Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, From the People's Republic of China; Preliminary Results and Termination in Part of Antidumping Duty Administrative Reviews

DEPARTMENT OF COMMERCE

[A-570-803]

Heavy Forged Hand Tools, Finished or Unfinished, With or Without

Handles, From the People's Republic of China; Preliminary Results and

Termination in Part of Antidumping Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results and termination in part of

antidumping duty administrative reviews.

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SUMMARY: In response to requests by two resellers of the subject

merchandise, the Department of Commerce (the Department) is conducting

administrative reviews of the antidumping duty orders on heavy forged

hand tools, finished or unfinished, with or without handles, (HFHTs)

from the People's Republic of China (PRC). The reviews cover two

exporters of subject merchandise to the United States and the period

February 1, 1993, through January 31, 1994. The reviews indicate the

existence of dumping margins during the period of review.

We have preliminarily determined that sales have been made below

the foreign market value (FMV). If these preliminary results are

adopted in our final results of administrative reviews, we will

instruct U.S. Customs to assess antidumping duties equal to the

difference between United States price (U.S. price) and FMV.

Interested parties are invited to comment on these preliminary

results.

EFFECTIVE DATE: August 16, 1995.

FOR FURTHER INFORMATION CONTACT: Karin Price or Maureen Flannery,

Office of Antidumping Compliance, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, N.W., Washington D.C. 20230; telephone: (202) 482-

4733.

SUPPLEMENTARY INFORMATION:

Background

On February 19, 1991, the Department published in the Federal

Register (56 FR 6622) the antidumping duty orders on HFHTs from the

PRC. On February 4, 1994, the Department published in the Federal

Register (59 FR 5390) a notice of opportunity to request administrative

reviews of these antidumping duty orders. On February 28, 1994, in

accordance with 19 CFR 353.22(a), two resellers of the subject

merchandise to the United States, Fujian Machinery & Equipment Import &

Export Corporation (FMEC) and Shandong Machinery Import & Export

Corporation (SMC), requested that we conduct administrative reviews of

their exports of subject merchandise to the United States. We published

the notice of initiation of these antidumping duty administrative

reviews on March 14, 1994 (59 FR 11768). The notice of initiation was

amended on June 15, 1994 (59 FR 30770) and July 15, 1994 (59 FR 36160).

The Department is conducting these administrative reviews in accordance

with section 751 of the Tariff Act of 1930, as amended (the Act).

Termination of Review in Part

On June 10, 1994, FMEC withdrew its request for a review of the

order on picks and mattocks (picks/mattocks), and SMC withdrew its

request for a review of the order on axes, adzes and other similar

hewing tools (axes/adzes). Given the early stage of review at the time

of FMEC's and SMC's withdrawal requests, we informed FMEC that it did

not need to respond to the questionnaire with respect to picks/

mattocks, and we informed SMC that it did not need to respond to the

questionnaire with regard to axes/adzes. See File Memorandum from Karin

Price, dated July 5, 1994, ``Telephone conversation regarding the

withdrawal requests of respondents in the third administrative reviews

of heavy forged hand tools, finished or unfinished, with or without

handles, from the People's Republic of China,'' which is on file in the

Central Records Unit (room B-099 of the Main Commerce Building). We

hereby are terminating the review of the order on picks/mattocks with

respect to FMEC and the review of the order on axes/adzes with respect

to SMC, in accordance with 19 CFR 353.22(a)(5).

Scope of These Reviews

Imports covered by these reviews are shipments of HFHTs from the

PRC comprising the following classes or kinds of merchandise: (1)

hammers and sledges with heads over 1.5 kg. (3.33 pounds) (hammers/

sledges); (2) bars over 18 inches in length, track tools and wedges

(bars and wedges); (3) picks/mattocks; and (4) axes/adzes.

HFHTs include heads for drilling, hammers, sledges, axes, mauls,

picks, and mattocks, which may or may not be painted, which may or may

not be finished, or which may or may not be imported with handles;

assorted bar products and track tools including wrecking bars, digging

bars and tampers; and steel woodsplitting wedges. HFHTs are

manufactured through a hot forge operation in which steel is sheared to

required length, heated to forging temperature and

[[Page 42517]]

formed to final shape on forging equipment using dies specific to the

desired product shape and size. Depending on the product, finishing

operations may include shot blasting, grinding, polishing and painting,

and the insertion of handles for handled products. HFHTs are currently

provided for under the following Harmonized Tariff System (HTS)

subheadings: 8205.20.60, 8205.59.30, 8201.30.00, and 8201.40.60.

Specifically excluded are hammers and sledges with heads 1.5 kg. (3.33

pounds) in weight and under, hoes and rakes, and bars 18 inches in

length and under.

These reviews cover two exporters of HFHTs from the PRC, FMEC and

SMC. The review period is February 1, 1993, through January 31, 1994.

Separate Rates

The business licenses of both FMEC and SMC indicate that they are

owned by ``all the people.'' As stated in the Notice of Final

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

the People's Republic of China (59 FR 22585, May 2, 1994) (Silicon

Carbide), ``ownership by `all of the people' does not require the

application of a single rate.'' Accordingly, FMEC and SMC are eligible

for consideration for separate rates.

To establish whether a company is sufficiently independent to be

entitled to a separate rate, the Department analyzes each exporting

entity under the test established in the Final Determination of Sales

at Less Than Fair Value: Sparklers from the People's Republic of China

(56 FR 20588, May 6, 1991) (Sparklers), as amplified in Silicon

Carbide. Under this policy, exporters in non-market-economy (NME)

countries are entitled to separate, company-specific margins when they

can demonstrate an absence of government control, both in law and in

fact, with respect to exports. Evidence supporting, though not

requiring, a finding of de jure absence of government 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; and (3) any other

formal measures by the government decentralizing control of companies.

De facto absence of government control with respect to exports is based

on four criteria: (1) whether the export prices are set by or subject

to the approval of a government authority; (2) whether each exporter

retains the proceeds from its sales and makes independent decisions

regarding the disposition of profits and financing of losses; (3)

whether each exporter has autonomy in making decisions regarding the

selection of management; and (4) whether each exporter has the

authority to negotiate and sign contracts.

We have found that the evidence on the record demonstrates an

absence of government control, both in law and in fact, with respect to

FMEC's and SMC's exports according to the criteria identified in

Sparklers and Silicon Carbide for this period of review. For further

discussion of the Department's preliminary determination that FMEC and

SMC are entitled to separate rates, see Decision Memorandum to Holly A.

Kuga, Director, Office of Antidumping Compliance, dated July 21, 1995,

``Separate rates for Fujian Machinery & Equipment Import & Export

Corporation and Shandong Machinery Import & Export Corporation in the

third administrative reviews of heavy forged hand tools, finished or

unfinished, with or without handles, from the People's Republic of

China,'' which is on file in the Central Records Unit (room B-099 of

the Main Commerce Building).

United States Price

The Department used purchase price and exporter's sales price

(ESP), in accordance with sections 772 (b) and (c) of the Act, in

calculating U.S. price. We made deductions from purchase price and ESP

sales, where appropriate, for brokerage and handling, foreign inland

freight, ocean freight, and marine insurance. Ocean freight services

were provided by both PRC-owned and non-PRC-owned companies. Where we

knew that the company providing the ocean freight services was not a

PRC-owned company, we used the actual rates charged; for ocean freight

services provided by PRC-owned companies, we applied a weighted-average

ocean freight rate derived from those sales for which we used actual

ocean freight rates. Since marine insurance services were provided by

PRC-owned companies, we based the deduction for marine insurance on

surrogate values. We also used surrogate data to value foreign inland

freight and brokerage and handling. We selected India as the surrogate

country for reasons explained in the ``Foreign Market Value'' section

of this notice.

Complete sales data for SMC's ESP sales have not been provided to

the Department, despite the Department's requests for such data. In its

original questionnaire response, SMC did not report its ESP sales,

stating that SMC did not sell the subject merchandise to its U.S.

subsidiary, CMC Pacific Tools, Inc. (Pacific Tools) during the period

of review, despite the request in the questionnaire that ESP sales,

i.e., sales made to unrelated purchasers in the United States after the

date the merchandise was imported into the United States by or for the

account of the exporter, be reported. In our supplemental

questionnaire, we asked SMC to report any ESP sales of subject

merchandise made by Pacific Tools to unrelated customers in the United

States during the period of review and to answer all questions in the

original questionnaire regarding these sales. When it reported these

ESP sales in its supplemental questionnaire response, SMC did not

report any movement expenses for these sales, stating that these

expenses had been reported in a questionnaire response submitted for

the previous administrative reviews of this case. Since movement

expenses were not reported for the record of these reviews, as best

information available (BIA), we applied a weighted-average ocean

freight rate derived from those PP sales for which we used actual ocean

freight rates to adjust for ocean freight, and we used surrogate values

to make deductions for all other applicable movement expenses. We also

made a deduction for U.S. duties.

Foreign Market Value

For companies located in NME countries, section 773(c)(1) of the

Act provides that the Department shall determine FMV using a factors of

production methodology if (1) the merchandise is exported from a NME

country, and (2) the information does not permit the calculation of FMV

using home market prices, third country prices, or constructed value

(CV) under section 773(a) of the Act.

In every case conducted by the Department involving the PRC, the

PRC has been treated as an NME country. None of the parties to these

proceedings has contested such treatment in these reviews. Accordingly,

we calculated FMV in accordance with section 773(c) of the Act and

section 353.52 of the Department's regulations. We determined that

India is comparable to the PRC in terms of per capita gross national

product (GNP), the growth rate in per capita GNP, and the national

distribution of labor, and is a significant producer of comparable

merchandise. For further discussion of the Department's selection of

India as the primary surrogate country, see File Memorandum from Karin

Price, dated June 13, 1994, ``Telephone conversations regarding the

surrogate country selection in the third administrative reviews of

heavy forged hand tools, finished or unfinished, with or without

handles, from the People's

[[Page 42518]]

Republic of China,'' which is on file in the Central Records Unit (room

B-099 of the Main Commerce Building), with attached Memorandum to

Laurie Lucksinger, dated March 18, 1993, ``AD Order on Heavy Forged

Hand Tools from the People's Republic of China (case #A-570-803):

Nonmarket-Economy Status and Surrogate Country Determinations.''

For purposes of calculating FMV, we valued PRC factors of

production in the year in which production occurred as follows, in

accordance with section 773(c)(1) of the Act:

To value all direct materials used in the production of

HFHTs, including steel, resin glue, paint, varnish, wood for handles,

iron wedges, anti-rust oil, scrap steel, and dilution, we used the

rupee per metric ton, per kilogram, or per cubic meter value of imports

into India during April-December 1992, for production in 1992, and

during April 1993-January 1994, for production in 1993, obtained from

the Monthly Statistics of the Foreign Trade of India, Volume II--

Imports, December 1992, and the Monthly Statistics of the Foreign Trade

of India, Volume II--Imports, March 1994, respectively (Indian Import

Statistics). Some of the factories in the PRC used imported steel for

producing HFHTS, and, in these instances, we used the import price of

the steel to value the relevant portion of steel which was imported. We

made adjustments to include freight costs incurred between the

suppliers and the HFHT factories. We also made an adjustment to the

steel input factor for scrap and waste steel which was sold.

For direct labor, we used the labor rates reported in the

Business International Corporation reports IL&T India, released

November 1992 and November 1993. This source breaks out labor rates

between skilled, unskilled, semi-skilled, and foreman labor for 1993

and provides information on the number of labor hours worked per week.

For factory overhead, we used information reported in the

December 1992 and September 1994 Reserve Bank of India Bulletin. From

this information, we were able to determine factory overhead as a

percentage of total cost of manufacture. We included steel pellets used

to remove oxidization from the tool heads and detergent used to clean

the tool heads in factory overhead as these materials are not

physically incorporated into the subject merchandise.

For selling, general and administrative (SG&A) expenses,

we used information obtained from the December 1992 and September 1994

Reserve Bank of India Bulletin. We calculated an SG&A rate by dividing

SG&A expenses by the cost of manufacture. Since the calculated SG&A

expense rate is less than 10 percent, we used the statutory minimum of

10 percent to calculate SG&A expenses.

To calculate a profit rate, we used information obtained

from the December 1992 and September 1994 Reserve Bank of India

Bulletin. We calculated a profit rate by dividing the before-tax profit

by the sum of those components pertaining to the cost of manufacturing

plus SG&A. Since the calculated profit rate is less than 8 percent, we

used the statutory minimum of 8 percent to calculate profit.

To value the packing materials, including cartons (except

for imported cartons used at some of the factories), pallets, anti-rust

paper, anti-damp paper, plastic and iron straps, plastic bags, iron

buttons and knots, synthetic fiber, and iron wire, we used import

statistics for India obtained from the Indian Import Statistics. We

adjusted these values to include freight costs incurred between the

suppliers and the HFHT factories. Some of the factories used imported

cartons for packing, and, in these instances, we used the import price

of the cartons to value the relevant percentage of cartons which was

imported.

To value coal, we used the price of steam coal reported

for 1990 in the International Energy Agency publication Energy Prices

and Taxes, 2nd Quarter 1994. We adjusted the value of coal to reflect

inflation through 1992 and 1993 using wholesale price indices of India

(WPI) as published in the International Financial Statistics by the

International Monetary Fund (IMF).

To value electricity, we used the price of electricity for

1990 reported in the Asian Development Bank publication Energy

Indicators of Developing Member Countries of Asian Development Bank,

July 1992. We adjusted the value of electricity to reflect inflation

through 1992 and 1993 using WPI published by the IMF.

To value truck freight, we used the rates reported in a

June 1992 cable from the U.S. Embassy in India submitted for the Final

Determination of Sales at Less Than Fair Value: Sulfanilic Acid from

the People's Republic of China (57 FR 29705, July 6, 1992) and an

August 1993 cable from the U.S. Embassy in India submitted for the

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

Spring Lock Washers from the People's Republic of China (58 FR 48833,

September 20, 1993).

To value rail freight, we used the price reported in a

December 1989 cable from the U.S. Embassy in India submitted for the

Final Results of Antidumping Duty Administrative Review: Shop Towels of

Cotton from the People's Republic of China (56 FR 4040, February 1,

1991). We adjusted the rail freight rates to reflect inflation through

1992 and 1993 using WPI published by the IMF.

Currency Conversion

We made currency conversions in accordance with 19 CFR 353.60(a).

Currency conversions were made at the rates certified by the Federal

Reserve Bank.

Best Information Available

SMC did not provide factors-of-production data for one model, sales

of which were first reported to the Department in SMC's supplemental

questionnaire response. Since U.S. sales data for this model were

submitted without the data necessary for the calculation of FMV, we

must rely upon BIA, in accordance with section 776(1) of the Act, for

these sales. As BIA, we are assigning a rate of 31.76 percent, which is

the rate from the LTFV investigation for this class or kind of

merchandise.

Preliminary Results of the Reviews

As a result of our reviews, we preliminarily determine that the

following margins exist:

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

Margin

Manufacturer/exporter Time period (percent)

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

Fujian Machinery & Equipment Import &

Export Corporation:

Axes/Adzes........................... 2/1/93-1/31/94 11.72

Bars/Wedges.......................... 2/1/93-1/31/94 30.40

Hammers/Sledges...................... 2/1/93-1/31/94 12.17

Shandong Machinery Import & Export

Corporation:

Bars/Wedges.......................... 2/1/93-1/31/94 28.54

[[Page 42519]]

Hammers/Sledges...................... 2/1/93-1/31/94 7.26

Picks/Mattocks....................... 2/1/93-1/31/94 36.92

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Parties to the proceedings may request disclosure within 5 days of

the date of publication of this notice. Any interested party may

request a hearing within 10 days of publication. Any hearing, if

requested, will be held 44 days after the publication of this notice,

or the first workday thereafter. Interested parties may submit case

briefs within 30 days of the date of publication of this notice.

Rebuttal briefs, which must be limited to issues raised in the case

briefs, may be filed not later than 37 days after the date of

publication. See section 353.38(d) of the Department's regulations. The

Department will publish a notice of final results of these

administrative reviews, which will include the results of its analysis

of issues raised in any such comments.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between U.S. price and FMV may vary from the percentages

stated above. The Department will issue appraisement instructions

directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of the final results of these administrative reviews

for all shipments of HFHTs from the PRC entered, or withdrawn from

warehouse, for consumption on or after the publication date, as

provided for by section 751(a)(1) of the Act: (1) The cash deposit

rates for the reviewed companies named above which have separate rates

will be the rates for those firms established in the final results of

these administrative reviews; (2) for all other PRC exporters, the cash

deposit rates will be the rates established in the LTFV investigations,

the all-China rates; and (3) the cash deposit rates for non-PRC

exporters of subject merchandise from the PRC will be the rates

applicable to the PRC supplier of that exporter. The rates established

in the LTFV investigations are 45.42 percent for hammers/sledges, 31.76

percent for bars/wedges, 50.81 percent for picks/mattocks, and 15.02

percent for axes/adzes. These deposit requirements, when imposed, shall

remain in effect until publication of the final results of the next

administrative reviews.

Notification of Interested Parties

This notice serves as a preliminary reminder to importers of their

responsibility under section 353.26 of the Department's regulations to

file a certificate regarding the reimbursement of antidumping duties

prior to liquidation of the relevant entries during this review period.

Failure to comply with this requirement could result in the Secretary's

presumption that reimbursement of antidumping duties occurred and the

subsequent assessment of double antidumping duties.

These administrative reviews and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22

of the Department's regulations.

Dated: August 8, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-20207 Filed 8-15-95; 8:45 am]

BILLING CODE 3510-DS-P