Sebacic Acid From the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-825]

Sebacic Acid 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 of sebacic acid from the People's Republic of

China.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on sebacic acid

from the People's Republic of China (PRC) in response to requests from

the petitioner, Union Camp Corporation, and three respondents: Tianjin

Chemicals Import and Export Corporation (Tianjin), Guangdong Chemicals

Import and Export Corporation (Guangdong) and Sinochem International

Chemicals Company, Ltd. (SICC). This review covers four exporters of

the subject merchandise, including the three respondent companies above

and Sinochem Jiangsu Import and Export Corporation (Jiangsu). The

period of review (POR) is July 1, 1995, through June 30, 1996.

We have preliminarily determined that sales have been made below

normal value (NV) during this period. If these preliminary results are

adopted in the final results of this administrative review, we will

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

the difference between United States price (USP) and NV. These

assessment rates, if adopted for the final results of the review, will

be calculated on an importer-specific ad valorem duty basis. Interested

parties are invited to comment on these preliminary results.

EFFECTIVE DATE: August 8, 1997.

FOR FURTHER INFORMATION CONTACT: Lyn Baranowski, Doreen Chen, or

Stephen Jacques, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th and Constitution

Avenue, N.W., Washington, D.C. 20230; telephone: (202) 482-3793.

Applicable Statute and Regulations

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 Rounds Agreements Act (URAA). In addition, unless otherwise

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

reference to the regulations, codified at 19 CFR part 353, as they

existed on April 1, 1996.

SUPPLEMENTARY INFORMATION:

Background

The Department published in the Federal Register an antidumping

duty order on sebacic acid from the PRC on July 14, 1995 (59 FR 35909).

On July 8,

[[Page 42756]]

1996, the Department published in the Federal Register (61 FR 35712) a

notice of opportunity to request an administrative review of the

antidumping duty order on sebacic acid from the PRC covering the period

July 1, 1995, through June 30, 1996.

On July 9, 1996, in accordance with 19 CFR 353.22(a), Union Camp

requested that we conduct an administrative review of Tianjin,

Guangdong, SICC, and Jiangsu. On July 30, 1996, Tianjin and SICC

requested that we conduct an administrative review. We published a

notice of initiation of this antidumping duty administrative review on

August 15, 1996 (61 FR 42416). The Department is conducting this

administrative review in accordance with section 751 of the Act.

Scope of Review

The products covered by this order are all grades of sebacic acid,

a dicarboxylic acid with the formula (CH2)8(COOH)2, which include but

are not limited to CP Grade (500ppm maximum ash, 25 maximum APHA

color), Purified Grade (1000ppm maximum ash, 50 maximum APHA color),

and Nylon Grade (500ppm maximum ash, 70 maximum ICV color). The

principal difference between the grades is the quantity of ash and

color. Sebacic acid contains a minimum of 85 percent dibasic acids of

which the predominant species is the C10 dibasic acid. Sebacic acid is

sold generally as a free-flowing powder/flake.

Sebacic acid has numerous industrial uses, including the production

of nylon 6/10 (a polymer used for paintbrush and toothbrush bristles

and paper machine felts), plasticizers, esters, automotive coolants,

polyamides, polyester castings and films, inks and adhesives,

lubricants, and polyurethane castings and coatings.

Sebacic acid is currently classifiable under subheading

2917.13.00.00 of the Harmonized Tariff Schedule of the United States

(HTSUS). Although the HTSUS subheading is provided for convenience and

customs purposes, our written description of the scope of this

proceeding remains dispositive.

This review covers the period July 1, 1995, through June 30, 1996,

and four exporters of Chinese sebacic acid.

Verification

We conducted verification of the sales and factor information

provided by respondent SICC located in Beijing, PRC and its producer,

Tianjin Zhong He Chemical Plant (Zhong He), located in Tianjin, PRC. We

conducted the verifications using standard verification procedures,

including onsite inspection of the manufacturer's facilities, the

examination of relevant sales and financial records, and selection of

original documentation containing relevant information. Our

verification results are outlined in the public versions of the

verification reports.

Separate Rates

1. Background and Summary of Findings

It is the Department's standard policy to assign all exporters of

the merchandise subject to review in non-market-economy countries a

single rate, unless an exporter can demonstrate an absence of

government control, both in law and in fact, with respect to exports.

To establish whether an exporter is sufficiently independent of

government control to be entitled to a separate rate, the Department

analyzes the exporter in light of the criteria 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 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) (Silicon Carbide). Evidence supporting, though not requiring,

a finding of de jure absence of government control over export

activities 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. Evidence relevant to a de facto absence of government

control with respect to exports is based on four factors, whether the

respondent: (1) Sets its own export prices independent from the

government and other exporters; (2) can retain the proceeds from its

export sales; (3) has the authority to negotiate and sign contracts;

and (4) has autonomy from the government regarding the selection of

management. See Silicon Carbide at 22587; See also Sparklers at 20589.

In our final determination of sales at less than fair value, the

Department determined that there was de jure and de facto absence of

government control of each company's export activities and determined

that each company warranted a company-specific dumping margin. See

Final Determination of Sales at Less Than Fair Value: Sebacic Acid From

the People's Republic of China, 59 FR 28053 (Sebacic Acid). For this

period of review, SICC and Tianjin have responded to the Department's

request for information regarding separate rates. We have found that

the evidence on the record is consistent with the final determination

in the LTFV investigation and continues to demonstrate an absence of

government control, both in law and in fact, with respect to their

exports, in accordance with the criteria identified in Sparklers and

Silicon Carbide. During verification of SICC, we examined its business

and financial statements. We found no evidence of government control of

SICC's export activities.

For Guangdong, which had no sales during this POR, the company-

specific rate of 13.54% from the previous administrative review remains

unchanged.

2. Separate Rate Determination for Non-responsive Company

For Jiangsu, which did not respond to the questionnaire, we

preliminarily determine that this company does not merit a separate

rate. Because the Department assigns a single rate to companies in a

non-market economy unless an exporter can demonstrate absence of

government control, we preliminarily determine that Jiangsu is subject

to the country-wide rate for this case.

United States Price

For SICC and Tianjin, the Department based USP on export price

(EP), in accordance with section 772(a) of the Act. We made deductions

from EP, where appropriate, for foreign inland freight, ocean freight,

brokerage and handling, and marine insurance. See ``Factor Valuation''

section of this notice. We selected India as the surrogate country for

the reasons explained in the ``Normal Value'' section of this notice.

Normal Value

Section 773(c)(1) of the Act provides that the Department shall

determine the normal value (NV) using a factors-of-production

methodology if: (1) The merchandise is exported from an NME country;

and (2) the information does not permit the calculation of NV using

home-market prices, third-country prices, or constructed value under

section 773(a) of the Act.

The Department has treated the PRC as an NME country in all

previous antidumping cases. In accordance with section 771(18)(C)(i) of

the Act, any determination that a foreign country is a NME country

shall remain in effect until revoked by the administering authority.

None of the parties to this proceeding has contested such

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treatment in this review. Furthermore, available information does not

permit the calculation of NV using home market prices, third country

prices or CV under section 773(a) of the Act. Therefore, we treated the

PRC as a NME country for purposes of this review and calculated NV by

valuing the factors of production in a comparable market economy

country which is a significant producer of comparable merchandise.

Factors of production include, but are not limited to: (1) Hours of

labor required; (2) quantities of raw materials employed; (3) amounts

of energy and other utilities consumed; and (4) representative capital

cost, including depreciation.

Section 773(c)(4) of the Act and section 353.52(b) of the

Department's regulations direct us to select a surrogate country that

is economically comparable to the PRC. On the basis of per capita gross

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

national distribution of labor, we find that India is a comparable

economy to the PRC (See Memorandum from Director, Office of Policy, to

Office Director, AD/CVD Group III, Office 9, dated June 24, 1997.).

The statute (section 773(c)(4) of the Act and section 353.52(b) of

the Department's regulations) also requires that, to the extent

possible, the Department use a surrogate country that is a significant

producer of merchandise comparable to sebacic acid. The countries that

we confirmed to be producers of sebacic acid, such as Japan and the

United States, do not have economies comparable to the PRC. However, we

found that India was a significant producer of comparable merchandise

(e.g., oxalic acid) during the POR. Though sebacic acid and oxalic acid

have different end uses, both are dicarboxylic acids. In addition, many

of the inputs used to produce sebacic acid are also used to produce

oxalic acid. Therefore, we find that India fulfills both requirements

of the statute.

For purposes of calculating NV, we valued PRC factors of

production, in accordance with section 773(c)(1) of the Act. In

examining surrogate values, we selected, where possible, the publicly

available value which was: (1) An average non-export value; (2)

representative of a range of prices within the POR or most

contemporaneous with the POR; (3) product-specific; and (4) tax-

exclusive. We chose values with a preference for prices most

contemporaneous with the POR. Where we could not obtain a POR-

representative price for an input, we selected a value in accordance

with the remaining criteria mentioned above and which was the closest

in time to the POR. In accordance with this methodology, we valued the

factors of production as follows:

For castor oil and castor seed, the Department valued this material

using price data reported in The Economic Times (Bombay) for Calcutta,

Delhi, Hyderabad, and Kanpur during the months of June 1995 through

December 1995. Respondents provided this price information for castor

oil and castor seed. The Department adjusted these values to account

for freight costs between the supplier and the respondents' sebacic

acid manufacturing facilities.

For caustic soda, the Department used the value reported in the

publication Indian Chemical Weekly, using data from the months of July

1995 through June 1996. Because price quotes for caustic soda reported

by Chemical Weekly are for chemicals with a 100% concentration level of

caustic soda, we made chemical purity adjustments according to the

particular concentration level of caustic soda used by respondents. We

adjusted these values to exclude taxes and to include freight expenses

incurred from the suppliers to the respondents' sebacic acid

manufacturing facilities.

For cresol, both respondents and petitioner reported market values

published by Chemical Weekly for the period of July 1995 through June

1996. The Department reviewed pricing information for other months of

the POR which indicated that the market price reported by respondents

are representative of the market price of the material for the entire

POR. We adjusted this value for taxes and freight expenses.

The valuation of activated carbon, which is interchangeable with

macropore resin, was based upon information found in the publication

India's Imports by Commodities-Countries (Monthly Statistics of the

Foreign Trade of India (IMF)). This pricing information reflects the

average unit import price for the period April 1995 through February

1996.

The market values for sodium chloride (also referred to as sodium

chlorite or vacuum salt), sulphuric acid, and zinc oxide were based

upon the published market prices reported in Chemical Weekly for the

period of July 1995 through June 1996. We adjusted these values for

taxes and freight expenses.

For benzenic sulphuric acid, neither the petitioner nor the

respondent submitted a surrogate value. After extensive research, we

failed to locate a chemical called ``benzenic sulphuric acid.''

However, according to the Encyclopedia of Chemical Technology, when

benzene is sulfonated with sulphuric acid, a chemical called benzenic

sulfonic acid is produced. Therefore, we used a value for benzenic

sulfonic acid as a substitute surrogate value for benzenic sulphuric

acid. The value we used is from the Monthly Statistics of the Foreign

Trade of India for the period April 1995 through February 1996.

For direct labor, we used 1994 data from Investing, Licensing &

Trading Conditions Abroad, India, issues November 1995 and November

1996, by the Economist Intelligence Unit.

For factory overhead, we used information obtained from the April

1995 Reserve Bank of India Bulletin. From ``Statement 1--Combined

Income, Value of Production, Expenditure and Appropriation Accounts,

Industry Group-wise'' of that report for the Indian metals and

chemicals industries, we summed those components which pertain to

overhead expenses and divided them by the sum of those components

pertaining to the cost of manufacturing to calculate an overhead rate

of 15.42 percent.

For steam coal, we used prices published in Monthly Statistics of

Foreign Trade of India, Volume II--Imports for the period of April 1995

through January 1996, and for electricity, we used information obtained

from the Current Energy Scene in India for July 1995.

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

information from the same source we used for factory overhead. We

summed the values which comprised the components of SG&A and divided

that figure by the same cost of manufacturing figure used to determine

factory overhead, to arrive at an SG&A rate of 21.67 percent.

For the calculation of profit, we used information from the April

1995 Reserve Bank of India Bulletin. We divided the reported before-tax

profit for the ``processing and manufacture: metals, chemicals, and

products thereof'' category by the sum of those components pertaining

to the cost of manufacturing plus SG&A to calculate a profit rate of

5.24 percent.

For the value of export packing (plastic bags and woven bags), the

Department used the value of imports into India during April 1995

through February 1996, as reported in the Monthly Statistics of Foreign

Trade of India, Volume II. We adjusted this value to account for

freight expenses.

For foreign inland freight, the Department relied upon the trucking

[[Page 42758]]

freight rates reported to the Department in an August 1993 embassy

cable from India, pursuant to the less-than-fair-value investigation of

Certain Helical Spring Lock Washers from the PRC and the rail freight

rates reported to the Department in a December 1989 embassy cable for

the final results of the antidumping administrative review for Shop

Towels of Cotton from the PRC. This is the same information we used in

the sebacic acid less-than-fair-value investigation. We adjusted these

rates for the POR to reflect inflation, based on information published

in the International Financial Statistics of the International Monetary

Fund.

For ocean freight, we used the surrogate value provided by the

respondent in the first review. This value was added to values for

delivery destination charges and fuel adjustment charges provided by

the Federal Maritime Commission on January 24, 1997.

To calculate the expense for marine insurance, we used information

from a publicly summarized version of the questionnaire response for

the investigation of sales of less than fair value of Sulphur Vat Dyes

from India. The marine insurance rate reported in the public version of

the October 8, 1992 response was adjusted for inflation to reflect

marine insurance charges during the POR, based on information published

in the International Financial Statistics of the International Monetary

Fund.

For foreign brokerage and handling charges, we used information

from publicly available data for foreign brokerage and handling

reported for the investigation for Sulphur Vat Dyes. The rate

documented is Rs 0.39/kg. We adjusted this value for inflation using

the inflator value of 1.40 that the Department calculated from the

International Financial Statistics, published by the International

Monetary Fund.

Consistent with the methodology employed in the final determination

in the less-than-fair-value investigation of this case, we have

determined that fatty acid and glycerine are by-products. See Sebacic

Acid at 28056. Therefore, as by-products, we subtracted the sales

revenue of fatty acid and glycerine from the production costs of

sebacic acid. This treatment of by-products is also consistent with

generally accepted accounting principles. (See Cost Accounting: A

Managerial Emphasis (1991) at pages 539-544).

To value fatty acid, we used publicly available published

information from the Monthly Statistics of the Foreign Trade of India

(Monthly Statistics) for the period April 1995 through February 1996.

To value glycerine, we used the average price for glycerine (IW and

CP) in the publication Chemical Weekly for the period July 1995 through

June 1996 and adjusted the value to account for sales and excise taxes.

We also allocated a by-product credit for glycerine to the

production cost for the co-product caproyl alcohol. We deducted a by-

product credit for glycerine from both sebacic acid and caproyl alcohol

based on the ratio of the value of sebacic acid to the total value of

both sebacic acid and caproyl alcohol.

Consistent with the methodology employed in the final determination

in the less-than-fair-value investigation of this case, we have

determined that caproyl alcohol is a co-product. Therefore, we have

allocated the factor inputs, based on the relative quantity of output

of this product and sebacic acid. Additionally, we have used the

production times necessary to complete each production stage of sebacic

acid as a basis for allocating the amount of labor, energy usage, and

factory overhead among the products. This treatment of co-products is

consistent with generally accepted accounting principles. (See Cost

Accounting: A Managerial Emphasis (1991) at pages 528-533).

To value caproyl alcohol, we used publicly available published

information for octanol from Chemical Weekly and adjusted for sales and

excise taxes. We used the Chemical Weekly octanol value as the

surrogate value for caproyl alcohol because, in a letter submitted by

respondents in attachment four of their January 6, 1997 submission

concerning surrogate values, the editor of Chemical Weekly states that

the reference to octanol in the journal refers to the more common 2-

octanol, another name for caproyl alcohol.

Preliminary Results of Review

For Jiangsu, which failed to respond to the questionnaire, we have

not granted a separate rate and the country-wide rate will apply to all

sales. For Guangdong, which reported that there were no sales during

the POR, its company-specific rate from the previous administrative

review remains unchanged.

We preliminarily determine that the following dumping margins

exist:

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

Margin

Manufacturer/exporter Time period (percent)

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

Tianjin Chemicals I/E Corp................ 7/01/95--6/30/96 0.00

Sinochem International Chemicals Corp..... 7/01/95--6/30/96 0.00

Guangdong Chemicals I/E Corp.............. 7/01/95--6/30/96 13.54

Country-Wide Rate......................... 7/01/95--6/30/96 243.40

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

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 days after the publication of this notice,

or the first workday thereafter. Interested parties may submit written

comments (case briefs) within 30 days of the date of publication of

this notice. Rebuttal comments (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. The Department will publish a

notice of final results of this administrative review, which will

include the results of its analysis of issues raised in any such

comments, within 180 days of publication of these preliminary results.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between USP and NV may vary from the percentages stated

above. The Department will issue appraisement instructions directly to

the Customs Service.

Furthermore, the following cash deposit requirements will be

effective upon publication of the final results of this administrative

review for all shipments of the subject merchandise 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) For the

reviewed companies named above which have separate rates (SICC and

Tianjin), the cash deposit rates will be the rates for those firms

established in the final results of this administrative review; (2) for

companies previously found to be entitled to a separate rate and for

which no review was requested, the cash deposit rates will be the rate

established in the most recent review of that company; (3) for all

other non-PRC exporters of subject merchandise from the PRC, the cash

deposit rates will be the rates applicable to the PRC supplier of that

exporter; and (4) the cash deposit rate for non-PRC exporters of

subject

[[Page 42759]]

merchandise from the PRC will be the rate applicable to the PRC

supplier of that exporter. These deposit rates, when imposed, shall

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

administrative review.

Notification of Interested Parties

This notice also serves as a preliminary 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 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: July 31, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-20937 Filed 8-7-97; 8:45 am]

BILLING CODE 3510-DS-P