02-17353. Certain Helical Spring Lock Washers from the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of Antidumping Duty Administrative Review.

SUMMARY:

We preliminarily find that helical spring lock washers from the People's Republic of China are not being sold in the United States below normal value by the Hangzhou Spring Washer Plant (also known as Zhejiang Wanxin Group, Ltd.). Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

July 10, 2002.

FOR FURTHER INFORMATION CONTACT:

Sally Hastings, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone [phone].

SUPPLEMENTARY INFORMATION:

Applicable Statute

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930, as amended (the Act) by the Uruguay Round Agreements Act. Unless otherwise indicated, all citations to the Department of Commerce's (the Department's) regulations are to 19 CFR part 351 (2001).

Background

On October 19, 1993, the Department published the antidumping duty order on certain helical spring lock washers (HSLWs) from the People's Republic of China (PRC) (58 FR 53914). The Department notified interested parties of the opportunity to request an administrative review of this order on October 1, 2001 (66 FR 49923). The petitioner, Shakeproof Assembly Components Division of Illinois Tool Works, Inc., requested that the Department conduct an administrative review of Hangzhou Spring Washer Plant (also known as Zhejiang Wanxin Group Co. Ltd. (ZWG)), the predecessor firm to Hang Zhou Spring Washer Co., Ltd. (collectively Hangzhou), on October 30, 2001. The notice of initiation of this administrative review was published on November 21, 2001 (66 FR 58432).

On February 15, 2002, the petitioner timely requested verification for “good cause” pursuant to 19 CFR 351.307(b)(iv). On March 8, 2002, Hangzhou responded to the Department's January 4, 2002, questionnaire. The Department, on April 18, 2002, provided parties with an opportunity to submit information regarding appropriate surrogate values. On May 9, 2002, both petitioner and Hangzhou submitted surrogate value comments. The Department issued a supplemental questionnaire to Hangzhou on June 3, 2002. Hangzhou submitted its supplemental questionnaire responses on June 17, 2002.

The Department is conducting this administrative review in accordance with section 751 of the Act.

Scope of the Order

The products covered by the order are HSLWs of carbon steel, of carbon alloy steel, or of stainless steel, heat-treated or non-heat-treated, plated or non-plated, with ends that are off-line. HSLWs are designed to: (1) function as a spring to compensate for developed looseness between the component parts of a fastened assembly; (2) distribute the load over a larger area for screws or bolts; and, (3) provide a hardened bearing surface. The scope does not include internal or external tooth washers, nor does it include spring lock washers made of other metals, such as copper.

HSLWs subject to the order are currently classifiable under subheading 7318.21.0030 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the scope of this proceeding is dispositive.

Period of Review

This review covers the period October 1, 2000, through September 30, 2001.

Separate Rates Determination

To establish whether a company operating in a state-controlled economy is sufficiently independent to be entitled to a separate rate, the Department analyzes each exporting entity under the test established in the Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) (Sparklers), as amplified by 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). Under this policy, exporters in non-market economy countries (NMEs) are entitled to separate, company-specific margins when they can demonstrate an absence of government control, both in law and in fact, with respect to export activities. Evidence supporting, though not requiring, a finding of de jure absence of government control over export activities includes: 1) an absence of restrictive stipulations associated with the individual exporter's business and export licenses; 2) any legislative enactments decentralizing control of companies; and, 3) any other formal measures by the government decentralizing control of companies. De facto absence of government control over exports is based on four factors: 1) whether each exporter sets its own export prices independently of the government and without the approval of a government authority; 2) whether each exporter retains the proceeds from its sales and makes independent decisions regarding the disposition of profits or the financing of losses; 3) whether each exporter has the authority to negotiate and sign contracts and other agreements; and, 4) whether each exporter has autonomy from the government regarding the selection of management. (See Silicon Carbide, 59 FR at 22587 and Sparklers, 56 FR at 20589.)

In each of the previous administrative reviews of the antidumping duty order on HSLWs from the PRC, covering successive review periods from October 1, 1993, through September 30, 2000, we determined that Hangzhou and its predecessor, ZWG, merited a separate rate. We found, in each review, an absence of government control, both in law and in fact, with respect to Hangzhou's export activities according to the criteria identified in Sparklers, and an absence of government control with respect to the additional criteria identified in Silicon Carbide. During this period of review (POR), we have no evidence of any change in either the Sparklers or Silicon Carbide criteria. Therefore, we have assigned Hangzhou a separate rate.

Export Price

Because Hangzhou sold the subject merchandise to unaffiliated purchasers in the United States prior to importation into the United States and constructed export price methodology is not otherwise indicated, we have used export price in accordance with section 772(a) of the Act.

We calculated export price based on the FOB price to unaffiliated purchasers. From this price, we deducted amounts for foreign inland freight, and brokerage and handling pursuant to section 772(c)(2)(A) of the Act. We valued these deductions using surrogate values. We selected India as the primary surrogate country for the reasons explained in the “Normal Value” section of this notice.

Normal Value

The Department has determined the PRC to be an NME country in all previous antidumping cases. In accordance with section 771(18)(C)(i) of the Act, any determination that a foreign country is an NME shall remain in effect until revoked by the administering authority. None of the parties to this proceeding has contested such treatment in this review. Moreover, parties to this proceeding have not argued that the PRC HSLW industry is a market-oriented industry and, consequently, we have no basis to determine that the information in this review would permit the calculation of normal value (NV) using PRC prices or costs. Section 773(c)(1) of the Act provides that, in the case of an NME, the Department shall determine NV using a factors-of-production methodology if: (1) the merchandise is exported from an NME, 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. Therefore, we calculated NV based on factors of production in accordance with sections 773(c)(3) and (4) of the Act and 19 CFR 351.408(c).

Because we are using surrogate country factors-of-production prices to determine NV, section 773(c)(4) of the Act requires that the Department use values from a market economy (surrogate) country that 1) is at a level of economic development comparable to that of the PRC, and 2) is a significant producer of comparable merchandise. We have determined that India, Pakistan, Indonesia, Sri Lanka and the Philippines are market economy countries at a comparable level of economic development to that of the PRC. (See Memorandum to Susan Kuhbach from Jeff May, dated April 11, 2002, “Eighth Administrative Review for Certain Helical Spring Lock Washers from the People's Republic of China,” which is available in the Public File in the Central Records Unit in the main Commerce Building (CRU)). In addition, India and Indonesia are significant producers of comparable merchandise. The regulations at 19 CFR 351.408(c)(2) state that the Secretary normally will value all factors in a single surrogate country (emphasis added). However, when a FOP value from the primary surrogate country is aberrational or unreliable, we may use a publicly available value from another appropriate surrogate country. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China; Final Result s of 1998-1999 Administrative Review, and Determination Not To Revoke Order in Part, 66 FR 1953, (January 10, 2001), and the accompanying Decision Memorandum at Comment 10, which is available in the Public File of the CRU. As in the investigation and seven previous reviews, we have chosen India as the primary surrogate country. We have used Indian prices to value the factors of production except where 1) a meaningful amount of the factor was purchased from a market economy supplier and paid for in a market economy currency, or 2) the Indian price for a factor was aberrational and unreliable.

We selected, where possible, publicly available values from India which were: (1) average non-export values; (2) representative of a range of prices within the POR or most contemporaneous with the POR; (3) product-specific; and, (4) tax-exclusive. We valued the factors of production as follows:

• A meaningful amount of the input carbon steel wire rod was purchased from the United Kingdom, a market economy supplier, and paid for in a market economy currency. Pursuant to 19 CFR 351.408(c)(1), we valued this factor using the price paid to the market economy supplier. Thus, for carbon steel wire rod values, we used the average cost per metric ton of carbon steel wire rod imported from the United Kingdom by Hangzhou during the POR. We made adjustments to account for the freight costs incurred between the port and Hangzhou.
• To value the scrap steel sold by Hangzhou, we used per kilogram values obtained from the Monthly Statistics of the Foreign Trade of India - Imports (MSFTI) as a by-product offset.
• To value hydrochloric acid used in both the production and plating processes, we used per kilogram values for imports into Indonesia obtained from the Indonesian Badan Pusat Stastisik. We rejected the Indian import values as we did in the most recent review because the values were aberrational. See Certain Helical Spring Lock Washers from the People's Republic of China; Final Results of the Antidumping Duty Administrative Review, 67 FR 8520 (February 25, 2002) (HSLWs-7).
• To value other chemicals used in the production and plating processes of HSLWs, we used per kilogram import values obtained from MSFTI and the Indian publication Chemical Weekly. We adjusted these values, where appropriate, to reflect inflation using the Wholesale Price Index (WPI) as reported in the International Financial Statistics published by the International Monetary Fund (IMF). We also adjusted these values to account for freight costs incurred between the supplier and Hangzhou.
• To value coal, we used a per kilogram value obtained from the MFSTI. We adjusted this value to reflect inflation using the WPI published by the IMF. We also made adjustments to account for freight costs incurred between the supplier and Hangzhou.
• To value electricity, we used the electricity price data from Energy Data Directory and Yearbook (1999/2000) published by the Tata Energy Research Institute. We adjusted the value to reflect inflation using the electricity sector-specific inflation index published in the Reserve Bank of India (RBI) Bulletin.
• To value water, we used the Second Water Utilities Data Book for the Asian and Pacific Region published by the Asian Development Bank in 1997. We adjusted the value to reflect inflation using the WPI published by the IMF.
• For labor, we used the regression-based wage rate for the PRC in “Expected Wages of Selected NME Countries,” located on the Internet at http://ia.ita.doc.gov.wages/​99wages/​htm. Because of the variability of wage rates in countries with similar per capita gross domestic products (GDP), 19 CFR 351.408(c)(3) requires the use of a regression-based wage rate. The source for the regression wage rates is “Expected Wages of Selected NME Countries - 1999 Income Data,” Year Book of Labour Statistics 1999, International Labour Office, (Geneva: 2000).
• For factory overhead, selling, general, and administrative expenses (SG&A), and profit values, we used information from the January, 1997 RBI Bulletin for the Indian industry group “Processing and Manufacturing: Metals, Chemicals, and Products Thereof.” From this information, we were able to determine factory overhead as a percentage of the total raw materials, labor and energy (ML&E) costs, SG&A as a percentage of ML&E plus overhead (i.e., cost of manufacture), and the profit rate as a percentage of the cost of manufacture plus SG&A.
• For packing materials, we used the per kilogram values obtained from the MFSTI. Where necessary, we adjusted these values to reflect inflation using the WPI published by the IMF. We also made adjustments to account for freight costs incurred between the PRC supplier and Hangzhou.
• To value foreign brokerage and handling, we used information reported in the New Shipper Review for Stainless Steel Wire Rod from India, 66 FR 27629 (May 18, 2001). See Meltroll Engineering Pvt. Ltd.'s submission dated September 12, 1999. We adjusted this value to reflect inflation using the WPI published by the IMF.
• To value truck freight, we used November 1999 price quotes which were obtained by the Department in India and used in the Final Determination of Sales at Less than Fair Value: Bulk Aspirin from the People's Republic of China, 65 FR 33805 (May 25, 2000) (Bulk Aspirin from the PRC) and Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the PRC; Final Results of 1999-2000 Administrative Review, Partial Rescission of the Review , and Determination Not to Revoke the Order in Part, 66 FR 57420 (November 15, 2001) (TRBs-13).
• To value rail freight, we used November 1999 rail freight price quotes obtained by the Department and used in Bulk Aspirin from the PRC and TRBs-13.
• To value shipping freight, we used a rate reported in a July 14, 1997, letter from the Inland Waterways of India which was used in HSLWs-7. We adjusted the rate to reflect inflation using the WPI published by the IMF.

For a complete description of the factor values used, see “Memorandum to File: Factor Values Used for the Preliminary Results of the Eighth Administrative Review,” dated July 3, 2002 (Factors Memorandum), a public version of which is available in the Public File of the CRU.

Verification

Because the Department verified Hangzhou's information in the 6th administrative review for the POR from October 1, 1998, through September 30, 1999, we are not, absent a showing of good cause, statutorily required to verify Hangzhou's response in this review. (See Section 782(i)(3)(B) of the Act and 19 CFR 351.307(b)(iv)). The focus of petitioner's alleged “good cause” verification request is on Hangzhou's importation of steel from a market economy country that is used in the production of the subject merchandise. Hangzhou, however, provided the requested information regarding its steel purchases from a market economy supplier in its June 17, 2002, supplemental response. When verifications were conducted in previous reviews, we examined and verified the accuracy of Hangzhou's steel import information. Essentially, the petitioner makes the same arguments for a “good cause” verification that it has made in the past when the Department has conducted verifications of Hangzhou's steel imports. Petitioner has not presented any information to the Department for purposes of this review that causes us to question the validity of the information Hangzhou has submitted regarding its purchase of steel from a market economy supplier. Therefore, the Department has determined that the petitioner has not shown “good cause” to verify Hangzhou's information in this review.

Preliminary Results of Review

We preliminarily determine that the following dumping margin exists:

Manufacturer/exporter	Time Period	Margin (percent)
Hang Zhou Spring Washer Co. Ltd./
Zhejiang Wanxin
Group Co., Ltd	10/1/00-9/30/01	0

The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. If these preliminary results are adopted in our final results, we will direct Customs to liquidate the entries made during the POR without regard to antidumping duties. The Department will issue appraisement instructions directly to the U.S. Customs Service.

Furthermore, the following cash deposit rates will be effective upon publication of the final results for all shipments of HSLWs from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(1) of the Act: (1) for Hangzhou, which has a separate rate, the cash deposit rate will be the company-specific rate established in the final results of review; (2) for all other PRC exporters, the cash deposit rate will be the PRC rate, 128.63 percent, which is the All Other PRC Manufacturers, Producers and Exporters rate from the Final Determination of Sales at Less Than Fair Value: Certain Helical Spring Lock Washers from the PRC, 58 FR 48833 (September 20, 1993); and, (3) for non-PRC exporters of subject merchandise from the PRC, the cash deposit rate will be the rate applicable to the PRC supplier of that exporter. These deposit rates, when imposed, shall remain in effect until publication of the final results of the next administrative review.

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.

Public Comment

Pursuant to 19 CFR 351.24, the Department will disclose to parties the calculations performed in connection with these preliminary results within five days of the date of any public announcement, or, if there is no public announcement, within five days of the date of publication of this notice. Interested parties may request a hearing within 30 days of the date of publication of this notice (See 19 CFR 351.310). Any hearing, if requested, will be held two days after the scheduled date for submission of rebuttal briefs (see below). According to 19 CFR 351.309, interested parties may submit written arguments in case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in case briefs, may be filed no later than five days after the date of filing the case briefs. Parties who submit briefs in these proceedings should provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f)(3).

The Department will publish the final results of this administrative review, including the results of its analysis of issues raised in any such briefs or hearing, within 120 days of publication of these preliminary results.

This administrative review and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: July 3, 2002.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.