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 petitioner and one 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, 1997 through July 31, 1998.

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.

EFFECTIVE DATE: May 7, 1999.

FOR FURTHER INFORMATION CONTACT: Frank Thomson or Jim Terpstra, AD/CVD

Enforcement, Group II Office IV, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

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

4793, and 482-3965, 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 (1998).

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 11, 1998, the

Department published in the Federal Register (63 FR 42821) a notice of

opportunity to request an administrative review of this antidumping

duty order. On August 27, 1998, in accordance with 19 CFR

351.213(b)(1), 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 29,

1998 (63 FR 51893).

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 an 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 only as a

processor of sales-related documentation.

EP was based on the delivered price to unaffiliated purchasers in,

or for exportation to, the United States. 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.

[[Page 24575]]

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 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 the credit expense on its home market sales, Prayon

reported the discount on accounts receivable sold to its affiliated

coordination center. Because Prayon did not submit any information

which could serve as a benchmark to determine whether these affiliated

party transactions were conducted at arm's-length, we must assume that

they are not arm's-length transactions. 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

rates provided by Prayon for borrowing from unaffiliated entities in

calculating inventory carrying costs as the basis for the monthly home

market short-term interest rates used in the credit calculation. See

Import Administration Policy Bulletin 98-2.

In calculating the credit expense on its U.S. sales, Prayon

reported the discount on accounts receivable sold to its affiliated

coordination center in Belgian francs. Because Prayon did not submit

any information which could serve as a benchmark to determine whether

these affiliated party transactions were conducted at arm's-length, we

must assume that they are not arm's-length transactions. Therefore, we

have disregarded the credit expenses reported by Prayon. Instead, we

have utilized the weighted-average short-term dollar lending rates

calculated by the Federal Reserve in calculating Prayon's imputed

credit expense. See Import Administration Policy Bulletin 98-2.

No other adjustments were claimed or allowed.

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 sales 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 an 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 an 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 (CIT 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 57629 (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. In

its December 16, 1998 response, Prayon submitted its commission rates

with its affiliated sales agents in both the home and U.S. market. We

issued a supplemental questionnaire to Prayon, requesting that it

indicate whether the commissions were paid at arm's length by reference

to commission payments to unaffiliated parties in the foreign market

and other markets, and to submit evidence

[[Page 24576]]

demonstrating the arm's-length nature of the commissions. Prayon then

submitted documentation indicating that its commission rates with

unaffiliated parties in the foreign market and in other markets are

comparable to its affiliated party commission rates.

Our preliminary analysis of the submitted documentation indicates

that the affiliated commissions in both the home and U.S. market are

made at arm's-length. Therefore, for purposes of the preliminary

determination, we are accepting Prayon's reported home and U.S. market

commissions. Accordingly, we preliminarily determine to make a

circumstance of sale adjustment for commissions in both the home and

U.S. market. However, we have asked for certain additional information

in order to clarify the submitted documentation. This information will

not be readily available for the preliminary determination. For further

explanation of this issue, see Memorandum from Analyst to Holly A. Kuga

(``Arm's Length Commission Memorandum''), dated May 3, 1999.

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, 1997 through July 31,

1998:

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Margin

Manufacturer/exporter (percent)

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Prayon..................................................... 4.27

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The Department will disclose calculations made in connection with

its preliminary determination within five days of the date of

publication of this notice. Interested parties may also request a

hearing within 30 days of publication. If requested, a hearing will be

held two days after the date of filing of rebuttal briefs, 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 five days after the date of filing

of case briefs. 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 19 CFR 351.212(b), we have calculated an importer-specific duty

assessment rate based on the ratio of the total amount of antidumping

duties calculated for the examined sales to the total entered value of

the same sales. The rate will be assessed uniformly on all entries of

that particular company made during the POR. The Department will issue

appraisement instructions directly to the Customs Service.

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)(2)(c) 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 3, 1999.

Robert S. LaRussa,

Assistant Secretary, Import Administration.

[FR Doc. 99-11574 Filed 5-6-99; 8:45 am]

BILLING CODE 3510-DS-P