Natural Bristle Paintbrushes and Brush Heads From The People's Republic of China; Preliminary Results and Partial Recission of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-501]

Natural Bristle Paintbrushes and Brush Heads From The People's

Republic of China; Preliminary Results and Partial Recission of

Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results and partial recission of the

antidumping duty administrative review of natural bristle paintbrushes

and brush heads from the People's Republic of China.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on natural bristle

paintbrushes and brush heads (paintbrushes) from the People's Republic

of China (PRC) in response to a request by petitioner, the Paint

Applicator Division of the American Brush Manufacturers Association

(the Paint Applicator Division) and by a PRC exporter of subject

merchandise, the Hebei Animal By-Products Import & Export Corp. (HACO).

This review covers shipments of this merchandise to the United States

during the period February 1, 1997 through January 31, 1998. We are now

rescinding this review in part with respect to the respondent who had

no shipments of the subject merchandise during the period of review

(POR).

We have preliminarily determined that sales by HACO have been made

below normal value (NV). If these preliminary results are adopted in

our final results, we will instruct the U.S. Customs Service to assess

antidumping duties equal to the difference between export price and NV.

Interested parties are invited to comment on these preliminary

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

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

argument.

EFFECTIVE DATE: January 13, 1999.

FOR FURTHER INFORMATION CONTACT: Eric Scheier, Laurel LaCivita, or

Maureen Flannery, Antidumping/Countervailing Duty Enforcement, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC.

20230; telephone (202) 482-4052, 482-4236, or 482-3020, respectively.

Applicable Statute

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 refer to the

regulations codified at 19 CFR part 351 (April 1998).

Background

On February 18, 1986, the Department published in the Federal

Register an antidumping duty order on paintbrushes from the PRC. See 51

FR 5580. On February 4, 1998, the Department published in the Federal

Register (63 FR 5930) a notice of opportunity to request an

administrative review of the antidumping order on paintbrushes from the

PRC covering the period February 1, 1997, through January 31, 1998.

On February 27, 1998, in accordance with 19 CFR 351.213(b)(1),

petitioner, the Paint Applicator Division, requested that we conduct an

administrative review of Hunan Provincial Native Produce & Animal By-

Products I/E Corporation (Hunan). On February 27, 1998, HACO submitted

a request for a review. We published a notice of initiation of this

antidumping duty administrative review on March 23, 1998 (63 FR 13837).

The Department is conducting this administrative review in accordance

with section 751 of the Act.

Partial Rescission

We initiated a review of HACO and Hunan. However, on March 5, 1998,

Hunan informed the Department that it had no shipments of the subject

merchandise to the United States during the POR. We have independently

confirmed with the United States Customs Service that there were no

shipments from Hunan during the POR. Therefore, in accordance with

Sec. 351.213(d)(3) of the Department's regulations and consistent with

Department practice, we are rescinding our review of Hunan (see, e.g.,

Certain Welded Carbon Steel Pipe and Tube

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from Turkey: Final Results and Partial Rescission of Antidumping

Administrative Review, 63 FR 35191 (June 29, 1998) and Certain Fresh

Cut Flowers From Colombia; Final Results and Partial Rescission of

Antidumping Duty Administrative Review, 62 FR 53287, 53288 (October 14,

1997).

Scope of Review

Imports covered by this review are shipments of natural bristle

paint brushes and brush heads from the PRC. Excluded from the order are

paint brushes and brush heads with a blend of 40% natural bristles and

60% synthetic filaments. The merchandise under review is currently

classifiable under item 9603.40.40.40 of the Harmonized Tariff Schedule

of the United States (HTSUS). Although the HTSUS subheading is provided

for convenience and customs purposes, the Department's written

description of the merchandise is dispositive.

This review covers the period February 1, 1997, through January 31,

1998.

Verification

As provided in section 782(i) of the Act, we conducted a

verification of information provided by HACO and its supplier by using

standard verification procedures, including on-site inspection of the

manufacturer's facilities, the examination of relevant sales and

financial records, and the seclection of original documentation

containing relevant information. Our verification results are outlined

in the public version of the verification report.

Adverse Facts Available

We preliminarily determine, in accordance with sections 776(b) and

(c) of the Act, that the use of adverse facts available (FA) is

appropriate for HACO. See Determination of Adverse Facts Available

Based on Verification Failure in the Administrative Review of Natural

Bristle Paintbrushes and Brush Heads from the People's Republic of

China (Adverse Facts Available Memorandum), dated December 30, 1998.

From September 28 through September 30, 1998, the Department

conducted a verification of HACO's questionaire response at HACO's

sales office and its supplier's factory in the PRC. We were unable to

verify substantial sections of the questionnaire response at HACO's

supplier, including the statutorily required factors of production

information, such as the number of labor hours worked and the per unit

quantities consumed of primary material inputs. These discrepancies are

detailed in HACO's verification report, dated December 30, 1998. These

discrepancies are so significant as to constitute a failure of

verification.

Where a party provides information requested by the Department but

the information cannot be verified as required by section 782(i) of the

Act, section 776(a)(2)(D) of the Act requires the Department to use

facts otherwise available in reaching the applicable determination.

Therefore, in accordance with section 776(a) of the Act, the use of FA

is appropriate for HACO. See Extruded Rubber Thread from Malaysia,

Final Results of Antidumping Duty Administrative Review, 62 FR 33588

(June 9, 1997).

Section 776(b) of the Act authorizes the Department to use adverse

FA whenever it finds that an interested party has failed to cooperate

by not acting to the best of its ability to comply with the

Department's requests for information. Because HACO failed to

substantiate large portions of its questionnaire response, including

the statutorily required factors of production information, such as the

number of labor hours worked and the per unit quantities consumed of

primary material inputs, we determine that HACO did not cooperate to

the best of its ability with our requests for information. See Adverse

Facts Available Memorandum. Therefore, pursuant to section 776(b) of

the Act, we are using adverse FA to determine HACO's margin. Under

section 776(b) of the Act, adverse facts available may include reliance

on information derived from : (1) The petition, (2) a final

determination in the investigation, (3) any previous review under

section 751 of the Act or determination under section 753 of the Act,

or (4) any other information placed on the record. We have found that

the adverse FA rate appropriate for HACO is the highest rate from a

previous review or the original LTFV investigation, which in this case

is 351.92 percent, the rate calculated for HACO in the review covering

the period February 1, 1994 through January 31, 1995 (the 1994-1995

review).

Section 776(c) of the Act provides that the Department shall, to

the extent practicable, corroborate secondary information from

independent sources reasonably at its disposal. The Statement of

Administrative Action, H.R. Doc. 316, Vol. 1, 103d Cong., 2d Sess. 870

(1994) (SAA) provides that ``corroborate'' means simply that the

Department will satisfy itself that the secondary information to be

used has probative value. See SAA at 870.

To corroborate secondary information, the Department will, to the

extent practicable, examine the reliability and relevance of the

information to be used. However, unlike other types of information,

such as surrogate values, there are no independent sources for

calculated dumping margins. The only source for calculated margins is

an administrative determination. Thus, in an administrative review, if

the Department chooses as adverse FA a calculated dumping margin from a

prior segment of the proceeding, it is not necessary to question the

reliability of the margin for that time period. With respect to the

relevance aspect of corroboration, however, the Department will

consider information reasonably at its disposal as to whether there are

circumstances that would render a margin not relevant. Where

circumstances indicate that the selected margin is not appropriate as

adverse facts available, the Department will disregard the margin and

determine an appropriate margin. (See e.g., Fresh Cut Flowers from

Mexico; Preliminary Results of Antidumping Duty Administrative Review,

60 FR 49567, 49568 (September 26, 1995), where the Department

disregarded the highest margin as best information available because

that margin was based on an extraordinarily high business expense

resulting from uncharacteristic investment activities, which resulted

in the high margin.)

In this case, we have used the highest rate from any prior segment

of the proceeding, 351.92 percent, which was the rate calculated for

HACO in the 1994-1995 review. Because this margin is based on the rate

calculated for the relatively recent 1994-95 review using HACO's own

price data, and because there is no information that indicates that

this rate is not appropriate, we have determined that a margin of

351.92 percent is appropriate to use as facts available.

Separate Rates

We have conducted a separate rate analysis of HACO despite its

overall verification failure for the following reasons: (1) The

separate rate test is exporter-specific; (2) the verification failure

as described above resulted from the Department's inability to verify

the information provided by HACO's supplier, the producer of the

subject merchandise imported into the U.S. during the POR, and not from

any discrepancies in the information provided by HACO, the exporter of

the subject merchandise imported into the U.S. during the POR; (3) our

verification of the separate rate information provided in HACO's

responses revealed that a separate rate is warranted and; (4) the

Department granted HACO a

[[Page 2194]]

separate rate for the 1994-95 review of paintbrushes from the PRC,

which is the most recent review in which HACO participated. See Natural

Bristle Paint Brushes and Brush Heads From the People's Republic of

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

52917 (October 1, 1996). See also Verification of Sales for Hebei

Animal By-Products Import and Export Corporation (HACO) in the

Antidumping Administrative Review of Natural Bristle Paintbrushes and

Brush Heads from the People's Republic of China (PRC) (Verification

Report).

To establish whether a company operating in a state-controlled

economy is sufficiently independent to be entitled to a separate rate,

the Department analyzes each exporting entity under the test

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 by 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). Under this policy,

exporters in non-market economies (NMEs) are entitled to separate,

company-specific margins when they can demonstrate an absence of

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

activities. 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. See Sparklers at

20589. A de facto analysis of absence of government control over

exports is based on four factors: (1) Whether each exporter sets its

own export prices independently of the government or without the

approval of a government authority; (2) whether each exporter retains

the proceeds from its export sales and makes independent decisions

regarding the disposition of profits or financing of losses; (3)

whether each exporter has the authority to negotiate and sign contracts

and other agreements; and (4) whether each exporter has autonomy from

the government regarding the selection of management. See Silicon

Carbide at 22587, and Sparklers at 20589.

With respect to the absence of de jure government control over

export activities, evidence on the record indicates that HACO is a

collectively-owned enterprise. The ``All People's Ownership Business

Law'' of the PRC identifies rules and regulations pertaining to

collectively-owned enterprises, and gives collective enterprises the

right to sell the subject merchandise for export without any

restrictive stipulations. (See Exhibits 3 and 4 of HACO's August 27,

1998, questionnaire response.)

Additionally, HACO has reported in its May 13, 1998 questionnaire

response that the subject merchandise does not appear on any government

list regarding export provisions or export licensing, and that there

are no export quotas on the subject merchandise or export licenses

required to export subject merchandise. (See Questionnaire Response of

May 13, 1998, at A-5.)

With respect to the absence of de facto control over export

activities, HACO's management is elected by HACO's staff, and is

responsible for all decisions, such as the determination of its export

prices, profit distribution, employment policy, marketing strategy, and

contract negotiations. HACO has also reported that it maintains an

independent foreign exchange account at the Bank of China. At

verification we found that the provincial government has no control

over pricing, business practices, salary, payroll, or bonuses. At

verification we also found that HACO's relevant department head

negotiated sales of paintbrushes, that HACO did not coordinate prices

with other exporters, and that employees could be fired and salaries

could be reduced. See Separate Rate Analysis in the Administrative

Review of Natural Bristle Paintbrushes and Brush Heads from the

People's Republic of China dated December 30, 1998 (Separate Rate

Memorandum), and the public version of Verification Report dated

December 30, 1998, which is on file in the Central Records Unit (room

B099 of the Main Commerce Building).

Because evidence on the record demonstrates an absence of

government control, both in law and in fact, over HACO's export

activities, the Department preliminarily grants HACO a separate rate.

For further discussion of the Department's preliminary determination

that HACO is entitled to a separate rate, see Separate Rate Memorandum.

Preliminary Results of Review

We preliminarily determine that the following dumping margin

exists:

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

Margin

Manufacturer/exporter Time period (percent)

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

Hebei Native, Product & Animal By-

Products I/E Corp................... 02/01/97-01/31/98 351.92

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

Parties to the proceeding may request disclosure within 5 days of

the date of publication of this notice in accordance with 19 CFR

351.224(b). Any interested party may request a hearing within 30 days

of publication in accordance with 19 CFR 351.310(c). Any hearing, if

requested, will be held 37 days after the publication of this notice,

or the first workday thereafter. Interested parties may submit case

briefs within 30 days of the date of publication of this notice in

accordance with 19 CFR 351.309(c)(2). Rebuttal briefs, which must be

limited to issues raised in the case briefs, may be filed not later

than 35 days after the date of publication. The Department will publish

a notice of final results of this administrative review, which will

include the results of its analysis of issues raised in any such

comments, within 120 days from the publication of these preliminary

results.

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. For assessment

purposes, we intend to instruct Customs to collect duties equal to

351.92 percent of the entered value of the subject merchandise.

Furthermore, the following deposit rates will be effective upon

publication of the final results of this administrative review for all

shipments of paintbrushes from the PRC entered, or withdrawn from

warehouse, for consumption on or after the publication date, as

provided for by section 751(a)(2)(C) of the Act: (1) For HACO, which

has a separate rate, the cash deposit rate will be 351.92 percent; (2)

for previously-reviewed PRC and non-PRC exporters with separate rates,

the cash deposit rate will be the company-specific rate established for

the most recent period; (3) for all other PRC exporters, the rate will

be the PRC country-wide rate, which is 351.92 percent; and (4) for all

other non-PRC exporters of subject merchandise from the PRC, the cash

deposit rate will be

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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.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 351.401(f) of the Department's

regulations 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 published in accordance

with section 751(a)(1) of the Act and Secs. 351.213 and 351.221 of the

Department's regulations.

Dated: December 30, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-692 Filed 1-12-99; 8:45 am]

BILLING CODE 3510-DS-M