[Federal Register Volume 61, Number 111 (Friday, June 7, 1996)]
[Notices]
[Pages 29073-29077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14309]



-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE
[A-570-815]


Sulfanilic Acid From the People's Republic of China; Preliminary 
Results and Partial Rescission of Antidumping Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

-----------------------------------------------------------------------

[[Page 29074]]

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on sulfanilic acid 
from the People's Republic of China (PRC) in response to requests by 
petitioner, Nation Ford Chemical Company (formerly known as R-M 
Industries, Inc.), by a respondent, Sinochem Hebei Import and Export 
Corporation (Sinochem Hebei), and by an importer, PHT International 
(PHT). This review covers shipments of this merchandise to the United 
States during the period August 1, 1994 through July 31, 1995.
    We have preliminarily determined that sales have been made below 
normal value (NV). If these preliminary results are adopted in our 
final results, we will instruct U.S. Customs to assess antidumping 
duties equal to the differences between the United States price and NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit argument are requested to submit with each 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

EFFECTIVE DATE: June 7, 1996.

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

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations, as amended by the interim regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

    On August 19, 1992, the Department published in the Federal 
Register (57 FR 37524) an antidumping duty order on sulfanilic acid 
from the PRC. On August 1, 1995, we published in the Federal Register 
(60 FR 39150) a notice of opportunity to request an administrative 
review of the antidumping duty order on sulfanilic acid from the PRC 
covering the period August 1, 1994 through July 31, 1995.
    On August 11, 1995, in accordance with 19 CFR 353.22(a)(1)(1995), 
petitioner, Nation Ford Chemical Company (formerly known as R-M 
Industry, Inc.), requested that we conduct an administrative review of 
Sinochem Hebei, China National Chemical Construction Corporation, 
Beijing Branch (CNCCC), China National Chemical Construction 
Corporation, Qingdao Branch (CNCCC Qingdao), Sinochem Qingdao, Sinochem 
Shandong, Baoding No. 3 Chemical Factory (Baoding), Jinxing Chemical 
Factory (Jinxing), Zhenxing Chemical Industry Company (Zhenxing), 
Mancheng Xinyu Chemical Factory, Shijiazhuang (Xinyu Shijiazhuang), 
Mancheng Xinyu Chemical Factory, Beijing (Xinyu Beijing), Hainan Garden 
Trading Company (Hainan Garden), Yude Chemical Industry Company (Yude), 
and Shunping Lile (Shunping). Petitioner also requested an 
administrative review of Mancheng Xinyu Chemical Factory, Baoding, but 
as this company changed its name to Yude when it formed its joint 
venture with PHT, we have considered them to be one respondent. See 
File Memorandum from Karin Price, Case Analyst, dated February 6, 1996, 
``The questionnaire for Mancheng Xinyu Chemical Factory, Baoding in the 
1994/1995 administrative review of the antidumping duty order on 
sulfanilic acid from the People's Republic of China,'' which is on file 
in the Central Records Unit (room B-099 of the Main Commerce Building). 
On August 25, 1995, with a clarification on October 5, 1995, PHT, a 
U.S. importer of sulfanilic acid from the PRC, requested that we 
conduct a review of its two related Chinese exporters, Yude and 
Zhenxing. On August 25, 1995, Sinochem Hebei requested that we conduct 
a review of its sales. We published a notice of initiation of this 
antidumping duty administrative review on September 15, 1995 (60 FR 
47930). The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of Review

    Imports covered by this review are all grades of sulfanilic acid, 
which include technical (or crude) sulfanilic acid, refined (or 
purified) sulfanilic acid and sodium salt of sulfanilic acid.
    Sulfanilic acid is a synthetic organic chemical produced from the 
direct sulfonation of aniline with sulfuric acid. Sulfanilic acid is 
used as a raw material in the production of optical brighteners, food 
colors, specialty dyes, and concrete additives. The principal 
differences between the grades are the undesirable quantities of 
residual aniline and alkali insoluble materials present in the 
sulfanilic acid. All grades are available as dry, free flowing powders.
    Technical sulfanilic acid contains 96 percent minimum sulfanilic 
acid, 1.0 percent maximum aniline, and 1.0 percent maximum alkali 
insoluble materials. Refined sulfanilic acid contains 98 percent 
minimum sulfanilic acid, 0.5 percent maximum aniline and 0.25 percent 
maximum alkali insoluble materials.
    Sodium salt is a powder, granular or crystalline material which 
contains 75 percent minimum equivalent sulfanilic acid, 0.5 percent 
maximum aniline based on the equivalent sulfanilic acid content, and 
0.25 percent maximum alkali insoluble materials based on the equivalent 
sulfanilic acid content.
    This merchandise is classifiable under Harmonized Tariff Schedule 
(HTS) subheadings 2921.42.22 and 2921.42.90. Although the HTS 
subheadings are provided for convenience and customs purposes, our 
written description of the scope of this proceeding is dispositive.
    This review covers 13 manufacturers/exporters of sulfanilic acid 
from the PRC, and the period August 1, 1994 through July 31, 1995.

Verification

    We conducted verification of Yude's and Zhenxing's sales 
questionnaire responses at PHT's facility in Charlotte, North Carolina 
on April 16 and 17, 1995. We conducted the verification using standard 
verification procedures, including the examination of relevant sales 
and financial records, and selection of original documentation 
containing relevant information. Our verification results are outlined 
in the public version of the verification report.

Use of Facts Otherwise Available

    We preliminarily determine, in accordance with section 776(a) of 
the Act, that the use of facts available is appropriate for CNCCC, 
CNCCC Qingdao, Jinxing, Shunping, Sinochem Hebei, Sinochem Qingdao, 
Sinochem Shandong, Xinyu Beijing, and Xinyu Shijiazhuang, because these 
companies did not respond to the Department's antidumping 
questionnaire.
    Where the Department must base the entire dumping margin for a 
respondent in an administrative review on the facts available because 
that respondent failed to cooperate, section 776(b) authorizes the 
Department to use an inference adverse to the interests of that 
respondent in choosing the facts available. Section 776(b) also 
authorizes the Department to use as adverse facts available information 
derived from the

[[Page 29075]]

petition, the final determination, a previous administrative review, or 
other information placed on the record. Because information from prior 
proceedings constitutes secondary information, section 776(c) provides 
that the Department shall, to the extent practicable, corroborate that 
secondary information from independent sources reasonably at its 
disposal. The Statement of Administrative Action (SAA) provides that 
``corroborate'' means simply that the Department will satisfy itself 
that the secondary information to be used has probative value.
    To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. However, unlike other types of information, 
such as input costs or selling expenses, there are no independent 
sources for calculated dumping margins. The only source for margins is 
administrative determinations. Thus, in an administrative review, if 
the Department chooses as total adverse facts available a calculated 
dumping margin from a prior segment of the proceeding, it is not 
necessary to question the reliability of the margin for that time 
period. With respect to the relevance aspect of corroboration, however, 
the Department will consider information reasonably at its disposal as 
to whether there are circumstances that would render a margin not 
relevant. Where circumstances indicate that the selected margin is not 
appropriate as adverse facts available, the Department will disregard 
the margin and determine an appropriate margin (see, e.g., Fresh Cut 
Flowers from Mexico; Preliminary Results of Antidumping Duty 
Administrative Review (60 FR 49567), where the Department disregarded 
the highest margin in that case as adverse best information available 
because the margin was based on another company's uncharacteristic 
business expense resulting in an unusually high margin). In this case, 
we have used the highest rate from any prior segment of the proceeding, 
85.20 percent, the PRC rate established during the less-than-fair-value 
(LTFV) investigation of this case. See Final Determination of Sales at 
Less Than Fair Value: Sulfanilic Acid from the People's Republic of 
China (57 FR 29705, July 6, 1992). We have no reason to believe this 
rate is not relevant.

Separate Rates

    To establish whether a company operating in a state-controlled 
economy is sufficiently independent to be entitled to a separate rate, 
the Department analyzes each exporting entity under the test 
established in the Final Determination of Sales at Less Than Fair 
Value: Sparklers from the People's Republic of China (56 FR 20588, May 
6, 1991) (Sparklers), as amplified in Silicon Carbide. Under this 
policy, exporters in non-market-economy (NME) countries are entitled to 
separate, company-specific margins when they can demonstrate an absence 
of government control, both in law (de jure) and in fact (de facto), 
with respect to exports. Evidence supporting, though not requiring, a 
finding of de jure absence of government control over export activities 
includes: (1) an absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies. 
De facto absence of government control with respect to exports is based 
on four criteria: (1) whether the export prices are set by or subject 
to the approval of a government authority; (2) whether each exporter 
retains the proceeds from its sales and makes independent decisions 
regarding the disposition of profits and financing of losses; (3) 
whether each exporter has autonomy in making decisions regarding the 
selection of management; and (4) whether each exporter has the 
authority to negotiate and sign contracts and other agreements.
    Yude and Zhenxing have responded to the Department's request for 
information regarding separate rates. We have found that the evidence 
on the record demonstrates an absence of government control, both in 
law and in fact, with respect to Yude's and Zhenxing's exports 
according to the criteria identified in Sparklers and Silicon Carbide 
for this period of review, and have assigned a separate rate to each of 
these companies. For further discussion of this finding, see Decision 
Memorandum to Holly A. Kuga, Director, Office of Antidumping 
Compliance, dated May 21, 1996, ``Separate rates in the 1994/1995 
administrative review of sulfanilic acid from the People's Republic of 
China,'' which is on file in the Central Records Unit (room B-099 of 
the Main Commerce Building).
    In the LTFV investigation of this case, we found that Sinochem 
Hebei was eligible for a separate rate under the criteria set forth in 
Sparklers. However, since Sparklers does not address the additional 
information required by Silicon Carbide for making a determination of 
separate rates (i.e., whether each exporter has autonomy in making 
decisions regarding the selection of management and whether each 
exporter has the authority to negotiate and sign contracts and other 
agreements), we need to analyze information on the record of this 
review to determine whether Sinochem Hebei merits a separate rate with 
respect to the additional criteria. See Certain Helical Spring Lock 
Washers from the People's Republic of China; Preliminary Results of 
Antidumping Administrative Review (60 FR 42519, August 16, 1995). Since 
Sinochem Hebei did not respond to our separate rates questionnaire, we 
are not able to make this determination. Therefore, we have found that 
Sinochem Hebei is not eligible for a separate rate in this review.

Yude and Zhenxing: Affiliation and Collapsing

    Yude and Zhenxing are each joint venture partners with PHT. Due to 
PHT's ownership interest in both joint ventures and the fact that some 
of the same people sit on the boards of directors of each joint 
venture, and especially because PHT is legally and operationally in a 
position to exercise restraint or direction over both joint ventures, 
we consider Yude and Zhenxing to be affiliated pursuant to section 
771(33)(F) of the Act.
    The Department ``collapses'' affiliated firms (i.e., treats them as 
a single entity for review purposes and assigns them a single dumping 
margin) where the type and degree of relationship is so significant 
that we find that there is a strong possibility of manipulation of 
prices or production. See 19 CFR Parts 351, 353, and 355 Antidumping 
Duties; Countervailing Duties; Proposed Rule (61 FR 7381, February 27, 
1996) (Proposed Rule). See also Nihon Cement Co., Ltd. v. United 
States, 17 CIT 400 (1993). Because Yude and Zhenxing are each joint 
venture partners with PHT, we have considered whether Yude and Zhenxing 
should be collapsed for purposes of this administrative review as a 
result of their relationships with PHT.
    The Department's current policy is to treat two or more affiliated 
producers as a single entity where those producers have production 
facilities that would not require substantial retooling of either 
facility in order to restructure manufacturing priorities and the 
Department concludes that there is a significant potential for the 
manipulation of prices or production. In identifying a significant 
potential for the manipulation of prices or production, the Department 
considers the following:
    <bullet> The level of common ownership;

[[Page 29076]]

    <bullet> Whether managerial employees or board members of one of 
the affiliated producers sit on the board of directors of the other 
affiliated person; and
    <bullet> Whether operations are intertwined, such as through the 
sharing of sales information, information on production and pricing 
decisions, the sharing of facilities or employees, or significant 
transactions between the affiliated producers.

See Proposed Rule

    Based on our analysis of these criteria, we have determined that 
there is a strong possibility of manipulation of prices or production 
between Yude and Zhenxing. In addition to PHT's ownership percentage in 
each joint venture, we have found that some of the same people sit on 
Yude's and Zhenxing's boards of directors, and that PHT makes sales and 
pricing decisions for each of the joint ventures. We have also found 
that Yude and Zhenxing have similar production processes such that 
substantial retooling of either facility would not be necessary to 
restructure manufacturing priorities. Therefore, we have determined 
that Yude and Zhenxing should be collapsed as a result of their 
relationships with PHT. For a further discussion of this issue, see 
Decision Memorandum to Holly A. Kuga, Director, Office of Antidumping 
Compliance, dated May 20, 1996, ``Collapsing in the 1994/1995 
administrative review of sulfanilic acid from the People's Republic of 
China,'' which is on file in the Central Records Unit (room B-099 of 
the Main Commerce Building).
    We are collapsing Yude and Zhenxing for the purposes of calculating 
margins, and we are collapsing their factor data for use in calculating 
NV. We have calculated one NV for Yude and Zhenxing by weight averaging 
Yude's and Zhenxing's factors based on the quantities of sulfanilic 
acid each produced during the period of review.

United States Price

    For sales made by Yude and Zhenxing, we calculated constructed 
export price based on FOB, CIF, or CIP prices to unrelated purchasers 
in the United States. We made deductions for foreign inland freight, 
ocean freight, marine insurance, U.S. duties, U.S. transportation, 
credit, commissions, warehousing, repacking in the United States, 
indirect selling expenses, and constructed export price profit, as 
appropriate, in accordance with section 772(d)(3) of the Act.

Normal Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine NV using a factors of 
production methodology if (1) the merchandise is exported from a NME 
country, and (2) the available information does not permit the 
calculation of NV using home-market prices, third-country prices, or 
constructed value under section 773(a) of the Act.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. Pursuant to section 
771(18)(C)(i), any determination that a foreign country is a NME 
country shall remain in effect until revoked by the administering 
authority. None of the parties to this proceeding has contested such 
treatment in this review. Accordingly, we treated the PRC as a NME 
country for purposes of this review and calculated NV by valuing the 
factors of production as set forth in section 773(c)(3) of the Act in a 
comparable market economy country which is a significant producer of 
comparable merchandise. Pursuant to section 773(c)(4) and section 
353.52(2) of the Department's regulations, we determined that India is 
comparable to the PRC in terms of per capita gross national product 
(GNP), the growth rate in per capita GNP, and the national distribution 
of labor, and that India is a significant producer of comparable 
merchandise. For further discussion of the Department's selection of 
India as the primary surrogate country, see Memorandum from David 
Mueller, Director, Office of Policy, to Maureen Flannery, dated March 
28, 1996, ``Sulfanilic Acid from the People's Republic of China (PRC): 
Nonmarket Economy Status and Surrogate Country Selection,'' and File 
Memorandum, dated May 23, 1996, ``India as a significant producer of 
comparable merchandise in the 1994/1995 administrative review of 
sulfanilic acid from the People's Republic of China,'' which are on 
file in the Central Records Unit (room B-099 of the Main Commerce 
Building).
    For purposes of calculating NV, we valued PRC factors of production 
as follows, in accordance with section 773(c)(1) of the Act:
    <bullet> To value aniline used in the production of sulfanilic 
acid, we used the rupee per kilogram value of imports into India during 
April 1994-April 1995, obtained from the February 1995 and April 1995 
Monthly Statistics of the Foreign Trade of India, Volume II--Imports 
(Indian Import Statistics). Using wholesale price indices (WPI) 
obtained from the International Financial Statistics, published by the 
International Monetary Fund (IMF), we adjusted this value to reflect 
inflation through the period of review. We made adjustments to include 
freight costs incurred between the suppliers and the sulfanilic acid 
factories.
    <bullet> To value sulfuric acid used in the production of 
sulfanilic acid, we used the rupee per kilogram value reported in 
Chemical Weekly. We made adjustments to include freight costs incurred 
between the suppliers and the sulfanilic acid factories.
    <bullet> To value activated carbon used in the production of 
sulfanilic acid, we used the rupee per kilogram value reported in 
Chemical Weekly. We made adjustments to include freight costs incurred 
between the suppliers and the sulfanilic acid factories.
    <bullet> For direct labor, we used the labor rates reported in the 
Economist Intelligence Unit's Investing, Licensing and Trading 
Conditions Abroad: India, released November 1994. This source breaks 
out labor rates between skilled and unskilled labor for 1994 and 
provides information on the number of labor hours worked per week. 
Using WPI obtained from the International Financial Statistics, we 
adjusted the labor rates to reflect inflation through the period of 
review.
    <bullet> For factory overhead, we used information reported in the 
April 1995 Reserve Bank of India Bulletin. From this information, we 
were able to determine factory overhead as a percentage of total cost 
of manufacture.
    <bullet> For selling, general and administrative (SG&A) expenses, 
we used information obtained from the April 1995 Reserve Bank of India 
Bulletin. We calculated an SG&A rate by dividing SG&A expenses by the 
cost of manufacture.
    <bullet> To calculate a profit rate, we used information obtained 
from the April 1995 Reserve Bank of India Bulletin. We calculated a 
profit rate by dividing the before-tax profit by the sum of those 
components pertaining to the cost of manufacturing plus SG&A.
    <bullet> To value the inner and outer bags used as packing 
materials, we used import statistics for India obtained from the Indian 
Import Statistics. Using WPI obtained from the International Financial 
Statistics, we adjusted these values to reflect inflation through the 
period of review. We adjusted these values to include freight costs 
incurred between the suppliers and the sulfanilic acid factories.

[[Page 29077]]

    <bullet> To value coal, we used the price of steam coal reported in 
The Gazette of India, June 16, 1994. We adjusted the value of coal to 
reflect inflation through the period of review using WPI published by 
the IMF.
    <bullet> To value electricity, we used the price of electricity on 
March 1, 1995 reported in Current Energy Scene in India, July 1995, by 
the Centre for Monitoring Indian Economy.
    <bullet> To value truck freight, we used the rate reported in an 
August 1993 cable from the U.S. Embassy in India submitted for the 
Final Determination of Sales at Less Than Fair Value: Certain Helical 
Spring Lock Washers from the People's Republic of China (58 FR 48833, 
September 20, 1993). We adjusted the truck freight rates to reflect 
inflation through the period of review using WPI published by the IMF.
    <bullet> To value rail freight, we used the price reported in a 
December 1989 cable from the U.S. Embassy in India submitted for the 
Final Results of Antidumping Duty Administrative Review: Shop Towels of 
Cotton from the People's Republic of China (56 FR 4040, February 1, 
1991). We adjusted the rail freight rates to reflect inflation through 
the period of review using WPI published by the IMF.

Non-shippers

    Baoding and Hainan Garden stated that they did not have shipments 
during the period of review, and we confirmed this with the United 
States Customs Service. Therefore, we are treating them as non-shippers 
for this review, and are rescinding this review with respect to these 
companies. See Proposed Rule, section 351.213(d)(3) (61 FR 7365). The 
cash deposit rates for these firms will continue to be the rates 
established in the most recently completed final determination.

Preliminary Results of the Review

    We preliminarily determine that the following dumping margins 
exist:

------------------------------------------------------------------------
                                                                 Margin 
           Manufacturer/exporter               Time period     (percent)
------------------------------------------------------------------------
Yude Chemical Industry Company............     8/1/94-7/31/95    20.78 *
Zhenxing Chemical Industry Company........     8/1/94-7/31/95    20.78 *
PRC Rate <SUP>1................................     8/1/94-7/31/95     85.20 
------------------------------------------------------------------------
\1\ This rate will be applied to all firms which have not demonstrated  
  that they are separate from the PRC government, including, but not    
  limited to, the following firms for which a review was requested:     
  China National Chemical Construction Corporation, Beijing Branch;     
  China National Chemical Construction Corporation, Qingdao Branch;     
  Jinxing Chemical Factory; Mancheng Xinyu Chemical Factory, Beijing;   
  Mancheng Xinyu Chemical Factory, Shijiazhuang; Shunping Lile; Sinochem
  Hebei Import and Export Corporation; Sinochem Qingdao; and Sinochem   
  Shandong.                                                             
* Yude and Zhenxing have been collapsed for the purposes of this        
  administrative review. However, we have listed them separately on this
  chart for Customs purposes.                                           

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. The Department will publish a notice of final results of 
this administrative review, which will include the results of its 
analysis of issues raised in any such comments.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between United States price and NV may vary from the 
percentage stated above. Upon completion of this review, the Department 
will issue appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of these administrative reviews for 
all shipments of sulfanilic acid from the PRC entered, or withdrawn 
from warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(2)(c) of the Act: (1) the cash deposit 
rate for reviewed companies named above which have separate rates will 
be the rates for those firms established in the final results of this 
review; (2) for the companies named above which were not found to have 
a separate rate, as well as for all other PRC exporters, the cash 
deposit rate will be the highest margin ever in the LTFV investigation 
or in this or prior administrative reviews, the PRC rate; and (3) 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 deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 353.26 to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
    Dated: May 29, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-14309 Filed 6-6-96; 8:45 am]
BILLING CODE 3510-DS-P