[Federal Register Volume 62, Number 218 (Wednesday, November 12, 1997)]
[Notices]
[Pages 60684-60688]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29763]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-803]
Heavy Forged Hand Tools, Finished or Unfinished, With or Without
Handles, From the People's Republic of China; Preliminary Results of
Antidumping Duty Administrative Reviews
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative reviews.
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SUMMARY: In response to requests by the petitioner and five exporters
of the subject merchandise, the Department of Commerce is conducting
administrative reviews of the antidumping orders on heavy forged hand
tools, finished or unfinished, with or without handles, from the
People's Republic of China. These reviews cover five exporters of the
subject merchandise, Tianjin Machinery Import & Export Corporation,
Fujian Machinery & Equipment Import & Export Corporation, Shandong
Machinery Import & Export Corporation, Liaoning Machinery Import &
Export Corporation, and Shandong Huarong General Group Corporation. The
period of review is February 1, 1996 through January 31, 1997.
We have preliminarily determined that sales have been made below
normal value. If these preliminary results are adopted in our final
results, we will instruct the U.S. Customs Service to assess
antidumping duties on appropriate entries. Interested parties are
invited to comment on these preliminary results. Parties who submit
argument are requested to submit with each argument (1) a statement of
the issue and (2) a brief summary of the argument.
EFFECTIVE DATE: November 12, 1997.
FOR FURTHER INFORMATION CONTACT: Matthew Blaskovich or James Terpstra,
AD/CVD Enforcement, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-
5831/3965.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise stated, 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's regulations are references
to the provisions codified at 19 CFR Part 353 (April 1997). Although
the Department of Commerce's new regulations, codified at 19 CFR part
351 (62 FR 27296, May 19, 1997), do not govern these proceedings,
citations to those regulations are provided, where appropriate, to
explain current Departmental practice.
Background
On February 19, 1991, the Department of Commerce (Department)
published in the Federal Register (56 FR 6622) the antidumping duty
orders on heavy forged hand tools, finished or unfinished, with or
without handles (certain heavy forged hand tools or HFHTs) from the
People's Republic of China (PRC). On February 3, 1997, the Department
published in the Federal Register (62 FR 4978) a notice of opportunity
to request administrative reviews of these antidumping duty orders. In
accordance with 19 CFR 353.22(a), on February 21 and 25, 1997, three
exporters of the subject merchandise, Tianjin Machinery Import & Export
Corporation (TMC), Fujian Machinery & Equipment Import & Export
Corporation (FMEC), and Shandong Machinery Import & Export Corporation
(SMC), requested that the Department conduct administrative reviews of
their exports of axes/adzes; bars/wedges; hammers/sledges; and picks/
mattocks. On February 26, 1997, another exporter, Liaoning Machinery
Import & Export Corporation (LMC), requested that the Department
conduct an administrative review of its exports of bars and wedges.
Also on February 26, 1997, Olympia Industrial, Inc., a U.S. importer of
the subject merchandise, requested administrative reviews of Shandong
Huarong General Group Corporation's (Shandong Huarong) exports of bars/
wedges and FMEC's exports of axes/adzes; bars/wedges; hammers/sledges;
and picks/mattocks. On February 28, 1997, the petitioner, WVS
Corporation, formerly known as Woodings-Verona Tool Works, Inc.,
requested administrative reviews of SMC's and FMEC's exports of axes/
adzes; bars/wedges; hammers/sledges; and picks/mattocks and TMC's
exports of axes/adzes and hammers/sledges.
We published the notice of initiation of these reviews on March 18,
1997 (62 FR 12793). In its May 16, 1997 response to Section A of the
Department's questionnaire, TMC withdrew its request for a review of
bars/wedges and picks/mattocks because it did not export these products
during the period of review. Because TMC withdrew its request within
the time limit provided by the Department's regulations at 19 CFR
section 353.22(a)(5), the Department is terminating its review of bars/
wedges and picks/mattocks with respect to TMC. The Department is
conducting these administrative reviews in accordance with section 751
of the Act.
Scope of Reviews
Imports covered by these reviews are shipments of HFHTs from the
PRC comprising the following classes or kinds of merchandise: (1)
Hammers and sledges with heads over 1.5 kg (3.33 pounds) (hammers/
sledges); (2) bars over 18 inches in length, track tools and wedges
(bars/wedges); (3) picks/mattocks; and (4) axes/adzes.
HFHTs include heads for drilling, hammers, sledges, axes, mauls,
picks, and mattocks, which may or may not be painted, which may or may
not be finished, or which may or may not be imported with handles;
assorted bar
[[Page 60685]]
products and track tools including wrecking bars, digging bars and
tampers; and steel wood splitting wedges. HFHTs are manufactured
through a hot forge operation in which steel is sheared to required
length, heated to forging temperature, and formed to final shape on
forging equipment using dies specific to the desired product shape and
size. Depending on the product, finishing operations may include shot-
blasting, grinding, polishing and painting, and the insertion of
handles for handled products. HFHTs are currently classifiable under
the following Harmonized Tariff System (HTS) subheadings: 8205.20.60,
8205.59.30, 8201.30.00, and 8201.40.60. Specifically excluded are
hammers and sledges with heads 1.5 kg (3.33 pounds) in weight and
under, hoes and rakes, and bars 18 inches in length and under.
Although the HTS subheadings are provided for convenience and
customs purposes, our written description of the scope of these orders
is dispositive.
Duty Absorption
On April 17, 1997, WVS Corporation requested that the Department
conduct a duty absorption inquiry in order to determine whether
antidumping duties had been absorbed by a foreign producer or exporter
subject to the order. This request was made pursuant to the March 18,
1997, notice of initiation of administrative review (62 FR 12793).
However, the Department's invitation for such requests only applies to
certain administrative reviews of orders that were in effect before
January 1995.
Section 751(a)(4) provides for the Department, if requested, to
determine, during an administrative review initiated two years or four
years after publication of the order, whether antidumping duties have
been absorbed by a foreign producer or exporter subject to the order if
the subject merchandise is sold in the United States through an
importer who is affiliated with such foreign producer or exporter.
Section 751(a)(4) was added to the Act by the URAA. The Department's
interim regulations did not address this provision of the Act.
For transition orders as defined in section 751(c)(6)(C) of the
Tariff Act, i.e., orders in effect as of January 1, 1995, section
351.213(j)(2) of the Department's new antidumping regulations provides
that the Department will make a duty-absorption determination, if
requested, for any administrative review initiated in 1996 or 1998.
Although these antidumping regulations do not apply to this review,
they do represent the Department's interpretation of section 751(a)(4)
of the Act. This approach ensures that interested parties will have the
opportunity to request a duty-absorption determination prior to the
time for sunset review of the order under section 751(c) on entries for
which the second and fourth years following an order have already
passed. Because the antidumping duty order in HFHTs from the PRC has
been in effect since 1991, this is a ``transition order'' in accordance
with section 751 (c)(b)(C) of the Tariff Act. Since this administrative
review was not initiated in 1996 or 1998, the Department will not make
a duty absorption determination.
Verification
Because Shandong Huarong and LMC had not been previously reviewed
we verified these companies' questionnaire responses as provided in
Section 782 (i) of the Act. From August 25 through September 6, 1997,
we conducted the verifications using standard verification procedures,
including on-site inspection of the manufacturers' facilities, the
examination of relevant accounting, sales, and other financial records,
and selection of original documentation containing relevant
information. Our verification results are outlined in the public
version of the verification reports which are on file in the Central
Records Unit (CRU) in room B-099 of the Main Commerce Building.
Facts Available
Section 776(a)(2) of the Act provides that if an interested party:
(1) Withholds information that has been requested by the Department;
(2) fails to provide such information in a timely manner or in the form
or manner requested; (3) significantly impedes a determination under
the antidumping statute; or (4) provides such information but the
information cannot be verified, the Department shall, subject to
Section 782(d) of the Act, use facts otherwise available in reaching
the applicable determination. The quantities the respondents reported
for factors of production were ``caps'' or standards based on the
producer's experience. At verification, LMC's supplier was unable to
provide any documentation that substantiated the accuracy of the
``caps'' reported for labor and paint. Because the reported information
could not be verified, we must use facts otherwise available to
determine the amount of labor and paint used to produce the subject
merchandise.
Section 776(b) of the Act provides that adverse inferences may be
used with respect to a party that has failed to cooperate by not acting
to the best of its ability to comply with requests for information. See
also Statement of Administrative Action (SAA) accompanying the URAA, at
870. We determined that LMC did not act to the best of its ability
because it failed to provide any information that could be used to
support the reasonableness of the reported labor usage and paint
consumption. Therefore, as adverse facts available, we have assigned
labor usage and paint consumption figures to each model of subject
merchandise equal to the greatest figures reported for each factor for
any of the models of subject merchandise manufactured by LMC's
producer. For further discussion regarding the use of facts available,
see Decision Memorandum to Richard W. Moreland, Acting Deputy Assistant
Secretary, Group II, dated October 31, 1997, ``Use of Facts Available:
1996/1997 Antidumping Duty Administrative Review of Certain Heavy
Forged Hand Tools From the People's Republic of China,'' which is on
file in the CRU.
Separate Rates
To establish whether a company operating in a state-controlled
economy is sufficiently independent to be entitled to a separate rate,
the Department analyzes each exporting entity under the test
established 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), as 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). Under this policy,
exporters in non-market-economy (NME) countries are entitled to
separate, company-specific margins when they can demonstrate an absence
of government control, both in law (de jure) and in fact (de facto),
with respect to exports. Evidence supporting, though not requiring, a
finding of de jure absence of government 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; and, (3) any other formal measures
by the government decentralizing control of companies. De facto absence
of government control with respect to exports is based on four
criteria: (1) Whether export prices are set by or subject to the
approval of a government authority; (2) whether each exporter retains
the proceeds from its sales and makes independent decisions regarding
the disposition of profits and financing of losses; (3) whether each
exporter has autonomy in making
[[Page 60686]]
decisions regarding the selection of management; and, (4) whether each
exporter has the authority to negotiate and sign contracts. See Silicon
Carbide, 59 FR at 22587.
In the final results of the 1995-1996 reviews of HFHTs, the
Department granted separate rates to FMEC, SMC and TMC. See Heavy
Forged Hand Tools From the People's Republic of China; Final Results of
Antidumping Duty Administrative Reviews (62 FR 11813, March 13, 1997).
In the instant reviews, these companies submitted complete responses to
the separate rates section of the Department's questionnaire. Because
the evidence submitted in the instant reviews is consistent with the
Department's findings in the 1995-1996 reviews, we preliminarily
determine that these three companies continue to be entitled to
separate rates.
Shandong Huarong and LMC, which we had not previously reviewed,
provided the Department with separate rates information that we
examined at verification. After analyzing the record evidence using the
criteria identified in Sparklers and Silicon Carbide, we have
preliminarily found an absence of government control, both in law and
in fact, with respect to both Shandong Huarong's and LMC's export
activities. Accordingly, for this review, we have assigned separate
rates to Shandong Huarong and LMC. For further discussion of this
finding, see Decision Memorandum to Holly A. Kuga Senior Director
Office IV, Enforcement, Group II, dated October 31, 1997, ``Assignment
of a separate rate for Shandong Huarong General Group Corporation and
Liaoning Machinery Import & Export Corporation in the 1996/1997
administrative review of certain heavy forged hand tools from the
People's Republic of China,'' which is on file in the CRU.
Export Price
The Department calculated an export price (EP) on sales to the
United States in accordance with section 772(a) of the Act and because
use of constructed export price was not otherwise warranted. We made
deductions from the selling price to unaffiliated parties, where
appropriate, for ocean freight, marine insurance, foreign brokerage and
handling, and foreign inland freight. Each of these services was either
provided by a non-market economy vendor or paid for using a non-market
economy currency. Thus, we based the deduction for these movement
charges on surrogate values (see the discussion regarding companies
located in NME countries and the Department's surrogate country
selection in the Normal Value section of this notice).
We valued ocean freight using the October 1996 and July and August
1995 rates that were obtained and used in the 1995-1996 administrative
review of HFHTs from the PRC (62 FR 11813, March 13, 1997) and the
Final Determination of Sales at Less Than Fair Value: Brake Drums and
Brake Rotors From the People's Republic of China (Brake Drums and Brake
Rotors) (62 FR 9160, February 28, 1997), respectively. We valued marine
insurance using the average rate in effect during the period November
1991 through April 1992. This rate was reported in public information
placed on the record in the Final Determination of Sales at Less Than
Fair Value: Sulfur Dyes, Including Sulfur Vat Dyes From India (58 FR
11835, March 1, 1993), and recently used in Brake Drums and Brake
Rotors.
For foreign brokerage and handling, we used the average of the
rates reported in the public version of a document submitted in the
antidumping duty investigation of Stainless Steel Bar From India (59 FR
66915, December 28, 1994). These rates, which were in effect between
October 1993 and January 1994, were recently used in the Final
Determination of Sales at Less Than Fair Value: Persulfates From the
People's Republic of China (62 FR 27222, May 19, 1997).
The sources used to value foreign inland freight are identified
below in the Normal Value section of this notice. To account for price
changes between the time period that the freight, brokerage, and
insurance rates were in effect and the period of review (POR), we
inflated or deflated the rates using the wholesale price indices (WPI)
for India as published in the International Monetary Fund's (IMF)
publication, International Financial Statistics. For further discussion
of the surrogate values used in these reviews see the File Memorandum
From the Team dated October 31, 1997, ``Surrogate Values used for the
Preliminary Results of the Sixth Administrative Reviews of Certain
Heavy Forged Hand Tools From the People's Republic of China,''
(Surrogate Value Memorandum) which is on file in the CRU.
Normal Value
For companies located in NME countries, section 773(c)(1) of the
Act provides that the Department shall determine normal value (NV)
using a factors of production methodology if (1) the subject
merchandise is exported from an NME country, and (2) available
information does not permit the calculation of NV using home-market
prices, third-country prices, or constructed value, in accordance with
Section 773(a) of the Act.
In every case conducted by the Department involving the PRC, the
PRC has been treated as an NME country. Since none of the parties to
these proceedings contested such treatment in these reviews, we
calculated NV in accordance with section 773(c) of the Act and section
353.52 of the Department's regulations.
In accordance with section 773(c)(3) of the Act, the factors of
production utilized in producing HFHTs include, but are 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 cost, including depreciation. In accordance with
section 773(c)(4) of the Act, the Department valued the factors of
production to the extent possible, using the prices or cost of factors
of production in a market economy that is--(A) at a level of economic
development comparable to the PRC, and (B) a significant producer of
comparable merchandise. We determined that India is comparable to the
PRC in terms of per capita gross national product, the growth rate in
per capita income, and the national distribution of labor. Furthermore,
India is a significant producer of comparable merchandise. For a
further discussion of the Department's selection of India as the
surrogate country, see Memorandum From Jeff May, Director, Office of
Policy, to Holly Kuga, Director, Office 4, AD/CVD Enforcement Group II,
dated June 24, 1997, ``Certain Heavy Forged Hand Tools (``Hand Tools'')
from the PRC: Nonmarket Economy Status and Surrogate Country
Selection'' which is on file in the CRU.
In accordance with section 773(c)(1) of the Act, for purposes of
calculating NV, we valued PRC factors of production based on data for
the POR. Surrogate values that were in effect during periods other than
the POR were inflated or deflated, as appropriate, to account for price
changes between the effective period and the POR. We calculated the
inflation or deflation adjustments for all factor values, except labor,
using the wholesale price indices for India that were reported in the
IMF's publication, International Financial Statistics. We calculated
the inflation or deflation adjustment for labor using the consumer
price indices (CPI) for India that were reported in the IMF's
International Financial Statistics. We valued PRC factors of production
as follows:
[[Page 60687]]
We valued direct material used to produce HFHTs (i.e.,
steel scrap, paint, paint thinner (dilution), and anti-rust oil) and
the steel scrap generated from the production of HFHT's, using the
rupee per metric ton, per kilogram, or per cubic meter value of India
imports between February 1996 and August 1996. We used imports into
India between April 1995 and March 1996 to value steel bars used to
produce HFHTs because the Harmonized Tariff Schedule (HTS) subheading
that we selected for the steel surrogate value, HTS 7214.50, does not
appear in the Indian import statistics for April 1996 through August
1996. Although petitioner claimed that HTS subheading 7214.50 was
changed to subheading 7214.99 for import statistics for 1996, we did
not use statistics from the subheading suggested by petitioner because
it was not clear that this change was implemented by India in its
import statistics. For further discussion regarding the HTS category
used to value steel, see Decision Memorandum to Holly A. Kuga, Senior
Director, Enforcement Group II, dated October 31, 1997, ``Issues
Concerning Surrogate Values for Steel, Labor Rates and Trucking: 1996/
1997 Antidumping Duty Administrative Review of Certain Heavy Forged
Hand Tools From the People's Republic of China,'' which is on file in
the CRU. We used import statistics in our valuations that were
published in the Monthly Statistics of the Foreign Trade of India,
Volume II--Imports (Indian Import Statistics).
We valued labor using the October 1995 Indian labor rates
reported in the International Labour Office's Statistics on
Occupational Wages and Hours of Work and on Food Prices, October
Inquiry, 1994 and 1995.
We derived ratios for factory overhead, selling, general
and administrative (SG&A) expenses, and profit using information
reported for 1992-1993 in the Reserve Bank of India Bulletin. From this
information, we were able to calculate factory overhead as a percentage
of direct material, labor, and energy expenses; SG&A as a percentage of
the total cost of manufacturing; and profit as a percentage of the sum
of the total cost of manufacturing and SG&A.
We valued packing materials, including cartons, pallets,
anti-rust paper, anti-damp paper, plastic straps, plastic bags, iron
buttons and knots, and iron wire, using the rupee per metric ton, per
kilogram, or per cubic meter value of imports into India between
February 1996 and August 1996. Because iron straps were not imported
into India between February 1996 and August 1996, we based the value of
iron straps on imports between April 1995 and March 1996. The import
values were published in the publication, Indian Import Statistics.
We valued coal using the price of steam coal in 1996 as
reported in the International Energy Agency's publication Energy Prices
and Taxes, 1st Quarter 1997.
We valued electricity, using the simple average of the
March 1, 1995 Indian regional electricity prices for large industries
as reported in the India's Energy Sector, September 1996, published by
the Centre for Monitoring Indian Economy Pvt. Ltd.
We used the following sources to value truck and rail
freight services incurred to transport direct materials, packing
materials, and coal from the suppliers of the inputs to the factories
producing HFHTs:
Truck Freight--If a respondent used its own trucks to transport
material or subject merchandise, we valued freight services using the
average cost of operating a truck which we calculated from information
published in the Times of India on April 24, 1994. If a respondent did
not use its own trucks or the respondent did not state that it used its
own trucks, we valued freight services using the rates reported in an
August 1993 cable from the U.S. Embassy in India to the Department. See
Final Determination of Sales at Less Than Fair Value: Certain Helical
Spring Lock Washers from the People's Republic of China (58 FR 48833,
September 20, 1993).
Rail Freight--We valued rail freight services using the April 1,
1995 rates published by the Indian Railway Conference Association.
These rates were recently used in Brake Drums and Brake Rotors. For
further discussion of the surrogate values used in these reviews, see
the Surrogate Value Memorandum which is on file in the CRU.
Preliminary Results of the Reviews
As a result of our reviews, we preliminarily determine that the
following margins exist for the period February 1, 1996 through January
31, 1997:
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Margin
Manufacturer/exporter Time period (percent)
----------------------------------------------------------------------------------------------------------------
Shandong Huarong General Group Corporation: Bars/Wedges........................ 2/1/96-1/31/97 25.28
Liaoning Machinery Import & Export Corporation: Bars/Wedges.................... 2/1/96-1/31/97 8.97
Fujian Machinery & Equipment Import & Export Corporation:
Axes/Adzes................................................................. 2/1/96-1/31/97 10.43
Hammers/Sledges............................................................ 2/1/96-1/31/97 17.03
Shandong Machinery Import & Export Corporation:
Bars/Wedges................................................................ 2/1/96-1/31/97 52.29
Hammers/Sledges............................................................ 2/1/96-1/31/97 32.60
Picks/Mattocks............................................................. 2/1/96-1/31/97 53.43
Tianjin Machinery Import & Export Corporation:
Axes/Adzes................................................................. 2/1/96-1/31/97 7.28
Hammers/Sledges............................................................ 2/1/96-1/31/97 44.30
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Parties to the proceedings may request disclosure within 5 days of
the date of publication of this notice. Any interested party may
request a hearing within 10 days of publication. Any hearing, if
requested, will be held 44 days after the publication of this notice,
or the first workday thereafter. Interested parties may submit case
briefs within 30 days of the date of publication of this notice.
Rebuttal briefs, which must be limited to issues raised in the case
briefs, may be filed not later than 37 days after the date of
publication. Parties who submit argument in these proceedings are
requested to submit with the argument (1) a statement of the issue and
(2) a brief summary of the argument. The Department will publish a
notice of final results of these administrative reviews, which will
include the results of its analysis of issues raised in any such
comments.
Assessment Rates
The Department shall determine, and the Customs Service shall
assess,
[[Page 60688]]
antidumping duties on all appropriate entries. Individual differences
between EP and NV may vary from the percentages stated above. We have
calculated importer-specific duty assessment rates for each class or
kind of HFHTs by dividing the total dumping margins (calculated as the
difference between NV and EP) for each importer/customer by the total
number of units sold to that importer/customer. We will direct Customs
to assess the resulting per-unit dollar amount against each unit of
merchandise in each of the importer's/customer's entries under the
relevant order during the review period.
Cash Deposit Requirements
The following deposit requirements will be effective upon
publication of the final results of these administrative reviews for
all shipments of HFHTs from the PRC entered, or withdrawn from
warehouse, for consumption on or after the publication date, as
provided for by section 751(a)(1) of the Act: (1) The cash deposit
rates for the reviewed companies named above which have separate rates
(Shandong Huarong, LMC, TMC, FMEC, and SMC) will be the rates for those
firms established in the final results of these administrative reviews
for the classes or kinds listed above; (2) for all other PRC exporters,
the cash deposit rates will be the PRC-wide rates established in the
final results of the previous administrative reviews; and (3) the cash
deposit rates for non-PRC exporters of subject merchandise from the PRC
will be the rates applicable to the PRC supplier of that exporter. The
PRC-wide rates are: 21.93 percent for axes/adzes; 66.32 percent for
bars/wedges; 44.41 percent for hammers/sledges; and 108.2 percent for
picks/mattocks. These deposit requirements, when imposed, shall remain
in effect until publication of the final results of the next
administrative reviews.
Notification of Interested Parties
This notice serves as a preliminary reminder to importers of their
responsibility under section 353.26 of the Department's regulations to
file a certificate regarding the reimbursement of antidumping duties
prior to liquidation of the relevant entries during this review period.
Failure to comply with this requirement could result in the Secretary's
presumption that reimbursement of antidumping duties occurred and the
subsequent assessment of double antidumping duties.
These administrative reviews and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22
of the Department's regulations.
Dated: October 31, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-29763 Filed 11-10-97; 8:45 am]
BILLING CODE 3510-DS-P
