[Federal Register Volume 63, Number 156 (Thursday, August 13, 1998)]
[Notices]
[Pages 43373-43379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21790]
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DEPARTMENT OF COMMERCE
International Trade Administration
A-570-825
Sebacic Acid From the People's Republic of China; Final Results
of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce
ACTION: Notice of final results of antidumping duty administrative
review of sebacic acid from the People's Republic of China
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SUMMARY: On April 9, 1998, the Department of Commerce (the Department)
published the preliminary results of its administrative review of the
antidumping duty order on sebacic acid from the People's Republic of
China (PRC) (63 FR 17367). This review covers shipments of this
merchandise to the United States during the period of July 1, 1996,
through June 30, 1997. We gave interested parties an opportunity to
comment on our preliminary results. Based upon our analysis of the
comments received we have changed the results from those presented in
the preliminary results of the review.
EFFECTIVE DATE: August 13, 1998.
FOR FURTHER INFORMATION CONTACT: Brandon Farlander or Stephen Jacques,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th and Constitution Avenue, N.W., Washington,
D.C. 20230; telephone: (202) 482-0182 or (202) 482-1391, respectively.
APPLICABLE STATUTE AND REGULATIONS: 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 (the Act) by the Uruguay Round Agreements Act
(URAA). In addition, unless otherwise indicated, all citations to the
Department's regulations are in reference to the regulations, codified
at 19 CFR Part 351 (62 FR 27295, May 19, 1997).
SUPPLEMENTARY INFORMATION:
Background
The Department published in the Federal Register an antidumping
duty
[[Page 43374]]
order on sebacic acid from the PRC on July 14, 1994 (59 FR 35909). On
July 21, 1997, the Department published in the Federal Register (62 FR
38973) a notice of opportunity to request an administrative review of
the antidumping duty order on sebacic acid from the PRC covering the
period July 1, 1996, through June 30, 1997. On July 29, 1997, Tianjin
Chemicals Import and Export Corporation (``Tianjin''), Guangdong
Chemicals Import and Export Corporation (``Guangdong''), and Sinochem
International Chemicals Company, Ltd. (``SICC'') requested that we
conduct an administrative review. Also, on July 29, 1997, Tianjin
requested partial revocation of the antidumping duty order on sebacic
acid from the PRC. On July 30, 1997, in accordance with 19 CFR
351.213(b), Union Camp requested that we conduct an administrative
review of Tianjin, Guangdong, SICC, and Sinochem Jiangsu Import and
Export Corporation. We published a notice of initiation of this
antidumping duty administrative review on August 28, 1997 (62 FR
45621). The Department is conducting this administrative review in
accordance with section 751 of the Act. Sinochem Jiangsu was mailed a
questionnaire on August 30, 1997 but did not respond.
On April 9, 1998, the Department of Commerce (the Department)
published the preliminary results of its administrative review of the
antidumping duty order on sebacic acid from the PRC (63 FR 17367, April
9, 1998). We received written comments from three exporters of the
subject merchandise: Tianjin, Guangdong, and SICC (collectively,
respondents). We also received comments from the petitioner, Union Camp
Corporation.
On May 28, 1998, the Department informed parties that respondents'
May 11, 1998 case brief, and petitioner's May 11, 1998 case brief and
May 18, 1998 rebuttal brief, contained untimely new information,
pursuant to 19 CFR 351.301(b)(2), which requires that factual
information be submitted not later than 140 days after the last day of
the anniversary month. This untimely new factual information was
stricken from the record of this review. On June 12, 1998, the
Department informed parties that respondents' May 29, 1998 case brief,
May 18, 1998 rebuttal brief, and petitioner's June 1, 1998 rebuttal
brief contained untimely new information that was stricken from the
record of this review. On July 31, 1998, the Department informed
parties that presentations in the June 10, 1998 public hearing
contained untimely new factual information that was stricken from the
record of this review.
Tianjin requested partial revocation of the antidumping duty order
on sebacic acid from the PRC pursuant to 19 CFR 351.222(b). However, we
have determined in these final results a margin of 1.09 percent for
Tianjin, which is above the Department's de minimis standard of 0.5
percent. Therefore, we determine that Tianjin has not met the
requirements for revocation.
Scope of Review
The products covered by this order are all grades of sebacic acid,
a dicarboxylic acid with the formula (CH2)8(COOH)2, which
include but are not limited to CP Grade (500ppm maximum ash, 25 maximum
APHA color), Purified Grade (1000ppm maximum ash, 50 maximum APHA
color), and Nylon Grade (500ppm maximum ash, 70 maximum ICV color). The
principal difference between the grades is the quantity of ash and
color. Sebacic acid contains a minimum of 85 percent dibasic acids of
which the predominant species is the C10 dibasic acid. Sebacic acid is
sold generally as a free-flowing powder/flake.
Sebacic acid has numerous industrial uses, including the production
of nylon 6/10 (a polymer used for paintbrush and toothbrush bristles
and paper machine felts), plasticizers, esters, automotive coolants,
polyamides, polyester castings and films, inks and adhesives,
lubricants, and polyurethane castings and coatings.
Sebacic acid is currently classifiable under subheading
2917.13.00.00 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheading is provided for convenience and
customs purposes, our written description of the scope of this
proceeding remains dispositive.
This review covers the period July 1, 1996, through June 30, 1997,
and four exporters of Chinese sebacic acid.
Analysis of Comments Received
Comment 1: Surrogate value for 2-octanol (capryl alcohol). 1 (A)
Octanol value in Chemical Weekly (Bombay, India). Petitioner argues
that the octanol value in Chemical Weekly is for 1-octanol and not 2-
octanol or 2-ethylhexanol. Petitioner questions the reliability of the
letter from the editor of Chemical Weekly which was submitted by
respondents and used by the Department for the preliminary results. The
letter states that ``the octanol price referred by you corresponds to
the more common 2-octanol (2 ethylhexanol).'' See Preliminary Results
of Antidumping Duty Administrative Review; Sebacic Acid from the PRC 63
FR 17371 (April 9, 1998) and Analysis Memorandum for the Preliminary
Results of the 1996/1997 Review, April 2, 1998, at Attachment 5.
Petitioner contends that because respondents failed to provide for the
record the original inquiry letter sent to the editor of Chemical
Weekly, there is no evidence on the record to indicate whether the
octanol price referred to in the inquiry letter to the editor
corresponds to the octanol price in the Chemical Weekly. In addition,
petitioner argues that there is no evidence on the record to indicate
that the Chemical Weekly editor is sufficiently familiar with the
chemical composition of the octanol product published in Chemical
Weekly to declare that it is 2-octanol (2-ethylhexanol).
Respondents maintain that the Department correctly did not use a
surrogate value for 1-octanol for the margin calculations (as suggested
by petitioner), because the octanol value from the Chemical Weekly is
for 2-ethylhexanol, which is another type of octanol, is the best
available information.
Respondents argue that it is clear that the editor of Chemical
Weekly was referring in his letter to the price quote for octanol in
his own publication, and that the editor is knowledgeable about the
price quotes for the various chemicals found in the Indian market.
Respondents contend that the Chemical Weekly octanol price quote is for
2-ethylhexanol, which they assert is comparable in use and in value to
2-octanol. (See (B) below.)
Department's Position: 1 (A) Octanol value in Chemical Weekly
(Bombay, India). We disagree with petitioner. Respondents submitted a
letter written by the editor of Chemical Weekly stating that the
reference to the octanol value in Chemical Weekly refers to 2-
ethylhexanol, which is a type of octanol. See Attachment V of
respondent's December 4, 1997 PAPI submission and Analysis Memorandum
for the Preliminary Results of the 1996/1997 Review, April 2, 1998, at
Attachment 5. Furthermore, contrary to petitioner's argument,
respondents have placed a copy of the inquiry letter to the editor of
Chemical Weekly on the record as an attachment to its rebuttal brief
pursuant to the Department's request for this information. See
Attachment to respondents' June 16, 1998 rebuttal brief. Finally, there
is no evidence on the record suggesting that the editor of Chemical
Weekly is unfamiliar with the basis of the values reported in his own
publication. Therefore, based on the
[[Page 43375]]
above information, and absent any substantiated record evidence to the
contrary, the Department determines that the octanol value from
Chemical Weekly is for 2-ethylhexanol.
1 (B) Comparability between 1-octanol, 2-octanol, and 2-
ethylhexanol. Petitioner argues that 2-ethylhexanol, which the
Department used as a surrogate value for 2-octanol, is not a comparable
product to 2-octanol based on evidence on the record. Petitioner
asserts that the Court of International Trade (``CIT''), in both Union
Camp Corp. v. United States, 941 F. Supp. 108, 113 (1996) and Union
Camp Corp. v. United States, No. 97-03-00483, Slip Op. 98-38, (Ct.
Int'l Trade, March 27, 1998), held that the Department's use of 1-
octanol to value 2-octanol, based on its determination that 1-octanol
was comparable to 2-octanol, was ``unsupported by substantial evidence
on the record and not in accordance with law.'' See petitioner's June
1, 1998 case brief at 2-3. Also, petitioner argues that there is no
substantial evidence on the record to indicate that 2-ethylhexanol is
comparable to 2-octanol, which is a subsidiary product produced as a
result of the Chinese sebacic acid production process. In addition,
petitioner asserts that 2-ethylhexanol is a form of 1-octanol with a
chemical formula of CH3(CH2)6CH2OH, which is different from 2-octanol's
chemical formula of CH3(CH2)5CH2OCH3. Petitioner further alleges that
the uses for 2-ethylhexanol and 2-octanol differ. In this point,
petitioner notes that Hawley's Condensed Chemical Dictionary, 12th ed.
(``Hawley's'') lists the following uses for 1-octanol: ``perfumery,
cosmetics, organic synthesis, solvent manufacture of high-boiling
esters, antifoaming agent, flavoring agent,'' page 848. Hawley's lists
the following uses for 2-octanol: ``solvent, manufacture of
plasticizers, wetting agents, foam control agents, hydraulic oils,
petroleum additives, perfume intermediaries, masking of industrial
odors.'' Id. at 848. Therefore, petitioner's argue that 2-ethylhexanol
is not comparable to 2-octanol.
Respondents contend that the Chemical Weekly octanol price quote is
for 2-ethylhexanol, and it is comparable in use and in value to 2-
octanol. Respondents argue that 2-ethylhexanol and 2-octanol are both
plasticizer-range alcohol chemicals that can be used interchangeably
for certain applications and thus have some of the same uses.
Respondents argue that an article (in their June 16, 1998 case brief,
Exhibit 1) entitled, ``Alcohols, Higher Aliphatic,'' from Kirk-Othmer
Encyclopedia of Chemical Technology (``Kirk-Othmer'') (1991), refers to
all octanols as plasticizer-range alcohols and to 2-octanol as octanol.
Respondents maintain that Hawley's indicates that all octanols,
including 2-octanol and 2-ethylhexanol, are used interchangeably to
produce esters which are used to produce plastics. Respondents also
assert that the octanol price from Chemical Weekly, which respondents
claim is 2-ethylhexanol, is priced lower in world markets than 2-
octanol. Therefore, using the value of 2-ethylhexanol would not result
in granting respondents an overstated by-product credit.
Respondents argue that the Department has not considered evidence
on the record that 1-octanol and 2-octanol are interchangeable for
certain uses and are used in the production of plasticizers, lube oils,
and perfumes. Respondents request that the Department, in making its
determination about which surrogate value to use in the final results,
consider the uses and values of 1-octanol and 2-octanol, in light of
the CIT's previous ruling that Commerce's determination that 1-octanol
and 2-octanol were not comparable products solely because they have the
same molecular structure. See Union Camp Corp. v. United States, No.
97-03-00483, Slip Op. 98-38, (Ct. Int'l Trade, March 27, 1998).
Respondents contend that if the Department uses the petitioner's
internal cost as the surrogate value, the petitioner, rather than the
Department, will be controlling the dumping margins. Moreover,
respondents will not know in the future whether a particular U.S. price
will be considered a dumped price, because the petitioner's internal
cost is not publicly available.
Petitioner asserts that there is no common usage for 1-octanol and
2-octanol listed in Hawley's. Petitioner argues that the Kirk-Othmer
citation (the Alcohols, Higher Aliphatic article) submitted by
respondents does not state that 2-octanol is referred to as an octanol
or that all octanols are plasticizer range alcohols.
Department's Position: 1 (B) Comparability of 1-octanol, 2-octanol,
and 2-ethylhexanol. We disagree with petitioner's contention that the
CIT held in Union Camp Corp. v. United States, No. 97-03-00483, Slip
Op. 98-38 (March 27, 1998), that 1-octanol and 2-octanol are not
comparable. The CIT held that the Department's determination that 1-
octanol and 2-octanol are comparable merchandise based solely on the
fact the fact that the two chemicals have similar molecular structure
was contrary to law because it was not based on a reasonable
interpretation of the statute.
For the record of this review, however, we have substantial
evidence on the record establishing that 2-ethylhexanol (also known as
2-ethylhexanol alcohol and octyl alcohol) and 2-octanol are comparable
merchandise based on similar uses.
Respondents cite the Kirk-Othmer article, which states that
chemical family members with 6-11 carbon atoms are known as
plasticizer-range alcohols. See ``Alcohols, Higher Aliphatic,'' Kirk-
Othmer Encyclopedia of Chemical Technology (``Kirk-Othmer'') at 865
(1991). All of the octanols, including 1-octanol, 2-octanol and 2-
ethylhexanol, are plasticizer range alcohols with eight carbon atoms.
Therefore, 1-octanol, 2-octanol and 2-ethylhexanol are physically
similar.
Further, according to Kirk-Othmer, plasticizer-range alcohols are
used primarily as ester derivatives in plasticizers and lubricants. Id.
at 865. Respondents also submitted excerpts from Hawley's in their June
16, 1998 case brief demonstrating that 2-ethylhexanol, 1-octanol, and
2-octanol are comparable products with similar uses. Hawley's states
that di(2-ethylhexyl) phthalate is created by mixing 2-ethylhexanol and
phthalic anhydride and is used as a plasticizer for many resins and
elastomers; thus, 2-ethylhexanol, when mixed with another chemical, is
used as a plasticizer for many resins and elastomers. In addition,
other data in Hawley's indicates that 1-octanol, 2-ethylhexanol and 2-
octanol have similar uses.
Finally, in respondents' December 4, 1997 PAPI submission,
Attachment 4, the Chemical Marketing Reporter (U.S.) (June 30, 1997)
lists the following U.S. prices, in cents per pound: 2-ethylhexanol,
$0.56; and 2-octanol, $0.68. These prices are evidence that 2-
ethylhexanol may be priced lower than 2-octanol. Therefore,
petitioner's argument that respondents are getting a higher co-product
allocation with the use of the octanol value in Chemical Weekly is
unfounded.
Based on the above information, we find that 2-ethylhexanol, 2-
octanol, and 1-octanol are all comparable products. Therefore, given
the Department's preference for publicly available surrogate values, we
have concluded that the Chemical Weekly value for 2-ethylhexanol is the
most appropriate surrogate value. Because the octanol value in Chemical
Weekly is reported inclusive of taxes, we deducted taxes from the
octanol value.
1 (C) Crude versus refined 2-octanol surrogate value. Petitioner
asserts that
[[Page 43376]]
instead of the value from the Chemical Weekly used by the Department
for the preliminary results, the Department should use the U.S. value
for 2-octanol and deduct the inputs used to convert crude 2-octanol to
refined 2-octanol. Petitioner argues that using the U.S. value for
refined 2-octanol is consistent with the Department's practice of using
a U.S. surrogate value, citing Final Determination of Sales at Less
Than Fair Value: Certain Cased Pencils from the People's Republic of
China, 59 FR 55625, 55630 (November 8, 1994) (``Cased Pencils'').
Respondents allege that the petitioner is selling crude 2-octanol at a
much higher value than the value reported to the Department. Petitioner
counters that the source of this information is suspect, because the
respondent's source is not a qualified expert nor are his opinions
objective, since he is employed by a firm which imports subject
merchandise.
Next, respondents argue that the Department should grant a by-
product credit for refined 2-octanol because the Chinese sebacic acid
producers only sell refined 2-octanol and the additional factors of
production for the refining of the subsidiary product have been
reported to the Department. Therefore if the Department decides not to
use the octanol value from Chemical Weekly, the Department should use a
refined price for 2-octanol, because the Chinese producers sell refined
2-octanol not crude 2-octanol. Also, respondents state that the
additional factors for converting crude 2-octanol into refined 2-
octanol are already included in the sebacic acid factors of production.
Respondents maintain that the Department requires that the additional
factors of production for refining a by-product or co-product must be
included in the factors of production reported to the Department before
a subsidiary by-product credit(s) can be granted.
Respondents argue that, in past cases, the Department has granted a
by-product or co-product credit when: (1) the foreign producer proves
that the by-product or co-product was sold, and (2) the additional
factors of production for the refining of the subsidiary product are
reported to the Department, citing: Final Determination of Sales at
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from the
People's Republic of China, 62 FR 61964, 61997 (November 20, 1997);
Final Results of Antidumping Duty Administrative Review and
Determination Not to Revoke in Part: Silicon Metal from Brazil, 62 FR
1954, 1964 (January 14, 1997); and Final Determination of Sales at Less
Than Fair Value: Strontium Nitrate from Italy, 46 FR 25496 (May 7,
1981). Respondents also argue that the Department has used the sales
price of the subsidiary product to determine whether it is a by-product
or a co-product, citing: Final Determination of Sales at Less Than Fair
Value: Coumarin from the People's Republic of China, 59 FR 66895, 66901
(December 28, 1994); Final Determination of Sales at Less Than Fair
Value: Brake Drums and Brake Rotors from the People's Republic of
China, 62 FR 9160, 9172 (February 28, 1997); Magnesium Corp. of America
v. United States, 938 F. Supp. 885 (Ct. Int'l Trade, 1996). Respondents
argue, that based on the above arguments, the Department should grant a
by-product credit for refined 2-octanol and not crude 2-octanol.
Petitioner asserts that respondent should not receive a by-product
credit for refined 2-octanol because respondents did not state in their
submissions to the Department that the additional factors of production
to convert crude 2-octanol to refined 2-octanol have already been
included in the sebacic acid factors of production. Petitioner notes
that there was no cite to the record and their review of respondents's
Section D questionnaire response found no discussion of additional
factors for refining 2-octanol. Therefore, petitioner maintains that,
in the event that the Department uses the octanol value from Chemical
Weekly, the Department should reduce the surrogate value by the purity
levels at which each firm produces 2-octanol.
Department's Position: 1 (C) Crude versus refined 2-octanol
surrogate value. We disagree with petitioner. Petitioner cites Final
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length
Carbon Plate from the People's Republic of China, 62 FR 61964 (November
20, 1997), which states, ``(i)t is the Department's policy to only
grant by-product credits for by-products actually produced directly as
a result of the production process. A respondent must report the
factors associated with the further refining of a by-product if it
wishes to receive a credit for the further refined by-product.'' Id. at
61997. We note that, in contrast to petitioner's assertion, the sebacic
acid factors of production used to calculate normal value (``NV'')
already incorporate the relatively few factors of production (labor and
energy) necessary to convert crude 2-octanol to refined 2-octanol.
Production of sebacic acid results in the production of crude 2-octanol
as a subsidiary product. The sebacic acid factors of production already
include the factors of production used to refine 2-octanol and the
other subsidiary products because the Chinese sebacic acid producers
are unable to separate the additional factors of production used to
convert crude subsidiary products into refined subsidiary products. For
example, respondents state that, for producer Tianjin Zhong He, any
additional factors of production to process crude 2-octanol to refine
2-octanol have already been reported to the Department and are included
in the sebacic acid factors of production, because these additional
factors of production cannot be separated from the sebacic acid factors
of production. See respondents' January 20, 1998 supplemental
questionnaire response at page 7. Moreover, at verification, we made
certain that the additional factors of production to convert the crude
subsidiary products into refined subsidiary products had either been
reported to the Department or, if these additional factors of
production had not been reported to the Department, we added these
additional factors of production used to convert crude subsidiary
products into refined subsidiary products to the reported sebacic acid
factors of production. For example, we discovered at verification that
the electricity used to convert crude glycerine into refined glycerine
was not reported to the Department, but we added this additional
electricity used to the reported sebacic acid factors of production.
See Verification report to the File, page 13 (March 24, 1998).
Also, a more accurate by-product/co-product analysis results by
using the refined value of 2-octanol rather than a crude value for 2-
octanol. The Department's practice is to use the subsidiary product's
sales value and factories' material yield amounts for determining the
by-product/co-product analysis. In Preliminary Determination of Sales
at Less Than Fair Value and Postponement of Final Determination:
Sebacic Acid from the People's Republic of China, 59 FR 565, 569
(January 5, 1994), the Department ``used surrogate values from India
for sebacic acid, glycerine, caproyl (sic) alcohol, and fatty acid to
determine the relative value of each product based on the production on
one metric ton of sebacic acid, as well as to determine the total value
of one metric ton of sebacic acid.'' Since the Chinese producers sell
refined 2-octanol, as confirmed at verification, and they do not sell
crude 2-octanol, we believe that it is more appropriate to apply the
surrogate value of refined 2-octanol in conducting the by-product/co-
product analysis. Moreover, there is a publicly published sales price
on which we can base a surrogate value for
[[Page 43377]]
refined 2-octanol, which is the octanol value (2-ethylhexanol) from
Chemical Weekly.
1 (D) Treatment of 2-octanol by Chinese producers. Petitioner
contends that both it and respondent producers Handan Fuyan Sebacic
Acid Factory, Tianjin Zhong He, and Hengshui Dongfeng Chemical Factory
all treat 2-octanol as a by-product in their respective accounting
systems. Therefore, petitioner argues that the Department should also
treat 2-octanol as a by-product, rather than a co-product. Petitioner
asked the Department to verify how the Chinese producers treat 2-
octanol but the Department chose not verify how the Chinese producers
treat 2-octanol. Petitioner claims that because the Department used
what petitioner suggests to be the value of 1-octanol to value 2-
octanol in the preliminary results, the Department incorrectly
determined 2-octanol to be a co-product rather than a by-product of the
sebacic acid production process. Petitioner cites to Preliminary
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length
Carbon Steel Plate from the People's Republic of China (``Carbon Steel
Plate''), 62 FR 31972, 31977 (June 11, 1997), where the Department
determined that slag is a by-product and not a co-product, using a U.S.
value for slag when surrogate values for slag in India or Indonesia
were aberrationally high.
Respondents argue that the Chinese producers do not view 2-octanol
as a by-product and such characterization was made by their counsel and
not by the producers themselves. Whether Chinese producers classify 2-
octanol as a by-product or a co-product, respondents argue, is only
relevant in the context of the Chinese accounting system and the
relationship of the costs of 2-octanol to the actual Chinese sebacic
acid production costs. Respondents contend that the Department
determines whether 2-octanol is a by-product or co-product based on the
surrogate values used and not based on recorded Chinese costs.
Respondents dismiss petitioner's citation of the Carbon Steel Plate
case because it addresses a specific by-product and provides no
guidance as to whether a specific subsidiary product is either a by-
product or a co-product.
Department's Position: 1 (D) Treatment of 2-octanol by Chinese
producers. We disagree with petitioner. Petitioner cited Carbon Steel
Plate to support their position that the Department should use the U.S.
2-octanol value instead of the allegedly high octanol value from
Chemical Weekly, which petitioner suggests is 1-octanol. We disagree
with petitioner's reliance on the above case because the evidence on
the record confirms that the octanol value in Chemical Weekly is for 2-
ethylhexanol.
We determine whether a subsidiary product is either a by-product or
a co-product by comparing the subsidiary products' surrogate value to
the value of the subject merchandise. If we determine that the
surrogate value of the subsidiary product was significant relative to
the surrogate value of subject merchandise, we treat the subsidiary
product as a co-product; otherwise, we treat it as a by-product. We do
not determine if a subsidiary product is a by-product or co-product
based on how a particular company classifies the subsidiary product in
its accounting records. Therefore, the treatment of 2-octanol by
Chinese producers or by the U.S. producer of sebacic acid is irrelevant
to the Department's analysis. This is precisely why the Department did
not verify how the Chinese producer Hengshui classifies 2-octanol. In
this case, the Department determines that 2-octanol is a co-product,
because its value is significant relative to the surrogate value of
sebacic acid.
1 (E) Use of an exact match. Petitioner argues that the Department
should use the U.S. value of 2-octanol because it is an exact product
match, instead of the octanol value (2-ethylhexanol) from the Chemical
Weekly. Petitioner contends that past Department practice supports the
use of a U.S. value for 2-octanol, in accordance with Final
Determination of Sales at Less Than Fair Value: Certain Cased Pencils
from the People's Republic of China, 59 FR 55625, 55630 (November 8,
1994) (``Cased Pencils''); Union Camp Corp. v. United States, 941 F.
Supp. 108, 113 (1996) (``Union Camp I''); Union Camp Corp. v. United
States, No. 97-03-00483, Slip Op. 98-38 (1998)(``Union Camp II''); and
Writing Instruments Mfrs. Assoc. v. United States, 984 F. Supp. 629
(Ct. Int'l Trade, 1997), appeal docketed, Nos. 981178, 981292 (Fed.
Cir., January 9, 1998 and January 21, 1998). In contrast, petitioner
asserts that the product associated with the Chemical Weekly value
(which petitioner suggests may be 1-octanol) is ``not even `quite
similar' to 2-octanol either chemically or commercially.''
Respondents argue that 2-ethylhexanol (which respondents contend to
be the product with which the Chemical Weekly value is associated) and
2-octanol are comparable in both use and value and, therefore, the
Department should use the surrogate value 2-ethylhexanol. Respondents
note that 2-ethylhexanol is produced in the surrogate country.
Respondents state that the Department should not use an identical
surrogate value match from the U.S. for 2-octanol when a surrogate
value for a comparable product is available from India, the chosen
surrogate country used in this review.
Department's Position: 1 (E) Use of an exact match. We disagree
with petitioner. In valuing factors of production, the Department used
surrogate values from India. In accordance with section 773(c)(4) of
the Act, the Department chose India as its surrogate, because it was
most comparable to the PRC in terms of overall economic development
based on per capita gross national product (GNP), the national
distribution of labor, growth rate in per capita GNP, and because it
was a significant producer of comparable merchandise (oxalic acid). As
noted in Comment 4 below, both petitioner and respondent do not object
to the Department's use of India as the surrogate country.
Section 773(c)(4) of the statute and 19 CFR 351.408 of the
Department's regulations instruct the Department to value factors of
production in an appropriate surrogate country. The Department rarely
departs from use of a surrogate value from a country comparable to the
NME in terms of overall economic development. See Final Determination
of Sales at Less Than Fair Value: Beryllium Metal and High Beryllium
Alloys from the Republic of Kazakstan, 62 FR 2648 (January 17, 1997).
Surrogate values from countries at a similar level of development are
considered to be the most appropriate and comparable for valuation of
the factors in the similarly situated nonmarket economy country. While
the Department may use values from the United States or other countries
not at a comparable level of development for individual factors, its
practice is to do so only if it cannot find those values in a
comparable economy that produce comparable merchandise. See Memorandum
from David Mueller to Laurie Parkhill, Serbacic (sic) Acid from the
People's Republic of China: Nonmarket Economy Status and Surrogate
Country Selection, March 4, 1996.
In this review, the Department was unable to locate an Indian value
for 2-octanol in India, the surrogate country. Additionally, neither
the petitioner nor the respondents were able to locate a specific
Indian value for 2-octanol.
Petitioner cites Cased Pencils and the Union Camp I and Union Camp
II court decisions to support their position that the Department should
use the U.S. 2-octanol value instead of the octanol
[[Page 43378]]
value from Chemical Weekly for a surrogate value for 2-octanol. In
Cased Pencils, the Department used a U.S. value (basswood) as the
surrogate value that was ``most similar'' (Id. at 55630) instead of an
Indian value (a basket category of woods which included jelutong) which
was ``quite similar'' to the Chinese product (lindenwood) (Id. at
55629). In the Cased Pencils case, wood is the most significant input,
and jelutong, which was in the basket category of Indian import values,
was priced ``much higher than the most comparable wood.'' Id. at 55630.
Because of these case specific reasons, the Department selected a U.S.
surrogate value instead of a surrogate value from a country that is at
a comparable level of economic development. We disagree with petitioner
that the situation here is the same for selecting a surrogate value for
2-octanol. For the valuation of 2-octanol, India has been determined to
be a significant producer of comparable merchandise and India is
economically comparable to the People's Republic of China in the
following: per capita gross domestic product (GDP), growth rate in per
capita GDP, and the national distribution of labor. See Analysis
Memorandum for the Preliminary Results of the 1996/1997 Review, April
2, 1998, page 2. Also, the octanol in Chemical Weekly (2-ethylhexanol)
and 2-octanol are comparable merchandise. See Department's Position
(B). Because we have a suitable value from India, the Department need
not, and, indeed, should not, use a U.S. surrogate value.
Comment 2: Ministerial errors alleged by petitioner. Petitioner
maintains that the Department should correct certain alleged
ministerial errors discussed in the Department's Analysis Memorandum
for the Preliminary Results of the 1996/1997 Review, April 2, 1998,
namely: (1) for both Tianjin/Hengshui and SICC/Hengshui, profit was
incorrectly calculated by multiplying profit by COM and not COP; (2)
for the caustic soda surrogate value, taxes were incorrectly deducted
twice; (3) for the method of allocation--coal sections, the amount of
coal used was misallocated; (4) for ocean freight rates, the rates for
sales 5, 6, 7, 9, and 10 for Tianjin were miscalculated; (5) for the
glycerine and fatty acid by-products, by-product credits need to be
adjusted by each producers respective purity level; (6) for the truck
freight inflator, the WPI inflator used is incorrect; (7) for the
surrogate value for castor seed cake, use the castor seed cake
surrogate value from the Economic Times; (8) for water, include it as a
factor of production; (9) for the coal inflator, correct the WPI
inflator used to calculate coal and use the WPI inflator for the SICC/
Hengshui coal calculation.
Respondents disagree with petitioner's assertions concerning the
following alleged ministerial errors: (1) the profit calculation for
SICC/Hengshui and Tianjin/Hengshui is calculated correctly; (5) use an
average of the crude and refined glycerine values because the
Department has already included the factors of production to convert
crude glycerine to refined glycerine in the sebacic acid factors of
production; and (8) water is not a separate factor of production since
water is already included in the factory overhead calculations from the
Reserve Bank of India for the chemical industry.
Department's Position: We agree with petitioner concerning alleged
errors #2, 3, 4, 6, 7, 9 and have corrected these errors. We disagree
with petitioner concerning alleged errors #1, 5, and 8. With respect to
the calculation of profit as a percentage of COP (alleged error #1),
profit was calculated as a percentage of COP for both Tianjin/Hengshui
and SICC/Hengshui. See Analysis Memorandum for the Preliminary Results
of the 1996/1997 Review, April 2, 1998, page 19i. With respect to the
subsidiary products' surrogate value (alleged error #5), as mentioned
in the Comment 1, (C) above, any additional factors of production to
convert crude subsidiary products into refined subsidiary products are
already included in the sebacic acid factors of production. Therefore,
we are granting either by-product credits or co-product allocations
based on the refined value and not a crude value of the subsidiary
products. With respect to water being considered as a separate factor
of production (alleged error #8), as we have established in many
Chinese chemical dumping cases, such as in Final Determination of Sales
at Less Than Fair Value, Polyvinyl Alcohol from the People's Republic
of China, 61 FR 14058 (March 29, 1996); Final Results of Antidumping
Review for Sebacic Acid from the People's Republic of China, 62 FR
65674 (December 15, 1997); Final Results of Antidumping Review for
Sebacic Acid from the People's Republic of China, 62 FR 10530 (March 7,
1997), Final Determination of Sales at Less Than Fair Value, Sulfur
Dyes, Including Sulfur Vat Dyes from the People's Republic of China, 58
FR 7537 (February 8, 1993); and Final Results of Antidumping Review for
Sulfanilic Acid from the People's Republic of China, 62 FR 48597
(September 16, 1997), we did not value water as a separate factor of
production but relied instead on factory overhead data that reflected
water costs. In Preliminary Determination of Sales at Less Than Fair
Value: Freshwater Crawfish Tail Meat, 62 FR 14392 (March 26, 1997),
water was considered a separate factor of production because it is an
agricultural product that uses a large amount of water to clean and
boil the crawfish to extract the tail meat and to operate the freezer.
For sebacic acid, as in the other Chinese chemical case mentioned
above, water is considered part of the factory overhead data in the
Reserve Bank of India. Therefore, we determine that, in this case,
water is not a separate factor of production. While we agree with
petitioner that, for Hengshui, taxes were incorrectly deducted twice
for caustic soda (alleged error #2), we note that the result of this
correction is a value of 5.5 Rs/kg and not the 4.43 Rs/kg value
submitted by petitioner.
Comment 3: Ministerial errors alleged by respondents. Respondents
maintain that the Department should correct certain ministerial errors
discussed in the Department's Analysis Memorandum for the Preliminary
Results of the 1996/1997 Review, April 2, 1998, namely: (1) for
Hengshui, the plastic inner bag consumption per sebacic acid metric ton
was overstated; (2) for Tianjin, the weighted-average margin was
calculated incorrectly; and (3) ocean freight charge was calculated
incorrectly by dividing by 17.5 metric tons instead of 18 metric tons
for most of the shipments via a NME carrier.
Petitioner did not comment on respondents' ministerial error
allegations.
Department's Position: We agree with respondents' allegations with
regard to errors # 2, and 3, and have corrected these errors. With
respect to the calculation of the amount of plastic bags consumed at
Tianjin/Hengshui (alleged error #1), we disagree. We discovered at
verification at Tianjin/Hengshui that sale #8 did not use any plastic
bags but instead used only woven bags. Consequently, we divided the
total plastic inner bag weight for all sales except sale #8 by the
total weight of the sebacic acid shipped in plastic bags. Then, we
added the weight of the woven bags used for shipment for sale #8 to the
total weight of woven bags used for the shipment for all other sales
except sale #8 and divided the total weight of the woven bags used by
the total amount of sebacic acid shipped for all sales. See Analysis
Memorandum for the Preliminary Results of the 1996/1997 Review, April
2, 1998, pages 2-3. Therefore, for the final results, we have made no
further adjustment to
[[Page 43379]]
Hengshui's reported plastic inner bag consumption figure.
Comment 4: Use of India as the surrogate country. Respondent argues
that petitioner has stated that India is not an appropriate surrogate
country and that the Department should use either Japan or the United
States as an appropriate surrogate country.
Petitioner states that it does not object to use of India as the
surrogate country for this administrative review.
Department's Position: Since there is no argument as to which
surrogate country to use, the Department will continue to use India as
the surrogate country for this administrative review.
Final Results of Review
For Sinochem Jiangsu, which failed to respond to the questionnaire,
we have not granted a separate rate and the country-wide rate will
apply to all of its sales.
As a result of our review of the comments received, we have changed
the results from those presented in our preliminary results of the
review. Therefore, we determine that the following margins exists as a
result of our review:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Tianjin Chemicals I/E Corp............. 7/01/96-6/30/97 1.09
Sinochem International Chemicals Corp.. 7/01/96-6/30/97 0.11
Guangdong Chemicals I/E Corp........... 7/01/96-6/30/97 10.18
Country-Wide Rate...................... 7/01/96-6/30/97 243.40
Sinochem Jiangsu I/E Corp.............. 7/01/96-6/30/97 243.40
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. The Department
will issue appraisement instructions on each exporter directly to the
Customs Service. For assessment purposes, we have calculated importer
specific duty assessment rates for the merchandise based on the ratio
of the total amount of antidumping duties calculated for the examined
sales during the POR to the total entered value of sales examined
during the POR.
Furthermore, 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)(1) of the Act: (1) for the
reviewed companies named above which have separate rates (SICC,
Tianjin, and Guangdong), the cash deposit rates will be the rates for
those firms established in the final results of this administrative
review; (2) for companies previously found to be entitled to a separate
rate and for which no review was requested, the cash deposit rates will
be the rate established in the most recent review of that company; (3)
for all other PRC exporters of subject merchandise, the cash deposit
rates will be the PRC country-wide rate indicated above; and (4) the
cash deposit rate for non-PRC exporters of subject merchandise from the
PRC 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.
Notification of Interested Parties
This notice also serves as a final 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.
This determination is issued and published in accordance with
section 751(a)(1) and 777(i)(1) of the Act.
Dated: August 7, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-21790 Filed 8-12-98; 8:45 am]
BILLING CODE 3510-DS-P
