[Federal Register Volume 59, Number 83 (Monday, May 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10455]
[[Page Unknown]]
[Federal Register: May 2, 1994]
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DEPARTMENT OF COMMERCE
[A-570-824]
Notice of Final Determination of Sales at Less Than Fair Value:
Silicon Carbide From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 2, 1994.
FOR FURTHER INFORMATION CONTACT:
Steve Alley or Andrew McGilvray, Office of Antidumping Investigations,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-5288 or (202) 482-0108,
respectively.
FINAL DETERMINATION: We determine that silicon carbide 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, as provided in section 735
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 preliminary determination on November 29, 1993, (58 FR
64549, December 8, 1993), the following events have occurred:
On December 1, 1993, the Department of Commerce (the Department)
received a letter from Hainan Feitian Electrontech Company, Limited
(Hainan), Shaanxi Minmetals (Shaanxi) and Xiamen Abrasive Company
(Xiamen), three of the six respondents in this investigation,
requesting that the Department postpone the final determination to not
later than April 22, 1994, or 135 days after the date of the
publication of the preliminary determination. The letter from these
three respondents also requested the Department to (1) collect
information on third-country sales to use as foreign market value
(FMV); (2) find that Treibacher and Saint-Gobain do not qualify as
``interested parties'' in this proceeding, bar them from further
participation in this case, and re-examine the Department's decision
that petitioner has standing to file the petition; and (3) verify fully
respondents' answers to the Department's questionnaire. On the same
day, the other three respondents in this investigation--Inner Mongolia
Import and Export Corporation (IMI/E), Qinghai Metals Import and Export
Corporation (QI/E), and Seventh Grinding Wheel Factory Import and
Export Corporation (SGW--also requested a disclosure conference and a
postponement of the final determination.
On December 7, 1993, Hainan, Shaanxi and Xiamen submitted letters
alleging ministerial errors in the Department's calculations for the
preliminary determination. (For specific details of these allegations
and our analysis of them, see Memorandum from Richard W. Moreland to
Barbara R. Stafford of December 20, 1993.) One of these exporters,
Hainan, alleged that the Department made certain errors with respect to
the valuation of freight rates and packing materials. The Department
agreed with this one allegation, and in accordance with procedures set
forth in the proposed regulations, published an amended preliminary
dumping margin for Hainan (59 FR 570, January 5, 1994).
On December 29, 1993, petitioner submitted comments on issues
relating to verification. On December 30, 1993, petitioner submitted
publicly available information on electricity rates in India and
Pakistan as well as information on electricity capacity in the PRC.
Hainan, Shaanxi, and Xiamen submitted additional information on
December 30 regarding the price and quantity of their U.S. sales and
the mode of transportation used to transport coal. The Department sent
verification agendas to all six respondents in this investigation on
December 30, 1993.
On January 3, 1994, IMI/E, QI/E, and SGW submitted publicly
available information about Indian electricity rates and additional
information regarding freight distances. IMI/E supplemented its freight
information on January 7, 1994.
On January 4, 1994, the Department wrote to SGW regarding the
Department's intention to visit two other exporters during verification
to confirm that U.S. sales of silicon carbide had been reported for all
entities related to SGW. We also wrote to Xiamen regarding out
intention to visit China Abrasives Export Corporation (CAEC), the
parent corporation of Xiamen, to confirm that all U.S. sales during the
period of investigation (POI) had been reported. On January 5, 1994, we
requested the assistance of the Ministry of Foreign Trade and Economic
Cooperation of the PRC (MOFTEC) in arranging these meetings as well as
interviews with appropriate MOFTEC officials. WE wrote to MOFTEC again
on January 13, 1994, to request assistance in arranging additional
meetings for the verification teams with Quinghai and Inner Mongolia
provincial government officials and CAEC representatives. The
Department verified responses in the PRC from January 10 to February 5,
1994 and its verification reports between February 15 and March 14,
1994.
Requests for a public hearing were received by the Department on
January 5, 1994, from IMI/E, QI/E, and SGW, and on January 10, 1994,
from Hainan, Shaanxi, and Xiamen.
On March 1, 1994, petitioner alleged that critical circumstances
exist with regard to imports of silicon carbide from the PRC. We
requested shipment data from the six respondents in this investigation
on March 4, 1994, and received respondents' data on March 17, 18, 21
and 22. (Because Hainan, Shaanxi, and Xiamen failed to file public
versions of their original March 11, 1994 submissions of shipment data,
we rejected these submissions. Hainan, Shaanxi, and Xiamen refiled
these submissions in proper form on March 17.) On March 31, 1994, we
issued our preliminary affirmative determination of critical
circumstances for two respondents in this investigation--Shaanxi and
Xiamen. The other four respondents were found not to have massive
increases in imports. In addition, the Department found that critical
circumstances exist for all exporters who did not participate in this
investigation (59 FR 16795, April 8, 1994). On April 6, 1994, Shaanxi
and Xiamen requested that we base our calculations for critical
circumstances on the date of shipment rather than the date of
importation into the United States (the date used in the preliminary
determination of critical circumstances). Petitioner also submitted
comments on our preliminary affirmative determination of critical
circumstances on April 6, 1994.
On March 11, 1994, petitioner filed information concerning the
Department's surrogate value for electricity. Because this submission
contained untimely filed new information, we rejected this submission.
Petitioner filed new submissions regarding electricity valuation on
March 23, 1994. Certain of these submissions also contained untimely
filed new information and, therefore, were rejected. Petitioner and
respondents submitted case briefs on March 30 and rebuttal briefs on
April 4, 1994. A public hearing was held on April 6, 1994.
Scope of Investigation
The product covered by this investigation is silicon carbide,
regardless of grade or form, containing by weight from 20 to 98
percent, inclusive, silicon carbide and with a grain size coarser than
size 325F (as set by the American National Standards Institute), and
inclusive of split sizes. Silicon carbide covered by this investigation
typically contains additional impurities: iron, aluminum, silica,
silicon, and carbon as well as calcium and magnesium. Silicon carbide
is currently classifiable under subheadings 2849.20.10 and 2849.20.20
of the Harmonized Tariff Schedule (HTS). The HTS numbers are provided
for convenience and customs purposes. The written description is
dispositive.
Period of Investigation
The POI is January 1, 1993, through June 30, 1993.
Best Information Available (BIA)
As stated in the preliminary determination, the Department must
receive an adequate questionnaire response from each entity requesting
a separate dumping margin rate before a separate rate can be applied.
Consequently, all non-respondent entities, as well as respondents that
fail to demonstrate eligibility for a separate rate, must receive a
single ``All Other'' rate. We have based our ``All Other'' rate on BIA.
In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower
margins to those respondents who cooperated in an investigation and
margins based on more adverse assumptions for those respondents who did
not cooperate in an investigation or who failed to qualify for a
separate rate. According to the Department's two-tiered BIA methodology
outlined in the Final Determination of Sales at Less Than Fair Value:
Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled
Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel
Plate From Belgium, 58 FR 37083 (July 9, 1993), when a company refuses
to provide the information requested in the form required, or otherwise
significantly impedes the Department's investigation, it is appropriate
for the Department to assign to that company the higher of (a) the
highest margin alleged in the petition, or (b) the highest calculated
rate of any respondent in the investigation.
In this case, where some PRC exporters failed to respond to our
questionnaire and, thus, are uncooperative, we are assigning an ``All
Other'' rate of 406.00 percent (the highest margin calculated in the
amendment petition) as BIA to the uncooperative exporters. The 406.00
percent rate also applies to all other exporters that are ineligible
for separate rates.
Separate Rates
Respondents Xiamen, Hainan, and Shaanxi have requested that they be
assigned separate rates. For Xiamen, we cannot consider eligibility for
a separate rate because it failed to submit consolidated responses,
including information on separate rates, for affiliated companies which
it has stated are related to it within the meaning of section 771(13)
of the Act. (See Memorandum dated April 22, 1994, from Richard W.
Moreland to Barbara R. Stafford.)
For Hainan and Shaanxi, we were unable to verify certain
information in their separate rates responses. Specifically, these
respondents did not make available to us the bank records necessary to
verify that they retain the proceeds from their export sales. Given our
inability to verify Hainan's and Shaanxi's separate rate submissions,
we cannot consider applying separate rates to them. (See Ibid.)
In addition to Xiamen, Hainan, and Shaanxi, respondents IMI/E, QI/
E, and SGW have also requested that the Department issue to each of
them a separate rate. These respondents have submitted completed and
verified responses regarding their eligibility for separate rates.
We have analyzed the record in this investigation and agree that it
is appropriate to assign separate rates to IMI/E, QI/E, and SGW. In
making this determination, we have modified our separate rates policy,
previously set forth in Final Determination of Sales at Less Than Fair
Value; Certain Compact Ductile Iron Waterworks Fittings and Accessories
Thereof From the People's Republic of China (``CDIW'') (58 FR 37908,
July 14, 1993) and Final Determination of Sales at Less Than Fair
Value: Certain Helical Spring Lock Washers from the People's Republic
of China (``Lock Washers'') (58 FR 48833, September 20, 1993). In CDIW,
we took the position that state-ownership (i.e. ``ownership by all the
people'') ``provides the central government the opportunity to
manipulate the [exporter's] prices whether or not it has taken
advantage of that opportunity during the period of investigation.''
Thus, we concluded in CDIW that state-owned enterprises would not be
eligible for separate rates.
However, based upon further analysis and information developed in
the course of this investigation, we find that the ownership of IMI/E,
QI/E, and SGW ``by all the people,'' in and of itself, cannot be
considered as dispositive in determining whether those companies can
receive separate rates. At verification, Mr. Zhang Yuqing, the Division
Chief of the Department of Treaty and Law of MOFTEC (the Ministry of
Foreign Trade and Economic Cooperation), explained that the designation
on these respondents' business licenses that they are ``owned by all
the people'' does not mean that the central, provincial, or local
governments control these companies. Instead, ``ownership by the
people'' signifies that ``no individual can take the company; it cannot
become a private company.'' The company ``belongs to the community''
and the company's employees are entrusted with the management of the
company. (See Memorandum from Andrew McGilvray, to Gary Taverman, dated
February 15, 1994.)
A recent analysis by the Central Intelligence Agency supports
MOFTEC's statement that ownership ``by all the people'' is not
synonymous with central government control. (See 1992 report to the
Joint Economic Committee, Hearings on Global Economic and Technological
Change: Former Soviet Union and Eastern Europe and China, Pt. 2 (102
Cong., 2d Sess), 143, 196 (hereinafter, ``CIA report''). The report
states that a state-owned enterprise was subject to central government
control prior to 1980, but that ``[t]he reform decade of the 1980s
brought significant changes to this scheme'' and that the central
government devolved control of enterprises owned ``by all the people''.
We have, therefore, come to the conclusion that ownership ``by all the
people'' does not require the application of a single rate. Thus, we
believe a PRC respondent may receive a separate rate if it establishes
on a de jure and de facto basis that there is an absence of
governmental control. We have, therefore, adapted and amplified the
test set out in Final Determination of Sales at Less Than Fair Value:
Sparklers From the People's Republic of China (56 FR 20588, May 6,
1991) to determine whether the respondents in this case are entitled to
separate rates.
1. Absence of De Jure Control
Three enactments that have been placed on the record in this case
indicate that the responsibility for managing state-owned enterprises
has been shifted from the government to the enterprise itself. 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''); ``Regulations for Transformation of Operational
Mechanism of State-owned Industrial Enterprises,'' approved on August
23, 1992) ``1992 Regulations''; and the ``Temporary Provisions for
Administration of Export Commodities,'' approved on December 21, 1992
(``Export Provisions''. The 1988 Law states that enterprises have the
right to set their own prices (see Article 26). This principle is
restated in the 1992 Regulations (see Article IX). The Export
Provisions list those products subject to direct government control.
Silicon carbide does not appear on this list and is not, therefore,
subject to the constraints of these provisions.
The existence of these laws indicate that respondents IMI/E, QI/E,
and SGW are not subject to de jure control. However, there is publicly
available information indicating that the PRC central government has
acknowledged that the provisions of the above-cited laws and
regulations 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).
Given this report of uneven implementation of the PRC government's
laws on devolution of government control, it is critical that we
conduct a de facto analysis to determine whether these respondents
were, in fact, not subject to governmental control.
2. Absence of De Facto Control
For the reasons stated below, we have determined that these
respondents are not de facto controlled by the central, provincial or
municipal governments. In conducting this analysis, we are aware that
the CIA report stated that the central government has ``decentralized
the supervision and planning control over most state enterprises to
provincial or municipal authorities.'' As elaborated below and in the
responses to Comments 1 and 2, we have verified that these respondents
are not, in fact, subject to provincial control. Municipal control is
not an issue in this case as there is no tie between these companies
and any municipality.
We have taken the following factors into account in our
determination of absence of de facto control: First, the respondents'
export prices are not set by, nor subject to approval by, a
governmental authority. Second, the respondents also have authority to
negotiate and sign contracts and other agreements. These points were
confirmed by examination of correspondence files and other
documentation relating to sales negotiations, as noted in the
verification reports.
Third, we have determined, based on our investigation, that the
respondents have autonomy from the central government in making
decisions regarding selection of management, based on our examination
of management election/evaluation forms completed by employees. Lastly,
we have determined that the respondents retain the proceeds of their
export sales and make independent decisions regarding disposition of
profits or financing of losses. This last point was confirmed through
examination of bank records, and company accounting records relating to
investment and other activities. (See also Concurrence Memorandum and
various verification reports.)
3. Conclusion
Given that the record of this investigation demonstrates a de jure
and de facto absence of governmental control over the export functions
of IMI/E, QI/E, and SGW, we determine that IMI/E, QI/E, and SGW are
eligible for separate rates.
Surrogate Country
Section 773(c) of the Act requires the Department to value the
factors of production, to the extent possible, in one or more market
economy countries that are at a level of economic development
comparable to that of the non-market economy country, and that are
significant producers of comparable merchandise. The Department has
determined that India and Pakistan are the most comparable to the PRC
in terms of overall economic development, based on per capita gross
national product (``GNP''), the national distribution of labor, and
growth rate in per capita GNP. (See memorandum from the Office of
Policy to Gary Taverman, dated August 17, 1993, on file in room B-099
of the Main Commerce Department Building.) Because India fulfills both
requirements outlined in the statute, India is the preferred surrogate
country for purposes of calculating the factors of production used in
producing the subject merchandise. Accordingly, for this final
determination, we have used the values for the factors of production,
as appropriate, from Indian sources. As in our preliminary
determination, we have used a world market price in one instance where
no appropriate surrogate value was available. We have obtained and
relied upon published, publicly available information, wherever
possible.
Fair Value Comparisons
To determine whether sales of silicon carbide from the PRC to the
United States were made at less than fair value for those exporters
deemed eligible to receive a separate rate, we compared the United
States price (USP) to FMV, as specified in the ``United States Price''
and ``Foreign Market Value'' sections of this notice.
United States Price
United States price was calculated on the same basis as in the
preliminary determination. Minor adjustments were made to the reported
U.S. prices of IMI/E and SGW, pursuant to finding at verification. We
also adjusted foreign inland freight based on verification findings.
(See Calculation Memorandum, attached to the Department's Concurrence
Memorandum of April 22, 1994, on file in room B-099 of the Main
Commerce Department Building.)
Foreign Market Value
We calculated FMV based on factors of production cited in the
preliminary determination, making adjustments for specific verification
findings (see Calculation Memorandum). To calculate FMV, the verified
amounts for factors of production were multiplied by the appropriate
surrogate values for the different inputs. We have used the same
surrogate values as in the preliminary determination with the exception
of the value for electricity.
In our November 29, 1993, preliminary determination, we had used
publicly available information for Pakistan regarding electricity rates
for industrial use during the POI. We did so because the publicly
available information at the time for India either was out of date or
was not necessarily specific to industrial use. After the preliminary
determination, petitioner's December 30, 1993, submission provided new
publicly available information from the Asian Development Bank (ADB)
showing Indian electricity prices for industrial use in FY1990. Since
this new ADB data shows recent electricity rates specific to industrial
use for India (our first-choice surrogate), we have used the ADB data
for the final determination in preference to data for Pakistan (our
second-choice surrogate). (For a complete analysis of surrogate values,
see Calculation Memorandum.)
Verification
As provided in section 776(b) of the Act, we verified all the
information relied upon for this final determination.
Critical Circumstances
In our preliminary affirmative determination of critical
circumstances of March 31, 1994, we found that critical circumstances
exist for two respondents in this investigation--Shaanxi and Xiamen. We
also preliminary determined that critical circumstances exist for all
exporters who did not participate in this investigation.
Pursuant to section 733(e)(1) of the Act, we based that preliminary
determination on a finding of 1) a history of dumping of silicon
carbide in the European Community (EC), and 2) massive imports of
silicon carbide over a relatively short period by examining
respondents' shipment data. Because the timing of petitioner's
allegation (after the completion of verification) precluded on-site
verification of this information, the Department also referred to U.S.
Customs IM-115 entry data to corroborate respondents' reported shipment
information, pursuant to section 771(18)(E) of the Act. (See 59FR
16795, April 8, 1994).
For the final determination, we have continued to use BIA as the
basis for our determination of critical circumstances for non-
respondent exporters. The BIA margin (406.00 percent) for those
exporters exceeds the 25 percent threshold for imputing a knowledge of
dumping to the importers of the merchandise. In addition, we have
adversely assumed, as BIA, a massive increase in imports from these
non-respondent exporters. We, therefore, determine that critical
circumstances exist for all non-respondent exporters in this
investigation.
Since the preliminary determination of critical circumstances, we
have determined that Hainan, Shaanxi and Xiamen are ineligible for
rates separate from non-respondent PRC exporters. Because Hainan,
Shaanxi and Xiamen are ineligible for rates separate from non-
respondent exporters, we must extend to them the same BIA-based
determination of critical circumstances applied to the non-respondent
exporters.
For respondents IMI/E, QI/E, and SGW, we determine that critical
circumstances do not exist. The shipment data for these respondents,
which we have corroborated using U.S. Customs IM-115 entry data, shows
that there has been no massive increase in shipments from these
respondents in the period following the filing of the petition (See
Preliminary Affirmative Determination of Critical Circumstances).
Interested Party Comments
Because respondents Hainan, Shaanxi, and Xiamen, are not eligible
for calculated separate rates, we have not addressed comments made by
these parties regarding calculations for this determination.
Comment 1: Petitoner maintains that the Department cannot assign
separate rates to respondents because not all relevant entities in the
PRC have participated in the investigation. Petitioner states that: (1)
The silicon carbide industry in the PRC is characterized by significant
provincial and/or local government ownership; (2) information on the
record demonstrates a number of non-responding producers of silicon
carbide in each province in which respondents and/or their suppliers
are located; (3) respondents and the non-responding producers are owned
by the governments of the provinces in which they are located; and (4)
respondents have offered no reason why cooperation is not required of
the non-responding producers. Petitioner further states that, while PRC
law prohibits the central government from controlling prices for
silicon carbide, there is no evidence that provincial governments
cannot regulate prices between silicon carbide producers and exporters.
Petitioner concludes that the respondents are thus ineligible for
separate rates.
IMI/E, QI/E, and SGW maintain that petitioner has confused the
Department's market-oriented industry (MOI) policy with its separate
rates policy. They state that PRC export companies do not need to prove
that the product under investigation was produced in a market
environment to be eligible for separate dumping margins. These
respondents conclude that every PRC exporter and producer of silicon
carbide does not need to participate in the case for participating
exporters to qualify for separate rates.
DOC Position
We disagree with petitioner. Pursuant to the discussion in the
``Separate Rates'' section above, we have found that the three
responding exporters ``owned by all the people'' are not controlled by
the central, provincial, or municipal governments. (See discussion
under ``Separate Rates'' section.) Further, the information on the
record relating to provincial and local governments shows that their
activities with regard to IMI/E, QI/E, and SGW are limited to such
functions as taxation, business licensing, and the collection of export
statistics. There is no evidence that these governments (1) can
manipulate export prices or (2) interfere with other aspects of
conducting business with the United States. Therefore, we determine
that IMI/E, QI/E, and SGW are not subject to government control of
their silicon carbide exports.
Finally, petitioner's concerns regarding the ability of provincial
governments to regulate prices between domestic producers and exporters
are not relevant to those respondents' eligibility for separate rates.
The Department's separate rates analysis focuses on governmental
control over the respondents' export activities, not the regulation of
prices charged by the respondents' suppliers.
Comment 2: Petitioner maintains that the respondents in this case
do not meet the Department's criteria for separate rates because they
have not demonstrated that they are independent of government ownership
or control and, therefore, that the Department must presume central-
government control. Petitioner also maintains that evidence on the
record demonstrates that the respondents are subject to certain types
of control by the central and provincial governments. Further,
petitioner states that various provisions of PRC law demonstrate that
respondents, whose business licenses state that they are owned by ``the
whole people,'' are subject to state control. In conclusion, petitioner
states that, based on the record for this investigation, respondents
are ineligible for separate rates.
IMI/E, QI/E, and SGW state that the Department should apply the
Sparklers criteria and find them eligible for separate dumping margins.
These respondents state that they have cooperated completely in this
investigation and have provided information indicating a lack of
ownership or control by the PRC central government. Moreover, these
respondents emphasize that the appropriate test of ownership is control
of property rather than simple legal title. IMI/E, QI/E, and SGW state
that the record also provides evidence of a de facto absence of central
control with respect to exporters.
Hainan, Shaanix, and Xiamen state that they are not subject to de
jure or de facto control by the central government. As evidence of de
jure absence of control, Hainan, Shaanix and Xiamen cite the specific
law and regulations provided in the MOFTEC verification report which
indicate that: (1) the PRC central government cannot dictate the
decision-making of enterprises; (2) enterprises have the right to enjoy
the benefits from their business activities; and (3) enterprises are
free to select their own management independently from the PRC central
government. These respondents also maintain that evidence on the record
demonstrates a de facto absence of control.
DOC Position: The Department disagrees with petitioner regarding
respondents IMI/E, QI/E, and SGW. As discussed at length in the
``Separate Rates'' section above, IMI/E, QI/E, and SGW are eligible for
separate rates.
Respondents Hainan and Shaanxi have failed to establish their
eligibility for separate rates because, at verification, these
companies failed to produce bank records necessary to prove their
retention of proceeds from export sales. Therefore, these respondents
did not meet an important criterion for separate rates (see ``Separate
Rates'' section above).
Respondent Xiamen has also failed to establish its eligibility for
a separate rate. As noted in the ``Separate Rates'' section above,
Xiamen has stated that certain other PRC exporters of silicon carbide
(i.e., CAEC and its other affiliates) are related parties within the
meaning of section 771(13) of the Act. However, Xiamen has failed to
provide information regarding the eligibility for separate rates of
CAEC, et al. Without such information, the Department cannot consider
assigning a separate rate to Xiamen/CAEC. (See also the Concurrence
Memorandum of April 22, 1994.)
Comment 3: Hainan, Shaanxi, and Xiamen argue that two of the
members of the petitioning coalition, Treibacher and Saint-Gobin,
should be excluded as interested parties in this investigation because
these companies do not sell U.S.-manufactured silicon carbide. These
respondents assert that Treibacher and Saint-Gobain sell silicon
carbide produced in Canadian furnaces that is merely ground and
screened in the United States. Respondents ask the Department to notify
the U.S. International Trade Commission (ITC) that these two companies
should not be considered as part of the domestic silicon carbide
industry because of (1) their insignificant U.S. capital investment
regarding silicon carbide, (2) their negligible U.S. employment, and
(3) their negligible real value-added to the product in the United
States.
Hainan, Shaanxi, and Xiamen assert that, once the Department has
excluded Treibacher and Saint-Gobain from participating as interested
parties in this proceeding, the Department must scrutinize Exolon-ESK,
the sole remaining petitioner with standing as a U.S. producer of
silicon carbide. These respondents point out that Exolon was indicted
in February 1994 for alleged improper commercial activities. These
charges, Hainan, Shaanxi, and Xiamen argue, are ``directly relevant to
the credibility of the certifications on which the Department based the
initiation of this investigation and to the legitimacy of Exolon's
request for import relief.'' These respondents conclude that since (1)
the Department must reject Exolon's submissions as an unreliable basis
for the initiation of this investigation, and (2) Treibacher and Saint-
Gobain are not interested parties and are thus barred from status as
petitioners, there are no remaining petitioners with standing to
continue this investigation. Therefore, these respondents maintain that
the Department should rescind its investigation of silicon carbide from
the PRC,
Petitioner argues that based on long-standing practices, the
Department analyzes petitioner's standing only in the event of a
challenge from other U.S. producers. Petitioner rebuts respondents'
argument by maintaining that the indictment of the petitioner is not
relevant to this investigation, that Exolon, the indicted party, is
innocent of the charges, and that Treibacher and Saint-Gobain are
interested parties to this investigation.
DOC Position: We agree, in part, with petitioner. Exolon's
indictment is irrelevant to our analysis and its status as a U.S.
producer of subject merchandise is unchallenged. Further, the ITC
preliminarily determined that Treibacher and Saint-Gobain are engaged
in U.S. ``production'' of subject merchandise and thus qualify as
members of the domestic industry (see Silicon Carbide From the People's
Republic of China, Inv. No. 731-TA-651 (Preliminary) (Pub. 2668, August
1993), at 12-13). We have reviewed the ITC's analysis, which addresses
the same arguments raised by respondents in this proceeding, and we
concur with the ITC. Therefore, we determine that Treibacher and Saint-
Gobain are engaged in ``production'' of silicon carbide in the United
States. Thus, these companies qualify as interested parties to this
proceeding. Given these facts, there is no basis for rescinding the
initiation of this investigation.
Comment 4: Hainan, Shaanxi, and Xiamen argue that, if the
Department decides not to rescind the initiation of this investigation,
the Department should consider crude silicon carbide and refined
silicon carbide to be separate classes or kinds of merchandise.
Petitioner asserts that these respondents have offered no evidence
on the record to support an alternative class or kind analysis.
DOC Position: We agree with petitioner. Hainan, Shaanxi, and Xiamen
have provided no substantial analytical or factual basis for their
claim that crude silocon carbide and refined silicon carbide should be
considered as separate classes or kinds of merchandise.
Comment 5: IMI/E, QI/E, and SGW argue that the Department should
continue to use the Pakistani rates for electricity because the Indian
rates for industrial use from the petitioner's December 30, 1993,
submission were artificially high.
Petitioner asserts that the Department should follow its preference
for using surrogate values from one country when possible. In this
case, the Department has surrogate values from India for all factors of
production, including electricity. Petitioner further asserts that the
Pakistani rate used as the surrogate value for electricity in the
preliminary determination was flawed because it did not completely
capture electricity costs for industrial users.
DOC Position: We agree with petitioner. In its preliminary
determination, the Department relied upon published, publicly-available
information (PPI) regarding Pakistani electricity rates for industrial
use during the POI. We did so because the PPI available at that time
for India either was out of date or was not necessarily specific to
industrial use. Since that time, publicly available electricity rates
for India have become available and these rates more accurately capture
total costs for Indian industrial users.
With regard to the concern raised by IMI/E, QI/E, and SGW regarding
artificially high electricity rates in India, the document which these
respondents cites as evidence of their contention simply fails to
support their position; viz., that document states that ``[t]o
encourage industrial development, many states also offer low rates to
large industries.'' Therefore, the Department has selected the
publicly-available industrial rates for India to value electricity
consumption for the calculations for this determination (see
Calculation Memorandum).
Comment 6: Petitioner states that there is a history of dumping in
the United States and Europe of silicon carbide from the PRC. Moreover,
petitioner states that the import data show there have been massive
imports of silicon carbide from PRC over a relatively short period of
time. Since preliminarily estimated dumping margins in this case exceed
25 percent, petitioner maintains that the importers knew or should have
known that the product was being sold at less than fair value.
Petitioner maintains that the Department should find critical
circumstances in this case.
QI/E, IMI/E, and SGW state that since their exports were not
massive after the petition was filed, the Department should not find
critical circumstances.
Hainan, Shaanxi, and Xiamen state that the EC findings which
petitioner cites as evidence of a history of dumping do not, in fact,
demonstrate such a history. These respondents maintain that, because
the PRC exporters offered the EC ``satisfactory undertakings'' (i.e.,
agreed to eliminate injurious dumping), there is no ``history of
dumping'' in the EC.
DOC Position: As described in the ``Critical Circumstances''
section above, we have analyzed the information on the record regarding
critical circumstances and have found that critical circumstances do
not exist for the three respondents (IMI/E, QI/E, and SGW) that are
eligible for separate rates. For non-respondent exporters during the
POI, we have used BIA to determine the existence of critical
circumstances. Since Hainan, Shaanxi, and Xiamen are ineligible for
rates separate from those non-respondent exporters, we must extend to
them the same BIA-based determination of critical circumstances.
Comment 7: Petitioner maintains that the silicon carbide industry
is not a market-oriented industry due to: (1) State ownership of some
producers; (2) government control of production levels and prices for a
significant portion of the industry; and (3) government control of
prices and production of significant inputs.
IMI/E, QI/E, and SGW contend that, since prices for energy inputs
in the United States are also set by governments, the PRC respondents'
market rates submission should not have been rejected on the basis that
coal rates are set by the Government of the PRC. IMI/E, QI/E, and SGW
further contend that no U.S. industry could ever be considered an MOI
under these criteria. The Department's criteria according to IMI/E, QI/
E, and SGW, are therefore, inherently unreasonable.
According to Hainan, Shaanxi, and Xiamen, the Department's MOI
analysis is inaccurate. They maintain that the Department's MOI test is
a charade since, once the Department determines that a country is a
non-market economy, it is a foregone conclusion that respondents will
be unable to prove that an MOI exists.
DOC Position: We agree with petitioner. And MOI does not exist
because coal, a significant material input used to produce silicon
carbide, is not purchased at market-determined prices. On November 16,
1993, petitioner submitted for the record of this investigation a World
Bank Discussion Paper entitled ``The Sectoral Foundations of China's
Development.'' This paper demonstrates that much of the coal supply of
the PRC is subject to central regulation of both price and allocation.
Coal not subject to central regulation is often subject to regulation
by provincial price boards. The PRC's coal market is also distorted by
substantial ``in plan'' production. Given the many distortions of the
coal market evident from information on the record, we cannot consider
the price of coal in the PRC to be market-determined. (For further
discussion, see the preliminary determination in this investigation (58
FR 64549, December 8, 1993).
Comment 8: Petitioner maintains that IMI/E has not demonstrated its
independence from other entities listed on its organizational chart or
that these other entities did not export silicon carbide to the United
States during the POI. Further, petitioner maintains that the
Department's failure to find evidence of investments between IMI/E and
these other entities does not indicate a lack of business
relationships. Petitioner concludes that IMI/E's potential relationship
with these other entities renders it ineligible for a separate rate.
IMI/E states that its maintenance of business relationships with
other companies should not disqualify it from receiving a separate
rate.
DOC Position: The Department disagrees with petitioner. first, at
verification the Department examined the completeness of IMI/E's sales
reporting. That examination encompassed IMI/E's records and substantial
other documentation. There was no indication at verification that any
part of IMI/E had failed to report POI sales to the United States.
IMI/E for its part has stated that other entities shown on its
organizational chart are ``not related to IMI/E''. Rather, they contend
that those ``independent and unrelated organizations appear on IMI/E's
organization chart to give the impression that IMI/E is a large company
that is prepared to do business with huge customers requiring enormous
volumes of products.'' IMI/E's explanation is consistent with the
Department's examinations at verification.
Finally, although petitioner concedes that IMI/E's investment
accounts demonstrated no investments between IMI/E and the entities in
question, petitioner maintains that IMI/E is ineligible for a separate
rate because of potential business relationships with these entities.
However, petitioner has not indicated any reasonable basis upon which
the Department can determine that such potential relationships offer
entities an opportunity to manipulate IMI/E's export pricing.
Comment 9: Petitioner states that SGW is ineligible for a separate
rate because other silicon carbide exporters in the same province have
failed to respond to the Department's questionnaire. Further,
petitioner maintains that information on the record links SGW to other
exporters. Petitioner concludes that since exporters of silicon carbide
related to SGW are not cooperating in this investigation, the
Department cannot issue a separate rate for SGW.
SGW states that it is unrelated to any other exporters of silicon
carbide. In particular, SGW maintains that it demonstrated during
verification its independence from its provincial government and, thus,
from other exporters in the same province.
DOC Position: We agree with SGW that it has established its
eligibility for a separate rate. As noted in our ``Separate Rates''
section above, our analysis shows that SGW is not subject to central-
government control of its silicon carbide exports. Further, other than
the now disproven contention of relationships based on the common
``provincial ownership'' of exporters, the only other basis for
petitioner's assertion of a relationship among exporters is the use by
SGW of ledger paper bearing the name of another exporter. SGW has
satisfactorily explained this situation at verification (see
Concurrence Memorandum and Verification Report). There is no other
indication of a relationship between SGW and other exporters of silicon
carbide and, therefore, SGW's eligibility for a separate rate is
unaffected.
Comment 10: Petitioner states that the Department was unable to
verify the factors of production reported by IMI/E, QI/E, and SGW and,
therefore, must base FMV on BIA for the final determination.
IMI/E, QI/E, and SGW request that the Department accept the correct
and verified consumption factors and use these inputs in the final
determination.
DOC Position: The Department agrees with respondents. While the
Department's verification uncovered several inaccuracies in these
respondents' reported data, the inaccuracies do not undermine the
fundamental soundness of their questionnaire responses because the
inaccuracies were not significant and there was no pattern of under-
reporting of the factors of production. Given these findings, the
Department has used the verified factors of production in its
calculations for the final determination.
Comment 11: Petitioner states that, should the Department use the
factors of production for IME/E, QI/E, and SGW, it must adjust these
factors for findings at verification. Specifically, petitioner
maintains that the Department should do the following: (1) For IMI/E,
adjust sand consumption and electricity consumption, account for
previously unreported input materials, reallocate labor hours, and
correct transportation distances for certain raw materials; (2) QI/E,
adjust QI/E's rail freight distance from factory to port, coal
transportation distance and use BIA for sand transportation distance,
electricity consumption, and labor; and (3) for SGW adjust distances
for shipping sand and coal, reverse the number of skilled and unskilled
workers used in the calculations for the preliminary determination
ignore unverified information regarding labor rates, and use BIA for
rail freight distance from factory to port as well as SGW's reported
truck freight distances.
These respondents assert that the Department should use these
respondents' verified factors of production, taking clerical errors at
verification into account, where appropriate.
DOC Position: As stated in the Department's position to the
previous comment, we have used the verified amounts for each of these
respondents' factors of production. Any inaccuracies found at
verification do not undermine the fundamental soundness of the
respondent's questionnaire responses. The inaccuracies were not
significant and there was no pattern of under-reporting of the factors
of production. Given these findings, the Department has used the
verified factors of production in its calculations for the final
determination because the verified factors of production yield the most
accurate measure of the respondents' margins of dumping. (For an in-
depth discussion of verification findings, see our Concurrence
Memorandum).
Comment 12: Petitioner states that, should the Department consider
a separate rate for IMI/E, the Department should adjust IMI/E's U.S.
price to eliminate a claimed bonus payment for product purity in excess
of requirements.
IMI/E requests that the Department use its verified sales prices in
the final determination.
DOC Position: The Department agrees with respondent. The Department
verified the proof of payment for the sales in question. That proof of
payment demonstrated that actual final sales price for the reported
sales, including bonus payments. We have used the verified final sales
prices in the calculations for this determination.
Comment 13: Petitioner states that, should the Department consider
a separate rate for QI/E, the Department must adjust QI/E's U.S. price
based on documentation reviewed at verification. Specifically,
petitioner maintains that the Department must exclude a certain price
adjustment because the Department was unable to verify the silicon
carbide content of one sale.
DOC Position: We disagree with petitioner. The Department verified
the proof of payment for the sale in question. That proof of payment
demonstrated the actual final sales price for the reported sale. Since
the Department's calculations are based on actual sales prices, proof
of the silicon carbide content of the merchandise sold is unnecessary.
We have used the verified final sales price in the calculations for
this determination.
Comment 14: Petitioner states that the Department discovered at
verification that QI/E had failed to report certain U.S. sales. In
addition, petitioner maintains that changes in the terms of the sales,
which Qinghai claims place the dates of sale after the POI, were
immaterial. Petitioner concludes that the sales in question are POI
sales, and that QI/E's failure to report those sales requires that the
Department base its final determination for QI/E on BIA.
QI/E maintains that the changes in question were material changes
in quantity. QI/E states that the date of sale for these sales was
after the POI. QI/E concludes that these sales were properly excluded
from QI/E's questionnaire responses.
DOC Position: We agree with QI/E. The change in question was a
change in the quantity sold under the contract. Petitioner maintains
that the implementation of the change through a quantity variation is
an ``immaterial'' change. However, verification exhibits indicate that
the customer's intent (and the final result) was a change in the
quantity term of the shipment. That change went beyond the allowable
quantity variation of the original contract. Thus, the quantity of the
contract, a material term, was not established until after the POI.
Therefore, the date of sale was after the POI.
Comment 15: Petitioner states that SGW understated its U.S. sales
during the POI, and that the Department must use BIA for SGW's
unreported sale.
SGW requests that the Department include the verified, but
unreported sale, in its final determination because SGW did not benefit
from this oversight.
DOC Position: The Department agrees with SGW. The omission in
question appeared to be inadvertent and had the effect of raising,
rather than lowering, SGW's calculated margin. In addition, we have no
reason to believe that this omission is indicative of a larger pattern
of inaccurate reporting by SGW. Further, this omission does not
approach the magnitude of the omissions, errors, and inadequacies which
we discovered during the verifications of Hainan, Shaanxi, and Xiamen,
requiring us to use BIA for those respondents. Therefore, we have used
the actual, verified information for SGW's unreported sale in our
calculations for this determination because its inclusion yields the
most accurate estimate of SGW's margin of dumping. (See also the
Concurrence Memorandum.)
Comment 16: IMI/E, QI/E, and SGW state that the Department should
not include coal and water in overhead, in order to avoid double-
counting these items.
DOC Position: We agree with respondents that we should not double
count these costs. Therefore, we have not included water as a separate
factor of production because we believe that water costs are captured
in the ``other manufacturing expenses'' category of the Department's
surrogate overhead expense (see the Calculation Memorandum attached to
the Concurrence Memorandum). However, we have continued to account for
coal as a separate factor of production because we have excluded
``power and fuel'' from the surrogate overhead expense.
Continuation of Suspension of Liquidation
In accordance with sections 733(d)(1) and 735(c)(4) (A) and (B) of
the Act, we are directing the Customs Service to continue to suspend
liquidation of entries of silicon carbide from the PRC from three of
the respondents in this investigation--IMI/E, QI/E, and SGW--that are
entered, or withdrawn from warehouse, for consumption on or after
December 8, 1993, which is the date of publication of the preliminary
determination in the Federal Register. For imports of silicon carbide
from all other exporters from the PRC, we are directing the Customs
Service to suspend liquidation on or after September 9 1993, which is
90 days prior to the date of publication of the preliminary
determination 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.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter margin
percentage
------------------------------------------------------------------------
7th Grinding Wheel Factory Import and Export Corporation... 99.52
The Import and Export Trading Corporation of Inner Mongolia
Autonomous Region......................................... 27.41
The Qinghai Metals and Minerals Import and Export
Corporation............................................... 7.50
All Others*................................................ 406.00
------------------------------------------------------------------------
*Including respondents Hainan, Shaanxi, and Xiamen.
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. The ITC will now determine, within 45 days,
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry. If the ITC determines that material
injury, or threat of material injury does not exist, the proceeding
will be terminated and all securities posted will be refunded or
cancelled. If the ITC determines that such injury does exist, the
Department will issue an antidumping duty order directing Customs
officials to assess antidumping duties on all imports of the subject
merchandise entered, or withdrawn from warehouse, for consumption on or
after the effective date of the suspension of liquidation.
This determination is published pursuant to section 735(d) of the
Act and 19 CFR 353.20(a)(4).
Dated: April 22, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-10455 Filed 4-29-94; 8:45 am]
BILLING CODE 3510-DS-P
