Notice of Final Determination of Sales at Less Than Fair Value: Disposable Pocket Lighters From the People's Republic of China

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-834]

Notice of Final Determination of Sales at Less Than Fair Value:

Disposable Pocket Lighters From the People's Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: May 5, 1995.

FOR FURTHER INFORMATION CONTACT: Julie Anne Osgood or Todd Hansen,

Office of Countervailing Investigations, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482-0167 or (202) 482-1276, respectively.

Final Determination

We determine that disposable pocket lighters from the People's

Republic of China (``PRC'') are being, or are likely to be, sold in the

United States at less than fair value (``LTFV''), as provided in

section 735 of the Tariff Act of 1930, as amended (``the Act''). The

estimated margins are shown in the ``Continuation of Suspension of

Liquidation'' section of this notice. The U.S. Department of Commerce

(``the Department'') also determines that critical circumstances exist

for all exporters except Gao Yao (HK) Hua Fa Industrial Company Ltd.

(``Gao Yao''), Guangdong Light Industrial Products Import & Export

Corporation (``GLIP'') and PolyCity Industrial Limited (``PolyCity'').

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute and to the

Department's regulations are references to the provisions as they

existed on December 31, 1994.

Case History

Since the preliminary determination on December 5, 1994, (Notice of

Preliminary Determination of Sales at Less Than Fair Value: Disposable

Pocket Lighters from the People's Republic of China, 59 FR 64191

(December 13, 1994)), the following events have occurred:

On December 23, 1994, we issued our preliminary determination of

critical circumstances with respect to the subject merchandise (60 FR

436, January 4, 1995).

On December 9 and December 19, 1994, Cli-Claque Company Limited

(``Cli-Claque''), China National Overseas Trading Corporation

(``COTCO''), Gao Yao and GLIP, requested a postponement of the final

determination, pursuant to 19 CFR 353.20. Accordingly, on January 20,

1995, the deadline for the final determination was extended to April

27, 1995 (60 FR 5899, January 31, 1995).

From February 28 through March 17, 1995, we verified the responses

of the exporters and producers of disposable lighters.

Petitioner and respondents filed case briefs on April 6, 10, 11,

and 12, and rebuttal briefs on April 13 and 14, 1995. A public hearing

was held on April 17, 1995.

Scope of Investigation

The products covered by this investigation are disposable pocket

lighters (``lighters''), whether or not refillable, whose fuel is

butane, isobutane, propane, or other liquefied hydrocarbon, or a

mixture containing any of these, whose vapor pressure at 75 degrees

fahrenheit (24 degrees Celsius) exceeds a gauge pressure of 15 pounds

per square inch. Non-refillable pocket lighters are imported under

subheading 9613.10.0000 of the Harmonized Tariff Schedule of the United

States (``HTSUS''). Refillable, disposable pocket lighters would be

imported under subheading 9613.20.0000. Although the HTSUS subheadings

are provided for convenience and Customs purposes, our written

description of the scope of this proceeding is dispositive.

Certain windproof refillable lighters, as described in memoranda to

Barbara R. Stafford, dated December 5, 1994, and April 25, 1995, are

excluded from the scope of this investigation. Also, excluded from the

scope of this investigation are electric lighters (as described in the

April 25, 1995 memo) which use two AA batteries to heat a coil for

purposes of igniting smoking materials, rather than using butane,

isobutane, propane, or other liquefied hydrocarbon to fuel a flame for

purposes of igniting smoking materials.

Period of Investigation

The period of investigation (``POI'') is December 1, 1993 through

May 31, 1994.

Non-market Economy Status

The PRC has been treated as a non-market economy country (``NME'')

in past antidumping investigations (see, e.g., Final Determination of

Sales at Less Than Fair Value: Saccharin from the People's Republic of

China, 59 FR 58818 (November 15, 1994) (``Saccharin''). No information

has been provided in this proceeding that would lead us to overturn our

former determinations. Therefore, in accordance with section

[[Page 22360]] 771(18)(c) of the Act, we are continuing to treat the

PRC as an NME for purposes of this investigation.

Separate Rates

All five of the responding companies in this investigation have

requested separate antidumping duty rates. In cases involving NMEs, the

Department's policy is to assign a separate rate only when an exporter

can demonstrate the absence of both de jure and de facto governmental

control over export activities.

In this case, two of the five respondents, PolyCity and Cli-Claque,

are Hong Kong companies that are involved in joint ventures in the PRC

that manufacture disposable lighters. Since PolyCity and Cli-Claque are

located outside the PRC, the PRC government does not have jurisdiction

over them. Moreover, the PRC government does not have any ownership

interest in these exporters and, therefore, it cannot exercise control

through ownership of these companies. On this basis, we determine that

there is no need to apply our separate rates analysis to these two

companies and that PolyCity and Cli-Claque are entitled to individual

rates.

In contrast to PolyCity and Cli-Claque, Gao Yao is a 50/50 joint

venture between a Chinese company, owned ``by all the people,'' and a

Hong Kong company. The joint venture owns both the production and

export facilities used to manufacture and export the disposable

lighters it sells to the United States. Given the direct PRC ownership

in Gao Yao's export operations, we have determined that it is

appropriate to apply our separate rates analysis to this company.

Of the remaining companies, COTCO and GLIP indicated that they were

owned ``by all the people'' during the POI. As stated in the Final

Determination of Sales at Less than Fair Value: Silicon Carbide from

the PRC, 59 FR 22585 (May 2, 1994) (``Silicon Carbide''), ``ownership

of a company by all the people does not require the application of a

single rate.'' Accordingly, COTCO and GLIP are eligible for

consideration for a separate rate under our criteria.

Although GLIP was owned during the POI by ``all the people,'' after

the POI it became a shareholding company whose shares are held by a

variety of investors. GLIP received approval to become a shareholding

company in March 1994, but issued shares after the POI. A portion of

the company's shares representing the initial investment in the company

are held in trust by the State Asset Management Bureau (``SAMB'').

However, the record of the investigation indicates that the SAMB has

entrusted voting rights of its shares to the management of the company.

In past cases involving similar circumstances, we found that the

granting of a separate rate to the responding exporters was not

precluded. (See, e.g., Final Determination of Sales at Less Than Fair

Value: Certain Cased Pencils from the People's Republic of China, 59 FR

55625 (November 8, 1994), and Final Determination of Sales at Less than

Fair Value: Certain Paper Clips from the People's Republic of China, 59

FR 511680 (October 7, 1994).) As stated above, we have applied our

separate rates analysis to GLIP.

To establish whether a firm is entitled to a separate rate, the

Department analyzes each exporting entity under a test arising out of

the Final Determination of Sales at Less Than Fair Value: Sparklers

from the PRC, 56 FR 20588 (May 6, 1991) (``Sparklers'') and amplified

in Silicon Carbide. Under the separate rates criteria, the Department

assigns separate rates only where respondents can demonstrate the

absence of both de jure and de facto governmental control over export

activities.

1. Absence of de Jure1 Control

\1\Evidence supporting, though not requiring, a finding of de

jure absence of central control includes: (1) an absence of

restrictive stipulations associated with an individual exporter's

business and export licenses; (2) any legislative enactments

decentralizing control of companies; or (3) any other formal measure

by the government decentralizing control of companies.

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The respondents submitted a number of documents to demonstrate

absence of de jure control, including two PRC laws indicating that the

responsibility for managing enterprises owned by ``all the people'' is

with the enterprises themselves and not with the government. These are

the ``Law of the People's Republic of China on Industrial Enterprises

Owned by the Whole People,'' adopted on April 13, 1988 (``1988 Law'');

and the ``Regulations for Transformation of Operational Mechanism of

State-Owned Industrial Enterprises,'' approved on August 23, 1992

(``1992 Regulations''). Respondents' submission also included the

``Temporary Provisions for Administration of Export Commodities,''

approved on December 21, 1992 (``Export Provisions''). In April 1994,

the State Council enacted the ``Emergent Notice of Changes in Issuing

Authority for Export Licenses Regarding Public Quota Bidding for

Certain Commodities'' (Quota Measures).

The 1988 Law and 1992 Regulations shifted control of companies

owned ``by all the people'' from the government to the enterprises

themselves. The 1988 Law provides that enterprises owned by ``all the

people'' shall make their own management decisions, be responsible for

their own profits and losses, choose their own suppliers and purchase

their own goods and materials. The 1988 Law contains other provisions

which indicate that enterprises have management independence from the

government. The 1992 Regulations provide that these same enterprises

can, for example, set their own prices (Article IX); make their own

production decisions (Article XI); use their own retained foreign

exchange (Article XII); allocate profits (Article II); sell their own

products without government interference (Article X); make their own

investment decisions (Article XIII); dispose of their own assets

(Article XV); and hire and fire employees without government approval

(Article XVII). The Export Provisions indicate those products that may

be subject to direct government control. Lighters do not appear on the

Export Provisions list nor on the Quota Measures list and are not,

therefore, subject to export constraints.

Since GLIP was initially a company owned by ``all the people,'' the

laws cited above establish that the government devolved control over

such companies. The only additional law that is pertinent to the de

jure analysis of GLIP as a share company is the Company Law (effective

July 1, 1994). While GLIP indicated that it is now organized consistent

with the Company Law, the law did not enter into force until two months

after the POI. In any event, this law does not alter the government's

de jure devolution of control that occurred when the company was owned

``by all the people.'' Therefore, we have determined that GLIP is not

subject to de jure control.

Consistent with Silicon Carbide, we determine that the existence of

these laws demonstrates that COTCO, GLIP, and Gao Yao are not subject

to de jure central government control with respect to export sales and

pricing decisions. However, there is some evidence that the provisions

of the above-cited laws and regulations have not been implemented

uniformly among different sectors and/or jurisdictions in the PRC (see

``PRC Government Findings on Enterprise Autonomy,'' in Foreign

Broadcast Information Service-China-93-133 (July 14, 1993)). Therefore,

the Department has determined that a de facto analysis is critical to

determine whether COTCO, Gao Yao and GLIP are [[Page 22361]] subject to

governmental control over export sales and pricing decisions.

2. Absence of de Facto Control

The Department typically considers four factors in evaluating

whether a respondent is subject to de facto government 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 disposition of profits or

financing of losses (see Silicon Carbide).

During the verification proceedings, Department officials viewed

evidence in the form of sales documents, company correspondence, and

bank statements, and confirmed through inquiries of company

representatives and officials from the China Chamber of Commerce for

Machinery and Electronic Products Import & Export (``CCCME''), that

COTCO, GLIP, and Gao Yao:

Maintain their own bank accounts, including foreign

exchange accounts;

Are not restricted in their access to their bank accounts;

Make independent business decisions, based on market

conditions;

Set their own prices independently and that the prices are

not subject to review by government authorities;

Are not subject to foreign exchange targets set by either

the central or provincial governments; and

Have the ability to sell, transfer, or acquire assets.

Exporter-Specific Information

Gao Yao

Is a Sino-Hong Kong 50-50 joint venture whose Chinese

participant is a company owned by ``all the people'';

Maintains a bank account in Hong Kong where all monies

received from Gao Yao's foreign sales are deposited;

Has management that is selected by the board of directors,

without any governmental interference;

Divides its profits evenly between the joint venture

partners according to ownership participation; and

Retains a general manager who is a Hong Kong resident.

GLIP

Is owned by ``all the people'' during the POI, but became

a shareholding company in July 1994;

Has management that is selected by its board of directors;

Selection and continued employment of management is not

subject to government approval;

May issue additional shares through the company's board of

directors with the approval of shareholders; and

Government contact was limited to the issuance of GLIP's

shareholding license and a general notice pertaining to penalties for

illegal exporting.

COTCO

Is owned by ``all the people'';

Has managers that are hired following public notices of

vacancy, screening, and hiring negotiations; and

Has management that is evaluated by the employees of the

company. The selection and promotion of management are not subject to

any governmental entity's review or approval.

Based on the record evidence as verified, we find that there is a

de facto absence of governmental control of export functions of each of

the three companies. Consequently, COTCO, Gao Yao and GLIP have been

granted separate rates in our final determination.

Surrogate Country

Section 773(c)(4) of the Act requires that the Department value the

NME producers' factors of production, to the extent possible, in one or

more market economy countries that are (1) at a level of economic

development comparable to that of the NME country, and (2) significant

producers of comparable merchandise. The Department has determined that

Indonesia is the most suitable surrogate for purposes of this

investigation. Based on available statistical information, Indonesia is

at a level of economic development comparable to that of the PRC, and

is a significant producer of lighters (see, memorandum to the file from

Todd Hansen, dated December 5, Surrogate Country Selection and

memorandum from David Mueller to Susan Kuhbach, dated September 8,

1994, Lighters from the People's Republic of China and Surrogate

Country Selection.)

Fair Value Comparisons

To determine whether sales of lighters from the PRC to the United

States by respondents were made at less than fair value, we compared

the United States price (``USP'') to the foreign market value

(``FMV''), as specified in the ``United States Price'' and ``Foreign

Market Value'' sections of this notice.

United States Price

For all respondents, we based USP on purchase price, in accordance

with section 772(b) of the Act, because lighters were sold directly to

unrelated parties in the United States prior to importation into the

United States and because exporters sales price methodology was not

otherwise indicated.

We calculated purchase price based on packed, FOB foreign port

prices for unrelated purchasers in the United States and packed, CIF

prices, where appropriate. We made deductions for discounts, foreign

inland freight, containerization, loading, port handling expenses,

ocean freight and marine insurance, as indicated. When these services

were purchased from a market economy supplier and paid for in a market

economy currency, we used the actual cost. Otherwise, these charges

were valued in the surrogate country. In addition, we have relied upon

a price quote provided by an unrelated Hong Kong company to value

freight in those instances where Cli-Claque used a related trucking

company for the delivery of finished lighters.

At the request of the Department, on March 22 and 23, 1995,

PolyCity and Cli-Claque submitted revised U.S. sales and factors of

production information to reflect minor changes due to errors noted at

verification. In addition, PolyCity revised: the U.S. sales listing to

include additional sales that had been inadvertently omitted (see

Comment 8); foreign inland freight to include additional charges

incurred at the border; marine insurance and foreign brokerage and

handling to reflect costs incurred on a value basis rather than a per

piece basis; and ocean freight to reflect additional charges on certain

invoices and payment in Hong Kong dollars rather than U.S. dollars.

Cli-Claque's submission included small number of additional sales which

had been inadvertently omitted and revisions to foreign inland freight

figures on deliveries of finished lighters and purchases of inputs.

Pursuant to findings at verification, minor revisions were made to

COTCO's sales price. For Gao Yao, we adjusted USP for port handling

charges that had been paid in a market economy currency to a Hong Kong

company.

Foreign Market Value

In accordance with section 773(c) of the Act, we calculated FMV

based on factors of production reported by the factories in the PRC

which produced the subject merchandise for the five responding

exporters. The factors used [[Page 22362]] to produce lighters include

materials, labor, and energy. To calculate FMV, the reported factor

quantities were multiplied by the appropriate surrogate values from

Indonesia for those inputs purchased domestically from PRC suppliers.

Where inputs were imported from market economy countries and paid in a

market economy currency, we used the actual costs incurred by the

producers to value these factors (see, e.g. Final Determination of

Sales at Less Than Fair Value: Oscillating Ceiling Fans from the

People's Republic of China, 56 FR 55271, October 25, 1991). We adjusted

these input prices to make them delivered prices. We then added amounts

for overhead, general expenses and profit, the cost of containers and

coverings, and other expenses incident to placing the merchandise in

condition packed and ready for shipment to the United States.

In addition, we have made the following changes to our preliminary

calculations:

For PolyCity, we valued certain inputs purchased from

market-economy sources with market-economy currency using invoices

dated outside the POI. For inputs that were not purchased from market-

economy sources with market-economy currency, we used surrogate values

(see Comment 11).

For Cli-Claque, we calculated foreign inland freight based

on verified distances for packing materials and finished lighters. In

addition, we have relied upon a price quote provided by an unrelated

Hong Kong company to value freight in those instances where Cli-Claque

used a related trucking company for the delivery of imported inputs. We

have adjusted direct labor hours to reflect verified information.

Finally, to value the packing trays which were made by a factory

located in the PRC with imported inputs, we have used surrogate values.

For GLIP, we adjusted labor hours, butane usage,

electricity usage, certain lighter parts and packing materials to

reflect verified information. Also, we adjusted the prices paid to

market economy suppliers based on verified information.

For Gao Yao, we used surrogate values for inputs that we

verified were purchased from PRC suppliers, but had originally been

reported as purchased from market economy suppliers. We adjusted waste

and electricity figures to reflect verified information. In addition,

certain consumption figures were changed from a per kilogram basis to a

per-piece basis. Finally, the weights of certain lighter parts were

changed due to findings at verification.

For COTCO, we adjusted labor hours and consumption of

certain raw materials to reflect verified information. We also adjusted

the weights of certain lighter parts and packing materials based on

verified information.

In determining the surrogate price to be used for valuing the

remaining factors of production, we selected, when available, publicly

available published information (``public information'') from

Indonesia.

With the exception of butane, we used the Indonesian import prices

taken from the Indonesian Foreign Trade Statistical Bulletin--Imports,

December 1993 and April 1994 to value material inputs. Based on

discussions with U.S. Customs officials (see Memorandum to the File

from Todd Hansen, dated April 26, 1995, Appropriate HAS Numbers), we

have changed certain surrogate values to more accurately reflect the

cost of the input used.

For butane, the quantity imported into Indonesia was insignificant.

Therefore, for those PRC producers that did not import butane from

market economy sources, we relied on Indonesian export statistics, as

reported in the Indonesian Foreign Trade Statistical Bulletin--Exports,

December 1993 and April 1994.

We used Indonesian transportation rates taken from a September 18,

1991, U.S. State Department cable from the U.S. Embassy in Indonesia to

value inland freight between the source of the factor and the

disposable lighter factory.

To value electricity, we used the public information from the

Electric Utilities Data Book for Asian and Pacific Region (January

1993) published by the Asian Development Bank. To value labor amounts,

we have used figures for skilled and unskilled labor obtained from

Doing Business in Indonesia (1991) and the International Labor Office's

1994 Special Supplement to the Bulletin of Labor Statistics. We have

determined that these figure more accurately represent hourly wage

rates paid in Indonesia than the rate provided in the Department of

Labor's ``Foreign Labor Trends,'' which was the rate used in the

preliminary determination.

We adjusted the factor values, when necessary, to the POI using

wholesale price indices (``WPIs'') published by the International

Monetary Fund (``IMF'').

Because we were unable to locate appropriate information on factory

overhead in Indonesia, we relied upon data published by the Reserve

Bank of India pertaining to Manufacturing--metals, chemicals, and

products thereof. Because this figure includes indirect expenses and

water, we have not calculated separate costs for these inputs.

For general expense percentages, we also used the Reserve Bank of

India data. For profit, we used the statutory minimum of eight percent

of materials, labor, factory overhead, and general expenses. We could

not obtain Indonesian values for either general expenses or profit. The

Indian profit rate was less than the statutory minimum of eight

percent.

We added packing based on Indonesian values obtained from the

Indonesian Foreign Trade Statistical Bulletin--Imports, December 1993

and April 1994.

Best Information Available (BIA)

In this investigation, some PRC exporters failed to respond to our

questionnaire. We have determined that those exporters should receive

rates based on BIA. In addition, because we presume all exporters to be

centrally controlled, absent verified information to the contrary, in

accordance with section 776(c) of the Act, we have assigned a margin

based on BIA to all exporters who have not demonstrated their

independence from central control. This determination is consistent

with our use of a BIA-based ``PRC-Wide'' rate in other recent

investigations (see e.g., Saccharin).

In determining what to use as BIA, the Department follows a two-

tiered methodology, whereby the Department normally assigns less

adverse margins to those respondents that cooperated in an

investigation and more adverse margins for those respondents that did

not cooperate in an investigation. As outlined in the Antifriction

Bearings (Other than Tapered Roller Bearings) and Parts Thereof from

the Federal Republic of Germany; Final Results of Antidumping

Administrative Review (56 FR 31692, 31704-05, July 11, 1991), when a

company refuses to provide the information requested in the form

required, or otherwise significantly impedes the Department's

investigation, it is appropriate for the Department to assign to that

company the higher of (a) the highest margin alleged in the petition,

(b) the highest calculated rate of any respondent in the investigation,

or (c) the margin from the preliminary determination for that firm.

We consider all PRC exporters that did not respond, or otherwise

did not participate in the investigation, to be uncooperative and are

assigning to them the highest margin based on information submitted in

an amendment to the petition.

Critical Circumstances

In our notice of Preliminary Determination of Critical

[[Page 22363]] Circumstances: Disposable Pocket Lighters from the

People's Republic of China, 60 FR 436 (January 4, 1995), we found that

critical circumstances exist with respect to imports of disposable

lighters from COTCO and Cli-Claque.

Pursuant to section 733(e)(1) of the Act and 19 CFR 353.16, we

based our determination for COTCO on a finding of (1) an imputed

knowledge of dumping to the importers because the estimated dumping

margins were in excess of 25 percent, and (2) massive imports of

disposable lighters over a relatively short period, based on an

analysis of respondent's shipment data. Because Cli-Claque did not

submit shipment information for the preliminary critical circumstances

determination, we determined, as best information available, that

critical circumstances exist. Cli-Claque submitted the requested

information on January 6, 1995. For non-respondent exporters, we

determined that critical circumstances do exist.

Respondents' shipment information has now been verified. The

Department affirms the analysis as explained in its preliminary finding

with respect to PolyCity, Gao Yao, GLIP and COTCO. Accordingly, we

determine that critical circumstances do not exist with respect to

imports of disposable lighters from PolyCity, Gao Yao, and GLIP and do

exist with respect to COTCO and all non-responding exporters. With

respect to Cli-Claque, we also determine that critical circumstances do

exist (see Comment 13).

Verification

As provided in section 776(b) of the Act, we verified the

information submitted by respondents for use in our final

determination. We used standard verification procedures, including

examination of relevant accounting and production records, and original

source documents provided by respondents. Our verification results are

outlined in detail in the public version of the verification report,

available in Room B-099 of the Main Commerce Building, 14th and

Constitution, Washington DC 20230.

Interested Party Comments

General Issues

Comment 1: Separate Rates

Petitioner argues that an exporter should not receive a separate

rate unless the producer supplying the exporter can demonstrate that it

is also independent of central government control. The fact that an

exporter is independent from central government control provides no

guarantee that the producer or producers supplying it are also free of

government control. Since respondents have not overcome the presumption

that their Chinese disposable lighter producers are government

controlled, and the exporters merely serve as middlemen for the sale of

lighters to the U.S., the exporters should be assigned the ``PRC-Wide''

rate.

Petitioner questions whether the Department originally intended to

apply the separate rates analysis only to exporters. Petitioner points

to 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), where the Department enumerated separate rates for

``producer/exporter'' combinations. However, in recent cases, such as

Final Determination of Sales at Less Than Fair Value: Coumarin from the

People's Republic of China (59 FR 66899, December 28, 1994) (Coumarin),

the Department has indicated that it is intentionally restricting its

analysis of freedom from government control solely to exporters.

Petitioner argues that under this policy, the Department could find

itself in the position of certifying that an exporter is independent

and, therefore, can be assigned a separate rate, while the exporter is

purchasing from a producer who would not be allowed a separate rate

because of government control. Petitioner does not believe that this is

what the Department intended when it enunciated its separate rates

analysis in Sparklers. Petitioner also questions why the market

oriented industry (``MOI'') test looks at the producer and not the

exporter, while the separate rates test does the opposite.

Gao Yao, GLIP, and COTCO argue that the independence of their

suppliers is not relevant to the Department's determination of whether

Gao Yao, GLIP, and COTCO should receive separate rates. The Department

has sought, received, and verified information concerning the

independence of Chinese exporters. Gao Yao, GLIP, and COTCO argue that

examining the suppliers is irrelevant and conflicts with well-

established Department policy.

Both PolyCity and Cli-Claque argue that they are independent Hong

Kong companies, and the Chinese government does not own and cannot

control PolyCity's or Cli-Claque's activities. Therefore, they are

entitled to separate rates.

DOC Position

The separate rates policy reflects the Department's concern that

the Chinese government may interfere in the export activities of

companies selling to the United States and manipulate these companies'

export prices. Where an exporter is able to demonstrate that its export

activities are not controlled by the government, then the Department

will recognize that independence by awarding the exporter a separate

rate (see, e.g., Saccharin).

Petitioner's argument that trading companies are merely middlemen

suggests that the Chinese government manipulates the price of exports

to the United States (1) by controlling the price between the factory

and the trading company, or (2) by controlling the exporter's price to

the United States through the producer. With respect to the first

concern, the manufacturer's price to the exporter does not play any

role in the Department's calculation. U.S. price is based on the

exporter's (usually a trading company's) price to the United States and

FMV is based on the producer's factors of production. Therefore,

potential government control of prices between the producers and

exporters is irrelevant. Moreover, where the producer is not the

exporter, we have determined there is no evidence that the producer is

involved in the export activities of the exporter.

Because the exporter/trading company sets the export price, it is

appropriate to focus the separate rates analysis on the exporter. In

contrast, the purpose of the MOI test is to determine whether foreign

market value can be determined using prices or costs in the NME. Thus,

the test focuses on government control of the domestic industry, rather

than on export activities. Thus, petitioner's attempt to draw a

parallel between a separate rates analysis and an MOI analysis is

misplaced.

Comment 2: ``Tied'' Antidumping Duty Rates for Exporter/Supplier

Petitioner argues that where the Department issues a separate rate

to an exporter, that rate should be applied to the producer/exporter

combination that gave rise to the rate. Consequently, if the exporter

later purchases from another producer, the ``PRC-Wide'' rate should

apply. Such ``tied'' rates would prevent producers from channeling

merchandise out of the PRC through the exporter with the lowest rate.

Petitioner agrees with the Department's decision to tie Gao Yao and

its manufacturer when it assigned them a zero margin in the preliminary

determination, making any other manufacturers shipping through Gao Yao

subject to the ``PRC-Wide'' rate. However, petitioner contends that the

Department has refused to recognize [[Page 22364]] that other exporters

have been given a free hand to export disposable lighters from any

producer in China to the United States at the rate applicable to that

exporter. Consequently, producers will sell through exporters with low

rates, thereby avoiding the higher rates found in this investigation,

particularly the ``PRC-Wide'' rate. Because of the distinction made for

zero margins, petitioner argues that it is more beneficial for an

exporter to have a small positive margin than to have a zero margin, as

an exporter with a small positive margin may export for any producer at

that small margin. Therefore, petitioner requests that the Department

issue antidumping duty rates for exporter/producer combinations.

Gao Yao, GLIP, and COTCO state that petitioner's conclusion

regarding the channeling of all exports through the exporter with the

lowest dumping margin is erroneous. In the past, trading companies

which export to the United States have received individual rates

irrespective of their suppliers. COTCO and GLIP state that it is

appropriate for Gao Yao to receive a ``tied'' rate for merchandise sold

and manufactured by Gao Yao, because Gao Yao is a manufacturer who

exports, not a trading company. COTCO and GLIP state that, as trading

companies, they should not receive a ``tied'' rate even if they receive

a zero margin. Gao Yao, GLIP, and COTCO argue that even if a new

factory made shipments of goods to the United States through an

exporter with a lower dumping rate, the subsequent antidumping review

would require a factors analysis of the supplying factory.

Cli-Claque maintains that it is an independent Hong Kong company

that competes with all other lighter manufacturers. It has no incentive

or desire to help its competitors ship to the United States. Moreover,

if Cli-Claque shipped other companies' lighters to the United States,

Cli-Claque would risk losing its low dumping margin in subsequent

reviews.

DOC Position:

We have determined that the pairing of exporters and producers for

calculating antidumping rates is inappropriate under the circumstances

discussed above. Recent Department practice has been to assign rates

only to exporters except in the case of producer/exporter combinations

that have been found not to be dumping. (See e.g., Pencils, Saccharin,

Coumarin, and Final Antidumping Duty Determination: Certain Cased

Pencils from the People's Republic of China, 59 FR 55625, November 8,

1994, where the Department assigned a zero rate to a producer/exporter

for purposes of exclusion from the order, but the remaining rates were

assigned to exporters only.) Where a producer/exporter combination is

found not to be dumping, it is appropriate to publish a rate that

applies to that producer/exporter combination because they are excluded

from the order and, therefore, future administrative reviews. However,

all other exporters remain subject to the order and administrative

reviews. Hence, contrary to petitioner's assertion, those exporters

have no incentive to export the output of producers that might yield a

high FMV unless they adjust their U.S. prices accordingly. If they fail

to do so, an administrative review would result in an assessment of

additional duties, with interest, and a higher cash deposit rate for

future entries.

Comment 3: Overhead and Energy

COTCO, Gao Yao and GLIP argue that the cable from the U.S. Embassy

in Jakarta, relied upon by the Department in its preliminary

determination, does not state if indirect labor and electricity are

included in overhead. Since this is unclear, COTCO, Gao Yao and GLIP

argue that the Department should assume, as it has in past cases, that

indirect labor and electricity are included in factory overhead. (See

Sebacic Acid from the People's Republic of China, (59 FR 28053, 28060,

May 31, 1994) and Shop Towels of Cotton from the People's Republic of

China (56 FR 4040, 4042 , February 1, 1991).) COTCO, Gao Yao and GLIP

also state that the activities of the indirect laborers are not

directly related to production and would normally be included in

overhead.

PolyCity states that the standard cost accounting treatment

throughout the world for electricity and other utilities is to include

these items in factory overhead. According to PolyCity, the Department

double-counted these items when it separately included values for them

in addition to calculating a factory overhead rate.

Petitioner acknowledges that the factory overhead rate in the U.S.

Embassy cable does not make clear whether indirect labor is included.

However, since COTCO, Gao Yao and GLIP argue that there is very little

indirect labor involved in lighter production, petitioner states that

there would be little, if any, double counting if indirect labor were

valued separately.

DOC Position

For this final determination, we are using information from the

Reserve Bank of India Bulletin, (``RBIB'') December 1993 to value

factory overhead. We were unable to obtain an overhead rate for light

manufacturing plants in Indonesia. Therefore, we turned to India, where

a manufacturing overhead rate was available. We have determined that

this overhead figure represents the best overhead figure for the

industry in question because it is industry specific.

In determining what items should be valued separately from factory

overhead, we examined the costs included in the particular overhead

rate being used. Since the RBIB factory overhead rate does not include

indirect labor and energy, we are assigning separate values for these

items, notwithstanding respondents' arguments about standard cost

accounting practices.

Comment 4: Date of Sale

Petitioner argues that the date of sale should be the date of Cli-

Claque's and PolyCity's facsimile confirmation, not the date of

invoice. Petitioner contends that Cli-Claque and PolyCity negotiate

price, quantity, and estimated delivery date by phone and confirm these

terms by facsimile. However, these companies reported the date of

invoice as the date of sale. Because of a drastic increase in imports

during June and the first half of July, petitioner is particularly

concerned about any sales confirmed in the POI, but not invoiced in the

POI.

PolyCity and Cli-Claque state that the Department chose the date of

sale based on our normal methodology and that they correctly complied

with its request.

DOC Position

At verification, we confirmed that the appropriate date of sale was

the date PolyCity and Cli-Claque issued the invoice which accompanied

the shipping documentation. We noted that changes in delivery terms and

quantity did occur between the facsimile confirmation and the date of

invoice. Although the verification report stated that the facsimile was

a ``confirmation'' facsimile, that statement was not meant to imply

that all the terms of sale were agreed upon and could not change. The

facsimile, as verified, is merely an acknowledgement that a sales

transactions will occur between the company and its customer.

Generally speaking, the Department will consider the date of sale

to be the date on which all substantive terms of the sale are agreed

upon by the parties. This normally includes the price and quantity. If

the terms of sales agreement or contract permit the revision of prices

up to the date of invoice, shipment, or [[Page 22365]] the purchase

order, then it is the Department's practice to base the date of sale on

the shipment date, invoice date, or the purchase order date, depending

upon which date the revisions are made. Thus, we accept the date of

sale as verified.

Comment 5: Non-market Economy Currency

PolyCity and petitioners have advanced arguments regarding the

valuation of certain inputs purchased from market economy suppliers,

that cannot be addressed in this notice because of their proprietary

nature. These comments are addressed in a separate memorandum to the

file.

Comment 6: Appropriate BIA Rate

Petitioner maintains that the Department should use the highest

rate (i.e., 346.55 percent) alleged in the petition as the ``PRC-Wide''

rate. Petitioner calculated the FMV used in this margin calculation

based on a combination of Indian input values and its own costs.

Petitioner states that because the Department believed that it relied

too heavily on its own costs and that India may not be the most

appropriate surrogate country, the Department requested that petitioner

recalculate FMV based on the price of lighters exported from the

Philippines. (The Philippines is a known producer of disposable

lighters and, in prior cases, the Philippines had been determined to be

at a level of economic development comparable to the PRC.) The

estimated dumping margin using the Philippine export data is 197.85

percent. Petitioner argues that, although it submitted additional

information requested by the Department (offered as an alternative set

of documents to supplement the exhibits in the original petition), the

margin calculated in the original petition has not been discredited.

DOC Position

We are continuing to use the rate based on Philippine export data.

We believe this rate is appropriate because: (1) The original petition

rate relies too heavily on petitioner's own costs; (2) we initiated the

case on the basis of the Philippine export data; and (3) India is not a

significant producer of lighters.

Company Specific Issues

PolyCity Industrial Limited

Comment 7: BIA

Petitioner argues that the Department should use BIA in determining

the antidumping duty margin for PolyCity because, due to the numerous

corrections submitted to the Department since the preliminary

determination and the errors discovered at verification, the

reliability of PolyCity's data is called into question. In particular,

petitioner notes: (1) Every sale examined at verification required

revision; (2) foreign inland freight, ocean freight, and marine

insurance were misreported; (3) PolyCity used an unusual sales process;

and (4) PolyCity's method of documenting input purchases lacked

consistency. Petitioner contends that PolyCity had more than adequate

time to correct these errors in the numerous submissions PolyCity filed

between the preliminary determination and verification. Petitioner

argues that these facts, along with the inaccuracies uncovered at

verification, make PolyCity's data unreliable. Therefore, the

Department should use uncooperative BIA in calculating PolyCity's

margin.

If the Department does not use total uncooperative BIA, petitioner

then argues that the Department should use partial BIA for these costs.

Petitioner contends that since PolyCity failed to report certain

additional charges for foreign inland freight, reported ocean freight

in the wrong currency, and miscalculated marine insurance, using BIA

values for these factors is appropriate.

PolyCity maintains that accepting petitioner's allegations would

run counter to the Department's practice and regulations. PolyCity

states that all of its submissions and corrections have been timely

filed. The verification at PolyCity was routine, and the Department

treated it routinely. The Department typically makes corrections and

adjustments at verification. The corrections discovered at verification

were merely errors, not hidden or misrepresented information. In

addition, PolyCity maintains that it erred in favor of the petitioner,

rounding numbers up on most observations. To use BIA in this situation

would be a radical departure from the Department's rules and practice.

Hence, the Department should use PolyCity's verified information.

DOC Position

We agree with respondent that the final determination should be

based on PolyCity's verified data. The items described by petitioner

are minor changes that were corrected for this final determination.

Omissions from the response were inadvertent and corrected information

was verified. We are satisfied that the record is now complete and

accurate regarding this company's sales of subject merchandise during

the POI.

Comment 8: New Sales

Petitioner states that the three new invoices discovered at

verification should be included in the margin calculations and should

be assigned the highest BIA rate. Since these sales were not reported

in a timely manner, petitioner argues that the Department should assign

a unit margin for each of these sales based on BIA. Due to the numerous

errors found at verification, petitioner recommends using the

uncooperative BIA rate. For one sale, which was added to PolyCity's

sales listing after the preliminary determination, petitioner

recommends using the cooperative BIA rate.

PolyCity states that three sales were inadvertently excluded from

the sales listing but that they have now been included. Therefore, BIA

for these sales is unwarranted. The one sale petitioner alleges was

added to PolyCity's sales listing after the preliminary determination

was, in fact, included in the first sales listing and every listing

since. Therefore, it should not be treated differently than the other

sales that have been reported.

DOC Position

We determine that the omissions described above were inadvertent

and the corrected information was verified. The new sales represent a

small percentage of total sales during the POI and, at verification,

were not hidden or misrepresented. Further, we are satisfied that the

record is now complete and accurate as to this company's sales during

the POI of subject merchandise. Accordingly, the reported information,

as corrected based on verification, is the appropriate basis for this

LTFV determination for PolyCity.

Comment 9: Untimely Submissions

Petitioner argues that changes and additions to PolyCity's data

which were submitted on February 21, 1995, should be rejected as

untimely filed with the Department.

PolyCity states that this submission was timely filed in accordance

to instructions given by Department officials. PolyCity argues,

however, that petitioner's comment should not have been included in the

brief filed on April 10, 1995, since only comments on verification

reports were to be filed. Accordingly, PolyCity argues that this

comment cannot be included in the record.

DOC Position

We agree with respondent, in part. Respondent's submissions were

timely filed, in accordance with our instructions. However, we disagree

with [[Page 22366]] respondent that petitioner's comments should have

been rejected. Due to miscommunication between the Department and the

parties in this case, parties were unclear where to report company-

specific issues that were not verification issues. Therefore, we have

determined that this argument was properly included in this brief and

have allowed it to remain in the record of this investigation.

Comment 10: Use Actual Labor Rates

Respondent argues that the Department should use the actual wage

rates paid by PolyCity to its Chinese workers. In the past, the

Department has used actual costs for certain factors of production, if

these costs represent accurate, market-based values. Since the workers

of PolyCity freely negotiate their wages without interference from the

central government (e.g. unemployed workers wait at the factory gate to

interview for open positions,) respondent believes that there is no

basis for the use of surrogate values.

If the Department rejects the use of PolyCity's wage rates,

respondent asks that we use the average of the wages on the record for

unskilled factory0 workers in Indonesia. The rate used by the

Department in its preliminary determination based on locally engaged

U.S. Embassy personnel in Indonesia is not a valid surrogate for the

cost of unskilled factor labor in China.

DOC Position

As stated above, we have determined that the PRC is a non-market

economy country for purposes of this determination. Moreover, there has

been no claim and we have not found that available information would

permit us to determine FMV under the market economy provisions of the

antidumping duty law (see section 773(c)(1)(b) of the Act). Hence, we

are basing FMV on the Chinese factors of production values in a

surrogate country.

PolyCity points to Lasko Metal Prods., Inc. v. United States 810 F.

Sup. 314 (CIT 1992) aff'd 43 F.3d 1442 (Fed. Cir. 1994) to support the

proposition that the Department can use respondent's actual costs when

those costs represent accurate market-economy values. However, Lasko

addresses Department's practice of using respondent's actual costs in

narrow circumstances--i.e., where the input is purchased from a market

economy country and paid for in a market economy currency. We do not

use values within the non-market economy.

Moreover, in the one case cited by PolyCity (Final Determination of

Sales at Less Than Fair Value: Chrome Plated Lug Nuts From the People's

Republic of China, 56 FR 46153, 46154, September 10, 1991), the

Department was investigating an MOI claim, not a claim that labor was

market oriented. In addition, the Department did not find that wages in

the PRC were market determined. To the contrary, we stated,'' * * * we

have concluded that respondent has not overcome the presumption of

state control with respect to labor and that the PRC wage rate should

not be used for purposes of the factors of production analysis.''

Comment 11: Manufactured Parts vs. Purchased Parts

In cases where PolyCity both purchases a part and produces the same

part from imported raw materials, it argues that the price it pays for

the purchased part should not be used to value this input. Instead, the

Department should construct a value using the factors needed to produce

the part.

PolyCity contends that valuing the part using the price paid for

the finished part would overstate the amount of labor and overhead

allocated to PolyCity's other activities. This is because PolyCity's

labor and overhead figures include labor and overhead to produce these

parts, and the Department does not have the necessary information to

back out these amounts. Alternatively, if the Department does not

accept PolyCity's proposal to use solely a constructed value, then it

should value the parts on a weight-average basis between the purchased

and the manufactured parts.

DOC Position

We disagree with respondent that we should use the factors

methodology for all of the parts consumed during the POI. Contrary to

PolyCity's assertion, to use the factors methodology for all parts

consumed during the POI would understate the labor and overhead because

it would not include additional labor and overhead needed to produce

those parts. Thus, we have only applied the factors methodology for

inputs actually produced by PolyCity.

For the portion of the parts used which PolyCity purchases from

market economy suppliers in a market economy currency, we valued the

part using an invoice price outside the POI. While our first preference

would be an invoice price during the POI, in this investigation we are

accepting actual, pre-POI prices paid to a market economy producer in

market economy currency because such prices, although outside the POI,

are the best available information on the value of these inputs and are

more accurate than surrogate values. In many instances, the Department

uses surrogate values that are from pre-POI time periods and are

generally further removed from the POI than the pre-POI market economy

prices. Using pre-POI market economy prices that the producer actually

paid is consistent with that practice.

Comment 12: Jakarta vs. Non-Jakarta Rates

PolyCity maintains that the Department should use a non-Jakarta

wage rate in valuing labor. It states that wage rates in Jakarta are

not an appropriate surrogate for wages in Chinese factories because

Chinese lighter factories are located in small, provincial towns, not

major cities like Jakarta. Moreover, PolyCity states that not one of

the Indonesian lighter factories is located in Jakarta.

DOC Position

We disagree that we are required ``to customize'' factor values to

reflect the conditions of certain PRC respondents. We have used ILO

data pertaining to Indonesian wage rates to value the labor input for

all PRC producers. This data reflects an Indonesian-wide average, not

the wage rate in Jakarta.

Cli-Claque Company Limited

Comment 13: Electronic Lighters

Cli-Claque claims that its flat, refillable electronic lighter,

referred to as a card lighter, is not disposable and should not be

included within the scope of the investigation. In contrast to flint

lighters, this Cli-Claque lighter uses a piezo electronic lighting

mechanism. Further, because of its unique flat shape, the lighter must

be produced from a more costly, higher grade of plastic.

With respect to channels of distribution, Cli-Claque sell these

lighters at wholesale to tobacco and other companies for use as

promotional items. Because these lighters are considerably more costly

to produce, Cli-Claque states that it could not sell them at retail in

competition with ordinary flint lighters.

Throughout the investigation, petitioner has maintained that the

existence of an electric lighting mechanism alone should not be a

determining factor in deciding whether a lighter is or is not

disposable. Petitioner cites examples of disposable lighters that use

the piezo electric ignition mechanism. Regarding ultimate use of the

lighter, petitioner maintains that it is the same as the flint

lighter--to light various tobacco products. Regarding channels of

distribution, petitioner states that Cli-Claque's

[[Page 22367]] lighters could compete at retail with flint lighters, if

the manufacturer imprinted designer wraps or logos to entice customers

to pay a somewhat higher price.

DOC Position

Although Cli-Claque's card lighters are not currently sold at

retail but are sold at wholesale to tobacco and other companies as

promotional items, these lighters are not the only type of lighters to

be sold to companies as promotional items. The standard, disposable

butane lighter is also sold to companies as a promotional item. Thus,

the card lighters are not unique in their use as promotional items,

because standard, disposable lighters clearly serve this purpose as

well.

Also, the existence of a piezo electric ignition mechanism is not

decisive. Several brands of disposable lighter employ the piezo

mechanism rather than the more common flint ignition system. The fact

that a lighter is refillable is also not controlling, as indicated in

the scope of this investigation, which recognizes that a disposable

lighter may be refillable or non-refillable.

Further, card lighters come in both refillable and non-refillable

versions. The lighters are identical in every respect with the

exception of the refill valve on the refillable lighter. Both lighters

feature the more expensive plastic and the piezo electric lighting

mechanism. The addition of a refill value to the card lighter is

insufficient to warrant reclassifying it as a non-disposable lighter.

Therefore, disposable lighters with refill valves clearly fall within

the scope of the investigation.

Comment 14: Critical Circumstances

Cli-Claque argues that critical circumstances do not exist. Cli-

Claque maintains that the increase in July 1994 is due to a shipment to

a U.S. customer to meet the July 12, 1994 deadline. This deadline,

established by the Consumer Products Safety Commission's (``CPSC'').

The CPSC barred the import of disposable lighters that did not meet

more stringent safety requirements after July 1994. Thus, Cli-Claque

argues that this shipment did not result from the filing of the

antidumping petition, but from U.S. regulatory requirements imposed by

CPSC.

Cli-Claque argues that, with respect to the history of dumping,

although the Council of European Communities found dumping of gas-

fueled, non-refillable pocket flint lighters, the margin in the case of

China was only 16.90 percent, well below the Department's 25 percent

threshold. In addition, according to Cli-Claque, the European

determination did not cover piezo-electric lighters, but only flint

lighters. Since piezo-electric lighters represent a significant

percentage of the lighters exported to the United States by Cli-Claque,

the Department should not impute knowledge of dumping to Cli-Claque.

Moreover, Cli-Claque maintains that the Department cannot impute

knowledge of dumping to Cli-Claque's importers since the Department

found a dumping margin of only 7.03 percent. The Department's practice

has been to impute such knowledge only where it finds a preliminary

margin equal to or greater than 25 percent.

Petitioner argues that although the European determination only

covers flint lighters, the Department has preliminarily determined that

electronic lighters are in the same class or kind of merchandise as

flint lighters. In addition, petitioner argues that, as noted in the

verification report, Cli-Claque used the date of sale, rather than the

shipment date, for reporting monthly shipments. According to

petitioner, this incorrect reporting understates the massiveness of

imports by shifting shipments from the post-petition filing period to

the pre-petition filing period. Finally, petitioner argues that

although Cli-Claque claims that the increase in July 1994 was due to a

shipment to a customer to meet the July 12, 1994 deadline established

by the CPSC, the Department has repeatedly held that the statute and

regulations make no mention of weighing other factors or examining

alternative causes as to the reason for increased imports.

Petitioner also argues that the Department should continue to find

that critical circumstances exist with respect to imports of lighters

from Cli-Claque. Petitioner maintains that the first prong of the

statutory requirement for critical circumstances, i.e., knowledge of

dumping, is fulfilled. Petitioner states that disposable lighters from

the PRC have been found to be dumped in both the European Union and

Argentina. In 1991, the European Commission (EC) imposed antidumping

duties on gas-fueled, non-refillable pocket flint lighters originating

in China. The fact that the margin on lighters from China was only 16.9

percent is irrelevant for this prong of the knowledge test. According

to petitioner, the Department requires a 25 percent margin on imports

only when the Department is imputing knowledge of dumping under the

second alternative criteria for knowledge of dumping, not when the

Department is inquiring whether there is a history of dumping in the

United States or elsewhere under the first alternative criteria for

knowledge of dumping.

DOC Position

We disagree with petitioner that a history of dumping exists with

respect to disposable lighters. We do not require the scope of our

proceeding to match exactly the scope of the foreign proceeding. Since

the lighters examined by the EC are subject to this investigation, we

find that there is a history of dumping with respect to the class or

kind of merchandise as a whole and, by extension, with respect to Cli-

Claque. We have established a history of dumping with respect to Cli-

Claque and we agree with petitioner that in evaluating this criterion,

the size of the margin found by the EC is irrelevant. Because there is

a history of dumping, we are not required to consider whether the

importer knew or should have known that the exporter was selling the

subject merchandise at less than fair value.

We have also considered whether imports of the merchandise have

been massive over a relatively short period of time in accordance with

19 CFR 353.16(f) and (g). Based on verified information on shipments by

Cli-Claque, we find that imports have been massive over a relatively

short period of time, even when taking into account the increase in

volume in advance of the July 1994 deadline for importing non-

childproof lighters. (For a more detailed analysis, see the proprietary

Calculation Memorandum for this final determination.) Therefore, we

find that critical circumstances exist with respect to imports on

behalf of Cli-Claque because a history of dumping exists and because

imports have been massive over a relatively short period of time.

Comment 15: Defective Lighters

Cli-Claque argues that there is no need to adjust total production

figures to account for defective lighters, as petitioner maintains,

since the production figures used in the factor of production

calculations are already net of defective lighters sold to customers in

the PRC which were later returned to Cli-Claque.

DOC Position

We agree with petitioners and have made an adjustment to the cost

of manufacture to account for the defective lighters sold which were

later returned to Cli-Claque.

Comment 16: Water and Diesel

Petitioner argues that the Department should not include water and

diesel in overhead, but should calculate values [[Page 22368]] for

these inputs separately, using surrogate values. Petitioner maintains

that the diesel fuel used to power the generators is a direct factor of

production in producing lighters, and not, as in some other cases, an

incidental expense. As a direct factor of production, diesel fuel

should be included as a separate factor of production and not included

as a part of factory overhead.

Cli-Claque argues that water should be treated as an overhead item.

With regard to diesel fuel, Cli-Claque has submitted the total kilowatt

hours of electricity used because electricity is the direct input used

in the production process. Cli-Claque asserts that if the Department

were to also include diesel fuel used to produce electricity as a

factor of production, it would be double-counting the cost of

electricity.

DOC Position

We agree with respondents that water should be included in factory

overhead and, therefore, should not be valued separately. Because it is

normal practice to include such cost in factory overhead, and the RBIB

data did not indicate to the contrary, we find it reasonable to presume

that water is included in the overhead value we used (See Saccharin).

We also agree with Cli-Claque that, for those companies that

generate electricity using diesel-powered generators, inclusion of

diesel fuel and electricity as separate factors of production would

result in double-counting. Since diesel fuel is the factor actually

used by these companies, we have used the diesel fuel input in our

calculation of FMV, where possible. However, for some companies this

was not possible and, instead, we valued the electrical output of the

generators as the best available information.

Comment 17: Labor Hours

Petitioner argues that the Department should adjust labor hours

used to make the electronic lighter caps because, at verification, the

Department noted differences for the total number of hours worked by

unskilled labor in the metal workshop.

Cli-Claque maintains that no adjustment should be made to its labor

calculations for the metal workshop and that petitioner's comment on

this point is based on a misreading of the verification report.

According to Cli-Claque, as stated in the verification report, the

labor hours per month for the metal workshop were calculated by

multiplying the number of days per month a machine was in operation by

the average labor hours worked per day. The difference, cited by

petitioner, was not a discrepancy between the data reported and the

figure verified but the difference between the skilled and unskilled

hours worked per day in the metal workshop.

DOC Position

We agree with respondent. Our discussion in the verification report

was to note only the difference in the number of hours worked between

skilled and unskilled workers in the metal workshop. We did not note

any discrepancies in the information we reviewed.

Comment 18: Electroplating

Petitioner argues that the Department should assign appropriate

surrogate values for electroplating as best information available since

electroplating was done by a non-market economy source. In addition,

petitioner argues that Cli-Claque likely incurred transportation

charges for shipping lighter caps for electroplating. Therefore,

surrogate values for these transportation charges should also be

included.

Respondent argues that electroplating merely adds a finish to caps

produced by Cli-Claque. The Department reviewed the invoice provided by

the subcontractor at verification and found that the charges were

insignificant.

DOC Position

Based on information reviewed at verification, we agree with

respondent that electroplating was an insignificant cost, and would be

included in the surrogate overhead value. We disagree with petitioner's

characterization of the Department's practice, i.e., if a material is

used in the production process, it should be included in the direct

materials calculation. As stated in Saccharin, it is standard practice

to classify certain inputs as variable overhead. Electroplating is

infrequently used in the production process, is small in value relative

to the total cost of manufacturing the product and, hence, would be

included in the surrogate country overhead value. Therefore, we have

not valued it separately.

Gao (HK) Hua Fa Industrial Co. Ltd.(Gao Yao)

Comment 19: Market Economy Inputs Originally Reported in Renminbi (RMB)

Petitioner states that the Department should use surrogate values

for all inputs Gao Yao reported to the Department in Renminbi (RMB),

but actually purchased in Hong Kong dollars. Petitioner argues that Gao

Yao incorrectly reported purchases based on Gao Yao's calculation of

the exchange rate.

Gao Yao argues that certain accounting records are maintained in

RMB but this should not be grounds for using surrogate values. Gao Yao

states that the discrepancy caused by its calculation of the exchange

rate had a negligible effect on import prices, and the Department

should use market economy prices for material inputs purchased from

market economy suppliers.

DOC Position

When a respondent purchases imports from a market economy and pays

in a market economy currency, the Department prefers using the actual

price of that input rather than a surrogate value, (see, e.g., Final

Determinations of Sales at Less Than Fair Value: Oscillating Fans and

Ceiling Fans from the PRC, (56 FR 55271, 55275, October 25, 1991),

upheld Lasko Metal Products v. U.S. 810 F. Sup. 314, Aff'd, 43 F. 3rd

1142 (Fed. Cir. 1994)). For purposes of our final determination, we

have used actual, verified prices for those inputs which were purchased

by Gao Yao from a market economy supplier and paid for in market

economy currencies.

Comment 20: Natural Gas

Petitioner argues that the Department should include natural gas in

its calculation of Gao Yao's FMV since it reported that it uses natural

gas.

Gao Yao states that the reference in its response to ``natural

gas'' was incorrect. The input in question was butane--a factor which

was separately reported. According to Gao Yao, the Department verified

that it did not use natural gas as an energy source.

DOC Position

We agree with respondent. At verification, we determined no natural

gas was being used in the production process.

Comment 21: Port Handling Charges and Rejected Lighters

Petitioner also asserts that the Department should adjust Gao Yao's

production information to reflect lighters which failed internal

quality control inspection.

DOC Position

We agree with petitioner. We have adjusted our calculation of FMV

to account for lighters which were unsaleable. [[Page 22369]]

Guangdong Light Industrial Products Import and Export Corporation

(GLIP)

Comment 22: Governmental Ownership and Independence

Petitioner states that GLIP should not be granted a separate rate

because a portion of the company's shares are held by a governmental

entity. Petitioner argues that, while no evidence of governmental

interference was found during verification, the fact remains that

shares of the company are held by the government and, since GLIP only

transformed to a shareholding company shortly after the POI,

circumstances may change inciting the State Asset Management Bureau to

take actions which interfere in the company's operations.

Petitioner states further that not enough is known about the level

of governmental control exerted over GLIP during the POI, when the

company was still owned by ``all the people.'' Accordingly, petitioner

argues that GLIP should not be granted a separate rate in this

investigation and should be assigned the ``PRC-Wide rate.''

DOC Position

During verification, the Department examined all correspondence

files pertaining to the period prior to the POI, the POI, and the

period after the POI. We also examined bank records during the POI and

found no evidence of government control over the company activities. In

addition, based on discussions with GLIP officials, described in detail

in our verification report, that GLIP's management has not changed

since the company's transformation from a company owned by ``all the

people'' to a company owned by shareholders. It is not the Department's

practice to deny eligibility for a separate rate based on speculation

that a government might someday try to influence a company's

operations. If this did occur, a future administrative review would

analyze such government influence in its determination of whether to

grant a separate rate for this company. Currently, based on our de

facto analysis of governmental control over the company's export

activities, we conclude that GLIP is independent of government control.

(See Separate Rates discussion).

Comment 23: Cost Factors Should be Adjusted for Variances

Petitioner states that the Department should adjust the standard

usage amounts for materials and labor when calculating FMV for the

lighters sold by GLIP to account for variances from standard observed

at verification. Petitioner additionally states that since warehouse

withdrawal tickets are the only method for establishing variances for

material usage, the Department should use these tickets to calculate

variances for material usage.

DOC Position

We have adjusted labor figures to account for variances observed

during verification for purposes of our final determination. We have

based material usage on reported amounts, however, because the

variances calculated using warehouse tickets appeared to be largely

influenced by the amount of raw materials in work-in-process. Since the

producer of lighters did not maintain records of raw materials

inventory in work-in-process, it is not possible to calculate actual

consumption.

Comment 24: Butane Consumption

Petitioner states that the Department should use gross consumption

figures for butane in calculating GLIP's FMV for purposes of its final

determination.

DOC Position

We agree with petitioner, and have made this adjustment for

purposes of our final determination with respect to GLIP. Factory

officials stated at the beginning of verification that they had

inadvertently reported the net amount of butane in the final product in

the company's response to the Department's antidumping questionnaire

rather than the gross amount of butane used in producing the lighters.

We verified the correct amounts and have used them in this

determination.

China National Overseas Trading Corporation (COTCO)

Comment 25: Foreign Exchange Controls

Petitioner argues that COTCO should not be granted a separate rate

because the company is subject to foreign currency controls which are

indicative of a lack of independence from the central government.

Petitioner states that in Sparklers, the Department stated that for an

exporter to be granted a separate rate the company must (1) set its own

export prices, and (2) be allowed to keep the proceeds from its sales.

Petitioner cites to the Department's verification report, where

management states that COTCO must ask permission to refund foreign

currency on returned merchandise. Petitioner contends this statement is

indicative of a lack of control over earnings and, consequently, a lack

of independence.

Respondent argues that there is ample evidence of COTCO's

independence from government control. Respondent adds that Department

officials verified that there were no returns or refunds for any

subject merchandise during the POI.

DOC Position

Although COTCO must receive permission to purchase foreign

currency, during verification we viewed evidence that COTCO regularly

purchases foreign exchange to pay for imported merchandise. We saw no

evidence of returned merchandise; the statement by COTCO officials

concerning returned merchandise was in response to a hypothetical

question from Department officials. The PRC's complex system of foreign

exchange controls is not per se evidence of governmental control (see,

e.g., Coumarin). The body of evidence gathered at verification

indicates that COTCO retains control over its earnings, both foreign

and domestic.

Comment 26: Affiliated Companies

Petitioner states that the companies which are affiliated with

COTCO did not cooperate in this investigation and it should be assumed

that they had unreported lighter sales to U.S. customers during the

POI. Accordingly, petitioner argues, COTCO should not be granted a

separate rate, and should be assigned the ``PRC-Wide'' rate as punitive

BIA.

Respondent states that COTCO included information for all lighter

sales to U.S. customers in its response and that during verification

Department officials requested information to confirm that all sales

had been reported. Respondent argues that a separate rate based on its

verified response is appropriate in the Department's final

determination.

DOC Position

We agree with respondent. At verification, consistent with normal

verification practices, we verified that no COTCO affiliate, except for

the one under investigation, sold the subject merchandise during the

POI. COTCO officials cooperated with Department verifiers to the best

of their ability and we are satisfied that our tests of the

completeness of COTCO's response demonstrates that all sales of subject

merchandise have been included.

Comment 27: Shipment After POI

Petitioner states that a shipment made by COTCO after the POI and

for which there was no sales contract should be assumed to have been a

sale during the POI and should be included in the company's sales

listing. [[Page 22370]]

Respondent states that all sales made during the POI were included

in the data submitted to the Department, and that sales made after the

POI should not be included in the Department's antidumping duty rate

calculation.

DOC Position

We agree with respondent. We saw no evidence during verification

that the sale relating to the shipment in question was made during the

POI. During verification, we viewed another example of a sale by COTCO

where a contract was not generated prior to shipment of the

merchandise. Given the date of shipment, the invoice date, and based on

statements by COTCO officials, we believe the sale should not be

included in COTCO's sales data for the POI.

Continuation of Suspension of Liquidation

For Gao Yao, we calculated a zero margin. Consistent with Notice of

Final Determination of Sales at Less Than Fair Value: Certain Cased

Pencils from the People's Republic of China (59 FR 55625, November 8,

1994), merchandise that is sold by Gao Yao but manufactured by other

producers will not receive the zero margin. Instead, such entries will

be subject to the ``PRC-wide'' margin.

In accordance with sections 733(d)(1) and 735(c)(4)(B) of the Act,

we are directing the Customs Service to continue to suspend liquidation

of all entries of disposable pocket lighters from the PRC, that are

entered, or withdrawn from warehouse, for consumption on or after the

date of publication of this notice in the Federal Register. The Customs

Service shall require a cash deposit or posting of a bond equal to the

estimated amount by which the FMV exceeds the USP as shown below. These

suspension of liquidation instructions will remain in effect until

further notice. The weighted-average dumping margins are as follows:

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

Weighted-

average Critical

Manufacturer/producer/exporter margin circumstances

percentage

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

China National Overseas Trading 0 Affirmative.

Corporation*.

Cli-Claque Company Ltd.................... 6.15 Affirmative.

Gao Yao (HK) Hua Fa Industrial Co., Ltd... 0 Negative.

Guangdong Light Industrial Products Import 27.91 Negative.

and Export Corporation.

PolyCity Industrial, Ltd.................. 5.50 Negative.

PRC-Wide.................................. 197.85 Affirmative.

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

*This company has not disclosed for the public record the identity of

its supplier or suppliers in the PRC. Upon public disclosure of this

information to the Department, we will notify the Customs Service that

sales through certain supply channels have an LTFV margin of zero and

thus an exclusion from any order resulting from this investigation.

Until and unless such disclosure is made, all entries will be subject

to the ``PRC-wide'' deposit rate.

ITC Notification

In accordance with section 735(d) of the Act, we have notified the

International Trade Commission (ITC) of our determination. As our final

determination is affirmative, the ITC will determine whether these

imports are causing material injury, or threat of material injury, to

the industry in the United States, within 45 days. If the ITC

determines that material injury, or threat of material injury, does not

exist, the proceeding will be terminated and all securities posted will

be refunded or cancelled. If the ITC determines that such injury does

exist, the Department will issue an antidumping duty order directing

Customs officials to assess antidumping duties on all imports of the

subject merchandise entered, or withdrawn from warehouse, for

consumption on or after the effective date of the suspension of

liquidation.

This determination is published pursuant to section 735(d) of the

Act and 19 CFR 353.20(a)(4).

Dated: April 27, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-11161 Filed 5-4-95; 8:45 am]

BILLING CODE 3510-DS-P