[Federal Register Volume 65, Number 214 (Friday, November 3, 2000)]
[Notices]
[Pages 66232-66236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28285]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-557-805]


Extruded Rubber Thread From Malaysia; Preliminary Results of 
Antidumping Duty Administrative Review

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

SUMMARY: In response to a request by the petitioner and two producers/
exporters of the subject merchandise, the Department of Commerce is 
conducting an administrative review of the antidumping duty order on 
extruded rubber thread from Malaysia. This review covers three 
manufacturers/exporters of the subject merchandise to the United States 
(Filati Lastex Sdn. Bhd., Heveafil Sdn. Bhd./Filmax Sdn. Bhd, and 
Rubberflex Sdn. Bhd.). The period of review is October 1, 1998, through 
September 30, 1999.
    We have preliminarily determined that sales have been made below 
the normal value by each of the three companies subject to this review. 
If these preliminary results are adopted in the final results of this 
administrative review, we will instruct the Customs Service to assess 
antidumping duties on all appropriate entries.
    We invite interested parties to comment on these preliminary 
results. Parties who wish to submit comments in this proceeding are 
requested to submit with each argument: (1) A statement of the issue; 
and (2) a brief summary of the argument.

EFFECTIVE DATE: November 3, 2000.

FOR FURTHER INFORMATION CONTACT: Irina Itkin, Office of AD/CVD 
Enforcement, Office 2, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-
0656.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations at 19 CFR part 351 (1999).

SUPPLEMENTARY INFORMATION:

Background

    On October 20, 1999, the Department of Commerce (the Department) 
published in the Federal Register a notice of ``Opportunity to Request 
an Administrative Review'' of the antidumping duty order on extruded 
rubber thread from Malaysia (64 FR 56485).
    In accordance with 19 CFR 351.213(b)(1), on October 21, 1999, the 
petitioner, North American Rubber Thread, requested an administrative 
review of the antidumping order covering the period October 1, 1998, 
through September 30, 1999, for the following producers and exporters 
of extruded rubber thread: Filati Lastex Sdn. Bhd. (Filati), Heveafil 
Sdn. Bhd./Filmax Sdn. Bhd. (Heveafil), and Rubberflex Sdn. Bhd. 
(Rubberflex). On October 29, 1999, Filati and Heveafil also requested 
an administrative review.
    On November 23, 1999, the Department initiated an administrative 
review for Filati, Heveafil, and Rubberflex (64 FR 67846 (Dec. 3, 
1999)). The Department also issued questionnaires to each of these 
companies in November.
    In March 2000, we received responses from Filati, Heveafil, and 
Rubberflex.
    In June, July, and September 2000, we issued supplemental 
questionnaires to Filati, Heveafil, and Rubberflex. We received 
responses to these questionnaires in September 2000.
    In October 2000, we issued additional supplemental questionnaires 
to Rubberflex. We received responses to these questionnaires in October 
2000.

Scope of the Review

    The product covered by this review is extruded rubber thread. 
Extruded rubber thread is defined as vulcanized rubber thread obtained 
by extrusion of stable or concentrated natural rubber latex of any 
cross sectional shape, measuring from 0.18 mm, which is 0.007 inch or 
140 gauge, to 1.42 mm, which is 0.056 inch or 18 gauge, in diameter. 
Extruded rubber thread is currently classifiable under subheading 
4007.00.00 of the Harmonized Tariff Schedule of the United States 
(HTSUS). The HTSUS subheadings are provided for convenience and customs 
purposes. The written description of the scope of this review is 
dispositive.

Period of Review

    The period of review (POR) is October 1, 1998, through September 
30, 1999.

Normal Value Comparisons

    To determine whether sales of extruded rubber thread from Malaysia 
to the United States were made at less than normal value (NV), we 
compared the export price (EP) to the NV for Rubberflex, as specified 
in the ``Export Price and Constructed Export Price'' and ``Normal 
Value'' sections of this notice, below. We compared the constructed 
export price (CEP) to the NV for Filati and Heveafil, also as specified 
in those sections.
    When making comparisons in accordance with section 771(16) of the 
Act, we considered all products sold in the home market as described in 
the ``Scope of the Review'' section of this

[[Page 66233]]

notice, above, that were in the ordinary course of trade for purposes 
of determining appropriate product comparisons to U.S. sales. Where 
there were no sales of identical merchandise in the home market made in 
the ordinary course of trade (i.e., sales within the contemporaneous 
window which passed the cost test), we compared U.S. sales to sales of 
the most similar foreign like product made in the ordinary course of 
trade, based on the characteristics listed in sections B and C of our 
antidumping questionnaire, or constructed value (CV), as appropriate.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade as EP or CEP. The NV level of trade is that of 
the starting-price sales in the comparison market or, when NV is based 
on CV, that of the sales from which we derive selling, general and 
administrative expenses (SG&A) and profit. For EP, the U.S. level of 
trade is also the level of the starting-price sale, which is usually 
from the exporter to the importer. For CEP, it is the level of the 
constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP sales, we examine stages in the marketing process and 
selling functions along the chain of distribution between the producer 
and the unaffiliated customer. If the comparison market sales are at a 
different level of trade and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which NV is based and comparison-
market sales at the level of trade of the export transaction, we make a 
level of trade adjustment under section 773(a)(7)(A) of the Act. 
Finally, for CEP sales, if the NV level is more remote from the factory 
than the CEP level and there is no basis for determining whether the 
difference in the levels between NV and CEP affects price 
comparability, we adjust NV under section 773(a)(7)(B) of the Act (the 
CEP offset provision). See Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from 
South Africa, 62 FR 61731 (Nov. 19, 1997).
    We note that the U.S. Court of International Trade (CIT) has held 
that the Department's practice of determining levels of trade for CEP 
transactions after CEP deductions is an impermissible interpretation of 
section 772(d) of the Act. See Borden, Inc. v. United States, 4 F. 
Supp. 2d 1221, 1241-42 (CIT 1998) (Borden). The Department believes, 
however, that its practice is in full compliance with the statute. On 
June 4, 1999, the CIT entered final judgement in Borden on the level of 
trade issue. See Borden Inc. v. United States, Court No. 96-08-01970, 
Slip Op. 99-50 (CIT June 4, 1999). The government has filed an appeal 
of Borden which is pending before the U.S. Court of Appeals for the 
Federal Circuit. Consequently, the Department has continued to follow 
its normal practice of adjusting CEP under section 772(d) prior to 
starting a level of trade analysis, as articulated by the Department's 
regulations at section 351.412.
    Filati, Heveafil, and Rubberflex claimed that they made home market 
sales at only one level of trade (i.e., sales to original equipment 
manufacturers). Because each of these respondents performed the same 
selling activities for sales to all customers in the home market, we 
determined that all home market sales by each of these companies were 
at the same level of trade.
    Both Filati and Heveafil made CEP sales during the POR. In order to 
determine whether NV was established at a level of trade which 
constituted a more advanced stage of distribution than the level of 
trade of the CEP for these companies, we compared the selling functions 
performed for home market sales with those performed with respect to 
the CEP transaction, which excludes economic activities occurring in 
the United States. We found that Filati and Heveafil performed 
essentially the same selling functions in their sales offices in 
Malaysia for both home market and U.S. sales. Therefore, the 
respondents' sales in Malaysia were not at a more advanced stage of 
marketing and distribution than the constructed U.S. level of trade, 
which represents a F.O.B. foreign port price after the deduction of 
expenses associated with U.S. selling activities. Because we find that 
no difference in level of trade exists between markets, we have not 
granted a CEP offset for Filati or Heveafil.
    Regarding Rubberflex, we compared the selling functions performed 
for its home market and export price transactions in order to determine 
whether a level of trade adjustment was warranted. We found that 
Rubberflex performed essentially the same selling functions for its 
U.S. and home market sales and that, therefore, no level of trade 
adjustment is warranted for this company.

Export Price and Constructed Export Price

    For Rubberflex, we based the U.S. price on EP, in accordance with 
section 772(a) of the Act, when the subject merchandise was sold 
directly to the first unaffiliated purchaser in the United States prior 
to importation and CEP methodology was not otherwise warranted.
    For Filati and Heveafil, we based the U.S. price on CEP where sales 
to the unaffiliated purchaser took place after importation into the 
United States, in accordance with section 772(b) of the Act. We also 
based U.S. price on CEP for Filati and Heveafil where the merchandise 
was shipped directly to certain unaffiliated customers because we found 
that the extent of the affiliates' activities performed in the United 
States in connection with those sales was significant.

A. Filati

    We calculated CEP based on the starting price to the first 
unaffiliated purchaser in the United States. In accordance with section 
772(c)(1)(B) of the Act, we added an amount for uncollected import 
duties in Malaysia. We made deductions from the starting price, where 
appropriate, for rebates. In addition, where appropriate, we made 
deductions for foreign inland freight, foreign brokerage and handling 
expenses, ocean freight, marine insurance, U.S. customs duty, U.S. 
brokerage and handling expenses, U.S. inland freight, and U.S. 
warehousing expenses, in accordance with section 772(c)(2)(A) of the 
Act.
    We made additional deductions from CEP, where appropriate, for 
commissions, credit expenses, and U.S. indirect selling expenses, 
including U.S. inventory carrying costs, in accordance with section 
772(d)(1) of the Act. We disallowed an offset claimed by Filati 
relating to imputed costs associated with financing antidumping and 
countervailing duty deposits, in accordance with the Department's 
practice. See Extruded Rubber Thread from Malaysia; Final Results of 
Antidumping Duty Administrative Review, 65 FR 6140, 6142 (Feb. 8, 2000) 
(Thread Sixth Review); Extruded Rubber Thread from Malaysia; Final 
Results of Antidumping Duty Administrative Review, 64 FR 12967, 12968 
(Mar. 16, 1999); Extruded Rubber Thread from Malaysia; Final Results of 
Antidumping Duty Administrative Review, 63 FR 12752, 12754 (Mar. 16, 
1998); and Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof from France, Germany, Italy,

[[Page 66234]]

Japan, Romania, Singapore, Sweden and the United Kingdom; Final Results 
of Antidumping Duty Administrative Reviews, 62 FR 54043, 54075 (Oct. 
17, 1997).
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by Filati and its affiliate on their sales of the 
subject merchandise in the United States and the foreign like product 
in the home market and the profit associated with those sales.

B. Heveafil

    We calculated CEP based on the starting price to the first 
unaffiliated customer in the United States. In accordance with section 
772(c)(1)(B) of the Act, we added an amount for uncollected import 
duties in Malaysia. We made deductions from the starting price, where 
appropriate, for rebates. We also made deductions for foreign inland 
freight, foreign brokerage and handling expenses, ocean freight, marine 
insurance, U.S. customs duty, U.S. brokerage and handling expenses, 
U.S. inland freight, and U.S. warehousing expenses, in accordance with 
section 772(c)(2)(A) of the Act.
    We made additional deductions to CEP, where appropriate, for credit 
expenses and U.S. indirect selling expenses, including U.S. inventory 
carrying costs, in accordance with section 772(d)(1) of the Act.
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by Heveafil and its affiliate on their sales of 
the subject merchandise in the United States and the foreign like 
product in the home market and the profit associated with those sales.

C. Rubberflex

    We based EP on the starting price to the first unaffiliated 
purchaser in the United States. We made deductions from the starting 
price, where appropriate, for rebates. We also made deductions, where 
appropriate, for foreign inland freight, foreign brokerage and handling 
expenses, ocean freight, marine insurance, U.S. customs duty, U.S. 
inland freight, and U.S. warehousing expenses, in accordance with 
section 772(c)(2)(A) of the Act.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV 
(i.e., the aggregate volume of home market sales of the foreign like 
product is greater than five percent of the aggregate volume of U.S. 
sales), we compared the volume of each respondent's home market sales 
of the foreign like product to the volume of U.S. sales of subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act. Based 
on this comparison, we determined that each respondent had a viable 
home market during the POR. Consequently, we based NV on home market 
sales.
    Pursuant to section 773(b)(2)(A)(ii) of the Act, there were 
reasonable grounds to believe or suspect that Filati, Heveafil, and 
Rubberflex had made home market sales at prices below their costs of 
production (COPs) in this review because the Department had disregarded 
sales below the COP for these companies in the most recent 
administrative review. See Thread Sixth Review, 65 FR at 6143. As a 
result, the Department initiated an investigation to determine whether 
the respondents made home market sales during the POR at prices below 
their respective COPs.
    We calculated the COP based on the sum of each respondent's cost of 
materials and fabrication for the foreign like product, plus amounts 
for SG&A and packing costs, in accordance with section 773(b)(3) of the 
Act.
    We compared the COP figures to home market prices of the foreign 
like product, as required under section 773(b) of the Act, in order to 
determine whether these sales had been made at prices below the COP. On 
a product-specific basis, we compared the COP to home market prices, 
less any applicable movement charges, discounts, rebates, and packing 
costs.
    In determining whether to disregard home market sales made at 
prices below the COP, we examined whether such sales were made: (1) In 
substantial quantities within an extended period of time; and (2) at 
prices which permitted the recovery of all costs within a reasonable 
period of time in the normal course of trade. See section 773(b)(1) of 
the Act.
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of a respondent's sales of a given product were at prices less 
than the COP, we did not disregard any below-cost sales of that product 
because we determined that the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product were at prices below the COP, we found that 
sales of that model were made in ``substantial quantities'' within an 
extended period of time (as defined in section 773(b)(2)(B) of the 
Act), in accordance with section 773(b)(2)(C)(i) of the Act. In such 
cases, we also determined that such sales were not made at prices which 
would permit recovery of all costs within a reasonable period of time, 
in accordance with section 773(b)(2)(D) of the Act. Therefore, we 
disregarded the below-cost sales. Where all sales of a specific product 
were at prices below the COP, we disregarded all sales of that product.
    We found that, for certain models of extruded rubber thread, more 
than 20 percent of each respondent's home market sales within an 
extended period of time were at prices less than COP. Further, the 
prices did not provide for the recovery of costs within a reasonable 
period of time. We therefore disregarded the below-cost sales and used 
the remaining sales as the basis for determining NV, in accordance with 
section 773(b)(1) of the Act. For those U.S. sales of extruded rubber 
thread for which there were no comparable home market sales in the 
ordinary course of trade, we compared EP or CEP, as appropriate, to CV, 
in accordance with section 773(a)(4) of the Act.
    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of each respondent's cost of materials, fabrication, 
SG&A, profit, and U.S. packing costs. In accordance with section 
773(e)(2)(A) of the Act, we based SG&A and profit on the amounts 
incurred and realized by each respondent in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade for consumption in the foreign country.
    Company-specific calculations are discussed below.

A. Filati

    Where NV was based on home market sales, we based NV on the 
starting price to unaffiliated customers. For all price-to-price 
comparisons, we made deductions from the starting price for rebates, 
where appropriate. We also made deductions, where appropriate, for 
foreign inland freight, pursuant to section 773(a)(6)(B) of the Act. 
Pursuant to section 773(a)(6)(C)(iii) of the Act, we also made 
deductions for home market credit expenses and bank charges. Where 
applicable, in accordance with 19 CFR 351.410(e), we offset any 
commission paid on a U.S. sale by reducing the NV by the amount of home 
market indirect selling expenses and inventory carrying costs, up to 
the amount of the U.S. commission.
    In addition, we deducted home market packing costs and added U.S. 
packing costs, in accordance with

[[Page 66235]]

section 773(a)(6) of the Act. Where appropriate, we made adjustments to 
NV to account for differences in physical characteristics of the 
merchandise, in accordance with section 773(a)(6)(C)(ii) of the Act and 
19 CFR 351.411.
    For CV-to-CEP comparisons, we made an adjustment, where 
appropriate, for differences in credit expenses, in accordance with 
sections 773(a)(6)(C)(iii) and 773(a)(8) of the Act. Where applicable, 
in accordance with 19 CFR 351.410(e), we offset any commission paid on 
a U.S. sale by reducing the NV by the amount of home market indirect 
selling expenses and inventory carrying costs, up to the amount of the 
U.S. commission.

B. Heveafil

    Where NV was based on home market sales, we based NV on the 
starting price to unaffiliated customers. We made deductions from the 
starting price for discounts. We also made deductions for foreign 
inland freight and foreign inland insurance, pursuant to section 
773(a)(6)(B) of the Act. Pursuant to section 773(a)(6)(C)(iii) if the 
Act, we also made deductions for home market credit expenses.
    In addition, we deducted home market packing costs and added U.S. 
packing costs, in accordance with section 773(a)(6) of the Act. Where 
appropriate, we made adjustments to NV to account for differences in 
physical characteristics of the merchandise, in accordance with section 
773(a)(6)(c)(ii) of the Act and 19 CFR 351.411.

C. Rubberflex

    Where NV was based on home market sales, we based NV on the 
starting price to unaffiliated customers. We made deductions from the 
starting price for foreign inland freight expenses, pursuant to section 
773(a)(6)(B) of the Act.
    Pursuant to section 773(a)(6)(C)(iii) if the Act, we made 
circumstance of sale adjustments for differences in credit expenses.
    In addition, we deducted home market packing costs and added U.S. 
packing costs, in accordance with section 773(a)(6) of the Act. Where 
appropriate, we made adjustments to NV to account for differences in 
physical characteristics of the merchandise, in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.
    For CV-to-EP comparisons, we made circumstance of sale adjustments, 
where appropriate, for differences in credit expenses, in accordance 
with sections 773(a)(6)(C)(iii) and 773(a)(8) of the Act.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank.
    Section 773A of the Act directs the Department to use a daily 
exchange rate in order to convert foreign currencies into U.S. dollars 
unless the daily rate involves a fluctuation. It is the Department's 
practice to find that a fluctuation exists when the daily exchange rate 
differs from the benchmark rate by 2.25 percent. The benchmark is 
defined as the moving average of rates for the past 40 business days. 
When we determine a fluctuation to have existed, we substitute the 
benchmark for the daily rate, in accordance with established practice.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following margins exist for the period October 1, 1998, through 
September 30, 1999:

------------------------------------------------------------------------
                                                                Percent
                    Manufacturer/exporter                        margin
------------------------------------------------------------------------
Filati Lastex Sdn. Bhd.......................................      18.49
Heveafil Sdn. Bhd./..........................................  .........
Filmax Sdn. Bhd..............................................       0.04
Rubberflex Sdn. Bhd..........................................       0.14
------------------------------------------------------------------------

    The Department will disclose to parties the calculations performed 
in connection with these preliminary results within five days of the 
date of publication of this notice. Interested parties may request a 
hearing within 30 days of the publication. Any hearing, if requested, 
will be held seven days after the date rebuttal briefs are filed. 
Interested parties may submit case briefs not later than 30 days after 
the date of publication of this notice. Rebuttal briefs, limited to 
issues raised in the case briefs, may be filed not later than 37 days 
after the date of publication of this notice. The Department will 
publish a notice of the final results of this administrative review, 
which will include the results of its analysis of issues raised in any 
such case briefs, within 120 days of the publication of these 
preliminary results.
    Upon completion of this administrative review, the Department shall 
determine, and the Customs Service shall assess, antidumping duties on 
all appropriate entries. We calculate importer-specific assessment 
rates based on the ratio of the total amount of antidumping duties 
calculated for the examined sales to the total entered value of those 
sales, where available. Where the entered value is not available, we 
calculate a quantity-based assessment rate. These rates will be 
assessed uniformly on all entries of particular importers made during 
the POR. Pursuant to 19 CFR 351.106(c)(2), we will instruct the Customs 
Service to liquidate without regard to antidumping duties all entries 
for any importer for whom the assessment rate is de minimis (i.e., less 
than 0.50) percent. The Department will issue appraisement instructions 
directly to the Customs Service.
    Further, the following deposit requirements will be effective for 
all shipments of extruded rubber thread from Malaysia entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided 
for by section 751(a)(1) of the Act: (1) The cash deposit rates for 
Filati, Heveafil, and Rubberflex will be the rates established in the 
final results of this review, except if the rate is less than 0.50 
percent and, therefore, de minimis within the meaning of 19 CFR 
351.106, the cash deposit will be zero; (2) for previously reviewed or 
investigated companies not listed above, the cash deposit rate will 
continue to be the company-specific rate published for the most recent 
period; (3) if the exporter is not a firm covered in this review, a 
prior review, or the less-than-fair-value (LTFV) investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; and (4) 
the cash deposit rate for all other manufacturers or exporters will 
continue to be 15.16 percent, the all others rate established in the 
LTFV investigation.
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act and 777(i)(1) of the Act.


[[Page 66236]]


    Dated: October 30, 2000.
Troy H. Cribb,
Assistant Secretary for Import Administration.
[FR Doc. 00-28285 Filed 11-2-00; 8:45 am]
BILLING CODE 3510-DS-P