[Federal Register Volume 64, Number 161 (Friday, August 20, 1999)]
[Notices]
[Pages 45511-45514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21716]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-601]
Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From the People's Republic of China; Preliminary Results of
New Shipper Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of new shipper review of tapered
roller bearings and parts thereof, finished and unfinished, from the
People's Republic of China.
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SUMMARY: In response to requests from Zhejiang Changshan Changhe
Bearing Company and Weihai Machinery Holding (Group) Corporation
Limited, the Department of Commerce is conducting a new shipper review
of the antidumping duty order on tapered roller bearings and parts
thereof, finished and unfinished, from the People's Republic of China.
This review covers these companies' entries of tapered roller bearings
and parts thereof, finished and unfinished, to the United States during
the period June 1, 1998, through November 30, 1998.
We have preliminarily found that, during the period of review,
Zhejiang Changshan Changhe Bearing Company and Weihai Machinery Holding
(Group) Corporation Limited have not made sales of subject merchandise
below normal value. If these preliminary results are adopted in our
final results, we will instruct the Customs Service not to assess
antidumping duties.
Interested parties are invited to comment on these preliminary
results.
EFFECTIVE DATE: August 20, 1999.
FOR FURTHER INFORMATION CONTACT: James Breeden or Zak Smith, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington DC 20230;
telephone (202) 482-1174 and (202) 482-0189, respectively.
Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Act by the Uruguay Round Agreements Act. In addition, all
references to the Department of Commerce's (``Department's'')
regulations are to 19 CFR 351 (April 1998).
Background
On November 30, 1998, Zhejiang Changshan Changhe Bearing Company
(``ZCCBC''), a producer and exporter, requested that we conduct a new
shipper review. ZCCBC's request was followed by a similar request on
December 30, 1998, by Weihai Machinery Holding (Group) Corporation
Limited (``Weihai''), an exporter. We published the notice of
initiation for this new shipper review on February 19, 1999 (64 FR
8312).
Scope of Review
Merchandise covered by this review includes tapered roller bearings
(``TRBs'') and parts thereof, finished and unfinished, from the
People's Republic of China (``PRC''); flange, take up cartridge, and
hanger units incorporating tapered roller bearings; and tapered roller
housings (except pillow blocks) incorporating tapered rollers, with or
without spindles, whether or not for automotive use. This merchandise
is classifiable under the Harmonized Tariff Schedule of the United
States (``HTSUS'') item numbers 8482.20.00, 8482.91.00.50, 8482.99.30,
8483.20.40, 8483.20.80, 8483.30.80, 8483.90.20, 8483.90.30, 8483.90.80,
8708.99.80.15, and 8708.99.80.80. Although the HTSUS item numbers are
provided for convenience and customs purposes, the written description
of the scope of the order and this review is dispositive.
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 nonmarket economies (``NMEs'') are
entitled to separate, company-specific margins if 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 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).
With respect to Weihai, information submitted during this review
indicates that Weihai is owned by its shareholders. These shareholders
consist of the companies Weihai Machinery Industries Co. Ltd. (``MIC'')
and United Collective Enterprises of Weihai (``UCE''). Record evidence
indicates that MIC is owned ``by all the people of the People's
Republic of China'' and that UCE is collectively owned by its
employees.
An analysis performed by the CIA, which has been put on the record
of this proceeding, states that although collectively owned enterprises
(``collectives'') are theoretically owned by the company's workers
rather than
[[Page 45512]]
``all the people,'' the Chinese consider collectives to be another form
of public ownership. See 1992 Central Intelligence Agency Report to the
Joint Economic Committee, Hearings on Global Economic and Technological
Change: Former Soviet Union and Eastern Europe and China, Pt. 2 (102
Cong., 2d Sess.). Thus, similar to companies that are owned ``by all
the people,'' UCE belongs to the community of its employees who are
``entrusted with the management of the company.'' (See Silicon Carbide,
59 FR at 22586-7.) Based on these facts, the Department preliminary
determines that Weihai is eligible to be considered for a separate
rate.
As discussed below, Weihai and ZCCBC meet both the de jure and de
facto criteria. Accordingly, we preliminarily determine to apply
separate rates to Weihai and ZCCBC.
De Jure Analysis: Weihai and ZCCBC
The following laws indicate a lack of de jure government control
over these companies, and establish that the responsibility for
managing companies owned by ``all of the people'' and collectives has
been transferred from the government to the enterprises themselves.
These laws include: ``Law of the PRC on Industrial Enterprises Owned by
the Whole People,'' adopted on April 13, 1988 (``1988 Law'');
``Regulations for Transformation of Operational Mechanism of State-
Owned Industrial Enterprises,'' approved on August 23, 1992 (``1992
Regulations''); and the ``Temporary Provisions for Administration of
Export Commodities,'' approved on December 21, 1992 (``Export
Provisions''). The 1988 Law states that enterprises have the right to
set their own prices (see Article 26). This principle was restated in
the 1992 Regulations (see Article IX). Finally, the 1992 ``Temporary
Provisions for Administration of Export Commodities'' list those
products subject to direct government control. TRBs do not appear on
this list and are not subject, therefore, to the constraints of these
provisions.
With respect to ZCCBC, information submitted during this review
indicates that it is a joint venture company formed under the laws of
the PRC. The Chinese company participating in this joint venture is
controlled by private shareholders and independent from national,
provincial and local Chinese government entities (see ZCCBC
questionnaire response dated June 22, 1999). Furthermore, the following
laws, which have been placed on the record in this case, indicate a
lack of de jure government control over joint venture companies, and
establish that these companies are responsible for managing themselves.
These laws include the ``Law of the PRC on Chinese-Foreign Cooperative
Joint Ventures,'' adopted on April 13, 1988 (``Joint Venture Law'') and
the ``Foreign Trade Law of the PRC,'' approved on May 12, 1994
(``Foreign Trade Law''). The Joint Venture Law states that a
cooperative venture is to conduct its operations and management in
accordance with its approved articles of association and that no
interference with regard to the management autonomy of these
enterprises is allowed (see Article 11). In addition, the Foreign Trade
Law states that enterprises engaged in international trade shall enjoy
full autonomy in their business operation and be responsible for their
own profits and losses (see Article 11).
Therefore, consistent with Silicon Carbide, we preliminarily
determine that the existence of these laws demonstrates that Weihai and
ZCCBC are not subject to de jure government control with respect to
export activities.
In light of reports indicating that laws shifting control from the
government to the enterprises themselves have not been implemented
uniformly,1 an analysis of de facto control is critical in
determining whether respondents are, in fact, subject to government
control with respect to export activities.
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\1\ ``PRC Government Findings on Enterprise Autonomy,'' in
Foreign Broadcast Information Service--China--93-133 (July 14,
1993), and 1992 Central Intelligence Agency Report to the Joint
Economic Committee, Hearings on Global Economic and Technological
Change: Former Soviet Union and Eastern Europe and China, Pt. 2 (102
Cong., 2d Sess.).
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De facto Analysis: Weihai and ZCCBC
The following record evidence, which is contained in Weihai's and
ZCCBC's questionnaire responses, indicates a lack of de facto
government control over the export activities of these companies.
Weihai's chairman and sales representatives authorized by the
chairman, and ZCCBC's general manager have the right to contractually
bind their respective companies concerning the sale of TRBs. Both
Weihai and ZCCBC have stated that export decisions are not subject to
any government review or approval and there are no government policy
directives that affect these decisions.
Weihai's senior management is selected by the company's board of
directors. The remaining managers are appointed by the general manager.
The results of Weihai's senior management selections are recorded with
the State Administration for Industry and Commerce. There is no
evidence that this government authority controls the selection process
or that it has rejected senior managers selected through the election
process. The general manager of ZCCBC is appointed by the company's
stockholders and ZCCBC does not notify the government of its management
selections. Accordingly, there is no evidence that the government
controls the selection process or that it has rejected a general
manager selected.
Weihai's and ZCCBC's sources of funds are their own respective
revenues or bank loans. They have sole control over, and access to,
their bank accounts, which are held in Weihai's and ZCCBC's own names,
respectively.
Furthermore, there are no restrictions on the use of the
respondents' revenues or profits, including export earnings.
Based on the foregoing analysis of the evidence on the record, we
find neither de jure nor de facto government control over the export
activities of Weihai or ZCCBC. Accordingly, we preliminarily determine
that Weihai and ZCCBC are not part of any ``PRC enterprise'' and are
entitled to separate rates.
United States Sales
For sales made by Weihai and ZCCBC, we based the U.S. sales on
export price (``EP''), in accordance with section 772(a) of the Act,
because the subject merchandise was sold to unaffiliated purchasers in
the United States prior to importation into the United States and
because the constructed export price methodology was not indicated by
other circumstances.
We calculated EP based on, as appropriate, the FOB or CIF port
price to unaffiliated purchasers. From this amount we deducted amounts,
where appropriate, for foreign inland freight, ocean freight, and
marine insurance. We valued the deduction for foreign inland freight
using Indian freight costs (see the Normal Value section of this notice
for a discussion of our surrogate selection). Marine insurance and
ocean freight were provided by PRC-owned companies. Therefore, we
valued the deductions using amounts charged by international providers.
Normal Value
Section 773(c)(1) of the Act provides that the Department shall
determine normal value (``NV'') using a factors-of-production (``FOP'')
methodology if: (1) The merchandise is exported from an NME, and (2)
the information does not permit the calculation of NV under section
773(a) of the Act. The Department has treated the PRC as an NME in all
previous antidumping cases. In accordance with section 771(18)(C)(i)
[[Page 45513]]
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 tapered roller bearing industry is a market-oriented industry.
Consequently, we have no basis to determine that the information would
permit the calculation of NV using PRC prices or costs. Therefore,
except as noted below, we calculated NV based on factors of production
in accordance with sections 773(c)(3) and (4) of the Act and section
351.408(c) of our regulations.
Under the FOP methodology, we are required to value the NME
producer's inputs in a comparable market economy country that is a
significant producer of comparable merchandise. We have relied on India
as the primary surrogate for valuing the PRC producers' inputs. We have
used Indonesia as a secondary source of values (see Memorandum to Susan
Kuhbach from Jeff May: ``Tapered Roller Bearings (``TRBs'') from the
People's Republic of China (``PRC''): Nonmarket Economy Status and
Surrogate Country Selection,'' dated June 4, 1999, and Memorandum to
Susan Kuhbach: ``Selection of a Surrogate Country and Steel Value
Sources,'' dated August 10, 1999 (``Steel Values Memorandum''), for a
further discussion of our surrogate selection). We note that, in past
reviews of this order, we have found that both India and Indonesia are
economically comparable to the PRC and are significant producers of
TRBs (see Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From the People's Republic of China; Preliminary Results of
1997-1998 Antidumping Duty Administrative Review and Partial Rescission
of Antidumping Duty Administrative Review, 64 FR 36853 (July 8, 1999)
(``Preliminary TRBs XI'')).
We used Indian data to value the various factors of production with
the exception of the following: hot-rolled alloy steel bars for the
production of cups and cones, cold-rolled steel rods used in the
production of rollers, and steel scrap from the production of cups,
cones, and rollers. To value hot-rolled alloy steel bars for the
production of cups and cones, we used data on imports into Indonesia.
Specifically, we used Japanese export prices of cup and cone quality
steel to Indonesia. Use of Japanese export data allowed us to identify
bearing quality steel. To value cold-rolled steel rods used in the
production of rollers, we used Indonesian import data. We valued scrap
using information from the same country we used to value steel. In
these instances where we used Indonesian data, we did so because we
found the Indian data for those inputs to be unreliable. (See Steel
Values Memorandum.)
All valuations were made using publicly available information, as
described below. For a complete description of the factor values used,
see the ``Memorandum to Susan Kuhbach: Factors of Production Values
Used for the Preliminary Results,'' dated August 10, 1999.
1. Steel Inputs. For hot-rolled alloy steel bars used in the
production of cups and cones, we used a weighted average of Japanese
export values to Indonesia from the Harmonized Tariff Schedule
(``HTS'') category 7228.30.900 obtained from Official Japan Ministry of
Finance statistics. This is consistent with the approach followed in
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,
From the People's Republic of China; Final Results of 1996-1997
Antidumping Duty Administrative Review and New Shipper Review and
Determination Not to Revoke Order in Part, 63 FR 63842, 63845 (November
17, 1998) (``TRBs X''). For cold-rolled steel rods used in the
production of rollers, we used Indonesian import data for Indonesian
tariff subheading 7228.50000, as reported in Biro Pusat Statistik,
Republik Indonesia. For cold-rolled steel sheet for the production of
cages, we used Indian import data for Indian tariff subheading
7209.4200, as reported in the Monthly Statistics of the Foreign Trade
of India, Vol. II--Imports. (For further discussion of selection of
steel value sources, see Steel Values Memorandum).
As in previous administrative reviews, we eliminated from our
calculation steel imports from NME countries and imports from market
economy countries that were made in small quantities. For steel used in
the production of cups, cones, and rollers, we also excluded imports
from countries that do not produce bearing-quality steel (see, e.g.,
TRBs X).
We made adjustments to include freight costs incurred using the
shorter of the reported distances from either the closest PRC port to
the TRBs factory or the domestic supplier to the TRBs factory (see
Notice of Final Determination of Sales at Less Than Fair Value:
Collated Roofing Nails From the People's Republic of China, 62 FR 51410
(October 1, 1997), and Sigma Corporation versus United States, 117 F.
3d 1401 (Fed. Cir. 1997)). We also made adjustments to include freight
costs incurred between primary producers and their subcontractors.
One producer in this review purchased steel sheet from a market
economy supplier and paid for the steel with market economy currency.
Thus, in accordance with section 351.408(c)(1) of our regulations, we
valued this steel input using the actual price reported for directly
imported inputs from a market economy.
To be consistent with the valuation of steel for cups, cones, and
rollers, we valued scrap recovered from the production of cups, cones,
and rollers using official Japanese government statistics on Japanese
scrap exports to Indonesia from HTS category 7204.29.000. Similarly,
scrap recovered from the production of cages was valued using import
data from the Indian tariff subheading 7204.4100.
2. Labor. Section 351.408(c)(3) of our regulations requires the use
of a regression-based wage rate. We have used the regression-based wage
rate on Import Administration's internet website at www.ita.doc.gov/
import__admin/records/wages.
3. Overhead, SG&A Expenses, and Profit. For factory overhead, we
used information obtained from the fiscal year 1997-98 annual reports
of six Indian bearing producers. We calculated factory overhead and
selling, general and administrative (``SG&A'') expenses (exclusive of
labor and electricity) as percentages of direct inputs (also exclusive
of labor) and applied these ratios to each producer's direct input
costs (exclusive of labor). For profit, we totaled the reported profit
before taxes for the six Indian bearing producers and divided it by the
total calculated cost of production (``COP'') of goods sold. This
percentage was applied to each respondent's total COP to derive a
company-specific profit value.
4. Packing. We used surrogate values for each packing material
reported using values obtained from the Monthly Statistics of the
Foreign Trade of India, Vol. II--Imports by Commodity (April 1997
through December 1997). We adjusted the values to reflect inflation
using the Indian wholesale price index (``Indian WPI'').
5. Electricity. We used a simple average of 1995 regional
electricity prices in India for large industries as reported in India's
Energy Sector, published by the Centre for Monitoring Indian Economy
Pvt. Ltd. (September 1996). We adjusted the value to reflect inflation
using the Indian WPI.
6. Inland Freight. We valued truck freight using a rate derived
from the April 20, 1994 issue of The Times of
[[Page 45514]]
India. We adjusted the rate to reflect inflation through the POR using
the Indian WPI. We valued rail freight using rates published by the
Indian Railway Conference Association in 1995. We calculated an average
rate per kilometer and adjusted the rate to reflect inflation through
the POR using the Indian WPI.
7. Ocean Freight. We calculated a value for ocean freight based on
1996 rate quotes from Maersk Inc. We adjusted the rate to the POR using
the United States producer price index.
8. Marine Insurance. We calculated a value for marine insurance
based on the CIF value of the TRBs shipped. We obtained the rate used
through queries we made directly to an international marine insurance
provider. Because the information obtained was from a period
contemporaneous with the POR, no further adjustments were necessary.
Preliminary Results of the Review
We preliminarily determine that the following dumping margins exist
for the period June 1, 1998, through November 30, 1998:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
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Weihai..................................................... 0.00
ZCCBC...................................................... 0.00
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Any interested party may request a hearing within 30 days of
publication. A hearing, if requested, will be held 42 days after the
publication of this notice, or the first workday thereafter.
Issues raised in the hearing will be limited to those raised in the
respective case and rebuttal briefs. Interested parties may submit case
briefs within 30 days of the date of publication of this notice.
Rebuttal briefs, which must be limited to issues raised in the case
briefs, may be filed not later than 35 days after the date of
publication of this notice. Parties who submit case briefs or rebuttal
briefs in this proceeding are requested to submit with each argument
(1) a statement of the issue and (2) a brief summary of the argument
with an electronic version included.
The Department will publish the final results within 90 days after
the date on which these results were issued. The final results will
include our analysis of issues raised in the briefs or hearing.
If these preliminary results are adopted in the final results, we
will instruct the Customs Service to liquidate the entries of the
subject merchandise entered, or withdrawn from warehouse, for
consumption during the POR, without regard to antidumping duties. 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 PRC companies named above,
the cash deposit rates will be the rates for these firms established in
the final results of this review, except that, for exporters with de
minimis rates, i.e., less than 0.50 percent, no deposit will be
required; (2) for previously-reviewed PRC and non-PRC exporters with
separate rates, the cash deposit rate will be the company-specific rate
established for the most recent period; (3) for all other PRC
exporters, the rate will be the PRC country-wide rate, which is 33.12
percent; and (4) for all other 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 requirements, 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 section 351.402(f) of our regulations 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 results in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: August 10, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-21716 Filed 8-19-99; 8:45 am]
BILLING CODE 3510-DS-P