[Federal Register Volume 65, Number 1 (Monday, January 3, 2000)]
[Notices]
[Pages 116-120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33962]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-853]
Notice of Preliminary Determination of Sales at Less Than Fair
Value: Bulk Aspirin From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: January 3, 2000.
FOR FURTHER INFORMATION CONTACT: Blanche Ziv, Rosa Jeong or Ryan
Langan, Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone: (202) 482-4207, (202) 482-3853, and
(202) 482-1279, respectively.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Act by the Uruguay Round Agreements Act (``URAA''). In addition,
unless otherwise indicated, all citations to the Department of Commerce
(``Department'') regulations are to 19 CFR Part 351 (April 1, 1998).
Preliminary Determination
We preliminarily determine that bulk aspirin (``aspirin'') from the
People's Republic of China (``PRC'') is being, or is likely to be, sold
in the United States at less than fair value (``LTFV''), as provided in
section 733 of the Act. The estimated margins of sales at LTFV are
shown in the ``Suspension of Liquidation'' section of this notice.
Case History
Since the initiation of this investigation on June 23, 1999 (64 FR
33463) (``Notice of Initiation''), the following events have occurred:
On June 15, 1999, we received an entry of appearance by counsel on
behalf of Jilin Pharmaceutical Co., Ltd. (``Jilin''), a producer/
exporter of the subject merchandise. On June 16, 1999, we received an
entry of appearance by counsel on behalf of Shandong Xinhua
Pharmaceutical Factory (``Shandong''), a producer/exporter of the
subject merchandise
On July 19, 1999, the United States International Trade Commission
(``ITC'') notified the Department of its affirmative preliminary injury
determination in this case.
On July 26, 1999, the Department issued an antidumping
questionnaire to the Ministry of Foreign Trade and Economic Cooperation
(``MOFTEC''), the Embassy of the PRC, and the China Chamber of Commerce
for Medicine and Health with instructions to forward the questionnaire
to all producers/exporters of the subject merchandise. Also on July 26,
1999, the Department issued the antidumping questionnaire to Jilin and
Shandong.
On September 3, 1999, the Department invited interested parties to
provide publicly available information for valuing the factors of
production and to comment on the surrogate country selection. We
received responses on October 4, 1999, and additional comments on
October 8 and 12, 1999.
On August 24 and 30, and September 3 and 7, 1999, the Department
received questionnaire responses from Jilin and Shandong. We issued
supplemental questionnaires on September 10, 1999, to which we received
responses on October 4, 1999.
On October 8, 1999, pursuant to section 733(c)(1)(A) of the Act,
Rhodia, Inc., the petitioner, made a timely request to postpone the
issuance of the preliminary determination in this investigation. We
granted this request and, on October 21, 1999, we postponed the
preliminary determination until no later than December 21, 1999 (See 64
FR 56738).
On December 1, 1999, the petitioner submitted additional surrogate
value information and preliminary determination comments. On December
6, 1999, Jilin filed corrections to its reported factor data. In
addition, between December 6 and 16, 1999, Jilin filed several
submissions objecting to the petitioner's submission of new surrogate
value information. Shandong provided clarifications to its reported
factor data on December 6, 1999.
[[Page 117]]
Scope of Investigation
For purposes of this investigation, the product covered is bulk
acetylsalicylic acid, commonly referred to as bulk aspirin, whether or
not in pharmaceutical or compound form, not put up in dosage form
(tablet, capsule, powders or similar form for direct human
consumption). Bulk aspirin may be imported in two forms, as pure ortho-
acetylsalicylic acid or as mixed ortho-acetylsalicylic acid. Pure
ortho-acetylsalicylic acid can be either in crystal form or granulated
into a fine powder (pharmaceutical form). This product has the chemical
formula C9H8O4. It is defined by the
official monograph of the United States Pharmacopoeia (``USP'') 23. It
is classified under the Harmonized Tariff Schedule of the United States
(``HTSUS'') subheading 2918.22.1000.
Mixed ortho-acetylsalicylic acid consists of ortho-acetylsalicylic
acid combined with other inactive substances such as starch, lactose,
cellulose, or coloring materials and/or other active substances. The
presence of other active substances must be in concentrations less than
that specified for particular nonprescription drug combinations of
aspirin and active substances as published in the Handbook of
Nonprescription Drugs, eighth edition, American Pharmaceutical
Association. This product is classified under HTSUS subheading
3003.90.0000. Although the HTSUS subheadings are provided for
convenience and customs purposes, the written description of the
merchandise under investigation is dispositive.
Period of Investigation
The period of this investigation (``POI'') corresponds to each
exporter's two most recent fiscal quarters prior to the filing of the
petition, i.e., October 1, 1998, through March 31, 1999.
Nonmarket Economy Country Status
The Department has treated the PRC as a nonmarket economy (``NME'')
country in all past antidumping investigations (see, e.g., Final
Determination of Sales at Less Than Fair Value: Creatine Monohydrate
from the People's Republic of China, 64 FR 71104 (December 20, 1999)
(``Creatine'') and Final Determination of Sales at Less Than Fair
Value: Certain Preserved Mushrooms from the People's Republic of China,
63 FR 72255 (December 31, 1998) (``Mushrooms'')). A designation as an
NME remains in effect until it is revoked by the Department (see
section 771(18)(C) of the Act).
The respondents in this investigation have not requested a
revocation of the PRC's NME status. We have, therefore, preliminarily
determined to continue to treat the PRC as an NME.
Separate Rates
Both Jilin and Shandong have requested separate company-specific
rates. These companies have stated that they are privately owned
companies with no element of government ownership or control.
The Department's separate rate test is not concerned, in general,
with macroeconomic/border-type controls, e.g., export licenses, quotas,
and minimum export prices, particularly if these controls are imposed
to prevent dumping. The test focuses, rather, on controls over the
investment, pricing, and output decision-making process at the
individual firm level. See Certain Cut-to-Length Carbon Steel Plate
from Ukraine: Final Determination of Sales at Less than Fair Value, 62
FR 61754, 61757 (November 19, 1997); Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, from the People's Republic of China:
Final Results of Antidumping Duty Administrative Review, 62 FR 61276,
61279 (November 17, 1997); and Honey from the People's Republic of
China: Preliminary Determination of Sales at Less than Fair Value, 60
FR 14725, 14726 (March 20, 1995) (``Honey'').
To establish whether a firm is sufficiently independent from
government control to be entitled to a separate rate, the Department
analyzes each exporting entity under a test arising out of the Final
Determination of Sales at Less Than Fair Value: Sparklers from the
People's Republic of China, 56 FR 20588 (May 6, 1991) (``Sparklers''),
as modified 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) (``Silicon Carbide''). Under the separate rates criteria, the
Department assigns separate rates in NME cases only if the respondents
can demonstrate the absence of both de jure and de facto governmental
control over export activities.
1. Absence of De Jure Control
The respondents have placed on the record a number of documents to
demonstrate absence of de jure government control, including the
``Foreign Trade Law of the People's Republic of China'' and the
``Company Law of the People's Republic of China.''
The Department has analyzed these laws in prior cases and found
that they establish an absence of de jure control. (See, e.g., Final
Determination of Sales at Less Than Fair Value: Certain Partial-
Extension Steel Drawer Slides with Rollers from the People's Republic
of China, 60 FR 54472 (October 24, 1995); see also Mushrooms.) We have
no new information in this proceeding which would cause us to
reconsider this determination.
Accordingly, we preliminarily determine that, within the aspirin
industry, there is an absence of de jure government control over export
pricing and marketing decisions of firms.
2. Absence of De Facto Control
As stated in previous cases, there is some evidence that certain
enactments of the PRC central government have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC.
(See, e.g., Sparklers and Silicon Carbide) Therefore, the Department
has determined that an analysis of de facto control is critical in
determining whether respondents are, in fact, subject to a degree of
governmental control which would preclude the Department from assigning
separate rates.
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) Whether the export prices are set by, or
subject to, the approval of a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of its management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses (see Mushrooms).
Shandong and Jilin have each asserted the following: (1) They
establish their own export prices; (2) they negotiate contracts without
guidance from any governmental entities or organizations; (3) they make
their own personnel decisions; and (4) they retain the proceeds of
their export sales and use profits according to their business needs
without any restrictions. Additionally, these two respondents have
stated that they do not coordinate or consult with other exporters
regarding their pricing. This information supports a preliminary
finding that there is no de facto governmental control of the export
functions of these companies. Consequently, we preliminarily determine
that both responding exporters have met the criteria for the
application of separate rates.
We note that the petitioner has alleged that neither Jilin nor
Shandong
[[Page 118]]
is sufficiently independent from state control to justify the
calculation of separate rates. The petitioner makes various arguments
in support of its claim that the respondents do not have independence
with respect to pricing authority. The petitioner cites, for example,
the PRC government's control of essential raw materials used in the
production of aspirin and the fact that shareholders of Jilin and
Shandong were shareholders in the companies' state-owned predecessor
companies. We have considered the petitioner's various arguments and
find that they do not direct us to reject the respondents' claims that
they are entitled to separate rates. As stated above, our separate
rates test is not concerned with broad-based macroeconomic concerns,
but rather focuses on controls over pricing and decision-making at the
individual firm level. The petitioner's arguments do not address the
company-specific, day-to-day operations of Jilin and Shandong which we
consider in making a separate rates determination.
Use of Facts Available
PRC-Wide Rate
Information on the record of this investigation indicates that
there may be producers/exporters of the subject merchandise in the PRC
in addition to the companies participating in this investigation. Also,
U.S. import statistics indicate that the total quantity of U.S. imports
of aspirin from the PRC is greater than the total quantity of aspirin
exported to the United States as reported by both PRC aspirin exporters
that submitted responses in this investigation. Given this discrepancy,
it appears that not all PRC exporters of aspirin responded to our
questionnaire. Accordingly, we are applying a single antidumping
deposit rate--the PRC-wide rate--to all exporters in the PRC, other
than those specifically identified below in the ``Suspension of
Liquidation'' section, based on our presumption that the export
activities of the companies that failed to respond to the Department's
questionnaire are controlled by the PRC government (see, e.g., Bicycles
from the PRC).
The PRC-wide antidumping rate is based on adverse facts available.
Section 776(a)(2) of the Act provides that
if an interested party or any other person--(A) withholds
information that has been requested by the administering authority
or the Commission under this title, (B) fails to provide such
information by the deadlines for submission of the information or in
the form and manner requested, subject to subsections (c)(1) and (e)
of section 782, (C) significantly impedes a proceeding under this
title, or (D) provides such information but the information cannot
be verified as provided in section 782(i), the administering
authority and the Commission shall, subject to section 782(d), use
the facts otherwise available in reaching the applicable
determination under this title.
Only Jilin and Shandong have provided the information requested by the
Department. Accordingly, the use of facts available is warranted with
respect to all other PRC producers/exporters of aspirin.
Section 776(b) of the Act provides that adverse inferences may be
used when a party has failed to cooperate by not acting to the best of
its ability to comply with a request for information. The exporters
that decided not to respond in any form to the Department's
questionnaire failed to act to the best of their ability in this
investigation. Thus, the Department has determined that, in selecting
from among the facts otherwise available, an adverse inference is
warranted. As adverse facts available, we are assigning the highest
margin in the petition, 144.02 percent, which is higher than any of the
calculated margins.
Section 776(c) of the Act provides that where the Department
selects from among the facts otherwise available and relies on
``secondary information,'' such as the petition, the Department shall,
to the extent practicable, corroborate that information from
independent sources reasonably at the Department's disposal. The
Statement of Administrative Action accompanying the URAA, H.R. Doc. No.
103-316 (1994) (SAA), states that ``corroborate'' means to determine
that the information used has probative value. See SAA at 870.
The petitioner's methodology for calculating export price (``EP'')
and normal value (``NV'') is discussed in the Notice of Initiation. To
corroborate the petitioner's EP calculations, we compared the prices in
the petition for the product to the prices submitted by respondents for
the same product in similar volumes. To corroborate the petitioner's NV
calculations, we compared the petitioner's factor consumption and
surrogate value data for the product to the data reported by the
respondents for the most significant factors--chemical inputs, factory
overhead, and selling, general, and administrative expenses
(``SG&A'')--and the surrogate values for these factors in the petition
to the values selected for the preliminary determination, as discussed
below. Our analysis showed that, in general, the petitioner's data was
reasonably close to the data submitted by the respondents and to the
surrogate values chosen by the Department. (See memorandum to the file
dated December 21, 1999 (``Corroboration Memo'').) Based on our
analysis, we find that the figures and calculations set forth in the
petition have probative value.
Fair Value Comparisons
To determine whether sales of the subject merchandise by Shandong
and Jilin to the United States were made at LTFV, we compared the EP or
constructed export price (``CEP'') to the NV, as described in the
``Export Price'' and ``Normal Value'' sections of this notice, below.
In accordance with section 777A(d)(1)(A)(i) of the Act, we compared
POI-wide weighted-average EPs and CEPs to NVs.
Export Price
For all sales made by Shandong and certain sales by Jilin, we used
the EP methodology in accordance with section 772(a) of the Act,
because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to importation and CEP methodology
was not otherwise appropriate. We calculated EP based on packed FOB,
CIF or C&F prices to the first unaffiliated purchaser in the United
States. Where appropriate, we made deductions from the starting price
(gross unit price) for inland freight from the plant/warehouse to port
of exit, brokerage and handling in the PRC, marine insurance and ocean
freight. Because certain domestic brokerage and handling, marine
insurance, and inland freight were provided by NME companies, we based
those charges on surrogate rates from India. (See ``Normal Value''
section for further discussion.)
Constructed Export Price
For certain sales by Jilin, we calculated CEP, in accordance with
sections 772(b), (c) and (d) of the Act, because sales to the first
unaffiliated purchaser in the United States took place after
importation. We calculated CEP based on ex-dock, ex-warehouse, CIF or
delivered prices to unaffiliated purchasers in the United States. Where
appropriate, we made deductions for inland freight in the PRC,
brokerage and handling in the PRC, ocean freight, marine insurance,
U.S. duty, U.S. inland freight, U.S. brokerage and handling, and U.S.
warehousing. Because certain domestic brokerage and handling, marine
insurance, and inland freight were provided by NME companies, we based
those charges on surrogate rates from India. (See ``Normal Value''
section for further discussion.) Also, where appropriate, we deducted
direct and indirect selling expenses related to commercial activity in
the United
[[Page 119]]
States. Pursuant to section 772(d)(3) of the Act, where applicable, we
made an adjustment for CEP profit.
Normal Value
1. Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
NME producer's factors of production, to the extent possible, in one or
more market economy countries that: (1) Are at a level of economic
development comparable to that of the NME, and (2) are significant
producers of comparable merchandise. The Department has determined that
India, Pakistan, Sri Lanka, Egypt, Indonesia, and the Philippines are
countries comparable to the PRC in terms of overall economic
development (see memorandum from Jeff May, Director, Office of Policy,
to Susan Kuhbach, Senior Director, AD/CVD Enforcement, Office 1, July
13, 1999). We have further determined that India is a significant
producer of comparable merchandise. Accordingly, we have calculated NV
using mainly Indian values, and in some cases U.S. export values, for
the PRC producers' factors of production. Where it was applicable and
practicable, we have considered all information on the record,
including data provided in the petitioner's December 1, 1999, comments.
2. Factors of Production
In accordance with section 773(c) of the Act, we calculated NV
based on factors of production reported by the companies in the PRC
which produced aspirin and sold aspirin to the United States during the
POI. Our NV calculation included amounts for materials, labor, energy,
overhead, SG&A, and profit. To calculate NV, the reported unit factor
quantities were multiplied by publicly available Indian and U.S. export
price values.
In selecting the surrogate values, we considered the quality,
specificity, and contemporaneity of the data. As appropriate, we
adjusted input prices to make them delivered prices. Where the distance
between the material supplier and the factory was reported, we added to
Indian CIF surrogate values a surrogate freight cost using the shorter
of the reported distances from either the closest PRC port to the PRC
factory, or from the domestic supplier to the factory. This adjustment
is in accordance with the CAFC's decision in Sigma Corp. v. United
States, 117 F. 3d 1401 (Fed. Cir. 1997). Where a producer did not
report the distances between the material supplier and the factory, as
facts available, we used the distance to the nearest PRC port to the
PRC factory. For those values not contemporaneous with the POI and
quoted in a foreign currency, we adjusted for inflation using wholesale
price indices published in the International Monetary Fund's
International Financial Statistics.
(1) Material Inputs: To value acetic acid, sulfuric acid, and
certain other inputs, we used public information from the Indian
publication Indian Chemical Weekly (``ICW'') that corresponded with the
POI. For caustic soda, ethyl phosphate, ammonia, corn starch, and
certain other inputs, we relied on import prices contained in Monthly
Statistics of the Foreign Trade of India (``MSFTI''). Phenol was valued
using both ICW and MSFTI data. To value carbon dioxide, we used data
from 1998 U.S. Census Bureau Export Statistics. We used a U.S. export
value for this input because the value reported in the MSFTI was
aberrational. For further discussion, see ``Factors of Production
Valuation Memorandum'' dated December 21, 1999.
(2) Labor: We valued labor using the method described in 19 CFR
Sec. 351.408(c)(3).
(3) Energy: To value electricity, coal and fuel oil, we used the
rates reported in the publication Energy Prices and Taxes (1998).
(4) Overhead, SG&A and Profit: We based factory overhead, SG&A, and
profit on financial information relating to the Indian ``drugs and
pharmaceuticals'' industry, as reported by the Indian Informer.
(5) Inland Freight: To value truck freight rates, we used price
quotes obtained by the Department from Indian truck freight companies
in November 1999. With regard to rail freight, we based our calculation
on price quotes obtained by the Department from an Indian rail freight
company in November 1999.
(6) Packing Materials: For packing materials, we used import values
from the MSFTI.
(7) Brokerage and Handling: To value foreign brokerage and
handling, we relied on public information reported in the case record
for a new shipper review of stainless wire rod from India. See Certain
Stainless Steel Wire Rod From India; Preliminary Results of Antidumping
Duty Administrative and New Shipper Reviews, 63 FR 48184 (Sept. 9,
1998).
(8) Marine Insurance: For marine insurance, we used public
information collected for Tapered Roller Bearing and Parts Thereof,
Finished and Unfinished, from the PRC; Final Results of 1996-1997
Antidumping Administrative Review, 63 FR 63842, 63847 (Nov. 17, 1998)
(``TRBs-10''), which was obtained through queries made directly to an
international marine insurance provider.
(9) Ocean Freight: Where the PRC producer/exporter used a market
economy shipper and paid for the shipping in a market economy currency,
we used the amount reported. Where the producer/exporter also reported
that freight services were provided by a nonmarket economy carrier and/
or paid for in nonmarket economy currency, we used an average of the
market economy values as the factor value.
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
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all imports of subject
merchandise from the PRC, except for subject merchandise produced and
exported by Jilin (which has a zero weighted-average margin), that are
entered, or withdrawn from warehouse, for consumption on or after the
date of publication of this notice in the Federal Register. We will
instruct the Customs Service to require a cash deposit or the posting
of a bond equal to the weighted-average amount by which the NV exceeds
the EP or CEP, as indicated in the chart below. These suspension of
liquidation instructions will remain in effect until further notice.
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
percentage
------------------------------------------------------------------------
Shandong Xinhua Pharmaceutical Factory..................... 11.14
Jilin Pharmaceutical Co., Ltd./Jilin Pharmaceutical Import 0.00
and Export Corporation....................................
PRC-wide Rate.............................................. 144.02
------------------------------------------------------------------------
The PRC-wide rate applies to all entries of the subject merchandise
except for entries from exporters/producers that are identified
individually above.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
[[Page 120]]
Public Comment
Case briefs or other written comments in six copies must be
submitted to the Assistant Secretary for Import Administration no later
than February 18, 2000, and rebuttal briefs no later than February 23,
2000. A list of authorities used and an executive summary of issues
should accompany any briefs submitted to the Department. Such summary
should be limited to five pages total, including footnotes. In
accordance with section 774 of the Act, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs. Tentatively, the hearing
will be held on February 25, 2000, at the Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 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 to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the publication of this notice. Requests should
contain: (1) The party's name, address, and telephone number; (2) the
number of participants; and (3) a list of the issues to be discussed.
Oral presentations will be limited to issues raised in the briefs. If
this investigation proceeds normally, we will make our final
determination not later than 75 days after the date of the preliminary
determination.
This determination is issued and published in accordance with
sections 733(d) and 777(i)(1) of the Act.
Dated: December 21, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-33962 Filed 12-30-99; 8:45 am]
BILLING CODE 3510-DS-P
