Industrial Phosphoric Acid From Belgium; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-423-602]

Industrial Phosphoric Acid From Belgium; 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 industrial phosphoric acid from Belgium.

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SUMMARY: In response to requests from one respondent, petitioner and

one

[[Page 25831]]

domestic producer, the Department of Commerce is conducting an

administrative review of the antidumping duty order on industrial

phosphoric acid from Belgium. The period of review is August 1, 1996

through July 31, 1997. This review covers imports of industrial

phosphoric acid from one producer, Societe Chimique Prayon-Rupel S.A.

(``Prayon'').

We have preliminarily found that sales of subject merchandise have

been made below normal value. If these preliminary results are adopted

in our final results, we will instruct the Customs Service to assess

antidumping duties based on the difference between the export price and

normal value.

Interested parties are invited to comment on these preliminary

results. Parties who submit arguments are requested to submit with the

argument (1) a statement of the issue and (2) a brief summary of the

argument. We will issue the final results not later than 120 days from

the date of publication of this notice.

EFFECTIVE DATE: May 11, 1998.

FOR FURTHER INFORMATION CONTACT:

Robert Blankenbaker or Thomas Futtner, AD/CVD Enforcement Office 4,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, NW.,

Washington, DC 20230; telephone (202) 482-0989, and 482-3814,

respectively.

SUPPLEMENTARY INFORMATION:

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

indicated, all citations to the Department of Commerce's (the

Department's) regulations refer to the regulations codified at 19 CFR

Part 351, 62 FR 27296 (May 19, 1997).

Background

On August 20, 1987, the Department published in the Federal

Register (52 FR 31439) the antidumping duty order on industrial

phosphoric acid (``IPA'') from Belgium. On August 4, 1997, the

Department published in the Federal Register (62 FR 41925) a notice of

opportunity to request an administrative review of this antidumping

duty order. On August 29, 1997, in accordance with 19 CFR 351.213(b),

Prayon, the petitioner FMC Corporation (``FMC''), and Albright & Wilson

Americas Inc. (``Wilson''), a domestic producer of the subject

merchandise, requested that the Department conduct an administrative

review of Prayon's exports of subject merchandise to the United States.

We published the notice of initiation of this review on September 25,

1997 (62 FR 50292).

Scope of the Review

The products covered by this review include shipments of IPA from

Belgium. This merchandise is currently classifiable under the

Harmonized Tariff Schedule (HTS) item numbers 2809.2000 and 4163.0000.

The HTS item number is provided for convenience and Customs purposes.

The written description remains dispositive.

Product Comparisons

We calculated monthly, weighted-average, normal values (NVs). The

industrial phosphoric acid exported by Prayon to the United States is

PRAYPHOS P5, a refined industrial phosphoric acid, and is the identical

merchandise sold by Prayon in its home market in Belgium. Therefore, we

have compared U.S. sales to contemporaneous sales of identical

merchandise in Belgium.

Export Price

Prayon sells to end-users in the United States through its

affiliated sales agent. For these sales, we used export price (EP). In

accordance with sections 772 (a) and (c) of the Act, we calculated and

EP because Prayon sold the merchandise directly to the first

unaffiliated purchaser in the United States prior to importation.

Additional factors used to determine EP include: (1) Whether the

merchandise was shipped directly from the manufacturer to the

unaffiliated U.S. customer; (2) whether this was the customary

commercial channel between the parties involved; and (3) whether the

function of the U.S. affiliate was limited to that of a processor of

sales-related documentation and a communications link with the

unrelated buyer. Where the facts indicate that the activities of the

U.S. affiliate were ancillary to the sale (e.g., arranging

transportation or customs clearance, invoicing), we treat the

transactions as EP sales. See e.g., Certain Corrosion Resistant Steel

Flat Products From Canada: Final Results of Antidumping Duty

Administrative Review, 63 FR 12725, 12738 (March 16, 1998). The record

in this case indicates that Prayon has correctly classified its U.S.

sales as EP sales. Prayon's affiliated sales agent in the United

States, Quadra Corporation (USA) (``Quadra''), served as a processor of

sales-related documentation.

EP sales were based on the delivered price to unaffiliated

purchasers in, or for exportation to, the United States. As

appropriate, we made deductions for discounts and rebates, including

early payment discounts. We made deductions for movement expenses in

accordance with section 772(c)(2)(A) of the Act; these included foreign

inland freight, foreign brokerage and handling, ocean freight, marine

insurance, U.S. customs brokerage fees, merchandise processing fees,

and U.S. inland freight expenses.

Normal Value

We compared the aggregate quantity of home market and U.S. sales

and determined that the quantity of the company's sales in its home

market was more than five percent of the quantity of its sales to the

U.S. market. Consequently, in accordance with section 773(a)(1)(B) of

the Act, we based NV on home market sales.

We also excluded from our NV analysis sales to affiliated home

market customers where the weighted-average sales prices to the

affiliated parties were less than 99.5 percent of the weighted-average

sales prices to unaffiliated parties. See Usinor Sacilor v. United

States, 872 F. Supp. 1000, 1004 (CIT 1994).

We also made adjustments, consistent with section 773(a)(6)(B) of

the Act, for inland freight. In addition, we made adjustments for

differences in circumstances of sale (COS) in accordance with section

773(a)(6)(C)(iii) of the Act and 19 CFR 351.410.

In calculating credit expense, Prayon reported the discount on

accounts receivable sold to its affiliated coordination center. Since

the reported credit expense is greater than the credit expense

calculated using the standard credit calculation (i.e., (date of

payment less date of shipment/ 365)* monthly home market short-term

interest rates* gross price), we have determined that the discount

transaction between Prayon and its affiliated coordination center is

not conducted at arm's-length. Accordingly, we have used the standard

credit calculation when calculating the amount of credit to deduct from

normal value. We used the monthly home market short-term borrowing

rates provided by Prayon in calculating inventory carrying costs as the

basis for the monthly home market short-term interest rates used in the

credit calculation.

No other adjustments were claimed or allowed.

[[Page 25832]]

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (LOT) as the export price (EP) or the

(constructed export price (CEP) transaction. The NV LOT is that of the

starting-price sales in the comparison market or, when NV is based on

constructed value, that of the sales from which we derive selling,

general and administrative expenses and profit. For EP, the U.S. LOT is

also the level of the starting-price sale, which is usually from

exporter to importer. For CEP, it is the level of the constructed sale

from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or

CEP, we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sale are at a different

LOT, and the difference affects price comparability, as manifested in a

pattern of consistent price differences between the sales on which NV

is based and comparison-market sales at the LOT of the export

transaction, we make a LOT adjustment under section 773(a)(7)(A) of the

Act. Finally, for CEP sales, if the NV level is more remote from the

factory than the CEP level and there is no basis for determining

whether the difference in the levels between NV and CEP affects price

comparability, we adjust NV under section 773(a)(7)(B) of the Act (the

CEP offset provision). See Notice of Final Determination of Sales at

Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from

South Africa, 62 FR 61731, 61732 (November 19, 1997).

Prayon did not claim a LOT adjustment; however, we requested

information concerning Prayon's distribution system, including selling

functions, to determine whether such an adjustment was necessary.

Prayon reported that all sales during the period of review (POR), in

both the comparison market (the home market in this case) and the

United States, were to end-users and distributors. In the U.S. market,

Prayon sells to end-users through its affiliated sales agent. The

subject merchandise is shipped from tankage in a storage facility in

Canada directly to the customer. In the home market, Prayon sells

through several channels of distribution. The first channel includes

direct sales made to end-users. For the other channels, Prayon sells to

either end-users or distributors through its affiliated sales agent.

For all home market customers, Prayon ships the subject merchandise via

independent carriers directly to the customer from its storage

facilities at the plant. We have examined information provided by

Prayon concerning these sales and determined that the selling functions

are the same in the home market and U.S. market. Prayon negotiates all

final prices and quantities, and bears the cost of storage and

handling, surveys and delivery to customer. Prayon does not maintain

inventories for its customers, provide after-sales service, or offer

advertising or other sales support activities to its customers in

either market. Therefore, we preliminarily determine that sales in the

home market and sales in the United States are at the same LOT and that

no adjustment is warranted.

Commissions

The Department operates under the assumption that commission

payments to affiliated parties (in either the United States or home

market) are not at arm's length. The Court of International Trade has

held that this is a reasonable assumption. See Outokumpu Copper Rolled

Products AB v. United States, 850 F. Supp. 16,22 (1994).

Accordingly, the Department has established guidelines to determine

whether affiliated party commissions are paid on an arm's-length basis

such that an adjustment for such commissions can be made. See Tapered

Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan

and Tapered Roller Bearings, Four Inches or Less in Outside Diameter,

and Components Thereof, From Japan, 61 FR 57,629 (November 7, 1996).

First, we compare the commissions paid to affiliated and unaffiliated

sales agents in the same market. If there are no commissions paid to

unaffiliated parties, we then compare the commissions earned by the

affiliated selling agent on sales of merchandise produced by the

respondent to commissions earned on sales of merchandise produced by

unaffiliated sellers or manufacturers. If there is no benchmark which

can be used to determine whether the affiliated party commission is an

arm's-length value (i.e., the producer does not use an unaffiliated

selling agent and the affiliated selling agent does not sell subject

merchandise for an unaffiliated producer), the Department assumes that

the affiliated party commissions are not paid on an arm's-length basis.

In this case, Prayon used an affiliated sales agent in the home

market and a different affiliated sales agent in the United States.

Prayon did not use unaffiliated agents during the POR and did not place

on the record information that its affiliated home market and U.S.

selling agents acted as agents for unaffiliated producers of the

subject merchandise. As a result, we were unable to establish a

benchmark for use in determining whether commission payments Prayon

made to affiliated selling agents were at arm's length. Accordingly, we

preliminarily determine not to make a circumstance of sale adjustment

for commissions in either market.

Currency Conversion

We made currency conversions in accordance with section 773A of the

Act based on rates certified by the Federal Reserve Bank in effect on

the dates of U.S. sales. See Change in Policy Regarding Currency

Conversions, 61 FR 9434 (March 8, 1996).

Preliminary Results of the Review

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

following margin exists for the period August 1, 1996 through July 31,

1997:

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

Margin

Manufacturer/exporter (percent)

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Prayon..................................................... 3.96

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Parties to the proceeding may request disclosure within five days

of the date of publication of this notice. Interested parties may also

request a hearing within ten days of publication. If requested, a

hearing will be held as early as convenient for the parties but not

later than 44 days after the date of publication or the first work day

thereafter. Interested parties may submit case briefs not later than 30

days after 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 of this notice.

The Department will issue a notice of the final results of this

administrative review, which will include the results of its analysis

of issues raised in any such briefs, within 120 days from the

publication of these preliminary results.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. In accordance

with the methodology in Final Results of Antidumping Duty

Administrative Review and Partial Termination of Administrative Review:

Circular Welded Non-Alloy Steel Pipe from the Republic of Korea (62 FR

55574, October 27, 1997), we calculated exporter/importer-specific

assessment

[[Page 25833]]

values by dividing the total dumping duties due for each importer by

the number of tons used to determine the duties due. We will direct

Customs to assess the resulting per-ton dollar amount against each ton

of the merchandise entered by these importers during the review period.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of industrial phosphoric acid from Belgium entered, or

withdrawn from warehouse, for consumption on or after the publication

date of the final results of this administrative review, as provided by

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

reviewed company will be the rate established in the final results of

this administrative review (except no cash deposit will be required

where the weighted-average margin is de minimis, i.e., less than 0.5

percent); (2) for merchandise exported by manufacturers or exporters

not covered in this review but covered in the original less-than-fair-

value (LTFV) investigation or a previous review, the cash deposit will

continue to be the most recent rate published in the final

determination or final results for which the manufacturer or exporter

received an individual rate; (3) if the exporter is not a firm covered

in this review, a previous review, or the original investigation, but

the manufacturer is, the cash deposit rate will be the rate established

for the most recent period for the manufacturer of the merchandise; and

(4) if neither the exporter nor the manufacturer is a firm covered in

this or any previous reviews or the original investigation, the cash

deposit rate will be 14.67 percent, the ``all others'' rate established

in the LTFV investigation.

This notice serves as a preliminary reminder to importers of their

responsibility 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

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: May 4, 1998.

Robert S. LaRussa,

Assistant Secretary, Import Administration.

[FR Doc. 98-12317 Filed 5-8-98; 8:45 am]

BILLING CODE 3510-DS-M