Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, from the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-803]

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

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

Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to requests by the petitioner and two resellers of

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

conducting an administrative review of the antidumping duty order on

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

handles, (HFHTs) from the People's Republic of China (PRC). The review

covers four exporters of subject merchandise to the United States and

the period February 1, 1994 through January 31, 1995. The review

indicates the existence of dumping margins during the period of review.

We have preliminarily determined that sales have been made below

normal value (NV). If these preliminary results are adopted in our

final results of administrative review, we will instruct the U.S.

Customs Service to assess antidumping duties equal to the difference

between United States price (U.S. price) and NV.

Interested parties are invited to comment on these preliminary

results.

EFFECTIVE DATE: April 5, 1996.

FOR FURTHER INFORMATION CONTACT: Tom Prosser, Rebecca Trainor or

Maureen Flannery, Office of Antidumping Compliance, Import

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

Commerce, 14th Street and Constitution Avenue NW., 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).

SUPPLEMENTARY INFORMATION:

Background

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

Register (56 FR 6622) the antidumping duty order on HFHTs from the PRC.

On February 2, 1995, the Department published in the Federal Register

(60 FR 6524) a notice of opportunity to request an administrative

review of this antidumping duty order. On February 27, 1995, in

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

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

Export Corporation (FMEC) and Shandong Machinery Import & Export

Corporation (SMC), requested that the Department conduct an

administrative review of their exports of subject merchandise to the

United States. On February 28, 1995, the petitioner, Woodings-Verona

Tool Works, Inc., requested that the Department conduct an

administrative review of FMEC, SMC, Henan Machinery Import and Export

Co. (Henan) and Tianjin Machinery Import and Export Co. (Tianjin). We

published the notice of initiation of this review on March 15, 1995 (60

FR 13956).

The Department received no questionnaire responses from either

Henan or Tianjin. Therefore, we have based our analysis of these two

companies on facts otherwise available. The Department is conducting

this administrative review in accordance with section 751 of the Act.

Scope of the Review

Imports covered by this review 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 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,

[[Page 15219]]

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.

This review covers four exporters of HFHTs from the PRC. The review

period is February 1, 1994 through January 31, 1995.

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 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). 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 (de jure)

and in fact (de facto), 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. See Silicon

Carbide, 59 FR at 22587.

In our final results of review for the 1992-1993 review period of

this order, the Department determined that FMEC and SMC warranted

company-specific dumping margins according to the criteria identified

in Sparklers and Silicon Carbide. See Preliminary Results of

Antidumping Duty Administrative Review: Heavy Forged Hand Tools from

the PRC 60 FR 19723, 19724 (April 20, 1995), and Final Results of

Antidumping Duty Administrative Review: Heavy Forged Hand Tools from

the PRC, 60 FR 49251 (September 22, 1995). Because there is no new

evidence on the record, we preliminarily determine that these two

companies continue to be entitled to separate rates.

Because Henan and Tianjin did not respond to our separate rates

questionnaire, we preliminarily determine that they do not merit

separate rates.

United States Price

The Department used export price (EP), in accordance with section

772(a) of the Act, in calculating U.S. price. We made deductions from

EP, 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.

Normal Value

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

Act provides that the Department shall determine normal value (NV)

using a factors of production methodology if (1) the subject

merchandise is exported from an NME country, and (2) available

information does not permit the calculation of NV using home market

prices or third country prices, in accordance with 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. In accordance with section

771(18)(c)(i), any determination that a foreign country is an NME

country shall remain in effect until revoked by the administering

authority. Accordingly, we calculated NV in accordance with section

773(c) of the Act and section 353.52 of the Department's regulations.

In accordance with section 773(c)(3) of the Act, the factors of

production utilized in producing HFHTs include, but are not limited

to--(A) hours of labor required, (B) quantities of raw materials

employed, (C) amounts of energy and other utilities consumed, and (D)

representative capital cost, including depreciation. In accordance with

section 773(c)(4) of the Act, the Department valued the factors of

production, to the extent possible, using the prices or costs of

factors of production in a market economy country that is--(A) at a

level of economic development comparable to that of the PRC, and (B) a

significant producer of comparable merchandise. We determined that

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

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

distribution of labor. Furthermore, India is a significant producer of

comparable merchandise. For a further discussion of the Department's

selection of India as the surrogate country, see File Memorandum, dated

February 26, 1996, on file in Room B-099 of the Commerce Department.

In accordance with section 773(c) of the Act, for purposes of

calculating NV, we valued PRC factors of production in the year in

which production occurred as follows:

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 1993, for production in 1993, and

during April 1994-January 1995, for production in 1994, obtained from

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

Imports, January 1994 and January 1995 (Indian Import Statistics).

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

Economist Intelligence Unit's Investing, Licensing & Trading Conditions

Abroad: India, released in November 1993 and November 1994. This source

breaks out labor rates between skilled, unskilled, semi-skilled, and

foreman labor, and provides information on the number of labor hours

worked per week.

For factory overhead, we used information reported in the

April 1995 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.

[[Page 15220]]

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

we used information obtained from the April 1995 Reserve Bank of India

Bulletin. We calculated an SG&A rate by dividing SG&A expenses by the

cost of manufacture.

To calculate a profit rate, we used information obtained

from the April 1995 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.

To value the packing materials, including cartons,

pallets, anti-rust paper, anti-damp paper, plastic and iron straps,

plastic bags, iron buttons and knots, synthetic fiber, and iron wire,

we used the rupee per metric ton, per kilogram, or per cubic meter

value of imports into India during April-December 1993, for production

in 1993, and during April 1994-January 1995, for production in 1994,

obtained from the 1994 and 1995 Indian Import Statistics. We adjusted

these values to include freight costs incurred between the suppliers

and the HFHT factories.

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 1995. We adjusted the value of coal to reflect

inflation, using wholesale price indices (WPI) of India as published in

the International Financial Statistics by the International Monetary

Fund (IMF).

To value electricity, we used the price of electricity for

India for 1990, reported in the Asian Development Bank publication

Energy Indicators of Developing Member Countries of the Asian

Development Bank, July 1992. We adjusted the value of electricity to

reflect inflation, using the 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). We adjusted truck freight rates to reflect

inflation, using the WPI published by the IMF.

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 rail freight rates to reflect inflation, using the

WPI published by the IMF.

Currency Conversion

We made currency conversions based on the official exchange rates

in effect on the date of the U.S. sales as certified by the Federal

Reserve Bank.

Use of Facts Otherwise Available

On August 18, 1995, the Department sent to each respondent the

Department's antidumping questionnaire. We established that all of the

respondents received the questionnaires; however Henan and Tianjin

failed to submit responses. See File Memorandum dated September 11,

1995, on file in Room B-099 of the Commerce Department. Because Henan

and Tianjin have withheld the requested information, we must make our

preliminary determination based on facts otherwise available, in

accordance with section 776(a)(2)(A) of the Act.

The Department finds that, in not responding to the questionnaire,

Henan and Tianjin failed to cooperate by not acting to the best of

their abilities to comply with a request for information from the

Department. Section 776(b) of the Act therefore authorizes the

Department to use an inference adverse to the interests of that

respondent in choosing the facts available. Section 776(b) also

authorizes the Department to use as adverse facts available information

derived from the petition, the final determination, a previous

administrative review, or other information placed on the record.

Because information from prior proceedings constitutes secondary

information, section 776(c) of the Act provides that the Department

shall, to the extent practicable, corroborate that secondary

information from independent sources reasonably at its disposal. The

Statement of Administrative Action (SAA) provides that ``corroborate''

means simply that the Department will satisfy itself that the secondary

information to be used has probative value.

To corroborate secondary information, the Department will, to the

extent practicable, examine the reliability and relevance of the

information to be used. However, unlike other types of information,

such as input costs or selling expenses, there are no independent

sources for calculated dumping margins. The only source for margins is

administrative determinations. Thus, in an administrative review, if

the Department chooses as total adverse facts available a calculated

dumping margin from a prior segment of the proceeding, it is not

necessary to question the reliability of the margin for that time

period. With respect to the relevance aspect of corroboration, however,

the Department will consider information reasonably at its disposal as

to whether there are circumstances that would render a margin not

relevant. Where circumstances indicate that the selected margin is not

appropriate as adverse facts available, the Department will disregard

the margin and determine an appropriate margin (see, e.g., Fresh Cut

Flowers from Mexico; Preliminary Results of Antidumping Duty

Administrative Review (60 FR 49567)), where the Department disregarded

the highest margin in that case as adverse BIA because the margin was

based on another company's uncharacteristic business expense resulting

in an unusually high margin). For these reviews, we have used the

highest rate from any prior segment of each proceeding. These were

21.92 percent for axes/adzes, 66.32 percent for bars/wedges, 45.42

percent for hammers/sledges, and 108.20 percent for picks/mattocks.

Preliminary Results of the Review

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

following margins exist for the period February 1, 1994 through January

31, 1995:

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

Margin

Manufacturer/exporter (percent)

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

Fujian Machinery & Equipment Import & Export Corp:

Axes/Adzes............................................... 0.34

Bars/Wedges.............................................. 3.89

Hammers/Sledges.......................................... 0.34

Picks/Mattocks........................................... 46.91

Shandong Machinery Import & Export Corp:

Bars/Wedges.............................................. 12.51

Hammers/Sledges.......................................... 0.36

Picks/Mattocks........................................... 39.19

Henan Machinery Import & Export Co:

Axes/Adzes............................................... 21.92

Bars/Wedges.............................................. 66.32

Hammers/Sledges.......................................... 45.42

Picks/Mattocks........................................... 108.20

Tianjin Machinery Import & Export Co:

Axes/Adzes............................................... 21.92

Bars/Wedges.............................................. 66.32

Hammers/Sledges.......................................... 45.42

Picks/Mattocks........................................... 108.20

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

Parties to the proceeding 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

[[Page 15221]]

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. Parties who submit argument in this

proceeding are requested to submit with the argument (1) a statement of

the issue and (2) a brief summary of the argument. 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 NV 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 this administrative review 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

(FMEC and SMC) will be the rates for those firms established in the

final results of this administrative review; (2) for all other PRC

exporters, the cash deposit rates will be the PRC-wide rates

established in the final results of this administrative review; 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. We preliminarily determine the PRC-wide rates to be: 21.92

percent for axes/adzes; 66.32 percent for bars/wedges; 44.41 percent

for hammers/sledges; and 108.20 percent for picks/maddocks. These are

the highest rates found for any respondent in the LTFV investigation or

any review. These deposit requirements, when imposed, shall remain in

effect until publication of the final results of the next

administrative review.

The Department acknowledges a recent decision of the Court of

International Trade, UCF America Inc. v. United States, Slip Op. 96-42

(CIT Feb. 27, 1996), in which 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.

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) 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). 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

Silicon Carbide. 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) 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, FMEC and SMC qualify for separate rates as

discussed in the ``Separate Rates'' section of this notice. Because

Henan and Tianjin do not qualify for separate rates, they remain

representative of the NME entity, which is subject to the new PRC-wide

rate established in the final results of this administrative review.

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.

This administrative review 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: March 27, 1996.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 96-8364 Filed 4-4-96; 8:45 am]

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