67 FR 6482, February 12, 2002
                                                            A-570-867
                                                        Investigation
                                                      7/1/00-12/31/00
                                                      Public Document
                                                  IA/III/OIX: SMB, BF

MEMORANDUM TO: Faryar Shirzad
               Assistant Secretary 
                 for Import Administration

FROM:          Joseph A. Spetrini
               Deputy Assistant Secretary
               AD/CVD Enforcement Group III


SUBJECT: Issues and Decision Memorandum for the Final Results of
Antidumping Investigation of Automotive Replacement Glass ("ARG")
Windshield from the People's Republic of China 


SUMMARY: 

We have analyzed the case and rebuttal briefs of interested parties in
the preliminary determination on the investigation of Automotive
Replacement Glass ("ARG") Windshields from the People's Republic of China.
As a result of our analysis, we have made changes from the Notice of
Preliminary Determination of Sales at Less Than Fair Value: Certain
Automotive Replacement Glass Windshields From the People's Republic of
China, 66 FR 48233 (September 19, 2001) (Preliminary Determination) and
Notice of Amended Preliminary Antidumping Duty Determination of Sales at
Less Than Fair Value: Automotive Replacement Glass Windshields From the
People's Republic of China, 66 FR 53776 (October 24, 2001) (Amended
Preliminary Determination). The specific calculation changes for Fuyao
Glass Industry Group Co., Ltd. ("FYG") and Xinyi Automobile Glass
(Shenzhen) Co., Ltd. ("Xinyi") can be found in Analysis for the Final
Determination of Automotive Replacement Glass ("ARG") Windshields from the
People's Republic of China: Fuyao Glass Industry Group Co., Ltd. (FYG
Final Analysis Memorandum), and Analysis for the Final Determination of
Automotive Replacement Glass ("ARG") Windshields from the People's
Republic of China: Xinyi Automobile Glass (Shenzhen) Co., Ltd. ("Xinyi")
(Xinyi Final Analysis Memorandum). For surrogate value changes, see the
Factors of Production Valuation Memorandum for the Final Determination,
dated February 1, 2002 (Factor Valuation Memorandum for the Final
Determination). In addition, the following companies are non-mandatory
respondents and each received a separate rate: Shenzhen Benxun Auto-Glass
Co., Ltd. ("Benxun"), Changchun Pilkington Safety Glass Co., Ltd.
("Changchun"), Guilin Pilkington Safety Glass Co., Ltd. ("Guilin"), Wuhan
Yaohua Pilkington Safety Glass Co., Ltd. ("Wuhan"), and a Canadian
reseller, TCG International ("TCGI").

We recommend that you approve the positions we have developed in the
"Discussion of the Issues" section of this Issues and Decision Memorandum.
Below is the complete list of the issues in this review:

Issues

Petitioners' Comments

Comment 1: Whether Import Prices Paid by FYG and Xinyi for Float Glass
           from Korea may be Subsidized

Comment 2: Whether Import Prices Paid by FYG and Xinyi for Float Glass
           from Thailand may be Subsidized

Comment 3: Whether Import Prices Paid by FYG and Xinyi for Float Glass
           from Korea and Thailand may be Dumped

Comment 4: Whether Xinyi's Prices for Imports of Float Glass From India
           May be Subsidized 

Comment 5: Whether Chinese Prices for Indonesian Float Glass May Be
           Subsidized and/or Dumped

Comment 6: Whether the Department Should Continue to Use Indian Import
           Statistics as the Surrogate Value for Float Glass

Comment 7: Whether the Department Should Use as its Surrogate Value the
           Electricity rate Paid by the Indian Auto Glass Producers 

Comment 8: Whether the Department Should Use Actual Molding Prices and
           Mirror Brackets/Button Prices as the Surrogate Value for
Xinyi's 
           Moldings and Mirror Brackets/Buttons

Comment 9: Whether the Department Should Use the Updated Surrogate Value
           Information Provided by Petitioners for Certain Inputs and Also 
           Use a More Appropriate HTS Number for a Certain Other Input

Comment 10: Whether the Department Should Calculate Factory Overhead,
            Selling, General and Administrative Expenses, and Profit in 
            Accordance with Petitioners Proposed Methodology

Comment 11: Whether the Department Should Value the Labor Factor of
            Production on the Basis of Fully-Loaded Labor Costs 

Comment 12: Whether Xinyi's Market Economy Based Inland Freight Expenses
            Are Controlled by the Chinese Government 

Comment 13: Whether the Department Should Make Certain Adjustments to
            Freight for FYG 

Comment 14: Whether Respondents Reported Usage Rates for Float Glass and
            PVB Are Understated

Comment 15: Whether Respondents Reported U.S. Selling Prices are Reliable

Comment 16: Critical Circumstances 

Comment 17: Whether the Scope Includes ARG Windshields for Buses,
            Recreational Vehicles and Farm Machinery 

Comment 18: Whether the Department Used Incorrect Inflation Figures


FYG's Comments

Comment 19: Whether the Department Should Use the Remaining Average Float
            Glass Costs Specific to the Thickness and Type Required for 
            the CONNUM

Comment 20: Whether the Department Should Calculate the Profit Ratio
            Based on the 1999-2000 Financial Report of Asahi India 
            Safety Glass Ltd.

Comment 21: Whether the Net Profit Ratio Should be Based on a Simple
            Average of the Financial Results of Saint-Gobain Sekurit 
            and Asahi

Comment 22: Whether the Asahi India Profit Ratio Contains a Clerical Error

Comment 23: Whether the Department's Calculation of the Factory Overhead
            Ratio Should Exclude the Cost of Stores and Spare Parts

Comment 24: Whether the Department's Calculation of the SG&A Expense
            Ratio Contains Errors

Comment 25: Whether Water as Part of Energy in the Cost of Manufacturing
            Results in Double-Counting

Comment 26: Whether the Department Should Value Water Using the Asian
            Development Bank Data

Comment 27: Whether the Department Erred in Including U.S. Duty and
            International Freight Charges Among the CEP Selling Expenses

Comment 28: Whether the Department Double-Counted Molding

Comment 29: Updated Labor Rate for 1999

Comment 30: Surrogate Value for Styrofoam

Comment 31: Whether the Department Should Remove International Freight
            and Insurance Costs from Indian Surrogate Values



Xinyi's Comments

Comment 32: Whether Market Economy Expenditures Should be Used in Place
            of Surrogate Values

Comment 33: Verification Issues

Comment 34: Whether Negative Margins Should be Taken into Consideration
            in Calculating Certain Overall Weighted Average Margins

Comment 35: Whether the Department Should Calculate a Margin for Non-
            Mandatory Respondent Benxun Based on Its Data

Comment 36: Whether Recent Changes to the Antidumping Statute have
            Transformed the Law into a Penal Statute, thereby Violating 
            Certain Respondent Parties' Procedural Due Process Rights




Changes Since the Preliminary Determination

Both FYG and Xinyi

  We updated Indian inflator factors. 

  We used a more contemporaneous 1999 wage rate. 

  We excluded Korean and Thai export prices to India for all surrogate
   values from Indian Import Statistics. 


FYG

  As a result of verification, we discovered five additional credit memos
   for sales involving breakage. 

  As a result of verification, we discovered that coal was not used in the
   production of packing crates. 

  As a result of verification, we added cooper wire, glue, and solder to
   normal value. 

  As a result of verification, we changed the usage rate for ink medium,
   silver paste, water, crate wood, crate screws, crate steel bands, and
   mirror button PVB. 

  As a result of verification, we are using a surrogate value for foreign
   inland freight to the port. 

  As a result of verification, we calculated a new market economy freight
   rate to correct for double-counting of total shipment weight and freight
   costs for each line item per invoice. 

  As a result of verification, we corrected the carrier for one shipment. 

  Because we did not use any of FYG's market economy purchases of colored
   float glass from Korea and Thailand, we used colored float glass from
   Indian Import Statistics. 

  For numerous factors of production, we excluded Korean and Thai exports
   prices to India, the surrogate country. 

  For our calculation of CEP profit, we excluded U.S. duty and
   international freight. 

  We changed our molding methodology to avoid double-counting molding for
   windshields with molding sourced from both the U.S. and Taiwan. 

  Where a non-market economy shipper was used that did not match by zip
   code and state to a sale through a market economy shipper, we used a
   surrogate value for international and U.S. inland freight. 

  We updated the following surrogate values: scrap iron, aluminum foil,
   scrap polythene tube, nails, screws, labels, and styrofoam. 


Xinyi

  As a result of verification, we modified several of Xinyi's shade PVB
   and clear PVB market economy purchases. 
  As a result of verification, we changed usage rates for silicon powder,
   crate wood, electricity, nails, antenna connectors, polyethlene spacers,
   crate labels, windshield labels, and several other factors of production
   which are proprietary. 

  As a result of verification, we discovered that Xinyi incurred a
   demurrage and documentation fee. 

  As a result of verification, we discovered that Xinyi's international
   freight and marine insurance expenses for certain sales was incorrect. 

  Because we did not use any of Xinyi's market economy purchases of green
   float glass from Korea and Thailand, we used colored float glass from
   Indian Import Statistics. 

  For numerous factors of production, we excluded Korean and Thai exports
   prices to India, the surrogate country. 

  We used more contemporaneous surrogate values for labor; glass, green;
   tungsten wire; regular iron nails; iron brace buttons; label for crate;
   label for windshield; and several other factors of production which are
   proprietary. 

  We modified the profit rate from 9.59 percent to 8.42 percent. 

  We corrected a ministerial error from the preliminary determination
   where we inadvertently used Xinyi's clear PVB market economy price for
   shade PVB and vice versa. 


Discussion of the Issues

Comment 1: Whether Import Prices Paid by FYG and Xinyi for Float Glass
from Korea may be Subsidized

Petitioners' Argument: Petitioners argue that there is a reason to
believe or suspect that import prices paid by FYG and Xinyi for float
glass from Korea are subsidized and that these prices should not be used
by the Department either as market economy prices or as import prices (and
used in the surrogate value) to India, the surrogate country.

Petitioners note that Congress has instructed that the Department shall
avoid using any prices which it has reason to believe or suspect may be
dumped or subsidized. See Omnibus Trade and Competitiveness Act of 1988,
Conference Report to Accompany H.R., 3, H. Report No. 578, 100th Cong.,
2nd Sess. at 590-591 ("Conference Report"). Petitioners argue that the
Department has interpreted the Conference Report to apply not only to
surrogate country factor values (e.g., Final Results of Antidumping Duty
Administrative Review: Certain Iron Construction Castings From the
People's Republic of China, 57 FR 10644, 10645 (March 27, 1992)), but also
to inputs purchased from a market economy country and paid for in a
convertible currency. See Notice of Preliminary Determination of Sales at
Less Than Fair Value and Postponement of Final Determination: Certain
Partial-Extension Steel Drawer Slides With Rollers From the People's
Republic of China, 60 FR 29571, 29574 (June 5, 1995) (unchanged in the
final determination).

Petitioners also state that the Department has continued to assign
surrogate values to subsidized or dumped inputs in non-market economy
cases, including when such values are import prices, citing 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) 

(1998-99 TRBs from China Final) and accompanying Issues and Decision
Memorandum at Comment 1 and 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) (1999-00 TRBs from China Final) and accompanying Issues and Decision
Memorandum at Comment 1. Petitioners state that the Department's decision
not to use certain values for factors of production where there was reason
to believe or suspect that the values were dumped or subsidized was
affirmed by the Court of International Trade ("CIT") in Kerr-McGee
Chemical Corp. v. United States, 985 F. Supp. 1166, 1177 (CIT 1997) and
Technoimportexport, UCF America, Inc. v. United States, 783 F. Supp. 1401,
1405 (CIT 1992).

Petitioners also state that the Department has continued to avoid using
dumped or subsidized prices for actual market prices and as factors of
production when, in this investigation, the
Department did not include actual market purchases of Indonesian float
glass and Indian import prices for float glass from Indonesia because the
Department stated that Indonesia maintains non-specific export subsidies.
See Surrogate Country Selection Memorandum from Jeffrey May, Director,
Office of Policy, dated June 12, 2001 (Surrogate Country Selection
Memorandum) (where the Department stated its preference to refrain from
using Indian, Pakistani, Indonesian, or Philippine export prices because
these countries maintain non-specific export subsidies), and Automotive
Replacement Glass Windshields from the People's Republic of China; Factors
of Production Valuation Memorandum for the Preliminary Determination,
("FOP Memo") dated September 10, 2001 (citing Surrogate Country Selection
Memorandum).

Petitioners state that the Department has identified several non-industry
specific export subsidy programs in countervailing duty investigations of
imports from Korea, which are as follows: 1) Duty drawback on non-
physically incorporated items and excessive loss rates; 2) Export credit
financing from Export-Import Bank of Korea; 3) Export industry facility
loans; 4) Reserve for overseas market development - Article 17 of Tax
Exemption and Reduction Control Act; 5) Reserve for export loss - Article
16 of the Tax Exemption and Reduction Control Act; 6) Reserve for export
loss - Article 22 of the Tax Exemption and Reduction Control Act; 7) Short-
term export financing; and 8) Tax incentives for exporters/export tax
reserves. See Petitioners' December 27, 2001 Case Brief, (Petitioners'
Case Brief), Appendix 38.

Petitioners state that the United States Trade Representative ("USTR")
has determined that Korea aggressively promotes exports through a variety
of policy tools including export subsidies, and cite to the National Trade
Estimate Report on Foreign Trade Barriers (2001) at 285 (see Petitioners'
Case Brief, Appendix 39 for support of this proposition).

Petitioners note that the most recent (1996) WTO Trade Policy Review for
Korea states that:

  According to the authorities, Korea does not grant any direct export
  subsidies for individual sectors, producers or products. Rather, export-
  related assistance is based on measures such as post-shipment export
  loans, export-related tax-free reserves and preferential access to export
  credit. Korea recently notified two export-related subsidies to the WTO
  Committee on Subsidies and Countervailing Measures: reserves for export
  losses and reserves for overseas market development. Both schemes rely on
  tax concessions.

See Trade Policy Review: Republic of Korea 1996, World Trade
Organization, Geneva (November 1996) at 44, included in Petitioners' Case
Brief, Appendix 40.

Thus, based on this WTO report, Petitioners argue that the WTO recognizes
that Korea provided non-industry specific export subsidies.

Petitioners argue that they have presented more evidence that Korean
float glass may be subsidized than the evidence the Department had when it
determined to exclude Indonesian float glass export prices in the
preliminary determination of this investigation. Therefore, the Department
should exclude Korean float glass export prices in the final determination.

FYG Rebuttal: FYG waived business proprietary information ("BPI")
treatment that it purchased float glass from Korea. See Public hearing
transcripts at 42. FYG rebuts Petitioners' argument that there is a reason
to believe or suspect that FYG's Korean float glass suppliers are
benefitting from non-specific export subsidies. FYG argues that there is
no reason to believe or suspect nor is there any actual evidence that
FYG's Korean float glass suppliers used any of these non-specific export
subsidy programs, and that the Department should use FYG's Korean market
economy purchases as well as Indian import data from Korea. FYG argues
that the Korean subsidy programs cited by Petitioners from the following
Department determinations are either not used or confer only a de minimis
benefit.

  Duty drawback on non-physically incorporated items and excessive loss
   rates. See Final Affirmative Countervailing Duty Determinations and
Final
   Negative Critical Circumstances Determinations: Certain Steel Products
   From Korea, 58 FR 37338, 37349 (July 9, 1993). 

  Export credit financing from Export-Import Bank of Korea. See Final
   Affirmative Countervailing Duty Determination: Structural Steel Beams
from
   the Republic of Korea - (Period of Investigation: January 1, 1998
Through
   December 31, 1998), 65 FR 41051, (July 3, 2000) and accompanying Issues
   and Decision Memorandum. 

  Export industry facility loans. See Final Affirmative Countervailing
   Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate
From
   the Republic of Korea, 64 FR 73176, 73186 (December 29, 1999). 

  Reserve for overseas market development - Article 17 of Tax Exemption
   and Reduction Control Act. See Preliminary Results and Partial
Rescission
   of Countervailing Duty Administration Review: Stainless Steel Sheet and
   Strip in Coils From the Republic of Korea, 66 FR 47008, 47012 (September
   10, 2001). 

  Reserve for export loss - Article 16 of the Tax Exemption and Reduction
   Control Act. See Final Affirmative Countervailing Duty Determinations
and
   Final Negative Critical Circumstances Determinations: Certain Steel
   Products From Korea, 58 FR 37338, 37348 (July 9, 1993); see also Certain
   Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From
Korea:
   Final Results of Expedited Sunset Reviews, 65 FR 18973, 18975, n. 3
(April
   10, 2000) (relying on the 1993 final determination). 

  Short-term export financing. See Preliminary Results and Partial
   Rescission of Countervailing Duty Administrative Review: Stainless Steel
   Sheet and Strip in Coils From the Republic of Korea, 66 FR 47008, 47013
   (September 10, 2001); see also Final Affirmative Countervailing Duty
   Determination: Structural Steel Beams From the Republic of Korea, 65 FR
   41051, 41053 (July 3, 2000). 

  Tax incentives for exporters/export tax reserves. See Final Affirmative
   Countervailing Duty Determination; Certain Stainless Steel Cooking Ware
   From the Republic of Korea, 51 FR 42867, 42869 (November 26, 1986); see
   also Final Results of Expedited Sunset Review: Top-of-the-Stove
Stainless
   Steel Cookware From South Korea, 64 FR 48374, 48375 (September 3, 1999)
   (relying on the 1986 final determination). 


FYG argues that the CIT has ruled that the Department may not rely on de
minimis export subsidies to exclude a country from use as a surrogate to
calculate foreign market value, citing China National Arts and Crafts
Import and Export Corp. v. United States , 771 F Supp. 407 

(CIT 1991) (CNART).

FYG rebuts Petitioners' arguments that the USTR and the WTO Trade Policy
Review reports provide substantial evidence that there is a reason to
believe or suspect that Korean float glass manufacturers benefit from non-
specific export subsidies. FYG argues that the USTR report does not
specify whether the subsidies are non-specific export subsidies or company-
specific export subsidies nor whether the level of benefit is at an above
de minimis level. FYG argues the latter is critical given that the court
in CNART has ruled that the Department cannot rely on a de minimis subsidy
to reject surrogate data. FYG argues that even if all of the above de
minimis subsidy rates are totaled for all programs, the cumulated margin
is still de minimis. FYG argues that the WTO Trade Policy Review of Korea
is dated, from 1996, and does not provide information on the level of
alleged subsidies.

FYG argues that the Department should not ignore its own investigations
of Korean subsidy programs, as noted above, nor rely on vague policy
reports from the USTR and WTO to exclude FYG's Korean float glass
purchases and to exclude Korean export prices to India from the Indian
Import Statistics. FYG argues that the Department's conclusion that a
reason to believe or suspect exists must itself be supported by
substantial evidence and that the USTR and WTO reports do not provide such
evidence.

Xinyi's Rebuttal: Xinyi waived BPI treatment that it purchased float
glass from Korea and Thailand. See Public hearing transcripts at 42. Xinyi
rebuts Petitioners' argument that its Korean and Thai purchases of float
glass were from suppliers which received non-specific export subsidies.

Xinyi argues that in the Department's Surrogate Country Selection
Memorandum, it stated that it should refrain from using import prices from
four countries (i.e., India, Pakistan, Indonesia, and the Philippines)
because these countries maintain non-specific export prices. Xinyi notes
that Korea was not on this country list, and that there are presently only
a limited number of Korean countervailing duty orders and these are
against Korean steel industry products. Xinyi additionally argues that the
subsidies cited by Petitioners for Korean steel products (and not float
glass products) are minuscule. Xinyi argues that the only other Korean
countervailing duty order was on steel cooking ware from Korea and was
issued in 1987. In addition, Xinyi argues that most of the other products
cited by Petitioners are to countervailing duty orders that no longer
exist. Xinyi contends that the WTO report cited by Petitioners was issued
in 1996 and is outdated. Also, Xinyi argued that there is no evidence that
the Korean government is providing subsidies to the Korean float glass
industry.

Xinyi argued that for Thailand, there is only one countervailing duty
order, which is demonstrated by the hot-rolled steel final from Thailand,
and that there is no order against float glass from Thailand. See
Antidumping Duty Order: Certain Hot-Rolled Carbon Steel Flat Products From
Thailand, 66 FR 59562 (November 29, 2001) .

Xinyi argues that the statutory purpose of determining current margins as
accurately as possible requires the Department to use Xinyi's and FYG's
market-based import prices. Xinyi notes that the basic purpose of the
statute is to determine margins as accurately as possible, citing Rhone
Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990).
Xinyi argues that the objective of determining dumping margins as
accurately as possible led the Department to use respondents' actual
import prices to value the Chinese producers' factors of production,
citing Oscillating Fans and Ceiling Fans from the People's Republic of
China, 56 FR 55271 (October 25, 1991) (Oscillating Fans from China).

Xinyi notes that Petitioners entire argument is based on language in the
Conference Report and that Petitioners do not quote the entire relevant
portion of the Conference Report. Xinyi argues that the Conference Report
states that the prices that Commerce shall avoid using, based on a reason
to believe or suspect that they may be dumped or subsidized, are not
actual market economy prices but prices in the comparable economy country
to be used as surrogate values. Xinyi argues that to disregard these
market economy purchases of float glass, there must be particular and
objective evidence that the import prices of float glass from Korea,
Thailand, and Indonesia are dumped or subsidized, citing 1999-00 TRBs from
China Final, 66 FR 57420 (November 15, 2001) and accompanying Issues and
Decision Memorandum at Comment 1.

Xinyi argues that there is no objective evidence in this case that float
glass is either dumped or subsidized because there are presently no
outstanding dumping or countervailing duty orders against float glass
manufacturers from Korea, Thailand, or Indonesia and no antidumping or
countervailing duty orders in China directed at float glass imports.

Xinyi cites the Department's regulation, 19 C.F.R. section 351.408(c)(1)
and the court decision Shakeproof Assembly Components v. United States,
268 F.3d 1376 (Fed. Cir. 2001) (Shakeproof), in support of its argument
that the Department should use respondents' actual market-based import
prices.

Department's Position: We agree with petitioners. The legislative history
and recent Department determinations support the principal that we should
disregard prices that we have reason to believe or suspect are distorted
by subsidies. We are also directed by the legislative history not to
conduct a formal investigation to ensure that such prices are not
subsidized. Rather, Commerce was instructed by Congress to base its
decision on information that is generally available to it at the time it
is making its determination. (1)

In the Department's recent determinations on tapered roller bearings from
the PRC, (2) 

we found that, where the facts developed in U.S. or third-country CVD
findings include subsidies that appear to be used generally (in
particular, broadly available, non-industry specific export subsidies), it
is reasonable to infer that all exports to all markets from the
investigated country are subsidized. As we argued in the TRBs proceedings,
these prior CVD findings may provide the basis for the Department to also
consider that it has particular and objective evidence to support a reason
to believe or suspect that prices of the inputs from that country are
subsidized. It was exactly on this basis that the Department, in TRBs XII
and XIII, excluded export prices from a particular input supplier. See
TRBs XII, 66 FR 1953 (January 10, 2001) and TRBs XIII, 66 FR 57420
(November 15, 2001).

In our preliminary determination, we did not use market economy purchases
of Indonesian float glass by FYG nor did we use Indonesian export prices
to India for all surrogate values, including clear and colored float
glass, citing the Surrogate Country Selection Memorandum. (We note that
this memorandum was drafted for the Department's reference in selecting a
surrogate country which is the reason Thailand and Korea were not listed
as countries, which maintained non-industry specific export subsidies.)
Since the preliminary determination, Petitioners alleged that the Korean
and Thai float glass suppliers may be receiving non-industry specific
export subsidies. In support of these allegations, petitioners have
presented extensive evidence on the record of this investigation that
Korea, Thailand and Indonesia all maintain non-specific, broadly available
export subsidies. In fact, petitioners cite to U.S. CVD determinations in
which the Department investigated and countervailed such subsidies. For
Korea, Petitioners have cited the following non-industry specific export
subsidy programs: 1) Duty drawback on non-physically incorporated items
and excessive loss rates; 2) Export credit financing from Export-Import
Bank of Korea; 3) Export industry facility loans; 4) Reserve for overseas
market development - Article 17 of Tax Exemption and Reduction Control
Act; 5) Reserve for export loss - Article 16 of the Tax Exemption and
Reduction Control Act; 6) Reserve for export loss - Article 22 of the Tax
Exemption and Reduction Control Act; 7) Short-term export financing; and
8) Tax incentives for exporters/export tax reserves. For Thailand,
Petitioners have cited the following non-industry specific export subsidy
programs: 1) Export packing credits; 2) Investment Promotion Act, both
deduction from assessable income and double deduction for foreign
marketing expenses; 3) Duty exemption for raw materials; and 4) Tax
certificates for exporters. For Indonesia, Petitioners have cited the
following non-industry specific export subsidy programs: 1) Export Credit
Schemes; 2) Import Duty Exemption of Capital Equipment; and 3) Working
Capital Export Credits programs. Petitioners also cite to additional
information as evidence that each of these countries maintained non-
industry specific export subsidies, including WTO subsidies notifications,
the USTR National Trade Estimates Report, and, in the case of Thailand,
additional information concerning the export subsidy programs found
countervailable in U.S. CVD findings. We have examined this information,
and believe it is sufficient to provide us with a reason to believe or
suspect that prices of inputs from Korea, Thailand and Indonesia are
subsidized. This particular and objective evidence shows that each of
these countries maintain broadly available, non-industry specific export
subsidies which may benefit all exporters to all export markets. On the
basis of this information, we will not use these export prices, either as
market economy purchases or import statistics into India, the surrogate
country.

In their rebuttal comments in this proceeding, respondents make two main
arguments. First, respondents claim that there is no definitive evidence
that any of the float glass suppliers from Korea, Thailand or Indonesia
actually used any of the broadly available, non-industry specific export
subsidies cited by petitioners, and that the record lacks substantial
evidence to support any finding that they did. Second, respondents assert
that the CVD findings on which petitioners base their claims that exports
of float glass are subsidized concern subsidy programs that are either de
minimis or not used.

As for the first argument, we disagree that the type of finding suggested
by respondents is required here. The standard, as clearly stated in the
legislative history, is that the Department must avoid export prices which
it has a "reason to believe or suspect may be...subsidized." The standard
prescribed here is about making a reasonable inference from the evidence
on the record that export prices may be subsidized. It is not about making
an actual finding of subsidization. Moreover, a concrete and substantial
showing that an input supplier in fact benefitted from known, broadly
available export subsidies in this context, as suggested by respondents,
would require an actual investigation of these suppliers. The language of
the legislative history clearly states that this is not what Congress
intended the Department to do. Rather, the Department was instructed to
base its decision on information generally available to it at the time.
This is what we have done in this investigation. The information in this
investigation shows that Korea, Thailand and Indonesia all maintain
broadly available, non-specific export subsidies that may benefit exports
from these countries to all markets. We have concluded here that this
particular and objective evidence (that all exporters from these countries
can benefit from these broadly available subsidies) supports a reason to
believe or suspect that prices of the inputs purchased from these
countries are subsidized. Concerning respondents' second principal
argument, we again disagree that the level of subsidization in the CVD
findings is a relevant factor for making a reasonable inference concerning
the subsidization of export prices. Just as the legislative history does
not mandate an actual finding of subsidization, it does not require the
Department to examine the actual level of subsidization on the export
prices, because this would require the agency to conduct a formal
investigation which was explicitly not envisioned. Therefore, the level of
subsidization in a CVD finding on a certain product and certain exporters,
whether de minimis or not, is irrelevant. What is relevant is the fact
that each of these countries maintain broadly available, non-industry
specific export subsidies that may benefit all exporters to all markets.
Accordingly, we find that respondents' extensive arguments have not
persuasively countered the evidence on the record, and, as noted above, we
will therefore not use these export prices from Indonesia, Korea, and
Thailand, either as market economy purchases or import statistics into
India, the surrogate country.



Comment 2: Whether Import Prices Paid by FYG and Xinyi for Float Glass
from Thailand may be Subsidized 

See Comment 1 above for a summary of Petitioners' arguments concerning
Department precedent and law on subsidies and dumping.

Petitioners argue that there is a reason to believe or suspect that
import prices paid by FYG and Xinyi for float glass from Thailand are
subsidized and that these export price should not be used by the
Department either as market economy prices or as import prices (and used
in the surrogate value) to India, the surrogate country.

Petitioners state that the Department has identified several non-industry
specific export subsidy programs in countervailing duty investigations of
imports from Thailand, which are as follows: 1) Export packing credits; 2)
Investment Promotion Act, both deduction from assessable income and double
deduction for foreign marketing expenses; 3) Duty exemption for raw
materials; and 4) Tax certificates for exporters. See Petitioners' Case
Brief, Appendix 41.

Also, Petitioners state that the USTR has reported that Thailand's
programs to support trade in certain manufactured products may constitute
export subsidies, citing the National Trade Estimate Report on Foreign
Trade Barriers (2001) at 430-431, included in Petitioners' Case Brief,
Appendix 42.

Petitioners state that in the most recent (1999) WTO Trade Policy Review
for Thailand, the WTO identified various export subsidies provided by
Thailand. See Trade Policy Review: Thailand 1999, World Trade
Organization, Geneva (February 2000) at 54, included in Petitioners' Case
Brief, Appendix 43. Thus, based on this WTO report, Petitioners argue that
the WTO recognizes that Thailand provides non-industry specific export
subsidies.

Petitioners note that on January 5, 2001, Thailand notified the WTO of
existing non-industry specific export subsidies that it provides to Thai
exporters. See G/SCM/N/60/THA, Updating Notification Pursuant to Article
XVI:1 of the GATT 1994 and Article 25 of the SCM Agreement (January 10,
2001), included in Petitioners' Case Brief, Appendix 44. The export
subsidy programs specifically listed are as follows: 1) packing credit
facility; 2) direct packing credit facility; 3) export market
diversification promotion programme; and 4) machinery upgrading financing.

Petitioners allege that there is evidence that the Thai producers who
sold float glass to FYG and Xinyi are receiving specific and direct
subsidies due to several factors. See Factor Valuation Memorandum for the
Final Determination for a discussion specifics because this contains
business proprietary information.

Petitioners state that based on the above information, the Department has
more than a reasonable basis to believe or suspect that import prices paid
by FYG and Xinyi for float glass from Thailand may be subsidized.
Petitioners argue that they have presented more evidence that Thai float
glass may be subsidized, including alleged evidence that certain Thai
glass producers received direct and specific subsidizes from the Thai
government, than the evidence the Department had when it determined to
exclude Indonesian float glass export prices in the preliminary
determination of this investigation. Therefore, the Department should
exclude Thai float glass export prices in the final determination.

FYG's Rebuttal: FYG waived BPI treatment that it purchased float glass
from Thailand. See Public hearing transcripts at 42. FYG rebuts
Petitioners' argument that there is a reason to believe or suspect that
FYG's Thai float glass suppliers are benefitting from non-specific export
subsidies. Also, FYG argues that there is no reason to believe or suspect
nor is there any actual evidence that FYG's Thai suppliers used any of
these programs, and argue that the Department should use FYG's Thai market
economy purchases as well as Indian import data from Thailand.

FYG notes that the following non-specific export subsidy programs cited
by petitioners to argue that Thai float glass manufacturers may have
benefited from subsidies were actually found by the Department to be
either a de minimis subsidy rate or that the program was not being used.

  Export packing credits. See Ball Bearings and Parts Thereof From
   Thailand: Final Results of Countervailing Duty Administrative Review, 61
   FR 724, 729 (January 6, 1997). 

  Investment Promotion Act, both the deduction from assessable income and
   double deduction for foreign marketing expenses. See Carbon Steel Butt-
   Weld Pipe Fittings From Thailand; Final Results of Countervailing Duty
   Administrative Review, 61 FR 4960 (February 9, 1996). 

  Duty exemption for raw materials. FYG argues that there are two
   variations of this program, which are the duty exemptions on imports of
   raw and essential materials under IPA Section 30, and the duty
exemptions
   on imports of raw and essential materials under IPA Section 36(1). For
the
   duty exemptions on imports of raw and essential materials under IPA
   Section 30. See Notice of Final Determination of Sales at Less Than Fair
   Value; Certain Hot-Rolled Carbon Steel Flat Products From Thailand, 66
FR
   49622 (September 28, 2001) and accompanying Issues and Decision
   Memorandum. FYG argues that the subsidy rate of 0.58 percent does not
form
   a reasonable basis to believe or suspect that the Thai float glass
   producer received any benefits under this program. Also, FYG argues that
   Petitioners placed no information on the record to demonstrate that this
   Thai float glass producer was approved for benefits under Section 36(1)
   nor is there any information on the record that the Thai float glass
   producer would import raw materials, which FYG's alleges are widely
   available in the Thai domestic market, to make float glass. 

  Tax certificates for exporters. See Final Affirmative Countervailing
   Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products From
   Thailand, 66 FR 50410 (October 3, 2001) (Hot-Rolled Steel Final from
   Thailand) and accompanying Issues and Decision Memorandum. 


As noted in FYG's argument section in Comment 1 above, FYG argued that
the CIT has ruled that the Department may not rely on de minimis export
subsidies to exclude a country from use as a surrogate to calculate
foreign market value, citing CNART, 771 F Supp. 407 (CIT 1991).

FYG argues that the USTR and WTO Trade Policy Review reports do not
provide a reason to believe or suspect that Thai float glass manufacturers
benefit from non-specific export subsidies, as argued by Petitioners. FYG
notes that the USTR report states that Thailand's programs to support
trade in certain manufactured products and processed agricultural products
may constitute export subsidies. FYG argues that although Thailand's
various programs are available, these programs are not widely utilized or
otherwise provide only a de minimis benefit. In the one program at above a
de minimis level (i.e., duty exemptions on imports of raw and essential
materials under IPA Section 36(1)), FYG argues that this program seems to
require an application and approval process, and the USTR report does not
provide information that FYG's Thai float glass producer has applied and
been approved for this program.

For the WTO Trade Policy Review report, FYG notes that the following
three programs are identified: 1) term loan for business expansion; 2)
preshipment financing facility; and 3) direct packing credit facility. FYG
argues that despite at least thirty countervailing duty investigations or
reviews of products from Thailand conducted by the Department, the term
loan for business expansion program has never been identified. Next, FYG
argues that in hot-rolled steel from Thailand, the Department's most
recent Thai countervailing duty investigation, the preshipment financing
facility program was not used. See Hot-Rolled Steel Final from Thailand,
66 FR 50410 (October 3, 2001) and accompanying Issues and Decision
Memorandum. FYG argues that if the direct packing credit facility is the
same program as the export packing credits program, then the Department
found that this program was not used. See Ball Bearings and Parts Thereof
From Thailand: Final Results of Countervailing Duty Administrative Review,
61 FR 724, 729 (January 6, 1997) (Ball Bearing From Thailand). FYG argues
that if these are not the same programs, then the direct packing credit
facility has not been identified by the Department in previous
investigations or reviews.

FYG rebuts Petitioners argument that Thailand's notifications to the WTO
Committee on Subsidies and Countervailing Measures, on January 5, 2001, is
evidence supporting a reason to believe or suspect that Thai float glass
producers benefit from non-specific export subsidies. FYG notes that the
following four programs are listed in the report: 1) packing credit
facility; 2) direct packing credit facility; 3) export market
diversification promotion programme; and 4) machinery upgrading financing.
FYG argues that these programs are either not being used or there is no
evidence that, if being used, an above de minimis benefit was confered.

  Packing credit facility program has not been examined by the Department
   unless it is the export packing credits. See Ball Bearings From
Thailand,
   61 FR 724, 729 (January 6, 1997). 

  Direct packing credit facility program is not a program that the
   Department has found to be a countervailable benefit in the past, but it
   is an augmentation of the packing credit facility. 

  Export market diversification promotion programme. 

  Machinery upgrading financing program. 


FYG rebuts Petitioners argument that FYG's Thai float glass supplier must
be receiving subsidies due to a particular government subsidy program. FYG
argues that just because a subsidy program exists does not mean that a
particular company will use it or will use it at greater than a de minimis
level. In this instance, FYG argues that Petitioners have not provided any
evidence that FYG's Thai float glass supplier received such benefits.

FYG rebuts Petitioners argument that float glass manufacturers must meet
certain export requirements in order to receive certain benefits. FYG
argues, in fact, that the Thai government stated that it desired free
competition in the glass industry and therefore there are no export
requirements on new capacity. FYG argues that Petitioners' article in
Exhibit 15 of Petitioners' October 26, 2001 submission, pre-dates
Petitioners article in Exhibit 10 of the same submission, in which the
Thai government official confirmed that no export constraints were to be
imposed based on a particular issue, and thus argue that Petitioners' have
presented misleading conclusions.

Xinyi's Rebuttal: Please see Comment 1 above for Xinyi's rebuttal
comments for both Korea and Thailand.

Department's Position: See Comment 1 for the Department's position on
whether import prices paid by FYG and Xinyi for float glass from Thailand
may be subsidized.


Comment 3: Whether Import Prices Paid by FYG and Xinyi for Float Glass
from Korea and Thailand may be Dumped

See Comment 1 above for a summary of Petitioners' arguments concerning
Department practice and law on subsidies and dumping.


Petitioners' Argument: Petitioners argue that particular and objective
evidence, other than actual dumping findings in the subject NME country,
can support a reason to believe or suspect that NME import prices for an
input may be dumped. Petitioners cite to 1999-00 TRBs from China Final to
argue that the TRBs cases do not require that a dumping finding be in
place for the Department to believe or suspect that the import prices for
the input are dumped. Petitioners contend that the legislative history
merely requires a "reason to believe or suspect" that prices may be
dumped. See Conference Report. 

Petitioners contend that the Department should rely on other "particular
and objective" evidence to suspect dumping, other than a dumping finding.
Petitioners' Case Brief at 15. Petitioners argue that the Department
should use the "reasonable grounds to believe or suspect" standard, used
to determine if sales are below cost in initiating a below cost
investigation. See Import Administration Policy Bulletin No. 94.1 (Date of
Issue: 3/24/94). 

Petitioners contend there is a "reason to believe or suspect" that Korean
sales of float glass to Xinyi and FYG are being dumped. Petitioners base
this contention on a comparison of a constructed "normal value" of a
Korean producer to prices Xinyi paid for float glass from Korea.
Petitioners "build-up" a normal value using information from a U.S. and
Korean producer, then compare this price to prices Xinyi paid for float
glass from the same Korean producer of float glass. Petitioners argue that
this methodology is "commonly used to prepare an antidumping petition
against market economy imports." See Petitioners' Case Brief at 16.
Petitioners argue that a margin exists between the "normal value" they
constructed and the prices paid by Xinyi for float glass. Petitioners
argue that this constitutes evidence to support a reason to believe or
suspect that prices paid by FYG and Xinyi for float glass may be dumped. 

Additionally, Petitioners argue that there is reason to believe or
suspect that prices paid by FYG and Xinyi for Thai exports of float glass
may be sold at dumped prices. Petitioners contend that an antidumping
finding by New Zealand on imports of float glass from Thailand provide the
Department with a reason to believe or suspect that Thailand is dumping
float glass in China. Petitioners explain that they used United Nations
Statistical Division import statistics to develop a Thai price for float
glass into New Zealand. Petitioners explain that they then used New
Zealand's margin to estimate a "normal value" for a certain Thai producer
of float glass. Petitioners explain that their analysis results in prices
indicative of dumping, and provides the Department a reason to believe or
suspect that Thai exports of float glass to China during the POI may be
dumped. 

FYG's Rebuttal: FYG argues that there are no dumping orders in China
against the market economy countries in question. FYG argues that 1998-99
TRBs from China Final and the Factor Valuation Memorandum for the Amended
Preliminary Determination both support Department practice which requires
a dumping finding to constitute a sufficient reason to believe or suspect
dumping. FYG contends that Petitioners methodology for finding dumping by
these two market economy countries does not provide "particular and
objective" evidence supporting a reasonable "belief or suspicion" that
exports from Thailand and Korea are being dumped into China. See Comment 1
for Petitioners proposed standard for finding dumping. 

Also, FYG contends that Petitioners evidence of dumping by Thailand into
China does not pertain to FYG. FYG maintains that Petitioners calculation
relates only to Xinyi, as the calculations involve thicknesses for float
glass that FYG did not purchase. FYG also contends that the conversion
factor used by Petitioners to apply their methodology to FYG was done
incorrectly. 

FYG argues that the application of Petitioners' methodology,
demonstrating that Chinese purchases of float glass from Thailand may be
based on dumped prices, is misplaced because the New Zealand float glass
dumping case involves only clear float glass. And FYG argues that it did
not purchase clear glass from Thailand. Also, FYG points out that much of
the float glass it did purchase from Thailand is not even within the same
thickness range as that covered by the New Zealand case. 

FYG argues that Petitioners' methodology uses "reverse engineering" to
generate normal values, and the Department should be cautious in using
such a methodology. FYG argues that New Zealand authorities noted that
there existed a significant variation in the margins of dumping between
different thicknesses of glass and between different producers. FYG also
notes that its own supplier in Thailand, which produced the same
thicknesses as the New Zealand dumping case, was found not to have dumped
in New Zealand. FYG points out that the only supplier to be found dumping
in the New Zealand case was a supplier to Xinyi who was non-responsive to
the government questionnaire, which resulted in an affirmative finding by
New Zealand authorities. See FYG's Case Brief at 24 citing to Iem 1.7
"Disclosure of Information." 

FYG argues that the Department cannot extend a "facts available" finding
from a third country, on a different product, to this investigation. FYG
also argues that the Department should not extend Petitioners' dumping
analysis of a different supplier to FYG, especially where the New Zealand
authorities found no dumping by FYG's supplier in the instant
investigation.

Department's Position: We disagree with Petitioners. Petitioners and
respondents agree that China does not have a current dumping case,
investigation or review against Korea or Thailand. As FYG has argued and
as the Department explained in the Preliminary Determination, the
existence of a dumping order by China on imports of float glass from
Indonesia is crucial to the Department's analysis for determining whether
or not there is reason to believe or suspect that dumping exists. See FOP
Memo from the Preliminary Determination at 3 (citing 1998-99 TRBs from
China Final). 

With regard to Korea, the Petitioners provided a constructed margin
calculation using data from a U.S. and Korean float glass producer. As the
Department has stated previously in 1998-99 TRBs from China Final, dumping
is particular to markets. Where there is no dumping order in place in the
country subject to investigation, the Department has no evidence to
believe or suspect dumping in that country. Moreover, the Department does
not find that this constructed normal value calculation provides a
reasonable basis to believe or suspect dumping. Petitioners' methodology
uses the data from these two companies interchangeably, which the
Department finds leads to distortions due to possible differences in
production processes, capacity, absorption rates, glass thicknesses and
usage rates. Further, the Department does not find that it is appropriate
to conduct what is essentially a dumping investigation within an
investigation as the Petitioners' proposed methodology assumes. 

With regard to Thailand, Petitioners have provided a calculation derived
from a New Zealand dumping case from 1998 as evidence to support a reason
to believe or suspect dumping by Thailand into China. The Department has
made clear, in TRBs, cited by Petitioners in this investigation, that it
does not agree that third country antidumping findings provide a reason to
believe or suspect that import prices into the surrogate country are
dumped. Applying the Department's analysis in 1998-99 TRBs from China
Final to this case, the Department in this investigation does not consider
a dumping finding by New Zealand against Thailand as evidence to support a
reason to believe or suspect dumping by that market economy supplier into
China. The Department recognizes that Petitioners have used the dumping
margin in the New Zealand case as a starting point for its calculation and
not specifically to show dumping in China from the third country (New
Zealand). However, the Department will not rely on New Zealand dumping
findings from Thailand to show dumping by Thailand into China. The
Department also recognizes FYG's argument that it did not purchase the
color or thickness of glass included in the New Zealand dumping case.
Therefore, there is no reason to believe or suspect that imports of float
glass from Thailand or Korea are being sold at dumped prices. Accordingly,
the Department will not disqualify FYG's or Xinyi's purchases of float
glass from Thailand or Korea for reasons of dumping because there exist no
reason to believe or suspect dumping.



Comment 4: Whether Xinyi's Prices for Imports of Float Glass From India
May be Subsidized

Petitioners' Argument: Petitioners note that Xinyi reported that it
purchased float glass from India. However, Petitioners also note that
Xinyi stated that the type of float glass purchased from India was not
used to produce subject merchandise. Petitioners argue that the Department
should not use the Indian float glass prices because record evidence
supports a reason to believe or suspect that Indian export prices for
float glass may be subsidized. Petitioners note that the Department has
stated on the record that Indian export prices should not be used because
India maintains non-specific export subsidies, citing the Surrogate
Country Selection Memorandum. Petitioners also argue that the same
evidence of non-industry specific export subsidies they provided for Korea
and Thailand was also provided for India. These include the following: 1)
export subsidies identified by the Department in countervailing duty
investigations; 2) USTR's 2001 National Trade Estimates Report for India;
3) a 1998 WTO Trade Policy Review for India; and 4) India's notification
of subsidies to the WTO Committee on Subsidies and Countervailing Measures.

Xinyi did not rebut Petitioners' comments.

Department's Position: In the preliminary determination, we did not use
Xinyi's Indian market economy prices for a certain type of float glass
because this float glass was not used in the production of subject
merchandise. For the final determination, we will continue to not use
these Indian float glass prices for the same reason. Therefore, because
the Department is not using these market economy prices in its calculation
of a dumping margin for Xinyi, the issue of whether Indian export prices
are subsidized by non-industry specific export subsidies is not relevant.



Comment 5: Whether Chinese Prices for Indonesian Float Glass May Be
Subsidized and/or Dumped

Petitioners' Argument: Petitioners argue that additional information and
evidence supports the Department's position in the preliminary
determination to disregard market economy purchases of Indonesian float
glass for this investigation. Petitioners cite to the Department's Website
showing subsidy programs or non-industry specific export subsidies
identified by the Department in countervailing duty investigations
concerning Indonesia. Petitioners also cite to the U.S. Trade
Representative's 2001 National Trade Estimates Report for Indonesia, which
discusses export subsidies provided in Indonesia, including duty
exemptions on capital equipment imports. Petitioners also cite to excerpts
from the World Trade Organization ("WTO") Trade Policy Review for
Indonesia, for 1998 and 1999, that review export subsidies and other
export promotion policies provided by Indonesia. 

Petitioners argue that there is reason to believe or suspect that prices
from Indonesia for float glass may be dumped into China. Petitioners point
out that dumping cases filed against Indonesia by Thailand, Australia and
the Philippines, revealed that imports of float glass from Indonesia were
found to be dumped. Petitioners state that while no specific findings of
dumping of float glass have been made by India against Indonesia, India's
Monopolies and Restrictive Trade Practices Commission ("MRTPC"), in
February 1998, granted an application for interim relief filed by an
Indian glass manufacturers association. Petitioners argue that findings by
the MRTPC, and the cases listed above, should be sufficient cause for the
Department to believe or suspect that float glass is being sold at dumped
prices into India. Petitioners explained that they used the information
from the Philippine Tariff Commission's report to calculate a normal value
for float glass sales into India from Indonesia. Petitioners argue that
their calculation demonstrates that there is ample evidence for the
Department to have reason to believe or suspect that export prices from
Indonesia for float glass during the POI may be dumped.

FYG's Argument: FYG waived BPI treatment for its purchases of float glass
from Indonesia. FYG also points out that it learned through the public
record in Luoyang Bearing Corp. v. United States, U.S. Court of
International Trade, Consol. Court No. 01-00036, that Korea, and not
Indonesia, was rejected in the TRB's cases based on allegations of
subsidization. 

FYG notes that in the preliminary determination, the Department excluded
FYG's float glass purchases from Indonesia based on the existence of non-
specific export subsidies maintained by the Government of Indonesia. See
Surrogate Country Selection Memorandum. FYG argues that neither the
Surrogate Country Selection Memorandum nor the CVD determination in cut-to-
length carbon-quality steel plate from Indonesia, provide substantial
evidence supporting the Department's conclusion that there exists a reason
to believe or suspect that exports of float glass from Indonesia may be
subsidized. See Final Affirmative Countervailing Duty Determination:
Certain Cut-to-Length Carbon-Quality Steel Plate from Indonesia, 64 FR
73155 (December 29,1999) (Carbon Steel Plate from Indonesia). Accordingly,
FYG argues that the Department should reverse its decision in the
Preliminary Determination and include FYG's purchases of float glass from
Indonesia in the calculation of normal value and in the value of Indian
import prices.

FYG contends that in the most recent investigation by the Department
addressing the Rediscount Loan Program from Indonesia the Department
determined that the program was not used by the investigated respondents.
FYG argues that in Certain Hot-Rolled Carbon Steel Flat Products from
Indonesia, the Department found only one countervailable export subsidy in
use, the Rediscount Loan Program. See Final Affirmative Countervailing
duty Determination: Certain Hot-Rolled Carbon Steel Flat Products from
Indonesia, 66 FR 49637 (September 28, 2001) 

(Flat Products from Indonesia). FYG maintains that the same respondent in
the CTLP from Indonesia case did not receive any benefit under the
Rediscount Loan Program in Flat Products from Indonesia.

FYG contends that there is no antidumping order on Indonesian float glass
imports by the Chinese Goverment and no countervailing duty order in any
country on Indonesian float glass. FYG argues that the Department's
decision to reject Indonesian values was based only the Surrogate Country
Selection Memorandum from the Preliminary Determination. FYG argues that
recent U.S. countervailing duty investigations on other industries in
Indonesia have found that non-specific export subsidies were not used. FYG
also contends that it compared FYG's verified purchase price of the same
type of float glass from the United States and Indonesia, and found both
prices to be within one percent of each other.

FYG argues that the Surrogate Country Selection Memorandum was only meant
to disregard countries from the analysis if no other suitable surrogate
country could be found by the Department to use in this investigation. FYG
maintains that the Surrogate Country Selection Memorandum did not intend
for the Department to exclude market economy purchases from the analysis.
FYG contends that the Surrogate Country Selection Memorandum language
dealing with the exclusion of Indonesian surrogate values relates entirely
to the exception set forth in section 773(c)(2) of the Act. FYG also
maintains that the language in the Surrogate Country Selection Memorandum
did not intend to exclude the countries listed as maintaining non-specific
export subsidies altogether because the Surrogate Country Selection
Memorandum goes on to list these very same countries as potential
surrogates for China.

FYG argues that the Surrogate Country Selection Memorandum fails to
provide any documentation supporting the Office of Policy's conclusion
that non-specific export subsidies are maintained. FYG argues that the
failure of the Department to articulate a satisfactory explanation for
taking its action, as the court articulated in Motor Vehicle Mfrs. Assn.
v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29 43 (1983), shows that the
Department's reliance on the Surrogate Country Selection Memorandum to
exclude Indonesian market economy float glass purchases and Indonesian
exports to India, is unlawful.

FYG contends that the Department standard for excluding surrogate
information, a "reason to believe or suspect" that subsidization exists,
is not met by using the CTLP from Indonesia case because in this case the
Department only made an affirmative decision based on adverse inferences.
FYG argues that the other two companies in the case were found not to have
applied for or received benefits under the Rediscount Loan Program cited
in the case. FYG also contends that the Final Negative Countervailing Duty
Determination: Extruded Rubber Thread from Indonesia 64 Fed. Reg. 14695,
14696 (March 26, 1999) (ERT), cited in the CTLP from Indonesia case, only
found a de minimis export subsidy in regard to the Rediscount Loan
Program, which resulted in a negative final determination. See FYG's Case
Brief at 13.

FYG argues that the CIT made it clear in CNART that the Department may
not rely on de minimis export subsidies, regarding the Rediscount Loan
Program, to disqualify Malaysia from use as a surrogate country to
calculate foreign market value, and that the reasons presented by the
Department were "unsupported by substantial evidence."

FYG argues that the Department may not rely on the decision involving
textile mill products from Indonesia, as evidence that Indonesia provides
subsidies through the Export Credit Schemes, Import Duty Exemption of
Capital Equipment and Working Capital Export Credits programs because the
textiles and apparel case was terminated after the preliminary
determination. See Termination of Countervailing Duty Investigations;
Certain Textile Mill Products and Apparel from Indonesia, the Philippines,
and Tukey, 50 FR 15208 (April 17, 1985) 

(Textiles and Apparels). FYG also argues that the CIT rejected the
Department's use of Textiles and Apparels as a basis to reject the
Philippines' subsidies in CNART because the court in CNART concluded that
the use of preliminary findings to disqualify a surrogate is arbitrary and
not in accordance with law.

FYG notes that with respect to the Import Duty Exemption of Capital
Equipment program listed on the Department's Website, the ITA cites
Textiles and Apparels and ERT. FYG argues that the Textiles and Apparels
does not support the Import Duty Exemption of Capital Equipment program
based on the courts rejection of the Department's findings in CNART. FYG
also argues that ERT found that the Import Duty Exemption of Capital
Equipment was not used by any investigated company.

FYG contends that the National Trade Estimates Report states that the
Rediscount Loan Program lapsed in 1999. Therefore, this is another reason
the Department cannot rely on the adverse inferences with respect to this
program from CTLP from Indonesia.

FYG argues that a comparison of prices for float glass in the identical
thickness range from Indonesia versus the U.S. show that the Indonesian
prices are within one percent of the U.S. prices.

Petitioners' Rebuttal: Petitioners argue that the Department properly
excluded export prices from Indonesia. Petitioners contend that
Congressional intent, as expressed in the Conference Report, is for the
Department to avoid using any prices which it has reason to believe or
suspect may be dumped or subsidized. Petitioners contend that the
Department's own Surrogate Country Selection Memorandum and the
administrative review of the antidumping order on 

1999-00 TRBs from China provides clear evidence of subsidies. Petitioners
argue that 

1999-00 TRBs from China is a recent example of the Department's policy to
disregard any prices, including market economy prices, to value factors of
production where there is reason to believe or suspect that the prices may
be dumped or subsidized. Petitioners argue that the identity of the
country selling subsidized goods into China is irrelevant.

Petitioners contend that the Surrogate Country Selection Memorandum
admonishes the use of any prices that may be dumped or subsidized to value
factors of production. Petitioners argue that if there is sufficient
reason to believe or suspect that such export subsidies would disqualify
the use of export prices for ARG windshields or comparable merchandise
from these countries, it follows that there is equally sufficient reason
to believe or suspect that such export subsidies would disqualify the use
of export prices for other factors of production from these same
countries. Petitioners, however, point out that the Department can use the
prices paid for imports by certain countries to value factors of
production, even if the importing country maintains non-specific export
subsidies, because the prices the countries pay for the imports is not
affected by the importing countries' export subsidies.

Petitioners argue that there is no basis for FYG to contend that the
Surrogate Country Selection Memorandum fails to provide factual support
for its conclusion that the countries listed in it maintain non-specific
export subsidies. Petitioners maintain that the Department's Office of
Policy has provided guidance to the Department by issuing papers detailing
subsidies programs maintained by U.S. trading partners. Petitioners also
argue that the Office of Subsidies Enforcement, within the Office of
Policy, specifically monitors subsidy programs maintained by foreign
countries. Petitioners argue that it is necessary for the Office of Policy
to warn the Department, and unlawful for the Department to ignore this
information.

Petitioners argue that FYG's reliance on CNART to discredit the export
subsidies programs of Indonesia is flawed. Petitioners argue that CNART
was initiated in November 1987, which predates the Congressional
admonition against using prices where the Department has a reason to
believe or suspect that such prices may be subsidized. Petitioners argue
that Congress' statutory change implicitly overruled CNART. Petitioners
argue that a preliminary affirmative determination that non-product
specific export subsidies exist is a prima facie sufficient basis for a
reason to believe or suspect that export prices in the country that is the
subject of that preliminary determination may be subsidized. Petitioners
also argue that the Department found export subsidies from Indonesia in
Preliminary Affirmative Countervailing Duty Determinations; Certain
Textile Mill Products and Apparel from Indonesia, 49 FR 49672 (December
21, 1984). Petitioners argue that there is no evidence on the record to
suggest that the export programs present in that case do not still exist.

Petitioners argue that Indonesian exports of float glass to China may be
subsidized under the Export Credit Schemes, Import Duty Exemption of
Capital Equipment, and Working Capital Export Credits programs.
Petitioners point out that the non-product specific export subsidies
listed above are identified by the Department's Subsidies Enforcement
Office as existing in Indonesia. 

FYG's Rebuttal: FYG argues that its Case Brief on subsidization of
Chinese imports of float glass from Indonesia addresses this issue. Please
see FYG's Argument Section above. 

FYG argues that allegations that float glass from Indonesia is being
dumped into China is unsupported. FYG points out that there is no
antidumping finding in China on float glass from Indonesia. FYG cites to
1998-99 TRBs from China Final to argue that U.S. or third country
antidumping findings do not provide a basis to believe or suspect that
import prices into the surrogate country are dumped, FYG also argues that
Petitioners' "normal value" calculation, based on data in a Philippines
dumping case against Indonesia, covers colored float glass of a thickness
not used by FYG. FYG points out that the Philippines dumping case against
Indonesia was based on clear float glass, which FYG did not purchase form
Indonesia. 

FYG points out that in the Philippines case, the only producer from the
country in question which supplied FYG was not investigated. FYG also
points out that in the Philippines case, the Philippines Government
determined not to impose any anti-dumping duties on tinted float glass,
which is the only float glass FYG purchased from Indonesia. FYG argues
that for the reasons stated above, there is no "reason to believe or
suspect" that FYG's imports of float glass from the country in question
were dumped. 

Department's Position: For the Department position on whether Chinese
prices for Indonesian float glass may be subsidized, see Comment 1 above.
For the same reasons that Department does not determine that Thai float
glass is being dumped into China (see Comment 3 above), we do not
determine that Indonesian exports of float glass to China are being dumped.



Comment 6: Whether the Department Should Continue to Use Indian Import
Statistics as the Surrogate Value for Float Glass 

Petitioners' Argument: Petitioners note that, in the Preliminary
Determination, the Department used Indian Import Statistics for clear and
colored float glass. Petitioners argue that these Indian Import Statistics
surrogate values continue to be the most appropriate surrogate values
because they are: 1) public; 2) contemporaneous with the period of
investigation; 3) specific as to color; and 4) represent a range of market
prices. Petitioners cite to several determinations made by the Department
that generally describe the same criteria for selecting surrogate values.
For example, Petitioners cite to the Notice of Final Determination of
Sales at Less Than Fair Value: Certain Non-Frozen Apple Juice Concentrate
from the People's Republic of China, 65 FR 19873 (April 13, 2000) and
accompanying Issues and Decision Memorandum at Comment 4, where the
Department explained its criteria for surrogate values. Also, Petitioners
cite other Department determinations where, in general, the following
factors are considered: 1) the data must be publicly available; 2) quality
of the data; 3) whether the data are contemporaneous with the period of
investigation; 4) whether the data are as specific as possible to the
factor of production, the industry, and/or the subject merchandise; 5)
whether the data represents industry-wide or market-wide prices (e.g.,
import statistics); and 6) tax and duty-exclusive prices or values.

Petitioners note that while the Department did not use the value for
float glass from Asahi India Safety Glass' ("Asahi") (an Indian surrogate
company) annual report as a surrogate value, this value is a useful
benchmark against which to assess the reasonableness of the surrogate
values from the Indian Import Statistics. Petitioners argue that a
comparison of the Asahi float glass value to the Indian Import Statistics
values indicates the reasonableness of using the Indian Import Statistics
surrogate values because the values from these two sources are close in
price to one another.

Petitioners argue that the Department should not use Xinyi's proposed
surrogate value for float glass prices because the values are extrapolated
from a single Indian invoice from Float Glass India, Ltd. ("FGI") to
Lakshmi Float Glass Limited (an Indian glass company) and the price quote
is: 1) outside the period of investigation; and 2) for 5 millimeter ("mm")
thick float glass of undetermined quality and application (but it is not
used to make windshields). Also, Petitioners rebut Xinyi's argument, from
Xinyi's October 26, 2001, fact submission, that the float glass prices
from the annual reports for Indian producers FGI and Triveni Glass Company
("Triveni") support the prices extrapolated from the FGI invoice.
Petitioners argue that Xinyi makes an incorrect assumption that all 2 mm
thick float glass is the same quality as automotive windshield quality
float glass, but provides no evidence to support this assumption. Also,
Petitioners argue that the values from the FGI and Triveni annual reports
should not be relied upon either as surrogate values or as benchmarks for
the FGI invoice because both FGI and Triveni appear to be selling float
glass below their cost of production. Petitioners claim that FGI and
Triveni have been operating at a loss for several consecutive years.
Petitioners argue that the Department has not used data to calculate a
weighted average profit percentage using the actual financial data of an
Indian producer where that profit was negative. See Bicycles from the PRC,
61 FR 19026 (April 30, 1996). Petitioners argue that consistent with the
principle that the Department should not use unfair prices or values to
construct a fair value, the Department should also not use FGI or
Triveni's prices for float glass if there is evidence that both companies
are selling float glass below cost of production.

Petitioners argue that Xinyi's calculation of a 2 mm float glass price
from Asahi's annual report is flawed. Petitioners state that Xinyi made
two erroneous assumptions. First, Petitioners argue that there is no
record evidence to support Xinyi's statement that toughened glass is, on
average, 5 mm thick. Second, Petitioners argue that Xinyi did not provide
evidence that Asahi's average size of its windshields was 1.2 square
meters in area, which is the average size Xinyi used to calculate Asahi's
square meters of float glass consumed (and this figure is eventually used
to calculate Asahi's float glass value).

Xinyi's Argument: Xinyi argues that the Master Guide to Indian Float
Glass, 2000-01 ("Master Guide") and Tata International Ltd. ("Tata") price
quotes (Indian domestic prices) are reliable quotes for the Department to
use as surrogate values for float glass. Xinyi argues that the Tata price
quote is broken down by various thicknesses and by both clear and green
glass colors. Xinyi argues that Petitioners' price quote from Asahi's
annual report is the value of float glass purchased by Asahi divided by
the total float glass purchased. Thus it is not specific as to thickness,
color, or quality. Also, Xinyi argues that the Asahi price quote is not
the type of glass used to produce automotive windshields. Xinyi argues
that Petitioners' September 1997 price quotes for 2.5 mm float glass are
dated because the market has changed since 1997. Xinyi argues that many of
the price quotes in PPG's price quote list are for Solex, which is not the
same product as common green float glass used to produce windshields.
Xinyi notes that it agrees with Petitioners that float glass prices vary
for different glass colors but argues that this demonstrates why the Asahi
value, which is not split into a particular glass color, cannot be used as
a surrogate value. Finally, Xinyi argues that the most important evidence
supporting the accuracy of the Master Guide and Tata price quotes is that
these price quotes are close to the actual prices Xinyi paid for imported
float glass from market economies during the period of investigation.

Xinyi argues that the FGI price quotes (for 2 mm through 2.5 mm float
glass) are Indian market prices for float glass, and that these prices are
consistent with public information on the pricing of float glass in India.
Xinyi argues that FGI and Triveni's annual reports demonstrate a float
glass price, when converted to a 2 mm basis, that is close to the FGI
price quotes. Also, Xinyi argues that Petitioners average per square meter
value of float glass from Asahi's annual report consists of both thin
glass, which is used to make laminated automotive windshields, and thick
glass, which is used to make toughened or tempered glass products. Xinyi
argues that when the Asahi value is converted to a 2 mm thickness
standard, the value is close to the FGI price quotes and is consistent
with the FGI and Triveni's annual report values for float glass. Xinyi
also argues that its Indian expert is reliable because the person is
independent and is an expert concerning the Indian glass industry. In
contrast, Xinyi argues that Petitioners' U.S.-based expert is unreliable
as a source of information for the production of automotive glass in India
and should be considered suspect because this person is based in the
United States and has a vested interest in the outcome of the
investigation. Also, Xinyi notes that the Department did not use
Petitioners Asahi value as a surrogate value for float glass in the
preliminary determination and should used this unadjusted value as a
surrogate value for the final determination.

Xinyi Rebuttal: Further, in response to Petitioners' arguments, Xinyi
contends that the Department must use its surrogate value calculations
based on the best available information. See 19 U.S.C. Section
1677b(c)(1)(B); See Nation Ford Chemical Co. v. United States, 985 F. Supp
133, 137 (CIT 1997) aff'd. 166 F. 3d 1373 (Fed. Cir. 1999) (Nation Ford).
Xinyi argues that the FGI invoice to Lakshmi Float Glass satisfies the
most important criteria for selecting surrogate values, which is what the
market price of such float glass would be in China if it were a market
economy. Xinyi rebuts Petitioners claim that the FGI price quote is for
float glass of undetermined quality and application, noting that
Petitioners have used a similar approach to calculate export prices and
normal values for certain thicknesses of float glass in its dumping
analysis.

Xinyi stated that although the FGI price quote is outside the period of
investigation, the Department could apply an inflation factor to adjust
the price quote. Xinyi notes that Petitioners do not claim that the price
quote is aberrational. Xinyi argues that while the Department prefers to
use a range of prices to value an input rather than a single price quote,
the Department prefers to use domestic prices for surrogate values instead
of import prices. See Sebacic Acid From the People's Republic of China:
Final Results of Antidumping Duty Administrative Review, 64 FR 69503,
69506 (December 13, 1999).

Xinyi rebuts Petitioners' arguments that Xinyi's calculation methodology
(to derive prices for 2.0, 2.2, and 2.5 mm thicknesses from 5 mm thick
float glass) is imperfect. Xinyi states that Petitioners' arguments that
there is not necessarily a one-to-one correlation between prices for 5 mm
thick float glass and prices for other thicknesses of float glass is
unsupported with record evidence. Also, Xinyi argues that Petitioners'
affidavit from an employee of PPG is biased due to this employee's vested
interest in the outcome of this investigation and that this employee,
while having knowledge of how automotive glass is manufactured in the
United States, is not as reliable a source of how automotive glass is
manufactured in India. See Petitioners' November 5, 2001 submission,
Exhibit 1.

Xinyi states that while Petitioners have disagreed (with record
information) that clear and tinted float glass prices differ by 30
percent, Xinyi has provided an affidavit from M.V. Subramanian, an
employee of the Indo-Asahi Glass Company, Ltd., that supports Xinyi's
claim. See Xinyi's October 26, 2001 submission at Annex A. Xinyi next
argues that FGI and Tiveni's financial statements were submitted only to
demonstrate how pricing information is fully consistent with public
information on the pricing of float glass in India, and this is consistent
with the value data placed on the record by Petitioners when such data are
adjusted to a 2 mm thickness standard.

Petitioners' Rebuttal: Petitioners rebut Xinyi's arguments to use the
price quotes in the Master Guide, Tata, and the FGI invoice by stating
that Xinyi has just repeated the same arguments that it presented earlier
in the investigation. Petitioners argue that Xinyi does not address the
reasons cited by the Department, in the preliminary determination, for not
using the Master Guide (not specific as to color and thickness), and the
Tata quotes (outside the period of investigation). Petitioners argue that,
in addition to the reasons noted above, Master Guide data are less
contemporaneous than the Indian Import Statistics data. Also, the Tata
price quote is an export price, and the Department has stated already that
because India provides non-industry or product specific export subsidies,
the Department will not use Indian export prices. Also, Petitioners argue
that the Tata price quote is a rock bottom price that represents a
discount by Tata for new business with a new customer. Petitioners also
argue that Xinyi disagrees with its own expert witness from India
regarding whether there is a big difference in the price of float glass
because of color or grade. Petitioners rebut Xinyi's attacks regarding the
reliability of Petitioners' affidavit concerning Xinyi's surrogate value
information. Petitioners argue that Xinyi did not explain how the
affidavit by the Indian expert is reliable given that the company this
expert works for only produces sheet and figured glass and not products
used to produce laminated windshields.

Department's Position: We agree with Petitioners that the surrogate
values for clear and colored float glass from the Indian Import
Statistics, which were used by the Department in the preliminary
determination, continue to be the most appropriate surrogate values
because they are: 1) public; 2) contemporaneous with the period of
investigation; 3) specific as to color; and 4) represent a range of market
prices. We agree with Petitioners that the above referenced criteria are
what the Department has considered important in selecting surrogate values
in prior cases.

Therefore, we did not select Xinyi's proposed FGI invoice price as a
surrogate value because it is not: 1) public; 2) contemporaneous with the
period of investigation; 3) specific as to color; and 4) a range of market
prices. Because we have determined that the Indian Import Statistics
surrogate values meet the preferred criteria and are the best available
information pursuant to section 773(c)(1)(B) of the Act, Xinyi's remaining
arguments concerning the methodology to convert this 5 mm float glass
price to a 2 mm standard are not relevant as the price quote does not meet
any of the Department's criteria used to select surrogate values.

We did not select the float glass values, either as a benchmark or as a
surrogate value, from FGI or Triveni's annual reports, because these
values are not as contemporaneous nor specific as to color as are the
values from the Indian Import Statistics. Regarding Petitioners' arguments
that FGI and Triveni appear to be selling float glass below cost of
production, this argument is not relevant and not addressed here because
we are not using these values due to the reasons stated above.

We did not select Asahi's annual report float glass value either as a
surrogate value or as a benchmark because this value is not as
contemporaneous nor specific as to color as the values from the Indian
Import Statistics. Therefore, Petitioners' arguments about whether Xinyi
made erroneous assumptions regarding this value from Asahi's annual report
and any other remaining arguments regarding Asahi's annual report are no
longer relevant.

However, we note that we disagree with Petitioners' argument that Asahi's
float glass value from its annual report is a benchmark against which to
assess the reasonableness of the surrogate values from the Indian Import
Statistics. Because the Asahi float glass value was not specific enough
(e.g., it was not subdivided based on either glass color or thickness) nor
as contemporaneous as the import statistics from the Indian Import
Statistics, we are not able to determine whether Asahi's float glass cost
represents a benchmark against which to assess the reasonable of the
surrogate values from the Indian Import Statistics.

We did not select the prices from the Master Guide because, as we stated
in our preliminary determination, these prices are not specific as to
color and thickness and, as Petitioners note in their argument, the prices
are not as contemporaneous as the Indian Import Statistics. Also, we did
not select the Tata price quotes because, as we stated in our preliminary
determination, these price quotes are outside of the period of
investigation. Because the Tata price quote is not as contemporaneous as
the Indian Import Statistics surrogate values and we are not using this
value, Petitioners' remaining arguments (i.e., it is for an export price,
India maintains non-industry or product specific export subsidies, and it
is a "rock bottom" price) are not relevant.



Comment 7: Whether the Department Should Use as its Surrogate Value the
Electricity rate Paid by the Indian Auto Glass Producers 

Petitioners' Argument: Petitioners argue that the Department should base
the surrogate electricity value not on an India-wide rate, but rather on
the actual price paid for electricity by Indian surrogate companies.
Petitioners maintain that the annual reports of Asahi, Atul and St. Gobain
provide a more contemporaneous rate that is specific to the Indian
automotive glass industry.

Petitioners maintain that the annual reports of Asahi and St. Gobain
indicate that their sales of automotive glass account for more than two-
thirds (a substantial portion) of the total Indian automotive glass market
during the period April 1, 1999 through March 30, 2000. Petitioners also
argue that using an electricity rate based on the annual reports of
several surrogate producers of the subject merchandise is consistent with
Department precedent in Preserved Mushrooms from the PRC. See Preliminary
Results Valuation Memorandum: Certain Preserved Mushrooms from the
People's Republic of China, 65 FR 66703 (November 7, 2000) (Mushrooms
Preliminary Results or Mushrooms). In Mushrooms Preliminary Results, the
Department based the surrogate electricity rate on mushroom producers
because the producers' rate was specific to the industry producing the
subject merchandise and more contemporaneous to the POR, than the country-
wide rate and because the Mushroom producers accounted for a "substantial
segment of the industry."

Petitioners contend that Mushrooms Preliminary Results and this case are
similar because the Department has actual automotive glass producer
electricity values. Also, in this case the Department has three of the
five known Indian producers' annual reports, compared with only four of
twelve in Mushrooms Preliminary Results. 

FYG's Argument: FYG argues that the Department should use an Indian
surrogate electricity rate based on 19 Indian states or electricity
boards. FYG argues that the Department has used an electricity rate in
other cases that is more contemporaneous than the rate used by the
Department in the Preliminary Determination and that represents a broader-
base value. See Manganese Metal from the People's Republic of China; Final
Results of Antidumping Duty Administrative Review, 66 FR 15076 (March 15,
2001) (Manganese Metal from the PRC) and accompanying Issues and Decision
Memorandum at Comment 5 and 6. FYG agues that the Department should use a
surrogate value which is as representative of the situation in the NME
country as possible in order to be accurate as possible in determining the
dumping margin. See Nation Ford, 985 F. Supp 133, 137 (CIT 1997) aff'd.
166 F. 3d 1373 (Fed. Cir. 1999).

Petitioners' Rebuttal: Petitioners argue that FYG's Case Brief references
a new source for electricity not previously submitted on the record in
this investigation. Petitioners contend that Department regulations do not
allow FYG to submit 1999/2000 Data Energy Research Institute, Energy Data
Directory & Yearbook ("Teddy") because the deadline for submitting
publicly available information to value factors in this NME antidumping
investigation has passed. 

See 19 C.F.R.  351.301(c)(3)(i). Petitioners argue that simply because
the Department has used a particular surrogate value in another case, this
does not allow the Department to ignore its statutory deadlines.
Nevertheless, Petitioners argue that even if the electricity rates
provided by FYG were submitted in a timely manner, Petitioners'
electricity rate, using the audited annual reports of the Indian
producers, is more accurate and contemporaneous than FYG's proposed
electricity rate.

FYG's Rebuttal: FYG argues that Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, From the People's Republic of China;
Final Results of 1996-1997 Administrative Review, Partial Rescission of
Review, and Determination Not To Revoke Order in Part, 63 FR 63842, 63856-
57 (November 17, 1998) (1997-98 TRBs from China Final), demonstrates that
the Department has an established practice of using a simple average of
country-wide Indian state electricity rates as a surrogate value for
Chinese producers' electricity rates. FYG lists thirty-one cases in which
the Department has used a country-wide surrogate value for electricity.
See FYG's Rebuttal Brief at 31-34. 

FYG contends that the Department in the investigation of bulk aspirin
from the PRC rejected a methodology like the one Petitioners propose
because the country-wide rate represents public information on
transactions between many buyers and sellers. Also, IEA data can be
adjusted to be fully contemporaneous with the POI, and Indian electricity
rates can fluctuate according to location, demand, etc., in a manner which
the PRC producers' electricity costs may not. See 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) (Bulk Aspirin from
the PRC).

FYG also argues that Atul, St. Gobain and Asahi produce non-subject
merchandise as well as subject merchandise.

FYG argues that the present investigation is distinguishable from that in
the Mushrooms Preliminary Results because there: (1) the Department had an
unusually high degree of knowledge of the Indian mushroom market by reason
of the antidumping proceeding against mushrooms from India; (2) the
Department was able to accurately ascertain the nature and extent of
production of mushrooms in India; (3) the companies were located in a
limited number of areas in India and therefore the companies' production
could be accurately measured against total Indian production; and (4) the
companies represented a "substantial segment" of the Indian mushroom
industry. See Mushrooms Preliminary Results, 65 FR 66703 (November 7,
2000). FYG argues that none of these criteria are present in this
investigation.

With regard to point three listed above, FYG argues that the Department
must estimate a Chinese producer's cost as if China were a market economy
country, rather than to model the cost to an Indian producer. See Air
Products and Chemicals, Inc. v. United States, 14 F. Supp. 2d 737, 741
(CIT 1998). FYG argues, therefore, that the Department's focus should be
on what the cost to the Chinese producers would be if China were a market
economy country, not the cost to the Indian producers.

With regard to point four listed above, FYG contends that the Indian
producers make substantial quantities of non-subject merchandise. FYG
argues that based on the three Indian companies' data, these companies do
not make substantial quantities of subject merchandise and do not
represent a substantial segment of the float glass industry in India. FYG
maintains that Petitioner's calculation is based on OEM as well as
aftermarket windshield sales. FYG also contends that Petitioners'
calculation, showing that Asahi and St. Gobain represent two-thirds of the
Indian aftermarket industry, is flawed. FYG contends that when corrections
are made to Petitioners' calculation, the revised Indian ARG market share
represented by Asahi and St. Gobain is only 30 percent.

FYG argues that the electricity data that Petitioners want the Department
to use are not from the audited financial reports of the three Indian
companies, but rather from annex A of the directors' report. 

FYG argues that Petitioners' alternative rate for electricity, based on
St. Gobain's electricity rates for April through December 2000, uses an
incorrect inflator. FYG also argues that, although St. Gobain's rates are
more contemporaneous than the IEA rates, the Department in Bulk Aspirin
from the PRC used the sector-specific index, and this "largely eliminated"
the concerns regarding accuracy associated with outdated data. See Bulk
Aspirin from the PRC, 65 FR 33805 (May 25, 2000) and Accompanying Issues
and Decision Memorandum at Comment 6.

Xinyi's Rebuttal: Xinyi agrees with FYG and argues that the Department
should value electricity using the prices from the three annual reports of
the Indian windshield producers. Xinyi recognizes, however, that the
annual reports are not contemporaneous with the POI, and therefore
suggests that the Department use the 1999/2000 Data Energy Research
Institute data, as provided by FYG.

Department's Position: We disagree with Petitioners. Petitioners'
proposed methodology for valuing electricity based on company specific
data (prices paid for electricity by St. Gobain, Asahi, and Atul) was
accepted in the mushrooms case the parties cited above. The Department
does not feel, however, that the facts present in Mushrooms Preliminary
Results, which allowed the Department to utilize that methodology, are
present in this investigation.

As opposed to Mushrooms Preliminary Results, the Department has no
specialized knowledge of the ARG industry in India. In Mushrooms
Preliminary Results, specialized knowledge of the mushroom industry
existed because of a separate case before the Department on mushrooms from
India. See Preliminary Determination Valuation Memorandum for Mushrooms.
The facts in this investigation also differ from those in the mushrooms
case because of the location of the Indian factories. Although the
Department finds that it can reasonably ascertain the percentage of the
total Indian market represented by the three surrogate Indian producers,
the Indian ARG factories are spread out so that location-specific
influences, such as production level, methods of generation and
transmission, overall demand, local market conditions, state intervention,
and privatization can affect the electricity rates of the three Indian
surrogate companies. In Mushrooms, the producers were in close proximity
to one another. Therefore, the Department is unable to determine that the
three Indian ARG producers represent a substantial segment of the ARG
market. 

The Department does not agree with Petitioners that we should use the
most recent electricity rates of St. Gobain. The Department normally uses
and prefers a country-wide electricity rate to reflect a broad-base cost
for electricity which ensures a fair representation of electricity costs
country-wide. In Bulk Aspirin from the PRC, the Department disagreed that
the surrogate value for electricity costs should be based on company-
specific data of the Indian producers. The Department decided in favor of
a broad country based rate because "a single input price reported by a
surrogate producer may be less representative of the cost of that input in
the surrogate country." See Bulk Aspirin from the PRC, 65 FR 33805 (May
25, 2000) and accompanying Issues and Decision Memorandum at Comment 6.
The Department does not see a reason to depart from its normal methodology
here.



Comment 8: Whether the Department Should Use Actual Molding Prices and
Mirror Brackets/Buttons Prices as the Surrogate Values for Xinyi's
Moldings and Mirror Brackets/Buttons

Petitioners' Argument: Petitioners argue that, for valuing Xinyi's
molding purchases, the Department should use Indian prices for automotive
windshield moldings from the spare parts catalog of Maruti, an Indian
producer of automobile and automotive parts. Petitioners note that, in the
preliminary determination, the Department used the value from the Indian
Import Statistics for couplers/packing rings/O rings. Petitioners note
that while the Maruti catalog is after the period of investigation (June
2001), it is from a public, published source. Also, Petitioners note that
the prices are retail and are inclusive of excise and central sales tax.
Therefore, Petitioners state that they have provided record information
which indicates that the excise and sales tax rates combined are 24
percent so the Department can appropriately adjust for taxes. Petitioners
argue that, in a comparison between FYG's actual purchase prices for
moldings and Maruti's net-of-tax molding prices (and adjustment for
deflation), the Maruti prices are not significantly more than FYG's actual
market economy purchase prices.

However, if the Department decides not to use these Maruti molding prices
as a surrogate value for Xinyi's molding inputs, Petitioners argue that
the Department should use FYG's actual market economy molding purchase
prices, based on the NAGS number. Petitioners contend that if Xinyi
purchased a particular molding that was not purchased by FYG, then the
Department should use the average price per molding piece as a surrogate
value. Petitioners note that FYG's actual market economy molding prices
are contemporaneous with the period of investigation, and that the
Department has used actual market prices paid by a non-market economy
respondent as the surrogate value for another non-market economy
respondent as a last resort when no other reasonable values were
available. See Bicycles from the PRC, 61 FR at 19029-30 (April 30, 1996).

Petitioners also argue that for mirror brackets/buttons, the Department
should use the average price for FYG's market economy purchase prices of
mirror brackets/buttons for the same reasons as cited above. However, if
the Department does not use FYG's market economy prices for mirror
brackets/buttons, then Petitioners argue that the Department should use
the more contemporaneous Indian Import Statistics submitted by Petitioners.

Xinyi's Rebuttal: First, Xinyi rebuts Petitioners' arguments to value
moldings using the Maruti catalog by stating that these retail prices for
molding are not even close (i.e., much higher) than Xinyi's actual costs
for molding. Xinyi also argues that, based on past Department cases,
surrogate values must be tax exclusive.

Also, Xinyi rebuts Petitioners' argument that for mirror
brackets/buttons, the Department should use FYG's market prices. Xinyi
argues that if the Department decides to use FYG's market economy purchase
prices as a surrogate value for Xinyi's prices (both mirror
brackets/buttons and molding), then the Department should not "cherry
pick" and use only FYG's prices for these two inputs, but use FYG's market
economy prices for all of Xinyi's factors, when Xinyi has not purchased
market economy inputs. Also, Xinyi argues that the Department should not
allow Petitioners to have it both ways by having the Department use the
higher surrogate values to value Xinyi's factors of production or the
higher FYG market economy prices to value Xinyi's factors of production.
Xinyi argues that such a decision would be contrary to the statute, which
requires the Department to make a fair comparison between the U.S. prices
and normal value. See section 773(a) of the Act.

Department's Position: We disagree with the Petitioners and will continue
to value Xinyi's moldings and mirror brackets/buttons using the Indian
Import Statistics. In response to Petitioners' arguments we note that the
Maruti prices are outside the period of investigation; because the
Department has more contemporaneous tax-exclusive prices from the Indian
Import Statistics, the Maruti prices are not the best available
information on the record. See section 773(c)(1) of the Act. Additionally,
resorting to FYG's actual market economy molding and mirror
brackets/buttons purchase prices to value these two Xinyi inputs is not
necessary because the Department already has surrogate values, which are
tax-exclusive, for molding and mirror brackets/buttons from the Indian
Import Statistics. In Bicycles from the PRC, the Department stated that
using another respondent's market economy purchases for another
respondent's surrogate value was used as a last resort when no other
reasonable values were available. Here, we have a reasonable surrogate
value for molding and mirror brackets/buttons from the Indian Import
Statistics. Therefore, we do not have to rely on FYG's market economy
prices for molding as a surrogate value for Xinyi's molding inputs.

Finally, we agree with Petitioners that it is appropriate to use the more
contemporaneous data provided as the surrogate value for Xinyi's mirror
brackets/buttons.



Comment 9: Whether the Department Should Use the Updated Surrogate Value
Information Provided by Petitioners for Certain Inputs and Also Use a More
Appropriate HTS Number for Scrap Iron Input 

Petitioners' Argument: Petitioners argue that the Department should apply
more contemporaneous surrogate values for certain inputs including
tungsten wire, nails, wood screws, iron brace buttons, labels, styrofoam,
a certain other input (this input is Business Proprietary Information and,
therefore, cannot be listed publicly), plastic film and plastic tube,
aluminum foil, polythylene pallets, copper. Petitioners argue that the
values it submitted for the above listed inputs are for the period July
through December 2000 and are, therefore, more contemporaneous to the POI.
The Department notes that the input copper wire and solder wire were not
previously reported inputs but ones which FYG discovered during
preparation for verification. For a discussion of the actual HTS
classification of styrofoam, please see below.

Petitioners argue that HTS number 72045000, "remelting scrap ingots",
provides a more appropriate description for the scrap iron reported by
FYG, which consists of "old windshield molds and empty cans that contained
ink (ceramic paint) and silver paste." See FYG 

June 25, 2001 Section D Response at D-29. Petitioners argue that there is
no evidence that scrap iron is made from cast iron.

FYG's Rebuttal: FYG argues that the Department verified that the moldings
used by FYG in the bending process were iron. FYG argues that Petitioners'
characterization of the moldings, as ingots, is unsupported. FYG also
argues that the tin cans which are resold by FYG do not resemble ingots,
and that Petitioners' statement that these items are not made from cast
iron are unsupported by record evidence.

Department's Position: On the first issue, we agree with Petitioners that
certain inputs listed above should be given surrogate values more
contemporaneous with the POI, and we will use the updated surrogate values
in our calculations for the final determination. We, however, disagree
with Petitioners that scrap iron should be valued using HTS 72045000,
"remelting scrap ingots." Based on what we observed at verification, the
Department does not agree that scrap iron is classifiable as iron ingots
and, therefore, we are using the same value used in the Preliminary
Determination. 



Comment 10: Whether the Department Should Calculate Factory Overhead,
Selling, General and Administrative Expenses, and Profit in Accordance
with Petitioners Proposed Methodology 

Petitioners Argument: Petitioners argue that, in the interests of
calculating dumping margins as accurately as possible, the statute does
not require use of a uniform methodology in the valuation of all relevant
factors. See Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191
(Fed. Cir. 1990); Nation Ford Chemical Company v. United States, 166 F. 3d
1371, 1378 (Fed. Cir. 1999). Petitioners argue that the Department is
required to use a methodology which is supported by substantial evidence
in the record. See Shakeproof Assembly Components v. United States, 53 F.
Supp. 2d 1354, 1358 (CIT 1999). Petitioners also argue that the
Department, in NME cases, is required by the statute to calculate factors
of production on the basis of the "best information available." Section
773(c)(1)(B) of the Act. Petitioners argue, therefore, that where the
record makes possible a more accurate calculation of dumping margins than
has already been calculated by the Department, the Department is obliged
to use the information in a manner that accomplishes that result.
Petitioners also argue that the Department should address the calculation
of overhead, expense and profit on a case-by-case basis. See Antidumping
Duties; Countervailing Duties: Notice of Proposed Rulemaking, 61 FR 7308,
7345-46 (Feb. 27, 1996) Included in Petitioners' Case Brief at Ex. 9.

Petitioners argue that the Department should use the annual reports of
the Indian Surrogate Companies Asahi and St. Gobain to calculate factory
overhead ("FOH"), selling, general and administrative ("SG&A") and profit,
based on the quantity of primary inputs consumed as opposed to the value
of those inputs. Petitioners argue that by allocating St. Gobain's
overhead cost over its raw material consumption of float glass and PVB,
the Department can establish a figure for FOH that is constant and
therefore not subject to variability that arises from valuation of the NME
respondent's input costs. FYG further explains that the "constant" figure
for FOH can then be applied directly to the respondents' reported usage of
float glass and PVB, and the same exercise can then be applied with
respect to SG&A and profit. See Petitioners' Case Brief at 55.

Petitioners argue that its proposed methodology is "fully consistent"
with the statute, which equates "representative capital cost, including
depreciation, as a factor of production together with other factors such
as labor, raw materials, and its energy and other utilities consumed." See
Case Brief citing section 773(c)(3) of the Act. Petitioners argue that its
proposed methodology is appropriate because: Asahi and St. Gobain are
"nearly identical" to the Chinese respondents; the annual reports of Asahi
and St. Gobain are contemporaneous with the POI; and the proposed
methodology is reasonable because of the close identity of products
produced by the Indian and Chinese companies. 

Petitioners contend that using its proposed methodology avoids counting
indirect labor along with direct labor in the total cost of direct
materials, which the Department does when using the methodology employed
in the Preliminary Determination. 

FYG's Rebuttal: FYG argues that the Department has an "uninterrupted"
practice of calculating FOH, SG&A and profit based upon financial ratios
from surrogate companies. FYG argues that Petitioners admit that the
Department's methodology used in the Preliminary Determination is not
inconsistent with the statutory requirement to calculate accurate dumping
margins. FYG argues that the Department has always used the methodology
employed in the Preliminary Determination, whether the ratios were derived
from the financial reports of producers in the surrogate country or from a
statistical database such as the Reserve Bank of India reports, and this
methodology has never been overturned by the courts. 

FYG argues that the ratios are to reflect the experience of surrogate
country producers, i.e., the relationship between fixed elements of cost
or profit to the direct costs that fluctuate widely depending upon the
product or model being produced, and therefore do not contain an inherit
bias. FYG contends that the ratios calculated by the Department are
applied to the direct costs of respondents that are specific to each
product. FYG argues that by the Department calculating the financial
ratios as it did in the preliminary determination, a total cost and profit
amount is developed that can be used to determine what the respondents'
costs would be if China were a market economy country. 

FYG contends that the Department's methodology is consistent with its
treatment of expenses and profit in market economy dumping cases, because
in a market economy case, SG&A expenses are calculated as a percentage of
the cost of manufacturing or cost of sales, and are not based on raw
materials consumed. FYG points out that net profit is calculated by
dividing the total profit earned by the total cost of production, which in
turn is multiplied by the cost of production of individual models to
determine per unit amounts for profit. For FOH, FYG argues that it
understands that all cost accounting systems calculate indirect
manufacturing expenses as a percentage of direct costs, which results in
each unit of production absorbing an amount for fixed or indirect
manufacturing expenses that is proportional to the direct or variable
costs of manufacturing. FYG argues that there is nothing biased or
distortive in the Department's methodology. 

FYG argues that Petitioners do not demonstrate any bias in the
Department's methodology and that the raw amount of overhead costs
incurred by the surrogate country producer is no measure of the amount of
such expenses that FYG or any other Chinese respondent would incur if
China were a free market economy country. Rather, FYG argues that
Petitioners' methodology incorrectly includes only float glass and PVB as
direct inputs, which in turn creates potential for distortion because
float glass and PVB have different consumption rates.

FYG points out that because both Asahi and St. Gobain produce non-subject
merchandise, i.e., tempered glass, Petitioners' proposed methodology
likely leads to distortions. FYG argues that factors such as differences
in the age of the production facilities, the quality of products produced,
and the many different types and sizes of glass consumed, all could impact
the rate of overhead absorption between the Indian surrogate companies and
FYG. FYG also argues that differences in raw materials used and product
mix could have a significant impact on the calculation of a fixed or
constant amount of FOH, SG&A and profit. 

FYG argues that the best information available is the audited financial
reports of the Indian producers. FYG argues that the Department's normal
methodology, and the one used in the preliminary determination, minimizes
the chance of distortion because it results in an amount that is
reflective of the relationship between direct and indirect costs. FYG
maintains that in the Department's methodology, the indirect costs are
proportionate to the variable costs of production that fluctuate with each
model produced, as opposed to Petitioners' method, which effectively turns
indirect or fixed costs into direct inputs, resulting in the greatest
possibilities for distortion.

With regard to the inclusion of labor in cost of manufacturing ("COM"),
FYG argues that the Department properly included labor in the build up of
COM in the Preliminary Determination. FYG maintains that in a recent
investigation, petitioners argued the same thing argued by Petitioners
here, namely that labor should be excluded from the build-up of COM in
calculating SG&A and FOH, but included for the calculation of profit. See
Notice of Final Determination of Sales at Less Than Fair Value: Steel
Concrete Reinforcing Bars from Moldova, 66 FR 33525 (June 22, 2001) (Re-
bar from Moldova) and accompanying Issues and Decision Memorandum at
Comment 9. FYG points out that the Department, in Re-bar from Moldova
rejected Petitioner's request, stating: "The sum of materials, labor and
energy is, in general, a good proxy for the overall scale of operation,
and we believe that factory overhead and SG&A tend to be more a function
of the overall scale of the operations rather than a function of materials
and energy alone." FYG also cites to Re-bar from Moldova and argues that
labor should not be removed from the build-up of COM for SG&A and FOH
because to remove labor results in a significant upward skewing of the
overhead and SG&A costs. FYG argues that where labor was removed from the
denominator, it was possible to do so without causing distortions in the
result. FYG argues that the exclusion of labor as a direct input would
result in distorted FOH and SG&A ratios because FOH and SG&A would
represent a bloated share of total COM and cost of production,
respectively. 

FYG argues that Petitioners' reliance on Manganese Metal from the PRC is
misplaced. FYG argues that the only reason the Department excluded labor
from the build-up of COM for SG&A and FOH in that case is because labor
was reported broken out by direct and indirect in the company's financial
reports. See Notice of Final Results of Antidumping Duty Adminstrative
Review of Manganese Metal from the People's Republic of China, 65 FR 30067
(May 10, 2000) and accompanying Issues and Decision Memorandum at Comment
10. FYG argues that the financial reports of the Indian surrogate glass
producers are not broken out by direct and indirect labor. 

FYG argues that, according to the Department's questionnaire, it reported
both direct and indirect labor hours for the factory, and that it did not
report SG&A or office hours. FYG maintains that the petitioners' claim
that indirect labor hours constitute a substantial portion of the total
labor cost is, therefore, based on a misconception of FYG's reported
indirect labor. 

FYG argues that Petitioners' contention that packing labor is included in
"Salaries, Wages and Bonus" in the financial statements of St. Gobain,
which is added to direct costs, is incorrect because there is nothing in
the St. Gobain report that would lead to the conclusion that salaries,
wages and bonuses include costs for packing workers. FYG also argues that
these expenses might also be included in the packing expenses reflected in
the St. Gobain's financial statement, which were appropriately excluded
from the Department's ratio calculations. 

FYG argues that it is the common accounting practice in most countries to
include all labor costs as a single item on a profit and loss statement.
FYG argues, therefore, that Petitioners' claim that the Indian surrogate
producers financial reports caused distortions by not breaking out direct
and indirect labor, incorrectly characterizes a practice that is not
unusual.

FYG argues that in the Mushrooms case, the Department classified all
personnel-related expenses as part of the labor component of direct
manufacturing costs and were included in the COM. FYG also argues that the
Department has rejected the idea of including SG&A labor as a separate
component in the factors of production calculation, stating "we are
continuing to make a reasonable assumption that SG&A labor is included in
the surrogate SG&A ratio, consistent with our decision on this issue in
the two most recent segments of this proceeding." See Final Results of
Antidumping Duty Administrative Review of Persulfates from the People's
Republic of China, 66 FR 42628 (August 14, 2001) and accompanying Issues
and Decision Memorandum at Comment 5. FYG also argues that there is no
indication that indirect labor costs are included in St. Gobain's FOH
expenses. FYG cites to a determination in porcelain-on-steel cooking ware
from China to show that the Department will exclude indirect labor from
the calculation of normal value where the factory overhead expenses are
shown to include indirect labor. See Porcelain-on-Steel Cooking Ware from
the People's Republic of China: Rescission of Antidumping Duty
Administrative Review, 65 FR 31301 (May 17, 2000) and accompanying Issues
and Decision Memorandum at Comment 3.

Xinyi's Rebuttal: Xinyi argues that the Department should continue to
base the FOH, SG&A and profit ratios on the annual reports of the Indian
surrogate companies. Xinyi contends that the Department stated in the
Preliminary Determination that it does not favor looking behind the annual
reports of companies in the surrogate country. Xinyi argues that
Petitioners' proposed methodology violates the underlying primary purpose
of the antidumping statute.

Department's Position: We do not agree with Petitioners on the
methodology for calculating the financial ratios or on the exclusion of
labor from the build-up of FOH and SG&A. 

With regard to Petitioners' proposed methodology for calculating the
financial ratios, while the Department does consider information on a case
by case basis in determining appropriate surrogate values including FOH,
SG&A and profit rates, the Department believes that the facts of this case
do not warrant a deviation from our current and long-standing policy of
calculating financial ratios based on the cost incurred by surrogate
companies. 

Petitioners' proposed methodology would only factor in the raw material
usage of float glass and PVB. While the Department recognizes that these
two inputs constitute the majority of the raw materials consumed to
manufacture ARG windshields, other direct inputs cannot be ignored.

Direct inputs other than float glass and PVB are almost always included
in ARG windshields (ink, mirror buttons, etc). 

The Department finds it is better to calculate ratios based on all direct
costs, as opposed to Petitioners' methodology, which takes into account
only quantities of float glass and PVB. The Department also recognizes
that depreciation is influenced by the production process and that
Petitioners' methodology would include non-subject merchandise, which have
different production processes than ARG windshields. In sum, the
Department's methodology, to calculate financial ratios based on the COM
of surrogate companies, is reasonable and is a more accurate method of
calculating FOH, SG&A and profit than Petitioners' proposed methodology.

With regard to labor, the Department agrees with FYG that labor should be
included in the 

build-up of COM for calculating FOH, SG&A and profit. As pointed out by
FYG, in Re-bar from Moldova, the Department determined that materials and
energy by themselves do not drive FOH and SG&A and that FOH and SG&A are
more a function of the overall scale of the operation of the company. 

The Department also noted in a previous case that its normal methodology
for calculating SG&A takes into account all factors of production. See
Notice of Final Determination of Sales at Less Than Fair Value: Large
Newspaper Printing Presses and Components Thereof, Whether Assembled or
Unassembled, From Japan, 61 FR 38139 (July 23, 1996) (LNPP from Japan).
Citing to Carbon and Alloy Steel Wire Rod from Canada, the Department in
LNPP from Japan stated:

  [A]s set forth in Carbon and Alloy Steel Wire Rod, our normal methodology
  for allocating G&A expenses to different operations is based on CGS. The
  Department's normal method for allocating G&A costs based on CGS takes
  into account all production factors (i.e., materials, labor, and
overhead)
  rather than a single arbitrarily chosen factor. Absent evidence that our
  normal G&A allocation method unreasonably states G&A costs, we continued
  to allocate such costs for the final determination based on CGS.

See Final Determination: Certain Carbon and Alloy Steel Wire Rod from
Canada, 59 FR 18791,

18795 (April 20, 1994) (Carbon and Alloy Steel Wire Rod). While the
Department recognizes that LNPP involved a market economy country, the
principle set forth in that case, that SG&A costs will be based on the
cost of goods sold, holds true for this investigation.

In this investigation, it is not possible for the Department to break out
direct labor from St. Gobain's financial report because direct and
indirect labor are not separate line items in the financial report. To
exclude labor entirely from the build-up of COM to calculate FOH would
improperly omit an important item from COM, which would distort the FOH
ratio and, as Petitioners would have it, SG&A ratio. Petitioners' proposed
methodology, which simply omits all labor from the FOH and SG&A ratios,
would result in a significant distortion by not capturing the labor costs
associated with direct inputs. The Department fails to recognize how
Petitioners' proposed methodology would lead to a more accurate labor rate
than that used by the Department, when Petitioners' are only accounting
for labor in the build-up of profit. To only factor in labor when
calculating profit would unnecessarily distort the financial ratios and
result in the under reporting of COM. The Department sees no reason to
depart from its normal methodology of including labor in the build-up of
the COM prior to calculating the FOH and SG&A ratios. 



Comment 11: Whether the Department Should Value the Labor Factor of
Production on the Basis of Fully-Loaded Labor Costs

Petitioners Argument: Petitioners argue that the Department should value
the labor factor of production on the basis of fully-loaded labor costs
incurred by producers of the subject merchandise, and not merely wages
paid to employees. Petitioners note that, in the preliminary
determination, the Department valued the labor input on the basis of its
current practice, which is wages, rather than labor costs.

Petitioners argue that section 773(c)(4) of the Act instructs the
Department to value the prices or costs of factors of production, and not
just the wages. See Conference Report at 1623. Petitioners argue that when
the Department issued its regulations in 1997, the Department noted that
labor was based on wage rates rather than labor costs due to limitations
of available information at the time. In Antidumping Duties;
Countervailing Duties: Notice of Proposed Rulemaking and Request for
Public Comments, 61 FR 7308, 7345 (February 27, 1996), the Department
stated that the statute permits using prices or costs in "one or more
market economy countries."

Petitioners argue that, based on its preamble to the proposed
regulations, the Department recognized that the goal of the statue was the
valuation of labor costs and that, when a commenter to the proposed
regulations requested that the Department use full labor costs, the
Department stated that limitations on available data prevents this
consideration. See Preamble to Antidumping Duties; Countervailing Duties:
Final Rule, 62 FR 27367 (May 19, 1997) (Final Preamble).

Petitioners argue that the Department should now use labor cost data from
Chapter 6 of the ILO Yearbook instead of wage rates from Chapter 5 of the
ILO Yearbook to account for full labor costs. Also, Petitioners argue that
there is now no longer limitations on available data with respect to labor
costs. Therefore, Petitioners argue that the Department should reconsider
the database underlying its labor valuation methodology and use Chapter 6
labor costs data instead of Chapter 5 wage rate data, from the ILO
Yearbook.

Petitioners contend that the Department is obligated to interpret its
regulations in a manner that most accurately conforms to the statutory
directive. See Shakeproof Assembly Components Div. of Illinois Tool Works,
Inc. v. United States, 59 F. Supp. 2d 1354, 1358 (CIT 2000); Exxon Corp.
v. United States, 88 F.3d 968, 975 (Fed. Cir. 1996) cert. denied United
States v. Exxon Corp., 520 U.S. 1119 (1997). Thus, Petitioners argue that
with the availability of sufficient labor cost data in Chapter 6 of the
ILO Yearbook, the Department should use it because the database best
satisfies the statute's direction to use labor costs to value the labor
input.

Petitioners refer to the Chapter 5 wage rate data from the 2000 Year Book
of Labour Statistics represent wage rates/earnings, which specifically
excludes employers' contributions in respect of their employees paid
social security and pension schemes (and benefits received by employees
under these schemes), severance and termination pay, overtime payments,
bonuses and gratuities, and family allowances. See 2000 Year Book of
Labour Statistics, International Labor Office (Geneva: 1999), Chapter 5:
Wages, at 817. Petitioners argue that the Chapter 5 data are included in
what the employee receives and not, as it should be, on the cost the
employer incurs for labor.

Petitioners argue that Chapter 6 data cover the cost the employer incurs
for labor, rather than only what the employee receives. Instead,
Petitioners argue that the Chapter 6 labour cost data from the 2000 Year
Book of Labour Statistics represent labor cost/compensation of employees,
which includes the cost of food, drink and other payments in kind, cost to
employer for vocational training, and other items.

Petitioners note that, in 1998-99 TRBs from China Final, the Department
rejected Petitioners argument to use Chapter 6 labor cost data to value
the labor input, stating that the Chapter 6 data is overly inclusive by
including such items as employee housing, education, cultural and
recreational expenses, and other items. See 1998-99 TRBs from China Final,
66 FR 1953 (January 10, 2001) and accompanying Issues and Decision
Memorandum at Comment 7.

Petitioners argue that the types of labor costs that are included in
Chapter 6, but excluded from Chapter 5, are labor costs that are actually
incurred by the Xinyi and FYG and cite to a Xinyi and FYG brochure, and
FYG's annual report. 

Petitioners argue that the there is sufficient labor cost data available
from Chapter 6 of the ILO Yearbook to use as the basis for valuing labor.
Petitioners note that if the Department uses Chapter 6 labor cost data,
the Department should deduct the surrogate producers' contributions to
staff welfare and provident funds (included in Chapter 6 data) from the
SG&A in order to avoid any double counting.

FYG's Rebuttal: FYG argues that the Department has previously considered
the argument made by Petitioners here and rejected it. The Department
concluded that Chapter 5 data were "appropriately comprehensive" while the
Chapter 6 data was "overly inclusive." See 1999-00 TRBs from China Final,
66 FR 57420 (November 15, 2001) and accompanying Issues and Decision
Memorandum, Comment 7. FYG argues that the multiple "full labor costs"
Petitioners maintain are represented by Chapter 6 (e.g., food, drink and
other payments, transport of workers), for example, do not fit into any of
Atul's (a potential Indian surrogate company) employment expenses and are,
therefore, probably located in G&A. FYG contends that the same problem
with Petitioners methodology holds true of St. Gobain and Asahi. FYG
argues that it is simply not possible to ascertain the coverage of Chapter
6 data with sufficient detail to ensure that similar costs are not double-
counted in the Indian producers' SG&A. 

FYG argues that the Department's regulations do not violate the statute
because the Department's methodology accounts for labor hours and accounts
for the remaining additional personnel costs (i.e., food and drink and
housing) in SG&A. 

FYG also argues that Petitioners' argument that the Chapter 6 data now
cover additional countries than were covered in 1996 is irrelevant. FYG
argues that the 1999-00 TRBs from China Final have shown that Chapter 6
data is "overly inclusive" and that many kinds of expenses that are
included in Chapter 6 must also be included in SG&A. Id.

Xinyi Rebuttal: Xinyi argues that the Department should continue to value
labor according to its current practice, which uses the most current wage
statistics from the International Labor Office. Xinyi rebuts Petitioners
argument to use labor costs because this figure represents an inflated and
overly broad estimate of wage cost and has already been rejected by the
Department. See 1998-99 TRBs from China Final, 66 FR 1953 (January 10,
2001) and accompanying Issues and Decision Memorandum, Comment 7.

Department's Position: We disagree with Petitioners. Consistent with both
of the TRBs cases cited above, the 1998-1999 and the 1999-2000
administrative reviews, we continue to find that it is more appropriate to
use Chapter 5 wage data rather than Chapter 6 labor cost data as the
surrogate value for labor. The Chapter 6 data is overly inclusive in that
it encompasses not only wage cost, provident fund and welfare expenses,
but also other expenses such as employee housing, education, cultural, and
recreational facilities, grants to credit unions, the cost of employee
recruitment and other miscellaneous items (such as work clothes, travel
between the home and place of work). The Chapter 5 wage data, by contrast,
is appropriately comprehensive in that it includes holiday pay, incentive
pay, pay for piecework, and cost-of-living allowances.



Comment 12: Whether Xinyi's Market Economy-Based Inland Freight Expenses
Are Controlled by the Chinese Government

Petitioners' Argument: Petitioners argue that the Government of China
controls prices for inland transportation. Petitioners contend that the
prices Xinyi pays to its market economy based-freight forwarder are not
based on market economy prices. Petitioners submitted a table from the
Draft Report of the Working Party on the Accession of China, dated
September 5, 2001, which listed the service sectors subject to government
guidance pricing (including the CPC classification codes for transport
services) and, in several separate filings, at the request of the
Department, submitted the definition of government guidance pricing and a
descriptive list of the types of transport services for the CPC
classification codes under transport services. Petitioners argued that the
Chinese government controlled the trucking prices Xinyi was charged by the
Hong Kong-based freight forwarder for inland transportation. Petitioners'
note that this government guidance pricing provides that enterprises make
their pricing decisions according to a base price or within a range of
prices. Petitioners maintain, therefore, that the Department should assign
a surrogate value for Xinyi's foreign inland freight, which was for
trucking services from Xinyi's factory to the port. Petitioners also
maintain that a surrogate value for freight should be assigned to subject
merchandise that Xinyi transports with its own trucks.

Xinyi's Rebuttal: Xinyi argues that the Department should use market
economy prices for the inland freight charges. Xinyi argues that at
verification the Department confirmed that Xinyi uses market economy
carriers from Hong Kong to transport windshields to the port of Hong Kong.

Department's Position: We agree with Xinyi. Xinyi reported in its June
28, 2001, Section C response that it paid a market-economy price to its
freight forwarder for inland transportation to the Hong Kong port. Also,
we verified that a Hong Kong-based freight forwarder provided trucking
services for the transportation of subject merchandise from Xinyi's
factory to the Hong Kong port. See Verification of Sales and Factors of
Production for Xinyi Automotive Glass (Shenzhen) Co., Ltd. ("Xinyi") in
the Antidumping Duty Investigation of Automotive Replacement Glass ("ARG")
Windshields from the People's Republic of China ("PRC"), dated December
19, 2001 (Xinyi Verification Report) at 16-17. There is no evidence on the
record that demonstrates that the inland truck transportation prices in
China, for services provided by a Hong Kong-based market-economy provider,
are subject to government guidance pricing. The CPC classification codes
for transport services subject to government guidance pricing in
Petitioners' January 22, 2002 submission, which is from a portion of a WTO
report (the Service Sectoral Classification List from Annex 4 of the
Annexes of the Draft Protocol of Accession) does not include road
transport services such as trucks.



Comment 13: Whether the Department Should Make Certain Adjustments to
Freight for FYG

Petitioners' Arguments: Petitioners argue that the Department should add
a surrogate value for Chinese inland freight for FYG. See FYG November 16,
2001, Pre-verification Corrections at 3.

Petitioners argue that the reported freight costs for NME carriers are
too low. With respect to FYG, which based non-market economy shipper
prices on similar destined sales using market economy ("ME") shippers,
Petitioners argue that "substantially half" of Greenville Glass
Industries, Inc's. ("GGI") NME carrier shipments went to cities not served
by ME carriers and that "over half" were not even delivered to states by
ME carriers. Petitioners argue that this amount of mismatching data
renders the prices paid to FYG's ME carrier shipments an unrepresentative
basis upon which to calculate market economy equivalents for NME
shipments. 

Petitioners argue that the Department should use the ocean and U.S.
inland freight rates from the Maersk Sealand internet Website. Petitioners
argue that the rates on the Maersk Sealand internet site are more
contemporaneous with the POI. Petitioners argue that should the Department
choose not to disregard FYG's ME shipper rates, the Department should
apply the ME rate for the destination that is closest to the NME
destination and not use FYG's methodology.

Petitioners contend the Department should use updated marine insurance,
brokerage and handling, and domestic inland insurance surrogate values, as
Petitioners have provided to the Department. Petitioners' argue that the
new marine insurance rate should be based on a percent of the gross unit
price. 

FYG's Rebuttal: FYG agrees with the Petitioners that the Department must
calculate a surrogate freight rate for Chinese domestic inland freight.

FYG argues that the market economy shipper rates it uses are specific to
auto windshields, as opposed to Petitioners' proposed ME shipper values
which are based on glass and glassware. FYG argues that rates for glass
and glassware could be more expensive than auto windshields because glass
and glassware include laminated glass. FYG contends that its market
economy freight averages are contemporaneous with the entire POI, and
reflect actual prices paid. 

FYG contends that the market economy price it pays for shipping
windshields is based on a negotiated price, which is lower than the
internet-based prices proposed by Petitioners that are basically a
"sticker price" for freight. See FYG's Case Brief at 80.

FYG maintains that freight should be valued using market economy costs,
as is the practice with other inputs when the Department has market
economy purchases. See Tapered Roller Bearings and Parts Thereof, Finished
and Unfinished, From the People's Republic of China: Preliminary Results
of 1999-2000 Administrative Review, Partial Rescission of Review, and
Notice of Intent Not To Revoke Order in Part, 66 FR 35937 (July 10, 2001).

FYG contends that Petitioners' argument, that FYG's methodology is skewed
because it is based on high volume shipments to California resulting in
low market economy freight rates is unfounded. FYG argues that averaging
the market economy shipper sales through California in some instances
distorts the freight charge upward based on higher priced market economy
freight charges within the west region. Therefore any distortions caused
by low freight charges are evened out by these higher freight charges.

FYG contends that it analyzed the shipments from NME shipper COSCO and
found that at every level of the cost hierarchy, the average cost under
FYG's methodology was higher than the actual NME rate.

FYG argues that Petitioners' suggested, more contemporaneous marine
insurance rate, applies to cargo with similar characteristics as tapered
roller bearings and is only a few months more contemporaneous than the
marine insurance rate used by the Department in the Preliminary
Determination (which applies to steel wire rod cargo). FYG argues that
Petitioners have provided no evidence that a marine insurance rate for
tapered roller bearings is more specific to windshields, than one for
steel wire rod used by the Department in the Preliminary Determination.

FYG argues that if the Department does choose to use Petitioners' marine
insurance rate, then the Department should not apply that rate to the
"gross selling price" as suggested by Petitioners. FYG argues that entered
value more closely represents the gross value of the goods if lost in
transit to the U.S., and also does not include the markup of FYG's
affiliate in the U.S., GGI.

FYG argues that because the Department did not add brokerage and handling
and inland insurance expenses to FYG's movement charges, the Department
should not use the Petitioners' new values for FYG for the final
determination.

Department's Position: We agree with both parties that the Department
must include a surrogate value for Chinese inland transportation.

We agree with Petitioners in part regarding FYG's methodology for
calculating international and U.S. freight. Where FYG can match ME shipper
rates to NME shippers going to the same zip code and city, we will use
FYG's reported market economy shipper price. However, where there is no
match by zip code and city between the ME and NME shipper, the Department
will calculate a surrogate value.

With regard to brokerage and handling and inland insurance expenses, FYG
did not incur brokerage and handling or inland insurance charges. See
FYG's Section C Response at 25-26 (June 25, 2001). Accordingly, the
Department will not add an amount for brokerage and handling or inland
insurance fees and will not, therefore, apply Petitioners' updated values.

With regard to marine insurance, the Department will use the rate
provided by Petitioners. While FYG argues that Petitioners' marine
insurance rate is for tapered roller bearings and not subject merchandise,
the Department used a marine insurance rate for steel wire rods, also not
subject merchandise. The Department can see no reason why tapered roller
bearings bear any less of a relation to subject merchandise than steel
wire rod. And, as FYG points out, Petitioners' marine insurance rate is
more contemporaneous with the POI.

With regard to using gross selling price to value marine insurance, the
Department will value marine insurance based on the entered value of the
sales, and not on the gross selling price as argued by Petitioners. The
Department determines that entered value more closely represents the
shipping value of the goods. Gross selling price includes the mark-up of
GGI and should not be factored into the calculation for marine insurance.



Comment 14: Whether Respondents Reported Usage Rates for Float Glass and
PVB Are Understated

Petitioners' Argument: Petitioners argue that float glass and PVB usage
by respondents is understated and therefore should be adjusted.
Petitioners also contend that the Department was made aware, through pre-
verification comments submitted by Petitioners for both respondents, of
Petitioners' concerns. Petitioners expressed concern with respondents'
reported total glass and PVB consumption, when compared to the total glass
and PVB shipped in windshields. Petitioners wanted to compare total
windshields versus subject merchandise usage rates. See Petitioners'
November 2, 2001 submission.

Petitioners maintain that it is unclear to them whether or not the
Department obtained the kind of data necessary at verification to verify
the reported usage rates for float glass and PVB in the respondents'
questionnaire response. Particularly, Petitioners contend that the
verification report for FYG does not specify if the hand-written notations
on the tracking sheet record glass usage, or whether it records glass
usage once the bending furnace begins producing windshields to
specifications for that particular model. Petitioners argue that failure
to account for the glass that is used while the bending furnace is being
"tuned" to specifications can result in substantial under-reporting of
total glass usage.

Petitioners argue that its own analysis of yield rates shows that FYG's
and Xinyi's yield rates for float glass and PVB are too high when compared
with the yield rates for the domestic producers. Petitioners argue that
because respondents do not appear to have provided information that would
account for their usage of float glass at the beginning of the production
runs when the bending furnaces are being adjusted, the Department should
use the best information available as to float glass usage, and adjust
respondent's float glass usage by this determined amount.

FYG's Rebuttal: FYG argues that float glass and PVB usage was verified by
the Department, in accordance with the methods proposed by Petitioners.
FYG argues that the Department found no discrepancies with respect to its
float glass and PVB usage. FYG maintains that the Department verified the
number of molds in the furnace at one time, which FYG argues, showed the
Department that no tuning or adjustments occur at the beginning and end of
a production run.

FYG argues that the Department verified that FYG accounted for all
losses. FYG argues that Petitioners want the Department to use facts
available, and not verified data, based on an affidavit describing how PPG
produces windshields.

Xinyi's Rebuttal: Xinyi argues that at verification the Department noted
no discrepancies with respect to float glass usage and, therefore, there
is no basis whatsoever for the Department to use best information
available as to Xinyi's float glass usage.

Department's Position: We disagree with Petitioners. The Department
verified usage rates of both float glass and PVB based on comments
received from Petitioners and in accordance with our usual verification
procedures. See Verification of Sales and Factors of Fuyao Glass Industry
Group Co., Ltd., ("FYG") in the Antidumping Duty Investigation of
Automotive Replacement Glass ("ARG") Windshields from the People's
Republic of China ("PRC"), December 19, 2001 

(FYG Verification Report) and Verification of Sales and Factors of
Production for Xinyi Automotive Glass (Shenzhen) Co., Ltd. ("Xinyi") in
the Antidumping Duty Investigation of Automotive Replacement Glass ("ARG")
Windshields from the People's Republic of China ("PRC"), (Xinyi
Verification Report) both dated December 19, 2001. As stated by both FYG
and Xinyi, we noted no discrepancies between reported usage rates and
information gathered at verification. While Petitioners mention concerns
with the Department's collection of data which would allow it to verify
the accuracy of FYG's and Xinyi's usage factors, Petitioners have not
demonstrated a deficiency in data collection in the Department's
verification. See Verification Reports for FYG and Xinyi.



Comment 15: Whether Respondents Reported U.S. Selling Prices are Reliable

Petitioners' Argument: Petitioners argue that the reported per unit or
per square meter prices appear noticeably different than prices found in
official import statistics for subject merchandise. Petitioners argue that
Xinyi and FYG make up a high proportion of windshield sales in the U.S.
and their prices appear noticeably different than those found in official
import statistics. Petitioners argue that the Department should
investigate this issue thoroughly to ensure that the data on which it is
relying to calculate dumping margins is in fact reliable and accurate.

FYG's Rebuttal: FYG argues that the entered values for GGI have been
verified by the Department and no discrepancies were found. FYG maintains
that it is reasonable for FYG's entered values to be lower than the
reported prices, because the entered values do not represent the price to
the first unrelated customer. FYG argues that Petitioners' analysis
ignores the fact that FYG's U.S. prices are based almost entirely on CEP
transactions. FYG maintains that GGI adds its markup to those prices to
cover its expenses such as freight, duty, and the cost of its sales office
in Greenville, South Carolina.

Xinyi's Rebuttal: Xinyi argues that at verification the Department
verified Xinyi's selling prices. Xinyi also argues that most of it's
selling prices are set by Xinyi North America and, therefore, the import
statistics would not reflect the actual sales prices of Xinyi.

Department's Position: We disagree with Petitioners. The Department
verified the selling price of windshields based on comments received from
Petitioners and in accordance with the Department's normal verification
procedures. As stated by both FYG and Xinyi, we noted no discrepancies
between the reported selling price, entered value and information provided
by respondents. While Petitioners mention concerns that FYG's and Xinyi's
prices are noticeably different than the prices found in import
statistics, there is no new information on the record that shows
discrepancies with respondents' reported data. Petitioners have not
demonstrated a specific deficiency in the Department's verification of the
issue at hand.



Comment 16: Critical Circumstances

Petitioners' Argument: Petitioners argue that the Department should
continue to find critical circumstances exist with respect to the PRC
entity. In addition, Petitioners argue that based on the new information
submitted since the preliminary determination, the Department should also
find critical circumstances exist with respect to FYG, Xinyi, Benxum,
TCGI, Changchun, Guilin and Wuhan.

Petitioners note that the statutory elements for a critical circumstances
determination include: (A)(i) whether there is a history of dumping and
material injury by reason of dumped imports in the United States or
elsewhere of the subject merchandise, or (ii) whether the person by whom,
or for whose account, the merchandise was imported knew or should have
known that the exporter was selling the subject merchandise at less than
its fair value and that there was likely to be material injury by reason
of such sales, and (B) whether there have been massive imports of the
subject merchandise over a relatively short period. Section 733(e)(1)(A)
and (B) of the Act. 

Petitioners note that in the preliminary determination, the Department
concluded that there was sufficient evidence of massive imports from the
PRC with respect to ARG windshields for the PRC-wide entity, thereby
satisfying the second criterion for critical circumstances. See
Preliminary Critical Circumstances Memorandum, September 10, 2001.
Petitioners note that in the preliminary determination, the Department
also determined that the margin threshold was not sufficient to impute
importer knowledge with respect to FYG, Xinyi, Benxun, TCGI, Changchun,
Guilin and Wuhan.

Petitioners contend that using the new surrogate value information
submitted since the preliminary determination, the margin has met the
margin threshold to impute knowledge of dumping with respect to FYG. With
respect to Benxun, Changchun, Guilin and Wuhan, Petitioners argue that
sales from these respondents should be reclassified from EP to CEP sales
in light of information that these respondents have U.S. affiliates.
Petitioners argue that this reclassification would subject these
respondents to the fifteen percent CEP threshold to impute knowledge of
dumping for these respondents. Petitioners charge that Changchun, Guilin
and Wuhan all have a U.S. affiliate, Pilkington North America. With
respect to Benxun, Petitioners argue that Benxun's annual report indicates
that it has a U.S.-based subsidiary (Standard Glass Corporation) that may
be acting as a local sales agent for Benxun's windshields as well as for
other fabricated glass products produced by China Southern. Therefore,
Petitioners argue that Benxun's sales should be reclassified as CEP sales
also, which would subject Benxun to the fifteen percent threshold for
imputation of knowledge of dumping.

Xinyi's and others' Rebuttal: Xinyi, Benxum, TCGI, Diamond Triumph,
Elite, Mygrant and China Southern argue that pursuant to the Department's
normal practice, critical circumstances do not apply to those companies
that were not investigated and verified. See Final Determination of Sales
at Less Than Fair Value: Brake Drums and Brake Rotors from China, 62 FR
9160, 9165 (February 28, 1997) (Brake Drums and Rotors). The respondents
argue that in Brake Drums and Brake Rotors, 62 FR at 9165 and Final
Determination of Sales at Less Than Fair Value: Certain Preserved
Mushrooms from China, 63 FR 72255, 72259 (December 31, 1998) (Mushrooms
Final), where the Department explained that it is not appropriate to find
critical circumstances with respect to respondents whose individual data
have not been analyzed due to the Department's own administrative
constraints.

Changchun, Guilin and Wuhan likewise argue that it is the Department's
established practice not to find critical circumstances with respect to
cooperative respondents whose individual data were not analyzed due to the
Department's own administrative constraints. See Brake Drums and Rotors 62
FR at 9165; Mushrooms Final, 63 FR at 72259, 72262-72263 (December 31,
1998); Preliminary Determination of Sales at Less Than Fair Value: Honey
from the People's Republic of China, 60 FR 29824, 29825 (June 6, 1995).
Changchun, Guilin and Wuhan further argue that it would be unfair and
inappropriate to reclassify their sales as CEP sales and thus, apply the
fifteen percent threshold for critical circumstances. Changchun, Guilin
and Wuhan argue that Petitioners may be wrong that the Department elected
the twenty five percent threshold for these respondents because the
Department assumed the sales of these companies were EP sales. However,
Changchun, Guilin and Wuhan argue that it is more reasonable and
consistent with the Department's practice to apply the higher threshold to
cooperating companies that were not selected for investigation. Changchun,
Guilin and Wuhan argue that because their sales responses were not
analyzed in this case, it is questionable whether the Department can make
a determination on the record as to whether these companies' sales are EP
or CEP for critical circumstances purposes. Additionally, Changchun,
Guilin and Wuhan argue that it would be unfair and inappropriate for the
Department to selectively analyze the sales response of a company at this
late stage of the investigation.

Changchun, Guilin and Wuhan also argue that even if the Department were
to make an affirmative finding as to the knowledge of dumping, it would
still make a negative finding of critical circumstances, because none of
these companies had massive imports over a relatively short period of
time. Changchun, Guilin and Wuhan contend that their submitted shipment
data, which were submitted on August 23, 2001, show that none of these
companies had massive imports over a relatively short period of time
following the filing of the petition.

Department's Position: The Department continues to find that the margin
threshold to impute knowledge of dumping has not been met with respect to
FYG or Xinyi, or with respect to the non-mandatory respondents (Benxun,
Changchun, Guilin and Wuhan, and TCGI). The final calculated margin for
FYG is below 15 percent, the Department's threshold for imputing knowledge
of dumping for CEP sales. For Xinyi the final calculated margin is below
25 percent, the Department's threshold for imputing knowledge of dumping
for EP sales. We therefore do not find critical circumstances with respect
to these companies. Furthermore, the weighted-average margin we calculated
for the non-mandatory respondents, Benxun, TCGI, Changchun, Guilin and
Wuhan, is less than either the 25 percent threshold for imputing knowledge
for EP sales or the 15 percent threshold for CEP sales. Although the
record as to these respondents does not indicate whether their sales were
EP or CEP, neither threshold is met. See Notice of Final Determination of
Sales at Less Than Fair: Certain Non-Frozen Apple Juice Concentrate from
the People's Republic of China, 65 FR 19873 (April 13, 2000) (discussing
critical circumstances with respect to non-selected or non-mandatory
respondents). Therefore, we do not consider critical circumstances to
exist with regard to these non-mandatory respondents. 

Comment 17: Whether the Scope Includes ARG Windshields for Buses,
Recreational Vehicles and Farm Machinery

Petitioners argue that the scope of this investigation includes ARG
windshields for buses and farm machinery.

Both FYG and Xinyi argue that the scope of this investigation does not
include ARG windshields for buses and farm machinery.

Department's Position: The Department has determined that ARG windshields
for buses and farm machinery fall within the scope language of this
investigation set forth in the initiation. See Notice of Initiation of
Antidumping Duty Investigation: Automotive Replacement Glass Windshields
from the People's Republic of China, 66 FR 16651 (March 27, 2001). For a
complete discussion of this issue, including comments, please see
Memorandum from Edward C. Yang to Joseph Spetrini, dated January 24, 2002.



Comment 18: Whether the Department Used Incorrect Inflation Figures

Petitioners' Argument: Petitioners argue that the Department used an
incorrect inflation figure in the Preliminary Determination. 

FYG's Rebuttal: FYG argues that Petitioners are correct in arguing that
the Department used an incorrect inflation figure in the Preliminary
Determination.

Department's Position: We agree with Petitioners and FYG. We will make
the appropriate changes for the Final Determination. For an explanation of
this issue, please see the Factor Valuation Memorandum from Edward C. Yang
to the File dated February 1, 2002.



FYG's Comments 

Comment 19: Whether the Department Should Use the Remaining Average Float
Glass Costs Specific to the Thickness and Type Required for the CONNUM

FYG's Argument: FYG argues that the Department should value float glass
according to the thicknesses and types of float glass purchased by FYG.
FYG contends that in the Preliminary Determination, by averaging the cost
of all colored float glass, the Department lost the ability to match float
glass value to the normal value according to the thickness fields in the
CONNUM (i.e., THICKGU). FYG also argues that the Department included glass
not used in the production of subject merchandise to value float glass.

Petitioners' Rebuttal: Petitioners argue that, because there is a strong
reason to believe or suspect that market economy purchases of float glass
from Indonesia, Thailand and Korea are dumped and/or subsidized, the
Department should not use FYG's data to value FYG's float glass usage.

Petitioners argue that solar green glass should continued to be valued
from a certain market economy supplier (the market economy supplier is
Business Proprietary Information).

Department's Position: Because the Department is excluding FYG's market
economy purchases of colored float glass, the Department is using an
Indian Import Statistics surrogate value for colored float glass. See
Comment 1. Therefore, FYG's argument is not relevant.



Comment 20: Whether the Department Should Calculate the Profit Ratio
Based on the 1999-2000 Financial Report of Asahi India Safety Glass Ltd.

FYG's Argument: FYG argues that the Department should not use the 1999-
2000 financial report of Asahi to calculate the profit ratio. FYG argues
that Asahi purchased float glass from an affiliated company which enabled
Asahi to realize a profit on these purchases, while St. Gobain and Atul
suffered losses. FYG argues that Asahi's affiliated purchases result in a
discrepancy in the ratio of FOH to direct costs, as compared to the FOH
ratios of Atul and St. Gobain during the same fiscal period. See Exhibit
28 to FYG's July 23, 2001, Surrogate Values Submission. FYG also points
out that Asahi imported nearly 65 percent of its raw materials, compared
with 8 percent and 29 percent for Atul and St. Gobain respectively, and
this shows that Asahi's financial experience was not representative of the
Indian ARG's industry. See Atul Report at 34 and St. Gobain Report at 18.

Petitioners' Rebuttal: Petitioners argue that Asahi's prices for float
glass are not distortive. Petitioners contend that Asahi's prices for
float glass were higher than prices paid by St. Gobain during the period
April 1, 1999 through March 30, 2000. Petitioners also point out that St.
Gobain's auditors confirmed that St. Gobain's purchase of raw materials
were made at prices that reflect the prevailing market prices, which FYG
stressed in its July 23, 2001, Surrogate Factor Value submission.

Department's Position: We agree with Petitioner. FYG's contention that
Ashai's float glass purchases may not be at arm's length is not supported
by evidence on the record. While the Department recognizes that Asahi
realized a profit and the two other windshield producers, St. Gobain and
Atul, did not, this fact by itself does not support a finding that Asahi
realized a profit based on affiliated float glass purchases from Asahi
Japan as FYG argues. Also, FYG's argument that Ashai imported a large
amount of raw materials compared with St. Gobain's and Atul's imports of
raw materials, does not demonstrate to the Department that Asahi is not
representative of the all Indian ARG producers.



Comment 21: Whether the Net Profit Ratio Should be Based on a Simple
Average of the Financial Results of Saint-Gobain Sekurit and Asahi

FYG's Argument: FYG argues that the Department should use a simple
average of the profit of Asahi and St. Gobain to derive profit, with St.
Gobain's negative profit imputed to zero. Petitioners argue that the
Department usually uses a simple average of surrogate companies to derive
FOH, SG&A and profit. See Notice of Final Determination of Sales at Less
than Fair Value: Steel Concrete Reinforcing Bars from China, 66 FR 33522
(June 22, 2001) 

(Re-bar from China).

FYG contends that the CIT rejected the Department's apparent departure
from using a simple average to derive financial ratios. FYG argues that
the court in Rhodia, Inc. v. United States, Slip Op. 01-138, Court No. 00-
08-00407 (CIT 2001) (Rhodia) (ruling on Bulk Aspirin from the PRC, 65 FR
33805 (June 27, 2000)), found in favor of the Department using a simple
average for financial ratios, noting that in "almost every" antidumping
investigation where only a few surrogate companies are used, the
Department applies a simple average to derive FOH.

FYG argues that the Department should not rely on the decision of past
TRB cases from China, in which the Department departed from its usual
methodology of using a simple average to derive financial ratios, because
respondents in the TRB cases never disputed the Department's methodology.
However, FYG also points out that in 1998-99 TRBs from China Final, the
Department found that neither of the surrogate companies were designated
"sick" by the Indian Government or found to be in non-compliance with
Indian generally accepted accounting principles ("GAAP") and, therefore,
the Department zeroed out negative profit and used the financial reports
of the surrogate companies.

FYG argues that Atul has been labeled a "sick" company under Indian law
and, therefore, should not be used in the calculation for profit. See
section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Petitioners' Rebuttal: Petitioners argue that including the annual
reports of St. Gobain and Atul together with Asahi in calculating profit
is inconsistent with the SAA accompanying the Uruguay Round Agreements Act
("URAA"). See Statement of Administrative Action accompanying the Uruguay
Round Agreements Act, at H.R. Doc. 316, 103d Cong., 2d. Sess. at 814
(1994) ("SAA"). Petitioners contend that the Final Determination in the
Antidumping Investigation of Steel concrete Reinforcing Bars from the
People's Republic of China, 66 FR 33522 

(June 22, 2001) (Re-bar from China) stands for the principle that in NME
cases, the Department should disregard financial statements showing a loss
for purposes of calculating profit. Petitioners contend that FYG has
offered no reason for the Department not to follow Department precedent.

Petitioners contend that 1998-99 TRBs from China Final is distinguishable
from the present case. Petitioners argue that the losses suffered by the
surrogate companies in 1998-99 TRBs from China Final were in the ordinary
course of business. Petitioners contend that the losses suffered by St.
Gobain and Atul are extraordinary, which make them subject to special
provisions of Indian corporate law. Petitioners point out that St. Gobain
was found to be a "Potentially Sick Industrial Company" as laid down in
Section 23 of the Sick Industrial Companies (Special Provisions) Act,
1985. See St. Gobain's April-December 2000 Annual Report. Petitioners
argue that Atul was declared a "Sick Industrial Company" in its April 1999-
March 2000 Annual Report.

Department's Position: We agree with Petitioners. In this case, including
an Indian surrogate company which has a negative profit will distort the
profit calculation. Using the financial statement of only Asahi enables us
to derive an "element of profit" as intended by the SAA accompanying the
URAA. See SAA at 839. As the SAA explains, "in most cases, Commerce would
use profitable sales as the basis for calculating profit for the purposes
of constructed value." Id. at 840. The Department, therefore, "may ignore
sales that it disregards as a basis for normal value, such as those
disregarded because they were made at below cost prices." Id. at 839. See
Re-bar from China, 66 FR 33522 (June 22, 2001).



Comment 22: Whether the Asahi India Profit Ratio Contains a Clerical Error

FYG's Argument: FYG argues that the Preliminary Determination contains a
clerical error with respect to the transposition of Asahi's "Repairs and
Maintenance" expense.

Department's Position: We agree with FYG. FYG points out that correcting
the profit ratio to account for the error in transposing a value will not
change the profit ratio. Nevertheless, the Department has made the
correction for the final determination.



Comment 23: Whether the Department's Calculation of the Factory Overhead
Ratio Should Exclude the Cost of Stores and Spare Parts

Petitioners Argument: Petitioners argue that the Department correctly
included St. Gobain's reported stores and spare parts in the build-up of
St. Gobain's FOH. Petitioners contend that windshield producers must
maintain significant inventories of bending irons and silk screens, and
that stores and spare parts presumably contains shop supplies, which are
commonly used in the manufacture of most products. Petitioners argue that
it would be speculative to assume that stores and spare parts includes a
substantial portion of accessories used in the production of windshields.

FYG's Argument: FYG argues that St. Gobain's stores and spare parts
expense contains some direct material costs that should be included under
direct materials as opposed to FOH. FYG argues that because the
Department's calculation of FYG's material costs includes all FYG's
reported raw materials and components, the addition of a factory overhead
amount that also includes all materials and components other than float
glass and PVB results in double counting the costs for these materials.

FYG argues that the stores and spare parts expense is unusually high when
compared to other costs reported by St. Gobain in FOH and, therefore, must
include some direct material costs. FYG argues that other direct
materials, such as connectors, antennae, mirror buttons, etc., are not
accounted for in raw materials consumed, which only include float glass
and PVB, and must therefore be included in stores and spare parts, as no
other expense item in St. Gobain's financial report could contain these
direct material costs. 

FYG contends that the Department, in the 1997-1998 administrative review
of silicomanganese from the People's Republic of China, concluded that
certain electrode paste used was a "significant" and regular part of the
production process and that the Department should calculate a separate
factor value for this input. See Silicomanganese From the People's
Republic of China: Notice of Final Results of Antidumping Duty
Administrative Review, 65 FR 31514 

(May 18, 2000) (Silicomanganese from the PRC). FYG also argues that the
Department decided in Silicomanganese from the PRC to exclude the expense
category for stores and spares from the data before calculating the
factory overhead ratio because it would avoid double counting, and because
stores and spares would typically include the cost of "consumer materials"
similar to process materials like the electrode paste.

FYG argues that this case is more compelling than Silicomanganese from
the PRC because there is no doubt that the costs for a large number of
direct materials and possibly even packing materials are here in this
expense category of the Indian surrogate companies. FYG also argues that
if the Department chooses to exclude stores and spares from FOH, it still
prejudices FYG because these other direct material costs will not be
included in the direct material costs which include float glass and PVB.
FYG argues that even if the Department does not exclude stores and spares
from FOH, it should include stores and spares in the FOH after calculating
the FOH ratio.

Petitioners' Rebuttal: Petitioners argue that FYG offers no evidence that
stores and spare parts includes direct material inputs. Petitioners also
point out that FYG does not offer a methodology that would allow the
Department to determine what proportion of stores and spare parts contain
direct inputs.

Petitioners argue that FYG's position, that stores and spare parts in St.
Gobain's financial statement is aberrationally high, is not supported by
evidence. Petitioners argue that stores and spare parts could be high
because bending irons can require frequent repair and silk screens can
require frequent replacement. Petitioners also contend that windshield
production involves sophisticated machinery, which would also boost the
cost of stores and spare parts.

Petitioners argue packing materials, which FYG argues could be included
in stores and spare parts, could be included in the separate line items
for freight, octroi and packing expenses, which the Department deducts
from the totals for FOH and SG&A as part of its calculations.

Petitioners argue that Silicomanganese from the PRC does not serve as a
precedent for excluding stores and spare parts from FOH. Petitioners argue
that electrode paste, the item in question in that case, was found by the
Department to constitute a "significant portion" of the cost of the
finished product. Petitioners argue that there is no indication whether
that portion of electrode paste is smaller, larger or comparable to the
stores and spare parts expense in St. Gobain's annual report.

FYG's Rebuttal: FYG contends that Petitioners have "renamed" stores and
spares consumed to stores and spare parts. Please see FYG's Argument
section above for a discussion of FYG's position on this issue.

Xinyi's Rebuttal: Xinyi argues that stores and spares should be excluded
from FOH. Xinyi contends that stores and spares already includes an amount
for the manufacture of these items, and the addition of another factory
overhead amount over and above such an amount results in double-counting
the costs of these materials. 

Xinyi argues that the Department in this investigation should follow the
methodology it used in Silicomanganese from the PRC, when it excluded
stores and spares from the FOH expense used in its calculation. Xinyi
argues that this methodology employed by the Department in Silicomanganese
from the PRC effectively removed any chance that it would overstate or
double-count the materials in question.

Department's Position: We agree with Petitioners that stores and spare
parts should be included in FOH. The financial report of St. Gobain does
not provide a break out of the expenses that make up stores and spare
parts.

The Department does not agree with FYG's argument that the facts in
Silicomanganese from the PRC are comparable to the present investigation.
Silicomanganese from China is distinguishable from the present
investigation because it involved the exclusion of "consumable materials"
similar to process materials, like electrode paste. The Department's
treatment of electrode paste in Silicomanganese from the PRC is not
transferable to the present investigation. From the evidence on the
record, the Department cannot draw comparisons between electrode paste and
other direct materials needed for the production of ARG windshields, and
in turn determine whether these direct materials constitute a significant
portion of the production costs for windshields. The Department cannot
determine how electrode paste from Silicomanganese from the PRC relates to
other possible direct materials, used in the production of windshields,
which were presumably excluded from the direct material costs. Also, in
Silicomanganese from China, the only reason stores and spares were removed
from FOH was to avoid double counting electrode paste in FOH. While FYG
only argues for the premise that costs should not be double counted, the
fact that other direct materials they mention (connecters, antennae,
mirror buttons) do have a separate value enforces the argument that these
should not be included in direct material costs.

As for the issue that direct materials, other than float glass and PVB,
is present in stores and spare parts, the only evidence FYG has presented
that direct materials are included in stores and spares is that stores and
spares has an unusually high value compared to other expenses in St.
Gobain's financial report. The Department does not agree with FYG's
argument that the fact that stores and spare parts is unusually high
compared with other costs is evidence that stores and spare parts
necessarily includes other direct materials. While FYG does demonstrate
that the direct material costs in direct materials only includes float
glass and PVB, there is no evidence on the record that these other direct
materials are included under stores and spare parts.



Comment 24: Whether the Department's Calculation of the SG&A Expense
Ratio Contains Errors

FYG's Argument: FYG argues that "Commissions on Sales, found in St.
Gobain's financial report, was incorrectly included by the Department in
its build-up of SG&A. FYG argues that the Department should not add
commissions to normal value because the Department does not make
circumstance of sale adjustments in NME cases.

FYG argues that the Department improperly included "Interest on Fixed
Deposits with Bank", found in St. Gobain's financial report, in the total
amount for financial charges. FYG cites Peer Bearing Co v. United States,
Slip Op. 2001-125, Ct. No. 97-03-00419 (October 25, 2001), where the CIT
noted that the antidumping duty law is remedial in nature, but it does not
allow the Department to give an unfair advantage to the domestic party
when the Department has less than perfect evidentiary data.

FYG argues that "purchase of traded goods", found in St. Gobain's
financial report, should be included in the Department's build up of the
cost of manufacture. FYG argues that the cost of traded goods should be
added to the cost of manufacture after calculating FOH, but before
calculating SG&A. FYG points out that in Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, From the People's Republic of China;
Final Results of Antidumping Administrative Review, 62 FR 61276, 62188
(November 17, 1997) (996-97 TRBs from China Final) and accompanying Issues
and Decision Memorandum at Comment 3, the Department noted that "purchase
of traded goods" are not SG&A or FOH, but are costs associated with
manufacturers purchasing finished and semi-finished goods, and represent
ordinary business expenses. FYG contends that the purchasing department
and warehousing expenses apply to both manufactured and traded goods,
which are typical SG&A expenses. FYG also contends that traded goods
absorb the same expenses for warehousing, inventory maintenance, shipping
department, and related common costs included in administrative and
selling expenses.

Petitioners' Rebuttal: Petitioners argue that "Commissions on Sales" is
essential for the Department to fully capture the surrogate producer's
SG&A expense and, therefore, should be included in the SG&A buildup.
Petitioners argue that "Commissions on Sales", which FYG calls a
circumstance of sales adjustment, have nothing to do with the calculation
of the surrogate Indian producer's SG&A expense.

Petitioners argue that the Department should not offset interest expense
and other expenses with interest and other income where there is no
evidence that the expense and income categories are related. See 1996-97
TRBs from China Final 62 FR 61276 (November 17, 1997. Petitioners also
argue that the Department will make no offsets to interest expenses where
it is not clear from the financial statement that the interest income was
short-term in nature. See Bulk Aspirin from the PRC, 65 FR 33805 (May 25,
2000). Petitioners contend that there is no evidence that the income from
"Interest on Fixed Income with Bank" is either short-term or related to
expenses for "cash credit accounts", "term loan accounts", and "unsecured
loans" as well as "other" interest expenses. Petitioners point out that in
the Preliminary Determination, the Department chose not to "look behind"
the annual reports of the companies in the surrogate country "because most
of the issues are based on a lack of specific information, such as the
exact nature of the expenses, whether they pertain to subject merchandise
sales, etc., and therefore what the rebuttable presumption is when
detailed information is lacking." See Petitioners' Case Brief at .
Petitioners maintain that the Department has chosen to use the aggregate
data as it has been compiled in the financial statements as the rebuttable
presumption. See Factors of Production Valuation Memorandum from the
Preliminary Determination at 18.

Petitioners argue that purchases of traded goods should not be included
in the build-up of COM. 

Petitioners contend that the CIT remanded a TRBs determination to the
Department for including 

traded goods in direct input costs in one of the TRBs administrative
reviews. Petitioners point 

out that FYG does not account for this cost when calculating profit.
Petitioners contend that 

there is no separate line item for revenues from sales of traded goods
and, therefore, FYG's 

proposal would only distort the expense.

Department's Position: We agree with Petitioners on all three points.
With regard to sales

commissions, while the Department normally treats commissions as a
circumstance of sale

adjustment in a market-economy case, the Department will treat
commissions as a necessary part of the build-up of costs in an NME
situation.

With regard to interest income, the Department has concluded that there
is insufficient evidence on the record to differentiate short-term and
long-term interest income from the surrogate companies financial reports.
See 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, 61970 (November 20, 1997). The Department does not look behind the
surrogate companies financial records. See Factors of Production Valuation
Memorandum for the Preliminary Determination.

With regard to purchase of traded goods, the Department has concluded
that there is adequate information on the record that enables the
Department to include the costs associated with the purchase of traded
goods in the build-up of COM. The financial reports do not provide
evidence as to the location of these costs and the Department will
normally not look behind the financial reports of surrogate companies.



Comment 25: Whether Water as Part of Energy in the Cost of Manufacturing
Results in Double-Counting 

FYG's Argument: FYG contends that St. Gobain's energy cost, as found in
the financial report, includes only electricity and, therefore, water must
be included in FOH. FYG argues that because water is included in FOH, the
Department double counts water by including it as a separate value in
direct materials and as an amount included in FOH and eventually SG&A and
profit. FYG also contends that water is not included in the other direct
costs for St. Gobain, which FYG argues only contain float glass and PVB.

FYG argues that the Department determined in the 1998-1999 administrative
antidumping duty review of sebacic acid from China, that water should be
valued as part of factory overhead and not as a direct material cost
because water could not be separated from FOH. See Sebacic Acid from the
People's Repbulic of China: Final Results of Antidumping Duty
Administrative Review, 65 FR 49537 (August 14, 2000). FYG also cites
Saccharin from the People's Republic of China, 59 FR 58818, 58824
(November 15, 1994) (Saccharin from the PRC) to argue that the Department
presumed water was accounted for in FOH. FYG points out that while water
and ice used in Saccharin from the PRC were properly included in factory
overhead, the Department found that certain distilled water, specially
processed packaged and shipped to customers, and required for a particular
segment of production where standard water could not be used, was properly
treated as a direct material input.

FYG argues that water usage in FYG's production facilities is incidental
to the production process and not an ingredient, or cost of manufacturing,
in making windshields.

FYG contends that in the investigation of synthetic indigo from China,
the Department determined that the water costs were a separate line item
in the surrogate companies' financial data, which allowed the Department
to deny respondents' claim that water was included in FOH. See Notice of
Amendment of Final Determination of Sales at Less Than Fair Value and
Antidumping Duty Order: Synthetic Indigo from the People's Republic of
China, 65 FR 37961-01 (June 19, 2000) (Synthetic Indigo from the PRC) and
accompanying Issues and Decision Memo at Comment 9. FYG argues that in
this case the Department cannot break out the water costs in St. Gobain's
financial report and that, therefore, water should be considered a part of
FOH.

Petitioners' Rebuttal: Petitioners contend that the Department should
continue to include water as a direct input in the production of the
subject merchandise and should continue to use the Asian Development
Bank's Second Water Utilities Data Book to value water. Petitioners cite
to Saccharin from the PRC to argue that the Department will value water
separately if it is required for a particular segment of the production
process. See Notice of Final Determination of Sales at Less Than Fair
Value: Saccharin from the People's Republic of China; 59 FR 58818
(November 15, 1994) (Saccharin from the PRC) Additionally, Petitioners
cite to Glycine from the People's Republic of China: Final Results of New
Shipper Adminstrative Review, 66 FR 8383 (January 31, 2001) (Glycine from
the PRC) to argue that inputs should be valued separately if the inputs
are essential for producing the finished product and if the input appears
to be a significant input into the manufacturing process rather than
miscellaneous or occasionally used materials, i.e., cleaning supplies
which might normally be included in consumables." See Bicycles from the
PRC, 61 FR 19026 (April 30, 1996).

Petitioners also argue that Synthetic Indigo from the PRC and Sebacic
Acid from the PRC, cited to by FYG, are distinguishable from the present
investigation and from Glycine from the PRC because in Synthetic Indigo
from the PRC and Sebacic Acid from the PRC there was no record evidence
that water was a significant input into the manufacturing process of
either product and water was, therefore, included in factory overhead.
Petitioners also note that in Saccharin from the PRC, the Department
valued water separately because it was a requirement for a particular
segment of the production process, and because it was more typical of
items that are accounted for as direct material inputs, rather than as
overhead items.

Petitioners argue that water is a "significant input" in the production
of ARG windshields. Petitioners contend that every piece of glass must be
washed after cutting to ensure that it is free of dirt which would
interfere with the windshield's transparency, as well as adhesion of the
PVB to the glass. Petitioners also argue that Xinyi uses "purified water,
which has been filtered and purified" to clean its float glass. See Xinyi
Section D Response at 4.

Xinyi's Rebuttal: Xinyi argues that the Department should value water as
a part of FOH as argued above by FYG.

Department's Position: We agree with Petitioners. During the verification
of both FYG and Xinyi, the Department witnessed the use of water in the
production process. It is clear from the production process for
windshields that water usage is significant and vital for cleaning the
windshields prior to the "sandwiching" of PVB in between the two panes of
float glass. While the Department recognizes FYG's argument that water is
not included in the energy cost of St. Gobain, and that water is not
listed as a separate line item in its financial report, the Department
does not view water as "incidental" to the production of windshields. As
witnessed during verification, water is an ingredient in the production of
windshields and therefore is viewed by the Department as an input which
requires a value separate from FOH. See FYG Verification Report at page 34
and Xinyi Verification Report at page 27 for discussions relating to water
usage.



Comment 26: Whether the Department Should Value Water Using Asian
Development Bank Data

FYG's Argument: FYG contends, notwithstanding its arguments above, that
if the Department continues to value water separately from FOH, the
Department should use United Nations data provided in its October 29,
2001, Supplemental Surrogate Values Submission. FYG argues that the United
Nations data are more contemporaneous than the value used by the
Department in the Preliminary Determination, and represent water rates in
cities comparable in size to Fuqing, China, where FYG produces its
windshields.

Petitioners' Rebuttal: Petitioners contend that the Department should use
the same surrogate value to value water as it used in the Preliminary
Determination, namely the Asian Development Bank's Second Water Utilities
Data Book. Petitioners contend that FYG's suggested source for valuing
water, Global Urban Indicator's Website, reflects at best, household,
industrial, and commercial, rather than only industrial use of water.
Petitioners also argue that FYG's provided Urban Indicators Tool Kit
Guide, a companion to the Global Urban Indicator's Toolkit, provides
information on household use.

Department's Position: We agree with Petitioners. The water rate provided
by FYG relates to household use. The water rate used in the Preliminary
Determination is a more accurate measure of the price of water used in the
commercial manufacture of ARG windshields.



Comment 27: Whether the Department Erred in Including U.S. Duty and
International Freight Charges Among the CEP Selling Expenses

FYG's Argument: FYG argues that the Department erred in including U.S.
duty and international freight in the pool of selling expenses that were
multiplied by the surrogate profit rate to calculate the CEP profit
deduction. FYG notes that section 772(c)(2)(A) of the Act sets forth that
the export price and constructed export price will be reduced by "the
amount, if any, included in such price, attributable to any additional
costs, charges, or expenses, and the United States import duties, which
are incident to bringing the subject merchandise from the original place
of shipment in the exporting country to the place of delivery in the
United States."

FYG points out that the SAA limits the deduction of direct expenses
pursuant to 772(d)(1)(B) to those expenses incurred after importation. FYG
also quotes the Antidumping Manual, Chapter 7 at 20 which states: "The SAA
specifies that direct selling expenses may only be deducted to the extent
they are incurred after importation." FYG contends that U.S. Duty and
International Freight are not charges incurred after importation.

FYG cites to Certain Cold-Rolled and Corrosion-Resistant Steel Flat
Products From Korea: Final Results of Adminstrative Review, 64 FR 12927,
12933 (March 16, 1999) wherein the Department determined that section
772(c)(2)(A) of the Act effectively prohibits the inclusion of U.S. duty
and international freight in the buildup of total United States expenses
for purposes of the CEP profit ratio.

Petitioners did not comment.

Department's Position: We agree with FYG. We have made the appropriate
adjustments to our calculations.



Comment 28: Whether the Department Double-Counted Molding

FYG's Argument: FYG argues that the Department's methodology in the
Preliminary Determination double counted the cost of molding purchases.
FYG contends that the double counting occurred because certain windshield
models include molding sourced from two countries. FYG argues that by
deducting the price of molding from the U.S. price and adding the price of
molding to normal value, the Department double counted molding in those
instances where the molding used for certain windshield models was sourced
from two market economy countries.

FYG also contends that it has provided data which would enable the
Department to calculate a value for molding representative of the actual
molding sourced from a certain market economy supplier.

Petitioners did not comment.

Department's Position: We agree with FYG. FYG's proposed methodology for
valuing the molding expense is reasonable to the Department.



Comment 29: Updated Labor Rate for 1999

FYG's Argument: FYG contends that the Department's Website provides a
labor rate which is more contemporaneous with the POI than the labor rate
used by the Department for the Preliminary Determination. FYG argues that
the Department should use the updated labor rate for the Final
Determination.

Xinyi's Rebuttal: Xinyi agrees with FYG that the Department should use
the updated labor rate published on the Department's Website in its
surrogate values calculations for the Final Determination.

Petitioners did not comment.

Department's Position: We agree with FYG and Xinyi. The Department is
using the updated labor rate for the Final Determination.



Comment 30: Surrogate Value for Styrofoam

FYG's Argument: FYG argues that the Department should value styrofoam for
packing using HTS number 3903.1909 because it more closely matches the
material used, and it is contemporaneous with the POI. FYG contends that
at verification, the Department saw that the styrofoam piece in question
more closely resembles a "block", as defined in HTS number 3903.1909, as
opposed to HTS number 3921.1100 suggested by Petitioners which describes
"plate or sheets, of styrofoam".

Petitioners' Argument: Petitioners argue that styrofoam should be valued
using HTS number 3921.1100. Petitioners argue that HTS number 3921.1100
includes "plates, sheets, film, foil and strip", including "blocks of
regular geometric shape" of styrofoam. Petitioners argue that blocks of
regular geometric shape presumably includes "styrofoam squares and
trapezoids" such as those used by FYG. Petitioners argue that FYG's
proposed HTS number includes "blocks of irregular shape, lumps, powders
... granules, flakes and similar bulk forms." See HTS of the United States
of America, Annotated for Statistical Reporting Purposes, Chapter 39, Note
6 at 39-1.

Xinyi's Rebuttal: Xinyi argues that the Department should value styrofoam
according to FYG's proposed value.

Department's Position: We agree with Petitioners. In the Preliminary
Determination the Department used HTS number 3903.1909 to value styrofoam.
The Department considers the styrofoam blocks used for packing by FYG to
more closely resemble a regular geometric shape, as described in HTS
number 3921.1100. Therefore, the Department will use HTS number 3921.1100
to value styrofoam.



Comment 31: Whether the Department Should Remove International Freight
and Insurance Costs from Indian Surrogate Values

FYG's Argument: FYG argues that the Department should deduct
international freight and movement costs from Indian surrogate values. FYG
contends that the Department has acknowledged that Indian surrogate
values, from Indian Import Statistics, are on a cost, insurance and
freight ("CIF") basis. See Sulfanilic Acid From the People's Republic of
China; Final Results of Antidumping Duty Administrative Review, 61 FR
53711, 53716 (October 15, 1996). FYG contends, therefore, that Indian
surrogate values already contain international freight and marine
insurance charges. FYG argues that the prices it paid for material inputs
sourced within China did not include charges for international freight or
marine insurance and that the Department is already adding a surrogate
truck freight rate to FYG's material costs. 

Petitioners' Rebuttal: Petitioners argue that the Department does not
adjust surrogate values to exclude international freight and insurance.
Petitioners argue that the Department will use a surrogate price
reflective of all charges associated with getting the factor into the
surrogate country. See 1998-1999 TRBs from the PRC, 66 FR 1953 (January
10, 2001). Petitioners contend that part of the value of the factor of
production for Indian inputs is the cost of transporting the factor to the
surrogate country. Petitioners argue that FYG's argument that it does not
incur similar costs is, therefore, irrelevant.

Department's Position: We agree with Petitioners. The Department does not
consider the transportation cost associated with the importation of inputs
by a surrogate country when valuing inputs. While FYG cites to cases that
show that Indian import prices are on a CIF basis, FYG has not to cited to
a case in which the Department deducted an amount from the Indian import
price for international freight and insurance costs.




Xinyi's Comments

Comment 32: Whether Market Economy Expenditures Should be Used in Place
of Surrogate Values

Xinyi's Arguments: Xinyi notes that the Department valued certain Xinyi
material inputs using market economy prices; however, the Department did
not value molding even where there were market economy purchases. For the
preliminary determination, Xinyi notes that the Department stated that its
market economy purchases of molding were insignificant.

Xinyi argues that the Department stated that the actual price paid by the
non-market economy producer for its inputs constitutes the best available
information for valuing this factor. See Shakeproof Assembly Components
Div. of Ill. Tool Works, Inc. v. United States, 102 F. Supp. 2d 486, 492
(CIT 2000) (Shakeproof). Xinyi notes that, in Shakeproof, the Department
used record evidence to demonstrate that a respondent party had purchased
more than one-third of certain factors of production it used in the
production of subject merchandise, and therefore, the Department used the
actual market economy prices. In Shakeproof, Xinyi notes that the
Department determined that these market economy purchases were meaningful.
Xinyi notes that what is a meaningful percentage varies on a case-by-case
basis, according to Shakeproof, and therefore, argue that the percentage
of molding purchased from a market economy supplier is meaningful here and
should be used by the Department instead of a surrogate value.

Petitioners' Rebuttal: Petitioners rebut Xinyi's arguments that Xinyi's
market economy purchases of molding are significant and should be
considered meaningful. Petitioners note that in Shakeproof, the percentage
of the inputs from a market economy supplier was more than one-third.
However, in this case, Petitioners argue that Xinyi appears to concede
that its percentage is very small. Petitioners argue that following
Xinyi's argument, any purchase of a factor of production from a market
economy supplier, no matter how small, would be meaningful merely because
it is from a market economy. Petitioners argue that the issue is whether
import purchases from a market economy are so small as to render the
prices paid an unreliable value to assign to the non-market economy-
sourced factor. Petitioners argue that when the Department uses a market
economy price for a factor of production that the non-market economy
producer purchased from both market and non-market sources, the assumption
is that the non-market economy producer could have sourced all of its
particular needs for this input from market economy sources at that price.
However, the fact that only a small fraction of a particular factor of
production were purchased from market economy countries may indicate that
this is not the case.

Department's Position: We agree with Petitioners. As stated in the FOP
Memo, Xinyi's market economy purchases of molding are not significant, and
therefore, for the final determination, we continue to determine that
Xinyi's molding input should be valued using a surrogate value and not
using its actual purchase price from a market economy supplier.





Comment 33: Verification Issues

Xinyi's Arguments: Xinyi argues that it did not understate the weight of
its mirror buttons by ten times but that it reported these weights
correctly.

Xinyi argues that, after checking the wood usage books, the verification
investigators informed Xinyi that the factor usage rate for wood was
apparently underreported by 30 percent. Xinyi stated that it agrees with
the Department's conclusion at verification.

Xinyi argues that pursuant to Section D of the Department's
questionnaire, market economy inputs should be reported for those inputs
the company purchased from a market economy supplier and paid for in a
market economy currency during the period of investigation. Xinyi stated
that it followed the Department's instructions and did not report those
market economy inputs purchased prior to the period of investigation or
those after. Xinyi stated that it requests that the Department use its
actual market economy prices to value the factors of production in this
case.

Petitioners did not comment in their rebuttal brief on the verification
issues raised by Xinyi.

Department's Position: We agree with Xinyi that it correctly reported its
mirror button weight, and note that the verification report is in error.

We disagree with Xinyi that, at verification, the investigators verbally
stated to Xinyi that the Department determined how much Xinyi's wood usage
rate was underreported. In fact, in the verification report, we did not
state that Xinyi's wood usage rate was underreported by 30 percent but
only that we found that Xinyi's wood usage rate was underreported. In our
examinination of Xinyi's wood usage rate, we did determine that Xinyi's
usage rate for July 2000 was underreported by 30 percent. However, because
we have all of the actual vouchered values from Xinyi's purchase ledger
accounting records for each month of the period of investigation (from
Verification Exhibit 24), we are able to compare these vouchered values to
Xinyi's reported values it used to calculate its wood usage rate. (We note
that the reported value represents the amount of wood, in cubic meters,
Xinyi purchased during the period of investigation and that Xinyi's
calculated wood usage rate was based on the amount of cubic meters of wood
purchased and not on the purchased value of the wood.) Because we have the
vouchered values and the reported values for the period of investigation,
we are able to adjust Xinyi's wood usage rate upward by the exact
percentage that it was underreported, which was 16.89 percent. This is a
non-adverse adjustment due to several factors. First, Xinyi cooperated to
the best of its ability and inadvertently did not report the total value
and corresponding wood quantities purchased for certain purchase invoices
due to the large number of invoices for each month. Second, in comparing
the vouchered values and the reported values for each month, we note that
for August 2000, Xinyi actually slightly overreported its wood usage rate.

We agree with Xinyi concerning the information in our questionnaire that
we required from Xinyi. In regards to Xinyi's other arguments, Xinyi did
report some market economy inputs purchased both before and after the
period of investigation. However, for the preliminary determination, we
did not use any market economy inputs if the amount purchased was
insignificant or if the sales invoice date was outside of the period of
investigation. For the final determination, consistent with Department
practice, we will continue to not use these market economy inputs if they
are insignificant or purchased outside of the period of investigation.





Comment 34: Whether Negative Margins Should be Taken into Consideration
in Calculating Certain Overall Weighted Average Margins

Xinyi's Argument: Xinyi argues that the Department should take into
account Xinyi's negative margins in calculating its overall weighted
average margin. Xinyi argues that setting the negative margins to zero
results in an inflated dumping margin. See Bowe Passat Reinigungs und
Washereitechnik GMBH v. United States, 926 F. Supp. 1138, 1149-50 (CIT
1996) (Bowe Passat). Xinyi argues that this practice of 'zeroing' negative
margins was found to be inconsistent with the Article 2.4 and 2.4.2 of the
Antidumping Agreement. WTO Appellate Body in European Communities Anti-
Dumping Duties on Imports of Cotton-Type Bed Linen from India,
WT/DS141/AB/R at page 37 (March 1, 2001). Xinyi argues that the EC
practice of zeroing at issue in EC Bed Linen is identical to the U.S.
practice of zeroing in the instant case. Xinyi argues that although the
normal value in an NME country is determined based on factors of
production and surrogate values rather than prices, the WTO Appellate
Body's point is that by applying the zeroing methodology to Xinyi's
calculation of the weighted average, the Department, in effect, has
changed Xinyi's export prices and reduced the prices down to the normal
value. Xinyi contends that the U.S. antidumping statute, therefore, is
inconsistent with the AD Agreement. Furthermore, Xinyi asserts that now
that China has officially joined the WTO, the Department should ensure
that its decisions are consistent with the AD Agreement. Xinyi argues that
although the CIT has previously affirmed the Department's zeroing
practice, those cases involved interpretations of the antidumping statute,
prior to the URAA; Bowe Passat, 926 F. Supp. at 1149-50 (CIT 1996);
Serampore Industries Pvt., Ltd. v. United States, 675 F. Supp. 1354 (CIT
1987) (Serampore). Xinyi argues that Congress passed the URAA in part to
make "amendments to the antidumping statute {that} are either necessary or
appropriate to implement Article 2 of the AD Agreement, which establishes
rules regarding the identification and measurement of dumping." See SAA at
819. Xinyi asserts that Congress stated pursant to 19 U.S.C.  3512(d)
that the SAA shall be considered "an authoritative expression by the
United States concerning the interpretation and application of the Uruguay
Round Agreements and this Act in any judicial proceeding in which a
question arises concerning such interpretation or application." Therefore,
Xinyi argues that the Department must give effect to Congress' express
intent to overturn those benchmarks and rules that would be inconsistent
with the AD Agreement, such as the practice of zeroing at issue here.
Xinyi further points out that the CIT has stated "GATT agreements are
international obligations, and absent express Congressional language to
the contrary, statutes should not be interpreted to conflict with
international obligations." See Federal-Mongul Corp. v. United States, 63
F. 3d 1572, 1581 (Fed. Cir. 1995).

Petitioners' Rebuttal: Petitioners argue that Xinyi is incorrect that the
Department must comply with the WTO Panel Decision concerning an
antidumping determination that does not involve the U.S. antidumping law.
Petitioners argue that it is well-established that the WTO Panel and
Appellate Body Decisions are binding only on the country that is the
subject of the decision. See Japan-Taxes on Alcoholic Beverages,
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R at 13-15 (10/4/96). Petitioners
assert that the Department has already recognized that the Bed Linen
decision has no bearing on U.S. antidumping cases. See Notice of Final
Results of Antidumping Duty Administrative Review and Recission of
Administrative Review in Part: Canned Pineapple Fruit From Thailand, 66 FR
52744 (October 17, 2001) (Canned Pineapple Fruit From Thailand) and
accompanying Issues and Decision Memorandum at Comment 10.

Petitioners also rejects Xinyi's argument that the SAA requires
overturning the Department's current practice with respect to sales above
fair value. Petitioners cite section 102 of the URAA that provides that
"[n]o provision of any of the Uruguay Round Agreements, nor the
application of any such provision to any person or circumstances, that is
inconsistent with any law of the United States shall have effect" and that
nothing in the URAA "shall be construed... to amend or modify any law of
the United States... unless specifically provided for in this Act." 19
U.S.C.  3512(a)(1) and (2)(emphasis added). Petitioners argue, therefore,
even if Bed Linen had any relevance to the Department's administration of
the U.S. antidumping law, then to the extent that the decision renders the
AD Agreement inconsistent with U.S. law, it is the Bed Linen decision and
not U.S. law that is inoperative.

Petitioners argue that Xinyi omitted the discussion in Bowe Passat, where
the commentor also defended the zeroing practice, stating that the value
of the non dumped sale is not simply disregarded, but is actually included
in the value of the dumped sales (the denominator) that will be divided
into the combined unit margin of the dumped sales to determine the dumping
margin, which results in diluting the margin." Bowe Passat, 926 F. Supp.
at 1150 (CIT 1996). Petitioners note that the CIT also stated that
"Commerce justifies use of this methodology on the ground that it is
necessary to combat masked dumping," which is "an apparently legitimate
goal consistent with the antidumping statute." 926 F. Supp. at 1150
(citing Serampore, 675 F. Supp. 1354 (CIT 1987). Petitioners assert that
the Department has confirmed that it does, in fact, include sales above
fair value in its calculation of dumping margins, but simply does not
allow such sales to "cancel out" dumping found on other sales, and that
its methodology is required by existing law. See Canned Pineapple Fruit
From Thailand, 66 FR 52744 (October 17, 2001) and accompanying Issues and
Decision Memorandum at Comment 10.

Department's Position: We disagree with the respondent. As we have
discussed in prior cases, our methodology is consistent with our statutory
obligations under the Act. See, e.g., Hot-Rolled from the Netherlands, at
FR 50408 (October 3, 2001), and accompanying Issues and Decision
Memorandum, at Comment 1. First, sales that did not fall below normal
value are included in the weighted-average margin calculation as sales
with no dumping margin. The value of such sales is included in the
denominator of the weighted-average margin along with the value of dumped
sales. We do not, however, allow sales that did not fall below normal
value to cancel out dumping found on other sales. 

Second, the Act requires that the Department employ this methodology.
Section 771(35)(A) of the Act defines "dumping margin" as "the amount by
which the normal value exceeds the export price or constructed export
price of the subject merchandise." Section 771(35)(B) of the Act defines
"weighted-average dumping margin" as "the percentage determined by
dividing the aggregate dumping margins determined for a specific exporter
or producer by the aggregate export prices and constructed export prices
of such exporter or producer." These sections, taken together, direct the
Department to aggregate all individual dumping margins, each of which is
determined by the amount by which normal value exceeds export price or
constructed export price, and to divide this amount by the value of all
sales. The directive to determine the "aggregate dumping margins" in
section 771(35)(B) makes clear that the singular "dumping margin" in
section 771(35)(A) applies on a comparison-specific level, and does not
itself apply on an aggregate basis. At no stage in this process is the
amount by which EP or CEP exceeds normal value on sales that did not fall
below normal value permitted to cancel out the dumping margins found on
other sales. This does not mean, however, that sales that did not fall
below normal value are ignored in calculating the weighted-average rate.
It is important to note that the weighted-average margin will reflect any
"non-dumped" merchandise examined during the investigation, the value of
such sales is included in the denominator of the dumping rate, while no
dumping amount for "non-dumped" merchandise is included in the numerator.
Thus, a greater amount of "non-dumped" merchandise results in a lower
weighted-average margin. 

This is, furthermore, a reasonable means of establishing duty deposits in
investigations, and assessing duties in reviews. In an investigation such
as the present case, the deposit rate calculated must reflect the fact
that the Customs Service is not in a position to know which entries of
merchandise entered after the imposition of a dumping order are dumped and
which are not. By spreading the estimated liability for dumped sales
across all investigated sales, the weighted-average dumping margin allows
the Customs Service to apply this rate to all merchandise entered after an
order goes into effect. 

Finally, with respect to the respondent's WTO-specific arguments, we
believe U.S. law is consistent with our WTO obligations. Moreover, the Bed
Linen from India Panel and Appellate Body decisions concerned a dispute
between the European Union and India. We have no obligation under U.S. law
to act on this decision.





Comment 35: Whether the Department Should Calculate a Margin for Non-
Mandatory Respondent Benxun Based on Its Data

Benxun's Arguments: Benxun argues that the Department should calculate
its dumping margin based on its voluntary response. Benxun argues that on
May 10, 2001, Benxun submitted a request that it be treated as a voluntary
respondent in this case and responded to the Department's original May 8,
2001, questionnaire on May 29, 2001, and June 14, 2001. Benxun claims that
it raised the issue of its voluntary response in a July 20, 2001, letter,
but did not receive a response from the Department.

Benxun charges that the Department was both arbitrary and unfair in its
decision not to review its voluntary submission. Benxun argues that the
Department improperly discouraged voluntary responses, and this action is
contrary to U.S. trade law, which encourages the Department to calculate
individual dumping margins for each know exporter of merchandise subject
to investigation and encourages voluntary submissions of company-specific
information by foreign producers and exporters. See SAA at 1463 (citing
the WTO Antidumping Agreement, Article 6.10.2).

Benxun argues that while Department has discretion to limit an
investigation, such discretion is limited to instances where "it is not
practicable to make individual weighted average dumping margin
determinations... because of the large number of exporters or producers
involved in the investigation" 19 U.S.C.  1677f-1(c)(2) (emphasis added).
However, Benxun argues, the present case does not present a situation
where the number of producers or exporters is particularly high. Benxun
points out that in the present investigation, only five of approximately
sixteen known Chinese producers and exporting companies responded to the
Department's requests for information; yet, Benxun charges, the Department
has chosen to review only two respondents. Benxun asserts that four
companies account for over 90 percent of all exports of the subject
merchandise. Benxun argues that it is the third largest exporter, and only
slightly smaller than Xinyi, the second largest exporter, which was chosen
as a mandatory respondent in this case.

Benxun asserts that the Department suggested that the workload in other
cases necessarily limits the resources available for this case. See
Memorandum from Rick Johnson to Edward Yang: Selection of Respondents:
Antidumping Duty Investigation of Automotive Replacement Glass ("ARG")
Windshields from the People's Republic of China, May 7, 2001 (Selection of
Respondents Memorandum). Thus, Benxun argues that in the instant case, the
Department's interest in reducing its workload for administrative reasons
was tied to other investigations, and did not necessarily relate to the
impracticality of investigating three companies in this particular case.
Benxun claims the following repercussions would result as a consequence of
the Department's refusal to review Benxun as a voluntary respondent: as a
member of the WTO, China could potentially lodge a complaint against the
United States based on the Departments' unwillingness to review the
voluntary submissions of a substantial exporter; the voluntary respondents
would be discouraged in the future, thus leading to an atmosphere of
suspicion and cynicism by our trading partners regarding the fairness of
U.S. trade law; and retaliation from the Chinese government against U.S.
exporters would result in China's own antidumping investigations in which
China could likewise discourage voluntary responses from U.S. exporters.

Benxun argues that the Department's refusal to calculate the Benxun's
dumping margin based on its response would have an adverse impact on
Benxun's U.S. importers. In addition, Benxun also points out that as a
result of the Department's decision not to examine Benxun's response,
Benxun lost the significant opportunity to prove that it is not dumping
and be excluded from the investigation.

Benxun notes the possibility that both respondents FYG and Xinyi could
have zero dumping margins. Benxun notes that the Department in the
investigation of Brake Drums and Rotors, 62 FR at 9173-74 (February 28,
1997), addressed a similar situation. In Brake Drums and Rotors, four of
the five respondents had a de minimis margin except the largest exporter
which received the adverse facts available rate. Benxun notes that in this
situation, the Department used a simple average of the dumping margins
calculated for the exporters and producers individually investigated. In
making this determination, the Department relied on section 735(c)(5)(B)
of the Act, which states that the Department is allowed to "use any
reasonable method to establish the estimated all-others rate for exporters
and producers not individually investigated, including averaging the
estimated weighted average dumping margins determined for the exporters
and producers individually investigated." See Brake Drums and Rotors, 62
FR at 9173-74 (February 28, 1997) citing section 735(c) (5)(B) of the Act.
Benxun argues, in Brake Drums and Rotors, the Department calculated a 17
percent margin for non-investigated brake drum companies. Benxun argues
that if the Department follows Brake Drums and Rotors, it and other
respondents would be shut out from the market if it received more than a
five percent margin as was the case in Brake Drums and Rotors.

Petitioners' Rebuttal: Petitioners object to Benxun's argument that the
Department should calculate a separate dumping margin for the reasons set
forth by Benxun. First, Petitioners argue that it is too late in the
proceeding for the Department to conduct an investigation of Benxun.
Second, Petitioners argue that Benxun still has the opportunity to request
a review during the first administrative review of any antidumping duty
order. Third, Petitioners also assert that the Department has determined
to examine only the two largest producers in previous investigations. See
Notice of Preliminary Determination of Sales at Less Than Fair Value:
Steel Wire Rope from India and the People's Republic of China; Notice of
Preliminary Determination of Sales at Less Than Fair Value: Steel Wire
Rope from Malaysia, 65 FR 58736, 58739 (October 2, 2000). Fourth,
Petitioners argue that the Department has the discretion to determine what
resources and staff are reasonably available to work on particular
investigations, so long as the respondents that are selected are
representative of the subject imports for the period of investigation.
Petitioners argue that Benxun fails to recognize that shifting additional
resources from other investigations to this one would likely impede the
"timely completion" of those investigations, as called for in Article
6.10.2 of the WTO Antidumping Agreement. Finally, Petitioners argue that
Benxun's contention that examining three respondents in this investigation
is "clearly not too burdensome" is belied by the facts. Petitioners note
that the Department worked under a compressed schedule where the
verification reports were not issued until less than a full business week
before the case briefs were due.

Department's Position: We disagree with Benxun. Section 782(a) of the Act
states that, in an investigation in which the Department has, pursuant to
section 777A(c)(2), limited the number of exporters or producers examined,
the Department shall establish an individual weighted-average dumping
margin for those not investigated, where the number of exporters and
producers submitted information is not so large so that it would not be
unduly burdensome for the Department to conduct the investigation or
inhibit the timely completion of the investigation. See section 782(a)(2)
of the Act. Based on the same reasoning that led the Department to limit
the number of respondents in this investigation (i.e., the large number of
companies and Department administrative resource constraints), the
Department determined and stated in the Selection of Respondents
Memorandum that voluntary respondents could not be accepted unless one of
the mandatory respondents did not continue to participate. See Selection
of Respondents Memorandum.




Comment 36: Whether Recent Changes to the Antidumping Statute have
Transformed the Law into a Penal Statute, thereby Violating Certain
Respondent Parties' Procedural Due Process Rights

Benxun's Argument: Benxun argues that when the Continued Dumping and
Subsidy Act of 2000 (the "Byrd Amendment") became U.S. law, the principles
of the antidumping and countervailing duty law changed from a remedial
purpose to a penal or punitive purpose. Benxun states that the imposition
of an antidumping duty without full due process protections for Benxun's
importers, including a hearing before a neutral administrative law judge,
has been held to be within constitutional limits only because the
antidumping duty is a tax and not a penalty, citing C.J. Tower & Sons v.
United States, 71 F.2d 438 (CCPA 1934) (C.J. Tower). Benxun now argues
that with the change in the purpose of the law, failure to provide
additional procedural safeguards is a clear violation of due process under
the Fifth Amendment to the Constitution. See C.J. Tower, 71 F.2d at 445
(CCPA 1934).

Benxun argues that the antidumping duty revenue collected by the U.S.
Customs Service is no longer a duty but is liquidated damages to the
Petitioners for the dumping action. Benxun argues that although the Byrd
Amendment itself states that its purpose is remedial, it alters the
purpose of the antidumping statue (from a remedial statute into a penal
statute) because the duties no longer equalize competitive conditions in
the United States but shift revenue from the importers in this case to the
domestic industry, making it a compensatory action. See Chr. Bjelland
Seafoods v. United States, 16 CIT 945, 953 (CIT 1992) citing Helwig v.
United States, 188 U.S. 605, 610, 47 L. Ed. 614, 23 S. Ct. 427 (1903).

Therefore, Benxun argues that if the Department does not accept its
voluntary response, it requests a hearing in front of a neutral
administrative law judge to protect the due process rights of itself and
the U.S. importers in this case (i.e., Diamond Triumph, Elite, Mygrant,
and Southern).

Petitioners' Rebuttal: Petitioners rebut Benxun's arguments concerning
the Byrd Amendment converting the antidumping law from a remedial to a
punitive statute, and the argument that importers are now entitled to more
due process protections. Petitioners argue that the Department's
calculation of dumping margins are unaffected as is the amount of dumping
duties that importers must pay and the rights of importers. Petitioners
rebut Benxun's argument that antidumping duties are punitive because they
render antidumping actions compensatory, stating that the District Court
for the District of Columbia has stated that "[s]tatutes are ... penal
only if the purpose of the provision applied is punitive," citing Beltway
Management Co. v. Lexington-Landmark Ins., 746 F. Supp. 1145 (D.D.C. 1990)
(citing 3 Sutherland on Statutory Construction Section 60.03, at 66 (4th
ed. Sands 1974)). Petitioners argue that courts have generally recognized
that an exaction of monies characterized as a tax becomes penal when the
amount appears excessive in relation to its nonpunitive purpose, citing
Montana Dept. of Revenue v. Kurth Ranch, 511 U.S. 767 (1994) (citing A.
Magnano Co. v. Hamilton, 292 U.S. 40, 44 (1934)). Also, Petitioners argue
that because the calculation of the antidumping duties is tied to the
difference between the imported product's U.S. price and its normal value,
the courts have referred to antidumping duties as remedial, not penal, in
nature. See National Knitwear & Sportswear Association v. United States,
779 F. Supp. 1364, 1372 (CIT 1991) (citing Badger-Powhatan v. United
States, 633 F. Supp. 1364, 1373 (CIT 1986)).

Petitioners rebut Benxun's characterizations of the antidumping duties as
compensatory and liquidated damages as incorrect. Petitioners argue that
liquidated damages refers to a sum which parties to a contract have agreed
to at the time of the contract as being paid for any loss or injury from a
breach of contract. See 22 Am Jur 2d, Damages Section 683 (1988). Also,
Petitioners argue that liquidated damages are different, in contract law,
from a penalty, which is a sum for punishment for default and not payment
for a breach of contract. Id. 684. Petitioners argue that just because the
Byrd Amendment directs that the assessed dumping duties be distributed to
affected domestic distributors this does not by itself raise any
constitutional issues. The courts have held that the allocation and
distribution of public funds is within the discretion of the legislature
to determine. See Hess v. Mullaney, 213 F.2d 635, 640 (9th Cir. 1954)
(citing General American Tank Car Corp. v. Day, 270 U.S. 367 (1926).

Department's Position: We disagree with Benxun. The Continued Dumping and
Subsidy Offset Act of 2000, or "Byrd Amendment" ("CDSOA"), does not
transform the antidumping law into a penal or punitive statute. As Benxun
points out, it is well established that the antidumping law is remedial.
See C.J. Tower, 71 F.2d 438 (CCPA 1934); Chaparral Steel Co. v. United
States, 901 F.2d 1097, 1103-04 (Fed. Cir. 1990). The CDSOA in no way
affects the Department's factual findings or legal conclusions. The CDSOA
merely provides that antidumping and countervailing duties collected by
the Customs Service will be distributed to the affected domestic industry
(see section 754(a) of the CDSOA (codified at 19 USC 1675c)), and this
cannot possibly turn the antidumping law from a remedial law into a
punitive one. The CDSOA in no way affects the Department's administration
of the antidumping law, pursuant to which, during an investigation, the
Department determines the amounts of estimated antidumping duties to be
assessed when an administrative review upon an order is completed or not
requested, but leaves the actual collection of the duties to the Customs
Service. See Mitsubishi Elecs. America, Inc. v. United States, 44 F.3d 
973, 976 (Fed. Cir. 1994). Additionally, the CDSOA is not administered 
by the Department, but by a separate agency, the Customs Service. Section 
754(c) of the CDSOA. Because the CDSOA does not change the purpose of 
the antidumping law from a remedial one to a penal one, Benxun's request 
for an administrative law judge in this proceeding is without basis.


RECOMMENDATION

Based on our analysis of the comments received, we recommend adopting all
of the above changes and positions, and adjusting the margin calculation
programs accordingly. If accepted, we will publish the final results of
the reviews and the final weighted-average dumping margins for the
reviewed firms in the Federal Register.



AGREE________ DISAGREE________




__________________________________

Faryar Shirzad
Assistant Secretary
  for Import Adminstration

__________________________________
Date



________________________________________________________________________
footnotes:

1. See H.R. Conf. Rep. 100-576, 100th Cong., 2d Sess. 514, 590-91 (1998),
reprinted in 1988 U.S.C.A.A.N. 1547, 1623 (1988) (authorizing the
Department to avoid using prices that the Department has reason to
"believe or suspect" were unfair in calculating normal value ("NV") in non-
market economy ("NME") cases). 

2. See 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 Notice of
Intent to Revoke Order in Part, 66 FR 1953 (January 10, 2001) and
accompanying Issues and Decision Memorandum ("TRBs XII"); 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 Notice Not to Revoke Order in Part, 66
FR 57420 (November 15, 2001) and accompanying Issues and Decision
Memorandum ("TRBs XIII").