02-1791. Notice of Preliminary Results of Antidumping Duty New Shipper Review: Petroleum Wax Candles from the People's Republic of China

ACTION:

Import Administration, International Trade Administration, Department of Commerce

SUMMARY:

The Department of Commerce (the Department) is conducting a new shipper review of the antidumping duty order on petroleum wax candles from the People's Republic of China (PRC) in response to a request from Shanghai New Star Im/Ex Co., Ltd. (New Star). The review covers the period August 1, 2000 through January 31, 2001.

We preliminarily determine that sales have been made below normal value (NV). The preliminary results are listed below in the section titled “Preliminary Results of Review.” If these preliminary results are adopted in our final results, we will instruct the U.S. Customs Service to assess antidumping duties based on the difference between the export price (EP) and NV. Interested parties are invited to comment on these preliminary results. (See the “Preliminary Results of Review” section of this notice.)

EFFECTIVE DATE:

January 24, 2002.

FOR FURTHER INFORMATION CONTACT:

Matthew Renkey or Javier Barrientos, Office of AD/CVD Enforcement VII, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: [phone] or [phone], respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Act) are to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act. In addition, unless otherwise indicated, all citations to the Department's regulations are to 19 CFR part 351 (2000).

Background

The Department published in the Federal Register an antidumping duty order on petroleum wax candles from the PRC on August 28, 1986 (51 FR 30686). On February 28, 2001 the Department received, in accordance with section 751(a)(2)(B) of the Act and section 351.214(c) of the Department's regulations, a timely request from New Star to conduct a new shipper review of the antidumping duty order on petroleum wax candles from the PRC. On March 28, 2001 the Department published its initiation of this new shipper review for the period August 1, 2000 through January 31, 2001 (66 FR 16903). On August 27, 2001 the Department published an extension of the deadline for completion of the preliminary results of this new shipper review until January 15, 2002 (66 FR 45005).

This new shipper request was made pursuant to section 751(a)(2)(B) of the Act and section 351.214(b) of the Department's regulations, which state that, if the Department receives a request for review from an exporter or producer of the subject merchandise stating that it did not export the merchandise to the United States during the period covered by the original investigation (the POI) and that such exporter or producer is not affiliated with any exporter or producer who exported the subject merchandise during that period, the Department shall conduct a new shipper review to establish an individual weighted-average dumping margin for such exporter or producer, if the Department has not previously established such a margin for the exporter or producer.

The regulations require that the exporter or producer shall include in its request, with appropriate certifications: (i) The date on which the merchandise was first entered, or withdrawn from warehouse, for consumption, or, if it cannot certify as to the date of first entry, the date on which it first shipped the merchandise for export to the United States, or if the merchandise has not yet been shipped or entered, the date of sale; (ii) a list of the firms with which it is affiliated; (iii) a statement from such exporter or producer, and from each affiliated firm, that it did not, under its current or a former name, export the merchandise during the POI; and (iv) in an antidumping proceeding involving inputs from a non-market-economy (NME) country, a certification that the export activities of such exporter or producer are not controlled by the central government. See section 351.214(b)(2) of the Department's regulations.

New Star submitted the information and certifications establishing the effective date on which this company first shipped and entered petroleum wax candles for consumption in the United States, the volume of its shipment, and the date of first sale to an unaffiliated customer in the United States. New Star certified that it was not affiliated with any company which exported petroleum wax candles from the PRC during the POI. In addition, New Star certified that its export activities are not controlled by the central government.

Scope of Review

The products covered by this order are certain scented or unscented petroleum wax candles made from petroleum wax and having fiber or paper-cored wicks. They are sold in the following shapes: tapers, spirals, and straight-sided dinner candles; rounds, columns, pillars, votives; and various wax-filled containers. The products were classified under the Tariff Schedules of the United States (TSUS) item 755.25, Candles and Tapers. The products are currently classified under the Harmonized Tariff Schedule of the United States (HTSUS) item 3406.00.00. Although the HTSUS subheading is provided for convenience and customs purposes, our written description of the scope of this proceeding remains dispositive.

Verification

As provided in section 782(i) of the Act, we conducted verifications of the questionnaire responses of both New Star and its U.S. importer, Peak Candles, LLC (Peak Candle). We used standard verification procedures, including on-site inspection of the manufacturer's facilities and the examination of relevant sales and financial records. Our verification results are outlined in the public versions of the verification reports, which are on file in the Central Records Unit (room B099 of the Main Commerce Building).

New Shipper Status

Based on the questionnaire responses received from New Star and Peak Candle, and our verifications thereof, we preliminarily determine that New Star has met the requirements to qualify as a new shipper during the POR. We have determined that the company made its first sale or shipment of subject merchandise to the United States during the POR, that this sale was a bona fide sale, and that this company was not affiliated with any exporter or producer that previously shipped to the United States during the POI.

Separate Rates

New Star has requested a separate, company-specific rate. In its questionnaire responses, the company states that it is an independent legal entity.

To establish whether a company operating in a non-market economy (NME) country is sufficiently independent to be entitled to a separate rate, the Department analyzes each exporting entity under the test established in Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991), as amplified by Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994). Under this policy, exporters in NMEs are entitled to separate, company-specific margins when they can demonstrate an absence of government control, both in law and in fact, with respect to export activities. Evidence supporting, though not requiring, a finding of de jure absence of government control over export activities includes: (1) An absence of restrictive stipulations associated with an individual exporter's business and export licenses; (2) any legislative enactments decentralizing control of companies; and (3) any other formal measures by the government decentralizing control of companies. De facto absence of government control over exports is based on four factors: (1) Whether each exporter sets its own export prices independently of the government and without the approval of a government authority; (2) whether each exporter retains the proceeds from its sales and makes independent decisions regarding the disposition of profits or financing of losses; (3) whether each exporter has the authority to negotiate and sign contracts and other agreements; and (4) whether each exporter has autonomy from the government regarding the selection of management.

De Jure Control

With respect to the absence of de jure government control over the export activities of the company reviewed, evidence on the record indicates that New Star's export activities are not controlled by the government. New Star submitted evidence of its legal right to set prices independently of all government oversight. The business license of the company indicates that it is permitted to engage in the exportation of candles. We find no evidence of de jure government control restricting this company's exportation of candles.

The following laws, which have been placed on the record of this review, indicate a lack of de jure government control over privately-owned companies, such as New Star, and that control over these enterprises rests with the enterprises themselves. The Administrative Regulations of the People's Republic of China Governing the Registration of Enterprises as Legal Persons, issued on June 3, 1988 by the State Council of the PRC, the Company Law of the People's Republic of China, issued on December 29, 1993 by the National People's Congress, the Regulations of the People's Republic of China for Controlling the Registration of Enterprises as Legal Persons, promulgated by the State Administration for Industry and Commerce on June 13, 1988, and the General Principles of the Civil Law of the People's Republic of China, effective on January 1, 1987, all placed on the record of this review, provide that, to qualify as legal persons, companies must have the “ability to bear civil liability independently” and the right to control and manage their businesses. These regulations also state that, as an independent legal entity, a company is responsible for its own profits and losses. See Notice of Final Determination of Sales at Less Than Fair Value: Manganese Metal from the People's Republic of China, 60 FR 56045 (November 6, 1995) (Manganese Metal). At verification, we saw that the business license for New Star was granted in accordance with these laws. Therefore, we preliminarily determine that there is an absence of de jure control over export activity with respect to this firm.

De Facto Control

With respect to the absence of de facto control over export activities, the information provided in the questionnaire responses, and reviewed at verification, indicates that the management of New Star is responsible for the determination of export prices, profit distribution, marketing strategy, and contract negotiations. Our analysis indicates that there is no government involvement in the daily operations or the selection of management for this company. In addition, we have found that the respondent's pricing and export strategy decisions are not subject to any outside entity's review or approval, and that there are no governmental policy directives that affect these decisions.

There are no restrictions on the use of export earnings. The company's general manager has the right to negotiate and enter into contracts, and may delegate this authority to employees within the company. There is no evidence that this authority is subject to any level of governmental approval. New Star has stated that its management is selected by its board of directors and/or its employees and that there is no government involvement in the selection process. Lastly, decisions made by respondent concerning purchases of subject merchandise from other suppliers are not subject to government approval. Consequently, because evidence on the record indicates an absence of government control, both in law and in fact, over its export activities, we preliminarily determine that New Star is eligible for a separate rate for purposes of this review.

Normal Value Comparisons

To determine whether respondent's sales of the subject merchandise to the United States were made at prices below NV, we compared the United States prices to NV, as described in the “United States Price” and “Normal Value” sections of this notice.

United States Price

For New Star, we based United States price on EP, in accordance with section 772(a) of the Act, because the first sale to an unaffiliated purchaser was made prior to importation, and constructed export price (CEP) was not otherwise warranted by the facts on the record. See, the memorandum entitled Analysis of the Relationship and Treatment of Sale between Shanghai New Star Im/Ex Co., Ltd. (New Star) and Peak Candles, LLC (Peak Candle), January 15, 2002. We calculated EP based on the packed price from the exporter to the first unaffiliated purchaser in the United States. We deducted foreign inland freight, foreign inland insurance, and international freight expenses from the starting price (gross unit price) in accordance with section 772(c) of the Act.

Normal Value

Section 773(c)(1) of the Act provides that the Department shall determine NV using a factors-of-production methodology if (1) the merchandise is exported from an NME country, and (2) available information does not permit the calculation of NV using home-market prices, third-country prices, or constructed value under section 773(a) of the Act.

In every case conducted by the Department involving the PRC, the PRC has been treated as an NME country. Pursuant to section 771(18)(C)(i) of the Act, any determination that a foreign country is an NME country shall remain in effect until revoked by the administering authority. None of the companies contested such treatment in this review. Accordingly, we have applied surrogate values to the factors of production to determine NV. See Factor Values Memo for the Preliminary Results of the Antidumping Duty New Shipper Review of Petroleum Wax Candles from the People's Republic of China, January 15, 2002 (Factor Values Memo).

We calculated NV based on factors of production in accordance with section 773(c)(4) of the Act and section 351.408(c) of our regulations. Consistent with numerous other cases involving the PRC, we determined that India (1) is comparable to the PRC in level of economic development, and (2) is a significant producer of comparable merchandise. See the November 27, 2001 memo from the Office of Policy regarding surrogate country selection for this review and the Factor Values Memo. We valued the factors of production using publicly available information from India. We adjusted the Indian input prices by adding freight expenses to reflect delivered prices. At verification we found that New Star had not reported in its questionnaire responses factor information for several factors, including water, scent, additive and plaster. Because these factors are a relatively minor part of the production process for candles, we gathered information at verification to use as the basis for including these factors in the calculation of NV. Thus, the information gathered at verification for these factors is being used as facts available (FA) in accordance with section 776(a) of the Act and section 351.308 of the Department's regulations.

We valued the factors of production as follows:

To value petroleum wax, we used the average Indian price for paraffin wax derived from rates published in Chemical Weekly for the second quarter 2000 (IIQ00), as found in petitioner's August 17, 2001 Surrogate Value Submission in the 1999-2000 administrative review of Sulfanilic Acid from the PRC. We selected the price quotes from the IIQ00 because that period represents the most recent complete quarter available from that submission. This price was adjusted on a tax-exclusive basis to account for the Indian excise tax of 16 percent and has been inflated through the POR.

To value wicks, we used the average Indian import price for HTS number 5908 from the February 2001 issue of the Monthly Statistics of Foreign Trade of India (Monthly Statistics), which includes data for the period April 2000-February 2001. For this unit value, we divided the total import value, less the value of imports from NME countries, by the total import quantity, less the quantity from NME countries. Since most months from this period overlap with the POR, we did not adjust for inflation or deflation.

To value color, we used the average Indian import price for HTS numbers 3204.1121 and 3204.1129 from the February 2001 issue of the Monthly Statistics, which includes data for the period April 2000-February 2001. These HTS numbers are for red and pink dyes, which were the colors used by New Star's producer. For this unit value, we divided the total import value, less the value of imports from NME countries, by the total import quantity, less the quantity from NME countries. Since most months from this period overlap with the POR, we did not adjust for inflation or deflation.

To value additive (stearic acid), we used the average Indian import price for HTS number 2915.7003 from the February 2001 issue of the Monthly Statistics of Foreign Trade of India (Monthly Statistics), which includes data for the period April 2000-February 2001. For this unit value, we divided the total import value, less the value of imports from NME countries, by the total import quantity, less the quantity from NME countries. Since most months from this period overlap with the POR, we did not adjust for inflation or deflation.

To value scent, we used the average Indian import price for HTS number 3302.9002 from the February 2001 issue of the Monthly Statistics of Foreign Trade of India (Monthly Statistics), which includes data for the period April 2000-February 2001. For this unit value, we divided the total import value, less the value of imports from NME countries, by the total import quantity, less the quantity from NME countries. Since most months from this period overlap with the POR, we did not adjust for inflation or deflation.

To value plaster, we used the average Indian import price for HTS number 2520.2001 from the February 2001 issue of the Monthly Statistics of Foreign Trade of India (Monthly Statistics), which includes data for the period April 2000-February 2001. For this unit value, we divided the total import value, less the value of imports from NME countries, by the total import quantity, less the quantity from NME countries. Since most months from this period overlap with the POR, we did not adjust for inflation or deflation.

To value coal and electricity, we used data reported as the average Indian domestic prices within the categories of “Steam Coal for Industry” and “Electricity for Industry,” published in the International Energy Agency's publication, Energy Prices and Taxes, First Quarter, 2000. We adjusted the cost of coal to include an amount for transportation. For water, we relied upon public information from the October 1997 Second Water Utilities Data Book: Asian and Pacific Region, published by the Asian Development Bank.

To achieve comparability of energy and water prices to the factors reported for the company under review, we adjusted these factor values to reflect inflation through the POR using the Wholesale Price Index (WPI) for India, as published in the 2001 International Financial Statistics (IFS) by the International Monetary Fund (IMF).

To value packing materials (plastic bags, cardboard boxes and adhesive tape), we relied upon Indian import data from the April 2000 through February 2001 issues of Monthly Statistics of the Foreign Trade of India (Monthly Statistics). We did not adjust these prices to reflect inflation to the candles processing season during the POR because most months from this period overlap with the POR. We adjusted the values of packing materials to include freight costs incurred between the supplier of the packing materials and the factory. For transportation distances used in the calculation of freight expenses on packing materials, we added, to surrogate values from India, a surrogate freight cost using the distance between the domestic supplier and the factory. See Notice of Final Determination of Sales at Less Than Fair Value: Collated Roofing Nails From the People's Republic of China, 62 FR 51410 (October 1, 1997) (Roofing Nails).

To value factory overhead, selling, general, and administrative expenses (SG&A), and profit, we used information reported in the January, 1997 Reserve Bank of India Bulletin, “Statement 1 - Combined Income, Value of Production, Expenditure and Appropriation Accounts, Industry Group-wise” of that report for the Indian metals and chemicals (and products thereof) industries.

For labor, we used the PRC regression-based wage rate at Import Administration's home page, Import Library, Expected Wages of Selected NME Countries, revised in September 2001. See http://ia.ita.doc.gov/​wages/​. Because of the variability of wage rates in countries with similar per capita gross domestic products, section 351.408(c)(3) of the Department's regulations requires the use of a regression-based wage rate. The source of these wage rate data on the Import Administration's web site is the Yearbook of Labour Statistics 2000, International Labour Office (Geneva: 2000), Chapter 5B: Wages in Manufacturing.

We valued movement expenses as follows:

To value truck freight expenses, we used the average of seventeen price quotes from six different Indian trucking companies which were used in the antidumping investigation of Bulk Aspirin from the People's Republic of China, 65 FR 33805 (May 25, 2000). We adjusted the rates to reflect inflation to the month of sale of the finished product using the WPI for India from the IFS.

To value inland insurance, we used data available on our website's index of factor values at http://ia.ita.doc.gov/​factorv/​prc/​insuranc.htm. The published rate of Rs. 133.75/mt was inflated through the POR and converted to a per kilogram rate.

To value domestic ocean freight, we used data available on our website's index of factor values at http://ia.ita.doc.gov/​factorv/​prc/​freight.htm. The published rate of $0.17/kg was inflated through the POR.

To value international ocean freight, we used freight quotes from the first administrative and new shipper reviews of crawfish tail meat from the PRC (See Memorandum to the File from Mike Strollo to Maureen Flannery: Ocean Freight Rates for the New Shipper and Administrative Reviews of Freshwater Crawfish Tail Meat from the People's Republic of China, dated September 29, 1999). These quotes were the most contemporaneous to the POR that we were able to locate. For additional values, we used freight quotes from Maersk/Sea Land and Transoceanic Shipping Co., Inc. See Memorandum to the File from Scott Lindsay to Maureen Flannery: Ocean Freight Rates for the New Shipper and Administrative Reviews of Freshwater Crawfish Tail Meat from the People's Republic of China, dated September 29, 2000). Ocean freight rates from Sea Land Services have been obtained and applied in previous investigations, such as Saccharin from the People's Republic of China, 59 FR 58818 (November 15, 1994), Coumarin from the People's Republic of China, 59 FR 66895 (December 2, 1994) and Persulfates. All ocean freight surrogate values have been adjusted for inflation through the POR.

Currency Conversion

We made currency conversions pursuant to §351.415 of the Department's regulations at the rates certified by the Federal Reserve Bank. See http://ia.ita.doc.gov/​exchange/​index.html.

Preliminary Results of Review

We preliminarily determine that the following dumping margin exists:

Manufacturer/ ­Exporter	Time Period	Margin (­ad valorem)
New Star	8/1/00-1/31/01	74.20%

Any interested party may request a hearing within 30 days of publication of this notice in accordance with §351.310(c) of the Department's regulations. Any hearing would normally be held 37 days after the publication of this notice, or the first workday thereafter, at the U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230. Individuals who wish to request a hearing must submit a written request within 30 days of the publication of this notice in the Federal Register to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, 14th Street and Constitution Avenue, NW, Washington, DC 20230. Requests for a public hearing should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and, (3) to the extent practicable, an identification of the arguments to be raised at the hearing.

Unless otherwise notified by the Department, interested parties may submit case briefs within 30 days of the date of publication of this notice in accordance with section 351.309(c)(ii) of the Department's regulations. As part of the case brief, parties are encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Rebuttal briefs, which must be limited to issues raised in the case briefs, must be filed within five days after the case brief is filed. If a hearing is held, an interested party may make an affirmative presentation only on arguments included in that party's case brief and may make a rebuttal presentation only on arguments included in that party's rebuttal brief. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

The Department will issue the final results of this new shipper review, which will include the results of its analysis of issues raised in the briefs, within 90 days from the date of these preliminary results, unless the time limit is extended.

Upon completion of this new shipper review, the Department shall determine, and the U.S. Customs Service shall assess, antidumping duties on all appropriate entries. The Department will issue assessment instructions directly to the U.S. Customs Service upon completion of this review. For assessment purposes, we intend to calculate importer-specific assessment rates for petroleum wax candles from the PRC. We will divide the total dumping margins (calculated as the difference between NV and the United States price) for each importer by the entered value of the merchandise. Upon the completion of this review, we will direct Customs to assess the resulting ad valorem rate against the entered quantity of each entry of the subject merchandise by the importer during the POR.

Furthermore, the following deposit rates will be effective upon publication of the final results of this administrative review for all shipments of petroleum wax candles from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for the reviewed firm will be the rate established in the final results of this review; (2) for previously-reviewed PRC and non-PRC exporters with separate rates, the cash deposit rate will be the company-specific rate established for the most recent period; (3) for all other PRC exporters, the rate will be the PRC-wide rate, which is currently 54.21 percent; and (4) for all other non-PRC exporters of subject merchandise from the PRC, the cash deposit rate will be the rate applicable to the PRC supplier of that exporter.

This notice also serves as a preliminary reminder to importers of their responsibility under 351.402(f) of the Department's regulations to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

This new shipper review and this notice are published in accordance with sections 751(a)(2)(B) and 777 (i)(1) of the Act.

January 15, 2002

Faryar Shirzad,

Assistant Secretary for Import Administration.