01-457. Brake Rotors From the People's Republic of China: Preliminary Results and Partial Rescission of the Fourth New Shipper Review and Rescission of the Third Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results and partial rescission of fourth new shipper review and rescission of third antidumping duty administrative review.

SUMMARY:

The Department of Commerce is currently conducting the fourth new shipper review and third administrative review of the antidumping duty order on brake rotors from the People's Republic of China covering the period April 1, 1999, through March 31, 2000. The fourth new shipper review covers two exporters. The Department of Commerce is preliminarily rescinding in part the fourth new shipper review with respect to one exporter. We have preliminarily determined that sales have not been made below normal value by the other exporter. If these preliminary results are adopted in our final results of the fourth new shipper review, we will instruct the U.S. Customs Service to assess no antidumping duties on entries of subject merchandise during the period of review from the exporter that cooperated in the review, for which the importer-specific assessment rates are zero or de minimis (i.e., less than 0.50 percent), and to continue to assess duties on all entries of subject merchandise made during the period of review by the other uncooperative exporter at the country-wide rate. Furthermore, we will instruct the U.S. Customs Service (“the Customs Service”) to require a cash deposit on all future entries of the subject merchandise from the uncooperative exporter at the country-wide rate.

The third administrative review covers three exporter/producer combinations (see “Background” section of this notice for further discussion). The Department of Commerce (“the Department”) is preliminarily rescinding the third administrative review because none of the respondents made shipments of the subject merchandise during the period of review (“POR”). Interested parties are invited to comment on these preliminary results. We will issue the final results no later than 120 days from the date of publication of this notice.

EFFECTIVE DATE:

January 8, 2001.

FOR FURTHER INFORMATION CONTACT:

Brian Smith or Brian Ledgerwood, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., 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 references 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).

SUPPLEMENTARY INFORMATION:

Background

On April 28, 2000, the petitioner ^[1] requested an administrative review pursuant to 19 CFR 351.213(b) for three exporter/producer combinations that received zero rates in the less-than-fair-value (“LTFV”) investigation and thus were excluded from the antidumping duty order only with respect to brake rotors sold through the specified exporter/producer combinations.^[2]

Also on April 28, 2000, the Department received timely requests from Hongfa Machinery (Dalian) Co., Ltd. (“Hongfa”) and Luoyang Haoxiang Brake Disc Factory (“Luoyang”) for a new shipper review of this antidumping duty order in accordance with 19 CFR 351.214(c). In their requests for a new shipper review and in accordance with 19 CFR 351.214(b)(2)(i) and (iii)(A), Hongfa and Luoyang each certified that it did not export the subject merchandise to the United States during the period covered by the original LTFV investigation, and that it is not affiliated with any company which exported subject merchandise to the United States during the period of investigation. Hongfa and Luoyang also certified that their export activities are not controlled by the central government of the People's Republic of China (“PRC”). Pursuant to 19 CFR 351.214(b)(2)(iv), Hongfa and Luoyang submitted documentation establishing the date on which the merchandise was first entered for consumption in the United States, the volume of that first shipment, and the date of the first sale to an unaffiliated customer in the United States.

On May 22, 2000, the excluded exporter/producer combinations submitted a letter in which they contended that the Department did not have the basis for conducting an administrative review of them because they were excluded from the antidumping duty order on brake rotors from the PRC. On May 26, 2000, the Department initiated an administrative review covering the exporter/producer combinations which received zero rates in the LTFV investigation only with respect to their U.S. sales of brake rotors produced by companies other than those included in the excluded exporter/producer combinations noted above (see Initiation of Antidumping and Countervailing Duty Administrative Reviews (65 FR 35320, June 2, 2000)). In accordance with 19 CFR 351.214(d), the Department also initiated a new shipper review covering Hongfa and Luoyang on May 26, 2000. See Brake Rotors from the People's Republic of China: Initiation of New Shipper Antidumping Duty Review, 65 FR 35322 (June 2, 2000).

On June 5 and 6, 2000, we issued a questionnaire to each PRC company listed in the brake rotor initiation notices. On June 28, 2000, the Department provided the parties an opportunity to submit publicly available information for consideration in these preliminary results. On June 29, 2000, Hongfa and Luoyang requested an extension of time until July 21, 2000, to file their responses to the antidumping duty questionnaire, which the Department subsequently granted on July 7, 2000.

Also on June 29, 2000, both respondents agreed to waive the time limits applicable to the new shipper review and to permit the Department to conduct the new shipper review concurrently with the administrative review. Therefore, the Department issued a Federal Register notice stating that it intended to conduct the new shipper review concurrent with the administrative review (see Brake Rotors from the People's Republic of China: Notice of Extension of Time Limits for the Preliminary and Final Results of the Fourth New Shipper Antidumping Duty Review, 65 FR 51294 (August 23, 2000)).

On July 7, 2000, each of the exporters which received zero rates in the LTFV investigation stated that during the POR it did not make U.S. sales of brake rotors produced by companies other than those included in its respective excluded exporter/producer combination. On July 21, 2000, Hongfa and Luoyang submitted their questionnaire responses. On July 26, 2000, the petitioner requested an extension of time until October 18, 2000, to submit publicly available information in this proceeding. On July 31, 2000, the Department granted the petitioner's request and extended the time limit for the submission of publicly available information by all parties.

On September 8, 2000, the petitioner submitted a letter in which it requested that the Department conduct verification of: (1) The responses submitted by the two respondents in the new shipper review; (2) the no-shipment claims made by the exporters named in the three exporter/producer combinations excluded from the antidumping duty order; and (3) the Ministry of Foreign Trade and Economic Cooperation (“MOFTEC”) and National Industrial and Commercial Administration Bureau (“NICAB”). On September 14, 2000, the Department issued a decision memorandum which outlined the Department's reasons for conducting a review of the exporter/producer combinations receiving rates of zero in the LTFV investigation with respect to shipments of merchandise produced by manufacturers other than those in the respective excluded exporter/producer combinations (see September 14, 2000, Memorandum from the team to Louis Apple, Office Director). On September 15, 2000, the petitioner submitted comments on the questionnaire responses submitted by Hongfa and Luoyang. On September 25, 2000, the Department issued supplemental questionnaires to Hongfa and Luoyang. On September 29, 2000, Hongfa and Luoyang requested an extension of time until October 16, 2000, to file their responses to the supplemental questionnaire, which the Department subsequently granted on October 6, 2000.

In order to substantiate the claims made by the exporter/producer combinations excluded from the order that they did not ship merchandise from producers other than those covered by their exclusion, on September 27, 2000, the Department conducted a data query on brake rotor entries made during the POR from all exporters named in the excluded exporter/producer combinations. As a result of the data query on September 28, 2000, the Department requested that the Customs Service confirm the actual manufacturer for specific entries associated with the excluded exporter/producer combinations.

On October 4, 2000, in response to the petitioner's September 8, 2000, letter requesting the verification of all respondents in these reviews, the Department informed the petitioner that it (1) did intend to conduct verification of the responses submitted by Hongfa and Luoyang; (2) did not intend to conduct verification of the sales records of the exporters named in the three exporter/producer combinations unless the results of its Customs data query of U.S. entries of brake rotors during the POR revealed that an excluded exporter shipped brake rotors produced by a firm other than the producer named in the corresponding excluded exporter/producer combination; and (3) did not intend to visit MOFTEC or NICAB because the information provided by the petitioner in its September 8, 2000, submission did not serve as a sufficient basis for conducting such visits (see the October 4, 2000, Letter from Louis Apple, Office Director, to Mr. Leslie A. Glick for further details).

On October 16, 2000, the Department received a supplemental questionnaire response from Hongfa, but did not receive a response from Luoyang. On October 18, 2000, Luoyang's counsel submitted a letter which stated that it was withdrawing its notice of appearance on behalf of Luoyang in the proceeding. Also on October 18, 2000, the petitioner submitted publicly available information for use in valuing the factors of production. On October 25, 2000, the respondents provided rebuttal publicly available information and comments on the publicly available information submitted by the petitioner.

On October 20, 2000, the Department provided a verification outline to Hongfa. Also on October 20, 2000, the Department issued a letter to Luoyang which provided the firm with an additional extension of time to submit its supplemental questionnaire response. The Department also notified Luoyang that if it did not provide its supplemental questionnaire response by October 26, 2000, the Department would (1) conclude that Luoyang was no longer participating in the proceeding; (2) cancel plans to conduct verification of Luoyang's response; and (3) use the facts available with respect to Luoyang for the preliminary results.

On October 23, 2000, the petitioner submitted a letter objecting to the extension of time the Department had granted to Luoyang for its supplemental response. On October 24, 2000, the Department placed on the record correspondence obtained from the U.S. Embassy in Beijing which indicated that Luoyang did not intend to participate further in the new shipper review (see October 24, 2000, Memorandum from the case analyst to the file for further details). Also on October 24, 2000, the petitioner filed comments related to the Department's verification of Hongfa.

On October 25, 2000, the Department issued a memorandum stating that it preliminarily found no evidence that shipments of merchandise subject to the order were made by the three exporter/producer combinations during the POR. From October 30 through November 2, 2000, the Department conducted verification of the information submitted by Hongfa, in accordance with 19 CFR 351.307.

On November 15, 2000, the petitioner submitted a copy of a PRC law (i.e., “Rules for the Implementation of the Law of the People's Republic of China on Foreign-Capital Enterprises”)(“Rules for Foreign-Capital Enterprises”) and claimed that the Department should resort to facts available with respect to Hongfa because Hongfa did not provide a copy of this law in its entirety at verification and because certain sections of the law allegedly demonstrate that the PRC government maintains de jure and de facto control over foreign-capital companies like Hongfa in the PRC. Moreover, the petitioner renewed its request that the Department conduct verification of MOFTEC and other PRC government entities based on the contents of the PRC law it submitted.

On November 30, 2000, the Department issued its verification report on Hongfa.

Scope of Reviews

The products covered by these reviews are brake rotors made of gray cast iron, whether finished, semifinished, or unfinished, ranging in diameter from 8 to 16 inches (20.32 to 40.64 centimeters) and in weight from 8 to 45 pounds (3.63 to 20.41 kilograms). The size parameters (weight and dimension) of the brake rotors limit their use to the following types of motor vehicles: automobiles, all-terrain vehicles, vans and recreational vehicles under “one ton and a half,” and light trucks designated as “one ton and a half.”

Finished brake rotors are those that are ready for sale and installation without any further operations. Semi-finished rotors are those on which the surface is not entirely smooth, and have undergone some drilling. Unfinished rotors are those which have undergone some grinding or turning.

These brake rotors are for motor vehicles, and do not contain in the casting a logo of an original equipment manufacturer (“OEM”) which produces vehicles sold in the United States (e.g., General Motors, Ford, Chrysler, Honda, Toyota, Volvo). Brake rotors covered in these reviews are not certified by OEM producers of vehicles sold in the United States. The scope also includes composite brake rotors that are made of gray cast iron, which contain a steel plate, but otherwise meet the above criteria. Excluded from the scope of the reviews are brake rotors made of gray cast iron, whether finished, semifinished, or unfinished, with a diameter less than 8 inches or greater than 16 inches (less than 20.32 centimeters or greater than 40.64 centimeters) and a weight less than 8 pounds or greater than 45 pounds (less than 3.63 kilograms or greater than 20.41 kilograms).

Brake rotors are currently classifiable under subheading 8708.39.5010 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the scope of these reviews is dispositive.

Period of Reviews

The period of review (“POR”) covers April 1, 1999, through March 31, 2000.

Verification

As provided in section 782(i)(2) of the Act, we verified information provided by Hongfa. We used standard verification procedures, including on-site inspection of the manufacturer's facilities and examination of relevant sales and financial records. Our verification results are outlined in the verification report (see the November 30, 2000, Hongfa verification report for further discussion).

Rescission of Administrative Review

Pursuant to 19 CFR 351.213(d)(3), we have preliminarily determined that, during the POR, the three exporter/producer combinations which received zero rates in the LTFV investigation did not make shipments of subject merchandise to the United States during the POR. Specifically, we preliminarily determined that during the POR, (1) neither CAIEC nor Laizhou CAPCO exported brake rotors to the United States that were manufactured by producers other than Laizhou CAPCO; (2) neither Shenyang Honbase nor Laizhou Luyuan exported brake rotors to the United States that were manufactured by producers other than Shenyang Honbase or Laizhou Luyuan; and (3) Xinjiang did not export brake rotors to the United States that were manufactured by producers other than Zibo (see October 25, 2000, Memorandum from the case analyst to the file). In order to make this determination, we first examined POR subject merchandise shipment data maintained by the Customs Service. We then requested the Customs Service to examine the documentation filed at the U.S. port for selected entries made by the exporters at issue to determine the manufacturer of the merchandise. Based on the results of our query, we are preliminarily rescinding the administrative review because we found no evidence that the exporter/producer combinations subject to this review made U.S. shipments of the subject merchandise during the POR.

Partial Rescission of New Shipper Review

We are also preliminarily rescinding in part the fourth new shipper review with respect to Luoyang based on its decision not to submit a response to the Department's supplemental questionnaire and not to cooperate in this review which Luoyang itself requested. As a consequence of Luoyang's decision to discontinue participation in this review, the Department canceled verification of Luoyang's questionnaire response, including its separate rate information. Therefore, we consider Luoyang to be an uncooperative respondent and have made the adverse inference that Luoyang does not qualify for a separate rate. We, therefore, have treated Luoyang as part of the non-market economy (“NME”) entity. As part of the NME entity, Luoyang is not entitled to a rate as a new shipper, because the NME entity as a whole was subject to the LTFV investigation. For these reasons, we are rescinding the new shipper review with respect to Luoyang.

Separate Rates

In proceedings involving NME countries, the Department begins with a rebuttable presumption that all companies within the country are subject to government control and thus should be assessed a single antidumping duty deposit rate (i.e., a PRC-wide rate).

The cooperative respondent in the new shipper review, Hongfa, is wholly foreign-owned. Thus, for Hongfa, because we have no evidence indicating that it is under the control of the PRC government, a separate rates analysis is not necessary to determine whether it is independent from government control (see Notice of Final Determination of Sales at Less Than Fair Value: Creatine Monohydrate from the People's Republic of China, 64 FR 71104, 71105 (December 20, 1999); Preliminary Results of First New Shipper Review and First Antidumping Duty Administrative Review: Certain Preserved Mushrooms from the People's Republic of China, 65 FR 66703, 66705 (November 7, 2000); and Notice of Final Determination of Sales at Less Than Fair Value: Bicycles From the People's Republic of China (“Bicycles”) 61 FR 19026 (April 30, 1996)).

With respect to the petitioner's November 15, 2000, claim that Hongfa should be denied a separate rate because it withheld information at verification, we find that Hongfa complied fully with the Department's request for information. Specifically, the Department requested Hongfa to provide documentation on the registered capital requirements for wholly-foreign owned companies in the PRC. In response to the Department's request for information, Hongfa provided an excerpt from the PRC law, Rules for Foreign-Capital Enterprises, which discussed the timeframe PRC companies (such as Hongfa) had in order to meet registered capital requirements for obtaining business licenses (se e page five of the Hongfa verification report). Hongfa complied fully with the Department's request for information in this area. Thus, the petitioner's claim is without merit.

With respect to the petitioner's claim that certain sections of the PRC government document at issue indicate de jure and de facto government control of the export activities of wholly foreign-owned companies such as Hongfa, we note that the document in question does not contain compelling information which would lead us to believe that the PRC government exercises de jure or de facto control over all foreign-owned PRC companies. (For further discussion, see the control criteria of our separate rates 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) and amplified in the Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994) (“Silicon Carbide”).) In Hongfa's case, since this company is wholly foreign-owned, it is not necessary to apply the separate rates test to it (see discussion above). Therefore, the petitioner's claim that certain sections of the 1990 Rules for Foreign-Capital Enterprises indicate de jure and de facto government control is moot.

Finally with respect to the petitioner's request that the Department should conduct visits of MOFTEC and NICAB based on the requirements contained in the Rules for Foreign Enterprises, the Department does not consider the contents of that law to provide sufficient grounds for conducting visits at MOFTEC and NICAB in order to further interpret the regulations contained in the above-mentioned document.

Fair Value Comparisons

To determine whether sales of the subject merchandise by Hongfa to the United States were made at LTFV, we compared the export price to the normal value, as described in the “Export Price” and “Normal Value” sections of this notice, below.

Export Price

We used export price methodology in accordance with section 772(a) of the Act because the subject merchandise was sold by the exporter directly to an unaffiliated customer in the United States prior to importation and constructed export price was not otherwise indicated.

For Hongfa, we calculated export price based on packed, FOB foreign port prices to the first unaffiliated purchaser in the United States. Where appropriate, we made deductions from the starting price (gross unit price) for foreign inland freight and foreign brokerage and handling charges in the PRC, in accordance with section 772(c) of the Act. Because foreign inland freight and foreign brokerage and handling fees were provided by PRC service providers or paid for in a reminbi, we based those charges on surrogate rates from India (see “Surrogate Country” section below for further discussion of our surrogate country selection). To value foreign inland trucking charges, we used a November 1999 average truck freight value based on price quotes from Indian trucking companies. We most recently used this rate in the second administrative review of brake rotors from the PRC (see Brake Rotors from the People's Republic of China: Final Results of Third New Shipper Review and Final Results and Partial Rescission of Second Antidumping Duty Administrative Review, 65 FR 64664 (October 30, 2000) (which cites to the “Issues and Decision Memorandum” from Richard W. Moreland, Deputy Assistant Secretary for Import Administration, to Troy H. Cribb, Assistant Secretary for Import Administration, dated October 24, 2000)) (“Brake Rotors Second Administrative Review”)). To value foreign brokerage and handling expenses, we relied on public information reported in the 1997-1998 antidumping duty new shipper review of stainless steel wire rod from India (see also Brake Rotors Second Administrative Review). Based on our verification findings, we revised the reported distance from Hongfa to the port of exportation (see Hongfa verification report at page 3).

In its pre-verification comments, the petitioner claimed that Hongfa's POR sale is not a bona fide transaction due to the circumstances surrounding the sale. In prior cases, the Department has considered factors such as timing, sale price, transportation costs, other expenses borne by the importer, and whether the merchandise was resold by the importer at a loss to determine whether a sale was a bona fide transaction (see Preliminary Results of First New Shipper Review and First Antidumping Duty Administrative Review: Certain Preserved Mushrooms from the People's Republic of China, 65 FR 66703, 66706 (November 7, 2000)) (“Mushrooms from the PRC”). (See also Certain Cut-to-Length Carbon Steel Plate from Romania: Notice of Rescission of Antidumping Duty Administrative Review, 63 FR 47232 (September 4, 1998) and American Silicon Technologies v. United States, CIT Slip Op. 00-84 (July 17, 2000).) As described in the Hongfa verification report, we verified that Hongfa made only one sale to the U.S. market during the POR and that Hongfa has made no other sales to the United States since the POR (i.e., as of the date of verification). Therefore, unlike Mushrooms from the PRC, we could not compare sales prices for the subject merchandise during the POR with sales prices after the POR. Moreover, we have no evidence on the record to support a conclusion that the price for the reviewed sale is not commercially reasonable or the result of arm's-length bargaining. There is also no record evidence that the importer resold the merchandise at a loss. Furthermore, the transportation costs and other expenses borne by the importer based on the respondent's terms of sale are consistent with those incurred by other importers of the subject merchandise in previous administrative reviews, new shipper reviews and the LTFV investigation. In addition, while the sale occurred shortly before the end of the POR, the timing of the transaction is not a basis in-and-of-itself to render the transaction less than bona fide (see Mushrooms from the PRC, 65 at FR 66706). Therefore, absent evidence to the contrary, we have determined Hongfa's sale to be a bona fide transaction for purposes of this review.

Normal Value

A. Non-Market Economy Status

In every case conducted by the Department involving the PRC, the PRC has been treated as a NME country. Pursuant to section 771(18)(C)(i) of the Act, any determination that a foreign country is a NME country shall remain in effect until revoked by the administering authority (see Notice of Preliminary Results of Antidumping Duty Administrative Review and New Shipper Reviews, Partial Rescission of the Antidumping Duty Administrative Review, and Rescission of a New Shipper Review: Freshwater Crawfish Tail Meat From the People's Republic of China, 65 FR 60399, 60404 (October 11, 2000). None of the parties to this proceeding has contested such treatment. Accordingly, we calculated normal value in accordance with section 773(c) of the Act, which applies to NME countries.

B. Surrogate Country

Section 773(c)(4) of the Act requires the Department to value a NME producer's factors of production, to the extent possible, in one or more market economy countries that (1) are at a level of economic development comparable to that of the NME country, and (2) are significant producers of comparable merchandise. India and Indonesia are among the countries comparable to the PRC in terms of overall economic development (see June 12, 2000, Memorandum from the Office of Policy to the case analyst). In addition, based on publicly available information placed on the record, India is a significant producer of the subject merchandise. Accordingly, we considered India the primary surrogate country for purposes of valuing the factors of production because it meets the Department's criteria for surrogate country selection. Where we could not find surrogate values from India, we used values from Indonesia.

C. Factors of Production

In accordance with section 773(c) of the Act, we calculated normal value based on the factors of production which included, but were not limited to: (A) hours of labor required; (B) quantities of raw materials employed; (C) amounts of energy and other utilities consumed; and (D) representative capital costs, including depreciation. We used the factors reported by Hongfa which produced the brake rotors it exported to the United States during the POR. To calculate normal value, we multiplied the reported unit factor quantities by publicly available Indian or Indonesian values. Based on our verification findings, we revised (1) the factor for lug bolts; (2) the factor for packing labor; and (3) the distances from Hongfa to each of its suppliers (see page three of the Hongfa verification report and December 18, 2000, Memorandum from case analyst to the file).

In its October 18, 2000, publicly available information submission, the petitioner argued that the Department should use price data from International Business Information Services (“IBIS”) rather than from the Indian government publication Monthly Statistics of the Foreign Trade of India (“Monthly Statistics”) to value a number of direct and packing material inputs because the IBIS data is (1) the most contemporaneous with the POR; (2) it is based on Indian Customs statistics; and (3) it has been used to value inputs in previous NME cases. In its October 25, 2000, rebuttal comments, the respondent pointed out that the IBIS data, though more contemporaneous to the POR than Monthly Statistics, is less representative of the import prices paid for the inputs in question because the values the petitioner submitted from IBIS either were based on specific shipments from only a few market economy countries or the values were not specific to the input reported by the respondent. After considering the data and arguments made by the parties with respect to this issue, for these preliminary results, we have relied on data from Monthly Statistics rather than IBIS to value the inputs in question because either the former data were more representative of Indian import prices or the latter data did not allow the Department to value properly the factor reported by the respondent (see detailed discussion below).

The Department's selection of the surrogate values applied in this determination was based on the quality, specificity, and contemporaneity of the data. As appropriate, we adjusted input prices to make them delivered prices. For those values not contemporaneous with the POR and quoted in a foreign currency, we adjusted for inflation using wholesale price indices published in the International Monetary Fund's International Financial Statistics.

To value pig iron, ferrosilicon, and ferromanganese, we used April 1998-December 1998 average import values from Monthly Statistics. For steel scrap and lubrication oil, we used April 1998-August 1998 average import values from Monthly Statistics. For limestone, we used an April 1998-March 1999 average import value from Monthly Statistics rather than the May 1999-March 2000 IBIS value. Monthly Statistics provided a more representative Indian import value for limestone because it covers all imports of limestone into India. The IBIS data appears to be based on a limited number of shipments of limestone to India. Furthermore, one of those limestone shipments is from an unknown exporting country accounting for 51 percent of the total import value based on the IBIS data.

The brake rotors Hongfa produced during the POR use lug bolts and ball bearing cups. Because we could not obtain a product-specific price from India to value lug bolts (see Bicycles, 61 FR at 19040 (Comment 17)), we used a January-March 1999 product-specific import value from the Indonesian government publication Foreign Trade Statistical Bulletin. To value ball bearing cups, we used an April 1998-December 1998 average import value from Monthly Statistics.

To value coking coal, we used an April 1998-August 1998 average import price from Monthly Statistics. We also added an amount for loading and additional transportation charges associated with delivering coal to the factory based on June 1999 Indian price data contained in the periodical Business Line. To value firewood, we used a 1991 domestic value from the Food and Agricultural Organization of the United Nations' working paper, Wood Materials from Non-Forest Areas, which is the most recent value available for this input. To value electricity, we used data from the Indian publications 1995 Conference of Indian Industries: Handbook of Statistics and The Center for Monitoring Indian Economy and the methodology used in two recent NME cases. (See Persulfates from the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Partial Rescission of Administrative Review, 65 FR 46691, 46692 (July 31, 2000); Manganese Metal from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 65 FR 30067, 30068 (May 10, 2000); and Preliminary Results Valuation Memorandum).

We valued labor based on a regression-based wage rate, in accordance with 19 CFR 351.408(c)(3).

To value selling, general, and administrative (“SG&A”) expenses, factory overhead and profit, we used the 1998 financial data of Jayaswals Neco Limited and the 1998-1999 financial data of Kalyani Brakes Limited (“Kalyani”) and Rico Auto Industries Limited (“Rico”).

Where appropriate, we removed from the surrogate overhead and SG&A calculations the excise duty amount listed in the financial reports (see Brake Rotors Investigation, 62 FR at 9164). We made certain adjustments to the ratios calculated as a result of reclassifying certain expenses contained in the financial reports. In utilizing the financial data of the Indian companies, we treated the line item labeled “stores and spares consumed” as part of factory overhead because stores and spares are not direct materials consumed in the production process. Based on publicly available information, we considered the molding materials (i.e., sand, bentonite, coal powder, steel pellets, lead powder, and waste oil) to be indirect materials included in the “stores and spares consumed” category of the financial statements. We based our factory overhead calculation on the cost of manufacturing. We also included interest and/or financial expenses in the SG&A calculation. In addition, we only reduced interest and financial expenses by amounts for interest income if the Indian financial report noted that the income was short-term in nature. Where a company did not distinguish interest income as a line item within total “other income,” we used the ratio of interest income to total other income as reported for the Indian metals industry in the Reserve Bank of India Bulletin to calculate the interest income amount. For example, if an Indian company's financial statement indicated that the company had miscellaneous receipts or other income under the general category “other income,” we applied a ratio (based on data contained in Reserve Bank of India Bulletin) to that miscellaneous receipts or other income figure in the financial statement to determine the amount associated with short-term interest income. To avoid double-counting, we treated the line item “packing, freight, and delivery charges” as expenses to be valued separately. Specifically, to determine the packing expense, we used Hongfa's reported packing material factors. We used the corrected distance (per verification findings) to determine the foreign inland freight expense (see page three of the Hongfa verification report for further discussion). For a further discussion of other adjustments made, see the Preliminary Results Valuation Memorandum.

All inputs were shipped by truck. Therefore, to value PRC inland freight, we used a November 1999 average truck freight value based on price quotes from Indian trucking companies.

In accordance with the decision of the Court of Appeals for the Federal Circuit in Sigma Corp. v. United States, 117 F. 3d 1401 (1997), we revised our methodology for calculating source-to-factory surrogate freight for those material inputs that are valued based on CIF import values in the surrogate country. Therefore, we have added to CIF surrogate values from India a surrogate freight cost using the shorter of the reported distances from either the closest PRC port of importation to the factory, or from the domestic supplier to the factory on an input-specific basis.

To value corrugated cartons and steel strip, we used April 1998-December 1998 average import values from Monthly Statistics. For plastic bags, we used an April 1997-March 1998 average import value for plastic bags from Monthly Statistics because that data (which was based on plastic bag imports from 18 market economy countries) was a more representative Indian import value for plastic bags than the more contemporaneous IBIS data (which was based on one shipment from one country). To value adhesive tape and nails, we used April 1998-March 1999 average import values from Monthly Statistics because the data (which was based on imports of adhesive tape from 26 market economy countries and imports of nails from 10 market economy countries) was also more representative of Indian import prices for tape and nails than the more contemporaneous IBIS data (which was based on one shipment of tape and 12 shipments of nails from one country). To value pallet wood, we used an April 1995-March 1996 import value per kilogram from Monthly Statistics rather than values obtained after March 1996, because the more contemporaneous values appeared aberrational relative to the overall value of the subject merchandise (see Brake Rotors Second Administrative Review). Moreover, we used the value per kilogram from Monthly Statistics rather than the more contemporaneous value per piece from IBIS because the value from IBIS did not indicate the size or weight of a piece of wood in a manner which would have allowed the Department to value the factor reported by the respondent.

Preliminary Results of the Review

We preliminarily determine that the following margin exists for Hongfa during the period April 1, 1999, through March 31, 2000:

Manufacturer/producer/exporter	Margin percent
Hongfa Machinery (Dalian) Co., Ltd.	0.00

We will disclose the calculations used in our analysis to parties to this proceeding within five days of the date of publication of this notice. Any interested party may request a hearing within 30 days of publication of this notice. Any hearing, if requested, will be held on January 31, 2001.

Interested parties who wish to request a hearing or to participate if one is requested, must submit a written request to the Assistant Secretary for Import Administration, Room B-099, within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of issues to be discussed. See 19 CFR 351.310(c).

Issues raised in the hearing will be limited to those raised in case briefs and rebuttal briefs. Case briefs from interested parties may be submitted not later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, will be due not later 37 days after the date of publication of this notice. Parties who submit case briefs or rebuttal briefs in this proceeding are requested to submit with each argument (1) a statement of the issue and (2) a brief summary of the argument. Parties are also encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited.

The Department will issue the final results of these administrative and new shipper reviews, including the results of its analysis of issues raised in any such written briefs or at the hearing, if held, not later than 120 days after the date of publication of this notice.

Assessment Rates

The Department shall determine, and Customs shall assess, antidumping duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), we will calculate importer-specific ad valorem duty assessment rates based on the ratio of the total amount of the dumping margins calculated for the examined sales to the total entered value of those same sales. In order to estimate the entered value, we will subtract applicable movement expenses from the gross sales value. In accordance with 19 CFR 351.106(c)(2), we will instruct Customs to liquidate without regard to antidumping duties all entries of subject merchandise during the POR for which the importer-specific assessment rate is zero or de minimis (i.e., less than 0.50 percent). For entries subject to the PRC-wide rate, Customs shall assess ad valorem duties at the rate established in the LTFV investigation. The Department will issue appropriate appraisement instructions directly to Customs upon completion of this review.

Cash Deposit Requirements

Upon completion of this new shipper review, for entries from Hongfa, we will require cash deposits at the rate established in the final results pursuant to 19 CFR 351.214(e) and as further described below.

The following deposit requirements will be effective upon publication of the final results of these administrative and new shipper antidumping duty administrative reviews for all shipments of brake rotors from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for Hongfa will be the rate established in the final results; (2) the cash deposit rate for PRC exporters who received a separate rate in a prior segment of the proceeding will continue to be the rate assigned in that segment of the proceeding; (3) the cash deposit rate for the PRC NME entity (including Luoyang) will continue to be 43.32 percent; and (4) the cash deposit rate for non-PRC exporters of subject merchandise from the PRC will be the rate applicable to the PRC supplier of that exporter. These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Importers

This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

These administrative and new shipper administrative reviews and notice are in accordance with section 751(a)(1) and (2)(B) of the Act (19 U.S.C. 1675(a)(1) and (2)(B)) and 19 CFR 351.213 and 351.214.

Dated: January 2, 2001.

Troy H. Cribb,

Assistant Secretary for Import Administration.

Footnotes

1.  The petitioner is the Coalition for the Preservation of American Brake Drum and Rotor Aftermarket Manufacturers.

2.  The excluded exporters/producer combinations are: (1) China National Automobile Industry Import & Export Corporation (“CAIEC”) or Shandong Laizhou CAPCO Industry (“Laizhou CAPCO”)/Laizhou CAPCO; (2) Shenyang Honbase Machinery Co., Ltd. (“Shenyang Honbase”) or Laizhou Luyuan Automobile Fittings Co., Ltd. (“Laizhou Luyuan”)/Shenyang Honbase or Laizhou Luyuan; and (3) China National Machinery and Equipment Import & Export (Xinjiang) Co., Ltd. (“Xinjiang”)/Zibo Botai Manufacturing Co., Ltd. (“Zibo”).