01-29633. Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Preliminary Results of New Shipper Reviews

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of new shipper reviews of tapered roller bearings and parts thereof, finished and unfinished, from the People's Republic of China.

SUMMARY:

In response to requests from Peer Bearing Company—Changshan and Yantai Timken Company Limited, the Department of Commerce is conducting new shipper reviews of the antidumping duty order on tapered roller bearings and parts thereof, finished and unfinished, from the People's Republic of China. These reviews cover these companies' entries of tapered roller bearings and parts thereof, finished and unfinished, to the United States during the period June 1, 2000 through November 30, 2000 for Yantai Timken Company Limited and June 1, 2000 through January 31, 2001 for Peer Bearing Company—Changshan.

We have preliminarily found that, during the periods of review, Peer Bearing Company—Changshan and Yantai Timken Company Limited have made sales below normal value. The preliminary results are listed below in the Preliminary Results of the Reviews section. If these preliminary results are adopted in our final results, we will instruct the Customs Service to assess antidumping duties based on the difference between the constructed export price and normal value. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

November 29, 2001.

FOR FURTHER INFORMATION CONTACT:

Jarrod Goldfeder or Anthony Grasso, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: [phone], or [phone], respectively.

SUPPLEMENTARY INFORMATION:

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 (“URAA”). In addition, unless otherwise indicated, all references to the Department of Commerce's (“the Department”) regulations are to 19 CFR part 351 (2000).

Background

On December 28, 2000, Peer Bearing Company—Changshan (“CPZ”) requested that we conduct a new shipper review. On December 29, 2000, a similar request was made by Yantai Timken Company Limited (“Yantai Timken”). We published the notice of initiation for these new shipper reviews on January 31, 2001 (66 FR 8385) with a period of review (“POR”) covering June 1, 2000 through November 30, 2000 for Yantai Timken and CPZ . On May 9, 2001, the Department expanded CPZ's POR through January 31, 2001. See Memorandum to Susan Kuhbach: “Expansion of the Period of Review,” dated May 9, 2001, on file in the Department's Central Records Unit (“CRU”), in room B-099 of the main Commerce building.

On January 26, 2001, we sent out antidumping questionnaires to both Yantai Timken and CPZ. We received responses to these questionnaires from both companies in February and March 2001. We issued and received responses to supplemental questionnaires in April and May 2001.

Continuation of New Shipper Review

In a letter dated October 26, 2001, the petitioner submitted comments urging the Department to discontinue the new shipper review of CPZ. Due to the proprietary nature of these comments, we are unable to restate them here.

We have analyzed the petitioner's comments. In accordance with 19 CFR 351.214(f), the Department may rescind a new shipper review if: (1) There has not been an entry and sale to an unaffiliated customer in the U.S. of subject merchandise, or (2) if a party withdraws its request for review not later than 60 days after the date of publication of notice of initiation of the requested review. CPZ does not meet either of these criteria for discontinuing a new shipper review. Therefore, the Department is not rescinding the new shipper review of CPZ.

Scope of the Order

Merchandise covered by this order 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 currently classifiable under 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.

Verification

As provided in section 782(i) of the Act, we verified information provided by CPZ and Yantai Timken, using standard verification procedures, including onsite inspection of manufacturers' facilities, the examination of relevant sales and financial records, and selection of original documentation containing relevant information. Our verification results are outlined in the public versions of the verification reports that are available in the Department's CRU. For the verification report of Yantai Timken, see Memorandum to John Brinkmann: “Yantai Timken Company Limited Verification Report,” dated September 26, 2001. For the report of CPZ, see Memorandum to John Brinkmann: “Peer Bearing Company—Changshan Verification Report,” dated October 3, 2001.

Separate Rates Determination

The Department has treated the PRC as a nonmarket economy (“NME”) country in all previous antidumping cases. In accordance with section 771(18)(C)(i) of the Act, any determination that a foreign country is an NME shall remain in effect until revoked by the Department. 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 TRB industry is a market-oriented industry. Therefore, we are treating the PRC as an NME country within the meaning of section 773(c) of the Act.

We allow companies in NME countries to receive separate antidumping duty rates for purposes of assessment and cash deposits when those companies can demonstrate an absence of government control, both in law and in fact, with respect to export activities. To establish whether a company operating in an NME country 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”). As shown below, CPZ and Yantai Timken meet both the de jure and de facto criteria and are entitled, therefore, to a separate rate. Accordingly, we preliminarily determine to apply a rate separate from the PRC rate to CPZ and Yantai Timken.

De Jure Analysis

The Department considers three factors which support, though do not require, a finding of de jure absence of governmental control. These factors include: (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.

During the PORs, both Yantai Timken and CPZ were joint ventures formed under the laws of the PRC and controlled by a board of directors. Yantai Timken was a joint venture majority owned by The Timken Company, with a minority interest held by Yantai Bearing Factory. Yantai Bearing Factory is a state-owned company administered by the Yantai Machinery Bureau, which is under the Yantai municipal government. CPZ is also a joint venture with majority interest held by a U.S. company and minority interest held by a PRC company (that is not a state-owned enterprise).

Information submitted during this review indicates that Yantai Bearing Factory is owned “by all of the people.” In Silicon Carbide (at 22586), we found that the PRC central government had devolved control of state-owned enterprises, i.e., enterprises owned “by all of the people.” As a result, we determined that companies owned “by all of the people” were eligible for individual rates if they met the criteria developed in Sparklers and Silicon Carbide, as described above.

Yantai Timken and CPZ have placed documents on the record that they claim demonstrate the absence of de jure governmental control. Additionally, in prior TRB cases, the Department has analyzed similar PRC laws and regulations, and found that they establish an absence of de jure control.

Yantai Timken's and CPZ's separation from the government is explicitly shown under the provisions of Article 3 of the Sino-Foreign Joint Venture Law of the People's Republic of China which grants companies “the right to do business and conduct business management activities independently.” The business licenses issued to Yantai Timken and CPZ authorize these companies to make domestic and export sales of tapered roller bearings as outlined in their respective business scopes.

Other laws placed on the record in this case—the “Law of the People's Republic of China on Foreign-Capital Enterprises,” effective April 12, 1986 (“1986 Law”); “Regulations of the PRC for Controlling the Registration of Enterprises as Legal Persons,” adopted on May 13, 1988 (“1988 Regulations”); and “Company Law of the PRC,” effective July 1, 1994 (“1994 Law”)—also demonstrate a lack of de jure governmental control. The 1986 Law states that the government will not nationalize or requisition any enterprise with foreign capital allowing companies to facilitate their own business within the laws of the PRC. Chapter X of the 1988 Regulations discusses supervision and control, and allows companies to conduct business operations as legal persons in line with the items of registration and in accordance with company articles of association and contracts. The 1994 Law places responsibility for profits and losses with each company, further demonstrating lack of de jure control.

There is no indication from the company responses that the subject merchandise is listed on any governmental list of export provisions or export licensing. In addition, there are no reported export quotas regarding the subject merchandise. Consistent with Silicon Carbide, we preliminarily determine that there is an absence of de jure governmental control over Yantai Timken and CPZ's export pricing and marketing decisions.

De Facto Analysis

The Department uses four factors to determine de facto absence of government control: (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).

The following record evidence, which is contained in CPZ's and Yantai Timken's questionnaire responses and the Department's company-specific verification reports, demonstrates a lack of de facto government control over the export activities of both companies.

Both Yantai Timken and CPZ have asserted that they establish their own export prices. However, in order to pass the subject merchandise through PRC Customs, both companies are required to have a stamp of approval from their local Chamber of Commerce confirming that the company-established price is above a minimum. The authority of any PRC Chamber of Commerce to review prices for minimum values derives from the “Interim Provisions on Implementing Seal upon Price Preview Process for Export Price Control on Certain Key Merchandise.” During verification, each company stated that it was never prevented from exporting subject merchandise due to the level of its selling price. Additionally, according to their responses, neither company coordinated or consulted with other exporters regarding its pricing.

The board of directors of Yantai Timken controls the company and chooses the general manager. Other high-level officials are nominated by the general manager and approved by the board. The general manager and the vice-managers of CPZ are appointed by the company's board of directors. Outside of board approval, the general manager may appoint mid-level management and make daily routine manufacturing and merchandise decisions. Although both companies report the board members and the appointed managers to the PRC government, there is no evidence that any government authority controls the selection process or has rejected senior managers selected.

CPZ's and Yantai Timken'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 CPZ's and Yantai Timken's own names. Furthermore, there are no restrictions on the use of the respondents' revenues or profits, including export earnings.

The general managers of both companies have the right to negotiate and enter into contracts, and may delegate this authority to other employees within the companies. There is no evidence that this authority is subject to any level of governmental approval.

This information supports a preliminary finding that there is an absence of de facto governmental control of the export functions of Yantai Timken and CPZ. Consequently, we preliminarily determine that Yantai Timken and CPZ have met the criteria for the application of separate rates.

Constructed Export Price

For all sales made by CPZ and Yantai Timken to the United States, we used constructed export price (“CEP”) in accordance with section 772(b) of the Act. Section 772(b) of the Act defines CEP as the price at which the subject merchandise is first sold in the United States before or after the date of importation, by or for the account of the producer or exporter of the merchandise, or by a seller affiliated with the producer or exporter, to an unaffiliated purchaser, as adjusted under sections 772(c) and (d) of the Act.

We calculated CEP based on the packed, ex-warehouse prices from CPZ's and Yantai Timken's U.S. subsidiaries to unaffiliated customers. We made deductions, where appropriate, from the starting price for CEP for international freight, foreign brokerage and handling, foreign inland freight, marine insurance, customs duties, U.S. brokerage, U.S. warehousing, and U.S. inland freight. In accordance with 772(d)(1) of the Act, we made further deductions from the starting price for CEP for the following selling expenses that related to economic activity in the United States: commissions, credit expenses, further manufacturing, repacking costs, and indirect selling expenses (including inventory carrying costs). For CPZ, we adjusted upwards its reported indirect selling expenses. For more information, see Preliminary Results Calculation Memorandum for CPZ (November 20, 2001). In accordance with section 772(d)(3) of the Act, we have deducted from the starting price an amount for profit. For information on how profit was calculated, see “Overhead, SG&A Expenses, and Profit” in the “Normal Value” section below.

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 subject merchandise is exported from an NME country, and (2) the Department finds that the available information does not permit the calculation of NV under section 773(a) of the Act. We have no basis to determine that the available information would permit the calculation of NV using PRC prices or costs. Therefore, we calculated NV based on factors data in accordance with sections 773(c)(3) and (4) of the Act and 19 CFR 351.408(c).

Under the FOP methodology, we are required to value, to the extent possible, the NME producer's inputs in a market economy country that is at a comparable level of economic development and that is a significant producer of comparable merchandise. We chose India as the surrogate on the basis of the criteria set out in 19 CFR 351.408(b). For further discussion of our surrogate selection see Memorandum to John Brinkmann from Jeff May, “Antidumping Duty Investigation of TRBs and Parts, Thereof, Finished and Unfinished from the PRC: Nonmarket Economy Status and Surrogate Country Selection,” dated January 29, 2001; and Memorandum to Susan Kuhbach, “Selection of a Surrogate Country and Steel Value Sources” dated November 20, 2001 (“Steel Values Memo”).

We used publicly available information on Indian imports and exports to India to value the various factors. Pursuant to the Department's FOP methodology, we valued the respondents' reported FOP by multiplying them by the values 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” (“FOP Memo”), dated November 20, 2001, which is on file in the Department's CRU.

1. Steel Inputs. For hot-rolled alloy steel bars used in the production of cups, consistent with Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China; Final Results of 1999-2000 Administrative Review, Partial Rescission of Review, and Determination Not to Revoke Order in Part, 66 FR 57420 (November 15, 2001) (“TRBs XIII”), we used an adjusted weighted-average of Japanese export values to India from the Japanese Harmonized Schedule (“HS”) category 7228.30.900 obtained from Official Japan Ministry of Finance statistics. For a further discussion of selection of steel value sources, see the Steel Values Memo.

As in previous administrative reviews in this proceeding, we eliminated from our calculation steel imports from NME countries and imports from market economy countries that were made in small quantities. 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 v. United States, 117 F. 3d 1401 (Fed. Cir. 1997).

CPZ states that it manufactured the subject merchandise under review using steel purchased from a market economy producer. In accordance with 19 CFR 351.408(c)(1), we generally value steel inputs using the actual price reported for directly imported inputs from a market economy. However, in TRBs XIII, we found a reasonable basis to believe or suspect that certain market economy steel inputs purchased by PRC TRB manufacturers and used to manufacture TRBs were subsidized. Consistent with our treatment of subsidized inputs in TRBs XIII, we have not used the actual prices paid by CPZ for steel which we have continuing reason to believe or suspect is subsidized. Instead, we relied on surrogate values. (See individual company calculation memoranda for a more detailed company-specific discussion of this issue.)

We valued scrap recovered from the production of cups, using Indian import statistics from Indian HS category 7204.2909.

Because this information is contemporaneous with the current PORs, we made no further adjustments to the steel input data.

2. Labor. 19 CFR 351.408(c)(3) requires the use of a regression-based wage rate. We have used the regression-based wage rate available on Import Administration's internet website at www.ia.ita.doc.gov/​wages.

3. Overhead, SG&A Expenses, and Profit. For factory overhead, we used information obtained from the fiscal year 1999-2000 annual reports of five Indian bearing producers. We calculated factory overhead and selling, general and administrative (“SG&A”) expenses as percentages of direct inputs and applied these ratios to each producer's direct input costs. These expenses were calculated exclusive of labor and electricity, but included employer provident funds and welfare expenses not reflected in the Department's regressed wage rate. This is consistent with the methodology we utilized in TRBs XIII. For profit, we totaled the reported profit before taxes for the five 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 calculated surrogate values for packing materials reported by each company (e.g., wooden pallet, plastic bag, steel strip) using import statistics reported in Monthly Statistics of the Foreign Trade of India, Vol. II—Imports by Commodity (April 2000 through January 2001). We multiplied these surrogate values by the usage factor reported by each company to calculate packing costs.

5. Electricity. Consistent with 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 a simple average of the 1998/1999 rates for the “industrial” category listed for 19 Indian states or electricity boards. The source of this data was the Energy Data Directory and Yearbook published by Tata Energy Research Institute. We adjusted the electricity value to the PORs using the Reserve Bank of India electricity-specific price index.

6. Foreign Inland Freight. We valued truck freight using an average of November 1999 truck freight rate quotes collected from Indian trucking companies by the Department and used in the Notice of Preliminary Determination of Sales at Less than Fair Value: Bulk Aspirin from the People's Republic of China, 65 FR 116 (January 3, 2000) (“Bulk Aspirin from the PRC”). We valued rail freight using two November 1999 rate quotes for domestic bearing quality steel shipments within India that were also used in Bulk Aspirin from the PRC. Because this information is not contemporaneous with the current PORs, we adjusted the freight rate to the PORs using the Indian wholesale price index (“WPI”).

7. Ocean Freight. We calculated a value for ocean freight based on May 2000 rate quotes from Maersk Inc. Because this information is contemporaneous with the current PORs, no further calculations were necessary.

8. Marine Insurance. We calculated a value for marine insurance based on the CIF value of shipped TRBs. This rate was obtained for Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China; Final Results of 1998-1999 Administrative Review, Partial Rescission of Review, and Determination Not to Revoke Order in Part, 66 FR 1953 (January 10, 2001) through queries made directly to an international marine insurance provider. We adjusted the marine insurance rate to the PORs using the U.S. purchase price index.

9. 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 current PORs, we adjusted the brokerage and handling rate to the PORs using the Indian WPI.

Preliminary Results of the Reviews

We preliminarily determine that the following dumping margins exist for the period June 1, 2000 through November 30, 2000 for Yantai Timken and June 1, 2000 through January 1, 2001 for CPZ:

Exporter/manufacturer	Weighted-average margin percentage
CPZ	1.76
Yantai Timken	3.84

The above deposit rates will be effective upon publication of the final results of these new shipper reviews for all shipments of TRBs from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Act.

Public Comment

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

The Department will issue the final results of these new shipper reviews within 90 days from the issuance of these preliminary results. The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries.

For CEP sales, we divided the total dumping margins for the reviewed sales by the total entered value of those reviewed sales for each importer/customer. If these preliminary results are adopted in our final results of new shipper reviews, we will direct the Customs Service to assess the resulting percentage margin against the entered customs values for the subject merchandise on each of that importer's/customer's entries during the review period.

Effective upon publication of the final results of these new shipper reviews for all shipments by the PRC companies named above 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) The cash deposit rates will be the rates for these firms established in the final results of these reviews, 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 during which they were reviewed; (3) for all other PRC exporters, the rate will be the PRC country-wide rate, which is 33.18 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 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 doubled antidumping duties.

These new shipper reviews and notice are in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act.

Dated: November 20, 2001.

Faryar Shirzad,

Assistant Secretary for Import Administration.