02-19989. Bulk Aspirin from the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review and Changed Circumstances Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce is currently conducting an administrative review of the antidumping duty order on bulk aspirin from the People's Republic of China. The period of review is July 6, 2000, through June 30, 2001. This review covers imports of subject merchandise from two producer/exporters.

We preliminarily find that sales have not been made below normal value. If these preliminary results are adopted in our final results of review, we will instruct the Customs Service not to assess antidumping duties.

In addition, in response to a request from Jilin Pharmaceutical Import and Export Corporation, Jilin Pharmaceutical (U.S.A.) Inc., and Jilin Pharmaceutical Company Ltd., the Department of Commerce published a notice of initiation of changed circumstances review on June 7, 2002 (67 FR 39344). We preliminary find that Jilin Henghe Pharmaceutical is the successor-in-interest of Jilin Pharmaceutical Company Ltd. and Jilin Pharmaceutical Import and Export Corporation.

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

EFFECTIVE DATE:

August 7, 2002.

FOR FURTHER INFORMATION CONTACT:

Blanche Ziv or Cole Kyle, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone: [phone], or [phone], respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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 (“URAA”). In addition, unless otherwise indicated, all citations to the Department of Commerce (“Department”) regulations are to 19 CFR Part 351 (April 2001).

Background

On July 11, 2000, the Department published an antidumping order on bulk aspirin from the People's Republic of China (“PRC”). See Notice of Antidumping Duty Order: Bulk Aspirin from the People's Republic of China, 65 FR 42673 (July 11, 2000). On July 2, 2001 , the Department published in the Federal Register an Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 66 FR 34910 (July 2, 2001).

On July 27 and 31, 2001, in accordance with 19 CFR 351.213(b), two manufacturers/exporters of the subject merchandise, Shandong Xinhua Pharmaceutical Co., Ltd. (“Shandong”), and Jilin Pharmaceutical Import and Export Company, Jilin Pharmaceutical (U.S.A.) Inc., and Jilin Pharmaceutical Limited Company (collectively, “Jilin Pharmaceutical”), respectively, requested that the Department conduct an administrative review of this order. In addition, Jilin Pharmaceutical requested that, contemporaneous with the ongoing administrative review of the order, the Department review the company's name change and determine that Jilin Henghe Pharmaceutical (“Jilin Henghe”) is the successor-in-interest of Jilin Pharmaceutical.

On August 20, 2001, we published a notice of initiation of the administrative review. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocations in Part, 66 FR 43570 (August 20, 2001). The period of this review (“POR”) is July 6, 2000, through June 30, 2001.

We issued questionnaires to Jilin Pharmaceutical and Shandong on October 29, 2001. We received responses to the questionnaires from Shandong and Jilin Pharmaceutical on December 5 and 27, 2001, respectively.

On December 21, 2001, the Department invited interested parties to comment on surrogate country selection and to provide publicly available information for valuing the factors of production. We received responses from Rhodia, Inc., (“the petitioner”) and Jilin Pharmaceutical on January 22, 2002. Shandong provided surrogate value information to the Department on July 8, 2002.

On March 29, 2002, the Department found that it was not practicable to complete the review in the time allotted and published an extension of time limit for the completion of the preliminary results of this review to no later than July 31, 2002, in accordance with section 751(a)(3)(A) of the Act. See Bulk Aspirin from the People's Republic of China; Extension of Time Limit for the Preliminary Results of the Antidumping Duty Administrative Review, 67 FR 15177 (March 29, 2002).

We issued supplemental questionnaires to Jilin Pharmaceutical and Shandong on April 22 and 24, 2002, respectively. We received responses to the supplemental questionnaires from Jilin Pharmaceutical and Shandong on May 24 and 29, 2002, respectively.

On, June 3, 2002, we initiated a changed circumstances review to be conducted contemporaneously with the ongoing administrative review of the order. See Bulk Aspirin From the People's Republic of China; Initiation of Changed Circumstances Antidumping Duty Administrative Review, 67 FR 39344 (June 7, 2002). On June 5, 2002, we issued a supplemental questionnaire to Jilin Pharmaceutical regarding the changed circumstances review. We received a response to the supplemental questionnaire from Jilin Pharmaceutical on June 28, 2002. See “Changed Circumstances” section, below.

Scope of the Order

The product covered by this review is bulk acetylsalicylic acid, commonly referred to as bulk aspirin, whether or not in pharmaceutical or compound form, not put up in dosage form (tablet, capsule, powders or similar form for direct human consumption). Bulk aspirin may be imported in two forms, as pure ortho-acetylsalicylic acid or as mixed ortho-acetylsalicylic acid. Pure ortho-acetylsalicylic acid can be either in crystal form or granulated into a fine powder (pharmaceutical form). This product has the chemical formula C9H8O4. It is defined by the official monograph of the United States Pharmacopoeia 23 (“USP”). It is currently classifiable under the Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 2918.22.1000.

Mixed ortho-acetylsalicylic acid consists of ortho-acetylsalicylic acid combined with other inactive substances such as starch, lactose, cellulose, or coloring materials and/or other active substances. The presence of other active substances must be in concentrations less than that specified for particular nonprescription drug combinations of aspirin and active substances as published in the Handbook of Nonprescription Drugs, eighth edition, American Pharmaceutical Association. This product is currently classifiable under HTSUS subheading 3003.90.0000.

Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise under review is dispositive.

Separate Rates

It is the Department's standard policy to assign all exporters of the merchandise subject to review in nonmarket economy (“NME”) countries a single rate unless an exporter can demonstrate an absence of government control, both in law and in fact, with respect to exports. To establish whether an exporter is sufficiently independent of government control to be entitled to a separate rate, the Department analyzes the exporter in light of the criteria 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 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”).

Absence of De Jure Control

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 an 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. See Sparklers, 56 FR at 20589.

Absence of De Facto Control

A de facto analysis of absence of government control over exports is based on four factors -- whether the respondent: 1) sets its own export prices independently of the government and other exporters; 2) retains the proceeds from its export sales and makes independent decisions regarding the disposition of profits or financing of losses; 3) has the authority to negotiate and sign contracts and other agreements; and 4) has autonomy from the government regarding the selection of management. See Silicon Carbide, 59 FR at 22587; see also Sparklers, 56 FR at 20589.

In the Notice of Final Determination of Sales at Less Than Fair Value: Bulk Aspirin from the People's Republic of China 65 FR 33805 (May 25, 2000) (“LTFV Investigation”), we determined that there was de jure and de facto absence of government control of each investigated company's export activities and determined that each company warranted a company-specific dumping margin. For the POR, Jilin Pharmaceutical and Shandong (collectively, “the respondents”), responded to the Department's request for information regarding separate rates. We have found that the evidence on the record is consistent with the final determination in the LTFV Investigation and the respondents continue to demonstrate an absence of government control, both in law and in fact, with respect to their exports, in accordance with the criteria identified in Sparklers and Silicon Carbide.

Changed Circumstances

Jilin Pharmaceutical has requested that the Department conduct a changed circumstances review to determine that Jilin Henghe is the successor-in-interest of Jilin Pharmaceutical. In making successor-in-interest determinations, the Department examines several factors including, but not limited to, changes in: (1) Management; (2) production facilities; (3) supplier relationships; and (4) customer base. See, e.g., Brass Sheet and Strip from Canada; Final Results of Antidumping Duty Administrative Review, 57 FR 20460, 20461 (May 13, 1992). While no single factor, or combination of factors, will necessarily prove dispositive, the Department will generally consider the new company to be the successor to its predecessor company if the resulting operations are essentially the same as those of the predecessor company. See, e.g., id. and Industrial Phosphoric Acid from Israel; Final Results of Changed Circumstances Review, 59 FR 6944, 6945 (February 14, 1994). Thus, if the evidence demonstrates that, with respect to the production and sale of the subject merchandise, the new company operates as the same business entity as its predecessor, the Department will assign the new company the cash-deposit rate of its predecessor.

Based on the information submitted by Jilin Pharmaceutical during the initiation stages of this changed circumstances review and the supplemental information submitted on June 28, 2002, we preliminarily determine that Jilin Henghe Pharmaceutical Company (“Jilin Henghe”) is the successor-in-interest to Jilin Pharmaceutical. We find that the company's organizational structure, senior management, production facilities, supplier relationships, and customers have remained essentially unchanged. Furthermore, Jilin Pharmaceutical has provided sufficient documentation of its name change (see Jilin Pharmaceutical's June 28, 2002, supplemental response). Based on all the evidence reviewed, we find that Jilin Henghe operates as the same business entity as Jilin Pharmaceutical. Thus, we preliminarily determine that Jilin Henghe should receive the same antidumping duty cash-deposit rate with respect to the subject merchandise as Jilin Pharmaceutical, its predecessor company.

Export Price and Constructed Export Price

For certain sales made by the respondents to the United States, we used constructed export price (“CEP”) in accordance with section 772(b) of the Act because the first sale to an unaffiliated purchaser occurred after importation of the merchandise into the United States. For other sales made by the respondents, we used export price (“EP”), in accordance with section 772(a) of the Act, because the subject merchandise was sold outside the United States to unaffiliated purchasers in the United States prior to importation into the United States.

We calculated EP based on the CIF, C&F, and FOB prices to unaffiliated purchasers, as appropriate. In accordance with section 772(c) of the Act, we deducted from these prices, where appropriate, amounts for foreign inland freight, foreign brokerage and handling, international freight, and marine insurance. We valued the deductions for foreign inland freight, foreign brokerage and handling, and marine insurance using surrogate data based on Indian freight costs. (We selected India as the surrogate country for the reasons explained in the “Normal Value” section of this notice, below.) Where all of a respondent's marine insurance and ocean freight were provided by PRC-owned companies, we valued the deductions using surrogate value data. However, where a respondent's marine insurance or ocean freight was provided by a market economy company and paid for in a market economy currency, we used the reported market economy marine insurance or ocean freight amount to value these expenses for all U.S. sales made by that respondent. See 19 CFR 351.408(c)(1).

We calculated CEP based on FOB and delivered prices from the respondents' U.S. subsidiaries to unaffiliated customers. In accordance with section 772(c) of the Act, we deducted from the CEP starting price foreign inland freight, international freight, marine insurance, U.S. inland freight, U.S. customs duties, and U.S. warehousing expenses. In accordance with section 772(d)(1) of the Act, we made deductions for the following selling expenses that related to economic activity in the United States: credit expenses, indirect selling expenses, inventory carrying costs, and direct selling expenses. For certain sales made by Jilin Pharmaceutical, we have used the signature date of the preliminary results (i.e., July 31, 2002) in the calculation of imputed credit expenses (see the memorandum from the Team to the file (“Preliminary Results Calculation Memorandum for Jilin Henghe Pharmaceutical Co., Ltd.”), dated July 31, 2002). In accordance with section 772(d)(3) of the Act, we deducted from the starting price an amount for profit.

International Freight: Where the respondent used a market-economy shipper for a significant portion of its sales and paid for the shipping in a market-economy currency, we used the average price paid by that producer/exporter to value international freight for all of its sales. See Tapered Roller Bearings from the People's Republic of China; Notice of Preliminary Results of 2000-2001 Review, Partial Rescission of Review, and Notice of Intent to Revoke Order, in Part, 67 FR 45451 (July 9, 2002).

Marine Insurance: Where the respondent used a market-economy marine insurance provider for its sales and paid for the insurance in a market-economy currency, we used the average price for marine insurance paid by that producer/exporter for all of its sales. Where the respondent did not use a market-economy insurance provider, we used a June 1998 price quote from a U.S. insurance provider, as we have in past PRC cases. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China; Preliminary Results of 1996-97 Antidumping Duty Administrative Review and New Shipper Review and Determination Not To Revoke Order in Part, 63 FR 63842 (November 17, 1998).

Brokerage and Handling: To value brokerage and handling, we used the public version of a U.S. sales listing reported in the questionnaire response submitted by Meltroll Engineering for Stainless Steel Bar from India; Final Results of Antidumping Duty Administrative Review and New Shipper Review and Partial Rescission of Administrative Review, 65 FR 48965 (August 10, 2000). Because this information is not contemporaneous with the POR, we adjusted the data to the POR by using the Indian wholesale price index.

Normal Value

Section 773(c)(1) of the Act provides that the Department shall determine the normal value (“NV”) using a factors-of-production methodology if: (1) The merchandise is exported from an NME country; and (2) the information does not permit the calculation of NV using home-market prices, third-country prices, or constructed value (“CV”) under section 773(a) of the Act.

The Department has treated the PRC as an NME country in all previous antidumping cases. Furthermore, available information does not permit the calculation of NV using home market prices, third country prices, or CV under section 773(a) of the Act. In accordance with section 771(18)(C)(i) of the Act, any determination that a foreign country is an NME country shall remain in effect until revoked by the administering authority. The party in this proceeding has not contested such treatment in this review. Therefore, we treated the PRC as an NME country for purposes of this review and calculated NV by valuing the factors of production in a surrogate country.

Section 773(c)(4) of the Act requires the Department to value the NME producer's factors of production, to the extent possible, in one or more market economy countries that: (1) are at a level of economic development comparable to that of the NME, and (2) are significant producers of comparable merchandise. The Department has determined that India, Pakistan, Indonesia, Sri Lanka, and the Philippines are countries comparable to the PRC in terms of overall economic development. For a further discussion of our surrogate selection, see the December 18, 2001, Memorandum to Susan Kuhbach from Jeff May “1st Administrative Review of Bulk Aspirin from the People's Republic of China,” (“Surrogate Country Memo”), which is on file in the Department's Central Records Unit in Room B-099 of the main Department building. According to the available information on the record, we determined that India is a significant producer of comparable merchandise. None of the interested parties contested the selection of India as the surrogate country. Accordingly, we calculated NV using Indian values for the PRC producers' factors of production. We obtained and relied upon publicly available information wherever possible. In many instances, we used the Monthly Statistics of the Foreign Trade of India; Volume II Imports (“MSFTI” ) to value factors of production, energy inputs and packing materials. Consistent with the Final Determination of Sales at Less than Fair Value: Certain Automotive Replacement Glass Windshields From the People's Republic of China, 67 FR 6482 (February 12, 2002) and accompanying Issues and Decision Memorandum, we excluded Indian import data reported in the MSFTI for Korea, Thailand and Indonesia in our surrogate value calculations. In addition to the MSFTI data, we used information from Indian Chemical Weekly (“ICW”) to value certain chemical inputs.

Factors of Production

In accordance with section 773(c) of the Act, we calculated NV based on factors of production reported by the respondents. To calculate NV, the reported unit factor quantities were multiplied by publicly available Indian surrogate values.

In selecting the surrogate values, we considered the quality, specificity, and contemporaneity of the data. As appropriate, we adjusted input prices to make them delivered prices. For the distances reported, we added to Indian CIF surrogate values a surrogate freight cost using the reported distances from the PRC port to the PRC factory, or from the domestic supplier to the factory. This adjustment is in accordance with the United States Court of Appeals for the Federal Circuit's decision in Sigma Corp. v. United States, 117 F. 3d 1401, 1807-1908 (Fed.Cir. 1997). For those values not contemporaneous with the POR, we adjusted for inflation using the appropriate wholesale or producer price index published in the International Monetary Fund's International Financial Statistics.

Many of the inputs in the production of bulk aspirin are considered business proprietary information by the respondents. Due to the proprietary nature of this data, we are unable to discuss many of the inputs in this preliminary results notice. For a complete analysis of surrogate values, see the memorandum from the Team to the file (“Factors of Production Valuation Memorandum”), dated July 31, 2002.

Labor: We valued labor using the method described in 19 CFR 351.408(c)(3).

Electricity, Coal and Oil: Consistent with our approach in Manganese Metal from the People's Republic of China; Final Results of Antidumping Duty Administrative Review, 66 FR 15076 (March 15, 2001), we calculated our surrogate value for electricity based on electricity rate data reported by the International Energy Agency (“IEA”), 4th quarter 2000. For coal, we used import values from the MSFTI. We based the value of fuel oil on prices reported by the IEA, 4th quarter 2000.

Factory Overhead, SG&A, and Profit: We based our calculation of factory overhead, SG&A, and profit on a simple average derived from the financial data of three Indian companies of comparable merchandise: Andhra Sugars Ltd. (“Andhra”), Alta Laboratories Ltd. (“Alta”), and Gujarat Organics Ltd. (“Gujarat”). Our calculations and application of overhead, SG&A and profit ratios are consistent with the Department's practice. See, e.g., Certain Preserved Mushrooms from the People's Republic of China, 65 FR 66703, 66707 (November 7, 2000); Certain Cut-to-Length Carbon Steel Late from the People's Republic of China, 62 FR 61964, 61970 (November 20, 1997); Notice of Final Determination of Sales at Less Than Fair Value: Bicycles from the People's Republic of China, 61 FR 19026, 19039 (April 30, 1996).

Packing Materials: For packing materials we used import values from the MSFTI.

Inland Freight Rates: To value truck freight rates, we used a 2000 rate quote from an Indian trucking company. For rail freight, we based our calculation on 1999 price quotes from Indian rail freight transporters.

Preliminary Results of the Review

We preliminary find that the following dumping margins exist for the period July 6, 2000, through June 30, 2001:

Exporter/Manufacturer	Weighted-average ­margin ­percentage
Shandong Xinhua ­Pharmaceutical Co., Ltd.	0.00
Jilin Pharmaceutical	0.04 (de minimis)

Any interested party may request a hearing within 30 days of publication of this notice. See 19 CFR 351.310(c). Any hearing, if requested, will be held approximately 44 days after the date of publication of this notice, or the first working day thereafter. Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of this notice. Rebuttal briefs and rebuttals to written comments, which must be limited to issues raised in such briefs or comments, may be filed not later than 37 days after the date of publication. Parties who submit arguments are requested to submit with the argument (1) a statement of the issue, (2) a brief summary of the argument, and (3) a table of authorities.

The Department will issue a notice of final results of this administrative review, including the results of its analysis of issues raised in any such written comments, within 120 days of publication of these preliminary results.

Assessment Rates and Cash Deposit Requirements

Pursuant to 19 CFR 351.212(b), the Department calculates an assessment rate for each importer of the subject merchandise. Upon issuance of the final results of this administrative review, if any importer-specific assessment rates calculated in the final results are above de minimis (i.e., at or above 0.5 percent), the Department will issue appraisement instructions directly to the Customs Service to assess antidumping duties on appropriate entries by applying the assessment rate to the entered value of the merchandise. For assessment purposes, we calculate importer-specific assessment rates for the subject merchandise by aggregating the dumping duties due for all U.S. sales to each importer and dividing the amount by the total entered value of the sales to that importer.

The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of bulk aspirin entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided for by section 751(a)(1) of the Act: (1) For the PRC companies named above, which have separate rates, no antidumping duty deposits 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 during which they were reviewed; (3) for all other PRC exporters, the rate will be the PRC country-wide rate, which is 144.02 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.

Notification to Importers

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

We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: July 31, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.