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

DEPARTMENT OF COMMERCE

International Trade Administration

A-570-825

Sebacic Acid From the People's Republic of China; Final Results

of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce

ACTION: Notice of final results of antidumping duty administrative

review of sebacic acid from the People's Republic of China

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SUMMARY: On April 9, 1998, the Department of Commerce (the Department)

published the preliminary results of its administrative review of the

antidumping duty order on sebacic acid from the People's Republic of

China (PRC) (63 FR 17367). This review covers shipments of this

merchandise to the United States during the period of July 1, 1996,

through June 30, 1997. We gave interested parties an opportunity to

comment on our preliminary results. Based upon our analysis of the

comments received we have changed the results from those presented in

the preliminary results of the review.

EFFECTIVE DATE: August 13, 1998.

FOR FURTHER INFORMATION CONTACT: Brandon Farlander 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) 482-0182 or (202) 482-1391, respectively.

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's regulations are in reference to the regulations, codified

at 19 CFR Part 351 (62 FR 27295, May 19, 1997).

SUPPLEMENTARY INFORMATION:

Background

The Department published in the Federal Register an antidumping

duty

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order on sebacic acid from the PRC on July 14, 1994 (59 FR 35909). On

July 21, 1997, the Department published in the Federal Register (62 FR

38973) 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, 1996, through June 30, 1997. On July 29, 1997, Tianjin

Chemicals Import and Export Corporation (``Tianjin''), Guangdong

Chemicals Import and Export Corporation (``Guangdong''), and Sinochem

International Chemicals Company, Ltd. (``SICC'') requested that we

conduct an administrative review. Also, on July 29, 1997, Tianjin

requested partial revocation of the antidumping duty order on sebacic

acid from the PRC. On July 30, 1997, in accordance with 19 CFR

351.213(b), Union Camp requested that we conduct an administrative

review of Tianjin, Guangdong, SICC, and Sinochem Jiangsu Import and

Export Corporation. We published a notice of initiation of this

antidumping duty administrative review on August 28, 1997 (62 FR

45621). The Department is conducting this administrative review in

accordance with section 751 of the Act. Sinochem Jiangsu was mailed a

questionnaire on August 30, 1997 but did not respond.

On April 9, 1998, the Department of Commerce (the Department)

published the preliminary results of its administrative review of the

antidumping duty order on sebacic acid from the PRC (63 FR 17367, April

9, 1998). We received written comments from three exporters of the

subject merchandise: Tianjin, Guangdong, and SICC (collectively,

respondents). We also received comments from the petitioner, Union Camp

Corporation.

On May 28, 1998, the Department informed parties that respondents'

May 11, 1998 case brief, and petitioner's May 11, 1998 case brief and

May 18, 1998 rebuttal brief, contained untimely new information,

pursuant to 19 CFR 351.301(b)(2), which requires that factual

information be submitted not later than 140 days after the last day of

the anniversary month. This untimely new factual information was

stricken from the record of this review. On June 12, 1998, the

Department informed parties that respondents' May 29, 1998 case brief,

May 18, 1998 rebuttal brief, and petitioner's June 1, 1998 rebuttal

brief contained untimely new information that was stricken from the

record of this review. On July 31, 1998, the Department informed

parties that presentations in the June 10, 1998 public hearing

contained untimely new factual information that was stricken from the

record of this review.

Tianjin requested partial revocation of the antidumping duty order

on sebacic acid from the PRC pursuant to 19 CFR 351.222(b). However, we

have determined in these final results a margin of 1.09 percent for

Tianjin, which is above the Department's de minimis standard of 0.5

percent. Therefore, we determine that Tianjin has not met the

requirements for revocation.

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, 1996, through June 30, 1997,

and four exporters of Chinese sebacic acid.

Analysis of Comments Received

Comment 1: Surrogate value for 2-octanol (capryl alcohol). 1 (A)

Octanol value in Chemical Weekly (Bombay, India). Petitioner argues

that the octanol value in Chemical Weekly is for 1-octanol and not 2-

octanol or 2-ethylhexanol. Petitioner questions the reliability of the

letter from the editor of Chemical Weekly which was submitted by

respondents and used by the Department for the preliminary results. The

letter states that ``the octanol price referred by you corresponds to

the more common 2-octanol (2 ethylhexanol).'' See Preliminary Results

of Antidumping Duty Administrative Review; Sebacic Acid from the PRC 63

FR 17371 (April 9, 1998) and Analysis Memorandum for the Preliminary

Results of the 1996/1997 Review, April 2, 1998, at Attachment 5.

Petitioner contends that because respondents failed to provide for the

record the original inquiry letter sent to the editor of Chemical

Weekly, there is no evidence on the record to indicate whether the

octanol price referred to in the inquiry letter to the editor

corresponds to the octanol price in the Chemical Weekly. In addition,

petitioner argues that there is no evidence on the record to indicate

that the Chemical Weekly editor is sufficiently familiar with the

chemical composition of the octanol product published in Chemical

Weekly to declare that it is 2-octanol (2-ethylhexanol).

Respondents maintain that the Department correctly did not use a

surrogate value for 1-octanol for the margin calculations (as suggested

by petitioner), because the octanol value from the Chemical Weekly is

for 2-ethylhexanol, which is another type of octanol, is the best

available information.

Respondents argue that it is clear that the editor of Chemical

Weekly was referring in his letter to the price quote for octanol in

his own publication, and that the editor is knowledgeable about the

price quotes for the various chemicals found in the Indian market.

Respondents contend that the Chemical Weekly octanol price quote is for

2-ethylhexanol, which they assert is comparable in use and in value to

2-octanol. (See (B) below.)

Department's Position: 1 (A) Octanol value in Chemical Weekly

(Bombay, India). We disagree with petitioner. Respondents submitted a

letter written by the editor of Chemical Weekly stating that the

reference to the octanol value in Chemical Weekly refers to 2-

ethylhexanol, which is a type of octanol. See Attachment V of

respondent's December 4, 1997 PAPI submission and Analysis Memorandum

for the Preliminary Results of the 1996/1997 Review, April 2, 1998, at

Attachment 5. Furthermore, contrary to petitioner's argument,

respondents have placed a copy of the inquiry letter to the editor of

Chemical Weekly on the record as an attachment to its rebuttal brief

pursuant to the Department's request for this information. See

Attachment to respondents' June 16, 1998 rebuttal brief. Finally, there

is no evidence on the record suggesting that the editor of Chemical

Weekly is unfamiliar with the basis of the values reported in his own

publication. Therefore, based on the

[[Page 43375]]

above information, and absent any substantiated record evidence to the

contrary, the Department determines that the octanol value from

Chemical Weekly is for 2-ethylhexanol.

1 (B) Comparability between 1-octanol, 2-octanol, and 2-

ethylhexanol. Petitioner argues that 2-ethylhexanol, which the

Department used as a surrogate value for 2-octanol, is not a comparable

product to 2-octanol based on evidence on the record. Petitioner

asserts that the Court of International Trade (``CIT''), in both Union

Camp Corp. v. United States, 941 F. Supp. 108, 113 (1996) and Union

Camp Corp. v. United States, No. 97-03-00483, Slip Op. 98-38, (Ct.

Int'l Trade, March 27, 1998), held that the Department's use of 1-

octanol to value 2-octanol, based on its determination that 1-octanol

was comparable to 2-octanol, was ``unsupported by substantial evidence

on the record and not in accordance with law.'' See petitioner's June

1, 1998 case brief at 2-3. Also, petitioner argues that there is no

substantial evidence on the record to indicate that 2-ethylhexanol is

comparable to 2-octanol, which is a subsidiary product produced as a

result of the Chinese sebacic acid production process. In addition,

petitioner asserts that 2-ethylhexanol is a form of 1-octanol with a

chemical formula of CH3(CH2)6CH2OH, which is different from 2-octanol's

chemical formula of CH3(CH2)5CH2OCH3. Petitioner further alleges that

the uses for 2-ethylhexanol and 2-octanol differ. In this point,

petitioner notes that Hawley's Condensed Chemical Dictionary, 12th ed.

(``Hawley's'') lists the following uses for 1-octanol: ``perfumery,

cosmetics, organic synthesis, solvent manufacture of high-boiling

esters, antifoaming agent, flavoring agent,'' page 848. Hawley's lists

the following uses for 2-octanol: ``solvent, manufacture of

plasticizers, wetting agents, foam control agents, hydraulic oils,

petroleum additives, perfume intermediaries, masking of industrial

odors.'' Id. at 848. Therefore, petitioner's argue that 2-ethylhexanol

is not comparable to 2-octanol.

Respondents contend that the Chemical Weekly octanol price quote is

for 2-ethylhexanol, and it is comparable in use and in value to 2-

octanol. Respondents argue that 2-ethylhexanol and 2-octanol are both

plasticizer-range alcohol chemicals that can be used interchangeably

for certain applications and thus have some of the same uses.

Respondents argue that an article (in their June 16, 1998 case brief,

Exhibit 1) entitled, ``Alcohols, Higher Aliphatic,'' from Kirk-Othmer

Encyclopedia of Chemical Technology (``Kirk-Othmer'') (1991), refers to

all octanols as plasticizer-range alcohols and to 2-octanol as octanol.

Respondents maintain that Hawley's indicates that all octanols,

including 2-octanol and 2-ethylhexanol, are used interchangeably to

produce esters which are used to produce plastics. Respondents also

assert that the octanol price from Chemical Weekly, which respondents

claim is 2-ethylhexanol, is priced lower in world markets than 2-

octanol. Therefore, using the value of 2-ethylhexanol would not result

in granting respondents an overstated by-product credit.

Respondents argue that the Department has not considered evidence

on the record that 1-octanol and 2-octanol are interchangeable for

certain uses and are used in the production of plasticizers, lube oils,

and perfumes. Respondents request that the Department, in making its

determination about which surrogate value to use in the final results,

consider the uses and values of 1-octanol and 2-octanol, in light of

the CIT's previous ruling that Commerce's determination that 1-octanol

and 2-octanol were not comparable products solely because they have the

same molecular structure. See Union Camp Corp. v. United States, No.

97-03-00483, Slip Op. 98-38, (Ct. Int'l Trade, March 27, 1998).

Respondents contend that if the Department uses the petitioner's

internal cost as the surrogate value, the petitioner, rather than the

Department, will be controlling the dumping margins. Moreover,

respondents will not know in the future whether a particular U.S. price

will be considered a dumped price, because the petitioner's internal

cost is not publicly available.

Petitioner asserts that there is no common usage for 1-octanol and

2-octanol listed in Hawley's. Petitioner argues that the Kirk-Othmer

citation (the Alcohols, Higher Aliphatic article) submitted by

respondents does not state that 2-octanol is referred to as an octanol

or that all octanols are plasticizer range alcohols.

Department's Position: 1 (B) Comparability of 1-octanol, 2-octanol,

and 2-ethylhexanol. We disagree with petitioner's contention that the

CIT held in Union Camp Corp. v. United States, No. 97-03-00483, Slip

Op. 98-38 (March 27, 1998), that 1-octanol and 2-octanol are not

comparable. The CIT held that the Department's determination that 1-

octanol and 2-octanol are comparable merchandise based solely on the

fact the fact that the two chemicals have similar molecular structure

was contrary to law because it was not based on a reasonable

interpretation of the statute.

For the record of this review, however, we have substantial

evidence on the record establishing that 2-ethylhexanol (also known as

2-ethylhexanol alcohol and octyl alcohol) and 2-octanol are comparable

merchandise based on similar uses.

Respondents cite the Kirk-Othmer article, which states that

chemical family members with 6-11 carbon atoms are known as

plasticizer-range alcohols. See ``Alcohols, Higher Aliphatic,'' Kirk-

Othmer Encyclopedia of Chemical Technology (``Kirk-Othmer'') at 865

(1991). All of the octanols, including 1-octanol, 2-octanol and 2-

ethylhexanol, are plasticizer range alcohols with eight carbon atoms.

Therefore, 1-octanol, 2-octanol and 2-ethylhexanol are physically

similar.

Further, according to Kirk-Othmer, plasticizer-range alcohols are

used primarily as ester derivatives in plasticizers and lubricants. Id.

at 865. Respondents also submitted excerpts from Hawley's in their June

16, 1998 case brief demonstrating that 2-ethylhexanol, 1-octanol, and

2-octanol are comparable products with similar uses. Hawley's states

that di(2-ethylhexyl) phthalate is created by mixing 2-ethylhexanol and

phthalic anhydride and is used as a plasticizer for many resins and

elastomers; thus, 2-ethylhexanol, when mixed with another chemical, is

used as a plasticizer for many resins and elastomers. In addition,

other data in Hawley's indicates that 1-octanol, 2-ethylhexanol and 2-

octanol have similar uses.

Finally, in respondents' December 4, 1997 PAPI submission,

Attachment 4, the Chemical Marketing Reporter (U.S.) (June 30, 1997)

lists the following U.S. prices, in cents per pound: 2-ethylhexanol,

$0.56; and 2-octanol, $0.68. These prices are evidence that 2-

ethylhexanol may be priced lower than 2-octanol. Therefore,

petitioner's argument that respondents are getting a higher co-product

allocation with the use of the octanol value in Chemical Weekly is

unfounded.

Based on the above information, we find that 2-ethylhexanol, 2-

octanol, and 1-octanol are all comparable products. Therefore, given

the Department's preference for publicly available surrogate values, we

have concluded that the Chemical Weekly value for 2-ethylhexanol is the

most appropriate surrogate value. Because the octanol value in Chemical

Weekly is reported inclusive of taxes, we deducted taxes from the

octanol value.

1 (C) Crude versus refined 2-octanol surrogate value. Petitioner

asserts that

[[Page 43376]]

instead of the value from the Chemical Weekly used by the Department

for the preliminary results, the Department should use the U.S. value

for 2-octanol and deduct the inputs used to convert crude 2-octanol to

refined 2-octanol. Petitioner argues that using the U.S. value for

refined 2-octanol is consistent with the Department's practice of using

a U.S. surrogate value, citing Final Determination of Sales at Less

Than Fair Value: Certain Cased Pencils from the People's Republic of

China, 59 FR 55625, 55630 (November 8, 1994) (``Cased Pencils'').

Respondents allege that the petitioner is selling crude 2-octanol at a

much higher value than the value reported to the Department. Petitioner

counters that the source of this information is suspect, because the

respondent's source is not a qualified expert nor are his opinions

objective, since he is employed by a firm which imports subject

merchandise.

Next, respondents argue that the Department should grant a by-

product credit for refined 2-octanol because the Chinese sebacic acid

producers only sell refined 2-octanol and the additional factors of

production for the refining of the subsidiary product have been

reported to the Department. Therefore if the Department decides not to

use the octanol value from Chemical Weekly, the Department should use a

refined price for 2-octanol, because the Chinese producers sell refined

2-octanol not crude 2-octanol. Also, respondents state that the

additional factors for converting crude 2-octanol into refined 2-

octanol are already included in the sebacic acid factors of production.

Respondents maintain that the Department requires that the additional

factors of production for refining a by-product or co-product must be

included in the factors of production reported to the Department before

a subsidiary by-product credit(s) can be granted.

Respondents argue that, in past cases, the Department has granted a

by-product or co-product credit when: (1) the foreign producer proves

that the by-product or co-product was sold, and (2) the additional

factors of production for the refining of the subsidiary product are

reported to the Department, citing: Final Determination of Sales at

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

People's Republic of China, 62 FR 61964, 61997 (November 20, 1997);

Final Results of Antidumping Duty Administrative Review and

Determination Not to Revoke in Part: Silicon Metal from Brazil, 62 FR

1954, 1964 (January 14, 1997); and Final Determination of Sales at Less

Than Fair Value: Strontium Nitrate from Italy, 46 FR 25496 (May 7,

1981). Respondents also argue that the Department has used the sales

price of the subsidiary product to determine whether it is a by-product

or a co-product, citing: Final Determination of Sales at Less Than Fair

Value: Coumarin from the People's Republic of China, 59 FR 66895, 66901

(December 28, 1994); Final Determination of Sales at Less Than Fair

Value: Brake Drums and Brake Rotors from the People's Republic of

China, 62 FR 9160, 9172 (February 28, 1997); Magnesium Corp. of America

v. United States, 938 F. Supp. 885 (Ct. Int'l Trade, 1996). Respondents

argue, that based on the above arguments, the Department should grant a

by-product credit for refined 2-octanol and not crude 2-octanol.

Petitioner asserts that respondent should not receive a by-product

credit for refined 2-octanol because respondents did not state in their

submissions to the Department that the additional factors of production

to convert crude 2-octanol to refined 2-octanol have already been

included in the sebacic acid factors of production. Petitioner notes

that there was no cite to the record and their review of respondents's

Section D questionnaire response found no discussion of additional

factors for refining 2-octanol. Therefore, petitioner maintains that,

in the event that the Department uses the octanol value from Chemical

Weekly, the Department should reduce the surrogate value by the purity

levels at which each firm produces 2-octanol.

Department's Position: 1 (C) Crude versus refined 2-octanol

surrogate value. We disagree with petitioner. Petitioner cites Final

Determination of Sales at Less Than Fair Value: Certain Cut-to-Length

Carbon Plate from the People's Republic of China, 62 FR 61964 (November

20, 1997), which states, ``(i)t is the Department's policy to only

grant by-product credits for by-products actually produced directly as

a result of the production process. A respondent must report the

factors associated with the further refining of a by-product if it

wishes to receive a credit for the further refined by-product.'' Id. at

61997. We note that, in contrast to petitioner's assertion, the sebacic

acid factors of production used to calculate normal value (``NV'')

already incorporate the relatively few factors of production (labor and

energy) necessary to convert crude 2-octanol to refined 2-octanol.

Production of sebacic acid results in the production of crude 2-octanol

as a subsidiary product. The sebacic acid factors of production already

include the factors of production used to refine 2-octanol and the

other subsidiary products because the Chinese sebacic acid producers

are unable to separate the additional factors of production used to

convert crude subsidiary products into refined subsidiary products. For

example, respondents state that, for producer Tianjin Zhong He, any

additional factors of production to process crude 2-octanol to refine

2-octanol have already been reported to the Department and are included

in the sebacic acid factors of production, because these additional

factors of production cannot be separated from the sebacic acid factors

of production. See respondents' January 20, 1998 supplemental

questionnaire response at page 7. Moreover, at verification, we made

certain that the additional factors of production to convert the crude

subsidiary products into refined subsidiary products had either been

reported to the Department or, if these additional factors of

production had not been reported to the Department, we added these

additional factors of production used to convert crude subsidiary

products into refined subsidiary products to the reported sebacic acid

factors of production. For example, we discovered at verification that

the electricity used to convert crude glycerine into refined glycerine

was not reported to the Department, but we added this additional

electricity used to the reported sebacic acid factors of production.

See Verification report to the File, page 13 (March 24, 1998).

Also, a more accurate by-product/co-product analysis results by

using the refined value of 2-octanol rather than a crude value for 2-

octanol. The Department's practice is to use the subsidiary product's

sales value and factories' material yield amounts for determining the

by-product/co-product analysis. In Preliminary Determination of Sales

at Less Than Fair Value and Postponement of Final Determination:

Sebacic Acid from the People's Republic of China, 59 FR 565, 569

(January 5, 1994), the Department ``used surrogate values from India

for sebacic acid, glycerine, caproyl (sic) alcohol, and fatty acid to

determine the relative value of each product based on the production on

one metric ton of sebacic acid, as well as to determine the total value

of one metric ton of sebacic acid.'' Since the Chinese producers sell

refined 2-octanol, as confirmed at verification, and they do not sell

crude 2-octanol, we believe that it is more appropriate to apply the

surrogate value of refined 2-octanol in conducting the by-product/co-

product analysis. Moreover, there is a publicly published sales price

on which we can base a surrogate value for

[[Page 43377]]

refined 2-octanol, which is the octanol value (2-ethylhexanol) from

Chemical Weekly.

1 (D) Treatment of 2-octanol by Chinese producers. Petitioner

contends that both it and respondent producers Handan Fuyan Sebacic

Acid Factory, Tianjin Zhong He, and Hengshui Dongfeng Chemical Factory

all treat 2-octanol as a by-product in their respective accounting

systems. Therefore, petitioner argues that the Department should also

treat 2-octanol as a by-product, rather than a co-product. Petitioner

asked the Department to verify how the Chinese producers treat 2-

octanol but the Department chose not verify how the Chinese producers

treat 2-octanol. Petitioner claims that because the Department used

what petitioner suggests to be the value of 1-octanol to value 2-

octanol in the preliminary results, the Department incorrectly

determined 2-octanol to be a co-product rather than a by-product of the

sebacic acid production process. Petitioner cites to Preliminary

Determination of Sales at Less Than Fair Value: Certain Cut-to-Length

Carbon Steel Plate from the People's Republic of China (``Carbon Steel

Plate''), 62 FR 31972, 31977 (June 11, 1997), where the Department

determined that slag is a by-product and not a co-product, using a U.S.

value for slag when surrogate values for slag in India or Indonesia

were aberrationally high.

Respondents argue that the Chinese producers do not view 2-octanol

as a by-product and such characterization was made by their counsel and

not by the producers themselves. Whether Chinese producers classify 2-

octanol as a by-product or a co-product, respondents argue, is only

relevant in the context of the Chinese accounting system and the

relationship of the costs of 2-octanol to the actual Chinese sebacic

acid production costs. Respondents contend that the Department

determines whether 2-octanol is a by-product or co-product based on the

surrogate values used and not based on recorded Chinese costs.

Respondents dismiss petitioner's citation of the Carbon Steel Plate

case because it addresses a specific by-product and provides no

guidance as to whether a specific subsidiary product is either a by-

product or a co-product.

Department's Position: 1 (D) Treatment of 2-octanol by Chinese

producers. We disagree with petitioner. Petitioner cited Carbon Steel

Plate to support their position that the Department should use the U.S.

2-octanol value instead of the allegedly high octanol value from

Chemical Weekly, which petitioner suggests is 1-octanol. We disagree

with petitioner's reliance on the above case because the evidence on

the record confirms that the octanol value in Chemical Weekly is for 2-

ethylhexanol.

We determine whether a subsidiary product is either a by-product or

a co-product by comparing the subsidiary products' surrogate value to

the value of the subject merchandise. If we determine that the

surrogate value of the subsidiary product was significant relative to

the surrogate value of subject merchandise, we treat the subsidiary

product as a co-product; otherwise, we treat it as a by-product. We do

not determine if a subsidiary product is a by-product or co-product

based on how a particular company classifies the subsidiary product in

its accounting records. Therefore, the treatment of 2-octanol by

Chinese producers or by the U.S. producer of sebacic acid is irrelevant

to the Department's analysis. This is precisely why the Department did

not verify how the Chinese producer Hengshui classifies 2-octanol. In

this case, the Department determines that 2-octanol is a co-product,

because its value is significant relative to the surrogate value of

sebacic acid.

1 (E) Use of an exact match. Petitioner argues that the Department

should use the U.S. value of 2-octanol because it is an exact product

match, instead of the octanol value (2-ethylhexanol) from the Chemical

Weekly. Petitioner contends that past Department practice supports the

use of a U.S. value for 2-octanol, in accordance with Final

Determination of Sales at Less Than Fair Value: Certain Cased Pencils

from the People's Republic of China, 59 FR 55625, 55630 (November 8,

1994) (``Cased Pencils''); Union Camp Corp. v. United States, 941 F.

Supp. 108, 113 (1996) (``Union Camp I''); Union Camp Corp. v. United

States, No. 97-03-00483, Slip Op. 98-38 (1998)(``Union Camp II''); and

Writing Instruments Mfrs. Assoc. v. United States, 984 F. Supp. 629

(Ct. Int'l Trade, 1997), appeal docketed, Nos. 981178, 981292 (Fed.

Cir., January 9, 1998 and January 21, 1998). In contrast, petitioner

asserts that the product associated with the Chemical Weekly value

(which petitioner suggests may be 1-octanol) is ``not even `quite

similar' to 2-octanol either chemically or commercially.''

Respondents argue that 2-ethylhexanol (which respondents contend to

be the product with which the Chemical Weekly value is associated) and

2-octanol are comparable in both use and value and, therefore, the

Department should use the surrogate value 2-ethylhexanol. Respondents

note that 2-ethylhexanol is produced in the surrogate country.

Respondents state that the Department should not use an identical

surrogate value match from the U.S. for 2-octanol when a surrogate

value for a comparable product is available from India, the chosen

surrogate country used in this review.

Department's Position: 1 (E) Use of an exact match. We disagree

with petitioner. In valuing factors of production, the Department used

surrogate values from India. In accordance with section 773(c)(4) of

the Act, the Department chose India as its surrogate, because it was

most comparable to the PRC in terms of overall economic development

based on per capita gross national product (GNP), the national

distribution of labor, growth rate in per capita GNP, and because it

was a significant producer of comparable merchandise (oxalic acid). As

noted in Comment 4 below, both petitioner and respondent do not object

to the Department's use of India as the surrogate country.

Section 773(c)(4) of the statute and 19 CFR 351.408 of the

Department's regulations instruct the Department to value factors of

production in an appropriate surrogate country. The Department rarely

departs from use of a surrogate value from a country comparable to the

NME in terms of overall economic development. See Final Determination

of Sales at Less Than Fair Value: Beryllium Metal and High Beryllium

Alloys from the Republic of Kazakstan, 62 FR 2648 (January 17, 1997).

Surrogate values from countries at a similar level of development are

considered to be the most appropriate and comparable for valuation of

the factors in the similarly situated nonmarket economy country. While

the Department may use values from the United States or other countries

not at a comparable level of development for individual factors, its

practice is to do so only if it cannot find those values in a

comparable economy that produce comparable merchandise. See Memorandum

from David Mueller to Laurie Parkhill, Serbacic (sic) Acid from the

People's Republic of China: Nonmarket Economy Status and Surrogate

Country Selection, March 4, 1996.

In this review, the Department was unable to locate an Indian value

for 2-octanol in India, the surrogate country. Additionally, neither

the petitioner nor the respondents were able to locate a specific

Indian value for 2-octanol.

Petitioner cites Cased Pencils and the Union Camp I and Union Camp

II court decisions to support their position that the Department should

use the U.S. 2-octanol value instead of the octanol

[[Page 43378]]

value from Chemical Weekly for a surrogate value for 2-octanol. In

Cased Pencils, the Department used a U.S. value (basswood) as the

surrogate value that was ``most similar'' (Id. at 55630) instead of an

Indian value (a basket category of woods which included jelutong) which

was ``quite similar'' to the Chinese product (lindenwood) (Id. at

55629). In the Cased Pencils case, wood is the most significant input,

and jelutong, which was in the basket category of Indian import values,

was priced ``much higher than the most comparable wood.'' Id. at 55630.

Because of these case specific reasons, the Department selected a U.S.

surrogate value instead of a surrogate value from a country that is at

a comparable level of economic development. We disagree with petitioner

that the situation here is the same for selecting a surrogate value for

2-octanol. For the valuation of 2-octanol, India has been determined to

be a significant producer of comparable merchandise and India is

economically comparable to the People's Republic of China in the

following: per capita gross domestic product (GDP), growth rate in per

capita GDP, and the national distribution of labor. See Analysis

Memorandum for the Preliminary Results of the 1996/1997 Review, April

2, 1998, page 2. Also, the octanol in Chemical Weekly (2-ethylhexanol)

and 2-octanol are comparable merchandise. See Department's Position

(B). Because we have a suitable value from India, the Department need

not, and, indeed, should not, use a U.S. surrogate value.

Comment 2: Ministerial errors alleged by petitioner. Petitioner

maintains that the Department should correct certain alleged

ministerial errors discussed in the Department's Analysis Memorandum

for the Preliminary Results of the 1996/1997 Review, April 2, 1998,

namely: (1) for both Tianjin/Hengshui and SICC/Hengshui, profit was

incorrectly calculated by multiplying profit by COM and not COP; (2)

for the caustic soda surrogate value, taxes were incorrectly deducted

twice; (3) for the method of allocation--coal sections, the amount of

coal used was misallocated; (4) for ocean freight rates, the rates for

sales 5, 6, 7, 9, and 10 for Tianjin were miscalculated; (5) for the

glycerine and fatty acid by-products, by-product credits need to be

adjusted by each producers respective purity level; (6) for the truck

freight inflator, the WPI inflator used is incorrect; (7) for the

surrogate value for castor seed cake, use the castor seed cake

surrogate value from the Economic Times; (8) for water, include it as a

factor of production; (9) for the coal inflator, correct the WPI

inflator used to calculate coal and use the WPI inflator for the SICC/

Hengshui coal calculation.

Respondents disagree with petitioner's assertions concerning the

following alleged ministerial errors: (1) the profit calculation for

SICC/Hengshui and Tianjin/Hengshui is calculated correctly; (5) use an

average of the crude and refined glycerine values because the

Department has already included the factors of production to convert

crude glycerine to refined glycerine in the sebacic acid factors of

production; and (8) water is not a separate factor of production since

water is already included in the factory overhead calculations from the

Reserve Bank of India for the chemical industry.

Department's Position: We agree with petitioner concerning alleged

errors #2, 3, 4, 6, 7, 9 and have corrected these errors. We disagree

with petitioner concerning alleged errors #1, 5, and 8. With respect to

the calculation of profit as a percentage of COP (alleged error #1),

profit was calculated as a percentage of COP for both Tianjin/Hengshui

and SICC/Hengshui. See Analysis Memorandum for the Preliminary Results

of the 1996/1997 Review, April 2, 1998, page 19i. With respect to the

subsidiary products' surrogate value (alleged error #5), as mentioned

in the Comment 1, (C) above, any additional factors of production to

convert crude subsidiary products into refined subsidiary products are

already included in the sebacic acid factors of production. Therefore,

we are granting either by-product credits or co-product allocations

based on the refined value and not a crude value of the subsidiary

products. With respect to water being considered as a separate factor

of production (alleged error #8), as we have established in many

Chinese chemical dumping cases, such as in Final Determination of Sales

at Less Than Fair Value, Polyvinyl Alcohol from the People's Republic

of China, 61 FR 14058 (March 29, 1996); Final Results of Antidumping

Review for Sebacic Acid from the People's Republic of China, 62 FR

65674 (December 15, 1997); Final Results of Antidumping Review for

Sebacic Acid from the People's Republic of China, 62 FR 10530 (March 7,

1997), Final Determination of Sales at Less Than Fair Value, Sulfur

Dyes, Including Sulfur Vat Dyes from the People's Republic of China, 58

FR 7537 (February 8, 1993); and Final Results of Antidumping Review for

Sulfanilic Acid from the People's Republic of China, 62 FR 48597

(September 16, 1997), we did not value water as a separate factor of

production but relied instead on factory overhead data that reflected

water costs. In Preliminary Determination of Sales at Less Than Fair

Value: Freshwater Crawfish Tail Meat, 62 FR 14392 (March 26, 1997),

water was considered a separate factor of production because it is an

agricultural product that uses a large amount of water to clean and

boil the crawfish to extract the tail meat and to operate the freezer.

For sebacic acid, as in the other Chinese chemical case mentioned

above, water is considered part of the factory overhead data in the

Reserve Bank of India. Therefore, we determine that, in this case,

water is not a separate factor of production. While we agree with

petitioner that, for Hengshui, taxes were incorrectly deducted twice

for caustic soda (alleged error #2), we note that the result of this

correction is a value of 5.5 Rs/kg and not the 4.43 Rs/kg value

submitted by petitioner.

Comment 3: Ministerial errors alleged by respondents. Respondents

maintain that the Department should correct certain ministerial errors

discussed in the Department's Analysis Memorandum for the Preliminary

Results of the 1996/1997 Review, April 2, 1998, namely: (1) for

Hengshui, the plastic inner bag consumption per sebacic acid metric ton

was overstated; (2) for Tianjin, the weighted-average margin was

calculated incorrectly; and (3) ocean freight charge was calculated

incorrectly by dividing by 17.5 metric tons instead of 18 metric tons

for most of the shipments via a NME carrier.

Petitioner did not comment on respondents' ministerial error

allegations.

Department's Position: We agree with respondents' allegations with

regard to errors # 2, and 3, and have corrected these errors. With

respect to the calculation of the amount of plastic bags consumed at

Tianjin/Hengshui (alleged error #1), we disagree. We discovered at

verification at Tianjin/Hengshui that sale #8 did not use any plastic

bags but instead used only woven bags. Consequently, we divided the

total plastic inner bag weight for all sales except sale #8 by the

total weight of the sebacic acid shipped in plastic bags. Then, we

added the weight of the woven bags used for shipment for sale #8 to the

total weight of woven bags used for the shipment for all other sales

except sale #8 and divided the total weight of the woven bags used by

the total amount of sebacic acid shipped for all sales. See Analysis

Memorandum for the Preliminary Results of the 1996/1997 Review, April

2, 1998, pages 2-3. Therefore, for the final results, we have made no

further adjustment to

[[Page 43379]]

Hengshui's reported plastic inner bag consumption figure.

Comment 4: Use of India as the surrogate country. Respondent argues

that petitioner has stated that India is not an appropriate surrogate

country and that the Department should use either Japan or the United

States as an appropriate surrogate country.

Petitioner states that it does not object to use of India as the

surrogate country for this administrative review.

Department's Position: Since there is no argument as to which

surrogate country to use, the Department will continue to use India as

the surrogate country for this administrative review.

Final Results of Review

For Sinochem Jiangsu, which failed to respond to the questionnaire,

we have not granted a separate rate and the country-wide rate will

apply to all of its sales.

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

the results from those presented in our preliminary results of the

review. Therefore, we determine that the following margins exists as a

result of our review:

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

Margin

Manufacturer/exporter Time period (percent)

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

Tianjin Chemicals I/E Corp............. 7/01/96-6/30/97 1.09

Sinochem International Chemicals Corp.. 7/01/96-6/30/97 0.11

Guangdong Chemicals I/E Corp........... 7/01/96-6/30/97 10.18

Country-Wide Rate...................... 7/01/96-6/30/97 243.40

Sinochem Jiangsu I/E Corp.............. 7/01/96-6/30/97 243.40

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

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. The Department

will issue appraisement instructions on each exporter directly to the

Customs Service. For assessment purposes, we have calculated importer

specific duty assessment rates for the merchandise based on the ratio

of the total amount of antidumping duties calculated for the examined

sales during the POR to the total entered value of sales examined

during the POR.

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,

Tianjin, and Guangdong), 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 PRC exporters of subject merchandise, the cash deposit

rates will be the PRC country-wide rate indicated above; and (4) the

cash deposit rate for non-PRC exporters of subject 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 final reminder to importers of their

responsibility under 19 CFR 351.402(f) 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 determination is issued and published in accordance with

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

Dated: August 7, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-21790 Filed 8-12-98; 8:45 am]

BILLING CODE 3510-DS-P