Notice of Final Determination of Sales at Less Than Fair Value: Emulsion Styrene-Butadiene Rubber From Brazil

DEPARTMENT OF COMMERCE

International Trade Administration

[A-351-827]

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

Emulsion Styrene-Butadiene Rubber From Brazil

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: March 29, 1999.

FOR FURTHER INFORMATION CONTACT: Sunkyu Kim or John Maloney, Office of

AD/CVD Enforcement, Group II, Office 5, Import Administration,

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

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

(202) 482-2613 or (202) 482-1503.

The Applicable Statute

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 (URAA). In addition, unless

otherwise indicated, all citations to the Department of Commerce's (the

Department's) regulations are to the regulations codified at 19 CFR

part 351 (April 1998).

Final Determination

We determine that emulsion styrene-butadiene rubber (ESBR) from

Brazil is being sold in the United States at less than fair value

(LTFV), as provided in section 735 of the Act. The estimated margins of

sales at LTFV are shown in the ``Continuation of Suspension of

Liquidation'' section of this notice.

Case History

Since the preliminary determination in this investigation on

October 28, 1998 (see Notice of Preliminary Determination of Sales at

Less Than Fair Value and Postponement of Final Determination: Emulsion

Styrene-Butadiene Rubber from Brazil, 63 FR 59509 (November 4, 1998)

(Preliminary Determination)), the following events have occurred:

On December 9, 1998, the sole respondent in this case, Petroflex

Industria e Comercio S.A. (Petroflex), submitted a letter to the

Department stating that Petroflex is ``unable to receive Department

personnel for verification as scheduled.'' Furthermore, Petroflex

stated that the ``company does not anticipate a significant reduction

in the final margin to warrant further participation in the

Department's investigation'' and ``has therefore decided to focus its

efforts on the injury proceedings at the U.S. International Trade

Commission.'' As a result of Petroflex's decision not to participate in

verification, the information provided by the company, which was the

basis of our preliminary determination, could not be verified.

Therefore, we have applied facts otherwise available in our final

determination. For a further discussion, see ``Facts Available''

section below.

We received a case brief from the petitioners on February 5, 1999.

We received no case or rebuttal brief from Petroflex.

Scope of Investigation

For purposes of this investigation, the product covered is ESBR.

ESBR is a synthetic polymer made via free radical cold emulsion

copolymerization of styrene and butadiene monomers in reactors. The

reaction process involves combining styrene and butadiene monomers in

water, with an initiator system, an emulsifier system, and molecular

weight modifiers. ESBR consists of cold non-pigmented rubbers and cold

oil extended non-pigmented rubbers that contain at least one percent of

organic acids from the emulsion polymerization process.

ESBR is produced and sold, both inside the United States and

internationally, in accordance with a generally accepted set of product

specifications issued by the International Institute of Synthetic

Rubber Producers (IISRP). The universe of products subject to this

investigation are grades of ESBR included in the IISRP 1500 series and

IISRP 1700 series of synthetic rubbers. The 1500 grades are light in

color and are often described as ``Clear'' or ``White Rubber.'' The

1700 grades are oil-extended and thus darker in color, and are often

called ``Brown Rubber.'' ESBR is used primarily in the production of

tires. It is also used in a variety of other products, including

conveyor belts, shoe soles, some kinds of hoses, roller coverings, and

flooring.

Products manufactured by blending ESBR with other polymers, high

styrene resin master batch, carbon black master batch (i.e., IISRP 1600

series and 1800 series) and latex (an intermediate product) are not

included within the scope of this investigation.

The products under investigation are currently classifiable under

subheading 4002.19.0010 of the Harmonized Tariff Schedule of the United

States (HTSUS). Although the HTSUS subheading is provided for

convenience and customs purposes, the written description of the scope

of this investigation is dispositive.

Period of Investigation

The period of investigation (POI) is April 1, 1997 through March

31, 1998.

Facts Available

Section 776(a)(2) of the Act provides that, if an interested party:

(A) withholds information that has been requested by the Department;

(B) fails to provide such information in a timely manner or in the form

or manner requested; (C) significantly impedes a proceeding under the

antidumping statute; or (D) provides such information but the

information cannot be verified, the Department shall, subject to

certain exceptions contained in section 782, use facts otherwise

available in reaching the applicable determination. In this case,

Petroflex refused to allow the Department to verify the sales and cost

of production data it provided in its questionnaire responses, thus

rendering subsections 782(c)(1) and (e) inapplicable. Accordingly, we

have determined that use of facts available is appropriate for

Petroflex.

Section 776(b) of the Act provides that adverse inferences may be

used

[[Page 14864]]

when 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. See also Statement of Administrative Action accompanying

the URAA, H.R. Rep. No. 316, 103d Cong., 2d Sess. 870 (1994) (SAA).

Petroflex's decision to refuse verification of its submitted data

demonstrates that it has failed to act to the best of its ability to

comply with a request for information under section 776 of the Act.

Thus, the Department has determined that, in selecting among the facts

otherwise available, an adverse inference is warranted. Consistent with

Department practice in cases where the respondent refuses to

participate, as adverse facts otherwise available, we have applied a

margin based on the highest margin stated in the petition (there were

no calculated margins in this investigation for us to consider). See,

e.g., Notice of Final Determination of Sales At Less Than Fair Value:

Stainless Steel Wire Rod from Germany, 63 FR 40433 (July 29, 1998).

Section 776(c) provides that, when the Department relies on

secondary information, such as the petition, when resorting to the

facts otherwise available, it must, to the extent practicable,

corroborate that information using independent sources that are

reasonably at its disposal. To corroborate secondary information, to

the extent practicable, the Department will examine the reliability and

relevance of the information to be used. With respect to the

reliability aspect of corroboration, we reviewed the adequacy and

accuracy of the information in the petition during our pre-initiation

analysis of the petition, to the extent appropriate information was

available for this purpose (e.g., import statistics, call reports, and

data from business contacts) as outlined below.

The petitioners identified Petroflex as the sole exporter and

producer of ESBR from Brazil. The petitioners based export price on

U.S. prices in call reports generated by the petitioners' sales

personnel in the normal course of business and obtained from various

customers for ESBR grades 1502 and 1712, two grades most commonly

exported to the United States. The petitioners adjusted the delivered

U.S. prices to ex-factory prices by deducting international freight and

insurance expenses. The source of these expenses were official U.S.

import statistics. For sales that did not specify ``FOB Port'' or

``Delivered'', the petitioners assumed the terms of these sales to be

FOB Brazil and did not deduct international freight and insurance

expenses. No other adjustments were made.

With respect to normal value, the petitioners obtained from a local

business contact in Brazil prices for contemporaneous sales of ESBR

grades 1502 and 1712 from Petroflex to a Brazilian customer. The

petitioners adjusted these home market prices for estimated inland

freight and credit expenses. The interest rates used in the calculation

of credit expenses were obtained from publicly available information.

The Brazilian inland freight expenses and credit terms were based on

information obtained by local business contacts, as noted in an

affidavit. After making adjustments for movement expenses and credit

expenses, the petitioners calculated ex-factory normal values which

were converted to U.S. dollars using publicly available exchange rates.

See Notice of Initiation of Antidumping Investigations: Emulsion

Styrene-Butadiene Rubber from Brazil, the Republic of Korea, and

Mexico, 63 FR 20575 (April 27, 1998), and ``Office of Antidumping

Investigations Initiation Checklist'' dated April 21, 1998 (Initiation

Checklist).

For purposes of the final determination, we reexamined the export

price and normal value data provided in the petition in light of

information obtained during the investigation and, to the extent that

it could be corroborated, found that it continues to be reliable. For

export prices, we attempted to corroborate the petition information by

comparing the range of prices in the petition to U.S. Customs C.I.F.

prices for the HTSUS number which includes subject merchandise (i.e.,

subheading 4002.19.0010). The price quotes submitted by the petitioners

are consistent with the U.S. import statistics. Additionally, the

actual information submitted by Petroflex regarding U.S. price in this

case, although not dispositive because it is unverified, tends to

corroborate information submitted in the petition. With regard to

normal value, information obtained from Petroflex during the

investigation shows the prices calculated by the petitioners represent

a reasonable range of prices for the sale of the foreign like product

in the home market.

With respect to the relevance aspect of corroboration, the

Department considers information reasonably at its disposal as to

whether there are circumstances that would render a margin not

relevant. In this proceeding, there was no information that indicated

that the margins in the petition are not relevant. Thus, as the highest

margin in the petition is reliable and relevant, the Department

concludes that this margin has probative value and is sufficiently

corroborated so that it may be used as facts available. See, the

Memorandum to Louis Apple, Office Director from the Team on ``The

Application of Facts Available Rate and Corroboration of Secondary

Information for Petroflex Industria e Comercio S.A.'' dated March 19,

1999.

The All-Others Rate

The foreign manufacturer/exporter in this investigation is being

assigned a dumping margin on the basis of facts otherwise available.

Section 735(c)(5) of the Act provides that, where the dumping margins

established for all exporters and producers individually investigated

are determined entirely under section 776, the Department may use any

reasonable method to establish the estimated all-others rate for

exporters and producers not individually investigated, including

averaging the estimated weighted average dumping margins determined for

the exporters and producers individually investigated. Where the data

is not available to weight average the facts available rates, the SAA,

at 873, provides that we may use other reasonable methods. In this

case, the margin assigned to the only company investigated is based on

adverse facts available. Therefore, consistent with the SAA, we are

using an alternative method. As our alternative, we are basing the all

others rate on a simple average of the margins in the petition, 43.85

percent.

Interested Party Comments

Comment Use of Facts Available for Petroflex

The petitioners argue that Petroflex refused to allow verification

of its questionnaire responses and, therefore, the Department should

base its final determination on total facts available. Further, the

petitioners assert that Petroflex has not cooperated with the

Department in this investigation and that adverse inferences are

warranted in assigning a facts available margin to Petroflex. As

adverse facts available, the petitioners urge the Department to assign

the highest margin calculated in the petition.

DOC Position

We agree with the petitioners. As discussed above in the ``Facts

Available'' section of the notice, as adverse facts available, we

assigned the highest margin calculated in the petition, 71.08 percent,

to Petroflex.

[[Page 14865]]

Continuation of Suspension of Liquidation

In accordance with section 735(c)(4)(A) of the Act, we are

directing the Customs Service to continue to suspend liquidation of all

entries of emulsion styrene-butadiene from Brazil, as defined in the

``Scope of Investigation'' section of this notice, that are entered, or

withdrawn from warehouse, for consumption on or after November 4, 1998,

the date of publication of our preliminary determination in the Federal

Register. For these entries, the Customs Service will require a cash

deposit equal to the estimated amount by which the normal value exceeds

the export price as shown below. This suspension of liquidation will

remain in effect until further notice.

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

Weighted-

average

Exporter/manufacturer margin

percentage

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

Petroflex Industria e Comercio S.A........................ 71.08

All Others................................................ 43.85

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

The all-others rate applies to all entries of subject merchandise

except for the entries of merchandise produced by the exporter/

manufacturer listed above.

ITC Notification

In accordance with section 735(d) of the Act, we have notified the

International Trade Commission (ITC) of our determination. As our final

determination is affirmative, the ITC will, within 45 days, determine

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry. If the ITC determines that material

injury, or threat of material injury does not exist, the proceeding

will be terminated and all securities posted will be refunded or

canceled. If the ITC determines that such injury does exist, the

Department will issue an antidumping duty order directing Customs

officials to assess antidumping duties on all imports of the subject

merchandise entered, or withdrawn from warehouse, for consumption on or

after the effective date of the suspension of liquidation.

This determination is published pursuant to section 777(i) of the

Act.

Dated: March 19, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration

[FR Doc. 99-7525 Filed 3-26-99; 8:45 am]

BILLING CODE 3510-DS-P