[Federal Register Volume 66, Number 5 (Monday, January 8, 2001)]
[Notices]
[Pages 1303-1309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-457]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-846]


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

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

ACTION: Notice of preliminary results and partial rescission of fourth 
new shipper review and rescission of third antidumping duty 
administrative review.

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

SUMMARY: The Department of Commerce is currently conducting the fourth 
new shipper review and third administrative review of the antidumping 
duty order on brake rotors from the People's Republic of China covering 
the period April 1, 1999, through March 31, 2000. The fourth new 
shipper review covers two exporters. The Department of Commerce is 
preliminarily rescinding in part the fourth new shipper review with 
respect to one exporter. We have

[[Page 1304]]

preliminarily determined that sales have not been made below normal 
value by the other exporter. If these preliminary results are adopted 
in our final results of the fourth new shipper review, we will instruct 
the U.S. Customs Service to assess no antidumping duties on entries of 
subject merchandise during the period of review from the exporter that 
cooperated in the review, for which the importer-specific assessment 
rates are zero or de minimis (i.e., less than 0.50 percent), and to 
continue to assess duties on all entries of subject merchandise made 
during the period of review by the other uncooperative exporter at the 
country-wide rate. Furthermore, we will instruct the U.S. Customs 
Service (``the Customs Service'') to require a cash deposit on all 
future entries of the subject merchandise from the uncooperative 
exporter at the country-wide rate.
    The third administrative review covers three exporter/producer 
combinations (see ``Background'' section of this notice for further 
discussion). The Department of Commerce (``the Department'') is 
preliminarily rescinding the third administrative review because none 
of the respondents made shipments of the subject merchandise during the 
period of review (``POR''). Interested parties are invited to comment 
on these preliminary results. We will issue the final results no later 
than 120 days from the date of publication of this notice.

EFFECTIVE DATE: January 8, 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, N.W., 
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 April 28, 2000, the petitioner \1\ requested an administrative 
review pursuant to 19 CFR 351.213(b) for three exporter/producer 
combinations that received zero rates in the less-than-fair-value 
(``LTFV'') investigation and thus were excluded from the antidumping 
duty order only with respect to brake rotors sold through the specified 
exporter/producer combinations.\2\
---------------------------------------------------------------------------

    \1\ The petitioner is the Coalition for the Preservation of 
American Brake Drum and Rotor Aftermarket Manufacturers.
    \2\ The excluded exporters/producer combinations are: (1) China 
National Automobile Industry Import & Export Corporation (``CAIEC'') 
or Shandong Laizhou CAPCO Industry (``Laizhou CAPCO'')/Laizhou 
CAPCO; (2) Shenyang Honbase Machinery Co., Ltd. (``Shenyang 
Honbase'') or Laizhou Luyuan Automobile Fittings Co., Ltd. 
(``Laizhou Luyuan'')/Shenyang Honbase or Laizhou Luyuan; and (3) 
China National Machinery and Equipment Import & Export (Xinjiang) 
Co., Ltd. (``Xinjiang'')/Zibo Botai Manufacturing Co., Ltd. 
(``Zibo'').
---------------------------------------------------------------------------

    Also on April 28, 2000, the Department received timely requests 
from Hongfa Machinery (Dalian) Co., Ltd. (``Hongfa'') and Luoyang 
Haoxiang Brake Disc Factory (``Luoyang'') 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), Hongfa and Luoyang each certified that 
it did not export the subject merchandise to the United States during 
the period covered by the original LTFV investigation, and that it is 
not affiliated with any company which exported subject merchandise to 
the United States during the period of investigation. Hongfa and 
Luoyang 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), Hongfa and Luoyang 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.
    On May 22, 2000, the excluded exporter/producer combinations 
submitted a letter in which they contended that the Department did not 
have the basis for conducting an administrative review of them because 
they were excluded from the antidumping duty order on brake rotors from 
the PRC. On May 26, 2000, the Department initiated an administrative 
review covering the exporter/producer combinations which received zero 
rates in the LTFV investigation only with respect to their U.S. sales 
of brake rotors produced by companies other than those included in the 
excluded exporter/producer combinations noted above (see Initiation of 
Antidumping and Countervailing Duty Administrative Reviews (65 FR 
35320, June 2, 2000)). In accordance with 19 CFR 351.214(d), the 
Department also initiated a new shipper review covering Hongfa and 
Luoyang on May 26, 2000. See Brake Rotors from the People's Republic of 
China: Initiation of New Shipper Antidumping Duty Review, 65 FR 35322 
(June 2, 2000).
    On June 5 and 6, 2000, we issued a questionnaire to each PRC 
company listed in the brake rotor initiation notices. On June 28, 2000, 
the Department provided the parties an opportunity to submit publicly 
available information for consideration in these preliminary results. 
On June 29, 2000, Hongfa and Luoyang requested an extension of time 
until July 21, 2000, to file their responses to the antidumping duty 
questionnaire, which the Department subsequently granted on July 7, 
2000.
    Also on June 29, 2000, both respondents agreed to waive the time 
limits applicable to the new shipper review and to permit the 
Department to conduct the new shipper review concurrently with the 
administrative review. Therefore, the Department issued a Federal 
Register notice stating that it intended to conduct the new shipper 
review concurrent with the administrative review (see Brake Rotors from 
the People's Republic of China: Notice of Extension of Time Limits for 
the Preliminary and Final Results of the Fourth New Shipper Antidumping 
Duty Review, 65 FR 51294 (August 23, 2000)).
    On July 7, 2000, each of the exporters which received zero rates in 
the LTFV investigation stated that during the POR it did not make U.S. 
sales of brake rotors produced by companies other than those included 
in its respective excluded exporter/producer combination. On July 21, 
2000, Hongfa and Luoyang submitted their questionnaire responses. On 
July 26, 2000, the petitioner requested an extension of time until 
October 18, 2000, to submit publicly available information in this 
proceeding. On July 31, 2000, the Department granted the petitioner's 
request and extended the time limit for the submission of publicly 
available information by all parties.
    On September 8, 2000, the petitioner submitted a letter in which it 
requested that the Department conduct verification of: (1) The 
responses submitted by the two respondents in the new shipper review; 
(2) the no-shipment claims made by the exporters named in the three 
exporter/producer combinations excluded from the antidumping duty 
order; and (3) the Ministry of Foreign Trade and Economic Cooperation 
(``MOFTEC'') and National Industrial and Commercial Administration 
Bureau (``NICAB''). On September 14, 2000, the Department

[[Page 1305]]

issued a decision memorandum which outlined the Department's reasons 
for conducting a review of the exporter/producer combinations receiving 
rates of zero in the LTFV investigation with respect to shipments of 
merchandise produced by manufacturers other than those in the 
respective excluded exporter/producer combinations (see September 14, 
2000, Memorandum from the team to Louis Apple, Office Director). On 
September 15, 2000, the petitioner submitted comments on the 
questionnaire responses submitted by Hongfa and Luoyang. On September 
25, 2000, the Department issued supplemental questionnaires to Hongfa 
and Luoyang. On September 29, 2000, Hongfa and Luoyang requested an 
extension of time until October 16, 2000, to file their responses to 
the supplemental questionnaire, which the Department subsequently 
granted on October 6, 2000.
    In order to substantiate the claims made by the exporter/producer 
combinations excluded from the order that they did not ship merchandise 
from producers other than those covered by their exclusion, on 
September 27, 2000, the Department conducted a data query on brake 
rotor entries made during the POR from all exporters named in the 
excluded exporter/producer combinations. As a result of the data query 
on September 28, 2000, the Department requested that the Customs 
Service confirm the actual manufacturer for specific entries associated 
with the excluded exporter/producer combinations.
    On October 4, 2000, in response to the petitioner's September 8, 
2000, letter requesting the verification of all respondents in these 
reviews, the Department informed the petitioner that it (1) did intend 
to conduct verification of the responses submitted by Hongfa and 
Luoyang; (2) did not intend to conduct verification of the sales 
records of the exporters named in the three exporter/producer 
combinations unless the results of its Customs data query of U.S. 
entries of brake rotors during the POR revealed that an excluded 
exporter shipped brake rotors produced by a firm other than the 
producer named in the corresponding excluded exporter/producer 
combination; and (3) did not intend to visit MOFTEC or NICAB because 
the information provided by the petitioner in its September 8, 2000, 
submission did not serve as a sufficient basis for conducting such 
visits (see the October 4, 2000, Letter from Louis Apple, Office 
Director, to Mr. Leslie A. Glick for further details).
    On October 16, 2000, the Department received a supplemental 
questionnaire response from Hongfa, but did not receive a response from 
Luoyang. On October 18, 2000, Luoyang's counsel submitted a letter 
which stated that it was withdrawing its notice of appearance on behalf 
of Luoyang in the proceeding. Also on October 18, 2000, the petitioner 
submitted publicly available information for use in valuing the factors 
of production. On October 25, 2000, the respondents provided rebuttal 
publicly available information and comments on the publicly available 
information submitted by the petitioner.
    On October 20, 2000, the Department provided a verification outline 
to Hongfa. Also on October 20, 2000, the Department issued a letter to 
Luoyang which provided the firm with an additional extension of time to 
submit its supplemental questionnaire response. The Department also 
notified Luoyang that if it did not provide its supplemental 
questionnaire response by October 26, 2000, the Department would (1) 
conclude that Luoyang was no longer participating in the proceeding; 
(2) cancel plans to conduct verification of Luoyang's response; and (3) 
use the facts available with respect to Luoyang for the preliminary 
results.
    On October 23, 2000, the petitioner submitted a letter objecting to 
the extension of time the Department had granted to Luoyang for its 
supplemental response. On October 24, 2000, the Department placed on 
the record correspondence obtained from the U.S. Embassy in Beijing 
which indicated that Luoyang did not intend to participate further in 
the new shipper review (see October 24, 2000, Memorandum from the case 
analyst to the file for further details). Also on October 24, 2000, the 
petitioner filed comments related to the Department's verification of 
Hongfa.
    On October 25, 2000, the Department issued a memorandum stating 
that it preliminarily found no evidence that shipments of merchandise 
subject to the order were made by the three exporter/producer 
combinations during the POR. From October 30 through November 2, 2000, 
the Department conducted verification of the information submitted by 
Hongfa, in accordance with 19 CFR 351.307.
    On November 15, 2000, the petitioner submitted a copy of a PRC law 
(i.e., ``Rules for the Implementation of the Law of the People's 
Republic of China on Foreign-Capital Enterprises'')(``Rules for 
Foreign-Capital Enterprises'') and claimed that the Department should 
resort to facts available with respect to Hongfa because Hongfa did not 
provide a copy of this law in its entirety at verification and because 
certain sections of the law allegedly demonstrate that the PRC 
government maintains de jure and de facto control over foreign-capital 
companies like Hongfa in the PRC. Moreover, the petitioner renewed its 
request that the Department conduct verification of MOFTEC and other 
PRC government entities based on the contents of the PRC law it 
submitted.
    On November 30, 2000, the Department issued its verification report 
on Hongfa.

Scope of Reviews

    The products covered by these reviews 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 
these reviews 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 the reviews 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 these 
reviews is dispositive.

[[Page 1306]]

Period of Reviews

    The period of review (``POR'') covers April 1, 1999, through March 
31, 2000.

Verification

    As provided in section 782(i)(2) of the Act, we verified 
information provided by Hongfa. 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 (see the 
November 30, 2000, Hongfa verification report for further discussion).

Rescission of Administrative Review

    Pursuant to 19 CFR 351.213(d)(3), we have preliminarily determined 
that, during the POR, the three exporter/producer combinations which 
received zero rates in the LTFV investigation did not make shipments of 
subject merchandise to the United States during the POR. Specifically, 
we preliminarily determined that during the POR, (1) neither CAIEC nor 
Laizhou CAPCO exported brake rotors to the United States that were 
manufactured by producers other than Laizhou CAPCO; (2) neither 
Shenyang Honbase nor Laizhou Luyuan exported brake rotors to the United 
States that were manufactured by producers other than Shenyang Honbase 
or Laizhou Luyuan; and (3) Xinjiang did not export brake rotors to the 
United States that were manufactured by producers other than Zibo (see 
October 25, 2000, Memorandum from the case analyst to the file). In 
order to make this determination, we first examined POR subject 
merchandise shipment data maintained by the Customs Service. We then 
requested the Customs Service to examine the documentation filed at the 
U.S. port for selected entries made by the exporters at issue to 
determine the manufacturer of the merchandise. Based on the results of 
our query, we are preliminarily rescinding the administrative review 
because we found no evidence that the exporter/producer combinations 
subject to this review made U.S. shipments of the subject merchandise 
during the POR.

Partial Rescission of New Shipper Review

    We are also preliminarily rescinding in part the fourth new shipper 
review with respect to Luoyang based on its decision not to submit a 
response to the Department's supplemental questionnaire and not to 
cooperate in this review which Luoyang itself requested. As a 
consequence of Luoyang's decision to discontinue participation in this 
review, the Department canceled verification of Luoyang's questionnaire 
response, including its separate rate information. Therefore, we 
consider Luoyang to be an uncooperative respondent and have made the 
adverse inference that Luoyang does not qualify for a separate rate. 
We, therefore, have treated Luoyang as part of the non-market economy 
(``NME'') entity. As part of the NME entity, Luoyang 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 rescinding the new 
shipper review with respect to Luoyang.

Separate Rates

    In proceedings involving 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).
    The cooperative respondent in the new shipper review, Hongfa, is 
wholly foreign-owned. Thus, for Hongfa, because we have no evidence 
indicating that it is under the control of the PRC government, 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); 
Preliminary Results of First New Shipper Review and First Antidumping 
Duty Administrative Review: Certain Preserved Mushrooms from the 
People's Republic of China, 65 FR 66703, 66705 (November 7, 2000); and 
Notice of Final Determination of Sales at Less Than Fair Value: 
Bicycles From the People's Republic of China (``Bicycles'') 61 FR 19026 
(April 30, 1996)).
    With respect to the petitioner's November 15, 2000, claim that 
Hongfa should be denied a separate rate because it withheld information 
at verification, we find that Hongfa complied fully with the 
Department's request for information. Specifically, the Department 
requested Hongfa to provide documentation on the registered capital 
requirements for wholly-foreign owned companies in the PRC. In response 
to the Department's request for information, Hongfa provided an excerpt 
from the PRC law, Rules for Foreign-Capital Enterprises, which 
discussed the timeframe PRC companies (such as Hongfa) had in order to 
meet registered capital requirements for obtaining business licenses 
(see page five of the Hongfa verification report). Hongfa complied 
fully with the Department's request for information in this area. Thus, 
the petitioner's claim is without merit.
    With respect to the petitioner's claim that certain sections of the 
PRC government document at issue indicate de jure and de facto 
government control of the export activities of wholly foreign-owned 
companies such as Hongfa, we note that the document in question does 
not contain compelling information which would lead us to believe that 
the PRC government exercises de jure or de facto control over all 
foreign-owned PRC companies. (For further discussion, see the control 
criteria of our separate rates test arising out of the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991) 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'').) In Hongfa's case, since this company is wholly 
foreign-owned, it is not necessary to apply the separate rates test to 
it (see discussion above). Therefore, the petitioner's claim that 
certain sections of the 1990 Rules for Foreign-Capital Enterprises 
indicate de jure and de facto government control is moot.
    Finally with respect to the petitioner's request that the 
Department should conduct visits of MOFTEC and NICAB based on the 
requirements contained in the Rules for Foreign Enterprises, the 
Department does not consider the contents of that law to provide 
sufficient grounds for conducting visits at MOFTEC and NICAB in order 
to further interpret the regulations contained in the above-mentioned 
document.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by Hongfa 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 Hongfa, we calculated export price based on packed, FOB foreign 
port prices to the first unaffiliated purchaser in the United States. 
Where appropriate,

[[Page 1307]]

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 a reminbi, 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 
most recently used this rate in the second administrative review of 
brake rotors from the PRC (see Brake Rotors from the People's Republic 
of China: Final Results of Third New Shipper Review and Final Results 
and Partial Rescission of Second Antidumping Duty Administrative 
Review, 65 FR 64664 (October 30, 2000) (which cites to the ``Issues and 
Decision Memorandum'' from Richard W. Moreland, Deputy Assistant 
Secretary for Import Administration, to Troy H. Cribb, Assistant 
Secretary for Import Administration, dated October 24, 2000)) (``Brake 
Rotors Second Administrative 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 Second Administrative Review). 
Based on our verification findings, we revised the reported distance 
from Hongfa to the port of exportation (see Hongfa verification report 
at page 3).
    In its pre-verification comments, the petitioner claimed that 
Hongfa's POR sale is not a bona fide transaction due to the 
circumstances surrounding the sale. In prior cases, the Department has 
considered factors such as timing, sale price, transportation costs, 
other expenses borne by the importer, and whether the merchandise was 
resold by the importer at a loss to determine whether a sale was a bona 
fide transaction (see Preliminary Results of First New Shipper Review 
and First Antidumping Duty Administrative Review: Certain Preserved 
Mushrooms from the People's Republic of China, 65 FR 66703, 66706 
(November 7, 2000)) (``Mushrooms from the PRC''). (See also Certain 
Cut-to-Length Carbon Steel Plate from Romania: Notice of Rescission of 
Antidumping Duty Administrative Review, 63 FR 47232 (September 4, 1998) 
and American Silicon Technologies v. United States, CIT Slip Op. 00-84 
(July 17, 2000).) As described in the Hongfa verification report, we 
verified that Hongfa made only one sale to the U.S. market during the 
POR and that Hongfa has made no other sales to the United States since 
the POR (i.e., as of the date of verification). Therefore, unlike 
Mushrooms from the PRC, we could not compare sales prices for the 
subject merchandise during the POR with sales prices after the POR. 
Moreover, we have no evidence on the record to support a conclusion 
that the price for the reviewed sale is not commercially reasonable or 
the result of arm's-length bargaining. There is also no record evidence 
that the importer resold the merchandise at a loss. Furthermore, the 
transportation costs and other expenses borne by the importer based on 
the respondent's terms of sale are consistent with those incurred by 
other importers of the subject merchandise in previous administrative 
reviews, new shipper reviews and the LTFV investigation. In addition, 
while the sale occurred shortly before the end of the POR, the timing 
of the transaction is not a basis in-and-of-itself to render the 
transaction less than bona fide (see Mushrooms from the PRC, 65 at FR 
66706). Therefore, absent evidence to the contrary, we have determined 
Hongfa's sale to be a bona fide transaction for purposes of this 
review.

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 June 12, 2000, Memorandum from the Office of 
Policy to the case analyst). 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 from 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 Hongfa which produced the brake rotors it 
exported to the United States 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, we revised (1) the factor for lug bolts; (2) the factor for 
packing labor; and (3) the distances from Hongfa to each of its 
suppliers (see page three of the Hongfa verification report and 
December 18, 2000, Memorandum from case analyst to the file).
    In its October 18, 2000, publicly available information submission, 
the petitioner argued that the Department should use price data from 
International Business Information Services (``IBIS'') rather than from 
the Indian government publication Monthly Statistics of the Foreign 
Trade of India (``Monthly Statistics'') to value a number of direct and 
packing material inputs because the IBIS data is (1) the most 
contemporaneous with the POR; (2) it is based on Indian Customs 
statistics; and (3) it has been used to value inputs in previous NME 
cases. In its October 25, 2000, rebuttal comments, the respondent 
pointed out that the IBIS data, though more contemporaneous to the POR 
than Monthly Statistics, is less representative of the import prices 
paid for the inputs in question because the values the petitioner 
submitted from IBIS either were based on specific

[[Page 1308]]

shipments from only a few market economy countries or the values were 
not specific to the input reported by the respondent. After considering 
the data and arguments made by the parties with respect to this issue, 
for these preliminary results, we have relied on data from Monthly 
Statistics rather than IBIS to value the inputs in question because 
either the former data were more representative of Indian import prices 
or the latter data did not allow the Department to value properly the 
factor reported by the respondent (see detailed discussion below).
    The Department's selection of the surrogate values applied in this 
determination was 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, ferrosilicon, and ferromanganese, we used April 
1998-December 1998 average import values from Monthly Statistics. For 
steel scrap and lubrication oil, we used April 1998-August 1998 average 
import values from Monthly Statistics. For limestone, we used an April 
1998-March 1999 average import value from Monthly Statistics rather 
than the May 1999-March 2000 IBIS value. Monthly Statistics provided a 
more representative Indian import value for limestone because it covers 
all imports of limestone into India. The IBIS data appears to be based 
on a limited number of shipments of limestone to India. Furthermore, 
one of those limestone shipments is from an unknown exporting country 
accounting for 51 percent of the total import value based on the IBIS 
data.
    The brake rotors Hongfa produced during the POR use lug bolts and 
ball bearing cups. Because we could not obtain a product-specific price 
from India to value lug bolts (see Bicycles, 61 FR at 19040 (Comment 
17)), we used a January-March 1999 product-specific import value from 
the Indonesian government publication Foreign Trade Statistical 
Bulletin. 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. To value firewood, we used a 
1991 domestic value from the Food and Agricultural Organization of the 
United Nations' working paper, Wood Materials from Non-Forest Areas, 
which is the most recent value available for this input. To value 
electricity, we used data from the Indian publications 1995 Conference 
of 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).
    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 (``Kalyani'') and Rico Auto Industries Limited 
(``Rico'').
    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 at 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 the 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 that miscellaneous receipts or 
other income figure 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 Hongfa's reported packing material factors. We 
used the corrected distance (per verification findings) to determine 
the foreign inland freight expense (see page three of the Hongfa 
verification report for further discussion). 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, we have added to CIF 
surrogate values from India a surrogate freight cost using the shorter 
of the reported distances from either the closest PRC port of 
importation to the factory, or from the domestic supplier to the 
factory on an input-specific basis.
    To value corrugated cartons and steel strip, we used April 1998-
December 1998 average import values from Monthly Statistics. For 
plastic bags, we used an April 1997-March 1998 average import value for 
plastic bags from Monthly Statistics because that data (which was based 
on plastic bag imports from 18 market economy countries) was a more 
representative Indian import value for plastic bags than the more 
contemporaneous IBIS data (which was based on one shipment from one 
country). To value adhesive tape and nails, we used April 1998-March 
1999 average import values from Monthly Statistics because the data 
(which was based on imports of adhesive tape from 26 market economy 
countries and imports of nails from 10 market economy countries) was 
also more representative of Indian import prices

[[Page 1309]]

for tape and nails than the more contemporaneous IBIS data (which was 
based on one shipment of tape and 12 shipments of nails from one 
country). To value pallet wood, we used an April 1995-March 1996 import 
value per kilogram from Monthly Statistics rather than values obtained 
after March 1996, because the more contemporaneous values appeared 
aberrational relative to the overall value of the subject merchandise 
(see Brake Rotors Second Administrative Review). Moreover, we used the 
value per kilogram from Monthly Statistics rather than the more 
contemporaneous value per piece from IBIS because the value from IBIS 
did not indicate the size or weight of a piece of wood in a manner 
which would have allowed the Department to value the factor reported by 
the respondent.

Preliminary Results of the Review

    We preliminarily determine that the following margin exists for 
Hongfa during the period April 1, 1999, through March 31, 2000:

------------------------------------------------------------------------
                                                                Margin
               Manufacturer/producer/exporter                  percent
------------------------------------------------------------------------
Hongfa Machinery (Dalian) 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. Any interested party may request a hearing within 30 days of 
publication of this notice. Any hearing, if requested, will be held on 
January 31, 2001.
    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).
    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 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 these administrative 
and new shipper reviews, including the results of its analysis of 
issues raised in any such written briefs or at the hearing, if held, 
not later than 120 days after the date of publication 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 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 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 
Hongfa, we will require cash deposits at the rate 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 these administrative and new 
shipper antidumping duty administrative reviews 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 rate for Hongfa will be the 
rate 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 
Luoyang) 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.
    These administrative and new shipper administrative reviews 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 351.213 and 351.214.

    Dated: January 2, 2001.
Troy H. Cribb,
Assistant Secretary for Import Administration.
[FR Doc. 01-457 Filed 1-5-01; 8:45 am]
BILLING CODE 3510-DS-P