[Federal Register Volume 66, Number 103 (Tuesday, May 29, 2001)]
[Notices]
[Pages 29080-29086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13406]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-846]


Brake Rotors From the People's Republic of China: Preliminary 
Results and Partial Rescission of Fifth New Shipper Review

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

ACTION: Notice of preliminary results and partial rescission of fifth 
new shipper review.

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SUMMARY: The Department of Commerce is currently conducting the fifth 
new shipper review of the antidumping duty order on brake rotors from 
the People's Republic of China covering the period April 1, 2000, 
through September 30, 2000. This review covers three exporters. We have 
preliminarily determined that two exporters have made sales at not less 
than normal value. For the other exporter, we have preliminarily 
determined that it failed to demonstrate its entitlement to a separate 
rate and thus are preliminarily rescinding the review with respect to 
it. If these preliminary results are adopted in our final results of 
this review, we will instruct the Customs Service to assess no 
antidumping duties on entries of subject merchandise during the period 
of review from the two exporters, for which the importer-specific 
assessment rates are zero or de minimis (i.e., less than 0.50 percent), 
and to assess duties on all entries of subject merchandise made during 
the period of review by the other exporter at the country-wide rate. 
Furthermore, we will instruct the Customs Service to require a cash 
deposit on all future entries of the subject merchandise from that 
exporter at the country-wide rate.
    We will issue the final results no later than 90 days from the date 
of issuance of this notice.

EFFECTIVE DATE: May 29, 2001.

FOR FURTHER INFORMATION CONTACT: Brian Smith or Brian Ledgerwood, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-1766 or (202) 482-3836, 
respectively.

The Applicable Statute

    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. In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to 19 CFR Part 351 (2000).

SUPPLEMENTARY INFORMATION:

Background

    On October 31, 2000, the Department received timely requests from 
Beijing Concord Auto Technology Inc. (``Concord''), Qingdao Meita 
Automotive Industry Co., Ltd. (``Meita''), and Shandong Laizhou Huanri 
Group General Co. (``Huanri General'') for a new shipper review of this 
antidumping duty order in accordance with 19 CFR 351.214(c). In their 
requests for a new shipper review and in accordance with 19 CFR 
351.214(b)(2)(i) and (iii)(A), Concord, Huanri General, and Meita each 
certified that it did not export the subject merchandise to the United 
States during the period covered by the original less-than-fair-value 
(``LTFV'') investigation and that it is not affiliated with any company 
which exported the subject merchandise to the United States during the 
period of investigation (``POI''). Concord, Huanri General, and Meita 
also certified that their export activities are not controlled by the 
central government of the People's Republic of China (``PRC''). 
Pursuant to 19 CFR 351.214(b)(2)(iv), Concord, Huanri General, and 
Meita submitted documentation establishing the date on which the 
merchandise was first entered for consumption in the United States, the 
volume of that first shipment, and the date of the first sale to an 
unaffiliated customer in the United States.
    The Department initiated a new shipper review covering Concord, 
Huanri General, and Meita on November 20, 2000. See Brake Rotors from 
the People's Republic of China: Initiation of New Shipper Antidumping 
Duty Review, 65 FR 70695 (November 27, 2000).
    On November 28, 2000, we issued a questionnaire to each PRC company 
listed in the brake rotor initiation notice. On December 5, 2000, the 
Department provided the parties an opportunity to submit publicly 
available information for consideration in these preliminary results. 
On December 28, 2000, Concord, Huanri General, and Meita requested an 
extension of time until January 19, 2001, to file their responses to 
the antidumping duty questionnaire, which the Department subsequently 
granted on December 29, 2000. On January 9, 2001, the petitioner \1\ 
requested an extension of time until February 20, 2001, to submit 
publicly available information for consideration in the preliminary 
results, which the Department subsequently granted to all parties on 
January 16, 2001.
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    \1\ The petitioner is the Coalition for the Preservation of 
American Brake Drum and Rotor Aftermarket Manufacturers.
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    On January 25, 2001, the Department notified the respondents that 
it intended to conduct a verification of their responses to the 
antidumping duty questionnaire in this review and provided each 
respondent with a sample verification outline for purposes of 
familiarizing each company with the verification process. On January 
19, 2001, each respondent submitted its questionnaire response.
    Also on January 25, 2001, the Department issued supplemental 
questionnaires to each respondent. On February 5, 2001, each respondent 
requested an extension of time until February 23, 2001, to file its 
response to the supplemental questionnaire, which the Department 
subsequently granted on February 7, 2001. On February 23, 2001, each 
respondent submitted its supplemental questionnaire response.
    On February 20, 2001, the respondents and the petitioner submitted 
publicly available information. On February 27, 2001, the respondents 
and the petitioner provided rebuttal comments on the publicly available 
information submitted by the other.
    On March 2, 2001, the Department provided a verification outline to 
each

[[Page 29081]]

respondent. Also on March 2, 2001, the petitioner provided comments on 
the respondent's questionnaire responses for consideration by the 
Department. From March 9 through March 28, 2001, the Department 
conducted its verification of the information submitted by each 
respondent, in accordance with 19 CFR 351.307.
    On April 24 and 27, 2001, the Department issued its verification 
reports. We provided parties with an opportunity to submit comments on 
our verification findings for consideration in these preliminary 
results (see April 25, 2001, Memorandum from Brian C. Smith, Team 
Leader, to the File and April 27, 2001, Memorandum from Brian E. 
Ledgerwood, Financial Analyst, to the File). On May 2 and 4, 2001, the 
parties submitted their comments on the Department's verification 
findings. On May 7, 2001, the petitioner submitted rebuttal comments.

Scope of the Order

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

Period of Review

    The period of review (``POR'') covers April 1, 2000, through 
September 30, 2000.

Verification

    As provided in section 782(i)(2) of the Act, we verified 
information provided by each respondent. We used standard verification 
procedures, including on-site inspection of the manufacturer's 
facilities and examination of relevant sales and financial records. Our 
verification results are outlined in the verification report for each 
company (see April 24, 2001, Verification Report for Huanri General and 
Laizhou Huanri Automobile Parts Co., Ltd. (``Huanri Auto'') in the 
Fifth Antidumping Duty New Shipper Review (``Huanri General 
verification report''), April 24, 2001, Verification Report for Concord 
and Yantai Mouping Hongli Machinery Factory (``Hongli'') in the Fifth 
Antidumping Duty New Shipper Review (``Concord verification report''), 
and the April 27, 2001, Verification Report for Qingdao Meita 
Automotive Industry Co., Ltd. in the Fifth Antidumping Duty New Shipper 
Review (``Meita verification report'') for further discussion).

Partial Rescission of New Shipper Review

    We are preliminarily rescinding, in part, the fifth new shipper 
review with respect to Concord because it failed to demonstrate at 
verification that it was entitled to a separate rate (see ``Separate 
Rates'' section below for further discussion).

Separate Rates

    In proceedings involving non-market-economy (``NME'') countries, 
the Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and thus should be 
assessed a single antidumping duty deposit rate (i.e., a PRC-wide 
rate).
    One respondent, Meita, is wholly foreign-owned. Thus, for Meita, a 
separate-rates analysis is not necessary to determine whether it is 
independent from government control (see Notice of Final Determination 
of Sales at Less Than Fair Value: Creatine Monohydrate from the 
People's Republic of China, 64 FR 71104, 71105 (December 20, 1999).
    With respect to the petitioner's May 4, 2001, contention that Meita 
should be denied a separate rate because it failed to provide its 
fiscal year (``FY'') 2000 financial statements, no separate-rates 
analysis is necessary for Meita since it is wholly foreign-owned. As 
for Meita's inability to provide its FY 2000 financial statements, the 
Department's verification findings note that Meita was unable to 
provide these documents at verification because it had not prepared it 
as of the date of the verification. Reliance on its accounting records 
and source documentation (including bank statements) provided the 
Department with the necessary documentation to determine the accuracy 
of the data Meita submitted in its questionnaire response. Moreover, 
the Department does not consider a company not having a financial 
statement at verification (especially if the company's auditing period 
follows the Department's verification) to constitute grounds for 
automatic failure or evidence that its accounting records are 
unreliable. The Department cannot require the respondent to furnish 
financial documents that have not been created in the normal course of 
business as of the date of verification. Therefore, we find the 
petitioner's argument is without merit.
    Huanri General claims that it is collectively owned by local 
villagers and Concord claims that it is owned by private PRC 
individuals. Thus, for these two companies, a separate-rates analysis 
is necessary to determine whether this exporter is independent from 
government control (see Notice of Final Determination of Sales at Less 
Than Fair Value: Bicycles From the People's Republic of China 
(``Bicycles'') 61 FR 56570 (April 30, 1996)).
    To establish whether a firm is sufficiently independent in its 
export activities from government control to be entitled to a separate 
rate, the Department utilizes a test arising from the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991) (``Sparklers''), 
and amplified in the Final Determination of Sales at Less Than Fair 
Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 
(May 2, 1994) (``Silicon Carbide''). Under the separate-rates criteria, 
the Department assigns separate rates in NME cases only if the 
respondent can demonstrate the absence of both de jure and de facto 
governmental control over export activities.

[[Page 29082]]

1. De Jure Control

    Huanri General has placed on the administrative record documents to 
demonstrate absence of de jure control, including the ``Law of the 
People's Republic of China on Industrial Enterprises Owned by the Whole 
People,'' adopted on April 13, 1988 (``the Industrial Enterprises 
Law''); ``The Enterprise Legal Person Registration Administrative 
Regulations,'' promulgated on June 13, 1988; the 1990 ``Regulation 
Governing Rural Collectively-Owned Enterprises of PRC;'' the 1992 
``Regulations for Transformation of Operational Mechanisms of State-
Owned Industrial Enterprises;'' (``Business Operation Provisions''); 
and the 1994 ``Foreign Trade Law of the People's Republic of China.''
    As in prior cases, we have analyzed these laws and have found them 
to establish sufficiently an absence of de jure control of companies 
``owned by the whole people,'' privately owned enterprises, joint 
ventures, stock companies including limited liability companies, and 
collectively owned enterprises. See, e.g., Final Determination of Sales 
at Less than Fair Value: Furfuryl Alcohol from the People's Republic of 
China (``Furfuryl Alcohol'') 60 FR 22544 (May 8, 1995), and Preliminary 
Determination of Sales at Less Than Fair Value: Certain Partial-
Extension Steel Drawer Slides with Rollers from the People's Republic 
of China, 60 FR 29571 (June 5, 1995).
    In its May 2, 2001, submission, the petitioner included an August 
28, 2000, article from the International Herald Tribune and an April 2, 
2000, article from AP Worldstream, claiming that excerpts from these 
articles constituted evidence that the village committee members, who 
set up Huanri General, are chosen by the local PRC Communist Party 
branch or officials at the PRC town government level. After examining 
the information provided by the petitioner in the context of the laws 
we have examined in previous NME proceedings, we do not have a 
sufficient basis in this proceeding to conclude that the information 
provided by the petitioner constitutes grounds for conclusively 
determining that collectively owned companies (such as Huanri General) 
are controlled de jure by the PRC government because the information 
noted above does not directly relate to the company under review.

2. De Facto Control

    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Silicon Carbide and Furfuryl Alcohol. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether the respondents are, in fact, subject to a degree 
of governmental control which would preclude the Department from 
assigning separate rates.
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by, or 
subject to the approval of, a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding the disposition of profits or 
financing of losses (see Silicon Carbide and Furfuryl Alcohol).
    Concord and Huanri General each asserted the following: (1) It 
establishes its own export prices; (2) it negotiates contracts without 
guidance from any governmental entities or organizations; (3) it makes 
its own personnel decisions; and (4) it retains the proceeds of its 
export sales, uses profits according to its business needs, and has the 
authority to sell its assets and to obtain loans.
    With respect to Concord, as detailed in the Department's April 24, 
2001, verification report at page three, Concord was unable to provide 
for the Department's review its bank statements for the POR. As a 
result, the Department was unable to determine the extent of Concord's 
deposit and withdrawal activity from its bank accounts or link the bank 
deposit and withdrawal receipts it did examine to entries reflected in 
the company's statements furnished by its banks.
    As stated above, one of the Department's de facto criteria for 
determining whether an exporter is entitled to a separate rate is that 
the exporter must demonstrate that it retains the proceeds of its 
export sales and makes independent decisions regarding the disposition 
of profits or financing of losses. In its May 4, 2001, submission, the 
respondent maintains that the Department was able to establish through 
an examination of source documentation (i.e., bank receipts, voucher 
booklets, invoices, etc.) at verification that Concord controlled the 
disposition of its sales proceeds and that, therefore, it had 
demonstrated a de facto absence of government control with respect to 
its export activities. However, contrary to the respondent's assertion, 
absent review of the company's bank statements for the POR, the 
Department was unable to ascertain whether Concord retained all of its 
proceeds from the sale of subject merchandise and made independent 
decisions regarding the disposition of profits or financing of losses. 
Specifically, without the bank statements, the Department could not 
confirm that all of Concord's secondary documentation (i.e., bank 
receipts) was provided at verification and therefore could not confirm 
that the company met the above-mentioned de facto criterion. The 
Department could rely only on the bank receipts furnished by the 
company at verification to check whether the company retained its 
proceeds, rather than trace the amounts of those receipts to its bank 
accounts. Relying only on bank receipts without a reliable reference 
document with which to reconcile them is insufficient for purposes of 
testing the disposition of the company's proceeds. In this instance, 
because we were unable to reconcile Concord's bank receipts with an 
independent reference document such as a bank statement, we determined 
that the bank receipts were insufficient for the purposes of examining 
whether Concord controlled the disposition of its profits. Therefore, 
absent examination of a primary reference document (e.g., the bank 
statement), the Department was unable to adequately verify Concord's 
claim.
    As a result of not being able to provide critical documentation at 
verification for demonstrating an absence of de facto government 
control based on the separate-rates criteria outlined above, the 
Department preliminarily finds that Concord has not adequately 
demonstrated that it is not part of the NME entity. Therefore, we find 
that Concord is not entitled to a separate rate. As part of the NME 
entity, Concord is not entitled to a rate as a new shipper because the 
NME entity as a whole was subject to the LTFV investigation. For these 
reasons, we are preliminarily rescinding the new shipper review with 
respect to Concord.
    As for Huanri General, the Department preliminarily finds that 
Huanri General has demonstrated a de facto absence of government 
control and is entitled to a separate rate for the several reasons. As 
detailed in the verification report and supported by documentation 
examined at verification,

[[Page 29083]]

Huanri General was set up by the Panjacun village committee through 
capital voluntarily provided by all of the inhabitants of Panjacun 
village. At verification, the Department further clarified that the 
members of the village committee were elected to the committee by the 
villagers who also provided the capital to set up Huanri General (see 
pages 5 and 7 of the Huanri General verification report). Data on the 
record establishes that the villagers are the long-term investors/
shareholders in Huanri General and that the villagers determine via 
election the individuals who serve on the village committee. Further, 
the villagers have entrusted the village committee to decide how and 
when Huanri General's profits are to be distributed. In this case, the 
villagers have in fact elected a group within the same village (i.e., 
the village committee) to handle the business decisions and operation 
strategy of the company which is wholly owned by all the villagers, 
some of whom are also elected members of the village committee. Based 
on these facts, we conclude that the central government does not 
control Huanri General's export activities.
    The petitioner contends in its May 2, 2001, submission that the 
village committee is a PRC government entity which has a financial 
relationship with the town government and that this link constitutes 
government control of Huanri General's operations. We have ruled in 
previous NME cases that companies which are either owned by local or 
provincial government entities or the managers of which are appointed 
by the provincial, not the central, government can also receive a 
separate rate if they sufficiently demonstrate that they are entitled 
to one based on the criteria set forth in Sparklers and amplified in 
Silicon Carbide and Furfuryl Alcohol. For example, in one NME case, the 
Department found that although, the local government owned an exporting 
company, that company elected its own management and was responsible 
for all decisions such as determining export prices, allocation and 
retention of profits on export sales, and negotiating export sales 
contracts (see Chrome-Plated Lug Nuts from the People's Republic of 
China: Preliminary Results of Antidumping Duty Administrative Review, 
60 FR 42504, 42505 (August 16, 1995) (``Lug Nuts'')). The Department 
also found in another NME case that, although the provincial government 
appointed the management of a company, that company was entitled to a 
separate rate because it was able to demonstrate that it solely 
performed the de facto activities noted above and there was no evidence 
of significant government involvement in that company's business 
operations (see Pure Magnesium from the People's Republic of China: 
Final Results of Antidumping Duty New Shipper Administrative Review, 63 
FR 3085, 3086 (January 21, 1998) (``Pure Magnesium'').
    With respect to Huanri General, the data on the record demonstrates 
that, unlike the situations which existed in Lug Nuts and Pure 
Magnesium, we have no evidence that this company is owned by the town 
government or that its management is appointed by the town government. 
Rather, this company is ultimately owned by the villagers of Panjacun 
village. Moreover, the president of the company (who is also the 
company's legal representative on the company's business license and 
was elected by the villagers as the chairman of the village committee) 
appoints the managers. Consistent with the facts in Pure Magnesium and 
Lug Nuts, Huanri General in this case has also demonstrated that it is 
responsible for all decisions such as determining export prices, 
allocation and retention of profits on export sales, and negotiating 
export sales contracts. Although the village committee actually decides 
how the company's profits are to be distributed, we do not find that 
the village committee constitutes a form of central or provincial 
government control over the company, especially since all of the 
village committee members are investors in the company.
    We also are not convinced by the petitioner's argument that the 
village committee's dealings with the town government constitute 
evidence that the town government controls both the village committee's 
and Huanri General's operations. Based on our examination of the 
village committee's financial records at verification, we found that 
the village committee is an entity which simply pays infrastructure 
taxes to the town government and to which the town government owes 
money (see page 6 of the Huanri General verification report). Thus, in 
this case, the town government is a debtor to the village committee. 
These activities are no different than those of any company paying its 
taxes and operating a business without government interference in the 
PRC. Moreover, the information provided by Huanri General in its 
response and amplified and/or clarified at verification supports a 
preliminary finding that there is de facto absence of governmental 
control of the export functions of Huanri General. See Pure Magnesium 
from the People's Republic of China: Preliminary Results of Antidumping 
Duty New Shipper Administrative Review, 62 FR 55215 (October 23, 1997). 
Consequently, we have preliminarily determined that Huanri General has 
met the criteria for the application of separate rates.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by Huanri 
General and Meita to the United States were made at LTFV, we compared 
the export price to the normal value, as described in the ``Export 
Price'' and ``Normal Value'' sections of this notice, below.

Export Price

    We used export price methodology in accordance with section 772(a) 
of the Act because the subject merchandise was sold by the exporter 
directly to an unaffiliated customer in the United States prior to 
importation and constructed export price was not otherwise indicated.
    For both respondents, we calculated export price based on packed, 
FOB foreign port prices to the first unaffiliated purchaser in the 
United States. Where appropriate, we made deductions from the starting 
price (gross unit price) for foreign inland freight and foreign 
brokerage and handling charges in the PRC, in accordance with section 
772(c) of the Act. Because foreign inland freight and foreign brokerage 
and handling fees were provided by PRC service providers or paid for in 
renminbi, we based those charges on surrogate rates from India (see 
``Surrogate Country'' section below for further discussion of our 
surrogate-country selection). To value foreign inland trucking charges, 
we used a November 1999 average truck freight value based on price 
quotes from Indian trucking companies. We used this rate most recently 
in the fourth new shipper review of brake rotors from the PRC (see 
Brake Rotors from the People's Republic of China: Final Results and 
Partial Rescission of Fourth New Shipper Review and Rescission of Third 
Antidumping Duty Administrative Review, 66 FR 27063 (May 16, 2001) 
(which cites to Brake Rotors from the People's Republic of China: 
Preliminary Results and Partial Rescission of the Fourth New Shipper 
Review and Rescission of the Third Antidumping Duty Administrative 
Review, 66 FR 1303, 1308 (January 8, 2001)) (``Brake Rotors Fourth New 
Shipper Review'')). To value foreign brokerage and handling expenses, 
we relied on public information reported in the 1997-1998 antidumping 
duty new shipper review of stainless steel wire rod from India (see 
also Brake Rotors Fourth New

[[Page 29084]]

Shipper Review). Based on our verification findings, we revised the 
reported distance from Huanri General's supplier factory, Huanri Auto, 
to the port of exportation (see page 16 of the Huanri General 
verification report).

Normal Value

A. Non-Market-Economy Status

    In every case conducted by the Department involving the PRC, the 
PRC has been treated as a NME country. Pursuant to section 
771(18)(C)(i) of the Act, any determination that a foreign country is a 
NME country shall remain in effect until revoked by the administering 
authority (see Notice of Preliminary Results of Antidumping Duty 
Administrative Review and New Shipper Reviews, Partial Rescission of 
the Antidumping Duty Administrative Review, and Rescission of a New 
Shipper Review: Freshwater Crawfish Tail Meat From the People's 
Republic of China, 65 FR 60399, 60404 (October 11, 2000).) None of the 
parties to this proceeding has contested such treatment. Accordingly, 
we calculated normal value in accordance with section 773(c) of the 
Act, which applies to NME countries.

B. Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value a NME 
producer's factors of production, to the extent possible, in one or 
more market-economy countries that (1) are at a level of economic 
development comparable to that of the NME country, and (2) are 
significant producers of comparable merchandise. India and Indonesia 
are among the countries comparable to the PRC in terms of overall 
economic development (see December 4, 2000, Memorandum from the Office 
of Policy to Brian C. Smith, Team Leader). In addition, based on 
publicly available information placed on the record, India is a 
significant producer of the subject merchandise. Accordingly, we 
considered India the primary surrogate country for purposes of valuing 
the factors of production because it meets the Department's criteria 
for surrogate-country selection. Where we could not find surrogate 
values in India, we used values from Indonesia.

C. Factors of Production

    In accordance with section 773(c) of the Act, we calculated normal 
value based on the factors of production which included, but were not 
limited to: (A) Hours of labor required; (B) quantities of raw 
materials employed; (C) amounts of energy and other utilities consumed; 
and (D) representative capital costs, including depreciation. We used 
the factors reported by Huanri Auto and Meita which produced the brake 
rotors exported to the United States by Huanri General and Meita, 
respectively, during the POR. To calculate normal value, we multiplied 
the reported unit factor quantities by publicly available Indian or 
Indonesian values.
    Based on our verification findings at Huanri General and Huanri 
Auto, we found that Huanri Auto used an additional packing material 
(i.e., tin clamps) to pack the subject merchandise for exportation and 
used lugs and bearing cups for one of its brake rotor models. We 
accounted for these items in our factors analysis. In addition, we 
revised the following data in Huanri General's and Huanri Auto's 
response: (1) The reported per-unit weight for one brake rotor model; 
(2) the reported per-unit factor amounts for all material, energy, and 
labor inputs based on revisions to the total POR production quantity 
figure \2\ for brake rotors and per-unit weights of certain brake rotor 
models; (3) the per-unit factor amounts for steel strap for each brake 
rotor model reported in the Section D response; and (4) the distances 
from Huanri Auto to certain of its suppliers (see pages 18, 19, 22 
through 25 of the Huanri General verification report and May 21, 2001, 
Memorandum from Case Analyst to the File).
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    \2\ In order to derive the per-unit consumption amount for each 
factor of production as reported in the Section D response, the 
respondent first derived a factor-specific allocation factor by 
dividing the total POR factor consumption over the total POR 
production weight. The respondent then multiplied the factor-
specific allocation factor by the per-unit weight of each brake 
rotor model to arrive at the per-unit consumption amount for each 
factor on a brake rotor model-specific basis.
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    Based on our verification findings at Meita, we found that the 
factory used an additional packing material (i.e., clamps) to pack the 
subject merchandise for exportation which we accounted for in our 
factors analysis. We also revised the following data reported in 
Meita's response: (1) The per-unit factor amounts for steel strap for 
each brake rotor model; (2) the reported per-unit factor amounts for 
all four labor inputs; and (3) the distances from Meita to certain of 
its suppliers (see verification exhibit 0 and pages 18 and 20 of the 
Meita verification report and May 21, 2001, Memorandum from Case 
Analyst to the File).
    In its May 2, 2001, comments, the petitioner claims that the extent 
and magnitude of the Department's corrections to Huanri General's data 
based on verification (1) constitute major corrections; (2) represent 
an attempt by Huanri General to reconstruct its response; (3) undermine 
the integrity of the company's overall response; and (4) constitute 
grounds for resorting to adverse facts available in this situation. 
After considering the totality of the corrections identified above for 
Huanri General and the circumstances under which those errors were 
made, we find that the (1) above-mentioned errors were inadvertent and 
common in nature; and (2) the corrections had no meaningful impact on 
our calculation of normal value for Huanri General.
    We selected surrogate values for this review based on the quality, 
specificity, and contemporaneity of the data. As appropriate, we 
adjusted input prices to make them delivered prices. For those values 
not contemporaneous with the POR and quoted in a foreign currency, we 
adjusted for inflation using wholesale price indices published in the 
International Monetary Fund's International Financial Statistics.
    To value pig iron, steel and iron scrap, ferrosilicon, and 
ferromanganese, limestone, and lubrication oil, we used April 1998-
March 1999 average import values from the Indian government publication 
Monthly Statistics of the Foreign Trade of India (``Monthly 
Statistics'').
    One of the brake rotor models which Huanri Auto made during the POR 
used lug bolts and ball bearing cups (see discussion above). Because we 
could not obtain a product-specific price from India to value lug 
bolts, we used a January-March 1999 product-specific import value from 
the Indonesian government publication Foreign Trade Statistical 
Bulletin (see Bicycles, 61 FR at 19040 (Comment 17)). To value ball 
bearing cups, we used an April 1998-December 1998 average import value 
from Monthly Statistics.
    To value coking coal, we used an April 1998-August 1998 average 
import price from Monthly Statistics. We also added an amount for 
loading and additional transportation charges associated with 
delivering coal to the factory based on June 1999 Indian price data 
contained in the periodical Business Line. For firewood, we used an 
April 1997-March 1998 average import value from Monthly Statistics 
rather than a 1991 domestic value from the Food and Agricultural 
Organization of the United Nations' working paper Wood Materials from 
Non-Forest Areas (which we used in Brake Rotors Fourth New Shipper 
Review) because Monthly Statistics provided a more contemporaneous 
value for firewood. To value electricity, we used data from the Indian 
publications 1995 Conference of

[[Page 29085]]

Indian Industries: Handbook of Statistics and The Center for Monitoring 
Indian Economy and the methodology used in two recent NME cases. (See 
Persulfates from the People's Republic of China: Final Results of 
Antidumping Duty Administrative Review and Partial Rescission of 
Administrative Review, 65 FR 46691, 46692 (July 31, 2000); Manganese 
Metal from the People's Republic of China: Final Results of Antidumping 
Duty Administrative Review, 65 FR 30067, 30068 (May 10, 2000); and 
Preliminary Results Valuation Memorandum for further discussion.)
    We valued labor based on a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3).
    To value selling, general, and administrative (``SG&A'') expenses, 
factory overhead, and profit, we used the 1998 financial data of 
Jayaswals Neco Limited and the 1998-1999 financial data of Kalyani 
Brakes Limited and Rico Auto Industries Limited.
    Where appropriate, we removed from the surrogate overhead and SG&A 
calculations the excise duty amount listed in the financial reports 
(see Brake Rotors Investigation, 62 FR 9164). We made certain 
adjustments to the ratios calculated as a result of reclassifying 
certain expenses contained in the financial reports. In utilizing the 
financial data of the Indian companies, we treated the line item 
labeled ``stores and spares consumed'' as part of factory overhead 
because stores and spares are not direct materials consumed in the 
production process. Based on publicly available information, we 
considered molding materials (i.e., sand, bentonite, coal powder, steel 
pellets, lead powder, and waste oil) to be indirect materials included 
in the ``stores and spares consumed'' category of the financial 
statements. We based our factory overhead calculation on the cost of 
manufacturing. We also included interest and/or financial expenses in 
the SG&A calculation. In addition, we only reduced interest and 
financial expenses by amounts for interest income if the Indian 
financial report noted that the income was short-term in nature. Where 
a company did not distinguish interest income as a line item within 
total ``other income,'' we used the ratio of interest income to total 
other income as reported for the Indian metals industry in the Reserve 
Bank of India Bulletin to calculate the interest income amount. For 
example, if an Indian company's financial statement indicated that the 
company had miscellaneous receipts or other income under the general 
category ``other income,'' we applied a ratio (based on data contained 
in Reserve Bank of India Bulletin) to the figure for miscellaneous 
receipts or other income in the financial statement to determine the 
amount associated with short-term interest income. To avoid double-
counting, we treated the line item ``packing, freight, and delivery 
charges'' as expenses to be valued separately. Specifically, to 
determine the packing expense, we used Huanri General's and Meita's 
reported packing material factors. For a further discussion of other 
adjustments made, see the Preliminary Results Valuation Memorandum.
    All inputs were shipped by truck. Therefore, to value PRC inland 
freight, we used a November 1999 average truck freight value based on 
price quotes from Indian trucking companies.
    In accordance with the decision of the Court of Appeals for the 
Federal Circuit in Sigma Corp. v. United States, 117 F.3d 1401 (1997), 
we revised our methodology for calculating source-to-factory surrogate 
freight for those material inputs that are valued based on CIF import 
values in the surrogate country. Therefore, on an input-specific basis, 
we have added to CIF surrogate values from India a surrogate freight 
cost using the shorter of the reported distances from (1) the closest 
PRC port of importation to the factory or (2) the domestic supplier to 
the factory.
    To value corrugated cartons, plastic bags and sheet, nails, tape, 
and steel strap, we used April 1998-March 1999 average import values 
from Monthly Statistics. Because we could not obtain a non-aberrational 
and/or current price from India to value pallet wood, we used a 1998 
import value from the Indonesian government publication Foreign Trade 
Statistical Bulletin. (See Brake Rotors Fourth New Shipper Review, 
which cites to Issues and Decision Memorandum from Richard W. Moreland, 
Deputy Assistant Secretary for Import Administration, to Bernard T. 
Carreau, fulfilling the duties of Assistant Secretary for Import 
Administration, dated May 8, 2001 (Comment 3).) We did not use the 
pallet wood values obtained after March 1996 from Monthly Statistics 
because they appeared aberrational relative to the overall value of the 
subject merchandise.
    At verification, the respondents informed us that they also use tin 
clamps to fasten the steel straps around the brake rotors (see 
discussion above, page 22 of the Huanri General verification report, 
and page 18 of the Meita verification report). Therefore, to value tin 
clamps, we used an April 1998-February 1999 average import value from 
Monthly Statistics.

Preliminary Results of the Review

    We preliminarily determine that the following margins exist for 
Huanri General and Meita during the period April 1, 2000, through 
September 30, 2000:

------------------------------------------------------------------------
              Manufactuer/producer/exporter               Margin percent
------------------------------------------------------------------------
Shandong Laizhou Huanri Group General Co................            0.00
Qingado Meita Automotive Industry Co., Ltd..............            0.00
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the date of publication of this 
notice.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, within 30 days of the 
date of publication of this notice. Requests should contain: (1) The 
party's name, address, and telephone number; (2) the number of 
participants; and (3) a list of issues to be discussed. See 19 CFR 
351.310(c). Any hearing, if requested, will be held approximately 44 
days after the publication of this notice. Parties should confirm by 
telephone the time, date, and place of the hearing 48 hours before the 
scheduled time.
    Issues raised in the hearing will be limited to those raised in 
case briefs and rebuttal briefs. Case briefs from interested parties 
may be submitted not later than 30 days after the date of publication 
of this notice. Rebuttal briefs, limited to issues raised in the case 
briefs, will be due not later than 37 days after the date of 
publication of this notice. Parties who submit case briefs or rebuttal 
briefs in this proceeding are requested to submit with each argument 
(1) a statement of the issue and (2) a brief summary of the argument. 
Parties are also encouraged to provide a summary of the arguments not 
to exceed five pages and a table of statutes, regulations, and cases 
cited.
    The Department will issue the final results of this new shipper 
review, including the results of its analysis of issues raised in any 
such written briefs or at the hearing, if held, not later than 90 days 
after the date of issuance of this notice.

Assessment Rates

    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. Pursuant to 19 CFR 
351.212(b)(1), we will calculate importer-specific ad valorem duty 
assessment rates based on

[[Page 29086]]

the ratio of the total amount of the dumping margins calculated for the 
examined sales to the total entered value of those same sales. In order 
to estimate the entered value, we will subtract applicable movement 
expenses from the gross sales value. In accordance with 19 CFR 
351.106(c)(2), we will instruct Customs to liquidate without regard to 
antidumping duties all entries of subject merchandise during the POR 
from Huanri General and Meita for which the importer-specific 
assessment rate is zero or de minimis (i.e., less than 0.50 percent). 
For entries subject to the PRC-wide rate, Customs shall assess ad 
valorem duties at the rate established in the LTFV investigation. The 
Department will issue appropriate appraisement instructions directly to 
Customs upon completion of this review.

Cash Deposit Requirements

    Upon completion of this new shipper review, for entries from Huanri 
General and Meita, we will require cash deposits at the rates 
established in the final results pursuant to 19 CFR 351.214(e) and as 
further described below.
    The following deposit requirements will be effective upon 
publication of the final results of this new shipper antidumping duty 
administrative review for all shipments of brake rotors from the PRC 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date, as provided by section 751(a)(1) of the Act: (1) The 
cash deposit rates for Huanri General and Meita will be the rates 
established in the final results; (2) the cash deposit rate for PRC 
exporters who received a separate rate in a prior segment of the 
proceeding will continue to be the rate assigned in that segment of the 
proceeding; (3) the cash deposit rate for the PRC NME entity (including 
Concord) will continue to be 43.32 percent; and (4) the cash deposit 
rate for non-PRC exporters of subject merchandise from the PRC will be 
the rate applicable to the PRC supplier of that exporter. These 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) 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 new shipper administrative review and notice are in accordance 
with section 751(a)(1) and (2)(B) of the Act (19 U.S.C. 1675(a)(1) and 
(2)(B)) and 19 CFR 351.214.

    Dated: May 21, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-13406 Filed 5-25-01; 8:45 am]
BILLING CODE 3510-DS-P