[Federal Register Volume 60, Number 88 (Monday, May 8, 1995)]
[Notices]
[Pages 22544-22550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11262]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-835]


Notice of Final Determination of Sales at Less Than Fair Value: 
Furfuryl Alcohol From the People's Republic of China

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

EFFECTIVE DATE: May 8, 1995.

FOR FURTHER INFORMATION CONTACT: John Brinkmann or Greg Thompson, 
Office of Antidumping Investigations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-5288 or (202) 482-2336, respectively.

Final Determination

    We determine that furfuryl alcohol from the People's Republic of 
China (PRC) is being, or is likely to be, sold in the United States at 
less than fair value (LTFV), as provided in section 735 of the Tariff 
Act of 1930, as amended (the Act). The estimated margins are shown in 
the ``Continuation of Suspension of Liquidation'' section of this 
notice.

Case History

    Since the preliminary determination of sales at LTFV on December 9, 
1994, (59 FR 65009, December 16, 1994), the following events have 
occurred:
    Verification of the questionnaire responses was conducted in 
February 1995. Reports concerning these verifications were issued in 
March 1995.
    QO Chemicals, Inc. (the petitioner) as well as Qingdao Chemicals & 
Medicines & Health Products Import & Export Company (Qingdao) and 
Sinochem Shandong Import & Export Company (Sinochem Shandong) (together 
referred to as respondents) submitted case and rebuttal briefs on March 
27 and 30, 1995, respectively. A public hearing was held on April 3, 
1995. Inasmuch as the submitted briefs contained certain untimely, new 
information, the Department of Commerce (the Department) issued letters 
to the petitioner and the respondents concerning the redaction from the 
record of this new information on April 10, 1994.

Scope of Investigation

    The product covered by this investigation is furfuryl alcohol 
(C<INF>4H<INF>3OCH<INF>2OH). Furfuryl alcohol is a primary alcohol, and 
is colorless or pale yellow in appearance. It is used in the 
manufacture of resins and as a wetting agent and solvent for coating 
resins, nitrocellulose, cellulose acetate, and other soluble dyes.
    The product subject to this investigation is classifiable under 
subheading 2932.13.00 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 is dispositive.

Period of Investigation

    The period of investigation (POI) is December 1, 1993 through May 
31, 1994.

Separate Rates

    Both of the participating exporters, Qingdao and Sinochem Shandong 
have requested a separate, company-specific dumping margin. Their 
respective business licenses indicate that they are owned ``by all the 
people.'' 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) and the Final Determination of Sales at Less 
Than Fair Value: Coumarin from the People's Republic of China, 59 FR 
66895 (December 28, 1994) (Coumarin), we found that the PRC central 
government had devolved control of state-owned enterprises, i.e., 
enterprises ``owned by all the people.'' As a result, we determined 
that companies owned ``by all the people'' were eligible for individual 
rates, if they met the criteria developed 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) and amplified in Silicon 
Carbide. Under this analysis, the Department assigns a separate rate 
only when an exporter can demonstrate the absence of both de jure and 
de facto governmental control over export activities.

De Jure Analysis\1\

    The PRC laws placed on the record of this investigation establish 
that the responsibility for managing companies owned by ``all the 
people,'' including the respondent companies, has been transferred from 
the government to the enterprises themselves. These laws include: ``Law 
of the People's Republic of China on Industrial Enterprises Owned by 
the Whole People,'' adopted on April 13, 1988 (1988 Law); ``Regulations 
for Transformation of Operational Mechanism of State-Owned Industrial 
Enterprises,'' approved on August 23, 1992 (1992 Regulations); and the 
``Temporary Provisions for Administration of Export Commodities,'' 
approved on December 21, 1992 (1992 Export Provisions). In particular, 
the 1988 Law states that enterprises have the right to set their own 
prices (see Article 26). This principle was restated in the 1992 
Regulations (see Article IX).

    \1\Evidence supporting, though not requiring, a finding of de 
jure absence of central control 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; or (3) any other formal measure 
by the government decentralizing control of companies.
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    The 1992 Export Provisions list includes those products subject to 
direct government control. In April 1994, the ``Emergent Notice of 
Changes in Issuing Authority for Export Licenses Regarding Public Quota 
Bidding for Certain Commodities'' (1994 Quota Measure) entered into 
force, superseding earlier laws that had listed the subject 
merchandise. Although furfuryl alcohol was on the 1992 version of the 
Export Provisions list, it has since been removed. (See discussion in 
Comment 1.)
    Consistent with Silicon Carbide, we determine that the existence of 
these laws demonstrates that Qingdao and Sinochem Shandong, companies 
owned by ``all the people,'' are not subject to de jure control.
    In light of reports\2\ indicating that laws shifting control from 
the government to the enterprises themselves have not been implemented 
uniformly, our analysis of de facto control becomes critical in 
determining whether respondents are, in fact, subject to governmental 
control.

    \2\See ``PRC Government Findings on Enterprise Autonomy,'' in 
Foreign Broadcast Information Service-China-93-133 (July 14, 1993) 
and 1992 Central Intelligence Agency Report to the Joint Economic 
Committee, Hearings on Global Economic and Technological Change: 
Former Soviet Union and Eastern Europe and China, Pt. 2 (102 Cong., 
2d Sess.).
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De Facto Control Analysis\3\

    In the course of verification, we confirmed that export prices for 
both [[Page 22545]] Qingdao and Sinochem Shandong are not set by, nor 
subject to approval of, any government authority. This point was 
supported by the companies' sales documentation and customer 
correspondence. We also confirmed, based on examination of documents 
related to sales negotiations, written agreements and other 
correspondence, that respondents have the authority to negotiate and 
sign contracts and other agreements independent of government 
intervention. Moreover, the respondents' financial statements, 
accounting records, and bank statements support the conclusion that 
these companies retain the proceeds of their export sales and finance 
their losses.

    \3\The factors considered include: (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 disposition of profits or financing of losses (see, 
Silicon Carbide).
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    Based on our examination of company records during verification, we 
have determined that both Qingdao and Sinochem Shandong had autonomy 
from the central government in making decisions regarding the selection 
of management. Qingdao's general manager is selected for a three-year 
term by worker elections. Sinochem Shandong's general manager is 
selected by worker elections for a term of five years. We found no 
involvement by any government entity in the selection of management or 
of hiring for either company. See the verification reports for Qingdao 
(March 3, 1995) and Sinochem Shandong (March 22, 1995).

Conclusion

    For both Sinochem Shandong and Qingdao, the record demonstrates an 
absence of de jure and de facto government control. Accordingly, we 
determine that each of these exporters should receive a separate rate. 
(For further discussion, see Comment 1 below and the concurrence 
memorandum, dated May 1, 1995, on file in Room B-099 of the main 
Department of Commerce Building.)

Nonmarket Economy

    The PRC has been treated as a nonmarket economy country (NME) in 
all past antidumping investigations. Given that no information has been 
provided in this proceeding that would lead us to conclude otherwise, 
in accordance with section 771(18)(c) of the Act, we continue to treat 
the PRC as an NME for purposes of this investigation.

Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value the 
NME producers' factors of production, to the extent possible, in one or 
more market economy countries that are (1) at a level of economic 
development comparable to that of the NME country, and (2) significant 
producers of comparable merchandise. As stated in our preliminary 
determination, the Department has determined that Indonesia is the most 
suitable surrogate for purposes of this investigation. Based on 
available statistical information, Indonesia is at a level of economic 
development comparable to that of the PRC. Further, Indonesian 
government statistics and other data indicate that the country is a 
significant producer of furfuryl alcohol. Based on available 
information, Indonesia is the only surrogate country, of those 
identified by our Office of Policy, that meets both of these criteria.
    For those adjustments to United States price that we have been 
unable to value using information from Indonesia, we have used India as 
the surrogate. India is economically comparable to the PRC and is a 
significant producer of furfuryl, which is comparable to furfuryl 
alcohol within the meaning of section 773(c)(1). Furfuryl is the 
feedstock, and the major input, in the production of furfuryl alcohol. 
(See memoranda to the file, dated November 22, 1994 and March 23, 1995, 
and memorandum from David Mueller, Director, Office of Policy to Gary 
Taverman, Acting Director, Office of Antidumping Investigations, dated 
August 2, 1994, furfuryl alcohol from the People's Republic of China, 
Non-Market Economy Status and Surrogate Country Selection.)

Fair Value Comparisons

    To determine whether sales of furfuryl alcohol from the PRC to the 
United States by Sinochem Shandong and Qingdao were made at less than 
fair value, we compared the United States price (USP) to the foreign 
market value (FMV), as specified in the ``United States Price'' and 
``Foreign Market Value'' sections of this notice.

United States Price

    United States price was calculated on the basis of purchase price, 
as described in the preliminary determination, in accordance with 
section 772(b) of the Act. Pursuant to findings at verification, we 
made minor adjustments to foreign inland freight, sales quantities and 
the date of payment for certain sales reported by Sinochem Shandong. We 
also made an adjustment for Sinochem Shandong's iso-tanker rental 
expense (see Comment 11). In the case of Qingdao, we adjusted its 
reported amounts for ocean freight. (See calculation memorandum, 
attached to the Department's concurrence memorandum of May 1, 1995).

Foreign Market Value

    In accordance with section 773(c) of the Act, we calculated FMV 
based on the factors of production reported by the factories in the PRC 
which produced the subject merchandise for the two participating 
exporters. We calculated FMV for this final determination as discussed 
in the preliminary determination, making adjustments for specific 
verification findings and certain revisions to surrogate values, 
discussed below (see, also, calculation memorandum attached to the 
concurrence memorandum of May 1, 1995).
    In our December 9, 1994, preliminary determination, we had valued 
individually the energy inputs used to produce the subject merchandise. 
We subsequently received additional information from the U.S. Embassy 
in Jakarta indicating that energy costs and indirect labor were 
included in the factory overhead rate used in our margin calculations 
(see memorandum to the file, dated March 23, 1995). Therefore, to avoid 
double-counting costs, we no longer have applied individual values for 
energy inputs in the final determination.
    The Indonesian labor rates used in our preliminary determination 
were those that the Department had relied upon in the Preliminary 
Determination of Sales at Less Than Fair Value: Disposable Pocket 
Lighters from the PRC, 59 FR 64191, December 13, 1994 (Lighters). In 
the Final Determination of Sales at Less Than Fair Value: Disposable 
Pocket Lighters from the PRC, signed on April 27, 1995 (Lighters 
Final), the Department found that these labor rates were not 
appropriate for valuing labor factors. Therefore, for the Lighters 
Final, the Department relied on updated labor figures for skilled and 
unskilled labor obtained from Doing Business in Indonesia (1991) and 
the International Labor Office's 1994 Special Supplement to the 
Bulletin of Labor Statistics. We have adopted the revised labor rates 
for this investigation as well.
    Additionally, we revised the surrogate values for the material 
inputs of sulfuric acid and ammonia water because we determined that 
the 1993 Indonesian import values used in the preliminary determination 
were inappropriate. (For the details of our analysis of these 
[[Page 22546]] values, see the calculation memorandum attached to the 
concurrence memorandum of May 1, 1995). Since the Indonesian import 
values for both sulfuric acid and ammonia water were found to be 
inappropriate, we based our calculations on the export values derived 
from the Indonesian Foreign Trade Statistical Bulletin--Exports, 
November 1993.
    For the primary material input, furfuryl, we continued to rely on 
the Indonesian selling price supplied by the U.S. Embassy in Jakarta 
because it was the information on the record most contemporaneous to 
the POI. We applied this value to furfuryl that was purchased and used 
in the production of furfuryl alcohol. For those factories that also 
produced their own furfuryl, we constructed a surrogate value from 
verified factor data for this input. This surrogate value was then 
applied to the amount of self-produced furfuryl used to make furfuryl 
alcohol during the POI (see Comment 4).

China-Wide Rate

    The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and 
the China Chamber of Metals, Minerals & Chemical Importers & Exporters 
identified what we believe to be the only two PRC exporters of furfuryl 
alcohol to the United States during the POI. Both have responded in 
this investigation. We compared the respondents' sales data with U.S. 
import statistics for the period of investigation and found no 
inconsistencies. Accordingly, we have based the China-wide rate on the 
weighted-average of the margins calculated in this proceeding.

Verification

    As provided in section 776(b) of the Act, we verified all the 
information relied upon for this final determination.

Interested Party Comments

Comment 1: Separate Rates Eligibility

    The respondents contend that the Department should uphold its 
preliminary determination and issue separate rates to both Qingdao and 
Sinochem Shandong. They argue that the information on the record, as 
verified by the Department, supports their claims regarding the lack of 
central government ownership and the absence of de jure and de facto 
governmental control. Therefore, respondents assert, they are eligible 
for receiving separate, calculated margins in the final determination.
    The petitioner argues that the respondents are subject to 
significant control by the PRC government and are, thus, ineligible to 
receive separate rates in the final determination. According to the 
petitioner, governmental control is evidenced by several factors that 
apply both generally and selectively to the respondents in this 
investigation.
    First, the petitioner argues that the 1988 Law provides an example 
of de jure control by the central government. Petitioner points to 
chapter VI, article 55, of the 1988 Law, which states that the PRC 
government has the authority to ``issue mandatory plans'' to 
enterprises.
    Second, the petitioner makes reference to a 1994 World Bank report, 
``China Foreign Trade Reform,'' that was cited with approval in the 
Department's determination in Coumarin. This report states that the 
foreign contract system in the PRC has ``the effect of holding local 
authorities and FTCs [foreign trade companies] to what are in effect 
mandatory export targets.''
    Third, the petitioner refers to the 1992 Export Provisions which 
indicate that furfuryl alcohol is subject to quotas on exports to Japan 
and the European Community (EC). According to the petitioner, the 
imposition of these export quotas had an indirect effect on exports of 
furfuryl alcohol to the U.S. market.
    Fourth, the petitioner contends that the Department has determined 
that if a product is included on the 1992 Export Provisions list, then 
it is subject to mandatory plans and export targets (see Coumarin).
    Focusing specifically on Sinochem Shandong, the petitioner alleges 
that this exporter is a subsidiary of the national trading company, 
China National Chemicals Import and Export Corporation (commonly known 
as Sinochem Import & Export Corporation) which, in turn, is under the 
control of the State Council. The petitioner argues that the linkage 
between these entities is established by (a) the 1994 company catalog 
of Sinochem Shandong, and (b) the 1992 ``Directory of Chinese 
Enterprises for Foreign Economic Relations and Trade'' which suggests 
that Sinochem Shandong is under the control of the State Council.
    In response, Qingdao and Sinochem Shandong assert that the 
provisions of the 1988 Law concerning mandatory plans are not 
applicable to the furfuryl alcohol industry. Furthermore, the 1992 
Regulations, indicate that the responsibility for managing enterprises 
``owned by all of the people'' is with the enterprises themselves and 
not with the government.
    On the subject of furfuryl alcohol export quotas, the respondents 
agree with the Department's preliminary determination that such quotas 
are not applicable to PRC exports to the United States. According to 
the respondents, any suggestion that the quotas on exports to the EC 
and Japan might have had some distortive effect on pricing of furfuryl 
alcohol exports to the United States is ``pure speculation.''
    Regarding the specific allegation against Sinochem Shandong, that 
company states that the national trading company was dismantled during 
the 1992 decentralization and its former branches made independent. It 
notes, moreover, that the Department had granted Sinochem Shandong a 
separate rate in past investigations.

DOC Position

    We disagree with the petitioner. Regarding petitioner's argument 
that the 1988 Law allows for the imposition of mandatory plans, we note 
that (1) the 1992 Regulations, which further devolved control from the 
government to the enterprises, provides that ``enterprises have the 
right to reject mandatory plan targets'' (Article VIII), and (2) we 
confirmed at verification that these exporters (a) establish their own 
export prices; (b) negotiate their own sales without guidance from any 
government entities; (c) select their own management without 
interference from any government entities; and d) retain the proceeds 
from the sales of the subject merchandise.
    Regarding the petitioner's argument about the 1992 Export 
Provisions, we recognize that furfuryl alcohol was included on the list 
of commodities that were subject to export quotas. However, as stated 
in the preliminary determination, these quotas were confined to exports 
to Japan and the countries of the European Community and were not 
applicable to PRC exports to the United States. Petitioner did not 
offer any explanation as to how the quotas on exports to the EC 
countries and Japan might have affected the pricing of the PRC sales of 
furfuryl alcohol to the United States. Moreover, furfuryl alcohol is 
not included in the more recent 1994 Quota Measure.
    With regard to the specific allegation concerning Sinochem 
Shandong, the Department found Sinochem Shandong eligible for a 
separate rate, on a de jure basis, on the ground that the national 
trading company was dismantled and its former branches became 
independent (see Sparklers and Final Determination of Sales at Less 
Than Fair Value: Sulfur Dyes From the People's Republic of China, 58 FR 
7537-38 (February 8, 1993). The 1992 ``Directory of Chinese Enterprises 
for Foreign Economic Relations and Trade'' referenced by the 
[[Page 22547]] petitioner is outdated; the Sinochem national trading 
company was dismantled after the directory was compiled. As stated in 
the ``Separate Rates'' section of this notice, we therefore find that 
the administrative record in this investigation supports a final 
determination that there is the de jure and de facto absence of 
governmental control over the export activities of both respondents. 
Consequently, we find that these exporters have met the criteria for 
application of separate rates.

Comment 2: Assigning Separate Rates for Different Suppliers

    The respondents urge the Department to determine separate rates for 
each manufacturing respondent and to establish dual rates for trading 
companies sourcing from two manufacturers. In support of this request, 
the respondents cite to the Final Determination of Sales at Less Than 
Fair Value: Certain Cased Pencils from the PRC, 59 FR 55625 (November 
8, 1994) (Pencils).
    The petitioner argues that respondents' reliance on Pencils is 
misplaced, noting that the Department established factory-specific 
rates in that case to prevent investigated producer/exporter 
combinations with no dumping margin from becoming conduits for 
merchandise produced by producers that had been found to have positive 
dumping margins. Accordingly, the petitioner urges that respondents' 
request be rejected.

DOC Position

    We agree with the petitioner. The Department's practice is to apply 
separate rates only to those exporters of the subject merchandise who 
responded to the Department's questionnaire, whose responses were 
verified on this issue, and who satisfy the criteria of our separate 
rates test. For those exporters that have multiple suppliers, margins 
are based on weighted-average FMVs (see, Coumarin, 59 FR 66895, 66899).
    In Pencils, the Department found no dumping margin for one exporter 
based upon the factors of production provided by the suppliers of that 
exporter. The Department determined that, for purposes of exclusion 
from the order, the exclusion applied only to the exporter's sales of 
merchandise produced by those suppliers. If the exporter sold 
merchandise produced by other suppliers, that merchandise would be 
subject to the order at the ``China-wide'' rate. The Department 
assigned a margin based on the weighted-average FMV of all suppliers to 
other exporters that did not qualify for exclusion. In this 
investigation, because none of the exporter-supplier combinations are 
without a dumping margin, the Department assigned each exporter a rate 
based on the respective weight-average FMV of the exporter/producer 
combinations.

Comment 3: Market-Oriented Treatment for Certain Inputs

    At the preliminary determination, respondents requested market-
oriented-industry (MOI) treatment and the use of domestic PRC prices 
for major inputs in the production of furfuryl alcohol (furfuryl and 
its primary material input, corn cobs). The Department rejected 
respondents' claim. In its subsequent briefs, the respondents argued 
that MOI treatment and the use of domestic PRC prices was appropriate 
for the furfuryl alcohol itself.
    The petitioner cites the Final Determination of Less Than Fair 
Value: Sulfanilic Acid from the PRC, 57 FR 29705 (July 6, 1992) 
(Sulfanilic Acid), for the proposition that the MOI test is not and 
should not be applied on an input-by-input basis.

DOC Position

    The Department's practice with MOI claims has been to require the 
respondents to show that the subject merchandise is produced within an 
MOI. Showing that a respondent purchases one input at a market-
determined price (which we have not concluded in this investigation) is 
relevant but, alone, not sufficient to find an MOI for the subject 
merchandise (Sulfanilic Acid, 57 FR 29705). Respondents failed to show 
that the other inputs were available at market-determined prices. 
Accordingly, respondents have not demonstrated eligibility for MOI 
treatment and, in accordance with the statute, we must determine FMV on 
the basis of surrogate market economy values for inputs produced or 
purchased within the PRC.
    Comment 4: Constructed Surrogate Value for All Furfuryl
    The respondents urge the Department to use the reported factors of 
production to value both self-produced and purchased furfuryl during 
the POI. They argue that, according to the Omnibus Trade and 
Competitiveness Act of 1988 (1988 Act), the Department's first 
preference in determining FMV in an NME investigation is the 
calculation of the value of factors of production. Since the Department 
has verified the factors of production in the PRC, using the actual 
factor inputs and surrogate values for those inputs is the most 
accurate way to value furfuryl. The respondents assert that, at a 
minimum, the factors of production of furfuryl should be used to value 
both the furfuryl produced and the furfuryl purchased for the producers 
that did both during the POI.
    The petitioner contends that the respondents' reference to the 
change to using factor inputs and surrogate values for NME 
investigations in the 1988 Act is both factually and legally incorrect. 
To support its assertion, the petitioner states: (1) The Department has 
not constructed a surrogate value for furfuryl produced in the PRC as 
claimed by the respondents--the factors of production for furfuryl, 
based on the few responding producers in this investigation, are not 
necessarily applicable to all furfuryl producers in the PRC; (2) the 
1988 Act requires merely that the Department value in a surrogate 
country input factors of production of the subject merchandise; and (3) 
no statutory support exists for applying one NME producer's factors of 
production to another NME manufacturer's product.

DOC Position

    We agree with the petitioner that the 1988 Act does not support the 
respondents' proposal. In accordance with the statute's direction to 
measure and value ``the factors of production utilized in the 
production of the merchandise,'' we valued the inputs for furfuryl for 
the factories producing furfuryl. For those factories that purchased 
furfuryl for their production of furfuryl alcohol, we continued to 
treat the purchased furfuryl as the input to be valued on the basis of 
a surrogate.

Comment 5: Corn Cob Value

    The petitioner argues that corn cobs, a primary direct material of 
furfuryl and, therefore, furfuryl alcohol, should be assigned a value 
based on a price in one of the surrogate countries. In the preliminary 
determination the Department, based on information provided in a cable 
from the U.S. Embassy in Indonesia, treated corn cobs as an 
agricultural waste product and only assigned corn cobs the costs 
applicable to transporting corn cobs to the factory. The petitioner 
contends that it is inapposite to treat corn cobs as agricultural waste 
because the respondents have to pay for corn cobs. If a price for corn 
cobs is unavailable in Indonesia, the petitioner urges the Department 
to use a price from another surrogate country.
    The respondents argue that if furfuryl production is based on the 
use of market factors, including corn cobs, then home market prices 
should be used for these factors. If, however, the Department continues 
to value furfuryl production [[Page 22548]] using the factor 
methodology, the respondents contend that corn cobs should be valued at 
Indonesian prices, as established in the preliminary determination.

DOC Position

    We agree with the petitioner that corn cobs should be assigned a 
value based on a price in one of the surrogate countries. However, we 
disagree with the petitioner that it is inapposite to treat corn cobs 
as agricultural waste because the respondents pay for corn cobs. In 
this investigation, we obtained information relating to the value of 
corn cobs in the surrogate country, Indonesia. In Indonesia, corn cobs 
are treated as agricultural waste and have no commercial value. 
Inasmuch as we valued these corn cobs on the basis of our surrogate 
country methodology, the surrogate value is appropriate.

Comment 6: Inappropriate Import Value for Furfuryl

    The petitioner contends that the Department should rely on publicly 
available information from 1992 Indonesian import statistics rather 
than a price quote received from a factory in Indonesia to value 
furfuryl.

DOC Position

    As in the preliminary determination, we used the respective factors 
of production in our calculation of FMV for the furfuryl that was 
produced by the respondents; however, for the furfuryl that was 
purchased, we based the value on cable information received from the 
U.S. Embassy in Indonesia. As stated in the calculation memorandum 
attached to the concurrence memorandum, dated December 9, 1994, the 
1992 value that the petitioner is referring to is publicly available, 
but it is less contemporaneous with the POI than the cable information, 
and therefore, was rejected.

Comment 7: Zhucheng's Claimed By-Product Credit

    The petitioner urges the Department to reject Shandong Zhucheng 
Chemical Company Limited's (Zhucheng) claimed by-product credit for a 
factor of production because the information was submitted during 
verification and, therefore, constitutes an untimely submission of 
data.
    The respondents argue that the record in this investigation 
indicates that the petitioner improperly characterized Zhucheng's 
claimed credit as untimely. Zhucheng indicates that it had reported the 
credit in its original response to Section D of the Department's 
questionnaire. While the respondents acknowledge that they provided a 
correction and calculation worksheet on this topic at verification, 
they argue that the documentation is fully in line with that which the 
Department normally accepts or requires at verification. Accordingly, 
the respondents request that the Department use the verified credit 
information in the final margin calculations.

DOC Position

    While we agree with the respondents that this information was not 
untimely, we did not include this credit in our final margin 
calculations because, as noted in our verification report, Zhucheng was 
unable to provide documentation to support its worksheet calculations 
for the credit amount of the factor. (For a further discussion of this 
issue, see our calculation memorandum attached to the May 1, 1995, 
concurrence memorandum and Zhucheng's verification report at page 17, 
dated March 22, 1995).

Comment 8: Zhucheng's Understated Usage of Corn Cobs

    The petitioner argues that the Department's verification revealed 
that Zhucheng underreported its consumption of corn cobs, and that the 
Department should base its final margin calculations on the verified 
amounts.
    According to the respondents, the petitioner has mischaracterized 
the Department's verification findings. The respondents suggest that 
the understatement was related to impurities, not corn cobs. The 
respondents also suggest that Zhucheng quite properly reported corn cob 
consumption, not the consumption of both the factor corn cobs and the 
impurities. However, the respondents view petitioner's argument as 
irrelevant because corn cobs are considered an agricultural waste in 
the surrogate, Indonesia.

DOC Position

    We agree with the petitioner that Zhucheng underreported its 
consumption of corn cobs. Our questionnaire requests respondents to 
report the gross, not net, amount of materials consumed in the 
production of the subject merchandise. Therefore, we have increased 
Zhucheng's consumption of this input, as verified. Inasmuch as the 
surrogate information in Indonesia assigns no monetary value to corn 
cobs, this increase in consumption will have an affect only on the 
expenses to transport the corn cobs to the furfuryl alcohol factory.

Comment 9: Zhucheng's Reallocation of Labor Hours

    The petitioner contends that the Department should reject 
Zhucheng's reallocation of labor hours presented at verification 
because the information is both untimely and without merit.
    According to the respondents, the petitioner has misinterpreted the 
record in arguing that Zhucheng submitted new data on labor hours in 
the middle of verification. The respondents emphasize that Zhucheng had 
reported labor hours in its original questionnaire responses to the 
Department. At verification, the respondents contend that the 
Department was able to review Zhucheng's records on labor and assess 
the proper division of direct, indirect and unrelated labor. Inasmuch 
as Zhucheng's reallocation verified without discrepancy, the 
respondents request that the Department include its verification 
findings on labor in its final margin calculations.

DOC Position

    We agree with the respondents. As noted in our verification report, 
Zhucheng had overstated the amount of labor used for producing the 
input furfuryl because the reported amounts included both indirect and 
unrelated labor. Since our surrogate value for factory overhead 
includes indirect labor and it is the Department's practice to only 
include the production labor related to the subject merchandise, we 
have revised our final calculations on labor to avoid double counting 
indirect labor.

Comment 10: Zhucheng's Self-Produced Input, Hydrogen

    Zhucheng requests that the Department revise its valuation of 
hydrogen for the final determination by not valuing it separately. The 
company argues that the costs associated with the manufacture of this 
input are included in the surrogate value for factory overhead and that 
the Department's separate valuation of this input constitutes double 
counting.
    The petitioner argues that the Department should reject Zhucheng's 
attempt to disregard hydrogen as a direct material and assign a factor 
value to the process used to produce this input. Moreover, inasmuch as 
the respondent failed to report usage rates for this process, the 
petitioner urges that the Department assign a value based upon the best 
information otherwise available.

DOC Position

    We confirmed that the process necessary to produce hydrogen is 
[[Page 22549]] accounted for in the surrogate value for factory 
overhead and that to value the company's input separately would involve 
double counting. Therefore, we have not assigned a separate value to 
hydrogen in our calculations for the final determination. (For a 
further discussion of this issue, see our calculation memorandum 
attached to the concurrence memorandum of May 1, 1995).

Comment 11: Iso-Tanker Rental Expense

    The petitioner asserts that, in computing movement expenses, the 
Department should include a rental expense for iso-tankers used by 
Sinochem Shandong because the Department verified that these expenses 
were incurred. The petitioner argues that it is appropriate to rely on 
the public information provided in the petition for the valuation of 
these expenses in the final margin calculations.

DOC Position

    We agree with the petitioner that Sinochem Shandong incurred a 
rental expense for transporting the subject merchandise in iso-tanker 
trucks during the POI. Given that we were unable to obtain any publicly 
available data, or other information, regarding this expense in any of 
our surrogate countries, we relied on the publicly available 
information in the petition for the rental of iso-tanker trucks from 
Thailand for shipments to the United States to derive a MT per 
kilometer cost. We applied this figure to the distance between the 
factory and the port for each PRC supplier of Sinochem Shandong.

Comment 12: BIA for Sinochem Shandong

    The petitioner argues that the Department should use BIA to 
calculate a margin for Sinochem Shandong because it failed to furnish a 
complete list of suppliers that provided the furfuryl alcohol it sold 
to the United States during the POI. The petitioner states that the 
reported suppliers did not deliver furfuryl alcohol from a total of 
five invoices in time for one of Sinochem Shandong's shipments. 
Accordingly, the petitioner asserts that Sinochem Shandong must have 
purchased the furfuryl alcohol elsewhere, and has failed to disclose 
that supplier to the Department.
    The respondents contend that the petitioner's allegation regarding 
Sinochem Shandong's sourcing is unfounded. The respondents argue that 
the integrity of Sinochem Shandong and its suppliers are demonstrated 
in the Department's verification reports and, therefore, there is no 
reason to use BIA. To support their argument, the respondents cite to 
the Department's verification reports.

DOC Position

    We agree with the respondents that the sales reported by Sinochem 
Shandong and by its suppliers did, in fact, correspond, and that the 
discrepancy was only a result of differences in the bookkeeping 
practices of these different entities. For these reasons, we relied on 
Sinochem Shandong's verified data and did not resort to using BIA to 
calculate its margin.

Comment 13: Additional Movement Expenses for Qingdao

    The petitioner asserts that the Department should deduct from the 
USP the additional expenses incurred for the movement of Qingdao's 
furfuryl alcohol from the point of shipment to the point of delivery. 
At verification, Qingdao indicated that it received partial payment for 
certain invoices and that the difference between the invoiced amounts 
and the actual payments represents movement expenses. The petitioner 
argues that these movement expenses must be accounted for in the 
Department's calculations.
    The respondents indicate that the record demonstrates that these 
additional charges are not those of Qingdao and that this was affirmed 
at verification. Accordingly, it would be inappropriate to charge these 
additional movement expenses to Qingdao.

DOC Position

    We agree with the respondents. The Department verified that only 
partial payments for three U.S. sales had been forwarded by the 
customer to Qingdao because of a dispute over shipping charges between 
the shipper and Qingdao's customer. Both Qingdao and its customer 
acknowledge that these charges are not the responsibility of Qingdao. 
The customer stated that it will complete payment to Qingdao as soon as 
the issue with the shipper is resolved (see Qingdao verification 
report, dated March 20, 1995). Accordingly, the Department is satisfied 
that a third party, not Qingdao, is liable for the additional movement 
expenses.

Comment 14: Ministerial Error on Packing

    The respondents state that the Department should correct the 
multiplication errors made in calculating packing expenses in the 
preliminary determination. Specifically, they state that for the 
producers Zibo Gaintact Chemical Company Limited and Zhucheng, the 
Department incorrectly multiplied the drum cost per metric ton by the 
number of drums in a metric ton. In addition, the respondents state 
that with respect to the producers Linzi Organic Chemicals Co. Ltd. and 
Zibo, the Department confirmed that shipment of products by Sinochem 
Shandong was by iso-tanker. Accordingly, the respondents assert that 
packing material costs for these shipments should be zero.
    The petitioner notes that although the Department's preliminary 
calculation has a mathematical error, it is not the error alleged by 
the respondent. In fact, the petitioner postulates that the packing 
figures used in the preliminary determination were partially correct. 
The petitioner makes the assumption that the Department charged all 
sales of furfuryl alcohol with packing cost to account for the packing 
that would be needed for the purchased furfuryl. Therefore, the 
petitioner states that all sales should include packing cost, and that 
the drum sales should have packing cost included twice.

DOC Position

    We agree with the respondents. These were ministerial errors and 
have been corrected (see calculation memorandum attached to the 
concurrence memorandum, dated May 1, 1995).

Comment 15: Labor Rates

    The respondents state that, in the preliminary determination, the 
Department used unrealistically high labor rates for both skilled and 
unskilled labor, and such rates did not accurately reflect the actual 
wage rates in Indonesia.
    The petitioner argues that the Department should continue to rely 
on the U.S. Department of Labor statistics for Indonesian labor that 
were used in the preliminary determination.

DOC Position

    We agree with the respondents. The labor rates used in the 
preliminary and final determinations are discussed above in the section 
on Foreign Market Value.

Comment 16: Indirect Labor & Energy

    The respondents state that, based on the March 23, 1995, memorandum 
to the file, the calculations for all three manufacturers should be 
corrected to eliminate indirect labor, coal, steam, and electricity 
because the memorandum states that the costs of indirect labor and 
energy are included [[Page 22550]] in the Indonesian surrogate value 
for factory overhead.
    The petitioner urges the Department not to eliminate indirect labor 
and energy, and instead use a surrogate valuation based on a percentage 
of direct materials, all labor and energy costs. In any event, the 
petitioner states that the Department should not ignore the 
respondent's energy costs.

DOC Position

    We agree with the respondents. Based on the Department's surrogate 
value methodology, Indonesia is our preferred surrogate, and since the 
factory overhead percentage for Indonesia includes the above-mentioned 
items, we have not separately valued those items in our calculations 
for the final determination.

Comment 17: Salt

    The respondents state that the Department verified that salt, not 
the originally reported factor, was used by two of the factories. To 
value this factor, the respondents suggest using either the Indonesian 
price, if available, or the U.S. price. Alternatively, the respondents 
state that the Department should consider disregarding the cost of salt 
altogether because it was not used in the production process. They 
point to the verification report for one of the factories, wherein salt 
was referred to as ``a low cost consumable'' used for equipment 
maintenance.
    The petitioner argues that the Department's calculations of 
surrogate values in the preliminary determination were correct and 
should not be changed.

DOC Position

    We agree with both parties, in part. For the factory that treats 
salt as a ``low cost consumable,'' we have treated these costs as part 
of factory overhead and have not valued them separately as a factor of 
production. For the other factory, there is no evidence concerning how 
salt was used in the production process or what kind of salt was used. 
Therefore, we have treated salt as a factor of production, and have 
continued to use the surrogate value that was used in the preliminary 
determination.

Comment 18: Sulfuric Acid

    The respondents state that the surrogate value used for sulfuric 
acid in the preliminary determination is either erroneous or 
aberrational and should be corrected. They state that a more realistic 
value for sulfuric acid has been established in the Pencils 
investigation, where an Indian price was used.
    The petitioner contends that the Department should follow the 
surrogate country hierarchy established in this case.

DOC Position

    We agree with both parties, in part. We agree with the petitioner 
that the Department should use the established hierarchy. Based on our 
analysis, we also agree with the respondents that a more accurate value 
should be used. Because furfuryl alcohol is not produced in India, we 
based our calculations on the export values derived from the November 
1993 Indonesian Foreign Trade Statistical Bulletin-- Exports. Because 
this was a contemporaneous value, no adjustment for inflation was 
needed (see calculation memorandum attached to the concurrence 
memorandum, dated May 1, 1995).

Comment 19: Valuation of Ammonia Water

    The respondents state that the surrogate value used for ammonia 
water in the preliminary determination was aberrational and should be 
corrected. The respondent cites to the Department's publication of an 
``Index of Factor Values for Use in Antidumping Duty Investigations 
Involving Products from the People's Republic of China'' which lists a 
price for ammonia water in another approved surrogate, India.
    The petitioner alleges that the respondents misuse the terms 
``erroneous'' and ``aberrational'' and completely disregard the 
Department's factor valuation hierarchy. The petitioner urges the 
Department not to change its surrogate value for this factor.

DOC Position

    We agree with the respondents in part. Based on our analysis, we 
determined that the surrogate value used in the preliminary 
determination was inappropriate. (For the details of our analysis of 
this value, see the calculation memorandum attached to the concurrence 
memorandum, dated May 1, 1995.) Since the Indonesian import value for 
ammonia water was found to be inappropriate, we based our calculations 
on the export values derived from the November 1993 Indonesian Foreign 
Trade Statistical Bulletin--Exports. Because this was a contemporaneous 
value, no adjustment for inflation was needed.

Continuation of Suspension of Liquidation

    In accordance with sections 733(d)(1) and 735(c)(4)(B) of the Act, 
we are directing the Customs Service to continue to suspend liquidation 
of all entries of furfuryl alcohol from the PRC, that are entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. The Customs Service 
shall require a cash deposit or posting of a bond equal to the 
estimated amount by which the FMV exceeds the USP as shown below. These 
suspension of liquidation instructions will remain in effect until 
further notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                               Weighted-
                                                                Average 
               Manufacturer/producer/exporter                   Margin  
                                                              Percentage
------------------------------------------------------------------------
Sinochem Shandong...........................................      43.54 
Qingdao.....................................................      50.43 
China-Wide..................................................      45.27 
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determination. As our final 
determination is affirmative, the ITC will determine whether these 
imports are causing material injury, or threat of material injury, to 
the industry in the United States, within 45 days. If the ITC 
determines that material injury, or threat of material injury, does not 
exist, the proceeding will be terminated and all securities posted will 
be refunded or cancelled. If the ITC determines that such injury does 
exist, the Department will issue an antidumping duty order directing 
Customs officials to assess antidumping duties on all imports of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the effective date of the suspension of 
liquidation.
    This determination is published pursuant to section 735(d) of the 
Act and 19 CFR 353.20(a)(4).

    Dated: May 1, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-11262 Filed 5-5-95; 8:45 am]
BILLING CODE 3510-DS-P