[Federal Register Volume 59, Number 120 (Thursday, June 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15329]
[[Page Unknown]]
[Federal Register: June 23, 1994]
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COMMISSION ON CIVIL RIGHTS
International Trade Administration
[A-570-829]
Notice of Preliminary Determination of Sales at Less Than Fair
Value: Saccharin From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: June 23, 1994.
FOR FURTHER INFORMATION CONTACT:
Gary Bettger or Jennifer Yeske, Office of Countervailing
Investigations, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
2239 or (202) 482-0189, respectively.
Preliminary Determination
We preliminarily determine that saccharin from the People's
Republic of China (PRC) is being, or is likely to be, sold in the
United States at less than fair value (LTFV), as provided in section
733 of the Tariff Act of 1930, as amended (the Act). The estimated
margins are shown in the ``Suspension of Liquidation'' section of this
notice.
Case History
Since the initiation of this investigation on December 8, 1993 (58
FR 65335; December 14, 1993), the following events have occurred:
During December 1993 and January 1994, the Department attempted to
identify possible PRC exporters of saccharin to the United States
during the period of investigation (POI). We learned of 18 potential
respondents through the petition, Port Import Export Reporting Service
(``PIERS'') data and other sources of information.
On January 3, 1994, the U.S. International Trade Commission (ITC)
notified us of its preliminary determination that there is a reasonable
indication that an industry in the United States is materially injured
by reason of saccharin imports from the PRC that are alleged to be sold
at less than fair value.
On January 18, 1994, the Department of Commerce (the Department)
sent its antidumping duty questionnaire to the Ministry of Foreign
Trade and Economic Cooperation (MOFTEC) and the above-referenced 18 PRC
companies. We asked MOFTEC to submit a comprehensive list of all
producers and exporters of saccharin to the United States within two
weeks of the receipt of the questionnaire and to provide copies of the
questionnaire to those producers and exporters. On February 24, 1994,
MOFTEC designated the China Chamber of Commerce of Medicines and Health
Products Importers and Exporters (``Chamber'') as the contact
organization for this investigation.
On March 4, 1994, the Department determined that this investigation
was extraordinarily complicated due to the large number of producers
and resellers. We also determined that respondent parties to the
proceeding were cooperating in this investigation. Therefore, we
determined that it was appropriate under section 733(c)(1)(B) of the
Tariff Act, as amended (``the Act''), and 19 CFR 353.15(b), to postpone
the date of the preliminary determination until no later than June 16,
1994.
On March 24, 1994, MOFTEC submitted a list of four exporters and
six supplying manufacturers which sold or manufactured saccharin
exported to the United States during the POI. On March 8, 1994, and
April 8, 1994, respectively, we received unofficially filed facsimiles
from one company on the MOFTEC list, Xia Men Electrochemical Company,
and also from another factory, Shanghai Fortune Chemical Company (which
is not on the MOFTEC list). Both companies stated that they did not
sell the subject merchandise to the United States during the POI.
During the period March through June, 1994, the Department received
responses to its questionnaire from the following respondents: Shanghai
KJ Import and Export Corporation (``Shanghai IE'') and Suzhou Cereals
Import and Export Corporation (``Suzhou IE'').
On June 14, 1994, two days before the preliminary determination in
this investigation, Shanghai IE reported that it would provide factors
of production for a second workshop of its supplier factory at a later
date, without giving any indication how much production was accounted
for by this second workshop. Prior to this submission, we had no
indication on the record that Shanghai IE had failed to report certain
factor information. On June 16, 1994, the date of this determination,
Shanghai IE provided factor information for this second workshop. This
submission also contained new factor information for both Suzhou IE's
and Shanghai IE's supplier factories. Due to the timing of this June
16th submission, it was administrably infeasible to use this
information for purposes of our preliminary determination.
Scope of Investigation
The product covered by this investigation is saccharin. Saccharin
is a non-nutritive sweetener used in beverages and foods, personal care
products such as toothpaste, table-top sweeteners, animal feeds, and
metalworking fluids. Three forms of saccharin are typically available
as referenced in the American Chemical Society's Chemical Abstract
Service (CAS). These forms are sodium saccharin (CAS #128-44-9),
calcium saccharin (CAS #6485-34-3), and acid (or insoluble) saccharin
(CAS #81-07-2). Saccharin is classified under subheading 2925.11.00 of
the Harmonized Tariff Schedule of the United States (HTS). The scope of
this investigation includes all types of saccharin imported under this
HTS subheading including research and specialized grades.
Although the HTS subheading is provided for convenience and customs
purposes, our written description of the scope of this investigation is
dispositive.
Period of Investigation
The POI is June 1, 1993, through November 30, 1993.
Separate Rates
Shanghai IE and Suzhou IE have each requested a separate rate.
Shanghai IE's and Suzhou IE's business licenses each indicate that they
are owned ``by all the people.'' As stated in the Final Determination
of Sales at Less than Fair Value: Silicon Carbide from the People's
Republic of China (59 FR 22585, May 2, 1994) (``Silicon Carbide''),
``ownership of a company by all the people does not require the
application of a single rate.'' Accordingly, Shanghai IE and Suzhou IE
are eligible for consideration for separate rates.
To establish whether a firm is entitled to a separate rate, the
Department analyzes each exporting entity under a test arising out of
the Final Determination of Sales at Less Than Fair Value: Sparklers
from the People's Republic of China (56 FR 20588, May 6, 1991)
(``Sparklers'') and amplified in Silicon Carbide. Under the separate
rates criteria, the Department assigns separate rates only where
respondents can demonstrate the absence of both de jure and de facto
governmental control over export activities.
1. Absence of De Jure Control
The respondents submitted a number of documents to demonstrate
absence of de jure control, including two PRC laws indicating that the
responsibility for managing enterprises ``owned by all the people'' is
with the enterprises themselves and not with the government. These are
the ``Law of the People's Republic of China on Industrial Enterprises
Owned by the Whole People,'' adopted on April 13, 1988 (``1988 Law'');
and the ``Regulations for Transformation of Operational Mechanism of
State-Owned Industrial Enterprises,'' approved on August 23, 1992
(``1992 Regulations''). The record of this investigation also includes
the ``Temporary Provisions for Administration of Export Commodities,''
approved on December 21, 1992 (``Export Provisions'').
The 1988 Law and 1992 Regulations shifted control from the
government to the enterprises themselves. The 1988 Law provides that
enterprises owned by ``all the people'' shall make their own management
decisions, be responsible for their own profits and losses, choose
their own suppliers and purchase their own goods and materials. The
1988 Law contains other provisions which indicate that enterprises have
management independence from the government. The 1992 Regulations
provide that these same enterprises can, for example, set their own
prices (Article IX); make their own production decisions (Article XI);
use their own retained foreign exchange (Article XII); allocate profits
(Article II); sell their own products without government interference
(Article X); make their own investment decisions (Article XIII);
dispose of their own assets (Article XV); and hire and fire their
employees without government approval (Article XVII).
The Export Provisions list those products subject to direct
government control. Saccharin does not appear on the Export Provisions
list and is not, therefore, subject to export constraints.
The existence of these laws indicates that Shanghai IE and Suzhou
IE are not de jure subject to central government control with respect
to export sales and pricing decisions. However, there is some evidence
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)).
Therefore, the Department has determined that a de facto analysis is
critical in determining whether respondents are subject to governmental
control over export sales and pricing decisions.
2. Absence of De Facto Control
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 export prices are set by, or
subject to the approval of, a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses (see Silicon Carbide).
Shanghai IE and Suzhou IE have both asserted that (1) they
establish their own export prices; (2) they negotiate contracts without
guidance from any governmental entities or organizations; (3) they
operate with a high degree of management autonomy; and (4) they retain
the proceeds of their export sales and have the authority to sell
assets and to obtain loans. In addition, company-specific pricing
during the POI does not suggest any coordination among exporters (i.e.,
the prices for comparable products appear to differ among companies).
This information supports a preliminary finding that there is a de
facto absence of governmental control of export functions.
Consequently, Shanghai IE and Suzhou IE have preliminarily met the
criteria for the application of separate rates. We will examine this
issue in detail at verification and determine whether the questionnaire
responses are supported by verifiable documentation.
There is an additional issue relating to governmental control that
we will consider further for purposes of our final determination.
First, the companies have indicated that they are ``under the
jurisdiction'' of their respective city or province. While the meaning
and significance of this phrase is unclear, the evidence cited above
indicates that the local governments do not control the key functions
of the enterprises. However, we will address the precise nature of the
authority that these governments exercise over the enterprises at
verification and in our final determination.
Market-Oriented Industry Claim
Respondents have argued that they should be treated as a market-
oriented industry (``MOI''). However, we have received MOI information
from only two saccharin producers in the PRC. We have no information on
the remaining producers, of which there are at least four (according to
information provided by MOFTEC). Consequently, we have no basis to
determine whether the production and sales practices of these two
producers are representative of PRC saccharin producers as a whole.
Therefore, we have preliminarily determined that an MOI does not exist
with respect to the PRC saccharin industry.
Nonmarket-Economy
The PRC has been treated as a nonmarket-economy (NME) in past
antidumping investigations. (See, e.g., Final Determination of Sales at
Less than Fair Value: Sebacic Acid from the People's Republic of China
(59 FR 28053 (May 31, 1994)). No information has been provided in this
proceeding that would lead us to determine otherwise. Therefore, in
accordance with section 771(18)(c) of the Act, we have treated the PRC
as an NME for purposes of this investigation.
Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
NME producers' factors of production, to the extent possible, in one or
more market-economy countries that are at a level of economic
development comparable to that of the nonmarket-economy country, and
that are significant producers of comparable merchandise. The
Department has determined that India is the country most comparable to
the PRC in terms of overall economic development. (See Memorandum from
the Office of Policy to the file, dated May 17, 1994, on file in the
Central Records Unit, Room B099, Department of Commerce Main Building,
14th and Constitution, Washington DC 20230.) In addition, there is
evidence on the record that saccharin is produced in India.
Fair Value Comparisons
To determine whether sales of saccharin from the PRC to the United
States by Suzhou IE were made at less than fair value, we compared the
United States price (USP) to the foreign market value (FMV), as
specified in the ``United States Price'' and ``Foreign Market Value''
sections of this notice.
Because Shanghai IE failed to report complete production and factor
information, we do not have information on all of the saccharin
produced for export by Shanghai IE. Therefore, we are basing Shanghai
IE's margin on best information available (``BIA''). Finally, because
other exporters listed by MOFTEC decided not to participate in this
investigation, we also based their margins on BIA. (See ``Best
Information Available'' section of this notice.)
United States Price
We based USP on purchase price, in accordance with section 772(b)
of the Act, because the subject merchandise was sold directly by Suzhou
IE to unrelated parties in the United States prior to importation into
the United States and because ESP methodology is not indicated by any
other circumstances. We calculated purchase price based on packed, CIF
delivered prices to unrelated purchasers in the United States. We made
deductions for containerization expenses, foreign inland freight,
foreign handling and brokerage fees, and marine insurance. The deducted
amounts were calculated using Indian values. We also deducted ocean
freight, which was calculated on the basis of market-economy,
international freight rates paid in U.S. dollars from Shanghai to New
York.
Foreign Market Value
In accordance with section 773(c) of the Act, we calculated FMV
using factors of production reported by the factory which produced
saccharin for Suzhou IE. The factors used to produce saccharin include
materials, labor, and energy. To calculate FMV, the reported quantities
were multiplied by the appropriate surrogate values for the different
inputs. For Suzhou IE, we made adjustments to material costs for
recovery of by-products in the production process. In determining which
surrogate value to use for valuing each factor of production, we
selected, where possible, a value based on publicly-available published
information (``PAPI'') which was: (1) An average non-export value; (2)
representative of a range of prices within the POI if submitted by an
interested party, or most contemporaneous with the POI; (3) product-
specific; and (4) tax-exclusive. We note that we have used Indian
import statistics for eight of the chemicals used in the production of
saccharin.
We used surrogate transportation rates to value inland freight
between the source of the production factor and the saccharin
factories. In those cases where the respondent failed to provide any
information on transportation distances and modes, we applied, as BIA,
the most expensive distance/mode combination that was available from
the surrogate information we had selected. For inland water transport,
we were unable to obtain PAPI or cable information in time for this
preliminary determination. To value this mode of transportation, we
have assumed that this form competed effectively with the alternate
form of transportation (e.g., trucking) over similar distances, and
used the applicable rates for the alternate form.
To value certain raw materials, we used PAPI from India Chemical
Weekly for July 1993-November 1993. For packing materials and raw
materials which were not listed in India Chemical Weekly, we used the
Monthly Trade Statistics of Foreign Trade of India, Volume II--Imports
for April 1992-March 1993. We adjusted the factor values, when
necessary, to the POI using wholesale price indices (WPIs) published by
the International Monetary Fund (IMF). No product-specific PAPI
pertaining to India or any other potential surrogate country was
available for the chemical sodium hypochlorite. Therefore, we have used
a price quote obtained by the Department from a U.S. chemical producer
which is neither an interested party, nor related to an interested
party, in this investigation.
To value electricity, we used PAPI from the Electric Utilities Data
Book for the Asian and Pacific Region (January 1993) published by the
Asian Development Bank. We selected this source because it provides an
electricity rate for industrial use during the POI from our preferred
surrogate country. To value water, we have used PAPI information from
the Water Utilities Data Book for the Asian and Pacific Region
(November 1993) which is published by the Asian Development Bank. To
value coal, we used the Monthly Trade Statistics of Foreign Trade of
India, Volume II--Imports for April 1992-March 1993. We adjusted the
factor values, when necessary, to the POI using WPIs published by the
IMF.
To value labor amounts, we used the International Labor Office's
1993 Yearbook of Labor Statistics. We used the Country Reports: Human
Rights Practices for 1990 to determine the number of hours in an Indian
workday.
To value factory overhead, we calculated percentages based on
elements of industry group income statements from The Reserve Bank of
India Bulletin (RBI), December 1993. For general expense percentages,
we used the RBI data and allocated total general expenses over the
total RBI-based materials, labor, and overhead cost calculated for each
factory. The RBI data yielded a general expense percentage greater than
the ten percent statutory minimum. For profit we used the statutory
minimum of eight percent of materials, labor, factory overhead, and
general expenses, because the RBI percentage was less than eight
percent. We added packing based on Indian values obtained from Indian
Import Statistics.
Best Information Available
Because Shanghai IE failed to report complete factor information
prior to this determination, we were unable to use Shanghai IE's data,
and are basing its margin on BIA. Additionally, because information has
not been presented to the Department to prove otherwise, any PRC
companies not participating in this investigation are not entitled to
separate dumping margins. Potential exporters identified by MOFTEC have
failed to respond to our questionnaire. In the absence of responses
from these and other PRC exporters during the POI, we are basing the
PRC country-wide rate on BIA.
In determining what to use as BIA in this case, the Department
follows a two-tiered methodology, whereby the Department normally
assigns lower margins to those respondents that cooperated in an
investigation and margins based on more adverse assumptions for those
respondents which did not cooperate in an investigation. When a company
cooperates with our requests for information but fails to provide the
information requested in a timely manner or in the form required, we
use as BIA the higher of: (1) the average of margins in the petition;
or (2) the calculated margin for another firm for the same class or
kind of merchandise from the same country. See, Final Determination of
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat
Products, Certain Cold-Rolled Carbon Steel Flat Products, and Certain
Cut-to-Length Carbon Steel Plate From Belgium, 58 FR 37083 (July 9,
1993) (``Belgium Steel''). Since Shanghai IE has been cooperative in
this proceeding, and since we have preliminarily determined it is
eligible for a separate rate, we are assigning to it the calculated
rate for the other respondent in the investigation, Suzhou IE, which is
higher than the average of the margins in the petitions.
When a company refuses to provide the information requested in the
form required, or otherwise significantly impedes the Department's
investigation, it is appropriate for the Department to assign to that
company the higher of (a) the highest margin alleged in the petition,
or (b) the highest calculated rate of any respondent in the
investigation (see, Belgium Steel). Here, since some PRC exporters
failed to respond to our questionnaire, we are assigning to all other
PRC exporters the margin calculated for Suzhou IE because it is higher
than the highest margin in the petition.
Verification
As provided in section 776(b) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d)(1) of the Act, we are directing
the Customs Service to suspend liquidation of all entries of saccharin
from the PRC that are entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. The Customs Service shall require a cash deposit or
posting of a bond equal to the estimated amount by which the FMV
exceeds the USP as shown below. These suspension of liquidation
instructions will remain in effect until further notice.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weight-
average
Manufacturer/producer/exporter margin
percentage
------------------------------------------------------------------------
Shanghai IE................................................ 452.85
Suzhou IE.................................................. 452.85
PRC Country-Wide Rate...................................... 452.85
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
In accordance with 19 CFR 353.38, case briefs or other written
comments in at least ten copies must be submitted to the Assistant
Secretary for Import Administration no later than August 8, 1994, and
rebuttal briefs, no later than August 12, 1994. In accordance with 19
CFR 353.38(b), we will hold a public hearing, if requested, to afford
interested parties an opportunity to comment on arguments raised in
case or rebuttal briefs. Tentatively, the hearing will be held on
August 15, 1994, at 10:00 a.m. at the U.S. Department of Commerce, Room
3708, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230. Parties should confirm by telephone the time, date, and place of
the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
B-099, within ten days of the publication of this notice. Requests
should contain: (1) the party's name, address, and telephone number;
(2) the number of participants; and (3) a list of the issues to be
discussed. In accordance with 19 CFR 353.38(b), oral presentations will
be limited to issues raised in the briefs. If this investigation
proceeds normally, we will make our final determination by the 135th
day after the date of publication of this affirmative preliminary
determination in the Federal Register.
This determination is published pursuant to section 733(f) of the
Act and 19 CFR 353.15(a)(4).
Dated: June 16, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-15329 Filed 6-22-94; 8:45 am]
BILLING CODE 3510-DS-P
