Preliminary Determination of Sales at Less Than Fair Value and Postponement of the Final Determination: Manganese Sulfate From the People's Republic of China

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-841]

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of the Final Determination: Manganese Sulfate From the

People's Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: May 16, 1995.

FOR FURTHER INFORMATION CONTACT: Dorothy Tomaszewski or Erik Warga,

Office of Antidumping Investigations, [[Page 26022]] Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW., Washington, DC

20230; telephone: (202) 482-0631 or (202) 482-0922, respectively.

Applicable Statute and Regulations

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

Department's regulations are in reference to the provisions as they

existed on December 31, 1994.

Preliminary Determination

We preliminarily determine that manganese sulfate from the People's

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

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

section 733 of the Tariff Act of 1930, as amended (``the Act''). The

estimated margins are shown in the ``Suspension of Liquidation''

section of this notice.

Case History

Since the initiation of this investigation on December 20, 1994,

(59 FR 66908, December 28, 1994), the following events have occurred:

On December 29, 1994, the Department of Commerce (``the

Department'') requested the PRC's Ministry of Foreign Trade and

Economic Cooperation (``MOFTEC'') and the China Chamber of Commerce for

Import and Export of Metals, Minerals and Chemicals (``the Chamber'')

to identify all producers and exporters who sold manganese sulfate to

the United States during the period of investigation. The Department

also asked MOFTEC and the Chamber to provide information on whether the

companies named in the petition or identified by the Department

exported the subject merchandise during the period of investigation.

The Chamber identified two PRC exporters: Hunan Chemicals Import and

Export Company (``Hunan Chemicals''), and China National Nonferrous

Metals Import and Export Company (Hunan) (``CNIEC''). However, neither

MOFTEC nor the Chamber addressed the Department's question concerning

the export activities of the companies identified in the petition or by

the Department.

On January 14, 1995, the U.S. International Trade Commission

(``ITC'') notified the Department of its preliminary determination that

there is a reasonable indication that an industry in the United States

is materially injured or threatened with material injury by reason of

imports of manganese sulfate from the PRC that are alleged to be sold

at less than fair value.

On February 23, 1995, the Department sent questionnaires to MOFTEC

and the Chamber, requesting that the questionnaire be transmitted to

all companies that produce manganese sulfate for export to the United

States and to all companies that were engaged in selling manganese

sulfate to the United States during the period of investigation.

Courtesy copies of the questionnaire were also transmitted to all

companies listed in the petition or identified by the Chamber.

On April 7, 1995, the Department received responses to the

questionnaire from two trading companies identified by the Chamber,

Hunan Chemicals and CNIEC, and their supplying producers, Xian Lu

Chemical Plant and Yan Jiang Chemical Plant. Supplemental information

was received on April 27, 1995. No other PRC companies responded to the

Department's questionnaire.

In response to the Department's April 14, 1995, request, both

petitioner and respondents submitted information on the record

regarding publicly available published information on surrogate country

selection and factors of production.

Postponement of Final Determination

Pursuant to section 735(a)(2)(A) of the Act and 19 CFR

353.20(b)(1), on May 5, 1995, the four respondents, Hunan Chemicals,

CNIEC, Yan Jiang Chemical Plant and Xian Lu Chemical Plant, requested

that, in the event of an affirmative preliminary determination in this

investigation, the Department postpone the final determination to 135

days after the date of publication of the affirmative preliminary

determination in the Federal Register. Therefore, because there are no

compelling reasons to deny the request, we are postponing the final

determination until the 135th day after the publication of this notice

in the Federal Register.

Scope of Investigation

The product covered by this investigation is manganese sulfate,

including manganese sulfate monohydrate (MnSO4H2O) and any

other forms, whether or not hydrated, without regard to form, shape or

size, the addition of other elements, the presence of other elements as

impurities, and/or the method of manufacture. The subject merchandise

is currently classifiable under subheading 2833.29.50 of the Harmonized

Tariff Schedule of the United States (``HTSUS''). Although the HTSUS

subheading is provided for convenience and customs purposes, our

written description of the scope of this proceeding is dispositive.

Period of Investigation

The period of investigation (``POI'') is June 1, 1994, through

November 30, 1994.

Separate Rates

Each of the responding PRC trading companies has requested a

separate, company-specific rate. According to their respective business

licenses, Hunan Chemicals and CNIEC are public-owned enterprises

(``owned by all the people'').

As stated in the Final Determination of Sales at Less than Fair

Value: Silicon Carbide from the People's Republic of China (59 FR

22585, 22586, May 2, 1994) (``Silicon Carbide''), and the Final

Determination of Sales at Less than Fair Value: Sebacic Acid from the

People's Republic of China (59 FR 28053, May 31, 1994 (``Sebacic

Acid''), ownership of a company by all the people does not require the

application of a single rate. Accordingly, each of the two trading

companies is eligible for consideration for a separate rate.

To establish whether a trading company is sufficiently independent

from government control to be 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 People's Republic of China (56 FR 20588, May 6, 1991)

(``Sparklers'') and amplified in Silicon Carbide. Under the separate

rates criteria, the Department assigns separate rates in nonmarket

economy cases only if respondents can demonstrate the absence of both

de jure and de facto governmental control over export activities.

1. Absence of De Jure Control

Several laws and regulations are on the record in this

investigation that demonstrate absence of de jure control for Hunan

Chemicals and CNIEC, including two enactments indicating that the

responsibility for managing enterprises ``owned by all of 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''); the ``Regulations for Transformation of Operational

Mechanism of State-Owned Industrial Enterprises,'' approved on August

23, 1992 (``1992 Regulations''); the ``Temporary Provisions for

Administration of Export Commodities,'' approved on August 23,

[[Page 26023]] 1992 (``1992 Export Provisions''), and the April 1994

``Emergent Notice of Changes in Issuing Authority for Export Licenses

Regarding Public Quota Bidding for Certain Commodities'' (``1994 Quota

Measure'').

The 1988 Law and 1992 Regulations shifted control of enterprises

owned by all the people from the government to the enterprises

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

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 also has other provisions

which support a finding that such enterprises have management

independence from the government in making management decisions. 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 their employees without government approval (Article

XVII).

The 1992 Export Provisions list those products subject to direct

government control. Manganese sulfate is not included in the 1992

Export Provisions and does not, therefore, appear to be subject to the

export constraints of these provisions. The 1994 Quota Measure

supersedes earlier laws dealing with the export of the named

commodities. Manganese sulfate was not named in the 1994 Quota Measure

and does not, therefore, appear to be subject to the export quota

regulation of this measure.

As stated in previous cases, there is some evidence that the

provisions of the above-cited laws regarding enterprise autonomy 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 an analysis

of de facto control is critical to determining whether respondents are,

in fact, subject to a degree of governmental control which would

preclude the Department from assigning separate rates.

2. Absence of De Facto Control

The Department typically considers four factors in evaluating

whether each respondent is subject to de facto governmental control of

its export functions: (1) Whether the export prices are set by or

subject to the approval of a governmental authority; (2) whether the

respondent has authority to negotiate and sign contracts and other

agreements; (3) whether the respondent has autonomy from the government

in making decisions regarding the selection of management; and (4)

whether the respondent retains the proceeds of its export sales and

makes independent decisions regarding disposition of profits or

financing of losses (see Silicon Carbide and Sebacic Acid).

Hunan Chemicals and CNIEC have each asserted that it: (1)

Establishes its own export prices; (2) negotiates contracts on a case

by case basis based on market conditions, without guidance from any

governmental entities or organizations; (3) makes its own personnel

decisions; and (4) retains the proceeds of its export sales, uses

profits according to its business needs and has the authority to sell

its assets and to obtain loans. In addition, questionnaire responses

indicate that company-specific pricing during the POI does not suggest

coordination among exporters (i.e., the prices for manganese sulfate

differ among companies). This information supports a preliminary

finding that there is a de facto absence of governmental control of the

export activities of these firms.

Consequently, we preliminarily determine that Hunan Chemicals and

CNIEC have met the criteria for the application of separate rates.

Nonmarket Economy Country Status

The Department has treated the PRC as a nonmarket economy country

(``NME'') in all past antidumping investigations and administrative

reviews (see, e.g., Sebacic Acid and Silicon Carbide). Neither

respondents nor petitioners have challenged such treatment. Therefore,

in accordance with section 771(18)(c) of the Act, we will continue to

treat the PRC as an NME in this investigation.

When the Department is investigating imports from an NME, section

773(c)(1) of the Act directs us to base FMV on the NME producers'

factors of production, valued in a comparable market economy that is a

significant producer of the subject or comparable merchandise. Section

773(c)(2) of the Act alternatively provides that when available

information is inadequate for using the factors of production

methodology, FMV may be based on the export prices for comparable

merchandise from market economy countries at a comparable level of

economic development.

For purposes of the preliminary determination, we have relied on

the methodology provided by section 773(c)(1) of the Act to determine

FMV. The sources of individual factor prices are discussed under the

FMV section, below.

Surrogate Country

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

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

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

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

significant producers of comparable merchandise. The Department has

determined that India, Indonesia, Kenya, Nigeria, Pakistan, and Sri

Lanka are the countries most comparable to the PRC in terms of overall

economic development (see Memorandum from David Mueller, Director,

Office of Policy, to Gary Taverman, Acting Director, Office of

Antidumping Investigations, dated April 13, 1995). According to the

information we have gathered, India, with two production facilities,

appears to be the only producer of manganese sulfate among these six

potential surrogate countries. India is also endowed with a primary

material for producing the subject merchandise, manganese ore. Because

India meets both statutory criteria, we have calculated foreign market

value (``FMV'') using Indian prices for the PRC producers' factors of

production. We have obtained and relied upon published, publicly

available information wherever possible.

Fair Value Comparisons

To determine whether sales of manganese sulfate from the PRC to the

United States by Hunan Chemicals and CNIEC were made at less than fair

value, we compared the United States price (``USP'') to the FMV, as

specified in the ``United States Price'' and ``Foreign Market Value''

sections of this notice.

United States Price

For Hunan Chemicals, we based USP on purchase price, in accordance

with section 772(b) of the Act, because the subject merchandise was

sold directly by the PRC exporters to unrelated parties in the United

States prior to importation into the United States. We calculated

purchase price based on FOB foreign-port prices to unrelated

purchasers. Where necessary, we made deductions for foreign inland

freight valued in India.

For CNIEC, we based USP on exporter's sales price (``ESP''), in

accordance with section 772(c) of the [[Page 26024]] Act. We calculated

ESP based on packed delivered prices, where appropriate. Where

necessary, we made deductions for foreign inland freight valued in

India.

We also made deductions, where appropriate, for ocean freight,

marine insurance, U.S. inland freight (including warehousing), U.S.

duties, U.S. brokerage and handling. Additionally, where appropriate,

we deducted an amount to account for added value associated with

further processing after the merchandise was imported into the United

States and before the merchandise was shipped to the U.S. customer, in

accordance with section 772(e)(3) of the Act.

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 two exporters. The

factors used to produce the subject merchandise include materials,

labor, factory overhead, selling, general and administrative expenses,

profit and packing. The reported factor quantities were multiplied by

Indian values except where otherwise noted. For a complete analysis of

surrogate values, see the Calculation Memorandum, dated May 9, 1995,

for this investigation.

To value materials, we used the following sources of publicly

available information for India in the Indian Foreign Trade

Statistics--Imports, (``Indian Import Statistics'') for April-June

1994; the India Minerals Yearbook for 1990-1991; and prices published

in the June 16, 1994, Gazette of India. For data from Indian Import

Statistics and the Gazette of India, no adjustment for inflation was

necessary since the data was for a portion of the POI. For the India

Minerals Yearbook, we adjusted the 1990-1991 prices to account for

inflation using wholesale price indices for India as reported in the

International Monetary Fund's International Financial Statistics (IFS).

To adjust certain material values to account for source-to-factory

freight, we used Indian freight rates from a 1991 cable from the U.S.

Embassy in Delhi and adjusted accordingly for inflation. (See Final

Determination of Sales at Less Than Fair Value: Certain Carbon Steel

Butt-Weld Pipe Fittings from the People's Republic of China (57 FR

21058, May 18, 1992)).

To value labor amounts for production and packing, we used 1990

labor data for India, as reported in the 1994 ILO Yearbook. We adjusted

labor wage rates to account for inflation using consumer price indices

for India as reported in the IFS.

To value fuel, we used 1993 data for India from the Energy

Information Administration's International Energy Annual and adjusted

accordingly for inflation.

To value electricity, we used information for India from the Asian

Development Bank's FY1994 Electric Utilities Data Book for Asian and

Pacific Region. No adjustment to account for inflation was made since

the rate was for the POI.

To value factory overhead, we calculated an energy-exclusive

percentage based on data from the 1994 edition of Reserve Bank of India

Bulletin (``RBI''). For selling, general and administrative (SG&A)

expenses, we also used 1994 RBI data to calculate SG&A as percentage of

materials, labor, energy and factory overhead. For profit, we used 1994

RBI data to calculate a profit as a percentage of materials, labor,

energy, factory overhead, and SG&A expenses. We added packing, using

Indian values obtained from Indian Import Statistics.

Best Information Available (BIA)

The following discussion regarding the application of BIA applies

to all exporters other than those that have responded to our

questionnaires. Because no information has been presented to the

Department to prove otherwise, any exporter of subject merchandise that

did not respond to the Department's questionnaires is presumed to be

under government control and, therefore, is not entitled to its own

separate dumping margin. The evidence on record indicates that the

responding companies may not account for all exports of the subject

merchandise. In the absence of responses from all exporters, therefore,

we are basing the country-wide deposit rate on BIA, pursuant to section

776(c) of the Act (see Silicon Carbide).

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

tiered methodology, whereby the Department normally assigns lower

margins to those respondents that cooperated in an investigation and

more adverse margins to those respondents that did not cooperate in an

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

the investigation (see Final Determination of Sales at Less Than Fair

Value: Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-

Rolled Carbon Steel Flat Products, and Certain Cut-to-Length Carbon

Steel Plate From Belgium (58 FR 37083, July 9, 1993). In this

investigation, since the evidence indicates that not all PRC exporters

of manganese sulfate responded to our questionnaire, we are assigning

to any PRC company, other than those specifically identified below, the

highest margin based on information submitted in the petition, as

recalculated by the Department. At initiation, the Department stated

that it will carefully reexamine the alleged margins, ranging from

142.25 percent to 801.26 percent, if the use of best information

available became an issue in this investigation (see Initiation of

Antidumping Duty Investigation: Manganese Sulfate From the People's

Republic of China, (59 FR 66908, December 28, 1994). When applying BIA

from the petition, the Department's practice is not to revise the

information accepted at initiation, except where the petition includes

erroneous or grossly aberrational data (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)

(``Pencils''). In this instance, the surrogate value cited for ocean

freight in the petition appears to be aberrational (e.g., the unit

charge for ocean freight deducted from gross unit price equals 68

percent of the gross unit price). Therefore, we reassigned the value

for ocean freight based on the highest reported ocean freight charge

incurred by a responding company, in this case, CNIEC (see Calculation

Memorandum). The recalculated petition rate of 211.48 percent applies

to all exporters other than those responding exporters that are

receiving separate rates.

Critical Circumstances

Petitioners allege that critical circumstances exist with respect

to imports of manganese sulfate from the PRC. Under 19 CFR 353.16(a),

critical circumstances exist if (1) There is a history of dumping in

the United States or elsewhere of the class or kind of merchandise

which is the subject of this investigation; or the importer knew or

should have known that the producer or reseller was selling the

merchandise which is the subject of this investigation at less than its

fair value; and (2) there have been massive imports of the class or

kind of merchandise which is the subject of this investigation over a

relatively short period. [[Page 26025]]

In determining whether imports have been massive over a short

period of time, 19 CFR 353.16(f) instructs consideration of: (i) The

volume and value of the imports; (ii) seasonal trends; and (iii) the

share of domestic consumption accounted for by the imports.

Further, 19 CFR 353.16(f)(2) states that imports will not generally

be considered massive unless they have increased by at least 15 percent

over the imports during the immediately preceding period of comparable

duration.

To determine whether the importers of manganese sulfate from the

PRC knew, or should have known, that the products were being sold at

less than fair value, we considered the company-specific preliminary

margins in these investigations. We consider margins of 25 percent or

more (when USP is based on PP) and 15 percent (when USP is based on

ESP) sufficient to impute knowledge. (See, e.g., Final Determination of

Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat

Products From Argentina (58 FR 37062, 37078, July 9, 1993)).

For Hunan Chemicals and CNIEC, the margins calculated with respect

to manganese sulfate do not exceed 25 percent when USP is based on PP

and 15 percent when USP is based on ESP. Accordingly, we must also

consider whether there is a history of dumping in the United States or

elsewhere with respect to manganese sulfate from the PRC in order to

determine whether critical circumstances exist with respect to those

companies. We are aware of no outstanding antidumping duty orders with

respect to manganese sulfate from the PRC.

In considering the factor of whether there were massive imports

over a relatively short period, neither Hunan Chemicals nor CNIEC

provided company-specific quantity and value data of monthly exports to

the U.S., as requested by the Department. The respondents' failure to

provide this information makes it impossible for the Department to

accurately evaluate whether the volume of manganese sulfate shipments

from the PRC during December 1994 through February 1995 (``post-

petition period'') exceeded that of August through November 1994

(``pre-petition period'').

An analysis of the Department's official import statistics shows

that the volume of imports of manganese sulfate that entered the United

States from the PRC, under the HTSUS subheading, during the post-

petition period (281.158 metric tons) did not exceed that of the pre-

petition period (888.292 metric tons). However, imports of manganese

sulfate are reported in a HTSUS basket subheading which includes

imports of ``other sulfates.'' Therefore, it is impossible to determine

the actual volume of imports of manganese sulfate from the PRC based on

this basket subheading, factors related to actual seasonal trends, and

the share of domestic consumption. Given the respondents' failure to

provide the company-specific monthly data requested by the Department,

as BIA, we find that imports of the subject merchandise were massive

over a relatively short period of time.

However, based upon our analysis of all the above criteria, we

preliminarily determine that critical circumstances do not exist for

the two PRC trading companies participating in this investigation.

As regards firms covered by the ``PRC-wide'' rate, we have used BIA

as the basis for determining whether critical circumstances exist for

non-respondent exporters. The BIA margin exceeds the threshold for

imputing knowledge of dumping to the importers of the merchandise. In

addition, we have adversely assumed, as BIA, a massive increase in

imports from these non-respondent exporters. We, therefore, determine

that critical circumstances exist for non-respondent exporters.

Verification

As provided in section 776(b) of the Act, we will verify all

information determined to be acceptable for use in making our final

determination.

Suspension of Liquidation

In accordance with section 733(d)(1) of the Act, we are directing

the Customs Service to suspend liquidation of all entries of manganese

sulfate from the PRC, that are entered, or withdrawn from warehouse for

consumption, on or after the date that is 90 days prior to 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

suspensions of liquidation instructions will remain in effect until

further notice. One of the trading companies, CNIEC, will be excepted

from these instructions because its sales of subject merchandise

supplied by manufacturers Yan Jiang and Xian Lu were found not to have

been sold below fair value. CNIEC's sales of subject merchandise

supplied by Yan Jiang and Xian Lu will be excluded from an antidumping

duty order should one be issued. If CNIEC sells to the United States

subject merchandise supplied from a PRC manufacturer other than Yan

Jiang or Xian Lu, such sales will be subject to the ``PRC-Wide'' rate.

The weighted-average dumping margins are as follows:

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

Weighted-

Exporter/manufacturer average margin

percentage

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

Hunan Chemicals......................................... 8.46

CNIEC/Yan Jiang......................................... 00.00

CNIEC/Xian Lu........................................... 00.00

CNIEC/Other............................................. 212.31

PRC-Wide Rate........................................... 212.31

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

The PRC-Wide rate applies to all entries of subject merchandise

except for entries from exporters that are identified above.

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine before the later of 120 days after the date of

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

In accordance with 19 CFR 353.38, case briefs or other written

comments in at least ten copies must be submitted to the Assistant

Secretary for Import Administration no later than July 21, 1995, and

rebuttal briefs, no later than July 28, 1995. A list of authorities

used and a summary of arguments made in the briefs should accompany

these briefs. In accordance with 19 CFR 353.38(b), we will hold a

public hearing, if requested, to afford interested parties an

opportunity to comment on arguments raised in case or rebuttal briefs.

Tentatively, the hearing will be held at 10 a.m. on July 31, 1995, at

the U.S. Department of Commerce, Room 1414, 14th Street and

Constitution Avenue, NW., Washington, DC 20230. Parties should confirm

by telephone the time, date, and place of the hearing 48 hours before

the scheduled time.

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, U.S. Department of Commerce, Room

B-099, within ten days of the 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 the issues to be

discussed. In accordance with 19 CFR 353.38(b), oral presentations will

be limited to issues [[Page 26026]] raised in the briefs. If this

investigation proceeds normally, we will make our final determination

within 135 days of the publication of the preliminary determination.

This determination is published pursuant to section 733(f) of the

Act and 19 CFR 353.15(a)(4).

Dated: May 9, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-12024 Filed 5-15-95; 8:45 am]

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