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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-423-602]

Industrial Phosphoric Acid From Belgium; 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 Industrial Phosphoric Acid from Belgium.

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SUMMARY: On May 7, 1999, the Department of Commerce (``the

Department'') published the preliminary results of its administrative

review of the antidumping order on industrial phosphoric acid (``IPA'')

from Belgium. This review covers imports of IPA from one producer,

Societe Chimique Prayon-Rupel S.A. (``Prayon'') and the period of

review (POR) is August 1, 1997, through July 31, 1998.

We gave interested parties an opportunity to comment on our

preliminary results. Based on our analysis of the comments received, we

have revised the results from those presented in the preliminary

results of review.

EFFECTIVE DATE: September 14, 1999.

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

Enforcement, Office IV, Group II, 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:

Background

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

Register (52 FR 31439) the antidumping duty order on 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 section 751(a)(1) of the Tariff Act of 1930, as amended

(``the Act'') and 19 CFR 351.213(b), FMC Corporation (``FMC''), and

Albright & Wilson Americas, Inc. (``Wilson''), both domestic producers

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). On May 7, 1999, the Department

published the Notice of Preliminary Results of Antidumping Duty

Administrative Review of Industrial Phosphoric Acid from Belgium, 64 FR

24574 (Preliminary Results). On May 12, 1999, Prayon submitted a

response to our supplemental questionnaire of April 21, 1999, in which

we asked for certain additional information regarding Prayon's reported

home market and U.S. market commissions. We gave interested parties an

opportunity to comment on the preliminary results. We received case and

rebuttal briefs from Prayon and the domestic producers on June 9, 1999,

and June 16, 1999, respectively. We did not receive any request from

interested parties for a hearing. The Department has now completed this

review in accordance with section 751 of the Act.

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Act are references

to the provisions as of January 1, 1995, the effective date of the

amendments made to the Act by the Uruguay Round Agreements Act (URAA).

In addition, unless otherwise indicated, all citations to the

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

Part 351 (1998).

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 U.S. Customs

Service (Customs Service) purposes. The written description remains

dispositive.

Analysis of Comments Received

Comment 1: Sales commissions Prayon argues that the Department

erroneously treated its home and U.S. market commission payments to

affiliated parties as arm's-length transactions. Prayon claims that the

commission it paid to its affiliated sales agent in the United States,

Quadra Corporation (USA) (``Quadra''), is not comparable to the

commissions it paid to its non-affiliated sales agents in third

countries.

Specifically, Prayon asserts that the commission paid to Quadra was

significantly higher than those paid to non-affiliated sales agents in

all other countries except one. According to Prayon, the only

commission rate comparable to the one it pays Quadra is the rate it

pays to Quadra Chimie Limite (``QCL''), with which Prayon claims to be

affiliated. Prayon asserts that this is not an appropriate comparison,

and thus, the Department does not have an appropriate basis for

concluding that the commission to Quadra was made at arm's-length.

Prayon concludes that the Department should find that its commission

payment to Quadra was not at arm's-length.

Regarding commission payments in the home market, Prayon points out

that its home-market sales agent (Zinchem Benelux) is virtually wholly

owned by Prayon, and that the Department has, in past segments of this

proceeding, treated this commission as not being at arm's-length (see

Industrial Phosphoric Acid from Belgium; Final Results of Antidumping

Duty Administrative Review, 63 FR 55087 (October 14, 1998) (Final

Results 1996-1997); Industrial Phosphoric Acid from Belgium; Final

Results of Antidumping Duty Administrative Review, 62 FR 41359 (August

1, 1997) (Final Results 1995-1996); Industrial Phosphoric Acid from

Belgium; Final Results of Antidumping Duty Administrative Review, 61 FR

51424 (October 2, 1996) (Final Results 1994-1995); Industrial

Phosphoric Acid from Belgium; Final Results of Antidumping Duty

Administrative Review, 61 FR 20227 (May 6, 1996) (Final Results 1993-

1994)). Prayon also points to the original investigation, where the

Department determined that these payments were not made at arm's-length

(see Notice of Final Determination of Sales at Less Than Fair Value:

Industrial Phosphoric Acid from Belgium, 52 FR 25436 (July 7, 1987)

(LTFV)). Prayon asserts that since the completion of those segments,

there has been no change in the circumstances of this commission

arrangement, and thus no reason for the Department's reversal of its

treatment in the current review.

The domestic producers agree with the Department's treatment of

these commissions in the preliminary results of review, and assert that

the commission Prayon paid to QCL represents a valid basis for

comparison and, furthermore, is consistent with the commission paid to

Quadra. The domestic producers disagree with Prayon's contention that

these commission payments were not at arm's-length. First, the domestic

producers assert that the Department's comparison of commission

payments using QCL is valid because QCL received them for sales made

directly to specific customers on its own, not for sales jointly made

with Quadra. Second, QCL ran its business operation

[[Page 49772]]

independently from Prayon, also an indication of the arm's-length

nature of the commission payments, according to the domestic producers.

In further support for finding that the commission paid to Quadra

was at arm's-length, the domestic producers point out that Prayon, as a

minority shareholder in Quadra, is not in a position to freely set

commission rates to Quadra, benefit from paying out unduly high

commissions to it, or have negotiating power over Quadra. The domestic

producers conclude that the commission payment in question reflects an

open market rate negotiation.

Finally, the domestic producers assert that, even were the

Department to disregard the commission paid to QCL, the commissions

paid by Prayon to non-affiliated sales agents in other countries are

sufficiently similar to that paid to Quadra to support the Department's

finding of the arm's-length nature of this commission.

Department's position: During the POR, Prayon used an affiliated

sales agent in the home market and a different affiliated sales agent

in the United States. For the preliminary results, we compared the

commission rates Prayon submitted for its affiliated sales agents in

both the home and U.S. market, with the rates paid to unaffiliated

parties in other markets. Since the preliminary results were published,

Prayon submitted additional documentation regarding these commission

rates. As discussed in the preliminary results of review, we have

applied the Department's guidelines for determining whether affiliated

party commissions are paid on an arm's-length basis. 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: Final Results of Antidumping Duty

Administrative Reviews and Revocation in Part of an Antidumping

Finding, 61 FR 57629 (November 7, 1996). Accordingly, because Prayon

did not use an unaffiliated sales agent in either the U.S. or home

market, we compared the affiliated commission rates with rates Prayon

paid to unaffiliated parties in other markets. Based on our comparison

of commission rates for affiliated and unaffiliated parties, we find

that Prayon's affiliated commission rates in all markets are reasonably

similar to the range of commission rates Prayon paid to unaffiliated

sales agents, such that we conclude that the affiliated commissions

were arm's-length transactions.

As to Prayon's assertion that the Department, in the four previous

reviews, treated Prayon's commissions to its affiliated sales agent in

the home market as not being at arm's-length, we agree. However, in

those reviews the Department found that Prayon did not use unaffiliated

sales agents. Thus, no information existed that would allow the

Department to establish a benchmark against which to compare the arm's-

length nature of the commission payments from Prayon to its affiliated

home market sales agent. The Department was therefore unable to carry

out an analysis as to the arm's-length nature of Prayon's commission

payments. Accordingly, the Department's treatment of home market

commissions in those reviews is not dispositive of the arm's-length

nature of the transactions. See Final Results 1996-1997; Industrial

Phosphoric Acid From Belgium; Preliminary Results of Antidumping Duty

Administrative Review, 63 FR 25830, 25832 (May 11, 1998); Final Results

1995-1996; Industrial Phosphoric Acid From Belgium; Preliminary Results

of Antidumping Duty Administrative Review, 62 FR 31073, 31074 (June 6,

1997); Final Results 1994-1995; Industrial Phosphoric Acid From

Belgium; Preliminary Results of Antidumping Duty Administrative Review,

61 FR 26160, 26161 (May 24, 1996); Final Results 1993-1994; Industrial

Phosphoric Acid From Belgium; Preliminary Results of Antidumping Duty

Administrative Review, 60 FR 57398 (November 15, 1995). Prayon's

reliance on the previous reviews, therefore, is misplaced.

As to Prayon's assertion that the Department, in the original

investigation, determined that Prayon's commissions to its affiliated

sales agent in the home market were not at arm's-length, our analysis

indicates otherwise. At the time of the investigation, the Department

considered Prayon's commission payments to be ``part of the general

expenses of the company, and [thus] not costs directly related to

particular sales.'' See LTFV at 25439. In addition, at the time of the

LTFV investigation, the Department did not have a practice or policy

with respect to considering commissions paid to unaffiliated sales

agents in other (i.e., third country) markets in determining whether a

respondent's affiliated commission rates were at arm's-length, since we

considered such transactions to be intracompany transfers of funds. Id.

Consequently, Prayon's argument is not supported by the LTFV.

Since the time of the investigation, the Department has changed its

practice regarding the arm's-length nature of commissions paid to

affiliated selling agents. Under guidelines the Department subsequently

developed, the Department compares the commission paid to affiliated

selling agents with the commission paid by the respondent to any

unaffiliated selling agents in the same market, (i.e., home or U.S.) or

in any third country market to determine the arm's-length nature of the

affiliated commissions. See Final Determination of Sales at Less Than

Fair Value: Coated Groundwood Paper from the United Kingdom, 56 FR

56403, 56405-06 (November 4, 1991) (Paper from United Kingdom); see

also Final Determination of Sales at Less Than Fair Value: Coated

Groundwood Paper from Finland, 56 FR 56363, 56371-72 (November 4, 1991)

(Paper from Finland); Final Determination of Sales at Less Than Fair

Value: Coated Groundwood Paper from Germany, 56 FR 56385, 56389

(November 4, 1991) (Paper from Germany). Pursuant to the current

practice, the Department will make an adjustment for commissions

between affiliated parties where we find the commissions paid to such

parties to be at arm's-length. See Paper from United Kingdom, 56 FR at

56406; Paper from Finland, 56 FR at 56372; Paper from Germany, 56 FR at

56389.

In the present review, Prayon used the services of unaffiliated

agents and provided detailed information on the record regarding the

commission rates it paid to these unaffiliated sales agents, (see

``Background'' section, above). Consequently, in this review, the

Department does have information appropriate for use as a benchmark in

establishing the arm's-length nature of Prayon's affiliated commission

rates.

Since the Department has determined that the commissions paid to

affiliated selling agents are comparable to the commissions paid by the

respondent to unaffiliated selling agents in third country markets, for

purposes of these final results we continue to find that the affiliated

commissions in both the home and U.S. market are made at arm's-length

and, for these final results, we are accepting Prayon's reported home

and U.S. market commissions. Accordingly, we have continued to make a

circumstance of sale adjustment for commissions in both markets.

Comment 2: Prayon argues that, even were the Department to continue

to treat its U.S. market commission payments as having been made at

arm's-length, the Department committed a clerical error

[[Page 49773]]

in deducting U.S. commission expense from U.S. price, instead of adding

it to normal value (NV).

The domestic producers disagree with Prayon and assert that in

conducting an administrative review, the Department considers

individual U.S. sales, and thus it is proper that the commission

expense associated with each U.S. sale be deducted from U.S. price.

Department's position: We agree with Prayon that this was a

clerical error. For the final results we have added U.S. commissions to

NV as is our normal practice in the treatment of circumstances of sale

adjustments for export price (EP) transactions.

Final Results of Review

As a result of our review, we have determined that the following

weighted-average dumping 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..................................................... 3.92

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The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. We have

calculated an importer-specific duty assessment rate based on the ratio

of the total amount of antidumping duties calculated for the importer-

specific sales to the total entered value of the same sales. The rate

will be assessed uniformly on all entries by that particular importer

made during the POR. The Department will issue appraisement

instructions directly to the Customs Service.

Further, the following deposit requirements will be effective upon

publication of this notice of final results of review for all shipments

of IPA from Belgium entered, or withdrawn from warehouse, for

consumption on or after the publication date, as provided for by

section 751(a) of the Act: (1) for the company named above, the cash

deposit rate will be the rate listed above; (2) for merchandise

exported by manufacturers or exporters not covered in this review but

covered in a previous segment of this proceeding, the cash deposit rate

will continue to be the company-specific rate published in the most

recent final results which covered that manufacturer or exporter; (3)

if the exporter is not a firm covered in this review or in any previous

segment of this proceeding, but the manufacturer is, the cash deposit

rate will be that established for the manufacturer of the merchandise

in these final results of review or in the most recent final results

which covered that manufacturer; and (4) if neither the exporter nor

the manufacturer is a firm covered in this review or in any previous

segment of this proceeding, the cash deposit rate will be 14.67

percent, the ``all others'' rate established in the LTFV.

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review. This notice

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 doubled antidumping

duties.

This notice also serves as the only reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with section 351.306 of the Department's regulations.

Timely notification of return/destruction of APO materials or

conversion to judicial protective order is hereby requested. Failure to

comply with the regulations and the terms of an APO is a sanctionable

violation.

This administrative review and notice are in accordance with

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

Dated: September 1, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-23954 Filed 9-13-99; 8:45 am]

BILLING CODE 3510-DS-P