Certain Compact Ductile Iron Waterworks Fittings and Glands From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-820]

Certain Compact Ductile Iron Waterworks Fittings and Glands From

the People's Republic of China: Preliminary Results of Antidumping Duty

Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

SUMMARY: The Department of Commerce (``the Department'') is conducting

an administrative review of the antidumping duty order on Certain

Compact Ductile Iron Waterworks Fittings and Glands (``CDIW'') from the

People's Republic of China in response to requests by the respondent,

Beijing Metals and Minerals Import and Export Corporation, and its

Cheng Hong Foundry (collectively known as ``BMMIEC''). The period of

review is September 1, 1997, through August 31, 1998.

We have preliminarily determined that U.S. sales of subject

merchandise by BMMIEC have not been made below normal value. Since

BMMIEC submitted full responses to the antidumping questionnaire and it

has been established that it is sufficiently

[[Page 55698]]

independent, it is entitled to a separate rate.

If these preliminary results are adopted in our final results of

administrative review, we will instruct the U.S. Customs Service to

assess no antidumping duties on entries from BMMIEC.

Interested parties are invited to comment on these preliminary

results.

EFFECTIVE DATE: October 14, 1999.

FOR FURTHER INFORMATION CONTACT: Lyman Armstrong, Jim Terpstra or Paige

Rivas, AD/CVD Enforcement Group II, Office IV, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, NW, Washington, DC 20230; telephone:

(202) 482-3601, (202) 482-3965, or (202) 482-0651 respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act), are references to the provisions effective

January 1, 1995, the effective date of the amendments made to the Act

by the Uruguay Round Agreements Act. In addition, unless otherwise

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

regulations at 19 CFR part 351 (1998).

Background

The Department received a request for review from BMMIEC on

September 30, 1997. We published a notice of initiation of this review

on October 29, 1997 (63 FR 58010).

On December 1, 1998, we issued an antidumping questionnaire to

BMMIEC. The Department received responses to Section A on January 6,

1999 and Sections C and D on February 11, 1999.

We issued a supplemental questionnaire to BMMIEC on March 18, 1999.

The response to this supplemental questionnaire was received on April

12, 1999. On April 27, 1999, the Department issued a second

supplemental questionnaire to BMMIEC. The response to the second

supplemental questionnaire was received on May 5, 1999.

Under section 751(a)(3)(A) of the Act, the Department may extend

the deadline for issuing a preliminary determination in an

administrative review if it determines that it is not practicable to

complete the preliminary review within the statutory time limit of 245

days. On May 13, 1999, the Department published a notice of extension

of the time limit for the preliminary results in this case to September

30, 1999. See CDIW From the People's Republic of China: Antidumping

Duty Administrative Review, Time Limit, 64 FR 27960 (May 24, 1999).

In August 1999, BMMIEC submitted publicly available information and

comments for consideration in valuing the factors of production. On

August 16, 1999, BMMIEC submitted revised sales and factors of

production data.

Scope of Review

The products subject to this antidumping duty order are (1) certain

compact ductile iron waterworks (CDIW) fittings of 3 to 16 inches

nominal diameter regardless of shape, including bends, tees, crosses,

wyes, reducers, adapters, and other shapes, whether or not cement line,

and whether or not covered with bitumen or similar substance,

conforming to American Water Works Association/American National

Standards Institute (AWWA/ANSI) specification C153/A21.53, and rated

for water working pressure of 350 PSI; and (2) certain CDIW standard

ductile iron glands for fittings in sizes 3 to 16 inches, conforming to

AWWA/ANSI specification C111/A21.11 and rated for water working

pressure of 350 PSI. All accessory packs (including accessory packs

containing glands), are excluded from the scope of this order.

The types of CDIW fittings covered by this order are compact

ductile iron mechanical joint waterworks fittings and compact ductile

iron push-on joint waterwork fittings, both of which are used for the

same application. CDIW fittings are used to join water main pressure

pipes, valves, or hydrants in straight lines, and change, divert,

divide, or direct the flow of raw and/or treated water in piping

systems. CDIW fittings attach to the pipe, valve, or hydrant at a joint

and are used principally for municipal water distribution systems. CDIW

glands are used to join mechanical joint CDIW fittings to pipes.

CDIW fittings with nominal diameters greater than 16 inches, are

specifically excluded from the scope of the order. Nonmalleable cast

iron fittings (also called gray iron fittings) and full-bodied ductile

fittings are also specifically excluded from the scope of this order.

Nonmalleable cast iron fittings have little ductility and are generally

rated only 150 to 250 PSI. Full-bodied ductile fittings have a longer

body design than a compact fitting because in the compact design the

straight section of the body is omitted to provide a more compact and

less heavy fitting without reducing strength or flow characteristics.

In addition, the full-bodied ductile fittings are thicker walled than

the compact fittings. Full-bodied fittings are made of either gray iron

or ductile iron, in sizes of 3 to 48 inches, conform to AWWA/ANSI

specification C110/C21.10, and are rated to a maximum of only 250 PSI.

In addition, compact ductile iron flanged fittings are excluded from

the scope of this order, as they have significantly different

characteristics and uses than CDIW fittings.

CDIW fittings are classifiable under subheading 7307.19.30.00 of

the Harmonized Tariff Schedule of the United States (HTSUS). Standard

ductile iron glands are classifiable under HTSUS subheading

7325.99.10.00. Although the HTSUS subheadings are provided for

convenience and customs purposes, our written description of the scope

of this order is dispositive.

Separate Rates

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

merchandise subject to review in non-market-economy (NME) countries a

single rate, unless an exporter can demonstrate an absence of

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

To establish whether an exporter is sufficiently independent of

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

analyzes the exporter in light of the criteria established in the Final

Determination of Sales at Less Than Fair Value: Sparklers from the

People's Republic of China, 56 FR 20588 (May 6, 1991) (Sparklers), as

amplified in the Final Determination of Sales at Less Than Fair Value:

Silicon Carbide from the People's Republic of China, 59 FR 22585 (May

2, 1994) (Silicon Carbide). Evidence supporting, though not requiring,

a finding of de jure absence of government control over export

activities includes: (1) An absence of restrictive stipulations

associated with an individual exporter's business and export licenses;

(2) any legislative enactments decentralizing control of companies; and

(3) any other formal measures by the government decentralizing control

of companies. Evidence relevant to a de facto absence of government

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

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

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

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

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

management. See Silicon Carbide, 59 FR at 22587; see also Sparklers, 56

FR at 20589.

[[Page 55699]]

BMMIEC responded to the Department's request for information

regarding separate rates, by providing the requested documentation. We

have determined that the evidence on the record demonstrates an absence

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

BMMIEC's exports, in accordance with the criteria identified in

Sparklers and Silicon Carbide. For further information, see Separate

Rates Memo dated September 30, 1999. As a result, BMMIEC is entitled to

a separate rate.

Export Price

We calculated EP in accordance with section 772(a) of the Act,

because the subject merchandise was sold directly to the first

unaffiliated purchaser in the United States prior to importation and

constructed export price (CEP) methodology was not otherwise warranted,

based on the facts of record. We calculated EP based on packed, CIF

U.S. port, or FOB PRC port, prices to unaffiliated purchasers in the

United States, as appropriate. We made deductions from the starting

price, where appropriate, for ocean freight services which were

provided by market economy suppliers. We also deducted from the

starting price, where appropriate, an amount for foreign inland

freight, foreign brokerage and handling. As these movement services

were provided by NME suppliers, we valued them using Indian rates. See

``Normal Value'' section below for further discussion.

Normal Value

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

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

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

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

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

section 773(a) of the Act.

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

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

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

shall remain in effect until revoked by the administering authority.

None of the parties to this proceeding has contested such treatment in

this review. Therefore, we treated the PRC as an NME country for

purposes of this review. Furthermore, available information does not

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

prices, or constructed value under section 773(a) of the Act. As a

result, we calculated NV by valuing the factors of production in a

comparable market economy country which is a significant producer of

comparable merchandise.

Section 773(c)(4) of the Act and 19 CFR 351.408 direct us to select

a surrogate country that is economically comparable to the PRC. On the

basis of per capita gross domestic product (GDP), the growth rate in

per capita GDP, and the national distribution of labor, we find that

India is a comparable economy to the PRC. See Memorandum from Director,

Office of Policy, to Office Director, AD/CVD Group II, Office IV, dated

May 21, 1999.

Section 773(c)(4) of the Act also requires that, to the extent

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

producer of merchandise comparable to CDIW. For purposes of the LTFV

investigation, we found that India was a significant producer of

comparable merchandise. See Notice of Final Determination of Sales at

Less Than Fair Value: CDIW Fittings and Accessories from the People's

Republic of China, 58 FR 37908 (July 14, 1993) (CDIW Final

Determination). For purposes of this administrative review, we find

that India is a producer of CDIW based on information submitted by the

respondents in their August 1999 submission. Therefore, we have

continued to use India as the surrogate country and have used publicly

available information relating to India, unless otherwise noted, to

value the various factors of production.

For purposes of calculating NV, we valued PRC factors of

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

production include, but are not limited to: hours of labor employed;

quantities of raw materials required; amounts of energy and other

utilities consumed; and representative capital cost, including

depreciation. In examining surrogate values, we selected, where

possible, the publicly available value which was: an average non-export

value; representative of a range of prices within the POR or most

contemporaneous with the POR; product-specific; and tax-exclusive. For

a more detailed explanation of the methodology used in calculating

various surrogate values, see Preliminary Results Factors Valuation

Memorandum from the Team to the File, dated September 30, 1999 (Factors

Memorandum). In accordance with this methodology, we valued the factors

of production as follows:

To value sand, bentonite, and graphite, we relied on import prices

contained in the September and November 1997, as well as the March

1998, issues of Indian Import Statistics. For pig iron, ferrosilicon,

limestone, and perlite, we used the import prices contained in the

September and November 1997, as well as the March 1998 issues of Indian

Import Statistics. For ferrosilico manganese, we relied on import

prices contained in the September 1997 and March 1998 issues of Indian

Import Statistics. For coke (hard), we used the November 1997 issue of

Indian Import Statistics. For firewood and cement, we relied on import

prices contained in the April 1997 through March 1998 issues of Indian

Import Statistics. For those values not contemporaneous with the POR,

we adjusted for inflation using the wholesale price indices (WPI)

published by the International Monetary Fund (IMF). We made further

adjustments to account for freight costs between the suppliers and

BMMIEC's manufacturing facilities.

In accordance with our practice, we added to CIF import values from

India a surrogate freight cost using the shorter of the reported

distances from either the closest PRC port to the factory, or from the

domestic supplier to the factory. See 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 61977 (November 20, 1997).

We valued labor based on a regression-based wage rate, in

accordance with 19 CFR 351.408(c)(3).

For electricity, we relied upon public information from the 1995

edition of IEA Energy Prices and Taxes to obtain an average price for

electricity provided to industries in India. We adjusted the values to

reflect inflation up to the POR using the WPI published by the IMF.

For the reported packing materials (i.e., bituminous pitch, steel

angles and straps, and welding rod), we relied upon Indian import data

in the April 1997 through March 1998 issues of Indian Import

Statistics. We adjusted the values to reflect inflation up to the POR

using the WPI published by the IMF. Additionally, we adjusted these

values to account for freight costs incurred between the suppliers and

BMMIEC.

For foreign inland freight, we used the August 1998 truck rate from

Rahul Roadlines. For foreign brokerage and handling, we used the

average of the rates reported in the questionnaire response in the

antidumping duty investigation of Stainless Steel Wire Rod From India.

See Certain Stainless Steel Wire Rod from India; Preliminary Results of

Antidumping Duty Administrative and New Shipper Review. 63 FR 48184

(September 9, 1998); Factors Memorandum. We adjusted the values to

reflect inflation

[[Page 55700]]

up to the POR using the WPI published by the IMF.

For factory overhead (FOH), selling, general, and administrative

expenses (SG&A), and profit, we relied on the 1997 financial statements

of Jayaswal Neco, Ltd, an Indian producer of certain compact ductile

iron waterworks fittings and glands, which were submitted by the

respondents, because this company is a producer of subject merchandise.

Preliminary Results of the Review

We preliminarily determine that the following de minimis margin

exists for the period September 1, 1997 through August 31, 1998:

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

Margin

Manufacturer/exporter (percent)

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

Beijing Metals and Minerals Import and Export Corporation.. .09

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

Interested parties may request a hearing within 30 days of

publication of this notice. See 19 CFR 351.310(c). Any hearing, if

requested, will be held 44 days after the date of the publication of

this notice or the first workday thereafter. Interested parties may

submit case briefs within 30 days of publication. Rebuttal briefs,

limited to issues raised in the case briefs, may be filed no later than

35 days after the date of publication. Parties who submit case briefs

or rebuttal briefs in this proceeding are requested to submit with each

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

argument. Parties are also encouraged to provide a summary of the

arguments not to exceed five pages and a table of statutes,

regulations, and cases cited.

The Department will subsequently issue the final results of this

administrative review, including the results of its analysis of issues

raised in any such written briefs or at a hearing, not later than 120

days after the date of publication of this notice.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Upon completion

of this review, the Department will issue appraisement instructions

directly to the U.S. Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of the final results of this antidumping duty

administrative review for all shipments of the subject merchandise

entered, or withdrawn from warehouse, for consumption on or after the

publication date, as provided by section 751(a)(1) of the Act: (1) For

BMMIEC, which has a separate rate, the cash deposit rate will be zero;

(2) for any previously reviewed PRC and non-PRC exporter with a

separate rate (including those companies and products where we

terminated the review), the cash deposit rate will be the company- and

product-specific rate established for the most recent period; (3) 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;

and (4) the cash deposit rate for all other PRC exporters will continue

to be 127.38 percent, the PRC-wide rate established in the LTFV

investigation. These requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a preliminary 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 administrative review is issued and published in accordance

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

Dated: September 30, 1999.

Robert La Russa,

Assistant Secretary for Import Administration.

[FR Doc. 99-26721 Filed 10-13-99; 8:45 am]

BILLING CODE 3510-DS-P