin to answer questions related to 
separate rates because no administrative review has been initiated that 
would require Tianjin to substantiate a de facto and de jure absence of 
government control of its export activities and no interested party in 
this review has made an allegation that Tianjin is not eligible for a 
separate rate. Additionally, we found in the 2000-2001 administrative 
review that Tianjin was a company that merited a separate rate. See 
2000-2001 Final Results. Thus, we did not examine the issue of whether 
Tianjin continues to merit a separate rate absent information 
indicating otherwise. Accordingly, we will examine Tianjin's 
entitlement to a separate rate in the context of any future 
administrative review in which Tianjin may participate.

Export Price

    We calculated export price (EP) in accordance with section 772(a) 
of the Act because the subject merchandise was sold directly to the 
first unaffiliated purchaser in the United States prior to importation 
and constructed-export-price methodology was not otherwise warranted. 
As appropriate, we calculated EP based on packed, free-on-board, PRC-
port prices to unaffiliated purchasers in the United States. We 
deducted from the starting price amounts for foreign inland truck 
freight and foreign brokerage and handling. As these movement services 
were provided by nonmarket-economy (NME) suppliers, we valued them 
using surrogate values from Indian suppliers. For further discussion of 
our use of surrogate data in an NME proceeding, as well as the 
selection of India as the appropriate surrogate country, see the 
``Normal Value'' section of this notice, below.
    For foreign inland freight, we obtained publicly available 
information which was published in the October 2002 through March 2003 
editions of Chemical Weekly. For foreign brokerage and handling 
expenses, we used a publicly summarized version of the average value 
for brokerage and handling expenses reported in the Final Determination 
of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat 
Products from India, 67 FR 50406 (Oct. 3, 2001), and used in the 2000-
2001 administrative review of freshwater crawfish tail meat from the 
PRC. See the Memorandum to the File from Jennifer Moats entitled 
``Preliminary Valuation of Factors of Production for the Preliminary 
Results of the 2002-2003 Changed Circumstances Review of Sebacic Acid 
from the People's Republic of China,'' dated November 15, 2004 (FOP 
Memo). We inflated the per-kilogram price (in rupees) to the POR using 
wholesale price index (WPI) data from the International Monetary Fund 
(IMF). For further discussion, see the FOP Memo, which is on the record 
of this review and is on file in the Central Records Unit (CRU), Room 
B-099 of the main Commerce building.

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 are at a level of economic 
development comparable to that of the NME country and are significant 
producers of comparable merchandise.
    For purposes of the most recent administrative review of the 
antidumping duty order on sebacic acid, we found that India is a 
producer of oxalic acid, a product comparable to sebacic acid. See 
2000-2001 Final Results. For purposes of the preliminary results, we 
continue to find that India is

[[Page 68881]]

a significant producer of oxalic acid. See the November 15, 2004, 
Memorandum to the File from Jennifer Moats entitled ``Oxalic Acid 
Production in India During the Period of Review,'' which is on the 
record of this review and is on file in the CRU, Room B-099 of the main 
Commerce building. Accordingly, as India is at a level of economic 
development comparable to that of the PRC and a significant producer of 
a product comparable to the subject merchandise, we find that India 
fulfills both statutory requirements for use as a surrogate country and 
have continued to use India as the surrogate country in this 
administrative review. Accordingly, we have calculated NV using Indian 
surrogate values for the PRC producer's factors of production. We have 
obtained and relied upon publicly available information wherever 
possible.

B. Factors of Production

    In accordance with 19 CFR 351.408(c)(1), the Department will 
normally use publicly available information to value the factors of 
production. The Department's regulations also provide that, where a 
producer purchases an input from a market-economy supplier and pays for 
it in a market-economy currency, the Department employs the actual 
price paid for the input to the market-economy supplier to calculate 
the factors-based NV. Id.; see also Lasko Metal Products v. United 
States, 43 F. 3d 1442, 1445-1446 (Fed. Cir. 1994).
    In accordance with section 773(c) of the Act, we calculated NV 
based on the factors of production for the POR which Tianjin reported. 
To calculate NV, we multiplied the reported per-unit factor quantities 
by publicly available Indian surrogate values. Factors of production 
include, but are not limited to the following elements: (1) Hours of 
labor required; (2) quantities of raw materials employed; (3) amounts 
of energy and other utilities consumed; (4) representative capital 
cost, including depreciation. In examining surrogate values, we 
selected, where possible, the publicly available value which was an 
average non-export value, representative of a range of prices within 
the POR or most contemporaneous with the POR, product-specific, and 
tax-exclusive. For a more detailed explanation of the methodology used 
in calculating various surrogate values, see the FOP Memo.
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. For those Indian rupee 
values not contemporaneous with the POR, we adjusted for inflation 
using wholesale price indices for India published in the International 
Monetary Fund's International Financial Statistics. We also used these 
surrogate values in the preliminary results of the 2002-2003 
administrative review of the antidumping duty order on sebacic acid 
from the PRC. See the July 30, 2004, Memorandum to the File from 
Gregory Kalbaugh entitled ``Preliminary Valuation of Factors of 
Production,'' which is on the record of the 2002-2003 administrative 
review of the antidumping duty order on sebacic acid from the PRC and 
is on file in the CRU. In accordance with this methodology, we valued 
the factors of production as follows:
    To value caustic soda, cresol, phenol, sulfuric acid, and zinc 
oxide, we obtained information from the Indian publication Chemical 
Weekly. Where necessary, we adjusted the values reported in Chemical 
Weekly to exclude sales and excise taxes. To value activated carbon, 
inner polyethylene bags, woven plastic bags, jumbo plastic bags, and 
bag-closing thread, we obtained import prices from the Government of 
India's Department of Commerce Import/Export Data for the period April 
2002 through March 2003. To value steam coal, we obtained import prices 
from the Monthly Statistics of the Foreign Trade of India (MSFTI) and 
from in the World Trade Atlas for the period April 2002 through March 
2003.
    Consistent with the methodology we have employed in previous 
administrative reviews, we have determined that capryl alcohol is a co-
product and have allocated the factor inputs based on the relative 
surrogate values for this product and sebacic acid. See 2000-2001 Final 
Results. Additionally, we have used the production times necessary to 
complete each production stage of sebacic acid as a basis for 
allocating the amount of labor, energy usage, and factory overhead 
among the co-product(s). This treatment of co-products is consistent 
with generally accepted accounting principles. See Cost Accounting: A 
Managerial Emphasis (1991) at pages 528-533. To value capryl alcohol, 
we used data published in Government of India's Department of Commerce 
Import/Export Data.
    Consistent with the methodology we employed in the 2000-2001 Final 
Results, we have determined that fatty acid and glycerine are by-
products. Because they are by-products, we subtracted the sales revenue 
of fatty acid and glycerine from the estimated production costs of 
sebacic acid. This treatment of by-products is also consistent with 
generally accepted accounting principles. See Cost Accounting: A 
Managerial Emphasis (1991) at pages 539-544. To value glycerine, we 
used data published in Chemical Weekly. Consistent with our calculation 
methodology in past segments of this proceeding, we allocated this 
offset between sebacic acid and capryl alcohol based on the ratio of 
the value of sebacic acid to the total value of both sebacic acid and 
capryl alcohol prior to applying the by-product offset for glycerine. 
See 2000-2001 Final Results. To value fatty acid, we used data 
published in Government of India's Department of Commerce Import/Export 
Data.
    To value electricity, we used data from the International Energy 
Agency's Key World Energy Statistics 2003 report. For further 
discussion, see the FOP Memo.
    We made adjustments to account for freight costs between the 
suppliers and the respective manufacturing facilities for each of the 
factors of production identified above. In accordance with our 
practice, for inputs for which we used cost-insurance-freight import 
values from India, we calculated a surrogate freight cost using the 
shorter of the reported distances either from the closest PRC ocean 
port to the factory or from the domestic supplier to the factory. See 
Final Determination of Sales at Less Than Fair Value: Certain Cut-to-
Length Carbon Steel Plate From the People's Republic of China, 62 FR 
61964, 61977 (Nov. 20, 1997); see also Sigma Corp. v. United States, 
117 F.3d 1401, 1407-1408 (Fed. Cir. 1997).
    For truck freight, we obtained publicly available information which 
was published in the October 2002 through March 2003 editions of 
Chemical Weekly. See the FOP Memo. To value rail freight, we relied 
upon price quotes obtained from Indian rail freight companies in 
November 1999. The Department used these quotes in the investigation of 
bulk aspirin from the PRC and the 1999-2000 administrative review of 
tapered roller bearings from the PRC. See Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Bulk Aspirin From the 
People's Republic of China, 65 FR 116, 119 (Jan. 3, 2000); and Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From the 
People's Republic of China: Preliminary Results of 1999-2000 
Administrative Review, Partial Rescission of Review, and Notice of 
Intent Not To Revoke Order in Part, 66 FR 35937, 35941 (July 10, 2001). 
We averaged these quotes and then inflated this average value to be 
contemporaneous with the POR using the WPI data published by the IMF.

[[Page 68882]]

    We valued labor based on a regression-based wage rate in accordance 
with 19 CFR 351.408(c)(3). This information is available on the 
Department's Web site at http://www.ia.ita.doc.gov/wages/01wages/01wages.html.
    To value factory overhead, selling, general, and administrative 
expenses, and profit, we used rates based on data obtained from the 
Reserve Bank of India Bulletin.

Preliminary Results of Review

    We preliminarily determine that the following margin exists for the 
period July 1, 2002, through June 30, 2003:

Manufacturer/Exporter

------------------------------------------------------------------------
                                                                Margin
                                                               (percent)
------------------------------------------------------------------------
Tianjin Chemicals Import and Export Corporation and produced      36.74
 by Hengshui Dongfeng Chemical Co., Ltd.....................
------------------------------------------------------------------------

    The Department will disclose to parties the calculations performed 
in connection with these preliminary results within ten days of the 
date of publication of this notice. Interested parties may request a 
hearing within 30 days of the publication. Any hearing, if requested, 
will be held 44 days after the publication of this notice or the first 
workday thereafter. Interested parties may submit case briefs not later 
than 30 days after the date of publication of this notice. Rebuttal 
briefs, limited to issues raised in the case briefs, may be filed not 
later than 37 days after the date of publication of this notice. 
Interested parties are also reminded that they have until 20 days after 
the date of publication of this notice to submit any surrogate-value 
information that they would like the Department to consider in the 
course of this review.
    As these are preliminary results, the Department may still come to 
a conclusion that Tianjin has not resumed dumping. Since we have 
preliminarily established that sebacic acid produced by Hengshui and 
exported by Tianjin is being sold at less than NV, the antidumping duty 
order is hereby provisionally reinstated, and we will instruct CBP to 
suspend liquidation of all entries of subject merchandise exported by 
Tianjin and manufactured by Hengshui entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. Furthermore, a cash-deposit requirement 
of 36.74 percent will be in effect for all shipments of the subject 
merchandise produced by Hengshui and exported by Tianjin that are 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date of this notice. This requirement shall remain in 
effect until publication of the final results of the next 
administrative review unless the Department finds that Tianjin has not 
resumed dumping in the final results of this changed circumstance 
review.
    The Department will complete this review within 270 days of the 
date on which it initiated the changed circumstances review (i.e., 
March 28, 2005). In accordance with 19 CFR 351.216(e), the final 
results of the changed circumstance review will set forth the factual 
and legal conclusions upon which our results are based and a 
description of any action proposed based on those results. This notice 
is in accordance with section 751(b)(1) of the Act and 19 CFR 351.216 
and 351.222.

    Dated: November 15, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. E4-3339 Filed 11-24-04; 8:45 am]
BILLING CODE 3510-DS-P