[Federal Register Volume 63, Number 198 (Wednesday, October 14, 1998)]
[Notices]
[Pages 55087-55090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27568]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-423-602]
Industrial Phosphoric Acid From Belgium; Final Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review of industrial phosphoric acid from Belgium.
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SUMMARY: On May 11, 1998, The Department of Commerce (``the
Department'') published the preliminary results of its administrative
review of the antidumping order on industrial phosphoric acid from
Belgium. This review covers imports of industrial phosphoric acid from
one producer, Societe Chimique Prayon-Rupel S.A. (``Prayon'') and the
period August 1, 1996, through July 31, 1997.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have revised the results from those presented in preliminary results of
review.
EFFECTIVE DATE: October 14, 1998.
FOR FURTHER INFORMATION CONTACT:
Todd Peterson or Thomas Futtner, AD/CVD Enforcement Office 4, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone (202) 482-4195, and 482-3814, respectively.
[[Page 55088]]
SUPPLEMENTARY INFORMATION:
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (``the Act'') by
the Uruguay Round Agreements Act (``URAA). In addition, unless
otherwise indicated, all citations to the Department of Commerce's
(``the Department's'') regulations refer to the regulations codified at
19 CFR Part 351, 62 FR 27296 (May 19, 1997).
Background
On August 20,1 987, the Department published in the Federal
Register (52 FR 31439) the antidumping duty order on industrial
phosphoric acid (``IPA'') from Belgium. On August 4, 1997, the
Department published in the Federal Register (62 FR 41925) a notice of
opportunity to request an administrative review of this antidumping
duty order. On August 29, 1997, in accordance with 19 CFR 351.213(b),
Prayon, the petitioner FMC Corporation (``FMC''), and Albright & Wilson
Americas Inc. (``Wilson''), a domestic producer of the subject
merchandise, requested that the Department conduct an administrative
review of Prayon's exports of subject merchandise to the United States.
We published the notice of initiation of this review on September 25,
1997 (62 FR 50292). On May 11, 1998, the Department published the
preliminary results of review (63 FR 25830). The Department has now
completed this review in accordance with section 751 of the Act.
Scope of the Review
The products covered by this review include shipments of IPA from
Belgium. This merchandise is currently classifiable under the
Harmonized Tariff Schedule (``HTS'') item numbers 2809.2000 and
4163.0000. The HTS item numbers are provided for convenience and
Customs purposes. The written description remains dispositive.
Analysis of the Comment Received
We gave interested parties an opportunity to comment on the
preliminary results of review. We received comments from respondent and
petitioner.
Comment 1: Sale comparisons. According to petitioner, the
Department erroneously compared Prayon's U.S. sales made in one channel
of distribution with the home market sales made in three channels of
distribution. For the U.S. channel, Prayon sold only through its
related sales agent to end-users. In Belgium, Prayon made sales through
three channels: (1) Direct to end-users; (2) through its related sales
agent to end-users; and (3) through its related sales agent to
distributors. Petitioner maintains there are selling, quantity and
price differences between sales made in the second channel and sales
made in the first and third channels. As a result of these differences,
petitioner requests that the Department exclude from its antidumping
calculation sales made through the first and third channels in the home
market. Petitioner argues that the level of trade (``LOT'') provision
of the regulations requires comparing sales transactions which are as
nearly identical as possible, such that the Department must match only
sales made to end-users through its related sales agent in Belgium with
sales made to end-users through its related sales agent in the United
States.
Prayon argues there is only one channel of distribution in the home
market. Prayon maintains that the selling functions performed for all
of its home market sales are the same, whether or not its related sales
agent is involved, and whether or not the purchaser is an end-user or a
distributor. Moreover, since the commission paid to the related sales
agents was disregarded in the dumping calculation, there are no
significant differences between sales to end-users made by Prayon and
sales made by Prayon through its related sales agents. For these sales
to end-users in the home market, there are not two different
distribution channels but only identical selling functions performed by
two different offices in the home market. Moreover, these home market
end-user sales are identical in all respects to the sales to end-users
in the United States. These functions include communications with
customers, taking orders, directing shipments and receiving payment.
Finally, Prayon asserts that the Department in previous cases has not
used channels of distribution as an appropriate basis for grouping
sales for comparison purposes.
DOC position: We disagree with petitioner. Before evaluating and
excluding any sales transactions to alleged home market customer
groups, the Department first matches Prayon's U.S. sales to Prayon's
home market sales. Only after Commerce has determined the most
physically similar model match for a U.S. sale does the Department
determine whether or not that sale has been matched to a home market
sale at the same LOT. See Import Administration Policy Bulletin Number
92/1 July 29, 1992) (``Matching at Levels of Trade''). If not, the U.S.
sale may be matched to a home market sale of that most similar model at
a different LOT. In this case, however, all home market sales are at
the same LOT.
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine normal value (``NV'') based on sales in the
comparison market at the same LOT as the export price (``EP'') or
constructed export price (``CEP'') transaction. The NV LOT is that of
the starting price of the comparison sale in the foreign market or,
when NV is based on constructed value (``CV''), that of the sales from
which we derive selling, general and administrative (``SG&A'') expenses
and profit. For EP, the U.S. LOT is also the level of the starting-
price sale, which is usually from exporter to importer. See Notice of
Final Determination of Sales at Less Than Fair Value: Certain Cut-to-
Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19,
1997). All of the U.S. sales in this review are EP sales. See
Industrial Phosphoric Acid From Belgium; Preliminary Results of
Antidumping Duty Administrative Review, 63 FR 25830 (May 11, 1998). To
determine whether NV sale are at a different LOT than U.S. sales, we
examine stages in the marketing process and selling functions along the
chain of distribution between producer and the unaffiliated customer.
Customers categories such as distributors, retailers, or end-users
are commonly used by petitioners respondents to describe different
LOTs, but without substantiation, they are insufficient to establish
that a claimed LOT is valid. An analysis of the chain of distribution
and of the selling functions substantiates or invalidates the claimed
LOTs.
The marketing process in both markets begins with goods being sold
by the producer and extends to the sale to the final user. The chain of
distribution between the producer and the final user may have many or
few links, and each respondent's sales occur somewhere along this
chain. In the United States, the respondent's sales are generally to an
importer, whether independent or affiliated. We review and compare the
distribution systems in the home market and the United States,
including selling functions, class of customer, and the extent and
level of selling expenses for each claimed LOT. Unless the sales being
compared are at different stages in the marketing process, the
Department will not find that a difference in LOT exists, even if
selling functions are different.
[[Page 55089]]
If the claimed LOTs are different, the selling functions performed
in selling to each level should also be different. Therefore, unless we
find that there are different selling functions for sales to the U.S.
and HM sales, we will not determine that there are separate LOTs.
Different LOTs necessarily involve differences in selling functions,
but differences in selling functions, even substantial ones, are not
alone sufficient to establish a difference in the LOTs. Differences in
LOTs are characterized by purchasers at different stages of marketing
or their equivalent.
Because the existence of different channels of distribution
suggested that differences in LOT might possibly be present in this
case, the Department analyzed the selling functions associated with
Prayon's U.S. sales with Prayon's home market sales through the three
channels of distribution described above. As Prayon has noted, all four
of these groups of sales involve substantially the same selling
functions. Specifically, for all of these sales Prayon communicates
with customers, takes orders, directs shipments and receives payment
and we found no differences in selling functions. The Department has
stated in the preamble to its LOT regulation that, in order to find a
level of trade difference ``each more remote level must be
characterized by an additional layer of selling activities, amounting
in the aggregate to a substantially different selling function.'' 62 FR
27296, 27371 (May 19, 1997) (emphasis added).
Because there are no substantially different selling functions
associated with the home market sales through any of the home market
channels of distribution, we determined that there are no LOT
differences between Prayon's U.S. sales and any of its home market
sales, regardless of the differences in channel of distribution.
Because none of Prayon's home market sales are at an LOT that is
different from that of the U.S. states, there is no reason to eliminate
any of Prayon's home market sales from the matching pool or from the
model-specific price averaging groups based on an LOT rationale.
Further, it is not our practice to limit price-averaging groups based
solely on channels of distribution. See Final Determination of Sales at
Less Than Fair Value: Certain Pasta From Turkey, 61 FR 30309 (June 14,
1996) (``channels are not an appropriate basis for creating product
average groups * * *. The SAA does not contemplate the use of channels
of distribution as a basis for creating an averaging group'').
Therefore, we have compared U.S. sale prices, properly adjusted, to a
model-specific average of all of Prayon's home market sales.
Comment 2: Credit expenses. Petitioner claims that the Department
should have used the same methodology it used for home market credit
expense to calculate U.S. credit expenses. In the preliminary results,
the Department determined that the discount transactions for home
market credit expenses between Prayon and its affiliated coordination
center were not made at arm's length. As a result, the Department
deducted from the price to the first unaffiliated customer in the home
market an imputed credit expense, rather than using the home market
credit expense reported by Prayon. According to petitioner, the
discount transactions for the U.S. credit expense between Prayon and
its affiliates, Quadra and Prayon Services and Finance, also were not
made at arm's length. Therefore, the Department should reject these
reported credit expense values and calculate an imputed U.S. credit
expense. For the purposes of the final results, the imputed credit
expense must be incorporated in the antidumping margin calculation.
Petitioner also argues that Prayon erroneously reported its credit
expense on these U.S. transactions in Belgian francs, and that the
Department must calculate the imputed credit expense using the interest
rate of the currency in which Prayon incurred credit expense on U.S.
sales, i.e., U.S. dollars.
Prayon argues that the Department should use the actual credit cost
incurred by Prayon and reported in Prayon's questionnaire response.
Although Prayon's actual cost is the cost incurred in factoring
invoices for U.S. sales with a related company, the related company
operates as a ``coordination center'' under Belgian law and is legally
required to charge an arms's length interest rate. This rate is based
on the prevailing Belgian interbank rate plus a premium to reflect a
commercial loan. If, however, the Department disregards Prayon's actual
credit expense and uses an imputed expense, then a Belgian franc-
denominated rate should be used in the calculation.
DOC position: We agree with petitioner. In the preliminary results,
we determined that Prayon's home market credit expense paid to its
affiliates was not incurred on an arm's length basis. Therefore, we
calculated an imputed home market credit value using our standard
credit calculation, i.e., (date of payment less date of shipment/365)*
monthly home market short term rate interest rate* gross price. We also
determined that Prayon's U.S. credit expense paid to its affiliates was
not incurred at arm's length and intended to calculate an imputed U.S.
credit value using the standard credit calculation. For these Final
Results, we have made this change.
In our calculation, we have used the prevailing U.S. dollar prime
rate in effect during the period of review See Federal Reserve Bulletin
``Prime Rate Charged By Banks,'' June 28, 1998, p.A 22, Number 1.33.
For this instant review, the application of the prime rate is
consistent with the Department's policy of calculating an imputed
credit expense using the interest rate of the currency of sale. As we
stated in a recent Import Administration Policy Bulletin, ``for the
purposes of calculating imputed credit expenses, we will use a short-
term interest rate tied to the currency in which the sales are
denominated. We will base this interest rate on the respondent's
weighted-average short-term borrowing experience in the currency of the
transaction.'' See Import Administration Policy Bulletin Number 98.2 at
3 (February 23, 1998). Further, our use of the prime rate in the
calculation of an imputed credit expense for this review adheres to the
Department's standard policy as outlined in the Bulletin cited above:
``(1) The surrogate rate should be reasonable; (2) it should be readily
obtainable and predictable; and (3) it should be a short-term interest
rate actually realized by borrowers in the course of the usual
commercial behavior in the United States.'' The U.S. dollar prime rate
meets this standard.
We disagree that any imputed credit expense should be calculated
using Belgian francs. In our Section C questionnaire, we explicitly
stated that it is our practice to calculate imputed credit expense in
U.S. dollars when the U.S. sales are denominated in dollars. We stated
that, if Prayon did not borrow in U.S. dollars, then it should use a
U.S. published commercial bank prime rate short-term lending rate in
reporting credit expense. Therefore, we have calculated the imputed
U.S. credit expense in U.S. dollars.
Finally, we find that Prayon's assertion that its affiliate, Prayon
Services, is required, under Belgian law, to charge an arm's length
interest rate to an affiliated company provides insufficient indication
that these credit transactions are in fact made at arm's length. Since
the arm's length standard established by Belgian law is not
sufficiently similar to the practice established by the Department, we
cannot rely on Prayon's compliance with the law as evidence that the
rate
[[Page 55090]]
charged by Prayon Services to Prayon is at arm's length. See Industrial
Phosphoric Acid from Belgium; Final Results of Antidumping
Administrative Review, 61 FR 20227 (May 6, 1996).
Currency Conversion
We made currency conversions in accordance with section 773A of the
Act based on rates certified by the Federal Reserve Bank in effect on
the dates of the U.S. sales. See Change in Policy Regarding Currency
Conversions, 61 FR 9434 (March 8, 1996).
Final Results of the Review
As a result of our review, we determine that the following margin
exists for the period August 1, 1996 through July 31, 1997:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Prayon.................................................... 4.35
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The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between normal value and export price may vary from the
percentage stated above. We have calculated an importer-specific duty
assessment rate based on the ratio of the total amount of antidumping
duties calculated for the examined sales to the total entered value of
the same sales. The rate will be assessed uniformly on all entries of
that particular company made during the POR. The Department will issue
appraisement instructions directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of amended final results of review for
all shipments of IPA from Belgium entered, or withdrawn from warehouse,
for consumption on or after the publication date, as provided for by
section 751(a) of the Act: (1) For the companies named above, the cash
deposit rate will be the rate listed above (2) for merchandise exported
by manufacturers or exporters not covered in this review but covered in
a previous segment of this proceeding, the cash deposit rate will
continue to be the company-specific rate published in the most recent
final results which covered that manufacturer or exporter; (3) if the
exporter is not a firm covered in this review or in any previous
segment of this proceeding, but the manufacturer is, the cash deposit
rate will be that established for the manufacturer of the merchandise
in these final results of review or in the most recent final results
which covered that manufacturer; and (4) if neither the exporter nor
the manufacturer is a firm covered in this review or in any previous
segment of this proceeding, the cash deposit rate will be 14.67
percent, the ``all others'' rate established in the LFTV investigation.
These deposit requirements shall remain in effect until publication of
the final results of the next administrative review.
This notice serves as a final reminder to importers of their
responsibility under 19 CFR 351.402(f) 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 doubled antidumping duties.
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with section 351.306 of the Department's regulations.
Timely notification of return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of an APO is a sanctionable
violation.
This administrative review and notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: October 7, 1998.
Robert S. LaRussa,
Assistant Secretary, Import Administration.
[FR Doc. 98-27568 Filed 10-13-98; 8:45 am]
BILLING CODE 3510-DS-M
