[Federal Register Volume 62, Number 153 (Friday, August 8, 1997)]
[Notices]
[Pages 42755-42759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20937]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-825]


Sebacic Acid From the People's Republic of China; Preliminary 
Results of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review of sebacic acid from the People's Republic of 
China.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on sebacic acid 
from the People's Republic of China (PRC) in response to requests from 
the petitioner, Union Camp Corporation, and three respondents: Tianjin 
Chemicals Import and Export Corporation (Tianjin), Guangdong Chemicals 
Import and Export Corporation (Guangdong) and Sinochem International 
Chemicals Company, Ltd. (SICC). This review covers four exporters of 
the subject merchandise, including the three respondent companies above 
and Sinochem Jiangsu Import and Export Corporation (Jiangsu). The 
period of review (POR) is July 1, 1995, through June 30, 1996.
    We have preliminarily determined that sales have been made below 
normal value (NV) during this period. If these preliminary results are 
adopted in the final results of this administrative review, we will 
instruct the U.S. Customs Service to assess antidumping duties equal to 
the difference between United States price (USP) and NV. These 
assessment rates, if adopted for the final results of the review, will 
be calculated on an importer-specific ad valorem duty basis. Interested 
parties are invited to comment on these preliminary results.

EFFECTIVE DATE: August 8, 1997.

FOR FURTHER INFORMATION CONTACT: Lyn Baranowski, Doreen Chen, or 
Stephen Jacques, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th and Constitution 
Avenue, N.W., Washington, D.C. 20230; telephone: (202) 482-3793.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Rounds Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are in 
reference to the regulations, codified at 19 CFR part 353, as they 
existed on April 1, 1996.

SUPPLEMENTARY INFORMATION:

Background

    The Department published in the Federal Register an antidumping 
duty order on sebacic acid from the PRC on July 14, 1995 (59 FR 35909). 
On July 8,

[[Page 42756]]

1996, the Department published in the Federal Register (61 FR 35712) a 
notice of opportunity to request an administrative review of the 
antidumping duty order on sebacic acid from the PRC covering the period 
July 1, 1995, through June 30, 1996.
    On July 9, 1996, in accordance with 19 CFR 353.22(a), Union Camp 
requested that we conduct an administrative review of Tianjin, 
Guangdong, SICC, and Jiangsu. On July 30, 1996, Tianjin and SICC 
requested that we conduct an administrative review. We published a 
notice of initiation of this antidumping duty administrative review on 
August 15, 1996 (61 FR 42416). The Department is conducting this 
administrative review in accordance with section 751 of the Act.

Scope of Review

    The products covered by this order are all grades of sebacic acid, 
a dicarboxylic acid with the formula (CH2)8(COOH)2, which include but 
are not limited to CP Grade (500ppm maximum ash, 25 maximum APHA 
color), Purified Grade (1000ppm maximum ash, 50 maximum APHA color), 
and Nylon Grade (500ppm maximum ash, 70 maximum ICV color). The 
principal difference between the grades is the quantity of ash and 
color. Sebacic acid contains a minimum of 85 percent dibasic acids of 
which the predominant species is the C10 dibasic acid. Sebacic acid is 
sold generally as a free-flowing powder/flake.
    Sebacic acid has numerous industrial uses, including the production 
of nylon 6/10 (a polymer used for paintbrush and toothbrush bristles 
and paper machine felts), plasticizers, esters, automotive coolants, 
polyamides, polyester castings and films, inks and adhesives, 
lubricants, and polyurethane castings and coatings.
    Sebacic acid is currently classifiable under subheading 
2917.13.00.00 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheading is provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding remains dispositive.
    This review covers the period July 1, 1995, through June 30, 1996, 
and four exporters of Chinese sebacic acid.

Verification

    We conducted verification of the sales and factor information 
provided by respondent SICC located in Beijing, PRC and its producer, 
Tianjin Zhong He Chemical Plant (Zhong He), located in Tianjin, PRC. We 
conducted the verifications using standard verification procedures, 
including onsite inspection of the manufacturer's facilities, the 
examination of relevant sales and financial records, and selection of 
original documentation containing relevant information. Our 
verification results are outlined in the public versions of the 
verification reports.

Separate Rates

1. Background and Summary of Findings

    It is the Department's standard policy to assign all exporters of 
the merchandise subject to review in non-market-economy countries a 
single rate, unless an exporter can demonstrate an absence of 
government control, both in law and in fact, with respect to exports. 
To establish whether an exporter is sufficiently independent of 
government control to be entitled to a separate rate, the Department 
analyzes the exporter in light of the criteria established in the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China (56 FR 20588, May 6, 1991) (Sparklers), as 
amplified in the Final Determination of Sales at Less Than Fair Value: 
Silicon Carbide from the People's Republic of China (59 FR 22585, May 
2, 1994) (Silicon Carbide). Evidence supporting, though not requiring, 
a finding of de jure absence of government control over export 
activities includes: (1) An absence of restrictive stipulations 
associated with an individual exporter's business and export licenses; 
(2) any legislative enactments decentralizing control of companies; and 
(3) any other formal measures by the government decentralizing control 
of companies. Evidence relevant to a de facto absence of government 
control with respect to exports is based on four factors, whether the 
respondent: (1) Sets its own export prices independent from the 
government and other exporters; (2) can retain the proceeds from its 
export sales; (3) has the authority to negotiate and sign contracts; 
and (4) has autonomy from the government regarding the selection of 
management. See Silicon Carbide at 22587; See also Sparklers at 20589.
    In our final determination of sales at less than fair value, the 
Department determined that there was de jure and de facto absence of 
government control of each company's export activities and determined 
that each company warranted a company-specific dumping margin. See 
Final Determination of Sales at Less Than Fair Value: Sebacic Acid From 
the People's Republic of China, 59 FR 28053 (Sebacic Acid). For this 
period of review, SICC and Tianjin have responded to the Department's 
request for information regarding separate rates. We have found that 
the evidence on the record is consistent with the final determination 
in the LTFV investigation and continues to demonstrate an absence of 
government control, both in law and in fact, with respect to their 
exports, in accordance with the criteria identified in Sparklers and 
Silicon Carbide. During verification of SICC, we examined its business 
and financial statements. We found no evidence of government control of 
SICC's export activities.
    For Guangdong, which had no sales during this POR, the company-
specific rate of 13.54% from the previous administrative review remains 
unchanged.

2. Separate Rate Determination for Non-responsive Company

    For Jiangsu, which did not respond to the questionnaire, we 
preliminarily determine that this company does not merit a separate 
rate. Because the Department assigns a single rate to companies in a 
non-market economy unless an exporter can demonstrate absence of 
government control, we preliminarily determine that Jiangsu is subject 
to the country-wide rate for this case.

United States Price

    For SICC and Tianjin, the Department based USP on export price 
(EP), in accordance with section 772(a) of the Act. We made deductions 
from EP, where appropriate, for foreign inland freight, ocean freight, 
brokerage and handling, and marine insurance. See ``Factor Valuation'' 
section of this notice. We selected India as the surrogate country for 
the reasons explained in the ``Normal Value'' section of this notice.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the normal value (NV) using a factors-of-production 
methodology if: (1) The merchandise is exported from an NME country; 
and (2) the information does not permit the calculation of NV using 
home-market prices, third-country prices, or constructed value under 
section 773(a) of the Act.
    The Department has treated the PRC as an NME country in all 
previous antidumping cases. In accordance with section 771(18)(C)(i) of 
the Act, any determination that a foreign country is a NME country 
shall remain in effect until revoked by the administering authority. 
None of the parties to this proceeding has contested such

[[Page 42757]]

treatment in this review. Furthermore, available information does not 
permit the calculation of NV using home market prices, third country 
prices or CV under section 773(a) of the Act. Therefore, we treated the 
PRC as a NME country for purposes of this review and calculated NV by 
valuing the factors of production in a comparable market economy 
country which is a significant producer of comparable merchandise. 
Factors of production include, but are not limited to: (1) Hours of 
labor required; (2) quantities of raw materials employed; (3) amounts 
of energy and other utilities consumed; and (4) representative capital 
cost, including depreciation.
    Section 773(c)(4) of the Act and section 353.52(b) of the 
Department's regulations direct us to select a surrogate country that 
is economically comparable to the PRC. On the basis of per capita gross 
national product (GNP), the growth rate in per capita GNP, and the 
national distribution of labor, we find that India is a comparable 
economy to the PRC (See Memorandum from Director, Office of Policy, to 
Office Director, AD/CVD Group III, Office 9, dated June 24, 1997.).
    The statute (section 773(c)(4) of the Act and section 353.52(b) of 
the Department's regulations) also requires that, to the extent 
possible, the Department use a surrogate country that is a significant 
producer of merchandise comparable to sebacic acid. The countries that 
we confirmed to be producers of sebacic acid, such as Japan and the 
United States, do not have economies comparable to the PRC. However, we 
found that India was a significant producer of comparable merchandise 
(e.g., oxalic acid) during the POR. Though sebacic acid and oxalic acid 
have different end uses, both are dicarboxylic acids. In addition, many 
of the inputs used to produce sebacic acid are also used to produce 
oxalic acid. Therefore, we find that India fulfills both requirements 
of the statute.
    For purposes of calculating NV, we valued PRC factors of 
production, in accordance with section 773(c)(1) of the Act. In 
examining surrogate values, we selected, where possible, the publicly 
available value which was: (1) An average non-export value; (2) 
representative of a range of prices within the POR or most 
contemporaneous with the POR; (3) product-specific; and (4) tax-
exclusive. We chose values with a preference for prices most 
contemporaneous with the POR. Where we could not obtain a POR-
representative price for an input, we selected a value in accordance 
with the remaining criteria mentioned above and which was the closest 
in time to the POR. In accordance with this methodology, we valued the 
factors of production as follows:
    For castor oil and castor seed, the Department valued this material 
using price data reported in The Economic Times (Bombay) for Calcutta, 
Delhi, Hyderabad, and Kanpur during the months of June 1995 through 
December 1995. Respondents provided this price information for castor 
oil and castor seed. The Department adjusted these values to account 
for freight costs between the supplier and the respondents' sebacic 
acid manufacturing facilities.
    For caustic soda, the Department used the value reported in the 
publication Indian Chemical Weekly, using data from the months of July 
1995 through June 1996. Because price quotes for caustic soda reported 
by Chemical Weekly are for chemicals with a 100% concentration level of 
caustic soda, we made chemical purity adjustments according to the 
particular concentration level of caustic soda used by respondents. We 
adjusted these values to exclude taxes and to include freight expenses 
incurred from the suppliers to the respondents' sebacic acid 
manufacturing facilities.
    For cresol, both respondents and petitioner reported market values 
published by Chemical Weekly for the period of July 1995 through June 
1996. The Department reviewed pricing information for other months of 
the POR which indicated that the market price reported by respondents 
are representative of the market price of the material for the entire 
POR. We adjusted this value for taxes and freight expenses.
    The valuation of activated carbon, which is interchangeable with 
macropore resin, was based upon information found in the publication 
India's Imports by Commodities-Countries (Monthly Statistics of the 
Foreign Trade of India (IMF)). This pricing information reflects the 
average unit import price for the period April 1995 through February 
1996.
    The market values for sodium chloride (also referred to as sodium 
chlorite or vacuum salt), sulphuric acid, and zinc oxide were based 
upon the published market prices reported in Chemical Weekly for the 
period of July 1995 through June 1996. We adjusted these values for 
taxes and freight expenses.
    For benzenic sulphuric acid, neither the petitioner nor the 
respondent submitted a surrogate value. After extensive research, we 
failed to locate a chemical called ``benzenic sulphuric acid.'' 
However, according to the Encyclopedia of Chemical Technology, when 
benzene is sulfonated with sulphuric acid, a chemical called benzenic 
sulfonic acid is produced. Therefore, we used a value for benzenic 
sulfonic acid as a substitute surrogate value for benzenic sulphuric 
acid. The value we used is from the Monthly Statistics of the Foreign 
Trade of India for the period April 1995 through February 1996.
    For direct labor, we used 1994 data from Investing, Licensing & 
Trading Conditions Abroad, India, issues November 1995 and November 
1996, by the Economist Intelligence Unit.
    For factory overhead, we used information obtained from the April 
1995 Reserve Bank of India Bulletin. From ``Statement 1--Combined 
Income, Value of Production, Expenditure and Appropriation Accounts, 
Industry Group-wise'' of that report for the Indian metals and 
chemicals industries, we summed those components which pertain to 
overhead expenses and divided them by the sum of those components 
pertaining to the cost of manufacturing to calculate an overhead rate 
of 15.42 percent.
    For steam coal, we used prices published in Monthly Statistics of 
Foreign Trade of India, Volume II--Imports for the period of April 1995 
through January 1996, and for electricity, we used information obtained 
from the Current Energy Scene in India for July 1995.
    For selling, general, and administrative (SG&A) expenses, we used 
information from the same source we used for factory overhead. We 
summed the values which comprised the components of SG&A and divided 
that figure by the same cost of manufacturing figure used to determine 
factory overhead, to arrive at an SG&A rate of 21.67 percent.
    For the calculation of profit, we used information from the April 
1995 Reserve Bank of India Bulletin. We divided the reported before-tax 
profit for the ``processing and manufacture: metals, chemicals, and 
products thereof'' category by the sum of those components pertaining 
to the cost of manufacturing plus SG&A to calculate a profit rate of 
5.24 percent.
    For the value of export packing (plastic bags and woven bags), the 
Department used the value of imports into India during April 1995 
through February 1996, as reported in the Monthly Statistics of Foreign 
Trade of India, Volume II. We adjusted this value to account for 
freight expenses.
    For foreign inland freight, the Department relied upon the trucking

[[Page 42758]]

freight rates reported to the Department in an August 1993 embassy 
cable from India, pursuant to the less-than-fair-value investigation of 
Certain Helical Spring Lock Washers from the PRC and the rail freight 
rates reported to the Department in a December 1989 embassy cable for 
the final results of the antidumping administrative review for Shop 
Towels of Cotton from the PRC. This is the same information we used in 
the sebacic acid less-than-fair-value investigation. We adjusted these 
rates for the POR to reflect inflation, based on information published 
in the International Financial Statistics of the International Monetary 
Fund.
    For ocean freight, we used the surrogate value provided by the 
respondent in the first review. This value was added to values for 
delivery destination charges and fuel adjustment charges provided by 
the Federal Maritime Commission on January 24, 1997.
    To calculate the expense for marine insurance, we used information 
from a publicly summarized version of the questionnaire response for 
the investigation of sales of less than fair value of Sulphur Vat Dyes 
from India. The marine insurance rate reported in the public version of 
the October 8, 1992 response was adjusted for inflation to reflect 
marine insurance charges during the POR, based on information published 
in the International Financial Statistics of the International Monetary 
Fund.
    For foreign brokerage and handling charges, we used information 
from publicly available data for foreign brokerage and handling 
reported for the investigation for Sulphur Vat Dyes. The rate 
documented is Rs 0.39/kg. We adjusted this value for inflation using 
the inflator value of 1.40 that the Department calculated from the 
International Financial Statistics, published by the International 
Monetary Fund.
    Consistent with the methodology employed in the final determination 
in the less-than-fair-value investigation of this case, we have 
determined that fatty acid and glycerine are by-products. See Sebacic 
Acid at 28056. Therefore, as by-products, we subtracted the sales 
revenue of fatty acid and glycerine from the production costs of 
sebacic acid. This treatment of by-products is also consistent with 
generally accepted accounting principles. (See Cost Accounting: A 
Managerial Emphasis (1991) at pages 539-544).
    To value fatty acid, we used publicly available published 
information from the Monthly Statistics of the Foreign Trade of India 
(Monthly Statistics) for the period April 1995 through February 1996.
    To value glycerine, we used the average price for glycerine (IW and 
CP) in the publication Chemical Weekly for the period July 1995 through 
June 1996 and adjusted the value to account for sales and excise taxes.
    We also allocated a by-product credit for glycerine to the 
production cost for the co-product caproyl alcohol. We deducted a by-
product credit for glycerine from both sebacic acid and caproyl alcohol 
based on the ratio of the value of sebacic acid to the total value of 
both sebacic acid and caproyl alcohol.
    Consistent with the methodology employed in the final determination 
in the less-than-fair-value investigation of this case, we have 
determined that caproyl alcohol is a co-product. Therefore, we have 
allocated the factor inputs, based on the relative quantity of output 
of this product and sebacic acid. Additionally, we have used the 
production times necessary to complete each production stage of sebacic 
acid as a basis for allocating the amount of labor, energy usage, and 
factory overhead among the products. This treatment of co-products is 
consistent with generally accepted accounting principles. (See Cost 
Accounting: A Managerial Emphasis (1991) at pages 528-533).
    To value caproyl alcohol, we used publicly available published 
information for octanol from Chemical Weekly and adjusted for sales and 
excise taxes. We used the Chemical Weekly octanol value as the 
surrogate value for caproyl alcohol because, in a letter submitted by 
respondents in attachment four of their January 6, 1997 submission 
concerning surrogate values, the editor of Chemical Weekly states that 
the reference to octanol in the journal refers to the more common 2-
octanol, another name for caproyl alcohol.

Preliminary Results of Review

    For Jiangsu, which failed to respond to the questionnaire, we have 
not granted a separate rate and the country-wide rate will apply to all 
sales. For Guangdong, which reported that there were no sales during 
the POR, its company-specific rate from the previous administrative 
review remains unchanged.
    We preliminarily determine that the following dumping margins 
exist:

------------------------------------------------------------------------
                                                                 Margin 
           Manufacturer/exporter               Time period     (percent)
------------------------------------------------------------------------
Tianjin Chemicals I/E Corp................   7/01/95--6/30/96      0.00 
Sinochem International Chemicals Corp.....   7/01/95--6/30/96      0.00 
Guangdong Chemicals I/E Corp..............   7/01/95--6/30/96     13.54 
Country-Wide Rate.........................   7/01/95--6/30/96    243.40 
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit written 
comments (case briefs) within 30 days of the date of publication of 
this notice. Rebuttal comments (rebuttal briefs), which must be limited 
to issues raised in the case briefs, may be filed not later than 37 
days after the date of publication. The Department will publish a 
notice of final results of this administrative review, which will 
include the results of its analysis of issues raised in any such 
comments, within 180 days of publication of these preliminary results.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between USP and NV may vary from the percentages stated 
above. The Department will issue appraisement instructions directly to 
the Customs Service.
    Furthermore, the following cash deposit requirements will be 
effective upon publication of the final results of this administrative 
review for all shipments of the subject merchandise entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date, as provided for by section 751(a)(1) of the Act: (1) For the 
reviewed companies named above which have separate rates (SICC and 
Tianjin), the cash deposit rates will be the rates for those firms 
established in the final results of this administrative review; (2) for 
companies previously found to be entitled to a separate rate and for 
which no review was requested, the cash deposit rates will be the rate 
established in the most recent review of that company; (3) for all 
other non-PRC exporters of subject merchandise from the PRC, the cash 
deposit rates will be the rates applicable to the PRC supplier of that 
exporter; and (4) the cash deposit rate for non-PRC exporters of 
subject

[[Page 42759]]

merchandise from the PRC will be the rate applicable to the PRC 
supplier of that exporter. These deposit rates, when imposed, shall 
remain in effect until publication of the final results of the next 
administrative review.

Notification of Interested Parties

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 353.26 to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22 
of the Department's regulations.

    Dated: July 31, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-20937 Filed 8-7-97; 8:45 am]
BILLING CODE 3510-DS-P