[Federal Register Volume 63, Number 111 (Wednesday, June 10, 1998)]
[Notices]
[Pages 31719-31723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15471]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-808]


Chrome-Plated Lug Nuts From the People's Republic of China; 
Preliminary Results of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of the antidumping duty 
administrative review of chrome-plated lug nuts 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 chrome-plated 
lug nuts (lug nuts) from the People's Republic of China (PRC) in 
response to a request by petitioner, Consolidated International 
Automotive, Inc. (Consolidated). This review covers shipments of this 
merchandise to the United States during the period of September 1, 1996 
through August 31, 1997.
    We have preliminarily determined that sales have been made below 
normal value (NV). If these preliminary results are adopted in our 
final results, we will instruct the U.S. Customs Service to assess 
antidumping duties based on the difference between export price and NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit argument are requested to submit with each 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

EFFECTIVE DATE: June 10, 1998.

FOR FURTHER INFORMATION CONTACT: Eric Scheier or Maureen Flannery, 
Antidumping/Countervailing Duty Enforcement, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington D.C. 20230; telephone 
(202) 482-4733.

SUPPLEMENTARY INFORMATION:

Applicable Statute

    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 Round Agreements Act. In addition, unless otherwise indicated, 
all citations to the Department's regulations are references to the 
regulations as codified at 19 CFR Part 351 (62 FR 27379, May 19, 1997).

Background

    The Department published in the Federal Register an antidumping 
duty order on lug nuts from the PRC on April 24, 1992 (57 FR 15052). On 
August 29, 1997, the Department published in the Federal Register (62 
FR 45794) a notice of opportunity to request an administrative review 
of the antidumping order on lug nuts from the PRC covering the period 
September 1, 1996 through August 31, 1997.
    On September 29, 1997, in accordance with 19 CFR 351.213(b)(1), 
Consolidated requested that we conduct an administrative review of the 
following PRC firms:

China National Automotive Industry I/E Corp.
China National Machinery & Equipment I/E Corp., Jiangsu Branch

[[Page 31720]]

Shanghai Automobile Import & Export Corp.
Tianjin Automobile Import & Export Co.
Ningbo Knives & Scissors Factory
China National Automobile Import & Export Corp., Yangzhou Branch
Jiangsu Rudong Grease Gun Factory
China National Automotive Industry I/E Corp., Nantong Branch

We published a notice of initiation of this antidumping duty 
administrative review on November 26, 1997 (62 FR 63069). The 
Department is conducting this administrative review in accordance with 
section 751 of the Act.

Scope of Review

    The products covered by the order and this review are one-piece and 
two-piece chrome-plated and nickel-plated lug nuts from the PRC. The 
subject merchandise includes chrome-plated and nickel-plated lug nuts, 
finished or unfinished, which are more than \11/16\ inches (17.45 
millimeters) in height and which have a hexagonal (hx) size of at least 
\3/4\ inches (19.05 millimeters) but not over one inch (25.4 
millimeters), plus or minus \1/16\ of an inch (1.59 millimeters). The 
term ``unfinished'' refers to unplated and/or unassembled chrome-plated 
lug nuts. The subject merchandise is used for securing wheels to cars, 
vans, trucks, utility vehicles, and trailers. Excluded from the order 
are zinc-plated lug nuts, finished or unfinished, stainless-steel 
capped lug nuts, and chrome-plated lock nuts.
    The merchandise under review is currently classifiable under item 
7318.16.00 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 merchandise is 
dispositive.
    This review covers the period September 1, 1996 through August 31, 
1997.

Facts Available

    We preliminarily determine that, in accordance with section 776(a) 
of the Act, the use of facts available is appropriate for the following 
firms:

China National Automotive Industry I/E Corp.
China National Machinery & Equipment I/E Corp., Jiangsu Branch
Tianjin Automobile Import & Export Co.
Ningbo Knives & Scissors Factory
China National Automobile Import & Export Corp., Yangzhou Branch
China National Automotive Industry I/E Corp. Nantong Branch

Two of the above firms, the Tianjin Automobile Import & Export Co. and 
the Ningbo Knives & Scissors Factory, had mailing addresses that were 
undeliverable. See memorandum to the file dated December 9, 1997, 
``Chrome-Plated Lug Nuts from the People's Republic of China.''
    Neither the PRC Ministry of Foreign Trade and Economic Cooperation 
(MOFTEC) nor the Embassy of the PRC in Washington, DC gave us any 
indication that any of the addresses for the eight firms listed above 
was incorrect. See Letter to MOFTEC dated November 11, 1997 and Letter 
to the Embassy of the PRC dated November 11, 1997. In the letter to the 
Embassy of the PRC we requested that the Embassy of the PRC provide the 
names, addresses, phone numbers, and appropriate contact persons for 
each company in the PRC that produced and/or exported the subject 
merchandise during the POR, and that they include the names of any 
foreign corporations engaged in joint ventures and/or partnerships with 
each company. We included in the letter to the Embassy of the PRC a 
copy of the letters and questionnaire sent to each of the firms. We 
included all of the above in the letter to MOFTEC, including the letter 
to the Embassy of the PRC, and requested, if MOFTEC believed that the 
Embassy of the PRC was not the proper party to respond to this 
questionnaire, or wished to have another person or organization act as 
the Department's contact for this review, that MOFTEC provide the name 
and address of that person or organization. Neither MOFTEC nor the 
Embassy of the PRC responded to these letters.
    Furthermore, the addresses to which we sent the questionnaires were 
identical to the addresses to which the questionnaires were sent in the 
most recent review, with the exception of the China National Automotive 
Industry I/E Corp. Nantong Branch (Nantong). In the 1994-95 
administrative review of lug nuts, we addressed the questionnaire to 
Nantong's counsel. Because Nantong does not have counsel in this 
current review, we mailed the questionnaire to Nantong's business 
address as reported in the public version of their February 13, 1995 
questionnaire response for the 1994-95 review. We were unable to find 
any more recent information regarding the two undeliverable addresses. 
See Memoranda to the File dated November 25, 1997 and June 1, 1998. 
Because necessary information is not available on the record with 
regard to sales by six firms during the period of review, the use of 
facts available for these six firms is warranted.
    Where a respondent has failed to cooperate to the best of its 
ability, section 776(b) of the Act authorizes the Department to use 
facts available that are adverse to the interests of that respondent, 
which include information derived from the petition, the final 
determination, a previous administrative review, or other information 
placed on the record.
    Because information from prior proceedings constitutes secondary 
information, section 776(c) of the Act provides that the Department 
shall, to the extent practicable, corroborate that secondary 
information from independent sources reasonably at its disposal. The 
Statement of Administrative Action (SAA) notes that ``corroborate'' 
means simply that the Department will satisfy itself that the secondary 
information to be used has probative value. H.#Doc. No. 316, Vol. 1, 
103d Cong., 2d Sess. 870 (1994).
    To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. However, unlike other types of information, 
such as surrogate values, there are no independent sources for 
calculated dumping margins. The only source for calculated margins is 
administrative determinations. Thus, in an administrative review, if 
the Department chooses as total adverse facts available a calculated 
dumping margin from a prior segment of the proceeding, it is not 
necessary to question the reliability of the margin for that time 
period. With respect to the relevance aspect of corroboration, however, 
the Department will consider information reasonably at its disposal as 
to whether there are circumstances that would render a margin not 
relevant. Where circumstances indicate that the selected margin is not 
appropriate as adverse facts available, the Department will disregard 
the margin and determine an appropriate margin. (See, e.g., Fresh Cut 
Flowers from Mexico; Final Results of Antidumping Duty Administrative 
Review, 61 FR 6812 (February 22, 1996), where the Department 
disregarded the highest margin as best information available because 
that margin was based on an uncharacteristic business expense, which 
resulted in the high margin.) In this case, we have used the highest 
rate from this or any prior segment of the proceeding, 44.99 percent, 
which was the rate calculated for Nantong in the 1992-93 review, and 
which is the PRC-wide rate currently in effect. See Chrome-Plated Lug 
Nuts From the People's Republic of China; Final Results of Antidumping 
Duty Administrative Review, 61 FR 58519 (November 15, 1996). There is 
no information on the record that indicates that this rate is not 
appropriate. Because these firms are part of the PRC entity, this rate 
remains the PRC rate.

[[Page 31721]]

    The Shanghai Automobile Import & Export Co. (Shanghai), which was 
not assigned a separate rate in any previous review, reported in its 
letter of December 3, 1997 that it did not export subject merchandise 
to the United States during the period of review. Because Shanghai has 
not been given a separate rate in any previous segment of this 
proceeding, and because there is no information on the record by which 
we might determine whether Shanghai should be considered for a separate 
rate in this review, we are considering Shanghai part of the PRC 
entity, and assigning it the PRC-wide rate of 44.99 percent.

Separate Rates

    Of the firms named in the initiation of the administrative review, 
the only one to respond to the separate rate section of the 
Department's antidumping questionnaire was the Jiangsu Rudong Grease 
Gun Factory (Rudong). Therefore, only Rudong was considered for a 
separate rate.
    To establish whether a company operating in a state-controlled 
economy is sufficiently independent to be entitled to a separate rate, 
the Department analyzes each exporting entity under the test 
established in the Final Determination of Sales at Less Than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991), as amplified by the Final Determination of Sales at Less Than 
Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 
22585 (May 2, 1994). Under this policy, exporters in non-market 
economies (NMEs) are entitled to separate, company-specific margins 
when they can demonstrate an absence of government control, both in law 
and in fact, with respect to export activities. 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. De facto absence of government 
control over exports is based on four factors: (1) Whether each 
exporter sets its own export prices independently of the government and 
without the approval of a government authority; (2) whether each 
exporter retains the proceeds from its sales and makes independent 
decisions regarding the disposition of profits or financing of losses; 
(3) whether each exporter has the authority to negotiate and sign 
contracts and other agreements; and (4) whether each exporter has 
autonomy from the government regarding the selection of management.
    With respect to the absence of de jure government control over 
export activities, evidence on the record indicates that Rudong is a 
collectively-owned enterprise, does not coordinate with other exporters 
and has no relationship with the national, provincial or local levels 
of the PRC government. As a collectively-owned enterprise, Rudong has 
the legal right to set prices independent of all government oversight, 
as codified by Chinese Law for Foreign Businesses, Ch. 3 Art. 26. 
Chinese Law for Foreign Businesses and ``Excerpts from Regulations for 
Transformation of Operational Mechanism of State-Owned Industrial 
Enterprises,'' published in the December, 1992 edition of The Bulletin 
of the Ministry of Foreign Economic Relations and Trade of the People's 
Republic of China, both of which regulate the operation of PRC 
collectively-owned industrial enterprises, are attached to Memorandum 
to the File dated June 2, 1998, ``Chrome-Plated Lug Nuts from the 
People's Republic of China: Laws and Regulations Governing Business 
Practices in the PRC.''
    With respect to the absence of de facto control over export 
activities, Rudong's management is responsible for all decisions such 
as the determination of its export prices, profit distribution, 
marketing strategy, and contract negotiations. For more information, 
see Separate Rate Analysis in the Administrative Review of Chrome-
Plated Lug Nuts from the People's Republic of China dated June 2, 1998 
(Separate Rates Memorandum), which is on file in the Central Records 
Unit (room B099 of the Main Commerce Building).
    Because evidence on the record demonstrates an absence of 
government control, both in law and in fact, over Rudong's export 
activities, the Department preliminarily grants Rudong a separate rate. 
For further discussion of the Department's preliminary determination 
that Rudong is entitled to a separate rate, see Separate Rates 
Memorandum.

United States Price

    For sales made by Rudong, we based United States price on export 
price, in accordance with section 772(a) of the Act, because the 
subject merchandise was sold to unaffiliated purchasers in the United 
States prior to importation into the United States, and because 
constructed export price is not indicated by other facts of record.
    We calculated export price based on the price to unaffiliated 
purchasers. We deducted an amount for foreign inland freight, 
insurance, and, for sales made on a CIF basis, international (ocean) 
freight. We selected India for all surrogate values with the exception 
of international freight, for the reasons explained in the ``Normal 
Value'' section of this notice.
    We valued movement expenses as follows:
    <bullet> To value truck freight, we used the rates reported in an 
April 20, 1994 newspaper article in the ``Times of India'' and 
submitted for the Final Determination of Sales at Less Than Fair Value: 
Polyvinyl Alcohol From the People's Republic of China, 60 FR 52647 
(October 10, 1995). We adjusted the rates to reflect inflation through 
the POR using WPI published by the IMF.
    <bullet> Where ocean freight was sourced from a market economy and 
paid for in a market-economy currency, we used the actual prices paid 
to the market-economy carriers; where ocean freight was provided by a 
nonmarket-economy carrier, we used a weighted average of the prices 
paid to the market-economy carriers. See Final Determination of Sales 
at Less Than Fair Value: Manganese Sulphate from the People's Republic 
of China, 60 FR 52155 (October 5, 1995).
    <bullet> We valued marine insurance using the average rate in 
effect during the period November 1991 through April 1992. This rate 
was reported in public information placed on the record for the Final 
Determination of Sales at Less Than Fair Value: Sulfur Dyes, Including 
Sulfur Vat Dyes, From India, 58 FR 11835 (March 1, 1993). We adjusted 
this rate to reflect inflation through the POR using WPI published by 
the IMF.

Normal Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine NV using a factors-of-
production methodology if (1) the merchandise is exported from an NME 
country, and (2) available 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.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. Pursuant to section 
771(18)(C)(i) of the Act, any determination that a foreign country is 
an NME country shall remain in effect until revoked by the 
administering authority. None of the

[[Page 31722]]

parties to this proceeding has contested such treatment in this review. 
Accordingly, we have applied surrogate values to the factors of 
production to determine NV.
    We calculated NV based on factors of production in accordance with 
section 773(c)(4) of the Act and section 351.408(c) of our regulations. 
We determined that India 1) is comparable to the PRC in terms of level 
of economic development, and 2) is a significant producer of comparable 
merchandise. See Memorandum to the File dated January 29, 1998, 
``Chrome-Plated Lug Nuts from the People's Republic of China--
Significant Production in India of Comparable Merchandise.'' Therefore, 
for this review, we used publicly available information relating to 
India to value the various factors of production. See Memorandum to the 
File from Eric Scheier, dated June 2, 1998, ``Factor Values Used for 
the Preliminary Results of the 1996-1997 Administrative Review of 
Chrome Plated Lug Nuts from the People's Republic of China.''
    We valued the factors of production as follows:
    <bullet> For steel wire rods, we used a per kilogram value obtained 
from the Monthly Statistics of Foreign Trade of India (Indian Import 
Statistics). Using wholesale price indices (WPI) obtained from the 
International Financial Statistics, published by the International 
Monetary Fund (IMF), we adjusted these values to reflect inflation 
through the period of review (POR). We made further adjustments to 
include freight costs incurred between the supplier and Rudong. For 
transportation distances used for the calculation of freight expenses 
on raw materials, we added to surrogate values from India a surrogate 
freight cost using the shorter of (a) the distances between the closest 
PRC port and the factory, or (b) the distance between the domestic 
supplier and the factory. See Notice of Final Determination of Sales at 
Less Than Fair Value: Collated Roofing Nails From the People's Republic 
of China, 62 FR 51410 (October 1, 1997) (Roofing Nails).
    <bullet> For chemicals used in the production and plating of lug 
nuts, we used per kilogram values obtained from the Indian publication 
Chemical Weekly and the Indian Import Statistics. We adjusted the 
Indian Import Statistics rates to reflect inflation through the POR 
using WPI published by the IMF. We made further adjustments to include 
freight costs incurred between the suppliers and Rudong, and to deduct 
sales and excise taxes from the prices listed in the Chemical Weekly. 
We obtained excise tax figures from the Central Excise Tariff of India 
1995-1996 and sales tax figures from the All India Sales Tax Ready 
Reckoner: 1996 Edition.
    <bullet> For hydrochloric acid, we relied on the price used in the 
Final Determination of Sales at Less Than Fair Value: Certain Helical 
Spring Lock Washers from the People's Republic of China (Lock Washers) 
(62 FR 61794, November 19, 1997) because the Indian Import Statistics 
rely on an Indian tariff category that also encompasses hydrogen 
chloride in gaseous form. This price is derived from prices listed in 
the Chemical Weekly for the period of October 1995 through September 
1996, and excludes prices that were found to be aberrational in Lock 
Washers. We adjusted this value to reflect inflation through the POR 
using WPI published by the IMF. We made further adjustments to include 
freight costs incurred between the supplier and Rudong.
    <bullet> For labor, we used the PRC regression-based wage rate at 
Import Administration's homepage, Import Library, Expected Wages of 
Selected NME Countries, revised on June 2, 1997. See <a href="http://
www.ita.doc.gov/import__admin/records/wages">http://
www.ita.doc.gov/import__admin/records/wages</a>. Because of the variability 
of wage rates in countries with similar per capita GDPs, section 
351.408(c)(3) of the Department's regulations requires the use of a 
regression-based wage rate. The source of these wage rate data on the 
Import Administration's homepage is found in the 1996 Year Book of 
Labour Statistics, International Labour Office (``ILO'') (Geneva: 
1996), Chapter 5B: Wages in Manufacturing.
    <bullet> For factory overhead, we used information reported in the 
April 1995 Reserve Bank of India Bulletin for the Indian metals and 
chemicals industries. From this information, we were able to determine 
factory overhead as a percentage of the total cost of manufacture.
    <bullet> For selling, general and administrative (SG&A) expenses, 
we used information obtained from the April 1995 Reserve Bank of India 
Bulletin for the Indian metals and chemicals industries. We calculated 
an SG&A rate by dividing SG&A expenses by the cost of manufacture.
    <bullet> To calculate a profit rate, we used information obtained 
from the April 1995 Reserve Bank of India Bulletin for the Indian 
metals and chemicals industries. We calculated a profit rate by 
dividing the before-tax profit by the cost of manufacturing plus SG&A.
    <bullet> For packing materials, we used per kilogram values 
obtained from the Indian Import Statistics. We adjusted these values to 
reflect inflation through the POR using WPI published by the IMF. We 
made further adjustments to include freight costs incurred between the 
suppliers and Rudong.
    <bullet> To value electricity, we used the average price of 
electricity as of July 1995 published in India's Energy Sector by the 
Center for Monitoring the Indian Economy. We adjusted the value of 
electricity to reflect inflation through the POR using the WPI 
published by the IMF.
    <bullet> Although Rudong did report banking charges, which it 
explains are incurred in connection with the collection of receivables, 
we are not allowing this adjustment. It is the Department's current 
practice not to make circumstance-of-sale adjustments in NME cases. The 
Department does not adjust for differences in selling expenses because 
there is insufficient detail about the selling expenses included in the 
surrogate SG&A to make an adjustment. See Final Determination of Sales 
at Less Than Fair Value: Manganese Metal from the People's Republic of 
China 60 FR 56045, 50-51 (November 6, 1995).

Currency Conversion

    We made currency conversions pursuant to section 351.415 of the 
Department's regulations at the rates certified by the Federal Reserve 
Bank.

Preliminary Results of Review

    We preliminarily determine that the following dumping margins 
exist:

------------------------------------------------------------------------
                                                                Margin  
             Manufacturer/Exporter              Time period   (percent) 
------------------------------------------------------------------------
Jiangsu Rudong Grease Gun Factory.............  09/01/96-08/            
                                                      31/97         5.44
PRC rate......................................  09/01/96-08/            
                                                      31/97        44.99
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice in accordance with 19 CFR 
351.224(b). Any interested party may request a hearing within 30 days 
of publication in accordance with 19 CFR 351.310(c). Any hearing, if 
requested, will be held 39 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice in 
accordance with 19 CFR 351.309(b)(2)(ii). 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

[[Page 31723]]

its analysis of issues raised in any such comments.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and NV may vary from the percentage 
stated above. We have calculated importer-specific duty assessment 
rates for lug nuts by dividing the total dumping margins (calculated as 
the difference between NV and EP) for each importer/customer by the 
total number of units sold to that importer/customer. We will direct 
Customs to assess the resulting per-unit dollar amount against each 
unit of merchandise in each of the importer's/customer's entries during 
the review period.
    Furthermore, the following deposit rate will be effective upon 
publication of the final results of this administrative review for all 
shipments of lug nuts from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(2)(C) of the Act: (1) For Rudong, which 
has a separate rate, the cash deposit rate will be 5.44 percent; (2) 
for all other PRC exporters, the rate will be the PRC country-wide 
rate; and (3) for non-PRC exporters of subject merchandise from the 
PRC, the cash deposit rate will be the rate applicable to the PRC 
supplier of that exporter.
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 2, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-15471 Filed 6-9-98; 8:45 am]
BILLING CODE 3510-DS-P