[Federal Register Volume 60, Number 193 (Thursday, October 5, 1995)]
[Notices]
[Pages 52155-52162]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24805]
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DEPARTMENT OF COMMERCE
[A-570-841]
Notice of Final Determination of Sales at Less Than Fair Value:
Manganese Sulfate From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: October 5, 1995.
FOR FURTHER INFORMATION CONTACT: Ellen Grebasch, Dorothy Tomaszewski or
Erik Warga, Office of Antidumping Investigations, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone: (202) 482-3773; (202) 482-0631 or (202) 482-0922,
respectively.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are in reference to the provisions as they
existed on December 31, 1994.
Final Determination
We determine that manganese sulfate 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 Tariff
Act of 1930, as amended (the Act). The estimated margins are shown in
the ``Continuation of Suspension of Liquidation'' section of this
notice.
Case History
Since the preliminary determination on May 9, 1995 (59 FR 25885,
May 16, 1995), the following events have occurred:
On May 12, 1995, the Department issued an additional supplemental
questionnaire to respondents China National Nonferrous Metals Import
and Export Company (``CNIEC'') and its U.S. subsidiary, Hunan Chemicals
Import and Export Company (``Hunan Chemicals''), Xian Lu Chemical
Factory, and Yan Jiang Chemical Factory. The Department received
responses and subsequent revisions to those submissions from
respondents in June 1995.
Petitioner, American Microtrace Corporation, submitted clerical
error allegations following the Department's preliminary determination.
The Department found that clerical errors were made in the preliminary
determination; however, these errors did not result in a combined
change of at least 5 absolute percentage points in, and no less than 25
percent of, any of the original preliminary dumping margins.
Accordingly, no revision to the preliminary determination was made (see
Notice of Amended Preliminary Determinations of Sales at Less Than Fair
Value: Antidumping Duty Investigations of Pure and Alloy Magnesium from
the Russian Federation and Pure Magnesium from Ukraine, (60 FR 7519,
February 8, 1995)).
In June and July 1995, we verified the respondents' questionnaire
responses. Additional publicly available published information on
surrogate values was submitted by petitioner and respondents on August
4, 1995, and comments from the respective parties were submitted on
August 11, 1995. Petitioner and respondents filed case briefs on August
18, 1995, and rebuttal briefs on August 25, 1995.
Scope of Investigation
The product covered by this investigation is manganese sulfate,
including manganese sulfate monohydrate (MnSO4H2O) and any
other forms, whether or not hydrated, without regard to form, shape or
size, the addition of other elements, the presence of other elements as
impurities, and/or the method of manufacture. The subject merchandise
is currently classifiable under subheading 2833.29.50 of the Harmonized
Tariff Schedule of the United States (``HTSUS''). Although the
[[Page 52156]]
HTSUS subheading is provided for convenience and customs purposes, our
written description of the scope of this proceeding is dispositive.
Period of Investigation
The period of investigation (``POI'') is June 1, 1994, through
November 30, 1994.
Best Information Available
As stated in the preliminary determination, we have based the duty
deposit rate for all other exporters in the PRC (``the `PRC-wide'
rate'') on best information available (``BIA''). The evidence on record
indicates that the responding companies may not account for all exports
of the subject merchandise.
In the case of Hunan Chemicals, verification revealed that, for its
sole POI sale to the U.S., there was no evidence that Hunan Chemicals
knew at the time of its sale to its customer that the merchandise was
destined for the United States. Therefore, we have not treated that
transaction as a sale by Hunan Chemicals to the United States.
Accordingly, Hunan Chemicals will be subject to the ``PRC-wide''
deposit rate for manganese sulfate. (see Comment 2, ``Interested Party
Comments'' section of this notice).
Because information has not been presented to the Department to
prove otherwise, other PRC exporters not participating in this
investigation are not entitled to separate dumping margins. In the
absence of responses from all exporters, therefore, we are basing the
country-wide deposit rate on BIA, pursuant to section 776(c) of the
Act. (See, e.g., Final Determination of Sales at Less Than Fair Value:
Antidumping Duty Investigation of Pure Magnesium From Ukraine (61 FR
16433, March 30, 1995).
In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower
margins to those respondents who cooperated in an investigation and
margins based on more adverse assumptions for those respondents who did
not cooperate in an investigation. As outlined in the Final
Determination of Sales at Less Than Fair Value: Certain Hot-Rolled
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat
Products, and Certain Cut-to-Length Carbon Steel Plate From Belgium (58
FR 37083, July 9, 1993), when a company refuses to provide the
information requested in the form required, or otherwise significantly
impedes the Department's investigation, it is appropriate for the
Department to assign to that company the higher of (a) the highest
margin alleged in the petition, or (b) the highest calculated rate of
any respondent in the investigation. In this investigation, we are
assigning to any PRC company, other than those specifically identified
below, the ``PRC-Wide'' deposit rate of 362.23 percent, ad valorem.
This margin represents the highest margin in the petition, as
recalculated by the Department for purposes of the final determination.
In the preliminary determination, we adjusted the BIA rate by
reassigning the value for ocean freight based on the highest reported
ocean freight charge incurred by a responding company--CNIEC--because
the surrogate value cited for ocean freight in the petition appeared to
be aberrational (e.g., the unit charge for ocean freight deducted from
gross unit price equals 68 percent of the gross unit price). (See
Calculation Memorandum for the Preliminary Determination of Sales at
Less Than Fair Value: Manganese Sulfate from the People's Republic of
China (59 FR 25885, May 16, 1995)). For the final determination, we
determined CNIEC's reported ocean freight charges are based on non-
market economy rates (see Comment 7, ``Interested Party Comments''
section of this notice). Therefore, we adjusted the PRC-wide rate, as
recalculated in the preliminary determination, to reflect the market
economy rate determined by the Department as the appropriate surrogate
value for ocean freight in final margin calculation for CNIEC.
Separate Rates
CNIEC and Hunan Chemicals have each requested a separate rate.
Because, as explained above, we determined that Hunan Chemicals had no
reported sales to the U.S. during the POI, Hunan Chemicals is precluded
from being considered for a separate rate, the request of this company
will not be further analyzed (see Final Determination of Sales at Less
Than Fair Value: Nitromethane from the People's Republic of China (59
FR 14834, March 30, 1994)).
To establish whether a firm is sufficiently independent to be
entitled to a separate rate, the Department uses criteria that were
developed in 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'') and in 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 a separate rate only when an exporter
can demonstrate the absence of both de jure 1 and de facto 2
governmental control over export activities.
\1\ Evidence supporting, though not requiring, a finding of de
jure absence of central control 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; or (3) any other formal
measures by the government decentralizing control of companies.
\2\ The factors considered include: (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 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 Silicon
Carbide).
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CNIEC's business license indicates that it is owned ``by all the
people.'' As stated in the Silicon Carbide, ``ownership of a company by
all the people does not require the application of a single rate.''
Accordingly, CNIEC is eligible to be considered for a separate rate.
De Jure Control
CNIEC has submitted copies of the following laws in support of its
claim of absence of de jure control: ``Law of the People's Republic of
China on Industrial Enterprises Owned by the Whole People,'' adopted on
April 13, 1988 (``1988 Law''); ``Regulations for Transformation of
Operational Mechanism of State-Owned Industrial Enterprises,'' approved
on August 23, 1992 (``1992 Regulations''); and the ``Temporary
Provisions for Administration of Export Commodities,'' approved on
December 21, 1992 (``Export Provisions''). The 1988 Law states that
enterprises have the right to set their own prices (see Article 26).
This principle was restated in the 1992 Regulations (see Article IX).
The Export Provisions list those products subject to direct government
control. Manganese sulfate does not appear on the Export Provisions
list and is not, therefore, subject to the constraints of these
provisions. The 1994 Quota Measure supersedes earlier laws dealing with
the export of the named commodities. Manganese sulfate was not named in
the 1994 Quota Measure and does not, therefore, appear to be subject to
the export quota regulation of this measure.
The Department stated in Silicon Carbide that the existence of the
1988 Law and the 1992 Regulations support a finding that the
respondents are not subject to de jure control either by the central
government or otherwise. However, we found in Silicon Carbide
[[Page 52157]]
and other reports (see ``PRC Government Findings on Enterprise
Autonomy,'' in Foreign Broadcast Information Service-China-93-133 (July
14, 1993)) that laws shifting control from the government to the
enterprises themselves have not been implemented uniformly. Therefore,
the Department has determined that an analysis of de facto control is
critical to determining whether respondents are, in fact, subject to
governmental control.
De Facto Control
During verification, our examination of correspondence and sales
documentation revealed no evidence that CNIEC's export prices are set,
or subject to approval, by any governmental authority. That CNIEC has
the authority to negotiate and sign contracts and other agreements
independent of any government authority was evident from our
examination of correspondence and written agreements and contracts. We
also noted that CNIEC retained proceeds from its export sales and made
independent decisions regarding disposition of profits and financing of
losses (based on our examination of financial records and purchase
invoices). Finally, we have determined that CNIEC has autonomy from the
central government in making decisions regarding the selection of
management, based on our examination of management election notices,
staff congress election ballots and minutes from the last company
election meeting. According to CNIEC's company constitution, the
company president is elected by the staff congress. Examination of
management documents and correspondence provided no evidence of
involvement by the central or provincial government in CNIEC's
management selection process. Further, there is no evidence in this
proceeding that any exporters are subject to common control.
Conclusion
Given that the record of this investigation demonstrates a de jure
and de facto absence of governmental control over the export functions
of CNIEC, we determine that CNIEC should receive a separate rate.
Fair Value Comparisons
To determine whether sales by CNIEC of manganese sulfate from the
PRC to the United States were made at less-than-fair value prices, we
compared the United States price (``USP'') to the foreign market value
(``FMV''), as specified in the ``United States Price'' and ``Foreign
Market Value'' sections of this notice.
United States Price
USP for CNIEC was calculated on the same basis as in the
preliminary determination. Certain adjustments were made to the CNIEC's
reported U.S. sales, based on verification findings, as follows:
reported quantities were changed for certain transactions; one sale was
added and another reported sale was determined actually to be two
sales; and no deduction for marine insurance was made since it was
determined that this charge was not incurred. We also rejected CNIEC's
reported ocean freight in favor of a surrogate freight rate (see
Comment 7, ``Interested Party Comments'' section of this notice) For
the one unreported sale discovered at verification, adjustments for
freight charges and duty were made using the highest figures for any
transportation charges reported by CNIEC as best information available
(``BIA''). (See Calculation Memorandum, attached to the Concurrence
Memorandum, on file in room B-099 of the Main Commerce Department
Building, for details of adjustments made.)
Foreign Market Value
We calculated FMV based on Yan Jiang's and Xian Lu's factors of
production cited in the preliminary determination, making adjustments
based on verification findings. To calculate FMV, the verified factor
amounts were multiplied by the appropriate surrogate values for the
different inputs. We have used the same surrogate values as the
preliminary determination with the exception of certain factors. The
identities of certain factors were deemed proprietary by the Department
and, therefore, their names are not disclosed in this notice. The two
factors in question will be referred to as ``factor X'' and ``factor
Z'' for the remaining sections of this notice.
For Xian Lu and Yan Jiang we used verified packing factor amounts
to calculate packing cost for the final calculations.
Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
factors of production, to the extent possible, in one or more market
economy countries that are (1) at a level of economic development
comparable to that of the non-market economy country, and (2)
significant production of comparable merchandise. The Department has
determined that India is the country most comparable to the PRC in
terms of overall economic development and significant production of
comparable merchandise. (See memorandum from the Office of Policy to
the file, dated April 13, 1995.) To value factors of production, we
have obtained and relied upon published, publicly available information
wherever possible.
Verification
As provided in section 776(b) of the Act, we verified the
information submitted by respondents for use in our final
determination. We used standard verification procedures, including
examination of relevant accounting and production records and original
source documents provided by respondents.
Interested Party Comments
Comment 1: Dumping Margins Based on BIA
Petitioner asserts that the Department should calculate the dumping
margins for CNIEC and Hunan Chemicals based on the highest margins
alleged in the petition as BIA. First, petitioner notes that
respondents failed to file questionnaire responses to section A for the
responding companies within the deadline established by the Department
and failed to request an extension before that deadline expired.
Further, according to petitioner, the perpetual revision of the
responses has reduced the credibility of the information presented in
respondents' submissions.
Respondents contend that there is no legal basis in this case for
the use of BIA to calculate the responding trading companies'
respective margins. Respondents note that the Department accepted and
verified the respondents' questionnaire responses. According to
respondents, the minor deviations and discrepancies discovered at
verification were well within the limits of what the Department accepts
as correcting insignificant errors found at verification.
DOC Position
Given the special circumstances outlined in the Memorandum to the
File dated June 8, 1995, the Department exercised its discretion to
accept the questionnaire responses (19 CFR 353.31(b)(1)). Further,
except for Hunan Chemicals' response, the discrepancies discovered at
verification were not such that the overall reliability of the
responses was called into question. Therefore, the Department is basing
its final determination on verified information from questionnaire
responses from CNIEC and supplier factories.
[[Page 52158]]
Comment 2: Hunan Chemicals' Status as Respondent
Petitioner contends that the Department has no basis for
determining a company-specific margin for Hunan Chemicals. According to
petitioner, evidence on the record for its only reported sale indicates
that Hunan Chemicals did not know, at the time of sale, that the
merchandise it sold to the third country trading company was ultimately
destined for the United States. All documentary evidence on the record
indicates that Hunan Chemicals only learned that the merchandise was
destined for the United States at the time of shipment, after the sale
had already been made.
Respondents argue that the Department should continue to treat
Hunan Chemicals' only reported sale as a U.S. sale and, therefore,
assign Hunan Chemicals a separate rate for the final determination
because of the following evidence on the record: (1) The bill of lading
for the shipment in question listed the destination as a U.S. port; (2)
PRC Customs export statistics' printout of exports to the United States
showed that this shipment was sent to the United States; and, (3)
correspondence from a company in New York with respect to this shipment
was dated before the issuance of this sales contract.
DOC Position
We agree with petitioner. Based on the evidence on the record, we
determine that this transaction was not a U.S. sale made by Hunan
Chemicals. The sales contract for the reported sale did not stipulate
the ultimate destination. The customer listed on the sales contract was
a non-U.S. trading company. The actual sales documents (i.e., sales
contract, invoice, bill of lading), sales records, or accounting
records do not mention the name of the company with the New York
address found on the facsimile correspondence dated before the issuance
of the sales contract. Further, the sales correspondence up to and
including the date of sale does not mention the identity of the U.S.
customer or the ultimate destination as the United States. The terms of
delivery on the sales invoice were not to the United States. The fact
that the bill of lading lists the U.S. port as destination of the
shipment does not prove that Hunan Chemicals knew the ultimate
destination at the time of the sale because this shipping document was
issued well after the date of the sales contract which established the
date of sale in this case. The PRC Customs export statistics do not
provide any supporting evidence as to the company's knowledge at the
date of the sale that the destination of the shipment was the United
States. Even though Hunan Chemicals cooperated in supplying the
requested information and permitting verification, absence of a viable
U.S. sale made by Hunan Chemicals gives the Department no choice but to
reject the company as a respondent in this investigation. Therefore,
based on the record of this investigation, the Department did not
calculate a separate margin for Hunan Chemicals for the final
determination. Accordingly, Hunan Chemicals will be subject to the
``PRC-wide'' rate.
Comment 3: Surrogate Value for Factor X
(N.b., Due to the proprietary nature of this issue, the following
discussion is presented in non-confidential form. A more detailed
analysis of the interested parties' positions and the Department's
position is given in the September 28, 1995, decision memorandum to the
file.)
Petitioner asserts that the surrogate value for factor X from the
Indian Minerals Yearbook (``Yearbook'') used in the preliminary
determination is aberrational and should not be used in the final
determination. In support of its assertion, petitioner (1) cites to
past cases where the Yearbook value was not chosen as the surrogate
value; (2) observes that the Yearbook value is significantly lower than
other values on the record for comparable material, including a price
quotation from a PRC supplier; and (3) notes that there is no evidence
on the record of any company in India purchasing the material at the
price listed in the Yearbook.
Moreover, petitioner argues that the type of material respondents
claim to use is different from the type of material priced in the
Yearbook. Based on these reasons, petitioner requests the Department to
use publicly available published value information in the TEX Report
(for a material that petitioner characterizes as similar to that used
by the PRC producers) and adjust the price to account for any
differences.
Respondents assert that the material used by the PRC producers is
in fact the same material as priced in the Yearbook. Contrary to
petitioner's claims, respondents contend that the Department has no
basis for determining the Yearbook price as aberrational since the
Yearbook price reflects a publicly available, published domestic price
in the chosen surrogate country based on credible source used in past
cases. Accordingly, respondents request that the Department use the
Yearbook unit price as the appropriate surrogate value for factor X in
the final determination.
DOC Position
We have determined to use the Yearbook price for valuing factor X.
Contrary to petitioner's suggestion, the Yearbook has been used
repeatedly by the Department as a reasonable source of publicly
available public information for factor valuation. Additionally,
information submitted by petitioner does not establish that the value
is aberrational. Specifically, with the exception of one price provided
by petitioner, all other prices apply to products which are less
comparable to the input used by the PRC producers than the product
described in the Yearbook. Hence, those values are not appropriate to
value factor X; and, the evidence provided does not allow us to use
them to test whether the Yearbook price is correct. With respect to the
one price provided by petitioner that is for a comparable product, the
information is not publicly available published information. Therefore,
consistent with our policy (see Notice of Final Determination of Sales
at Less Than Fair Value: Antidumping Duty Investigation of Certain
Carbon Steel Butt-Weld Pipe Fittings From the PRC (57 FR 21062, May 18,
1992)), we will give preference to the Yearbook price.
Further, a comparison of the Yearbook price to a non-market export
price quotation for the comparable material, as petitioner suggested,
cannot be considered a reasonable or meaningful test of whether a
surrogate value is aberrational. It has been the Department's practice
not to rely on prices set in non-market economies due to state controls
imposed on prices, wages, currency and production as well as the
absence of market forces in the economy. Petitioner asserts that a non-
market economy price quotation would be an understatement of the market
price due to price controls. However, the Department cannot be certain
that the quoted export price is in fact an understatement due to the
market distortions existing in a non-market economy.
Comment 4: Surrogate Value for Factor Z
(N.b., Due to the proprietary nature of this issue, the following
discussion is presented in non-confidential form. A more detailed
analysis of the interested parties' positions and the Department's
position is given in the September 28, 1995, decision memorandum to the
file.)
Respondents argue that the Chemical Weekly price used to value
factor Z in the preliminary determination is an
[[Page 52159]]
inappropriate surrogate value for the following reasons: (1) it
includes selling and movement expenses for smaller quantity purchases
not normally incurred in bulk purchases, and (2) it is for a different
type of material. According to respondents, the PRC producers bought a
different type of material in bulk quantities. While not considered
publicly available published information, respondents suggest that a
more appropriate surrogate value data for this material is a price
quotation based on information that respondents obtained from the
Department's US&FCS office in New Delhi and market research
correspondence since those prices are for a more comparable material
and reflect a unit price figure for bulk quantity purchases.
Respondents also suggest that, if the Department does not decide to
change the surrogate value, it should adjust the surrogate value used
in the preliminary determination to reflect the actual quality of the
material and further adjust the value to reflect a unit price exclusive
of any selling/movement expenses that are normally included in the
retail price from Chemical Weekly.
Petitioner counters that the Department's choice of a surrogate
value for factor Z in the preliminary determination is appropriate
because it is based on publicly available information from an Indian
publication and has been accepted by the Department in past
investigations as an appropriate surrogate value for factor Z.
Petitioner asserts that the alternative suggested by respondents is not
a preferred surrogate value under the Department's hierarchy because it
stems from individuals' statements and single transactions--information
which does not demonstrate that the Chemical Weekly price is in any way
an ``incorrect'' or aberrational value for the material.
Further, petitioner argues that the Department should not make an
adjustment for the difference in material type allegedly used by the
PRC producers. Petitioner considers the disclosure of the specific type
of material as new information since this information was not provided
to petitioner until August 4, 1995, when it was disclosed in
respondents' factor valuation submission. Therefore, petitioner urges
the Department to reject respondents' arguments to adjust the surrogate
value in the Chemical Weekly for differences in type and as best
information available, to assume that the PRC producers value factor Z
without adjustment.
DOC Position
We agree with petitioner. The Department verified that the PRC
producers use a specific type of factor Z. Verification did not reveal
the nature of the purchase arrangements or the production process for
the input (nor was any such information on the record prior to
verification). Further, there is no evidence on the record to indicate
that the surrogate value from the Chemical Weekly is aberrational for
purposes of this investigation. In fact, the type of material used by
PRC producers corresponds to the common description of the material
priced in Chemical Weekly. Therefore, for purposes of the final
determination, we are using the preliminary determination's surrogate
value from the Chemical Weekly without adjustment.
Comment 5: Packing Material Consumption and Surrogate Value
Petitioner requests that the Department reject respondents' data
for packing and rely on the petition's packing data as BIA since
verification revealed that the reported factor consumption for packing
was substantially understated. In the event that the Department decides
to base its final determination on the information submitted by
respondents, it should use the verified packing materials usage factor
and not the understated figure originally reported by respondents.
Further, petitioner asserts that the Department should use the
surrogate unit value for ``polypropylene bags'' based on information in
Monthly Statistics of Foreign Trade of India. Petitioner notes that
this surrogate value was used in past cases (see, e.g., Final
Determination of Sales at Less Than Fair Value: Silicon Carbide from
PRC (59 FR 22585, May 2, 1994)) and respondents are in agreement with
this choice of surrogate value for the packing materials (see
respondents' August 11, 1995, submission on factor valuation).
Respondents alleged a discrepancy in the weight of the packing
materials at verification of Xian Lu Chemical Plant, as noted in the
corresponding verification report.
DOC Position
We have determined that the value for plastic bags (expressed in
terms of weight) based on 1991-1992 UN Trade Statistics is the more
appropriate surrogate value. Information concerning the exact type of
plastic bag used by respondents was first presented to the Department
in respondents' August 11, 1995, submission on publicly available
published information for surrogate values and, therefore, is untimely
and too late to be verified for purposes of the final determination.
Further, information on the record does not indicate that the UN Trade
Statistics data is an inappropriate basis for surrogate value. The UN
Trade Statistics are the most recent, publicly available, published
information suitable for valuing plastic bags in this investigation.
Further, as we note no discrepancy in the verified weight of the 25
kilogram plastic bag used at Xian Lu Chemical Plant, no change from the
amount noted in the Department's verification report is warranted.
Comment 6: Surrogate Value for Unskilled Labor
Respondents argue that the surrogate labor rate from the ILO
Yearbook used to value unskilled labor in the preliminary determination
is inappropriate because it is an aggregate labor rate for all skill
levels of labor in India. According to respondents, the Department
should adjust downward the surrogate labor rate used in the preliminary
determination using formulae applied in previous cases.
Petitioner counters that the Department cannot accept respondents'
argument because there is no factual evidence on the record of this
investigation to support such a proposed adjustment. Petitioner
maintains that it is impossible to know whether the formula used in the
previous cases would be applicable to the unique circumstances of the
manganese sulfate industry in India, or whether it is specific to the
products involved in those cases. Further, petitioner contends that
respondents failed to provide complete and verifiable information
regarding their usage of different types of labor. Accordingly,
petitioner urges the Department to reject respondents' request.
DOC Position
We agree with petitioner. For purposes of the final determination,
the Department is valuing unskilled labor using the Indian labor rate
reported in the ILO Yearbook without adjustment. Respondents' proposed
method of (1) assuming that the ILO Yearbook labor rate is an average,
semi-skilled labor rate, and (2) adjusting this labor rate to reflect
unskilled and skilled labor rates using certain ratio adjustment
factors was applied by the Department in a particular investigation
based on the specific record of that investigation (see Final
Determination of Sales at Less Than Fair Value: Antidumping Duty
[[Page 52160]]
Investigation of Helical Spring Lock Washers from the People's Republic
of China (``HSLW'') Concurrence Memorandum (September 20, 1993)). In
another case, the Department has used the ILO Yearbook without
adjustment (see, e.g., Preliminary Determination of Sales at Less Than
Fair Value: Antidumping Duty Investigation of Certain Paper Clips from
the PRC Calculation Memorandum (May 11, 1995), and Notice of Final
Determination of Sales at Less Than Fair Value: Antidumping Duty
Investigation of Certain Paper Clips from the PRC (59 FR 1168, October
7, 1994)).
Additionally, there is no evidence on the record of this case on
which to base the application of the method proposed by respondents.
The manganese sulfate production process and industry in this
investigation are not comparable to those examined in HSLW. Because the
production processes and industries are different, the type of skilled
and unskilled labor used may vary significantly and, consequently, may
affect the wage adjustments in each case. Therefore, there is no
reasonable basis for applying the HSLW's assumptions and formulae to
the ILO Yearbook Indian labor rate used in this investigation.
With respect to petitioner's argument concerning the absence of
verified information on labor amounts, although the total labor hours
reported by the PRC producers were not verifiable due to record keeping
deficiencies, the reported hours exceeded the labor hours given in the
petition. Therefore, our decision to use the PRC producers' reported
hours represents an adverse inference for purposes of the final
determination.
Comment 7: Ocean Freight
Petitioner asserts that verification demonstrated that U.S. sales
were shipped via a non-market economy carrier, China Ocean Shipping
Company (``COSCO''). Petitioner requests that the Department revise the
final margin calculations for CNIEC to use a market-economy ocean
freight rate as a surrogate value instead of the reported ocean freight
rates.
Petitioner further argues that the ocean freight rates provided by
petitioner are not aberrational, and should be used in the final
determination. Petitioner maintains that only its information is
provided from a publicly available market-economy source, and
representative of terms similar to those verified to have applied to
CNIEC's shipments. Accordingly, petitioner also requests that the
Department revise its preliminary determination calculation of the
``PRC-wide'' deposit rate by using market-economy ocean freight rates
instead of the reported ocean freight used in the preliminary
determination.
Respondents argue that CNIEC's reported ocean freight was verified
as a market economy freight rate. According to respondents, the
Department verified that CNIEC's U.S. subsidiary purchased ocean
freight services in the United States from a U.S. company and paid in
U.S. dollars.
DOC Position
We agree in part with petitioner. In NME proceedings, the
Department's consistent methodology has been to determine whether a
good or service obtained through a market-economy transaction is, in
fact, sourced from a market economy rather than merely purchased in a
market economy (see, e.g., Final Determination of Sales at Less Than
Fair Value: Antidumping Duty Investigation of Ferrovanadium and
Nitrided Vanadium from the Russian Federation (60 FR 27962, May 26,
1995)). Because the good or service is produced in a NME, the
Department cannot rely on the transaction as a basis for valuation
because the underlying costs and expenses are not market-based.
Verification indicated that COSCO performed the service. Although
CNIEC's U.S. subsidiary arranges ocean freight through a U.S.-based
company, the company's costs for contracting ocean freight with COSCO,
a NME provider (see, e.g., Notice of Final Results of Antidumping
Administrative Review: Iron Castings from the PRC (56 FR 2742, January
24, 1991)), cannot be relied on unless found to be representative of
market-economy freight rates. The record of this case does not indicate
that the COSCO rates are representative of market economy rates and,
thus, the rate charged to CNIEC's U.S. subsidiary cannot be used for
purposes of the final determination.
When a service, such as ocean freight, is determined to be provided
by a non-market carrier, it has been the Department's practice to use a
surrogate rate from a market economy country to value that service
(see, e.g., Final Determination of Sales at Less Than Fair Value:
Antidumping Duty Investigation of Disposable Pocket Lighters from the
PRC (60 FR 22361, May 5, 1995); Final Determination of Sales at Less
Than Fair Value: Antidumping Duty Investigation of Sebacic Acid from
the PRC (59 FR 28053, May 31, 1994); and Final Determination of Sales
at Less Than Fair Value: Antidumping Duty Investigation of Sparklers
from the PRC (56 FR 20588, May 6, 1991)).
Therefore, we have valued ocean freight using a surrogate, market-
economy value based on international shipping rates.
Comment 8: Brokerage and Handling
Petitioner contends that foreign brokerage and handling should be
deducted from USP. Further, these charges should be valued at market
economy rates provided on the record by petitioner. Petitioner requests
that the Department adjust the margin calculations to account for this
movement charge and apply a market economy value for services a
forwarder provides in the final margin calculations.
Respondents counter that CNIEC did not incur any separate foreign
brokerage and handling charges. According to respondents, any foreign
brokerage and handling charges incurred by CNIEC are subsumed in the
freight rate.
DOC Position
We agree with respondents. No separate brokerage or handling
charges were reported in respondents' questionnaire responses or
discovered at CNIEC's verification. Accordingly, such charges were not
valued or accounted for in CNIEC's final margin calculation.
Comment 9: Marine and Foreign Inland Insurance
Because verification revealed that marine insurance and foreign
inland insurance were provided by non-market economy suppliers,
petitioner requests that the Department use market economy surrogate
rates, as provided in petitioner's July 7, 1995, submission, to value
these two movement expenses, where appropriate.
Respondents argue that verification revealed that neither CNIEC nor
its U.S. subsidiary obtained marine insurance for their manganese
sulfate shipments within the POI and, therefore, petitioner's proposed
surrogate value for marine insurance is inapplicable in this case.
DOC Position
Verification revealed no indication that marine insurance was
incurred by CNIEC or its U.S. subsidiary; therefore, this expense is
not considered for purposes of the final margin calculation. However,
we did confirm that foreign inland insurance was obtained by CNIEC from
a non-market provider and, therefore, we have valued this expense based
on market-economy surrogate rates in the margin calculation.
[[Page 52161]]
Comment 10: Adjusted Calculation to Reflect Actual Working Days in
India for Surrogate Labor Rate
Petitioner requests that, if the Department chooses to rely upon
the reported labor factor amounts in the questionnaire responses, the
Department adjust the factors to account for labor practices in India.
According to petitioner, if the PRC producers report that their workers
worked more hours than the total number of hours worked in India during
a normal work week, the Department should value the excess hours at
double the normal labor rate as ``overtime.''
Respondents assert that there is no basis under law, precedent or
practice to value PRC producers' ``excess'' hours at double the rate
the Department decides to use as its surrogate value based on labor
practices in India. Further, respondents counter that there is no
indication on the record that any of the PRC producers' employees work
over the hours calculated based on Indian labor practices. Accordingly,
respondents request that the Department reject such a request.
DOC Position
We agree with respondents. While the Department does use
information on labor practices in India to convert daily, weekly, and
monthly wage rates from India into hourly wage rates, it is not
Department practice to apply the surrogate country's overtime policies
in valuing NME labor. Further, because our questionnaire did not
require NME producers to report potential ``overtime'' hours worked as
a component of ``regular'' hours, there was no opportunity for this
issue to be fully analyzed, verified, and commented upon by interested
parties.
Critical Circumstances
In our preliminary determination, we found that critical
circumstances existed for all non-responding trading companies, but not
for Hunan Chemicals or CNIEC.
Under 19 CFR 353.16(a), critical circumstances exist if (1) There
is a history of dumping in the United States or elsewhere of the class
or kind of merchandise which is the subject of this investigation; or
the importer knew or should have known that the producer or reseller
was selling the merchandise which is the subject of this investigation
at less than its fair value; and (2) there have been massive imports of
the class or kind of merchandise which is the subject of this
investigation over a relatively short period.
In determining whether imports have been massive over a short
period of time, 19 CFR 353.16(f) instructs consideration of: (i) The
volume and value of the imports; (ii) seasonal trends; and (iii) the
share of domestic consumption accounted for by the imports.
Further, 19 CFR 353.16(f)(2) states that imports will not generally
be considered massive unless they have increased by at least 15 percent
over the imports during the immediately preceding period of comparable
duration.
In accordance with 19 CFR 353.16, we preliminarily determined that
critical circumstances did not exist for CNIEC and Hunan Chemicals
based on the following criteria: (1) The finding of no imputed
knowledge of dumping to importers because the estimated dumping margins
were less than 15 percent (the threshold where, as here, only ESP sales
are involved) and (2) the adverse assumption, based on BIA, that
massive imports of manganese sulfate occurred over a relatively short
period of time. (See Preliminary Determination Notice of Sales at Less
Than Fair Value: Manganese Sulfate from PRC (59 FR 25885, May 16,
1995)).
For the final determination, we continue, as BIA, to determine that
critical circumstances exist for all non-respondent exporters. The
``PRC-wide'' margin of 362.23 percent for those exporters exceeds the
25 percent threshold for imputing a knowledge of dumping to the
importers of the merchandise. In addition, we have adversely assumed,
as BIA, a massive increase in imports from these non-respondent
exporters. We, therefore, determine that critical circumstances exist
for all non-respondent exporters in this investigation.
Since the preliminary determination, we have determined that Hunan
Chemicals is not a respondent and will not be assigned a separate rate.
Therefore, we extend to Hunan Chemicals the same BIA-based
determination of critical circumstances applied to the non-responding
trading companies.
Additionally, CNIEC submitted shipment information following the
preliminary determination which has now been verified. While CNIEC's
margin (32.48%) does indicate that importers knew, or should have
known, that CNIEC's merchandise was being sold at LTFV prices, CNIEC's
shipment data shows that there has been no massive increase in the
shipments from CNIEC in the period following the filing of the
petition. Accordingly, for CNIEC, we determine that critical
circumstances do not exist.
Continuation of Suspension of Liquidation
In accordance with section 733(d)(1) and 735(c)(4)(B) of the Act,
we are directing the Customs Service to continue to suspend liquidation
of all entries of manganese sulfate from the PRC from all non-
responding trading companies, that are entered, or withdrawn from
warehouse for consumption, on or after February 14, 1995, which is the
date that is 90 days prior to the date of publication of our notice of
preliminary determination in the Federal Register. This retroactive
suspension will now also apply to Hunan Chemicals. In addition, we are
instructing Customs to suspend liquidation from the date of publication
of this notice in the Federal Register for all entries of manganese
sulfate from the PRC sold by CNIEC. The Customs Service shall require a
cash deposit or posting of a bond equal to the estimated amount by
which the FMV exceeds the USP as shown below. These suspension of
liquidation instructions will remain in effect until further notice.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Margin Critical
Manufacturer/producer/exporter percentage circumstances
------------------------------------------------------------------------
CNIEC....................................... 32.48 No.
``PRC-Wide'' Rate........................... 362.23 Yes.
------------------------------------------------------------------------
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. As our final determination is affirmative,
the ITC will within 45 days determine whether these imports are
materially injuring, or threaten material injury to, the U.S. industry.
If the ITC determines that material injury, or threat of material
injury does not exist, the proceeding will be terminated and all
securities posted will be refunded or cancelled. If the ITC determines
that such injury does exist, the Department will issue an antidumping
duty order directing Customs officials to assess antidumping duties on
all imports of the subject merchandise entered, for consumption on or
after the effective date of the suspension of liquidation.
This determination is published pursuant to section 735(d) of the
Act and 19 CFR 353.20(a)(4).
[[Page 52162]]
Dated: September 28, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-24805 Filed 10-4-95; 8:45 am]
BILLING CODE 3510-DS-P
