Tapered Roller Bearings and Parts Thereof, Finished or Unfinished, From the Republic of Romania; Final Results and Rescission in Part of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-485-602]

Tapered Roller Bearings and Parts Thereof, Finished or

Unfinished, From the Republic of Romania; Final Results and Rescission

in Part of Antidumping Duty Administrative Review

AGENCY: International Trade Administration, Import Administration,

Department of Commerce.

ACTION: Notice of final results and rescission in part of antidumping

duty administrative review.

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SUMMARY: On April 8, 1996, the Department of Commerce (the Department)

published the preliminary results of its administrative review of the

antidumping duty order on tapered roller bearings and parts thereof,

finished or unfinished (TRBs), from Romania. This review covers the

period June 1, 1994 through May 31, 1995.

EFFECTIVE DATE: October 2, 1996.

FOR FURTHER INFORMATION CONTACT: Karin Price or Maureen Flannery,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington D.C. 20230; telephone (202) 482-4733.

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department's regulations are to the

current regulations, as amended by the interim regulations published in

the Federal Register on May 11, 1995 (60 FR 25130).

Background

On April 8, 1996, the Department published in the Federal Register

(61 FR 15465) the preliminary results of its administrative review of

the antidumping duty order on TRBs from Romania (52 FR 23320, June 19,

1987). We conducted a hearing on May 22, 1996. On July 30, 1996, we

extended the time limit for the final results to September 25, 1996 (61

FR 39631). We have now completed the administrative review in

accordance with section 751 of the Act.

Scope of the Review

Imports covered by this review are shipments of TRBs from Romania.

These products include flange, take-up cartridge, and hanger units

incorporating tapered roller bearings, and tapered roller housings

(except pillow blocks) incorporating tapered rollers, with or without

spindles, whether or not for automotive use. This merchandise is

currently classifiable under Harmonized Tariff Schedule (HTS) item

numbers 8482.20.00, 8482.91.00, 8482.99.30, 8483.20.40, 8483.30.40, and

8483.90.20. Although the HTS item numbers are provided for convenience

and Customs purposes, the written description of the scope of this

order remains dispositive.

This review covers eight companies and the period June 1, 1994

through May 31, 1995. Of the eight companies for which petitioner

requested a review, only Tehnoimportexport (TIE) made shipments of the

subject merchandise to the United States during the period of review.

Analysis of Comments Received

We invited interested parties to comment on the preliminary

results. We received written comments from the respondent, TIE, and the

petitioner, The

[[Page 51428]]

Timken Company (Timken). At the request of both parties, a public

hearing was held on May 22, 1996.

Comment 1

TIE argues that the Department should not use surrogate data from

the Thailand bearing producers NMB Thai and Pelmec Thai (NMB/Pelmec)

for overhead and selling, general, and administrative (SG&A) expenses,

because the Thai producers manufacture ball bearings that are more

sophisticated than TIE bearings. TIE cites NMB/Pelmec's own catalogs as

evidence of the sophistication of those companies'' bearings, and notes

that the Department recognized, in a review of antifriction bearings

(AFBs) from Romania, that NMB/Pelmec may not be ideal for purposes of

comparison to TIE.

Timken counters that the rates from NMB/Pelmec used by the

Department are the only reasonable values on the record regarding costs

of producers of comparable merchandise in a country at a level of

economic development comparable to that of Romania.

Department's Position

We agree with Timken. As discussed in the preliminary results of

this review, we determined that Thailand is at a level of economic

development comparable to that of Romania and is a significant producer

of bearings. Therefore, we selected Thailand as a surrogate country.

Where we were unable to locate publicly available published information

(PAPI) to establish surrogate values from the primary surrogate

country, Poland, we used Thai values. Notwithstanding any differences

in the level of sophistication of bearings between the Thai and

Romanian companies, NMB/Pelmec was the best available source of

surrogate values from Thailand. Furthermore, the degree of

sophistication of the bearings sold by the Thai companies would not

directly impact the amount of SG&A expenses incurred by the company.

Comment 2

TIE argues that the Department's use of ranged Thai data to

establish SG&A and overhead rates violates due process. TIE notes that

the Department used ranged data based on the proprietary version of

NMB/Pelmec's response--data TIE cannot independently verify. Further,

TIE notes that the Department did not secure permission from NMB/Pelmec

to use its data for this particular review, as it did when the data was

used in a previous review of AFBs from Romania.

Timken responds that the rates are the best available, and should

be retained by the Department. Timken notes that in typical non-market

economy (NME) cases, the Department historically has relied on rates

supplied by the embassy of the surrogate country, without independently

verifying the underlying data. See transcript of the hearing, May 22,

1996, page 39.

Department's Position

We agree with Timken. The data used for this review were publicly

available information from producers in a comparable industry (NMB/

Pelmec), in a country deemed a suitable surrogate (Thailand). The fact

that the underlying data used to arrive at the publicly available rates

were proprietary is irrelevant; the ranged data are publicly available

on the record of the 1988-90 antidumping review of AFBs from Romania,

and we have placed these data on the record of this review. It is not

necessary for the Department to secure permission to use data that is

already in the public domain. Thus, the Department has continued to use

the NMB/Pelmec values.

Comment 3

TIE argues that the Department's use of the same Thai SG&A data in

the 1988-90 review of AFBs from Romania was based on application of

adverse best information available (BIA), which is not relevant to this

review. TIE notes that its alleged failure to provide certain

information regarding selling expenses during the course of the 1988-90

AFB review resulted in the Department's applying the SG&A rate as

adverse BIA. Further, this same rate was rejected in the subsequent AFB

review because adverse BIA was not warranted.

TIE further argues the rate should not be used as other than

adverse BIA, because certain expenses included in the NMB/Pelmec SG&A

calculation are not applicable to TIE. Since the Department has made no

findings in this review that TIE has not provided all necessary

information, TIE claims, adverse BIA is unwarranted, and by extension,

use of the NMB/Pelmec rate is inappropriate.

Timken notes that, unlike the numbers often used by the Department

from embassy correspondence, or estimates from companies'' annual

reports, the NMB/Pelmec rates are based on actual questionnaire

responses. Timken concludes that these rates are as accurate as, if not

more accurate than, any other rates used in NME antidumping duty

proceedings.

Department's Position

We recognize that, in the 1988-90 review of AFBs from Romania, the

Thai SG&A rate was applied as adverse BIA, and we recognize that this

rate includes non-SG&A expenses. As this rate was being used as adverse

BIA in that review, we did not consider whether the rate included non-

SG&A expenses at that time. However, we agree that, if a surrogate SG&A

value includes expenses that are generally not considered to be SG&A

expenses, these components should be excluded from the surrogate value.

After further analysis of the NMB/Pelmec SG&A rate, we find that the

rate included adjustments for inland freight and import duties on raw

materials, which generally are not categorized as SG&A expenses.

Furthermore, because we have already accounted for inland freight costs

elsewhere in our calculations, inclusion in the applied SG&A rate would

double-count this expense. Therefore, for the purposes of this review,

we have recalculated the Thai SG&A expense to exclude inland freight

and import duties on raw material inputs.

Comment 4

TIE argues that the Thai SG&A rate is aberrational, and that the

Department has an obligation not to use aberrational data.

According to TIE, because the SG&A expenses calculated by the

Department are the highest ever calculated in any NME case, the data

are aberrational, and should be rejected. TIE notes that the Department

has refused to use data in other cases because it determined that such

data conflicted with other publicly available data, and was, therefore,

unrepresentative.

Timken notes that because the NMB/Pelmec SG&A and overhead expense

data are derived from actual questionnaire responses, it is likely that

the rate is as accurate as, if not more accurate than, any other rates

used in previous antidumping proceedings. Furthermore, petitioner

claims, it is logical that overhead rates stated as a percentage of

total cost of production will be higher in countries in which labor

costs are lower, as is the case in developing countries such as

Thailand.

Department's Position

There is nothing on the record of this review to suggest that the

NMB/Pelmec SG&A expense is not reflective of the Thai bearings

industry. In fact, to our knowledge, NMB/Pelmec are the only bearing

producers in Thailand. Accordingly, we do not view the NMB/Pelmec SG&A

expense as aberrational.

[[Page 51429]]

Comment 5

TIE argues that, instead of using the NMB/Pelmec SG&A value, the

Department should use ``Yugoslavian or other data,'' and cites the data

it put on the record on March 28, 1996. TIE notes that the Department

used Yugoslavia as a surrogate country in the last completed review of

Romanian TRBs, and argues that the ten percent rate used in that review

is more logical than the NMB/Pelmec rate.

Timken notes that TIE admits that this Yugoslavian rate was simply

the former ten percent statutory minimum. Timken argues that, because

the statutory minimum is no longer valid, the ten percent rate should

be disregarded.

Department's Position

We agree with Timken. Yugoslavia is not a valid surrogate country

for this review, due to changed conditions since 1988-89, the period of

the review to which respondent refers. Therefore, it would not be

appropriate to use a Yugoslavian rate, except in the absence of a

publicly available SG&A rate from one of the suitable surrogate

countries, such as Thailand. Furthermore, although Yugoslavia was used

as a surrogate country in a past review, the SG&A rate used was

actually the ten percent statutory minimum, which is not valid under

the controlling statute.

Comment 6

TIE advocates the use of the former statutory minimum of ten

percent for the SG&A expense. TIE notes that the Department is using an

eight percent figure for profit, the former statutory minimum for

profit. Further, TIE notes that the Department has never used a figure

other than the former statutory minimum of ten percent for SG&A, except

where the Department selected an adverse BIA rate. Thus, TIE argues,

there is little or no evidence that the SG&A rate exceeds ten percent.

TIE claims that in market-economy bearings cases where SG&A has been

calculated, the expense has rarely exceeded ten percent.

Timken notes that as a result of Article 2.2.2 of the Uruguay

Round's Agreement on Implementation of Article VI of the General

Agreement on Tariffs and Trade, the statute eliminates the minimum rate

for SG&A, and mandates use of actual rates where possible.

Department's Position

We agree with Timken. Under the controlling statute, the statutory

minimum of ten percent for SG&A is invalid, and the Department must use

actual rates when possible. See 19 U.S.C. 1677b(e)(2). Hence, the

Department has continued to use the actual SG&A rate from NMB/Pelmec,

two producers of comparable merchandise from a qualifying surrogate

country. Use of the former statutory minimum in previous reviews has no

bearing on this review. Furthermore, TIE incorrectly states that the

Department is using the former eight percent minimum for profit. We are

using eight percent as the profit margin in this review not because it

was formerly the statutory minimum profit figure, but because publicly

available information indicates that the profit figure is not less than

eight percent.

Comment 7

TIE argues that the Department fails to describe the expenses

included within the NMB/Pelmec overhead rate, and that the rate should

therefore be rejected. TIE claims a breakdown of overhead expenses is

impossible to generate, and that some components likely should be

excluded to match the overhead for TIE.

Department's Position

The Department generally does not dissect the overhead rate of a

surrogate country and apply only components relevant to the producer.

It is generally not possible to break the surrogate overhead value into

its individual components, at the level of detail that would be

necessary to value each individual component of the NME producer's

overhead. See Notice of Preliminary Determination of Sales at Less Than

Fair Value and Postponement of Final Determination: Certain Partial-

Extension Steel Drawer Slides with Rollers from the People's Republic

of China (60 FR 29571, June 5, 1995) (Drawer Slides) and Notice of

Final Determination of Sales at Less Than Fair Value: Disposable Pocket

Lighters from the People's Republic of China (60 FR 22359, 29575, June

5, 1995). Rarely, if ever, will it be known that there is an exact

correlation between overhead expense components of the NME producer and

the components of the surrogate overhead expenses. Therefore, as

discussed in Drawer Slides, the Department normally bases normal value

completely on factor values from a surrogate country on the premise

that the actual experience in the NME cannot meaningfully be

considered. Accordingly, Department practice is to accept a valid

surrogate overhead rate as wholly applicable to the NME producer in

question.

Comment 8

TIE contends the NMB/Pelmec overhead rate is an improper surrogate

for Romanian overhead costs. Because TIE uses technology and machinery

from the 1960s, its equipment is fully depreciated. TIE argues NMB/

Pelmec's factories, which utilize expensive, modern equipment, have

large depreciation expenses built into overhead. Therefore, the

overhead rates as a percentage of the cost of manufacturing (COM) are

not comparable to overhead rates for Romanian companies, or for

comparable companies in Thailand or other surrogate countries, and

should not be used as a surrogate for TIE's overhead.

Further, TIE argues that NMB/Pelmec's miniature, high-precision

bearings use less raw materials than do TIE's bearings, which are

larger. Therefore, TIE reasons, overhead as a percentage of the cost of

manufacturing is higher for smaller bearings. By extension, TIE argues,

the overhead rate for TIE, as a percentage of raw materials and labor,

should be lower than the rate from NMB/Pelmec.

Timken notes that while TIE may have depreciated its equipment to

zero, the rate at which an NME producer is able to depreciate equipment

is irrelevant in the identification of appropriate, market economy

surrogate values. Timken also notes that if machinery is old, then

though depreciation costs are low, maintenance and repair expenses

would be correspondingly high. Timken further argues that NMB/Pelmec's

overhead rates are driven by low labor rates indicative of a developing

country, and not by raw material costs.

Department's Position

We disagree with TIE, again for the same reasons cited in our

response to comment 7. The Department does not tailor surrogate

overhead rates to match the circumstances in the NME country.

Therefore, following Department practice, we have continued to use the

valid surrogate overhead rate from Thailand.

Comment 9

TIE suggests that, if the Department continues to use the NMB/

Pelmec data for overhead, it should use the lowest of the overhead

rates for NMB/Pelmec bearings listed in NMB/Pelmec's 1988-90 cost

printouts, as ranged by the Department. TIE points out that there is a

large range in the bearings-specific overhead rates. TIE claims that

the lowest of the overhead rates would more accurately reflect overhead

for the larger bearings sold by TIE to the United States.

[[Page 51430]]

Department's Position

The record does not contain information which allows us to verify

TIE's assertion that the NMB/Pelmec models with the highest cost of

manufacture and lowest overhead are, in fact, the largest models made

by NMB/Pelmec. Therefore, the Department has continued to use the

average overhead rate of all NMB/Pelmec models.

Comment 10

TIE asks the Department to use overhead data TIE submitted in its

March 28, 1996 submission. In that submission, TIE asked the Department

to consider rates from a Portuguese bearings company, a Yugoslavian

metal processing company, and a Thai metal processor. TIE argues that

these rates are more timely than the NMB/Pelmec rate.

Timken points out that Romania is not at a level of economic

development comparable to that of Portugal--and that TIE actually

argued, in a previous review, that Romania's level of development has

never been as high as that of Portugal, and that the Department should

eliminate Portugal from consideration as a surrogate country. Timken

also notes that TIE's proposal to use surrogate values from metal

processors does not meet the comparable-merchandise requirement of the

statute (19 U.S.C. 1677b(e)(2)).

Department's Position

We agree with Timken. Neither Yugoslavia nor Portugal were found to

be appropriate as surrogate countries for this review. The Thai

overhead value submitted by TIE is from an industry other than

bearings, and therefore inferior to the NMB/Pelmec overhead rate.

Comment 11

TIE asks the Department to disregard the imported price of Swedish

steel in calculating cost of production for bearings produced at the

Alexandria factory. Because Alexandria purchased less than three

percent of its steel from Sweden, the amount purchased is

insignificant, and, consistent with Department practice and the

proposed regulations, the price should be disregarded. At the very

worst, argues TIE, only the corresponding percentage of Swedish steel

used by Alexandria should be used in the Department's calculations.

Timken argues that the amount of market economy steel purchased is

irrelevant; import prices selected by the Department represent the

price of steel available to TIE. Further, Timken argues that the

Swedish price should be applied to both factories, since they are part

of a single entity.

Department's Position

We agree with TIE. In calculating surrogate prices, the Department

routinely disregards quantities too small to be representative. See

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

Handles, from the People's Republic of China; Final Results of

Antidumping Duty Administrative Reviews (60 FR 49251, September 22,

1995). We have therefore recalculated steel costs for the Alexandria

plant using only surrogate prices from European Union (EU) exports to

Poland.

Comment 12

TIE argues that the number of hours worked per month, obtained from

the International Labor Office (ILO) Yearbook of Labor Statistics, 1995

and used to calculate surrogate wage rates in Poland, understates the

true hours worked per month in Poland. TIE notes that information

submitted by Timken, from Investing, Licensing & Trading Conditions

Abroad, Poland 1995 (IL&T), published by the Economist Intelligence

Unit, indicates a work week of 42 hours, and argues that the surrogate

wage rate should be recalculated to reflect this.

Timken responds that the IL&T referred to the statutory maximum

number of hours permitted under Polish law, and that the hours actually

worked may be lower in Polish industry.

Department's Position

We agree with TIE. The ILO data used in the preliminary results was

for actual hours worked, not paid hours (which would include, for

example, paid vacation leave). The monthly wage statistics we used in

the preliminary results, from the August 1995 issue of the Statistical

Bulletin, published by the Polish government, however, are based on

total compensation for paid hours, and not actual hours worked.

Therefore, for these final results we recalculated the wage rate using

the IL&T data, which represent paid hours.

Comment 13

TIE argues that Polish labor rates used by the Department

improperly included payments for bonuses from profits. According to

TIE, the use of a wage which includes bonus payments from profits is

improper, as it assumes profits were, in fact, made by Polish bearing

companies. TIE asks that the Department use wages exclusive of payments

from profit.

Timken maintains the Department's goal is to identify and apply the

fully-loaded labor costs (not just basic wages) of producers in the

surrogate country. Profit bonuses, a portion of the cost to the

employer, and of direct benefit to the employee, should be included in

the Department's calculation.

Department's Position

We agree with Timken. Wage rates should reflect, as accurately as

possible, the actual cost to employers. See Notice of Preliminary

Determination of Sales at Less Than Fair Value and Postponement of

Final Determination: Certain Partial-Extension Steel Drawer Slides With

Rollers From the People's Republic of China (60 FR 29571, 6/5/95). As

is the case with SG&A and overhead, the Department generally does not

dissect the wage rate of a surrogate country and apply only certain

components to the producing country. See our response to comment 7.

Department practice is to accept a valid surrogate wage rate as wholly

applicable to the NME respondent in question.

Comment 14

TIE argues that Polish labor rates are not representative of labor

rates in Romania or comparable countries, and should be rejected.

According to TIE, the per capita gross national product (GNP) of Poland

is roughly double that of Romania. TIE argues it would, therefore, be

unfair to use the Polish wage rate. TIE advocates use of an average

wage rate, derived from rates placed on the record from Algeria and

Ecuador, and a rate for Poland revised in accordance with comment 12,

above. Even this average, TIE contends, far exceeds the Romanian labor

rate. TIE notes that the Department's proposed regulations direct the

Department to use what is essentially an average labor rate in

economically comparable market economy countries, and argues that the

Department should adopt this policy for this review.

Timken discounts TIE's argument that Polish labor rates are not

representative of Romanian labor rates, noting that the purpose of the

surrogate value exercise is to find a rate to replace the Romanian

rate, not to find a rate representative of the Romanian rate. Timken

further counters that the components of the average wage rate proposed

by TIE are invalid. Except for the rate for Poland, the other wage

rates are minimum wage rates, not prevailing wage rates. Moreover,

Algeria and Ecuador are not suitable surrogates, as they have no

comparable industry.

Department's Position

We agree with Timken. Although proposed regulations suggest use of

an

[[Page 51431]]

average labor rate, current Department practice is to use wage data

from the surrogate country. Of the countries suggested for use by TIE,

only Poland has a comparable industry. Poland, as the chosen surrogate

country, is the proper source for surrogate wage rates.

Comment 15

Timken claims that TIE does not meet the Department's existing

criteria for a separate rate determination. Timken contends that TIE

does not have autonomy from the government in the selection of key

management personnel, one of the criteria for determining de facto

absence of government control. Timken notes the State Ownership Fund

(SOF) owns seventy percent of TIE stock. Because of this, the SOF has a

seat on the Council of Administration, which selects TIE's executive

management. Its presence on the Council of Administration, Timken says,

reflects participation in what is, by comparison with market-economy

countries, the board of the company. According to Timken, presence on

that board permits de facto control, by the Romania government, over

the selection of TIE's key management personnel.

TIE counters that it has made a clear, steady progression toward

complete privatization over the years, and that changes effective in

this review clearly indicate a lack of de facto government control. TIE

compares the status of privatization in Romania with that of Poland, to

which the Department granted market-economy status despite government

stock ownership of Polish industry. TIE claims that, even in the

context of a test for market-economy status, the Department does not

determine that ``government ownership'' of state-owned enterprises

precludes their independence.

Department's Position

We agree with Timken. We have reexamined our position on this issue

and have determined that TIE is not entitled to a separate rate. The

record of the review indicates that the General Assembly of

Shareholders consists of a representative of the SOF and a

representative of the POF, and that voting power is commensurate with

stock ownership. Seventy percent of the vote goes to the SOF, and

thirty percent to the POF. The General Assembly of Shareholders chooses

the Council of Administration, which is responsible for the hiring and

firing of key personnel, such as the general director, and the

designation of the Executive Committee, which controls the day-to-day

running of TIE. The Council of Administration consists of three

members, each with equal voting power; one of the members is from the

SOF, one is from the POF, and one is from TIE. There is no record

information indicating who any of these members are and whether they

are representatives of the Romanian government or its ministries (see

hearing transcript, pages 59-60) or otherwise how closely they are tied

to the government. In addition, we note that TIE's management has

remained the same since the composition of the Council of

Administration changed. Accordingly, we find that TIE has not

established that it has autonomy in making decisions regarding the

selection of its management and, for this reason, there is insufficient

record evidence of the absence of de facto government control over TIE

to entitle TIE to a separate rate.

Comment 16

Timken argues the Department's separate rate analysis should be

made consistent with rules for evaluating affiliated parties and for

collapsing firms in market-economy countries. Timken says that, since

the Romanian government owns more than five percent of TIE, and of the

bearings factories, it is in a position to shift export activities from

TIE to the factories to avoid antidumping duties. Timken argues that

the Romanian government, as a majority shareholder, has the ability to

exercise restraint or direction over TIE and the producing factories.

Citing 19 U.S.C. 1677(33) and section 351.401(f) of the proposed

regulations, Timken contends that, in a market-economy review, the

Department would normally treat two or more similarly affiliated

companies as a single entity. Timken argues that TIE, the bearings

factories, and the Romanian government should be treated likewise.

TIE counters that, since the Romanian government does not exercise

de facto control of TIE, despite its more than five percent stock

ownership, the Department should not consider TIE and the Romanian

government as affiliated parties. Nor should the Department view the

factories as affiliated with the Romanian government. TIE notes there

is no coordination between the two major stock-holding groups--the SOF

and the POF--with regard to TIE and the two independent factories. TIE

also notes that if the Department precluded a separate rate for a

company because of more than five percent ownership by the government,

no company could ever obtain a separate rate if its stock were owned by

the government. This would contradict the Department's decisions in a

number of cases, where the Department granted separate rates to Chinese

trading companies owned by ``all the people'' when the supplying

factories were also owned by ``all the people.''

Department's Position

The separate rates test for non-market economies is separate and

distinct from the test to determine whether related producers in market

economies should be treated as a single enterprise. Even the preamble

to the proposed regulations, cited by Timken, specifically notes that

section 351.401(f) ``does not address the issue of whether a producer

or exporter in a nonmarket economy country is entitled to an individual

antidumping rate.'' As set forth in the Final Determination of Sales at

Less Than Fair Value: Silicon Carbide From the People's Republic of

China (59 FR 22585, May 2, 1994), the NME separate rates test focuses

on government control over export activities. As discussed above in our

response to Comment 15, we have found that TIE is not eligible for a

separate rate in this review.

Comment 17

Timken argues that a separate, non-zero rate for TIE, while the

Romania-wide rate remains at zero, is contrary to the purpose of the

antidumping duty law. Such a determination would encourage the shifting

of production and export activities to avoid the reach of the

antidumping duty law. Timken argues this is contrary to congressional

intent and is an absurd conclusion, which should be rejected.

Timken further argues that, if the Department maintains a separate

rate for TIE, it should apply the margin from the investigation, 8.70

percent, not the rate from the previous review, to all other firms. In

UCF America v. United States, Ct. No. 92-01-00049, Slip Op. 96-42 (CIT

February 27, 1996) (UCF), Timken argues, the Court of International

Trade (the Court) held that companies that have never been individually

reviewed should receive the margin found in the original investigation.

Department's Position

The Department acknowledges the recent decision of the Court, cited

by Timken, in UCF. In this decision, the Court affirmed the

Department's remand results for reinstatement of the relevant cash

deposit rate, but expressed disagreement with use of the ``PRC-wide''

rate as the underlying basis for reinstatement. The Court raised

various concerns with the Department's application of a ``PRC-wide''

rate.

[[Page 51432]]

The Court suggested that the Department lacks authority for

applying a ``PRC-wide'' rate in lieu of an ``all others'' rate. We

note, however, that section 777A(c) of the Act requires the Department

to determine individual dumping margins for each known exporter or

producer. Pursuant to this authority, the Department implements a

policy in NME cases whereby all exporters or producers are presumed to

comprise a single entity, the ``NME entity.'' The Court has upheld our

NME policy in previous cases. See e.g., UCF America, Inc. v. United

States, 870 F. Supp. 1120, 1126 (CIT 1994); Sigma Corp. v. United

States, 841 F. Supp. 1255, 1266-67 (CIT 1993); Tianjin Machinery Import

& Export Corp. v. United States, 806 F. Supp. 1008, 1013-15 (CIT 1992).

The ``NME-wide'' rate is consistent with section 735(c)(1)(B)(i)(I)

of the Act. This provision directs the agency to assign a dumping

margin for each exporter or producer individually investigated. As

discussed above, in NME cases, all producers and exporters comprise a

single entity. Thus, we assign the NME rate to the NME entity just as

we assign an individual rate to a single exporter or producer operating

in a market economy. As a result, all exporters and producers that are

part of the NME entity are assigned the ``NME-wide'' rate. Because the

``NME-wide'' rate is the equivalent of a company-specific rate, it

changes only when we review the NME entity (i.e., all NME producers and

exporters that have not qualified for a separate rate).

To qualify for a separate rate, an NME exporter or producer must

provide evidence showing both de jure and de facto absence of

government control. See Final Determination of Sales at Less Than Fair

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

22585, May 2, 1994). Until such evidence is presented, a company is

presumed to be part of the NME entity and receives the ``NME-wide''

rate. Consequently, whenever the NME enterprise has been investigated

or reviewed, calculation of an ``all others'' rate under section

735(c)(1)(B)(i)(II) of the Act is unnecessary. All exporters or

producers will either qualify for a separate company-specific rate, or

be part of the NME enterprise, and receive the ``NME-wide'' rate. Thus,

there can be no exporters or producers who have never been investigated

or reviewed.

In this review, we have determined that TIE is, and always has

been, the sole exporter of the subject merchandise to the United

States. The Romanian government stated in its response to our

questionnaire, and we have confirmed with the U.S. Customs Service,

that TIE was the only Romanian exporter of the subject merchandise to

the United States during this period of review (POR). In addition, in

past administrative reviews of this case, TIE has been the only

exporter of the subject merchandise to the United States. However, we

have determined that TIE is not eligible for a separate rate. Since

TIE's exports represent the only exports of this merchandise to the

United States, we have calculated a rate for TIE based on its exports

to the United States during the POR, and TIE's rate becomes the all-

Romanian rate, or the ``NME-wide'' rate, and will be applied to all

companies in Romania.

Comment 18

Timken argues that the Department should use European HTS

subheading 7204.41 to classify nonalloy scrap generated in the

production process. Cold-rolled steel is nonalloy steel; scrap produced

from nonalloy steel is less costly, and should be reflected in the

Department's scrap adjustment to material costs. If there are no

significant exports of 7204.41 steel to Poland during the POR, it would

be reasonable to use exports for a period preceding the POR.

TIE argues that there is an insignificant variation in the scrap

values between HTS subheading 7204.29, which the Department used in its

preliminary results, and subheading 7204.41. Further, use of data from

prior periods would be less accurate, and should be rejected.

Department's Position

We agree with Timken. For these final results, we have calculated

the portion of nonalloy scrap steel generated from the cold-rolled

steel used, and have used HTS subheading 7204.41 for that portion in

our calculation of the surrogate value for nonalloy scrap. For the

remaining hot-rolled scrap steel, we have continued to use a surrogate

price from the POR for subheading 7204.29.

Comment 19

Timken requests the Department use different HTS classifications

for the steel bar used by the Romanian factories. Timken claims that

European HTS 7228.30.89, the category used by the Department in the

preliminary results, excludes steel with a chemical composition

suitable for manufacturing bearings. This category, according to

Timken, also excludes steel bars and rods with a circular cross-

section, the same type of steel used in bearings production. Timken

suggests the Department use the European HTS 7228.30.40 (for bearings

produced in 1994) and 7228.30.41 and 7228.30.49 (for bearings produced

in 1995). These classifications, Timken claims, are the closest matches

with the U.S. definition of bearing-quality steel.

TIE notes that, in prior reviews of this order, Timken advocated

the use of category 7228.30.89, the predecessor to the Department's

steel bar selection for the preliminary results of this review. TIE

notes there is no indication on the record that the Romanian factories

use steel precisely corresponding to the category 7228.30.40, and that

Timken has not asserted that European HTS 7228.30.89 is aberrational.

Furthermore, Timken has not provided any data or documentation

regarding category 7228.30.89. In addition, recent EU data show

virtually no exports of steel to Poland under Timken's suggested

categories. Therefore, TIE concludes, the Department should continue to

use category 7228.30.89 in steel calculations.

Department's Position

We agree with TIE. We previously have found, in Tapered Roller

Bearings and Parts Thereof, Finished or Unfinished, From the Republic

of Romania; Final Results of Antidumping Duty Administrative Review (56

FR 41518, August 21, 1991), that SAE 52100 steel, the type reported

used by TIE, best corresponds with European HTS 7228.30.89. While other

European HTS categories may closely match what the U.S. considers

bearing-quality steel, there is no evidence on record that the Romanian

factories used this type of steel. Since the steel type reported by TIE

is SAE 52100, and since we have previously found this type matches most

closely with European HTS 7228.30.89, we have continued to use this

category in our calculations.

Comment 20

Timken argues that the Department should use International Standard

Industrial Classification (ISIC) category 382 instead of 381 when

referring to the International Labour Office Yearbook of Labor

Statistics to determine the number of hours worked in Poland. In

Timken's February 26, 1996 submission, Timken provided the detailed

descriptions of the ISIC categories. Ball and roller bearings, Timken

points out, are classified in ISIC 3829, a subgroup of Major Group 382.

Hence, Timken claims, the Department should use ISIC Group 382 instead

of 381.

TIE argues that, since the Department used information from the

government of Poland which specifically lists the labor rate for the

manufacture of metal

[[Page 51433]]

products (except machinery and equipment), to the extent that the

Department continues to use ILO data, it should continue to use ISIC

group 381: Manufacture of Fabricated Metal Products, Except Machinery

and Equipment. To calculate wage rates using monthly income from one

category and hours worked from another would, TIE claims, lead to an

inaccurate valuation. TIE argues that industry group 381 has been used

by the Department in previous bearings cases.

Department's Position

We agree with Timken that the proper group for bearings is ISIC

group 382 because bearings are included in one of its subgroups.

However, for these final results we are using data on hours worked from

the IL&T that are not industry-specific (see our response to comment

12). With respect to monthly income data, we used, in the preliminary

results, ISIC group 381 data from the Statistical Bulletin, published

by the Polish government. For these final results, we have recalculated

the wage rate using monthly incomes in the Statistical Bulletin from

ISIC group 382.

Comment 21

Timken argues that the Department should adjust its materials

factor prices to account for insurance and freight costs incurred in

shipping to Poland. The EUROSTAT export data used by the Department in

the preliminary results reflected FOB values. Therefore, according to

Timken, an appropriate adjustment must be made to reflect the cost of

the materials when delivered to the importing country. Timken suggests

the Department use the CIF-FOB conversion factor published by the

International Monetary Fund in the International Financial Statistics

Yearbook. Timken notes that the Department made such an adjustment in

Final Results of Antidumping Duty Administrative Review: Tapered Roller

Bearings and Parts Thereof from the People's Republic of China (56 FR

67590, December 31, 1991).

TIE replies that applying the CIF-FOB conversion factor to import

prices into Poland would lead to distorted prices. First, TIE states

that there is no evidence on record that Romanian factories insured

their imports of raw materials. The CIF-FOB factor includes an

adjustment for insurance that is not relevant in determining a

surrogate value. Second, TIE argues that use of the CIF-FOB conversion

factor would overstate freight costs between the EU and Poland. The

CIF-FOB conversion factor is based on all imports into Poland, from all

countries, and therefore includes ocean and air freight from distant

countries. The EU and Poland, however, are contiguous, and most of the

steel imported by Poland was from Germany, a contiguous country;

therefore, freight methods and rates would be cheaper.

Department's Position

We agree with Timken that the FOB prices of EU exports to Poland do

not state the true costs to Poland for raw materials. Although there is

no evidence on record indicating whether Romanian factories insure

their imports of raw materials, producers do incur costs to ship inputs

to the factory. Therefore, the Department has used the CIF-FOB

conversion factor suggested by Timken, as the best available surrogate

information. This factor can not be separated into distinct rates for

freight and insurance. Similarly, although freight distances for steel

imported into Poland might differ from the average freight distance

reflected in the conversion factor, we have no way to ascertain that

difference.

Comment 22

Timken asks the Department to recalculate factor prices to exclude

data involving small quantities of a product. Specifically, Timken asks

the Department to disregard a country's exports to Poland if the total

quantity from that country during the POR is less than ten metric tons.

Smaller quantities, Timken claims, often involve special products or

peculiar transactions that yield unit values unrepresentative of

overall price levels for that HTS category.

Department's Position

We agree with Timken. In the preliminary results, we derived raw

material surrogate prices based in part on quantities too small to be

representative. Accordingly, the Department has recalculated factor

prices after eliminating any data from a country exporting an

insignificant amount to Poland during the POR. See Memorandum from Case

Analyst to the File, dated September 25, 1996, ``Analysis for the final

results of the 1994-1995 administrative review of tapered roller

bearings and parts thereof, finished or unfinished, from Romania--

Tehnoimportexport, S.A. (TIE),'' which is on file in the Central

Records Unit (room B-099 of the Main Commerce Building) for the amounts

considered to be insignificant.

Clerical Errors

TIE identified a clerical error with respect to the reporting of

packing costs in its original submission. Review of the data shows that

an obvious error was made in the reporting of a packing factor for one

model. Accordingly, we have decided to correct the error, and

recalculate the margins for the affected observations.

TIE also identified clerical errors made by the Department in its

preliminary results of review. Although the submission alleging the

clerical errors was submitted to the Department after the deadlines for

submission of case and rebuttal briefs, and after the public hearing,

we have determined that we made such errors, and have corrected them

for the final results.

Currency Conversion

During the interim between the publication of the preliminary

results and these final results, the Department was able to obtain

daily exchange rates certified by the Federal Reserve Bank for the Thai

Baht. Accordingly, we used these rates in place of the monthly rates

used in the preliminary results.

Non-Shippers

Tehnoforestexport, S.C. Rulmenti S.A. Alexandria, S.C. Rulmentul

S.A. Brasov, S.C. Rulmenti S.A. Barlad, S.C. Rulmenti Grei S.A.

Ploiesti, S.C. Rulmenti S.A. Slatina, and S.C. URB Rulmenti Suceava

S.A. stated that they did not have shipments during the period of

review, and we confirmed this with the United States Customs Service.

Therefore, we are treating them as non-shippers for this review, and

are rescinding this review with respect to these companies.

Final Results of Review

As a result of our review of the comments received, we have

determined the margin to be:

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

Margin

Manufacturer/exporter Time period (percent)

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

Romania Rate.............................. 6/1/94-5/31/95 14.89

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

The Department will instruct the Customs Service to assess

antidumping duties on all appropriate entries. The Department will

issue appraisement instructions directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of these final results for all shipments of TRBs from

Romania entered, or withdrawn from warehouse, for consumption on or

after the publication date, as provided for by section 751(a)(2)(c) of

the Act: (1) The cash deposit rate for TIE and all other exporters will

be 14.89 percent; and (2)

[[Page 51434]]

for non-Romanian exporters of subject merchandise from Romania, the

cash deposit rate will be the rate applicable to the Romanian supplier

of that exporter. These deposit requirements shall remain in effect

until publication of the final results of the next administrative

review.

This notice also serves as a final reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d)(1). Timely written notification

of the return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and terms of an APO is a sanctionable violation.

This administrative review and notice are in accordance with

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

Dated: September 25, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-25243 Filed 10-1-96; 8:45 am]

BILLING CODE 3510-DS-P