[Federal Register Volume 69, Number 201 (Tuesday, October 19, 2004)]
[Notices]
[Pages 61468-61470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-23379]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-846]


Brake Rotors From the People's Republic of China: Notice of 
Initiation of Changed Circumstances Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of initiation of changed circumstances review.

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SUMMARY: The Department of Commerce has received information sufficient 
to warrant initiation of a changed circumstances review of the 
antidumping order on brake rotors from the People's Republic of China 
(``PRC''). The review will be conducted to determine whether Shanxi 
Fengkun Foundry Ltd., Co. (``Fengkun Foundry'') is the successor-in-
interest to Shanxi Fengkun Metallurgical Ltd., Co. (``Fengkun 
Metallurgical'').

EFFECTIVE DATE: October 19, 2004.

FOR FURTHER INFORMATION CONTACT: Steve Winkates, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-1904.

SUPPLEMENTARY INFORMATION:

Background

    On April 17, 1997, the Department published in the Federal Register 
the antidumping duty order on brake rotors from the PRC (62 FR 18740). 
On August 27, 2004, Fengkun Foundry submitted information and 
documentation in support of its claim that it is the successor-in-
interest to Fengkun Metallurgical and requested that the Department 
conduct a changed-circumstances review to determine whether Fengkun 
Foundry is the successor-in-interest to Fengkun Metallurgical and 
whether it should receive the same antidumping duty treatment as is 
accorded to Fengkun Metallurgical with respect to the subject 
merchandise.
    On September 7, 2004, we informed Fengkun Foundry that in order to 
further consider its August 27, 2004, request for a changed 
circumstances review, it was required to provide a response to the 
Department's separate rates questionnaire for purposes of determining 
whether it was entitled to a separate rate (see September 7, 2004, 
memorandum from the team leader to the file, entitled ``Telephone 
Conversation with Counsel for Fengkun Foundry and Fengkun 
Metallurgical). On September 14, 2004, Fengkun Foundry provided its 
response to the Department's separate rates questionnaire.
    On September 14, 2004, the petitioner requested that the Department 
publish a separate notice of initiation and refrain from simultaneously 
issuing a preliminary finding because (1) it claimed that the data 
provided in the public version of Fengkun Foundry's August 27, 2004, 
request did not provide the Department with sufficient information to 
conduct an expedited review; and (2) the petitioner was denied the 
ability to comment fully on Fengkun Foundry's initiation request until 
it is granted access to the business proprietary data contained in 
Fengkun Foundry's initiation request pursuant to an administrative 
protective order (``APO'').

Scope of Review

    The products covered by this review are brake rotors made of gray 
cast iron, whether finished, semifinished, or unfinished, ranging in 
diameter from 8 to 16 inches (20.32 to 40.64 centimeters) and in weight 
from 8 to 45 pounds (3.63 to 20.41 kilograms). The size parameters 
(weight and dimension) of the brake rotors limit their use to the 
following types of motor vehicles: automobiles, all-terrain vehicles, 
vans, recreational vehicles under ``one ton and a half,'' and light 
trucks designated as ``one ton and a half.''
    Finished brake rotors are those that are ready for sale and 
installation without any further operations. Semi-finished rotors are 
those rotors which have undergone some drilling and on which the 
surface is not entirely smooth. Unfinished rotors are those which have 
undergone some grinding or turning.
    These brake rotors are for motor vehicles and do not contain in the 
casting a logo of an original equipment manufacturer (``OEM'') which 
produces vehicles sold in the United States (e.g., General Motors, 
Ford, Chrysler, Honda, Toyota, and Volvo). Brake rotors covered in this 
review are not certified by OEM producers of vehicles sold in the 
United States. The scope also includes composite brake rotors that are 
made of gray cast iron which contain a steel plate but otherwise meet 
the above criteria. Excluded from the scope of the review are brake 
rotors made of gray cast iron, whether finished, semifinished, or 
unfinished, with a diameter less than 8 inches or greater than 16 
inches (less than 20.32 centimeters or greater than 40.64 centimeters) 
and a weight less than 8 pounds or greater than 45 pounds (less than 
3.63 kilograms or greater than 20.41 kilograms).
    Brake rotors are currently classifiable under subheading 
8708.39.5010 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the HTSUS subheading is provided for convenience 
and customs purposes, the written description of the scope of this 
review is dispositive.

Separate Rates

    In proceedings involving non-market economy (``NME'') countries, 
the Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and thus should be 
assessed a single antidumping duty deposit rate. Based on information 
contained in its September 14, 2004, submission, Fengkun Foundry is 
registered in the PRC as a limited liability company owned by private 
individuals. Thus, a separate rates analysis is necessary to determine 
whether Fengkun Foundry is independent from government control (see 
Notice of Final Determination of Sales at Less Than Fair Value: 
Bicycles From the People's Republic of China, 61 FR 19026 (April 30, 
1996)).
    To establish whether a firm is sufficiently independent from

[[Page 61469]]

government control, and therefore entitled to a separate rate, the 
Department analyzes each exporting entity under a test arising out of 
the Final Determination of Sales at Less Than Fair Value: Sparklers 
from the People's Republic of China, 56 FR 20588 (May 6, 1991) 
(``Sparklers'') and amplified in the Final Determination of Sales at 
Less Than Fair Value: Silicon Carbide from the People's Republic of 
China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide''). Under the 
separate rates criteria, the Department assigns separate rates in NME 
cases only if the respondent can demonstrate the absence of both de 
jure and de facto governmental control over export activities.

1. De Jure Control

    Fengkun Foundry has placed on the administrative record 
documentation to demonstrate absence of de jure governmental control, 
including the 1994 ``Foreign Trade Law of the People's Republic of 
China,'' and the ``Administrative Regulations of the People's Republic 
of China Governing the Registration of Legal Corporations,'' 
promulgated on June 3, 1988.
    As in prior cases, we have analyzed these laws and have found them 
to establish sufficiently an absence of de jure control of stock 
companies including limited liability companies. See, e.g., Final 
Determination of Sales at Less than Fair Value: Furfuryl Alcohol from 
the People's Republic of China, 60 FR 22544 (May 8, 1995) (``Furfuryl 
Alcohol''), and Preliminary Determination of Sales at Less Than Fair 
Value: Certain Partial-Extension Steel Drawer Slides with Rollers from 
the People's Republic of China, 60 FR 29571 (June 5, 1995). We have no 
new information in this proceeding which would cause us to reconsider 
this determination with regard to Fengkun Foundry.

2. De Facto Control

    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Silicon Carbide and Furfuryl Alcohol. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether the respondents are, in fact, subject to a degree 
of governmental control which would preclude the Department from 
assigning separate rates.
    The Department typically considers four factors in evaluating 
whether a respondent is subject to de facto governmental control of its 
export functions: (1) Whether the export prices are set by, or subject 
to the approval of, a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding the disposition of profits or 
financing of losses. See Silicon Carbide and Furfuryl Alcohol.
    Fengkun Foundry asserted the following: (1) It establishes its own 
export prices; (2) it negotiates contracts without guidance from any 
governmental entities or organizations; (3) it makes its own personnel 
decisions; and (4) it retains the proceeds of its export sales, uses 
profits according to its business needs, and has the authority to sell 
its assets and to obtain loans. Additionally, statements contained in 
Fengkun Foundry's September 14, 2004, submission indicate that the 
company does not coordinate its prices with other exporters. This 
information supports a initial finding that there is de facto absence 
of governmental control of the export functions of Fengkun Foundry. See 
Pure Magnesium from the People's Republic of China: Preliminary Results 
of Antidumping Duty New Shipper Administrative Review, 62 FR 55215 
(October 23, 1997). Consequently, for purposes of initiating its 
request for a changed circumstances review, we find that there is a 
sufficient basis to determine that Fengkun Foundry has met the criteria 
for the application of a separate rate.

Initiation of Antidumping Duty Changed Circumstances Review

    Pursuant to section 751(b)(1) of the Act, the Department will 
conduct a changed circumstances review upon receipt of information 
concerning, or a request from an interested party for a review of, an 
antidumping duty order which shows changed circumstances sufficient to 
warrant a review of the order. In its August 27, 2004, submission, 
Fengkun Foundry notified the Department that it had changed its name on 
November 28, 2003, in order to reflect better the company's operations. 
In its submission, Fengkun Foundry also stated that neither its 
corporate structure nor its owners and shareholders has changed. The 
information submitted by Fengkun Foundry regarding its claim that it is 
the successor-in-interest to Fengkun Metallurgical shows changed 
circumstances sufficient to warrant a review. See 19 CFR 351.216(c).
    In antidumping duty changed circumstances reviews involving a 
successor-in-interest determination, the Department typically examines 
several factors including, but not limited to, changes in: (1) 
Management; (2) production facilities; (3) supplier relationships; and 
(4) customer base. See Brass Sheet and Strip from Canada: Notice of 
Final Results of Antidumping Administrative Review, 57 FR 20460, 20462 
(May 13, 1992) (``Brass Sheet''). While no single factor or combination 
of factors will necessarily be dispositive, the Department generally 
will consider the new company to be the successor to the predecessor 
company if the resulting operations are essentially the same as those 
of the predecessor company. See e.g., Industrial Phosphorus Acid from 
Israel: Final Results of Changed Circumstances Review, 59 FR 6944, 6945 
(February 14, 1994), and Brass Sheet, 57 FR at 20460. Thus, if the 
record evidence demonstrates that, with respect to the production and 
sale of the subject merchandise, the new company operates as the same 
business entity as the predecessor company, the Department may assign 
the new company the cash deposit rate of its predecessor. See e.g., 
Fresh and Chilled Atlantic Salmon from Norway: Final Results of Changed 
Circumstances Antidumping Duty Administrative Review, 64 FR 9979, 9980 
(March 1, 1999).
    Based on data contained in its August 27, 2004, submission and 
September 14, 2004, supplemental submission, Fengkun Foundry has 
provided sufficient evidence to warrant a review to determine if it is 
the successor-in-interest to Fengkun Metallurgical based on the 
successor-in-interest criteria enunciated in Brass Sheet and the 
Department's separate rates criteria articulated in Sparklers and 
amplified in Silicon Carbide. However, we consider it inappropriate to 
expedite this review by combining the preliminary results of review 
with this notice of initiation, as permitted under 19 CFR 
351.221(c)(3)(ii), because Fengkun Foundry's request for this changed 
circumstances review was based on business proprietary information. The 
petitioner has, therefore, been unable to review or comment on the 
review request to date. Therefore, the Department is not issuing the 
preliminary results of its antidumping duty changed circumstances 
review at this time.
    The Department will publish in the Federal Register a notice of 
preliminary

[[Page 61470]]

results of antidumping duty changed circumstances review, in accordance 
with 19 CFR 351.221(b)(4) and 19 CFR 351.221(c)(3)(I). This notice will 
set forth the factual and legal conclusions upon which our preliminary 
results are based and a description of any action proposed based on 
those results. Pursuant to 19 CFR 351.221(b)(4)(ii), interested parties 
will have an opportunity to comment on the preliminary results of 
review. In accordance with 19 CFR 351.216(e), the Department will issue 
the final results of its antidumping duty changed circumstances review 
not later than 270 days after the date on which the review is 
initiated.
    During the course of this antidumping duty changed circumstances 
review, we will not change the cash deposit requirements for the 
merchandise subject to review. The cash deposit will only be altered, 
if warranted, pursuant to the final results of this review.
    This notice of initiation is in accordance with section 751(b)(1) 
of the Act and 19 CFR 351.216 and 351.222.

    Dated: October 12, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-23379 Filed 10-18-04; 8:45 am]
BILLING CODE 3510-DS-P