E5-2233. Automotive Replacement Glass Windshields From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (“the Department”) is conducting the second administrative review of the antidumping duty order on automotive replacement glass (“ARG”) windshields from the People's Republic of China (“PRC”) covering the period April 1, 2003, through March 31, 2004. We have preliminarily determined that sales have been made below normal value. If these preliminary results are adopted in our final results of this review, we will instruct U.S. Customs and Border Protection (“CBP”) to assess antidumping duties on entries of subject merchandise during the period of review (“POR”), for which the importer-specific assessment rates are above de minimis.

Interested parties are invited to comment on these preliminary results. We will issue the final results no later than 120 days from the date of publication of this notice.

EFFECTIVE DATE:

May 9, 2005.

FOR FURTHER INFORMATION CONTACT:

Jon Freed or Will Dickerson, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] and [phone], respectively.

Background

On April 4, 2002, the Department published in the Federal Register the antidumping duty order on ARG windshields from the PRC. See Antidumping Duty Order: Automotive Replacement Glass Windshields from the People's Republic of China, 67 FR 16087. On April 1, 2004, the Department published a notice of opportunity to request an administrative review of the antidumping duty order on ARG windshields from the PRC for the period April 1, 2003, through March 31, 2004. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation: Opportunity to Request Administrative Review, 69 FR 17129. On April 21, 2004, Pilkington North America, Inc. (“PNA”), an importer of subject merchandise during the POR, requested an administrative review of Changchun Pilkington Safety Glass Company Limited and Wuhan Yaohua Pilkington Safety Glass Company Limited (collectively “the Pilkington JVs”), producers from which it imported the subject merchandise (with PNA, collectively “Pilkington”). On April 24, 2004, Dongguan Kongwan Automobile Glass, Ltd. (“Dongguan Kongwan”), and Peaceful City, Ltd. (“Peaceful City”) requested an administrative review of their sales to the United States during the POR. On April 26, 2004, Fuyao Glass Industry Group Company, Ltd. (“Fuyao”) requested an administrative review of its sales to the United States during the POR. On April 29, 2004, Shenzhen CSG Automotive Glass Co., Ltd. (“CSG”) requested an administrative review of its sales to the United States during the POR.^[1] The petitioners in the original investigation did not request an administrative review of any parties. On May 27, 2004, the Department published in the Federal Register a notice of the initiation of the antidumping duty administrative review of ARG windshields from the PRC for the period April 1, 2003, through March 31, 2004. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 69 FR 30282 (“Initiation Notice”).

On October 12, 2004, the Department published a notice of partial rescission, which rescinded the administrative review with regard to the following companies: Dongguan Kongwan, Fuyao, and Peaceful City. See Certain Automotive Replacement Glass Windshields From the People's Republic of China: Notice of Partial Rescission of the Antidumping Duty Administrative Review, 69 FR 60612. On December 3, 2004, the Department published a notice in the Federal Register extending the time limit for the preliminary results of review until March 31, 2005. See Extension of Time Limit for the Preliminary Results of the Antidumping Duty Administrative Review: Automotive Replacement Glass Windshields from the People's Republic of China, 69 FR 70224. Additionally, on March 22, 2005, the Department published a notice in the Federal Register further extending the time limit for the preliminary results of review until May 2, 2005. See Extension of Time Limit for Preliminary Results of the Antidumping Duty Administrative Review: Automotive Replacement Glass Windshields from the People's Republic of China, 70 FR 14445.

CSG

On June 14, 2004, the Department issued its antidumping questionnaire to CSG. CSG submitted its Section A questionnaire response on July 13, 2004, and its Sections C and D responses on July 22, 2004.^[2] The Department issued a Section A-D supplemental questionnaire to CSG on December 21, 2004, to which CSG responded on January 13, 2005. The Department issued a second Section A-D supplemental questionnaire to CSG on January 28, 2005, to which CSG responded on February 8, 2005. From February 28, 2005, through March 4, 2005, the Department conducted a sales and factors-of-production verification at CSG's facilities in Shenzhen, PRC. On April 8, 2005, the Department issued a request to CSG for it to make certain corrections to its U.S. sales database, to which CSG responded on April 12, 2005.

Pilkington

On June 14, 2004, the Department issued its antidumping questionnaire to Pilkington. Pilkington submitted its Section A questionnaire response on July 12, 2004, and its Sections C and D responses on July 21, 2004. From December 2004 to April 2005, the Department issued and Pilkington responded to four Section A-D supplemental questionnaires.

Period of Review

The POR is April 1, 2003, through March 31, 2004.

Scope of Order

The products covered by this order are ARG windshields, and parts thereof, whether clear or tinted, whether coated or not, and whether or not they include antennas, ceramics, mirror buttons or VIN notches, and whether or not they are encapsulated. ARG windshields are laminated safety glass (i.e., two layers of (typically float) glass with a sheet of clear or tinted plastic in between (usually polyvinyl butyral)), which are produced and sold for use by automotive glass installation shops to replace windshields in automotive vehicles (e.g., passenger cars, light trucks, vans, sport utility vehicles, etc.) that are cracked, broken or otherwise damaged.

ARG windshields subject to this order are currently classifiable under subheading 7007.21.10.10 of the Harmonized Tariff Schedules of the United States (HTSUS). Specifically excluded from the scope of this order are laminated automotive windshields sold for use in original assembly of vehicles. While HTSUS subheadings are provided for convenience and Customs purposes, our written description of the scope of this order is dispositive.

Verification

As provided in section 782(i) of the Tariff Act of 1930, as amended (“the Act”), we verified information provided by CSG. We used standard verification procedures, including on-site inspection of the manufacturers' and exporters' facilities, and examination of relevant sales and financial records.

The Department conducted the verification at CSG's facilities in Shenzhen, Guangdong Province from February 28, 2005, through March 4, 2005. Our verification results are outlined in the verification report for CSG. For further details see Verification of Sales and Factors of Production of CSG in the Antidumping Duty Administrative Review of Automotive Replacement Glass (“ARG”) Windshields from the People's Republic of China (“PRC”), dated May 2, 2005 (“CSG Verification Report”).

Nonmarket Economy Country Status

In every case conducted by the Department involving the PRC, the PRC has been treated as a non-market economy (“NME”) country. In accordance with section 771(18)(C)(i) of the Act, any determination that a foreign country is an NME country shall remain in effect until revoked by the administering authority. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Preliminary Results 2001-2002 Administrative Review and Partial Rescission of Review, 68 FR 7500 (February 14, 2003). None of the parties to this proceeding has contested such treatment. Accordingly, we calculated normal value (“NV”) in accordance with section 773(c) of the Act, which applies to NME countries.

Surrogate Country

When the Department is investigating imports from an NME country, section 773(c)(1) of the Act directs it to base normal value on the NME producer's factors of production, valued in a surrogate market-economy country or countries considered to be appropriate by the Department. In accordance with section 773(c)(4) of the Act, in valuing the factors of production, the Department shall utilize, to the extent possible, the prices or costs of factors of production in one or more market-economy countries that are: (1) At a level of economic development comparable to that of the NME country; and (2) significant producers of comparable merchandise. The sources of the surrogate factor values are discussed under the “normal value” section below and in Preliminary Results of Review of the Order on Automotive Replacement Glass Windshields from the People's Republic of China: Factor Valuation, Memorandum from Jon Freed, Case Analyst, through Robert Bolling, Program Manager, Office VIII to the File, dated May 2, 2005 (“Factor Valuation Memo”).

The Department has determined that India, Indonesia, Sri Lanka, the Philippines, and Egypt are countries comparable to the PRC in terms of economic development. See Memorandum from Ron Lorentzen to Laurie Parkhill: Antidumping Duty Administrative Review of Automotive Replacement Glass Windshields from the People's Republic of China (PRC): Request for a List of Surrogate Countries (“Policy Letter”), dated December 16, 2004. Customarily, we select an appropriate surrogate country based on the availability and reliability of data from the countries that are significant producers of comparable merchandise. For PRC cases, the primary surrogate country has often been India if it is a significant producer of comparable merchandise. In this case, we have found that India is a significant producer of comparable merchandise. See Memo to File through Wendy Frankel and Robert Bolling from Will Dickerson: Automotive Replacement Glass Windshields (“ARG”) from the People's Republic of China; Selection of a Surrogate Country, March 9, 2005 (“Surrogate Country Memo”).

The Department used India as the primary surrogate country, and, accordingly, has calculated normal value using Indian prices to value the PRC producers' factors of production, when available and appropriate. See Surrogate Country Memo and Factor Valuation Memo. We have obtained and relied upon publicly available information wherever possible.

In accordance with 19 CFR 351.301(c)(3)(ii), for the final results in an antidumping administrative review, interested parties may submit publicly available information to value factors of production within 20 days after the date of publication of these preliminary results.

Affiliation/Collapsing—the Pilkington JVs

Pilkington is comprised of several different corporations and joint ventures, including PNA and the Pilkington JVs. During the POR, PNA only sold subject merchandise in the U.S. from three of the Pilkington JVs, with the vast majority of subject merchandise being sourced from Changchun Pilkington Safety Glass Company Limited (“CPS”). In the first administrative review, the Department analyzed record evidence on affiliation and found the Pilkington JVs to be affiliated under section 771(33)(E), (F) and (G) of the Act, by virtue of Pilkington Plc's control over the four Pilkington JVs. See Automotive Replacement Glass Windshields From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review, 69 FR 25547-49 (May 7, 2004); see also, Antidumping Duty Administrative Review of Automotive Replacement Glass Windshields from the People's Republic of China: Collapsing of Affiliated Parties, dated April 29, 2004 (“Collapsing Memo—AR1”). The Department has placed the Collapsing Memo—AR1 on the record of this administrative review and served all parties on the administrative protective order service list. See Memorandum to the File from Will Dickerson: Collapsing Memo from First Administrative Review, April 12, 2005, (“Collapsing Memo—AR2”). Based on Pilkington's questionnaire responses in this POR, the Department has determined that none of the facts concerning Pilkington's ownership and control relationships have changed from the first administrative review. Therefore, the Department maintains its prior determination that the affiliation provisions of section 771(33)(E), (F), and (G) are met because Pilkington Plc continues to exercise control over the Pilkington JVs through its ownership share and ability to influence the sales of the Pilkington JVs.

The Department further determined in the first administrative review that, pursuant to 19 CFR 351.401(f), the Pilkington JVs should be collapsed for margin calculation purposes. Specifically, the Department found that all four of the Pilkington JVs have production facilities for producing similar or identical products that would not require substantial retooling in order to restructure manufacturing priorities. See Automotive Replacement Glass Windshields From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review, 69 FR 25547-9 (May 7, 2004); see also Collapsing Memo—AR2 at 5. The Department further found significant potential for manipulation of the Pilkington JVs' price or production due to the level of common ownership, the extent to which board members sit on the boards of each of the Pilkington JVs, and the intertwining of the operations of the Pilkington JVs through Pilkington Plc. See id.

Based on Pilkington's questionnaire responses from this review, the Department finds that the facts with regard to the criteria set forth in 19 CFR 351.401(f) have not changed and that the Pilkington JVs should be collapsed because (1) the Pilkington JVs are affiliated, (2) each has production facilities for producing similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities, and (3) there is a significant potential for manipulation of price or production. See Collapsing Memo—AR2 for a full discussion of our determination. For the preliminary results, we have determined that the Pilkington JVs are affiliated and collapsed; however the Department intends to conduct further inquiry into this matter prior to issuing its final results.

Separate Rates

In an NME proceeding, the Department presumes that all companies within the country are subject to government control and should be assigned a single antidumping duty rate unless the respondent demonstrates the absence of both de jure and de facto government control over its export activities. See Notice of Final Determination of Sales at Less Than Fair Value: Bicycles From the People's Republic of China, 61 FR 19026 (April 30, 1996). CSG and Pilkington each provided company-specific separate rates information and stated that they met the standards for the assignment of separate rates. In determining whether companies should receive separate rates, the Department focuses its attention on the exporter, in this case CSG and the Pilkington JVs, rather than the manufacturer, as our concern is the manipulation of dumping margins. See Notice of Final Determination of Sales at Less Than Fair Value: Manganese Metal from the People's Republic of China, 60 FR 56045 (November 6, 1995). Consequently, the Department analyzed whether the exporters of the subject merchandise, CSG and the Pilkington JVs, should receive a separate rate.

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 Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From Ukraine, 62 FR 61754 (November 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 (November 17, 1997); and Notice of Preliminary Determination of Sales at Less than Fair Value: Honey from the People's Republic of China, 60 FR 14725 (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), as modified by Notice of Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585, (May 2, 1994) (“Silicon Carbide”). Under the separate rates criteria, the Department assigns separate rates in NME cases only if the respondent can demonstrate the absence of both de jure and de facto government control over export activities. See Silicon Carbide and Notice of Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol from the People's Republic of China, 60 FR 22544 (May 8, 1995).

A. Absence of De Jure Control

The Department considers the following de jure criteria in determining whether an individual company may be granted a separate rate: (1) An absence of restrictive stipulations associated with an individual exporter's business and export licenses; and (2) any legislative enactments decentralizing control of companies.

B. 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 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). 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 government control which would preclude the Department from assigning separate rates. The Department typically considers four factors in evaluating whether each respondent is subject to de facto government control of its export functions: (1) Whether the exporter sets its own export prices independent of the government and without the approval of a government 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 its 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.

CSG

CSG has placed on the record statements and documents to demonstrate absence of de jure control. In its questionnaire responses, CSG reported that, other than paying taxes and renewing its business licenses, it has no relationship with any level of the PRC government. CSG stated that it has complete independence with respect to its export activities. CSG submitted a copy of the Foreign Trade Law of the PRC to demonstrate that there is no centralized control over its export activities. CSG also reported that the subject merchandise is not subject to export quotas or export control licenses. Furthermore, CSG stated that the local Chamber of Commerce in the PRC does not coordinate any export activities for CSG. CSG reported that it is required to obtain a business license, which is issued by the Shenzhen Industrial and Commercial Administration Bureau. Through questionnaire responses and at verification, we examined each of these laws and CSG's business license and determine that they demonstrate an authority for establishing the absence of de jure control over the export activities and evidence in favor of the absence of government control associated with CSG's business license.

In support of demonstrating an absence of de facto control, CSG has asserted the following: (1) CSG established its own export prices; (2) CSG negotiated contracts without guidance from any government entities or organizations; (3) CSG made its own personnel decisions; and (4) CSG retained the proceeds of its export sales and independently used profits according to its business needs. Additionally, CSG's questionnaire responses indicate that it does not coordinate with other exporters in setting prices. This information supports a preliminary finding that there is an absence of de facto government control of the export functions of CSG. Consequently, we preliminarily determine that CSG has met the criteria for the application of separate rates.

The evidence placed on the record of this administrative review by CSG demonstrates an absence of government control, both in law and in fact, with respect to its exports of the merchandise under review. As a result, for the purposes of these preliminary results, the Department is granting a separate, company-specific rate to CSG, the exporter which shipped the subject merchandise, ARG windshields, to the United States during the POR.

Pilkington

Pilkington placed on the record statements and documents to demonstrate absence of de jure control. In its questionnaire responses, Pilkington reported that it has complete independence with respect to its export activities and that neither any PRC legislative enactments nor any other formal government measures control any aspect of its export activities. Pilkington also reported that the subject merchandise is not subject to export quotas or export control licenses. Further, Pilkington reported that there are no legislative enactments by the government that centralize control of the export activities of the Pilkington JVs. Furthermore, Pilkington stated that the local Chamber of Commerce in the PRC does not coordinate any export activities for the Pilkington JVs.

Pilkington reported that it is required to obtain business licenses, which are issued by the Changchun Industrial and Commercial Administration Bureau for CPS; the Shanghai Industrial and Commercial Administrative Bureau for Shanghai Yaohua Pilkington Autoglass Company Limited (“SYPA”); the Guilin Industrial and Commercial Administration Bureau for GPS, and the Wuhan Industrial and Commercial Administrative Bureau for Wuhan Yaohua Pilkington Safety Glass Company Limited (“WYP”). Pilkington reported that the licenses need to be renewed annually for CPS, SYPA, and GPS, or at the end of the JVs' scheduled existence, in the case of WYP. Pilkington reported that the business licenses allow a business entity, such as the Pilkington JVs, to operate in the PRC as a producer and exporter of automotive glass. We examined each of these licenses and determine that they demonstrate an authority for establishing the de jure decentralized control over the export activities of the Pilkington JVs and evidence in favor of the absence of government control.

In support of an absence of de facto control, Pilkington asserted the following: (1) The Pilkington JVs established their own export prices; (2) the Pilkington JVs negotiated contracts without guidance from any government entities or organizations; (3) the Pilkington JVs made their own personnel decisions; and (4) the Pilkington JVs retained the proceeds of their export sales and used profits according to their business needs. Additionally, Pilkington's questionnaire responses indicate that the Pilkington JVs do not coordinate with other exporters in setting prices or in determining which companies will sell to which markets. This information supports a preliminary finding that there is an absence of de facto government control of the export functions of the Pilkington JVs. Consequently, we preliminarily determine that Pilkington has met the criteria for the application of separate rates.

The evidence placed on the record of this administrative review by Pilkington demonstrates an absence of government control, both in law and in fact, with respect to the Pilkington JVs exports of the merchandise under review. As a result, for the purposes of these preliminary results, the Department is granting a separate, company-specific rate to the Pilkington JVs, the exporters which shipped the subject merchandise to the United States during the POR.

Partial Adverse Facts Available

As discussed in detail below, we have preliminarily determined that the use of partial adverse facts available is warranted for certain U.S. sales that were not reported by CSG.

The Department finds that the use of facts available is warranted pursuant to section 776 (a) of the Act. Sections 776(a)(2)(A) and 776(a)(2)(B) of the Act provide that the Department shall use facts available when an interested party withholds information that has been requested by the Department or when an interested party fails to provide the information requested in a timely manner and in the form requested. CSG failed to provide information regarding certain U.S. sales of subject merchandise in a timely manner. The verification agenda sent to CSG prior to their verification stated that:

verification is not intended to be an opportunity for submitting new factual information. New information will be accepted at verification only when: (1) The need for that information was not evident previously, (2) the information makes minor corrections to information already on the record, or (3) the information corroborates, supports, or clarifies information already on the record. Please provide a list of any corrections to your responses to the verifiers at the beginning of verification.

Letter from the Department to CSG: Verification Agenda, February 18, 2005, at page 2.

At the beginning of verification, CSG identified other corrections to its responses, but it did not identify these unreported sales at that time. See CSG Verification Report at page 9. On the second day of verification, CSG informed the Department that it had not included certain invoices for sales to the United States in its section C database. CSG explained that it had discovered these invoices in preparation of the quantity and value of sales reconciliation segment of the verification. Because the data on these sales were not provided in a timely manner, at the beginning of verification, the Department declined to accept these data during verification.

CSG did not provide complete information regarding its U.S. sales by the deadline for submitting such information, and consequently, the Department lacked information necessary to conduct a complete and accurate analysis of CSG's U.S. sales of subject merchandise. See sections 776(a)(1) and 776(a)(2)(B) of the Act. Because the administrative record is incomplete with regard to these unreported U.S. sales, the Department must use facts otherwise available in conducting its analysis of CSG's U.S. sales that were unreported. See section 776(a) of the Act.

Section 776(b) of the Act provides that the Department may use adverse inferences when an interested party has failed to cooperate by not acting to the best of its ability to comply with the Department's request for information. In applying facts available to these certain sales, adverse inferences are warranted because CSG failed to cooperate by not acting to the best of its ability to comply with the Department's requests to report all U.S. sales in a timely manner.

CSG had numerous opportunities to present complete and accurate information regarding its U.S. sales. In its original submission, CSG stated that it had reported all of its U.S. sales of subject merchandise in its Section C database. See CSG's Section C and D Response, July 22, 2004, at page C-2. CSG submitted a revised Section C database in response to a supplemental questionnaire on January 13, 2005. Moreover, CSG submitted a second revised Section C database and a reconciliation of the quantity and value of U.S. sales to its audited financial statements on February 8, 2005. As a part of the February 8, 2005, sales reconciliation, the unreported invoices were included in a nine-page listing of CSG's U.S. sales, but nothing in the reconciliation package indicated that these sales were not reported in CSG's Section C database. Finally, CSG had the opportunity to present these sales at the beginning of verification, but it failed to identify these sales. CSG did not identify these sales until the second day of verification, after the time allowed to provide the Department any minor corrections to its questionnaire responses. See Letter from the Department to CSG: Verification Agenda, February 18, 2005, at page 2. CSG's failure to report these sales when it had numerous opportunities to do so, and when the sales were clearly known to it at least as early as February 8, 2005, demonstrates that it failed to cooperate by not acting to the best of its ability to report all of its sales in a timely manner. As adverse facts available, we have applied the PRC-wide rate from the petition to these certain sales. See Preliminary Results of Review of the Order on Automotive Replacement Glass Windshields from the People's Republic of China: CSG Autoglass Program Analysis Memorandum, May 2, 2005 (“CSG Analysis Memorandum”).

Corroboration of Secondary Information

Section 776(c) of the Act provides that, when the Department relies on secondary information rather than on information obtained in the course of an investigation as facts available, it must, to the extent practicable, corroborate that information from independent sources reasonably at its disposal. Secondary information is defined in the Statement of Administrative Action (“SAA”) as “information derived from the petition that gave rise to the investigation or review, the final determination concerning subject merchandise, or any previous review under section 751 concerning the subject merchandise.” See SAA at 870. The SAA provides that to “corroborate” means simply that the Department will satisfy itself that the secondary information to be used has probative value. See id. The SAA also states that independent sources used to corroborate may include, for example, published price lists, official import statistics and customs data, and information obtained from interested parties during the particular investigation. See Id. As noted in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, from Japan; Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 61 FR 57391, 57392 (November 6, 1996), to corroborate secondary information, the Department will, to the extent practicable, examine the reliability and relevance of the information used.

The adverse facts available rate we are applying for the unreported sales in question was corroborated in the investigation. See Memorandum from Jon Freed to Robert Bolling: Preliminary Results in the Antidumping Administrative Review of Automotive Replacement Glass Windshields from the People's Republic of China: First Administrative Review Corroboration Memorandum, dated April 29, 2004 (“First Review Corroboration Memo”), with attached Memorandum from Edward Yang to Joseph Spetrini: Preliminary Determination in the Antidumping Investigation of Automotive Replacement Glass Windshields from the People's Republic of China: Total Facts Available Corroboration Memorandum for All Others Rate, dated September 10, 2001 (“Corroboration Memo”). The Department has received no information to date that warrants revisiting the issue of the reliability of the rate calculation itself. See e.g., Certain Preserved Mushrooms from the People's Republic of China: Final Results and Partial Rescission of the New Shipper Review and Final Results and Partial Rescission of the Third Antidumping Duty Administrative Review, 68 FR 41304, 41307-41308 (July 11, 2003) (The Department relied on the corroboration memorandum from the investigation to assess the reliability of the petition rate as the basis for an adverse facts available rate in the administrative review). No information has been presented in the current review that calls into question the reliability of this information. Thus, the Department finds that the information contained in the petition is reliable.

With respect to the relevance aspect of corroboration, the Department will consider information reasonably at its disposal to determine whether a margin continues to have relevance. Where circumstances indicate that the selected margin is not appropriate as adverse facts available, the Department will disregard the margin and determine an appropriate margin. For example, in Fresh Cut Flowers from Mexico: Final Results of Antidumping Administrative Review, 61 FR 6812 (February 22, 1996), the Department disregarded the highest margin in that case as adverse best information available (the predecessor to facts available) because the margin was based on another company's uncharacteristic business expense resulting in an unusually high margin. Similarly, the Department does not apply a margin that has been discredited. See D&L Supply Co. v. United States, 113 F.3d 1220, 1221 (Fed. Cir. 1997) (the Department will not use a margin that has been judicially invalidated).

To assess the relevancy of the rate used, the Department compared the margin calculations of other respondents in this administrative review with the petition rate. The Department found that the petition rate was within the range of the highest margins calculated on the record of this administrative review. See Memorandum to the File: Corroboration of the PRC-wide Rate, May 2, 2005. Because the record of this administrative review contains margins within the range of the petition margin, we determine that the rate from the petition continues to be relevant for use in this administrative review. Further, the rate used is currently applicable to all exporters subject to the PRC-wide rate.

As the petition rate is both reliable and relevant, we determine that it has probative value. As a result, the Department determines that the petition rate is corroborated for the purposes of this administrative review and may reasonably be applied to certain sales for CSG as partial adverse facts available. Accordingly, we determine that the highest rate from any segment of this administrative proceeding (i.e., the petition rate of 124.50 percent) is in accord with section 776(c)'s requirement that secondary information be corroborated (i.e., have probative value).

Because this is a preliminary margin, the Department will consider all margins on the record at the time of the final results for the purpose of determining the most appropriate final margin for these unreported sales. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Solid Fertilizer Grade Ammonium Nitrate From the Russian Federation, 65 FR 1139 (January 7, 2000).

Date of Sale

19 CFR 351.401(i) states that “in identifying the date of sale of the subject merchandise or foreign like product, the Secretary normally will use the date of invoice, as recorded in the exporter or producer's records kept in the normal course of business.”

CSG

After examining the questionnaire responses and the sales documentation placed on the record by CSG, we preliminarily determine that invoice date is the most appropriate date of sale for CSG. We made this determination based on evidence on the record which demonstrates that CSG's invoices establish the material terms of sale to the extent required by our regulations. Thus, the evidence on the record does not rebut the presumption that invoice date is the proper date of sale. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Saccharin From the People's Republic of China, 67 FR 79054 (December 27, 2002).

Pilkington

After examining the sales documentation placed on the record by Pilkington, we preliminarily determine that invoice date is the most appropriate date of sale for Pilkington. We made this determination based on evidence on the record which demonstrates that Pilkington's invoices establish the material terms of sale to the extent required by our regulations. Thus, the evidence on the record does not rebut the presumption that invoice date is the proper date of sale. See id.

Normal Value Comparisons

To determine whether sales of ARG windshields to the United States by CSG and Pilkington were made at less than normal value (“NV”), we compared export price (“EP”) or constructed export price (“CEP”) to NV, as described in the “Export Price,” “Constructed Export Price” and “Normal Value” sections of this notice.

Export Price

In accordance with section 772(a) of the Act, EP is the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under section 772(c) of the Act. In accordance with section 772(a) of the Act, we used EP for all of CSG's U.S. sales because the subject merchandise was sold directly to the unaffiliated customers in the United States prior to importation and because CEP was not otherwise indicated for those transactions.

Constructed Export Price

In accordance with section 772(b) of the Act, CEP is the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted under subsections (c) and (d). In accordance with section 772(b) of the Act, we used CEP for all of Pilkington's sales because it sold subject merchandise to its affiliated company in the United States, which in turn sold subject merchandise to unaffiliated U.S. customers. We compared NV to individual EP and CEP transactions, in accordance with section 777A(d)(2) of the Act.

CSG

We calculated EP for CSG based on delivered prices to unaffiliated purchasers in the United States. We made deductions from the U.S. sale price for movement expenses in accordance with section 772(c)(2)(A) of the Act. These included foreign inland freight from the plant to the port of exportation, domestic brokerage, ocean freight, marine insurance, U.S. brokerage, and inland freight from port to unaffiliated U.S. customer. We made deductions to the U.S. sale price for commissions paid, U.S. customs duties, and fees associated with importing the subject merchandise into the United States.

Pilkington

For Pilkington's sales, we based the CEP on delivered prices to unaffiliated purchasers in the United States. In accordance with section 772(d)(1) of the Act, we made deductions for discounts, rebates, and movement expenses from the U.S. sale price. Movement expenses included expenses for foreign inland freight from the plant to the port of exportation, foreign inland insurance, domestic brokerage, marine insurance, international freight, U.S. duty, and inland freight from warehouse to unaffiliated U.S. customer. In accordance with section 772(d)(1) of the Act, the Department additionally deducted credit expenses, inventory carrying costs, and direct and indirect selling expenses from the U.S. price, all of which relate to commercial activity in the United States. We calculated Pilkington's credit expenses and inventory carrying costs based on the Federal Reserve short-term rate. See Preliminary Results of Review of the Order on Automotive Replacement Glass Windshields from the People's Republic of China: Pilkington North America (“PNA”) Program Analysis for the Preliminary Results of Review Memorandum from Will Dickerson, Case Analyst, through Robert Bolling, Program Manager, Office VIII to the File, dated May 2, 2005 (“Pilkington Analysis Memo”). Finally, we deducted CEP profit, in accordance with sections 772(d)(3) and 772(f) of the Act.

Normal Value

Section 773(c)(1) of the Act provides that the Department shall determine the NV using a factors-of-production methodology if: (1) The merchandise is exported from a non-market economy country; and (2) the information does not permit the calculation of NV using home-market prices, third-country prices, or constructed value under section 773(a) of the Act. The Department will base NV on factors of production because the presence of government controls on various aspects of these economies renders price comparisons and the calculation of production costs invalid under our normal methodologies.

Factors of production include: (1) Hours of labor required; (2) quantities of raw materials employed; (3) amounts of energy and other utilities consumed; and (4) representative capital costs. We used factors of production reported by respondents for materials, energy, labor, by-products, and packing.

In accordance with 19 CFR 351.408(c)(1), the Department will normally use publicly available information to value factors of production, but when a producer sources an input from a market economy and pays for it in market-economy currency, the Department will normally value the factor using the actual price paid for the input. See 19 CFR 351.408(c)(1); see also Lasko Metal Products v. United States, 43 F. 3d 1442, 1445-1446 (Fed. Cir. 1994). However, when the Department has reason to believe or suspect that such prices may be distorted by subsidies, the Department will disregard the market-economy purchase prices and use surrogate values to determine the NV. See Notice of Amended Final Determination of Sales at Less than Fair Value: Automotive Replacement Glass Windshields from the People's Republic of China (“PRC”), 67 FR 11670 (March 15, 2002).

CSG and Pilkington reported that some of their inputs were sourced from market economies and paid for in a market-economy currency. See Factor Valuation Memorandum for a listing of these inputs. Pursuant to 19 CFR 351.408(c)(1), we used the actual price paid by respondents for inputs purchased from a market-economy supplier and paid for in a market-economy currency, except when prices may have been distorted by subsidies. Specifically, we did not use respondents' actual prices for any market-economy purchases from Indonesia, Thailand or Korea, and also did not use import statistics from these countries in valuing any factors of production, i.e., for material inputs, packing materials, and by-product credits. The Department determined in the investigation and the first administrative review that there is reason to believe or suspect that Indonesia, Korea, and Thailand maintain broadly available, non-industry specific export subsidies that may benefit all exporters to all markets. It is the Department's consistent practice that, where the facts developed in U.S. or third-country countervailing duty findings include the existence of subsidies that appear to be used generally (in particular, broadly available, non-industry specific export subsidies), it is reasonable for the Department to consider that it has particular and objective evidence to support a reason to believe or suspect that prices of the inputs from the country granting the subsidies may be subsidized. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China; Final Results of the 1998-1999 Administrative Review, Partial Rescission of Review, and Determination Not to Revoke Order in Part, 66 FR 1953 (January 10, 2001), and accompanying Issues and Decision Memorandum at Comment 1, see also, Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China; Final Results of 1999-2000 Administrative Review, Partial Rescission of Review, and Determination Not To Revoke Order in Part, 66 FR 57420 (November 15, 2001), and accompanying Issues and Decision Memorandum at Comment 1. At the time of the original investigation, we supported our finding that prices paid by the PRC producers to their suppliers of float glass from Korea, Thailand, and Indonesia may have been subsidized by referring to 40 determinations by the United States of specific countervailable export subsidy programs in Korea, Thailand, and Indonesia. See Import Administration's Subsidy Enforcement Electronic Library for Korea, Thailand, and Indonesia at http://ia.ita.doc.gov/​esel/​eselframes.html. There is additional evidence that these countries continue to provide such subsidies. See e.g., Final Affirmative Countervailing Duty Determination: Dynamic Random Access Memory Semiconductors from the Republic of Korea, 68 FR 37122 (June 23, 2003), Final Affirmative Countervailing Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products From Thailand, 66 FR 50410 (October 3, 2001), and Preliminary Negative Countervailing Duty Determination and Alignment with Final Antidumping Duty Determination: Bottle-Grade Polyethylene Terephthalate (PET) Resin From Thailand, 69 FR 52862 (August 30, 2004). Therefore, the Department continues to find that there is reason to believe or suspect that prices paid for inputs from Korea, Thailand, and Indonesia may be subsidized and are, therefore, unreliable. Accordingly, we have determined that disregarding market-economy input prices from Korea, Thailand, and Indonesia in favor of surrogate prices results in a more accurate dumping analysis. The Department is not in a position to verify whether or not the reported market-economy purchases were distorted in fact by these non-industry specific export subsidies. However, the fact that each of these countries maintains non-industry specific export subsidies, broadly available to all exporters, gives rise to the Department's presumption that the exporters of float glass and other reported market-economy inputs to CSG and Pilkington may have benefitted from these non-industry specific export subsidies. Therefore, we will not use export prices from these countries, either as actual prices for market-economy purchases or as statistics on imports into India, the surrogate country. See Final Determination of Sales at Less Than Fair Value: Certain Automotive Replacement Glass Windshields From The People's Republic of China, 67 FR 6482 (February 12, 2002), and accompanying Issues and Decision Memorandum at Comment 1, see also Automotive Replacement Glass Windshields From the People's Republic of China: Final Results of Administrative Review, 69 FR 61790 (October 21, 2004), and accompanying Issues and Decision Memorandum at Comment 5.

Factor Valuations

In accordance with section 773(c) of the Act, we calculated NV based on factors of production reported by respondents for the POR. To calculate NV, the reported per-unit factor quantities were multiplied by publicly available Indian surrogate values (except as noted below). In selecting the surrogate values, we considered the quality, specificity, and contemporaneity of the data. As appropriate, we adjusted input prices by including freight costs to make them delivered prices. Specifically, we added to Indian import surrogate values a surrogate freight cost using the shorter of the reported distance from the domestic supplier to the factory or the distance from the nearest seaport to the factory where appropriate (i.e., where the sales terms for the market-economy inputs were not delivered to the factory). This adjustment is in accordance with the decision of the Court of Appeals for the Federal Circuit in Sigma Corp. v. United States, 117 F. 3d 1401 (Fed. Cir. 1997). For a detailed description of all surrogate values used for respondents, see Factor Valuation Memorandum.

Except as noted below, we valued raw material inputs using the weighted-average unit import values derived from the World Trade Atlas® online (“Indian Import Statistics”). See Factor Valuation Memorandum. The Indian Import Statistics we obtained from the World Trade Atlas were published by the DGCI&S, Ministry of Commerce of India, which were reported in rupees and are contemporaneous with the POR. Where we could not obtain publicly available information contemporaneous with the POR with which to value factors, we adjusted the surrogate values using the Indian Wholesale Price Index (“WPI”) as published in the International Financial Statistics of the International Monetary Fund.

CSG

CSG reported that it sourced much of its raw material inputs from market-economy suppliers and paid for them in market-economy currencies. See CSG Analysis Memorandum at page 3. For these preliminary results, in accordance with 19 CFR 351.408(c)(1), the Department has used the market-economy prices for CSG's inputs with two exceptions. First, because the Department has reason to believe or suspect that market-economy prices from Indonesia, Thailand, and Korea may be subsidized, we have not used the companies' reported actual prices for blue float glass, ink, and dilution medium and instead have valued these using Indian Import Statistics. In addition, we did not include some of CSG's purchases of green glass, solar glass, and clear PVB, which were sourced from either Indonesia, Thailand, or Korea, in the calculation of the average price paid by CSG for these materials. However, we based the value for green glass, solar glass, and clear PVB on CSG's actual purchases because it had significant market-economy purchases of these materials from suppliers in other market-economy countries.

Second, in order to demonstrate that prices paid to market-economy sellers for some portion of a given input are representative of prices paid overall for that input, the amounts purchased from the market-economy supplier must be meaningful. See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27366 (May 19, 1997). Where the quantity of the input purchased from market-economy suppliers was insignificant, the Department will not rely on the price paid by an NME producer to a market-economy supplier because it cannot have confidence that a company could fulfill all its needs at that price. CSG's reported information demonstrates that the quantity of ink, molding, and antenna lead which it sourced from market-economy suppliers was so small as to be insignificant when compared to the quantity of the same input it sourced from PRC suppliers or suppliers located in Indonesia, Thailand, or Korea. See CSG's Second Supplemental Response, Exhibit D-4, (February 8, 2005). Therefore, because the amount of ink, molding, and antenna lead that was purchased from suppliers in market-economy countries is insignificant, we did not use the price paid by CSG for these inputs and instead used Indian Import Statistics.

CSG reported that it sourced clear float glass, kerosene oil, silicone powder, mirror brackets, antenna lead, molding, mirror bracket glue, conducting glue, and solder within the PRC. Therefore, we have used Indian Import Statistics to value each of these inputs. CSG reported that it recovered scrap PVB and shattered glass for resale. The Department has offset the respondents' cost of production by the amount of a reported by-product (or a portion thereof) where CSG indicated that the by-product was sold and/or where the record evidence clearly demonstrates that the by-product was re-entered into the production process. See Factor Valuation Memorandum for a complete discussion of by-product credits given and the surrogate values used. To value recovered shattered glass, the Department used Indian Import Statistics reported for imports under HTS 7001, described in the Indian tariff schedule as “Cullet and other Waste and Scrap of Glass; Glass in the Mass.” In finding a surrogate value for recovered scrap PVB, the Department used the HTS number for recovered PVB that was used in the previous segments of this proceeding to derive a surrogate value from Indian Import Statistics.

To value electricity, we used values from the International Energy Agency to calculate a surrogate value in India for 2000, and adjusted for inflation. The Department used the same source in the investigation and the first administrative review. No interested parties submitted information or comments regarding these surrogate values and the Department was unable to find a more contemporaneous surrogate value. Therefore, the Department inflated the International Energy Agency 2000 Indian price for electricity, which results in a surrogate value for electricity usage during the POR of $0.092/kilowatt-hour.

To value water, we used the same information as in the previous segments of this proceeding. In the investigation and the first administrative review, the Department used the average water tariff rate as reported in the Asian Development Bank's Second Water Utilities Data Book: Asian and Pacific Region (published in 1997), based on the average Indian rupee per cubic meter rate for three cities in India during 1997. No interested parties submitted information or comments regarding this surrogate value and the Department was unable to find a more contemporaneous surrogate value. Therefore, the Department inflated the 1997 rupee price for water and converted it to U.S. dollars, which results in a surrogate value for water of $0.321/metric ton.

For direct labor, indirect labor, crate building labor, and packing labor, consistent with 19 CFR 351.408(c)(3), we used the PRC regression-based wage rate as reported on Import Administration's home page, Import Library, Expected Wages of Selected NME Countries, revised in November 2004, http://ia.ita.doc.gov/​wages/​02wages/​02wages.html. The source of these wage rate data on the Import Administration's web site is the Yearbook of Labour Statistics 2002, ILO, (Geneva: 2002), Chapter 5B: Wages in Manufacturing. The years of the reported wage rates range from 1996 to 2001. Because this regression-based wage rate does not separate the labor rates into different skill levels or types of labor, we have applied the same wage rate to all skill levels and types of labor reported by the respondent.

To value factory overhead, selling, general and administrative expenses (“SG&A”), and profit, we used the 2003 audited financial statements for the Indian producer of laminated and tempered automotive safety glass, Saint-Gobain Sekurit India Limited (“St.-Gobain”). See Factor Valuation Memorandum for a full discussion of the calculation of these ratios from St.-Gobain's financial statements.

Finally, we used Indian Import Statistics to value material inputs for packing. We used Indian Import Statistics data for the period April 2003 through March 2004. See Factor Valuation Memorandum.

Pilkington

Pilkington reported that, during the POR, it made all of its raw material purchases from market-economy suppliers and paid for them in market-economy currencies. Pilkington reported market-economy purchases for clear float glass, green float glass, PVB, ceramic ink, mirror buttons, silver paste, and powder. See Factor Valuation Memorandum at pages 4 and 5. For these preliminary results, in accordance with 19 CFR 351.408(c)(1), the Department has used the market-economy prices for Pilkington's inputs with one exception. Specifically, based on the fact that the Department has reason to believe or suspect that market-economy prices from Indonesia, Thailand, and Korea may be subsidized, we have disallowed the use of the companies' reported actual prices for clear float glass and green float glass purchased from one or more of these countries, and have valued these using Indian Import Statistics.

Pilkington reported that it sells its recovered scrap glass to float glass manufacturers for meltdown. The Department has offset the respondents' cost of production by the amount of a reported by-product (or a portion thereof) where respondents indicated that the by-product was sold. To value sales of scrap glass, the Department used Indian Import Statistics reported for imports under HTS 7001, described in the Indian tariff schedule as “Cullet and other Waste and Scrap of Glass; Glass in the Mass.” The surrogate values for packing, labor, electricity, water, overhead, SG&A, and profit were applied in the same manner as explained above in the CSG section.

Weighted-Average Dumping Margin

The weighted-average dumping margins are as follows:

Automotive Replacement Glass Windshields from the PRC

Producer/manufacturer/exporter r	Weighted-average margin (percent)
CSG	5.67
Pilkington	0.91

Disclosure

The Department will disclose calculations performed for these preliminary results to the parties within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). Any interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, will be held two days after the scheduled date for submission of rebuttal briefs. See 19 CFR 351.310(d). Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of review. See 19 CFR 351.309(c)(ii). Rebuttal briefs and rebuttals to written comments, limited to issues raised in such briefs or comments, may be filed no later than 35 days after the date of publication. See 19 CFR 351.309(d). Further, we would appreciate that parties submitting written comments also provide the Department with an additional copy of those comments on diskette. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, within 120 days of publication of these preliminary results, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

Upon issuance of the final results, the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate assessment instructions directly to CBP upon completion of this review. If these preliminary results are adopted in our final results of review, we will direct CBP to assess the resulting rate against the entered customs value for the subject merchandise on each importer's/customer's entries during the POR.

Cash-Deposit Requirements

The following cash-deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for each of the reviewed companies will be the rate listed in the final results of review (except where the rate for a particular company is de minimis, i.e., less than 0.5 percent, no cash deposit will be required for that company); (2) for previously investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original less than fair value (“LTFV”) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be the “PRC-wide” rate of 124.5 percent, which was established in the LTFV investigation. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Importers

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

We are issuing and publishing these preliminary results of review in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act, and 19 CFR 351.221(b).

Dated: May 2, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  Shenzhen CSG Automotive Glass also listed the following variations of the company names that may have been used during the POR: Shenzhen Benxun AutoGlass Co., Ltd.; Shenzhen Benxun Automotive Glass Co., Ltd.; Shenzhen Benxun Automotive Co., Ltd.; Shenzhen Benxun AutoGlass Co., Ltd., d/b/a Shenzhen CSG Automotive Glass Co., Ltd.; Shenzhen CSG (former name Benxun) Automotive Glass Co., Ltd.; Shenzhen CSG Automotive Glass Co., Ltd. (Shenzhen Benxun Automotive Co., Ltd.); and Shenzhen CSG Automotive Glass Co., Ltd. (Shenzhen Benxun Automotive Glass Co., Ltd.). Subsequent to CSG's request for an administrative review, the Department determined that CSG is a successor-in-interest to Shenzhen Benxun, which received a separate rate in the investigation of this proceeding. See Notice of Final Results of Antidumping Duty Changed Circumstances Review: Automotive Replacement Glass Windshields From the People's Republic of China, 69 FR 43388 (July 20, 2004).

2.  Letter from Robert Bolling to Shenzhen CSG Automotive Glass Company, Limited, Section A, C, D, and E Questionnaire for the Antidumping Duty Administrative Review on Automotive Replacement Glass Windshields from the People's Republic of China (June 14, 2004).