[Federal Register Volume 64, Number 243 (Monday, December 20, 1999)]
[Notices]
[Pages 71104-71111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32916]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-852]
Notice of Final Determination of Sales at Less Than Fair Value:
Creatine Monohydrate From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: December 20, 1999.
FOR FURTHER INFORMATION CONTACT: Blanche Ziv, Rosa Jeong, or Ryan
Langan, Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230; telephone: (202) 482-4207, (202) 482-3853, and
(202) 482-1279, respectively.
Final Determination
We determine that creatine monohydrate (``creatine'') 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''). The estimated
margins of sales at LTFV are shown in the ``Continuation of Suspension
of Liquidation'' section of this notice.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Act by the Uruguay Round Agreements Act (``URAA''). In addition,
unless otherwise indicated, all citations to the Department of Commerce
(``Department'') regulations are to the regulations at 19 CFR Part 351
(April 1, 1998).
Case History
Since the preliminary determination (64 FR 41375, July 30, 1999),
the following events have occurred:
During September and October 1999, we conducted verification of the
questionnaire responses of the respondents: Blue Science International
Trading (Shanghai) Co., Ltd. (``Blue Science''); Nantong Medicines and
Health Products Import and Export Co., Ltd. d/b/a Nantong Foreign Trade
Corporation Medicine and Health Products Department (``Nantong'');
Shanghai Desano International Trading Co., Ltd. (``Desano''); Shanghai
Freemen International Trading Co., Ltd./Shanghai Greenmen International
Trading Co., Ltd. (``Freemen''); Suzhou Sanjian Fine Chemical Co., Ltd.
(``Sanjian''); and Tianjin Tiancheng Pharmaceutical Co., Ltd.
(``Tiancheng''). We also verified information provided by the producers
who supplied the respondents with the subject merchandise during the
POI, including Jiangsu Shuang Qiang Chemical Co. and Wuxian
Agricultural Chemical Factory (collectively ``SQ'') and several other
producers whose identities have been treated as business proprietary
information and cannot be publicly summarized. We issued reports on our
findings of these verifications during October and November 1999.
The petitioner, Pfanstiehl Laboratories, Inc., and the respondents
filed case and rebuttal briefs on November 17, 1999, and November 23,
1999, respectively. On November 29, 1999, the Department held a public
hearing. On November 30, 1999, pursuant to the Department's request,
the petitioner submitted supplemental information regarding the
surrogate value of one input. On December 1, 1999, the respondents
commented on the supplemental information.
Scope of the Investigation
For purposes of this investigation, the product covered is creatine
monohydrate, which is commonly referred to as ``creatine.'' The
chemical name for creatine monohydrate is N-(aminoiminomethyl)-N-
methylgycine monohydrate. The Chemical Abstracts Service (``CAS'')
registry number for this product is 6020-87-7. Creatine monohydrate in
its pure form is a white, tasteless, odorless powder, that is a
naturally occurring metabolite found in muscle tissue. Creatine
monohydrate is provided for in subheading 2925.20.90 of the Harmonized
Tariff Schedule of the United States (``HTSUS''). Although the HTSUS
subheading and the CAS registry number are provided for convenience and
customs purposes, the written description of the merchandise under
investigation is dispositive.
Period of Investigation
The period of this investigation (``POI'') is July 1 through
December 31, 1998, which corresponds to each exporter's two most recent
fiscal quarters prior to the filing of the petition.
Nonmarket Economy Country and Market Oriented Industry Status
The Department has treated the PRC as a nonmarket economy (``NME'')
country in all past antidumping investigations. See, e.g., Final
Determination of Sales at Less Than Fair Value: Certain Preserved
Mushrooms from the People's Republic of China, 63 FR 72255 (December
31, 1998) (``Mushrooms''). Under section 771(18)(C) of the Act, this
NME designation remains in effect until it is revoked by the
Department.
The respondents in this investigation have not requested a
revocation of the PRC's NME status and no further information has been
provided that would lead to such a revocation. Therefore, we have
continued to treat the PRC as an NME in this investigation.
Separate Rates
All responding exporters have requested separate, company-specific
antidumping duty rates. Blue Science has stated, and we verified, that
it is a trading company which is wholly-owned by persons in Hong Kong.
Therefore, in accordance with our past practice, we determine that this
exporter qualifies for a separate rate. See, e.g., Notice of Final
Determination of Sales
[[Page 71105]]
at Less Than Fair Value: Disposable Pocket Lighters From the People's
Republic of China, 60 FR 22359, 22360 (May 5, 1995). The other
responding exporters have stated, and we verified, that they are
privately owned companies with no element of government ownership or
control.
The Department's separate rate test is not concerned, in general,
with macroeconomic/ border-type controls, e.g., export licenses,
quotas, and minimum export prices, particularly if these controls are
imposed to prevent dumping. The test focuses, rather, on controls over
the investment, pricing, and output decision-making process at the
individual firm level. See Certain Cut-to-Length Carbon Steel Plate
from Ukraine: Final Determination of Sales at Less than Fair Value, 62
FR 61754, 61757 (Nov. 19, 1997); Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, from the People's Republic of China:
Final Results of Antidumping Duty Administrative Review, 62 FR 61276,
61279 (Nov. 17, 1997); and Honey from the People's Republic of China:
Preliminary Determination of Sales at Less than Fair Value, 60 FR
14725, 14726 (March 20, 1995).
To establish whether a firm is sufficiently independent from
government control to be entitled to a separate rate, the Department
analyzes each exporting entity under a test arising out of the Final
Determination of Sales at Less Than Fair Value: Sparklers from the
People's Republic of China, 56 FR 20588 (May 6, 1991) (``Sparklers''),
as modified by Final Determination of Sales at Less Than Fair Value:
Silicon Carbide from the People's Republic of China, 59 FR 22585 (May
2, 1994). Under the separate rates criteria, the Department assigns
separate rates in NME cases only if the respondents can demonstrate the
absence of both de jure and de facto governmental control over export
activities.
1. Absence of De Jure Control
The respondents have placed on the record a number of documents to
demonstrate absence of de jure government control, including the
``Foreign Trade Law of the People's Republic of China'' and the
``Company Law of the People's Republic of China.''
The Department has analyzed these laws in prior cases and found
that they establish an absence of de jure control. See, e.g., Final
Determination of Sales at Less Than Fair Value: Certain Partial-
Extension Steel Drawer Slides with Rollers from the People's Republic
of China, 60 FR 54472 (October 24, 1995); see also Notice of Final
Results of New Shipper Review: Freshwater Crawfish Tail Meat from the
People's Republic of China, 64 FR 27961 (May 24, 1999). We have no new
information in this proceeding which would cause us to reconsider this
determination. Accordingly, we determine that, within the creatine
industry, there is an absence of de jure government control over export
pricing and marketing decisions of firms.
2. Absence of De Facto Control
As stated in previous cases, there is some evidence that certain
enactments of the PRC central government have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC. See,
e.g., Sparklers. Therefore, the Department has determined that an
analysis of de facto control is critical in determining whether
respondents are, in fact, subject to a degree of governmental control
which would preclude the Department from assigning separate rates.
As discussed in the preliminary determination, the responding
exporters claim to have the autonomy to set prices at whatever level
they wish through independent price negotiations with their foreign
customers without government interference. During verification, our
examination of correspondence and sales documentation revealed no
evidence that any of the responding exporters' export prices are set,
or are subject to approval by, any governmental authority. Based on our
review of written agreements and contracts, it appears that these
exporters have the authority to negotiate and sign contracts and other
agreements independent of any government authority. Moreover, we have
determined that the responding exporters have autonomy from the central
government in making decisions regarding the appointment of management.
Finally, based on our examination of financial records and purchase
invoices, we have concluded that the responding exporters retained
proceeds from their export sales and made independent decisions
regarding disposition of profits and financing of losses.
This information supports a finding that there is an absence of de
facto governmental control of the export functions of Desano, Freemen,
Nantong, Sanjian and Tiancheng. Consequently, we determine that the
responding exporters in this investigation should be assigned
individual dumping margins.
PRC-Wide Rate
As stated in the preliminary determination, information on the
record of this investigation indicates that there may be producers and
exporters of the subject merchandise in the PRC in addition to the
companies participating in this investigation. Also, U.S. import
statistics indicate that the total quantity of U.S. imports of creatine
from the PRC is greater than the total quantity of creatine exported to
the United States as reported by all PRC creatine exporters that
submitted responses in this investigation. Given this discrepancy, it
appears that not all PRC exporters of creatine responded to our
questionnaire. Accordingly, we are applying a single antidumping
deposit rate--the PRC-wide rate--to all exporters in the PRC, other
than those specifically identified below under the ``Continuation of
Suspension of Liquidation'' section of this notice. We apply this
single rate based on our presumption that the export activities of the
companies that failed to respond to the Department's questionnaire are
controlled by the PRC government. See, e.g., Final Determination of
Sales at Less Than Fair Value: Bicycles from the People's Republic of
China, 61 FR 19026 (April 30, 1996) (``Bicycles'').
Use of Facts Available
As explained in the preliminary determination, the PRC-wide
antidumping rate is based on adverse facts available, in accordance
with Section 776 of the Act. Section 776(a)(2) of the Act provides that
``if an interested party or any other person--(A) withholds information
that has been requested by the administering authority or the
Commission under this title, (B) fails to provide such information by
the deadlines for submission of the information or in the form and
manner requested, subject to subsections (c)(1) and (e) of section 782,
(C) significantly impedes a proceeding under this title, or (D)
provides such information but the information cannot be verified as
provided in section 782(i), the administering authority and the
Commission shall, subject to section 782(d), use the facts otherwise
available in reaching the applicable determination under this title.''
Use of facts available is warranted in this case because the exporters
other than those under investigation have failed to respond to the
Department's questionnaire.
Section 776(b) of the Act provides that adverse inferences may be
used when a party has failed to cooperate by not acting to the best of
its ability to comply with a request for information. The exporters
that decided not to respond in any form to the Department's
questionnaire failed to act to the best of
[[Page 71106]]
their ability in this investigation. Further, absent a response, we
must presume government control of these and all other PRC companies
for which we cannot make a separate rates determination. Thus, the
Department has determined that, in selecting from among the facts
otherwise available, an adverse inference is warranted.
As adverse facts available, we are assigning the highest margin in
the petition, 153.70 percent, which is higher than any of the
calculated margins.
Section 776(c) of the Act provides that where the Department
selects from among the facts otherwise available and relies on
``secondary information,'' such as the petition, the Department shall,
to the extent practicable, corroborate that information from
independent sources reasonably at the Department's disposal. The
Statement of Administrative Action accompanying the URAA, H.R. Doc. No.
103-316 (1994) (``SAA''), states that ``corroborate'' means to
determine that the information used has probative value. See SAA at
870. As discussed in the preliminary determination, we determine that
the calculations set forth in the petition have probative value. See
also Comment 2.
In addition to the PRC-wide rate, we have also used partial facts
available in calculating the dumping margins for two responding
exporters. As discussed below in comment 2, certain producers which
supplied the subject merchandise Blue Science and Freemen did not
provide complete factors of production information. We find that
neither Blue Science, Freemen, nor the suppliers in question have
cooperated to the best of their abilities in providing complete factors
of production information.
Accordingly, as adverse facts available, we have applied a margin
of 153.70 percent, the highest margin from the petition, to those sales
for which factor information was not provided (see Comment 2).
Fair Value Comparisons
To determine whether sales of the subject merchandise by Blue
Science, Desano, Freemen, Nantong, Sanjian and Tiancheng to the United
States were made at LTFV, we compared the export price (``EP'') to the
normal value (``NV''), as described in the ``Export Price'' and
``Normal Value'' sections of this notice, below. In accordance with
section 777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-
average EPs to weighted-average NVs.
Export Price
We used EP methodology in accordance with section 772(a) of the
Act, because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to importation and CEP methodology
was not otherwise appropriate. We calculated EP based on packed c.i.f.
or c&f prices to the first unaffiliated purchaser in the United States.
Where appropriate, we made deductions from the starting price (gross
unit price) for billing adjustments, inland freight from the plant/
warehouse to port of exit, brokerage and handling in the PRC, marine
insurance and ocean freight. Because certain domestic brokerage and
handling, marine insurance, and inland freight were provided by NME
companies, we valued those charges using surrogate rates from India
(see ``Normal Value'' section for further discussion). In addition, we
made corrections for certain clerical errors found at verification (see
calculation memoranda for individual respondents).
Normal Value
1. Surrogate Country
Section 773(c)(4) of the Act requires the Department to value an
NME producer's factors of production, to the extent possible, in one or
more market economy countries that: (1) are at a level of economic
development comparable to that of the NME, and (2) are significant
producers of comparable merchandise. The Department has determined that
India, Pakistan, Sri Lanka, Egypt, Indonesia, and the Philippines are
countries comparable to the PRC in terms of overall economic
development (see memorandum from Jeff May, Director, Office of Policy,
to Susan Kuhbach, Senior Director, AD/CVD Enforcement, Office 1, March
26, 1999). Moreover, we have determined that both India and Indonesia
are significant producers of comparable merchandise. As discussed in
the preliminary determination, although we have no information to
indicate that India and Indonesia produce creatine, they do produce
other products within the same customs heading and other fine chemicals
with nutritional characteristics.
For purposes of our final determination, we have continued to rely
on India as our primary surrogate country for this investigation.
Because India is frequently used as a surrogate in cases involving the
PRC, its use in this proceeding enhances predictability, one of the
Department's goals in administering the NME provisions (see preamble to
proposed 19 CFR Sec. 351.408, 61 FR 7308, 7344 (February 27, 1996)).
Also, India produces and exports more merchandise than Indonesia under
United National Standard International Trade Classification Revised
number 514.82, ``carboxyamide-function compounds (including saccharin
and its salts) and imine-function compounds,'' the heading which
includes creatine. Thus, we have relied primarily on Indian values to
calculate NV. When Indian values were not available or determined to be
aberrational, we used Indonesian values.
2. Factors of Production
In accordance with section 773(c) of the Act, we calculated NV
based on factors of production reported by the companies in the PRC
which produced creatine for the responding exporters during the POI.
To calculate NV, the verified per-unit factor quantities were
multiplied by publicly available surrogate values. We then added
amounts for labor, overhead, selling, general and administrative
expenses (including interest) (``SG&A''), profit, and packing expenses
incidental to placing the merchandise in packed condition and ready for
shipment to the United States.
We calculated NV based on the same methodology used in the
preliminary determination. In addition, we made corrections for certain
clerical errors found at verification (see calculation memoranda for
individual respondents).
3. Surrogate Values
In selecting the surrogate values, we considered the quality,
specificity, and contemporaneity of the data. As appropriate, we
adjusted input prices to make them delivered prices. Where a producer
did not report the distance between the material supplier and the
factory, as facts available, we used either the distance to the nearest
seaport (if an import value was used as the surrogate value for the
factor) or the farthest distance reported for a supplier. Where
distances were reported, we added to Indian and Indonesian c.i.f.
surrogate values a surrogate freight cost using the shorter of the
reported distances from either the closest PRC port to the PRC factory,
or from the domestic supplier to the factory. This adjustment is in
accordance with the Court of Appeals for the Federal Circuit's decision
in Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 1997).
For those values not contemporaneous with the POI and quoted in a
foreign currency, we adjusted for inflation using wholesale price
indices published in the International Monetary Fund's International
Financial Statistics.
(1) Material Inputs: Many of the inputs in the production and
packing of
[[Page 71107]]
creatine are considered business proprietary data by the respondents.
Thus, we are unable to discuss individual inputs in this notice. In
general, the chemical inputs were valued using data reported in the
following sources: Monthly Statistics of the Foreign Trade of India,
the Indian publication Indian Chemical Weekly (``ICW'') and Monthly
Statistics of the Foreign Trade of Indonesia. For a complete analysis
of surrogate values, see ``Factors of Production Valuation'' memoranda
dated July 22, 1999 and December 13, 1999.
(2) Labor: We valued labor using the method described in 19 CFR
Sec. 351.408(c)(3).
(3) Electricity: To value electricity, we used the 1995 electricity
rates reported in the publication Energy Prices and Taxes, 4th quarter
1998. We based the value of coal on prices reported in Energy Prices
and Taxes, 2nd quarter 1998.
(4) Overhead, SG&A and Profit: We based factory overhead, SG&A, and
profit on the financial statements of Sanderson Industries, Ltd.
(``Sanderson''), an Indian chemical producer (see comments 1 and 4).
(5) Inland Freight: To value truck freight rates, we used price
quotes obtained by the Department from Indian truck freight companies
in November 1999. For inland water transportation, we valued boat and
barge transportation using the surrogate values provided in an August
1993 cable from the US Embassy Bombay. With regard to rail freight, we
based our calculation on price quotes obtained by the Department from
an Indian rail freight company in November 1999.
(6) Packing Materials: For packing materials we used import values
from the Monthly Foreign Trade Statistics of India; Volume II Imports.
(7) Brokerage and Handling: To value foreign brokerage and
handling, we relied on public information reported in the case record
for a new shipper review of stainless wire rod from India. See Certain
Stainless Steel Wire Rod From India; Preliminary Results of Antidumping
Duty Administrative and New Shipper Reviews, 63 FR 48184 (Sept. 9,
1998).
(8) Marine Insurance: For marine insurance, we used public
information collected for Tapered Roller Bearing and Parts Thereof,
Finished and Unfinished, from the PRC; Final Results of 1996-1997
Antidumping Administrative Review, 63 FR 63842, 63847 (Nov. 17, 1998)
(``TRBs-10''), which was obtained through queries made directly to an
international marine insurance provider.
(9) Ocean Freight: For ocean freight, we relied on public
information used in TRBs-10, which was obtained through queries made
directly to an international freight provider.
Critical Circumstances
In the preliminary determination, we found that critical
circumstances, within the meaning of section 733(e)(1) of the Act,
exist for Desano, Freemen and all other PRC exporters except Blue
Science, Nantong, Sanjian and Tiancheng. Our decision was based on the
analysis of shipment data submitted by the respondents and available
import statistics, as well as evidence of importer knowledge of dumping
and the likelihood of resultant material injury. As discussed in the
preliminary determination, the Department normally considers margins of
25 percent or more and a preliminary International Trade Commission
(``ITC'') determination of material injury sufficient to impute
knowledge of dumping and the likelihood of resultant material injury.
In the final determination, Desano's calculated dumping margin is
less than 25 percent. Therefore, because there is no longer sufficient
evidence to impute knowledge of dumping, we have reversed our
preliminary finding of critical circumstances for Desano. With regard
to other exporters, no new information has been provided to warrant a
reconsideration of our finding. Therefore, we have determined that
critical circumstances exist for Freemen and all other PRC exporters
except Blue Science, Desano, Nantong, Sanjian and Tiancheng.
Verification
As provided in section 782(i) 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: Surrogate Value for Overhead, SG&A and Profit
Blue Science, Freemen, Nantong, SQ and Sanjian argue that the
Department should reject the data used in the preliminary determination
to calculate factory overhead, SG&A, and profit. The respondents argue
that these data from the Reserve Bank of India Bulletin (``RBI'') are
stale and unreliable because they relate to 1992-1993 and include data
drawn from an aggregation of over 600 companies from dissimilar
industries. The respondents claim that the Department has rejected the
use of RBI data in past cases for these same reasons (see, e.g.,
Tapered Roller Bearing and Parts Thereof, Finished and Unfinished, from
the PRC; Final Results of Antidumping Administrative Review, 62 FR
6189, 6206 (Feb. 11, 1997) and Pure Magnesium from the PRC, 63 FR 3085
(Jan. 21, 1998) (``Magnesium'')).
Instead, the respondents urge the Department to use the financial
statement of an Indian producer of bulk drugs, Kopran Limited
(``Kopran''), to derive overhead, SG&A, and profit. While Kopran does
not produce creatine, the respondents assert that it is in the same
general industry category as creatine and, thus, Kopran's experience is
more comparable to the experience of PRC creatine producers.
In the alternative, the respondents argue that the Department
should use the data from Sanderson, an Indian producer of sulfuric acid
and other chemicals. Sanderson's ratios were used in Notice of
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination: Persulfates from the PRC, 61 FR
68232 (Dec. 27, 1996) (``Persulfates (Preliminary)'') (Sanderson's data
were not used for the final determination). In that case, according to
the respondents, the Department selected Sanderson's industry-specific
data over the broad-based RBI data.
The petitioner contends that the Department should continue to use
the RBI ratios used in the preliminary determination. The petitioner
argues that the financial data of both Kopran and Sanderson are
inappropriate because neither company produces creatine. Moreover, use
of this data would be contrary to the Department's practice of using
publicly available statistical averages rather than relying on company-
specific data. See TRBs-10. Where the Department has relied on the
financial data from a single producer or the average of a small group
of surrogate producers, the petitioner contends that the producers
involved have been producers of the like merchandise (see, e.g.,
Mushrooms; Certain Cut-to-Length Carbon Steel Plate from the PRC, 60 FR
61964 (Nov. 20, 1997); Freshwater Crawfish Tail Meat from the PRC, 62
FR 41347 (Aug. 1, 1997)).
Concerning Persulfates (Preliminary), the petitioner contends that
the Department used company-specific information in that case only
after extensive information was placed on the record concerning the
specific production processes of the Indian chemical producers. In the
present case, according to the petitioner, no such evidence exists with
respect to the
[[Page 71108]]
production processes. The petitioner adds that the respondents'
``cherry-picking'' one particular Indian company is inherently
unreliable.
Department's Position
It is the Department's preference, where information is available,
to derive the overhead, SG&A and profit values from producers of
merchandise that is identical or comparable to the subject merchandise.
See section 351.408(c)(4) of the Department's regulations. Because the
RBI data cover a wide range of industries, and because we now
information relating to a producer of a narrower category of products
which includes comparable merchandise, we have determined that it would
be inappropriate to rely on the RBI data used in the preliminary
determination.
After reviewing publicly available information submitted for the
record and available to the Department in this investigation, we have
determined that Sanderson's financial data provide the best basis for
valuing overhead, SG&A and profit. The products produced by Sanderson
appear to be manufactured using bulk chemical processes, similar to the
processes used by the PRC creatine producers. In contrast, Kopran
produces high-grade pharmaceutical products. Given this, we have
concluded that Sanderson better reflects the overhead, SG&A and profit
levels that would be incurred by the producers of creatine.
We disagree with the petitioner's arguments against the use of
company-specific data to calculate overhead, SG&A and profit. First,
the Department does not require that these ratios be calculated using
data from producers of a like product. As noted above, section
351.408(c)(4) of the Department's regulations establishes that, for
purposes of valuing manufacturing overhead, general expenses, and
profit, the Department normally will use ``non-proprietary information
gathered from producers of identical or comparable merchandise in the
surrogate country'' (emphasis added). Second, the petitioner's
assertion that the Department's practice is to use publicly available
statistical averages rather than relying on company-specific data is
misplaced. While it is correct that we prefer average values for
valuing inputs such as raw materials, we prefer producer- or industry-
specific data for overhead, SG&A and profit. This is explained in the
preamble to the Department's regulations:
When compared to a publicly available price that reflects
numerous transactions between many buyers and sellers, a single
input price reported by a surrogate producer may be less
representative of the cost of that input in the surrogate country.
For these reasons, we have continued the general schema . . . of
relying on publicly available data (which will not normally be
producer-specific) for material inputs, while relying on producer-
or industry-specific data for manufacturing overhead, general
expenses, and profit.
62 FR 27296, 27366 (May 19, 1997). We note that in TRBs-10, cited by
the petitioner, the value at issue was labor (prior to the Department's
adoption of the present regression-based methodology), rather than
overhead, SG&A and profit. Finally, regarding the petitioner's concern
that the respondents may have submitted data favorable to them, we note
that the petitioner also had the opportunity to submit data relating
more specifically to creatine than the RBI data. In any case, since we
have not used the Kopran data, the petitioner's point is moot.
Comment 2: Use of Partial Facts Available for Freemen and Blue Science
Freemen and Blue Science argue that the Department's use of adverse
facts available for certain sales was overly punitive given that
Freemen and Blue Science have cooperated fully in the investigation and
that the sales in question account for a small percentage of their
total U.S. sales. Freemen and Blue Science assert that section
351.308(a) of the Department's regulations requires that to warrant an
adverse inference, the Department must find that the interested party
has impeded the investigation. Moreover, Freemen and Blue Science
contend that pursuant to section 351.308(e), the Department should
consider the factors information submitted by other suppliers of the
two exporters because the information meets all conditions of section
782(e) of the Act. The respondents assert that in cases such as Allied-
Signal Aerospace Co. v. United States, 996 F.2d 1185 (Fed. Cir. 1994)
and Olympic Adhesives, Inc. v. United States, 899 F.2d 1565 (Fed. Cir.
1990), the courts have consistently held that a company cannot be
penalized for failing to provide information that it does not have.
The respondents also argue that the petitioner's petition data, on
which the adverse facts available rate was based, cannot be
corroborated because the petition data uses the price of a more
expensive grade of one chemical input rather than the price of the less
expensive industrial grade that is used by all respondents.
The petitioner contends that the Department should continue to
apply adverse facts available to the sales for which Freemen and Blue
Science have not provided complete and accurate production data. Citing
TRBs-10 (at 61846), the petitioner argues that the suppliers, who are
interested parties, have failed to provide factors of production data
and, thus, have not acted to the best of their ability. According to
the petitioner, both Allied-Signal and Olympic Adhesives are
distinguishable because the cases involved a genuine lack of ability on
the part of interested parties to respond. In the instant case, the
petitioner contends that there is no evidence on the record
demonstrating that the non-responsive suppliers of Blue Science and
Freemen were genuinely unable to respond.
Department's Position
We have continued to apply adverse facts available for those
Freemen and Blue Science sales for which these exporters did not supply
factors of production data. As noted above, in accordance with section
776(b) of the Act, an adverse inference is appropriate where a party
``has failed to cooperate by not acting to the best of its ability to
comply with a request for information.'' As further explained below,
both Freemen and Blue Science and certain of their suppliers failed act
to the best of their abilities in providing factors of production
information from those certain suppliers.
As respondents are aware, our practice is to require convincing
evidence from exporters claiming that their suppliers cannot supply
requested factors of production information. See Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished, From the People's
Republic of China; Final Results of 1997-1998 Antidumping Duty
Administrative Review and Final Results of New Shipper Review, 64 FR
61837, 61846 (November 15, 1999) (``TRBs-11s'') (``In this case, we
determine that Premier has not acted to the best of its ability.
Premier was unable to provide letters from all of its suppliers
responding to Premier's request for information.''). While Freemen and
Blue Science argue that they did attempt to secure the requested
factors information from their suppliers, their explanations are not
persuasive. Specifically, Freemen claims that it made repeated demands
for this information on one supplier, and that this supplier responded
that it would not participate in the investigation. However, Freemen
provided no documentation confirming its efforts, or the supplier's
refusals. Similarly, Blue Science claims that its supplier only
produced the subject merchandise on a trial basis. This is not an
adequate
[[Page 71109]]
explanation, as the mere cessation of production of a particular
product does not mean that relevant records are no longer available. We
also emphasize that neither Freemen nor Blue Science provided any
additional information regarding their efforts to obtain the requested
information upon our application of adverse facts available for these
sales in the preliminary determination.
As we explained in TRBs-11, suppliers to respondent exporters are
interested parties, and their failure to provide factors information
prevents the Department from calculating accurate dumping margins.
Moreover, we must ensure that an exporter does not benefit by
selectively providing factors of production information from low-cost
producers. In cases such as this, we are precluded from measuring the
costs of those suppliers who refused to cooperate, and cannot assume
that their costs resemble those of other suppliers who did cooperate.
For this reason, too, an adverse inference in warranted.
In the case of Freemen, even if it is true that the supplier in
question refused to provide the necessary information, it is not
acceptable for a producer to withhold such information. As there is no
acceptable explanation on the record for the supplier's failure to
provide factors of production information, an adverse inference in
applying facts available is warranted due to the supplier's failure to
act to the best of its ability. Similarly, there is no acceptable
explanation on the record for the failure of Blue Science's supplier to
provide the necessary factors of production information, and therefore,
an adverse inference is warranted.
Freemen and Blue Science's argument concerning section 782(e) of
the Act is misplaced. Section 782(e) directs the Department to use
information submitted by a respondent, where possible, with respect to
that respondent. In this case, we have used the factors of production
information that was submitted to the extent that is applicable.
Section 782(e) of the Act does not, however, direct the Department to
apply one company's information to another company. Section 782(e) does
not require us to substitute the suppliers' information we have on the
record for those suppliers that failed to provide factors of production
information.
Finally, we disagree with respondents' contentions that the
petition data upon which the adverse facts available rate is based
cannot be corroborated due to the fact that the petitioner uses a more
expensive grade of one input than do respondents. Because there are a
variety of production processes for creatine, it would be inappropriate
to isolate the value of a single input in determining whether a
petition rate is valid for facts available purposes. Furthermore, the
constructed NV used in the petition is generally within close range of
NVs calculated in this investigation, suggesting that the petition data
do indeed have probative value.
Comment 3: Sales by Desano and Sanjian
Desano argues that certain sales of creatine supplied by Sanjian
and exported by Desano should be considered Sanjian's sales and
excluded from Desano's U.S. sales data. Desano asserts that the
invoices from Sanjian to Desano indicate that Sanjian knew the
merchandise was destined for the United States at the time it made the
sale to Desano. Additionally, Desano argues out that the sales, which
were denominated in U.S. dollars, are the first market-based sales in
the chain of distribution for export to the United States. In support
of its argument, Desano cites Polyvinyl Alcohol from the PRC, 61 FR
14057 (March 29, 1996) and Fresh Garlic from the PRC, 62 FR 23758 (May
1, 1997) (``Garlic''), where the Department based the exclusion or
inclusion of the sale on whether the sale constituted the first market-
based sale and whether the supplier had knowledge of the U.S.
destination.
Sanjian contends that it properly reported all of its U.S. sales
and the sales in question are Desano's sales. Sanjian asserts that its
sales were reported based on the contract date as the date of sale
because the contract date better reflects the date on which the
material terms of its sales were established. According to Sanjian,
there was no change in price, quantity or the terms of payment between
the contract and the subsequent invoice. Sanjian argues that at the
time of the sale to Desano (i.e., the contract date), Sanjian did not
know the merchandise was ultimately destined for the United States and
was only asked to identify the port of destination on the invoice to
Desano.
Department's Position
We agree with Sanjian that the sales in question should be
considered Desano's U.S. sales. First, we disagree with Desano that the
transaction between Sanjian and Desano is the first market-based
transaction. Both Sanjian and Desano are companies located in the PRC,
in terms of physical location, place of incorporation and the place of
business. As discussed in Garlic, our knowledge test ``is restricted
with regard to NME cases, since we will not base export price on
internal transactions between two companies located in the NME
country.'' 62 FR at 23759. Whether Sanjian knew the merchandise was
destined for the United States is irrelevant in this instance, as the
appropriate starting point for the application of the knowledge test is
the first transaction with a market-based entity (i.e., Desano's
transaction with the U.S. customer). Accordingly, we have continued to
treat these sales as Desano's sales.
Comment 4: Factory Overhead and SG&A Labor
The petitioner asserts that the Department failed to include
factory overhead and SG&A labor in its calculations.
The respondents disagree. According to the respondents, they
included all relevant labor hours in their initial questionnaire
responses. This is evidenced by the fact that at verification, the
Department asked that indirect labor be broken down into indirect
factory labor, overhead and SG&A labor. To adopt petitioner's position
would effectively double-count the labor costs for overhead and SG&A,
in respondents' view.
Department's Position
Based upon our verification, we have concluded that factory
overhead and SG&A labor hours were not included in the total labor
figures. For Tiencheng, although overhead and SG&A labor hours were
included in the indirect labor amount used for the preliminary
determination, this labor has since been reclassified and removed.
Therefore, for our final determination, we have included overhead and
SG&A labor in the overhead and SG&A ratios calculated from Sanderson's
financial statement. Since only surrogate overhead and SG&A labor hours
are included in normal value, there is no double-counting.
Comment 5: Indonesian Import Values
The respondents contend that the Department improperly adjusted
Indonesian values. Because Indonesian import values were reported in
U.S. dollars, they are not subject to Indonesian inflation and no
adjustment is necessary.
The petitioner asserts that the Department has consistently
adjusted source data for inflation in numerous NME cases using the
wholesale price index (``WPI'') of the country from which the source
data is obtained. The petitioner claims that the Indonesian WPI is the
best information available to
[[Page 71110]]
make this adjustment. Furthermore, the petitioner argues that the
stability of the U.S. dollars is irrelevant because the dollar is also
subject to inflationary forces.
Department's Position
We agree with the respondents that the Indonesian import statistics
were improperly adjusted for inflation in the preliminary determination
because we used the Indonesian WPI to make the adjustment. For the
final determination, we have adjusted the data (which predates the POI
by two-and-a-half years) using the U.S. WPI. This is consistent with
our practice in several cases (see, e.g., TRBs-10).
Comment 6: Material Input ``A'
The respondents contend that the Department should not use the ICW
data to value material input A. First, they argue that the prices
listed in ICW for material input A are aberrational when compared to a
price quote obtained by the respondents. Second, the ICW data may, in
fact, be for a different grade of material input than that used by the
respondents. Third, the respondents claim that the ICW data are
``highly suspect'' because they are based on sales by a company with an
interest in the outcome of this investigation. The respondents
conclude, therefore, that the only public data available to value this
input is unusable. For this reason, the respondents ask the Department
to construct a surrogate value for material input A by valuing the
various inputs used by one respondent in producing material input A.
The petitioner contends that the price quote obtained by the
respondents does not prove the ICW data to be aberrational and may even
support the ICW price. The petitioner notes that the price quote
obtained by respondents is for a 12 percent solution and that the ICW
price is for a 50 percent solution. According to the petitioner, when
adjustments for differences in concentration are made, the resulting
U.S. dollar per kilogram values do not differ enough to prove ICW data
aberrational. The petitioner also contends that the respondents'
accusation that the ICW data is highly suspect is entirely implausible.
Finally, the petitioner asserts that the ICW data are based on sales
executed by unrelated companies and reflect arms-length pricing.
Department's Position
We agree with the petitioner that the price quote obtained by the
respondents does not prove ICW data to be aberrational. When
appropriate adjustments are made to account for the differences in
solution concentrations between the prices listed in ICW and in the
price quote, the U.S. dollar per kilogram values for material input A
are close. Moreover, additional ICW price quotes (provided to the
Department by the petitioner upon the Department's request at the
November 29, 1999 public hearing) refute the respondents' allegations
concerning the legitimacy of the ICW data used in the preliminary
determination. Thus, we have no reason to believe that the ICW data do
not reflect sales made at arm's-length.
We note that, in a change from our preliminary determination, we
have adjusted the ICW price to reflect the different solution
concentrations used by the PRC respondents. With this adjustment, and
because we have determined that the ICW prices are neither aberrational
nor suspect, we do not believe that it is necessary to pursue the
alternative methodology suggested by the respondents for valuing this
input.
Comment 7: Under-Reported Labor at Tiancheng
The petitioner asserts that Tiancheng under-reported indirect labor
due to a mathematical error in its June 2, 1999, questionnaire
response. The petitioner further contends that Tiancheng did not report
labor hours for one month during the POI and failed to report certain
labor that was classified incorrectly as not being related to the
production of the subject merchandise. The petitioner urges the
Department to include any unreported labor in Tiancheng's labor
calculations.
Department's Position
We agree with the petitioner that Tiancheng miscalculated indirect
labor in its factors of production response and that labor data for one
month of the POI were not reported. However, the two errors mentioned
above were corrected during verification.
Concerning petitioner's claim that certain labor was not reported
because it was improperly classified as not being related to production
of the subject merchandise, we note that the verification exhibit upon
which the petitioner has based its argument does not correspond to the
factory in question.
Comment 8: Valuation of Inland Shipping Rates
The respondents argue that the surrogate value used by the
Department for inland boat rates was incorrect because the rate used by
the Department reflects the cost of shipping on large vessels while the
respondents used small barges.
Department's Position
The only information on the record with respect to inland boat
rates is the value used in the preliminary determination. No parties
have submitted any alternative values. Therefore, in the absence of
information, we have continued to value inland shipping rates in the
same manner as that in the preliminary determination.
Other Comments
The respondents have raised several additional arguments concerning
the calculation of inputs that are being treated as business
proprietary information. The petitioner did not comment on these
issues. We have agreed with the respondents' arguments and have made
applicable changes to our calculations for the final determination.
Because the proprietary nature of these inputs precludes any meaningful
discussion of these comments, we have included the detailed discussion
in the respective calculation memoranda for each company, rather than
in this notice.
Continuation of Suspension of Liquidation
We are directing the Customs Service to continue to suspend
liquidation of all imports of subject merchandise from the PRC, except
for subject merchandise exported by Nantong and produced by its
proprietary producer and merchandise produced and exported by Tianjin
(which have zero weighted-average margins), that are entered, or
withdrawn from warehouse, for consumption on or after July 30, 1999,
the date of publication of the preliminary determination in the Federal
Register. In addition, for Freemen, as well as for companies subject to
the PRC-wide rate, we are directing Customs to continue suspending
liquidation of any unliquidated entries of subject merchandise entered,
or withdrawn from warehouse, for consumption on or after May 1, 1999,
the date 90 days prior to the date of publication of the preliminary
determination in the Federal Register, in accordance with our critical
circumstances finding. Furthermore, we will instruct the Customs
Service to refund all bonds and cash deposits posted on subject
merchandise exported by Desano that was entered or withdrawn from
warehouse for consumption prior to July 30, 1999.
[[Page 71111]]
The Customs Service shall continue to require a cash deposit or the
posting of a bond equal to the weighted-average amount by which the NV
exceeds the EP, as indicated in the chart below. These suspension of
liquidation instructions will remain in effect until further notice.
----------------------------------------------------------------------------------------------------------------
Weighted-
Exporter/manufacturer average margin Critical
percentage circumstances
----------------------------------------------------------------------------------------------------------------
Blue Science International Trading (Shanghai) Co., Ltd......................... 58.10 No
Nantong Medicines and Health Products Import and Export Co., Ltd............... 0.00 No
Shanghai Desano International Trading Co., Ltd................................. 24.84 No
Shanghai Freemen International Trading Co., Ltd and Shanghai Greenmen 44.43 Yes
International Trading Co., Ltd................................................
Suzhou Sanjian Fine Chemical Co., Ltd.......................................... 50.32 No
Tianjin Tiancheng Pharmaceutical Co., Ltd...................................... 0.00 No
PRC-wide Rate.................................................................. 153.70 Yes
----------------------------------------------------------------------------------------------------------------
The PRC-wide rate applies to all entries of the subject merchandise
except for entries from exporters that are identified individually
above.
ITC Notification
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
canceled. If the ITC determines that such injury does exist, the
Department will issue an antidumping duty order.
This determination is issued and published in accordance with
sections 735(d) and 777(i)(1) of the Act.
Dated: December 13, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-32916 Filed 12-17-99; 8:45 am]
BILLING CODE 3510-DS-P
