[Federal Register Volume 60, Number 94 (Tuesday, May 16, 1995)]
[Notices]
[Pages 26021-26026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12024]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-841]
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of the Final Determination: Manganese Sulfate From the
People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 16, 1995.
FOR FURTHER INFORMATION CONTACT: Dorothy Tomaszewski or Erik Warga,
Office of Antidumping Investigations, [[Page 26022]] Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC
20230; telephone: (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.
Preliminary Determination
We preliminarily 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 ``Suspension of Liquidation''
section of this notice.
Case History
Since the initiation of this investigation on December 20, 1994,
(59 FR 66908, December 28, 1994), the following events have occurred:
On December 29, 1994, the Department of Commerce (``the
Department'') requested the PRC's Ministry of Foreign Trade and
Economic Cooperation (``MOFTEC'') and the China Chamber of Commerce for
Import and Export of Metals, Minerals and Chemicals (``the Chamber'')
to identify all producers and exporters who sold manganese sulfate to
the United States during the period of investigation. The Department
also asked MOFTEC and the Chamber to provide information on whether the
companies named in the petition or identified by the Department
exported the subject merchandise during the period of investigation.
The Chamber identified two PRC exporters: Hunan Chemicals Import and
Export Company (``Hunan Chemicals''), and China National Nonferrous
Metals Import and Export Company (Hunan) (``CNIEC''). However, neither
MOFTEC nor the Chamber addressed the Department's question concerning
the export activities of the companies identified in the petition or by
the Department.
On January 14, 1995, the U.S. International Trade Commission
(``ITC'') notified the Department of its preliminary determination that
there is a reasonable indication that an industry in the United States
is materially injured or threatened with material injury by reason of
imports of manganese sulfate from the PRC that are alleged to be sold
at less than fair value.
On February 23, 1995, the Department sent questionnaires to MOFTEC
and the Chamber, requesting that the questionnaire be transmitted to
all companies that produce manganese sulfate for export to the United
States and to all companies that were engaged in selling manganese
sulfate to the United States during the period of investigation.
Courtesy copies of the questionnaire were also transmitted to all
companies listed in the petition or identified by the Chamber.
On April 7, 1995, the Department received responses to the
questionnaire from two trading companies identified by the Chamber,
Hunan Chemicals and CNIEC, and their supplying producers, Xian Lu
Chemical Plant and Yan Jiang Chemical Plant. Supplemental information
was received on April 27, 1995. No other PRC companies responded to the
Department's questionnaire.
In response to the Department's April 14, 1995, request, both
petitioner and respondents submitted information on the record
regarding publicly available published information on surrogate country
selection and factors of production.
Postponement of Final Determination
Pursuant to section 735(a)(2)(A) of the Act and 19 CFR
353.20(b)(1), on May 5, 1995, the four respondents, Hunan Chemicals,
CNIEC, Yan Jiang Chemical Plant and Xian Lu Chemical Plant, requested
that, in the event of an affirmative preliminary determination in this
investigation, the Department postpone the final determination to 135
days after the date of publication of the affirmative preliminary
determination in the Federal Register. Therefore, because there are no
compelling reasons to deny the request, we are postponing the final
determination until the 135th day after the publication of this notice
in the Federal Register.
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 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.
Separate Rates
Each of the responding PRC trading companies has requested a
separate, company-specific rate. According to their respective business
licenses, Hunan Chemicals and CNIEC are public-owned enterprises
(``owned by all the people'').
As stated in the Final Determination of Sales at Less than Fair
Value: Silicon Carbide from the People's Republic of China (59 FR
22585, 22586, May 2, 1994) (``Silicon Carbide''), and the Final
Determination of Sales at Less than Fair Value: Sebacic Acid from the
People's Republic of China (59 FR 28053, May 31, 1994 (``Sebacic
Acid''), ownership of a company by all the people does not require the
application of a single rate. Accordingly, each of the two trading
companies is eligible for consideration for a separate rate.
To establish whether a trading company 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'') and amplified in Silicon Carbide. Under the separate
rates criteria, the Department assigns separate rates in nonmarket
economy cases only if respondents can demonstrate the absence of both
de jure and de facto governmental control over export activities.
1. Absence of De Jure Control
Several laws and regulations are on the record in this
investigation that demonstrate absence of de jure control for Hunan
Chemicals and CNIEC, including two enactments indicating that the
responsibility for managing enterprises ``owned by all of the people''
is with the enterprises themselves and not with the government. These
are the ``Law of the People's Republic of China on Industrial
Enterprises Owned by the Whole People,'' adopted on April 13, 1988
(``1988 Law''); the ``Regulations for Transformation of Operational
Mechanism of State-Owned Industrial Enterprises,'' approved on August
23, 1992 (``1992 Regulations''); the ``Temporary Provisions for
Administration of Export Commodities,'' approved on August 23,
[[Page 26023]] 1992 (``1992 Export Provisions''), and the April 1994
``Emergent Notice of Changes in Issuing Authority for Export Licenses
Regarding Public Quota Bidding for Certain Commodities'' (``1994 Quota
Measure'').
The 1988 Law and 1992 Regulations shifted control of enterprises
owned by all the people from the government to the enterprises
themselves. The 1988 Law provides that enterprises owned ``by the whole
people'' shall make their own management decisions, be responsible for
their own profits and losses, choose their own suppliers, and purchase
their own goods and materials. The 1988 Law also has other provisions
which support a finding that such enterprises have management
independence from the government in making management decisions. The
1992 Regulations provide that these same enterprises can, for example,
set their own prices (Article IX); make their own production decisions
(Article XI); use their own retained foreign exchange (Article XII);
allocate profits (Article II); sell their own products without
government interference (Article X); make their own investment
decisions (Article XIII); dispose of their own assets (Article XV); and
hire and fire their employees without government approval (Article
XVII).
The 1992 Export Provisions list those products subject to direct
government control. Manganese sulfate is not included in the 1992
Export Provisions and does not, therefore, appear to be subject to the
export 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.
As stated in previous cases, there is some evidence that the
provisions of the above-cited laws regarding enterprise autonomy have
not been implemented uniformly among different sectors and/or
jurisdictions in the PRC (see ``PRC Government Findings on Enterprise
Autonomy,'' in Foreign Broadcast Information Service-China-93-133 (July
14, 1993)). Therefore, the Department has determined that an analysis
of de facto control is critical to determining whether respondents are,
in fact, subject to a degree of governmental control which would
preclude the Department from assigning separate rates.
2. Absence of De Facto Control
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (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 and Sebacic Acid).
Hunan Chemicals and CNIEC have each asserted that it: (1)
Establishes its own export prices; (2) negotiates contracts on a case
by case basis based on market conditions, without guidance from any
governmental entities or organizations; (3) makes its own personnel
decisions; and (4) retains the proceeds of its export sales, uses
profits according to its business needs and has the authority to sell
its assets and to obtain loans. In addition, questionnaire responses
indicate that company-specific pricing during the POI does not suggest
coordination among exporters (i.e., the prices for manganese sulfate
differ among companies). This information supports a preliminary
finding that there is a de facto absence of governmental control of the
export activities of these firms.
Consequently, we preliminarily determine that Hunan Chemicals and
CNIEC have met the criteria for the application of separate rates.
Nonmarket Economy Country Status
The Department has treated the PRC as a nonmarket economy country
(``NME'') in all past antidumping investigations and administrative
reviews (see, e.g., Sebacic Acid and Silicon Carbide). Neither
respondents nor petitioners have challenged such treatment. Therefore,
in accordance with section 771(18)(c) of the Act, we will continue to
treat the PRC as an NME in this investigation.
When the Department is investigating imports from an NME, section
773(c)(1) of the Act directs us to base FMV on the NME producers'
factors of production, valued in a comparable market economy that is a
significant producer of the subject or comparable merchandise. Section
773(c)(2) of the Act alternatively provides that when available
information is inadequate for using the factors of production
methodology, FMV may be based on the export prices for comparable
merchandise from market economy countries at a comparable level of
economic development.
For purposes of the preliminary determination, we have relied on
the methodology provided by section 773(c)(1) of the Act to determine
FMV. The sources of individual factor prices are discussed under the
FMV section, below.
Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
NME producers' factors of production, to the extent possible, in one or
more market economy countries that (1) are at a level of economic
development comparable to that of the NME country, and (2) are
significant producers of comparable merchandise. The Department has
determined that India, Indonesia, Kenya, Nigeria, Pakistan, and Sri
Lanka are the countries most comparable to the PRC in terms of overall
economic development (see Memorandum from David Mueller, Director,
Office of Policy, to Gary Taverman, Acting Director, Office of
Antidumping Investigations, dated April 13, 1995). According to the
information we have gathered, India, with two production facilities,
appears to be the only producer of manganese sulfate among these six
potential surrogate countries. India is also endowed with a primary
material for producing the subject merchandise, manganese ore. Because
India meets both statutory criteria, we have calculated foreign market
value (``FMV'') using Indian prices for the PRC producers' factors of
production. We have obtained and relied upon published, publicly
available information wherever possible.
Fair Value Comparisons
To determine whether sales of manganese sulfate from the PRC to the
United States by Hunan Chemicals and CNIEC were made at less than fair
value, we compared the United States price (``USP'') to the FMV, as
specified in the ``United States Price'' and ``Foreign Market Value''
sections of this notice.
United States Price
For Hunan Chemicals, we based USP on purchase price, in accordance
with section 772(b) of the Act, because the subject merchandise was
sold directly by the PRC exporters to unrelated parties in the United
States prior to importation into the United States. We calculated
purchase price based on FOB foreign-port prices to unrelated
purchasers. Where necessary, we made deductions for foreign inland
freight valued in India.
For CNIEC, we based USP on exporter's sales price (``ESP''), in
accordance with section 772(c) of the [[Page 26024]] Act. We calculated
ESP based on packed delivered prices, where appropriate. Where
necessary, we made deductions for foreign inland freight valued in
India.
We also made deductions, where appropriate, for ocean freight,
marine insurance, U.S. inland freight (including warehousing), U.S.
duties, U.S. brokerage and handling. Additionally, where appropriate,
we deducted an amount to account for added value associated with
further processing after the merchandise was imported into the United
States and before the merchandise was shipped to the U.S. customer, in
accordance with section 772(e)(3) of the Act.
Foreign Market Value
In accordance with section 773(c) of the Act, we calculated FMV
based on factors of production reported by the factories in the PRC
which produced the subject merchandise for the two exporters. The
factors used to produce the subject merchandise include materials,
labor, factory overhead, selling, general and administrative expenses,
profit and packing. The reported factor quantities were multiplied by
Indian values except where otherwise noted. For a complete analysis of
surrogate values, see the Calculation Memorandum, dated May 9, 1995,
for this investigation.
To value materials, we used the following sources of publicly
available information for India in the Indian Foreign Trade
Statistics--Imports, (``Indian Import Statistics'') for April-June
1994; the India Minerals Yearbook for 1990-1991; and prices published
in the June 16, 1994, Gazette of India. For data from Indian Import
Statistics and the Gazette of India, no adjustment for inflation was
necessary since the data was for a portion of the POI. For the India
Minerals Yearbook, we adjusted the 1990-1991 prices to account for
inflation using wholesale price indices for India as reported in the
International Monetary Fund's International Financial Statistics (IFS).
To adjust certain material values to account for source-to-factory
freight, we used Indian freight rates from a 1991 cable from the U.S.
Embassy in Delhi and adjusted accordingly for inflation. (See Final
Determination of Sales at Less Than Fair Value: Certain Carbon Steel
Butt-Weld Pipe Fittings from the People's Republic of China (57 FR
21058, May 18, 1992)).
To value labor amounts for production and packing, we used 1990
labor data for India, as reported in the 1994 ILO Yearbook. We adjusted
labor wage rates to account for inflation using consumer price indices
for India as reported in the IFS.
To value fuel, we used 1993 data for India from the Energy
Information Administration's International Energy Annual and adjusted
accordingly for inflation.
To value electricity, we used information for India from the Asian
Development Bank's FY1994 Electric Utilities Data Book for Asian and
Pacific Region. No adjustment to account for inflation was made since
the rate was for the POI.
To value factory overhead, we calculated an energy-exclusive
percentage based on data from the 1994 edition of Reserve Bank of India
Bulletin (``RBI''). For selling, general and administrative (SG&A)
expenses, we also used 1994 RBI data to calculate SG&A as percentage of
materials, labor, energy and factory overhead. For profit, we used 1994
RBI data to calculate a profit as a percentage of materials, labor,
energy, factory overhead, and SG&A expenses. We added packing, using
Indian values obtained from Indian Import Statistics.
Best Information Available (BIA)
The following discussion regarding the application of BIA applies
to all exporters other than those that have responded to our
questionnaires. Because no information has been presented to the
Department to prove otherwise, any exporter of subject merchandise that
did not respond to the Department's questionnaires is presumed to be
under government control and, therefore, is not entitled to its own
separate dumping margin. The evidence on record indicates that the
responding companies may not account for all exports of the subject
merchandise. 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 Silicon Carbide).
In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower
margins to those respondents that cooperated in an investigation and
more adverse margins to those respondents that did not cooperate in an
investigation. 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 (see 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). In this
investigation, since the evidence indicates that not all PRC exporters
of manganese sulfate responded to our questionnaire, we are assigning
to any PRC company, other than those specifically identified below, the
highest margin based on information submitted in the petition, as
recalculated by the Department. At initiation, the Department stated
that it will carefully reexamine the alleged margins, ranging from
142.25 percent to 801.26 percent, if the use of best information
available became an issue in this investigation (see Initiation of
Antidumping Duty Investigation: Manganese Sulfate From the People's
Republic of China, (59 FR 66908, December 28, 1994). When applying BIA
from the petition, the Department's practice is not to revise the
information accepted at initiation, except where the petition includes
erroneous or grossly aberrational data (see, e.g., Final Determination
of Sales at Less Than Fair Value: Certain Cased Pencils From the
People's Republic of China, 59 FR 55625, November 8, 1994)
(``Pencils''). In this instance, the surrogate value cited for ocean
freight in the petition appears to be aberrational (e.g., the unit
charge for ocean freight deducted from gross unit price equals 68
percent of the gross unit price). Therefore, we reassigned the value
for ocean freight based on the highest reported ocean freight charge
incurred by a responding company, in this case, CNIEC (see Calculation
Memorandum). The recalculated petition rate of 211.48 percent applies
to all exporters other than those responding exporters that are
receiving separate rates.
Critical Circumstances
Petitioners allege that critical circumstances exist with respect
to imports of manganese sulfate from the PRC. 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. [[Page 26025]]
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.
To determine whether the importers of manganese sulfate from the
PRC knew, or should have known, that the products were being sold at
less than fair value, we considered the company-specific preliminary
margins in these investigations. We consider margins of 25 percent or
more (when USP is based on PP) and 15 percent (when USP is based on
ESP) sufficient to impute knowledge. (See, e.g., Final Determination of
Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat
Products From Argentina (58 FR 37062, 37078, July 9, 1993)).
For Hunan Chemicals and CNIEC, the margins calculated with respect
to manganese sulfate do not exceed 25 percent when USP is based on PP
and 15 percent when USP is based on ESP. Accordingly, we must also
consider whether there is a history of dumping in the United States or
elsewhere with respect to manganese sulfate from the PRC in order to
determine whether critical circumstances exist with respect to those
companies. We are aware of no outstanding antidumping duty orders with
respect to manganese sulfate from the PRC.
In considering the factor of whether there were massive imports
over a relatively short period, neither Hunan Chemicals nor CNIEC
provided company-specific quantity and value data of monthly exports to
the U.S., as requested by the Department. The respondents' failure to
provide this information makes it impossible for the Department to
accurately evaluate whether the volume of manganese sulfate shipments
from the PRC during December 1994 through February 1995 (``post-
petition period'') exceeded that of August through November 1994
(``pre-petition period'').
An analysis of the Department's official import statistics shows
that the volume of imports of manganese sulfate that entered the United
States from the PRC, under the HTSUS subheading, during the post-
petition period (281.158 metric tons) did not exceed that of the pre-
petition period (888.292 metric tons). However, imports of manganese
sulfate are reported in a HTSUS basket subheading which includes
imports of ``other sulfates.'' Therefore, it is impossible to determine
the actual volume of imports of manganese sulfate from the PRC based on
this basket subheading, factors related to actual seasonal trends, and
the share of domestic consumption. Given the respondents' failure to
provide the company-specific monthly data requested by the Department,
as BIA, we find that imports of the subject merchandise were massive
over a relatively short period of time.
However, based upon our analysis of all the above criteria, we
preliminarily determine that critical circumstances do not exist for
the two PRC trading companies participating in this investigation.
As regards firms covered by the ``PRC-wide'' rate, we have used BIA
as the basis for determining whether critical circumstances exist for
non-respondent exporters. The BIA margin exceeds the threshold for
imputing 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 non-respondent exporters.
Verification
As provided in section 776(b) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d)(1) of the Act, we are directing
the Customs Service to suspend liquidation of all entries of manganese
sulfate from the PRC, that are entered, or withdrawn from warehouse for
consumption, on or after the date that is 90 days prior to publication
of this notice in the Federal Register. 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
suspensions of liquidation instructions will remain in effect until
further notice. One of the trading companies, CNIEC, will be excepted
from these instructions because its sales of subject merchandise
supplied by manufacturers Yan Jiang and Xian Lu were found not to have
been sold below fair value. CNIEC's sales of subject merchandise
supplied by Yan Jiang and Xian Lu will be excluded from an antidumping
duty order should one be issued. If CNIEC sells to the United States
subject merchandise supplied from a PRC manufacturer other than Yan
Jiang or Xian Lu, such sales will be subject to the ``PRC-Wide'' rate.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
Exporter/manufacturer average margin
percentage
------------------------------------------------------------------------
Hunan Chemicals......................................... 8.46
CNIEC/Yan Jiang......................................... 00.00
CNIEC/Xian Lu........................................... 00.00
CNIEC/Other............................................. 212.31
PRC-Wide Rate........................................... 212.31
------------------------------------------------------------------------
The PRC-Wide rate applies to all entries of subject merchandise
except for entries from exporters that are identified above.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
In accordance with 19 CFR 353.38, case briefs or other written
comments in at least ten copies must be submitted to the Assistant
Secretary for Import Administration no later than July 21, 1995, and
rebuttal briefs, no later than July 28, 1995. A list of authorities
used and a summary of arguments made in the briefs should accompany
these briefs. In accordance with 19 CFR 353.38(b), we will hold a
public hearing, if requested, to afford interested parties an
opportunity to comment on arguments raised in case or rebuttal briefs.
Tentatively, the hearing will be held at 10 a.m. on July 31, 1995, at
the U.S. Department of Commerce, Room 1414, 14th Street and
Constitution Avenue, NW., Washington, DC 20230. Parties should confirm
by telephone the time, date, and place of the hearing 48 hours before
the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
B-099, within ten days of the publication of this notice. Requests
should contain: (1) The party's name, address, and telephone number;
(2) the number of participants; and (3) a list of the issues to be
discussed. In accordance with 19 CFR 353.38(b), oral presentations will
be limited to issues [[Page 26026]] raised in the briefs. If this
investigation proceeds normally, we will make our final determination
within 135 days of the publication of the preliminary determination.
This determination is published pursuant to section 733(f) of the
Act and 19 CFR 353.15(a)(4).
Dated: May 9, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-12024 Filed 5-15-95; 8:45 am]
BILLING CODE 3510-DS-P
