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Notice

Brake Rotors From the People's Republic of China: Preliminary Results of the Eighth New Shipper Review

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of the eighth new shipper review.

SUMMARY:

The Department of Commerce is currently conducting the eighth new shipper review of the antidumping duty order on brake rotors from the People's Republic of China covering the period April 1, 2002, through September 30, 2002. This review covers two exporters. We have preliminarily determined that sales have not been made at less than normal value with respect to the exporters subject to this review. If these preliminary results are adopted in our final results of this review, we will instruct the U.S. Bureau of Customs and Border Protection1 (“BCBP”) to assess antidumping duties on entries of subject merchandise during the period of review (“POR”), for which the importer-specific assessment rates are above de minimis.

Interested parties are invited to comment on these preliminary results. We will issue the final results no later than 90 days from the date of issuance of these preliminary results.

EFFECTIVE DATE:

June 3, 2003.

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FOR FURTHER INFORMATION CONTACT:

Brian Smith, Terre Keaton or Margarita Panayi, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-1766, (202) 482-1280 or (202) 482-0049, respectively.

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SUPPLEMENTARY INFORMATION:

Background

On October 31, 2002, the Department received timely requests from Xiangfen Hengtai Brake System Co., Ltd (“Hengtai”) and Xianghe Xumingyuan Auto Parts Co., Ltd. (“Xumingyuan”) for a new shipper review of this antidumping duty order in accordance with 19 CFR 351.214(c). In their requests for a new shipper review and in accordance with 19 CFR 351.214(b)(2)(i) and (iii)(A), Hengtai and Xumingyuan each certified that it did not export the subject merchandise to the United States during the period covered by the original less-than-fair-value (“LTFV”) investigation and that it is not affiliated with any company which exported the subject merchandise to the United States during the period of investigation (“POI”). Hengtai and Xumingyuan also certified that their export activities are not controlled by the central government of the People's Republic of China (“PRC”). Pursuant to 19 CFR 351.214(b)(2)(iv), Hengtai and Xumingyuan submitted documentation establishing the date on which the merchandise was first shipped for export to the United States, the volume of that first shipment, and the date of the first sale to an unaffiliated customer in the United States.

On December 3, 2002, the Department published a notice of initiation of a new shipper review of Hengtai and Xumingyuan (see Brake Rotors from the People's Republic of China: Initiation of New Shipper Antidumping Duty Review, 67 FR 71934 (December 3, 2002)). On December 4, 2002, the Department issued a questionnaire to each company.

On December 19, 2002, the Department provided the parties an opportunity to submit publicly available information for consideration in the preliminary results. In January and February 2003, we received responses to the Department's questionnaires, and granted an extension until March 10, 2003, for all interested parties to submit publicly available information for consideration in the preliminary results.

On February 27, 2003, we notified the respondents of our intent to conduct verification of their responses to the antidumping duty questionnaire and provided each respondent with a verification outline for purposes of familiarizing each company with the verification process. On March 10, 2003, the respondents submitted publicly available information, and on March 14, 2003, the petitioner2 submitted rebuttal comments to the publicly available information provided by the respondents. From March 10 through March 21, 2003, we conducted verification of the information submitted by each respondent, in accordance with 19 CFR 351.307. On April 16, 2003, we issued verification reports.

Scope of the Order

The products covered by this order are brake rotors made of gray cast iron, whether finished, semifinished, or unfinished, ranging in diameter from 8 to 16 inches (20.32 to 40.64 centimeters) and in weight from 8 to 45 pounds (3.63 to 20.41 kilograms). The size parameters (weight and dimension) of the brake rotors limit their use to the following types of motor vehicles: automobiles, all-terrain vehicles, vans and recreational vehicles under “one ton and a half,” and light trucks designated as “one ton and a half.”

Finished brake rotors are those that are ready for sale and installation without any further operations. Semi-finished rotors are those on which the surface is not entirely smooth, and have undergone some drilling. Unfinished rotors are those which have undergone some grinding or turning.

These brake rotors are for motor vehicles, and do not contain in the casting a logo of an original equipment manufacturer (“OEM”) which produces vehicles sold in the United States (e.g., General Motors, Ford, Chrysler, Honda, Toyota, Volvo). Brake rotors covered in this order are not certified by OEM producers of vehicles sold in the United States. The scope also includes composite brake rotors that are made of gray cast iron, which contain a steel plate, but otherwise meet the above criteria. Excluded from the scope of this order are brake rotors made of gray cast iron, whether finished, semifinished, or unfinished, with a diameter less than 8 inches or greater than 16 inches (less than 20.32 centimeters or greater than 40.64 centimeters) and a weight less than 8 pounds or greater than 45 pounds (less than 3.63 kilograms or greater than 20.41 kilograms).

Brake rotors are currently classifiable under subheading 8708.39.5010 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 order is dispositive.

Period of Review

The POR covers April 1, 2002, through September 30, 2002.

Verification

As provided in section 782(i) of the Act, we verified information provided by each respondent. We used standard Start Printed Page 33096verification procedures, including on-site inspection of the manufacturer's facilities and examination of relevant sales and financial records. Our verification results are outlined in the verification report for each company (see April 16, 2003, verification reports for Hengtai and Xumingyuan for further discussion).

Separate Rates

In proceedings involving non-market-economy (“NME”) countries, the Department begins with a rebuttable presumption that all companies within the country are subject to government control and thus should be assessed a single antidumping duty deposit rate (i.e., a PRC-wide rate).

Hengtai claims that it is a limited liability company in the PRC, and Xumingyuan claims that it is a joint venture between a PRC and a foreign company. Thus, for these respondents, a separate rates analysis is necessary to determine whether the exporters are independent from government control (see Notice of Final Determination of Sales at Less Than Fair Value: Bicycles From the People's Republic of China (“Bicycles”) 61 FR 56570 (April 30, 1996)).

To establish whether a firm is sufficiently independent in its export activities from government control to be entitled to a separate rate, the Department utilizes a test arising from 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”), and 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”). Under the separate-rates criteria, the Department assigns separate rates in NME cases only if the respondent can demonstrate the absence of both de jure and de facto governmental control over export activities.

1. De Jure Control

Hengtai and Xumingyuan have placed on the administrative record documents to demonstrate absence of de jure control, including the PRC's Enterprise Legal Person Registration Administrative Regulations promulgated on June 13, 1988, and the 1994 “Foreign Trade Law of the People's Republic of China.”

As in prior cases, we have analyzed these laws and have found them to establish sufficiently an absence of de jure control of joint ventures between PRC and foreign companies and limited liability companies in the PRC. See, e.g., Final Determination of Sales at Less than Fair Value: Furfuryl Alcohol from the People's Republic of China (“Furfuryl Alcohol”) 60 FR 22544 (May 8, 1995), and Preliminary Determination of Sales at Less Than Fair Value: Certain Partial-Extension Steel Drawer Slides with Rollers from the People's Republic of China, 60 FR 29571 (June 5, 1995). We have no new information in this proceeding which would cause us to reconsider this determination with regard to Hengtai and Xumingyuan.

2. De Facto Control

As stated in previous cases, there is some evidence that certain enactments of the PRC central government have not been implemented uniformly among different sectors and/or jurisdictions in the PRC. See Silicon Carbide and Furfuryl Alcohol. Therefore, the Department has determined that an analysis of de facto control is critical in determining whether the respondents are, in fact, subject to a degree of governmental control which would preclude the Department from assigning separate rates.

The Department typically considers four factors in evaluating whether each respondent is subject to de facto governmental control of its export functions: (1) whether the export prices are set by, or subject to the approval of, a governmental authority; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether the respondent retains the proceeds of its export sales and makes independent decisions regarding the disposition of profits or financing of losses (see Silicon Carbide and Furfuryl Alcohol).

Hengtai and Xumingyuan each asserted the following: (1) it establishes its own export prices; (2) it negotiates contracts without guidance from any governmental entities or organizations; (3) it makes its own personnel decisions; and (4) it retains the proceeds of its export sales, uses profits according to its business needs, and has the authority to sell its assets and to obtain loans. Additionally, each of these companies' questionnaire responses indicates that its pricing during the POR does not suggest coordination among exporters.

For Hengtai and Xumingyuan, the Department found no evidence at verification of government involvement in their business operations. Specifically, Department officials examined sales documents that showed that each of these respondents negotiated its contracts and set its own sales prices with its customers. In addition, the Department reviewed sales documentation, bank statements and accounting documentation that demonstrated that each of these respondents received payment from its U.S. customers via bank wire transfer, which was deposited into its own bank account without government intervention. Finally, the Department examined internal company memoranda such as appointment notices, which demonstrated that each of these companies selected its own management. See pages four through eight of the Department's verification report for Hengtai, and pages five through seven of the Department's verification report for Xumingyuan. This information, taken in its entirety, supports a finding that there is a de facto absence of governmental control of each of these companies' export functions.

Consequently, we have determined that Hengtai and Xumingyuan have each met the criteria for the application of separate rates based on our verification findings.

Fair Value Comparisons

To determine whether sales of the subject merchandise by Hengtai and Xumingyuan to the United States were made at prices below normal value (“NV”), we compared each company's export prices to NV, as described in the “Export Price” and “Normal Value” sections of this notice, below.

Export Price

For both respondents, we used export price methodology in accordance with section 772(a) of the Tariff Act of 1930, as amended (“the Act”) because the subject merchandise was first sold prior to importation by the exporter outside the United States directly to an unaffiliated purchaser in the United States, and constructed export price was not otherwise indicated.

For both respondents, we calculated export price based on packed, FOB foreign port prices to the first unaffiliated purchaser in the United States. Where appropriate, we made deductions from the starting price (gross unit price) for foreign inland freight and foreign brokerage and handling charges in the PRC, in accordance with section 772(c) of the Act. Because foreign inland freight and foreign brokerage and handling fees were provided by PRC service providers or paid for in renminbi, we based those charges on surrogate rates from India (see “Surrogate Country” section below for Start Printed Page 33097further discussion of our surrogate-country selection). To value foreign inland trucking charges, we used truck freight rates published in Indian Chemical Weekly and distance information obtained from the following websites: http://www.infreight.com, http://www.sitaindia.com/​Packages/​CityDistance.php, and http://www.abcindia.com. Based on our verification findings, we revised the reported distance from Xumingyuan to the port of exportation (see page 10 of Xumingyuan's verification report). To value foreign brokerage and handling expenses, we relied on public information reported in the 1998 - 1999 new shipper and administrative reviews of the antidumping order on stainless steel bar from India (See Stainless Steel Bar from India: Final Results of Antidumping Duty Administrative Review and New Shipper Review and Partial Rescission of Administrative Review, 65 FR 48965 (August 10, 2000)).

Normal Value

A. Non-Market-Economy Status

In every case conducted by the Department involving the PRC, the PRC has been treated as an NME country. Pursuant to 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 (see Notice of Preliminary Results of Antidumping Duty Administrative Review and Preliminary Partial Rescission of Antidumping Duty Administrative Review: Freshwater Crawfish Tail Meat From the People's Republic of China, 66 FR 52100, 52103 (October 12, 2001)). None of the parties to this proceeding has contested such treatment. Accordingly, we calculated normal value in accordance with section 773(c) of the Act, which applies to NME countries.

B. Surrogate Country

Section 773(c)(4) of the Act requires the Department to value a NME producer's factors of production, to the extent possible, in one or more market-economy countries that (1) are at a level of economic development comparable to that of the NME country, and (2) are significant producers of comparable merchandise. India was among the countries comparable to the PRC in terms of overall economic development (see December 11, 2002, Memorandum from the Office of Policy to Irene Darzenta Tzafolias). In addition, based on publicly available information placed on the record (e.g., Indian producer financial statements), India is a significant producer of the subject merchandise. Accordingly, we considered India the surrogate country for purposes of valuing the factors of production because it meets the Department's criteria for surrogate-country selection.

C. Factors of Production

In accordance with section 773(c) of the Act, we calculated normal value based on the factors of production which included, but were not limited to: (A) hours of labor required; (B) quantities of raw materials employed; (C) amounts of energy and other utilities consumed; and (D) representative capital costs, including depreciation. We used the factors reported by each of the respondents which produced the brake rotors it exported to the United States during the POR. To calculate normal value, we multiplied the reported unit factor quantities by publicly available Indian values.

Based on our verification findings at Hengtai, we revised the per-unit weight reported for adhesive tape (see page 14 of the Hengtai's verification report). Based on our verification findings at Xumingyuan, we revised the reported per-unit weight for three of its packing materials (i.e., corrugated paper cartons, wood pallet and steel pallet), and the distance reported from Xumingyuan to its plywood supplier. (See pages 13 and 15 of Xumingyuan's verification report).

The Department's selection of the surrogate values applied in this determination was based on the quality, specificity, and contemporaneity of the data. As appropriate, we adjusted input prices by including freight costs to make them delivered prices. We added to Indian surrogate values surrogate freight costs using the shorter of the reported distance from the domestic supplier to the factory or the distance from the nearest seaport to the factory. This adjustment is in accordance with the Court of Appeals for the Federal Circuit's decision in Sigma Corporation v. United States, 117 F. 3d 1401, 1407-08 (Fed. Cir. 1997). For those values not contemporaneous with the POR and quoted in a foreign currency, we adjusted for inflation using wholesale price indices published in the International Monetary Fund's International Financial Statistics. (See Preliminary Results Valuation Memorandum dated May 27, 2003, for a detailed explanation of the methodology used to calculate surrogate values.)

To value pig iron, steel scrap, ferrosilicon, ferromanganese, limestone, lubrication oil, coking coal, and firewood, we used April 2002-August 2002 average import values from Monthly Statistics of the Foreign Trade of India (“Monthly Statistics”). We relied on the factor specification data submitted by the respondents for the above-mentioned inputs in their questionnaire and supplemental questionnaire responses, as verified by the Department, for purposes of selecting surrogate values from Monthly Statistics.

We also added an amount for loading and additional transportation charges associated with delivering coal to the factory based on June 1999 Indian price data contained in the periodical Business Line.

We based our surrogate value for electricity on 2000-2001 data from the Government of India's Planning Commission report entitled The Working of State Electricity Boards & Electricity Departments Annual Report (2001-2002).

We valued labor based on a regression-based wage rate, in accordance with 19 CFR 351.408(c)(3).

To value selling, general, and administrative (“SG&A”) expenses, factory overhead and profit, we used the 2000-2001 financial data of Kalyani Brakes Limited (“Kalyani”), Mando Brake Systems India Limited (“Mando”), and Rico Auto Industries Limited (“Rico”).

Where appropriate, we removed from the surrogate overhead and SG&A calculations the excise duty amount listed in the financial reports. We made certain adjustments to the ratios calculated as a result of reclassifying certain expenses contained in the financial reports. For further discussion of the adjustments made, see the Preliminary Results Valuation Memorandum, dated May 27, 2003.

To value corrugated paper cartons, nails, plastic bags and sheets/covers, steel strip and straps/buckles, tape, pallet wood, plywood, and hot-rolled carbon steel for pallet construction, we used April 2002-August 2002 average import values from Monthly Statistics. Both respondents included the weight of the straps/buckles in their reported steel strip weights. Because the material of the straps/buckles and steel strip was the same for both inputs, we valued these factors using the combined weight reported by the respondents.

All inputs were shipped by truck. Therefore, to value PRC inland freight, we used a freight rates published in Indian Chemical Weekly and distance information obtained from the following websites: http://www.infreight.com, http://www.sitaindia.com/​Packages/​CityDistance.php,and http://www.abcindia.com.

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Preliminary Results of the Review

We preliminarily determine that the following margins exist for Hengtai and Xumingyuan during the period April 1, 2002, through September 30, 2002:

Manufacturer/producer/­exporterMargin ­Percent
Xiangfen Hengtai Brake ­System Co., Ltd.0.00
Xianghe Xumingyuan Auto Parts Co., Ltd.0.00

We will disclose the calculations used in our analysis to parties to this proceeding within five days of the date of publication of this notice. Any interested party may request a hearing within 30 days of publication of this notice. Any hearing, if requested, will be held on July 14, 2003.

Interested parties who wish to request a hearing or to participate if one is requested, must submit a written request to the Assistant Secretary for Import Administration, Room B-099, within 30 days of the date of publication of this notice. Requests should contain: (1) the party's name, address, and telephone number; (2) the number of participants; and (3) a list of issues to be discussed. See 19 CFR 351.310(c).

Issues raised in the hearing will be limited to those raised in case briefs and rebuttal briefs. Case briefs from interested parties may be submitted not later than June 30, 2003. Rebuttal briefs, limited to issues raised in the case briefs, will be due not later than July 7, 2003. 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 issue the final results of this new shipper review, including the results of its analysis of issues raised in any such written briefs or at the hearing, if held, not later than 90 days after the date of issuance of these preliminary results.

Assessment Rates

The Department shall determine, and the BCBP shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate appraisement instructions for the companies subject to this review directly to the BCBP within 15 days of publication of the final results of this review. For assessment purposes, we do not have the actual entered value for either respondent for which we calculated a margin because it is not the importer of record for the subject merchandise. Therefore, we calculated individual importer- or customer-specific assessment rates by aggregating the dumping margins calculated for all of the U.S. sales examined and dividing that amount by the total quantity of the sales examined. To determine whether the duty assessment rates are de minimis (i.e., at or above 0.50 percent), in accordance with the requirement set forth in 19 CFR 351.106(c)(2), we have calculated importer- or customer-specific ad valorem ratios based on export prices. We will instruct the BCBP to assess antidumping duties on all appropriate entries covered by this review if any importer or customer-specific assessment rate calculated in the final results of this review is above de minimis.

Cash Deposit Requirements

Bonding will no longer be permitted to fulfill security requirements for shipments from Hengtai or Xumingyuan of brake rotors from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of the new shipper review. Furthermore, the following cash deposit requirements will be effective upon publication of the final results of the new shipper review for all shipments of subject merchandise from Hengtai or Xumingyuan entered, or withdrawn from warehouse, for consumption on or after the publication date: (1) for subject merchandise manufactured and exported by Hengtai or Xumingyuan, no cash deposit will be required if the cash deposit rates calculated in the final results are zero or de minimis; and (2) for subject merchandise exported by Hengtai or Xumingyuan but not manufactured by them, the cash deposit will continue to be the PRC countrywide rate (i.e., 43.32 percent) made effective by the LTFV investigation. These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Importers

This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) 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 new shipper administrative review and notice are in accordance with section 751(a)(2)(B) of the Act and 19 CFR 351.214.

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Dated: May 27, 2003.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

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Footnotes

1.  As of March 1, 2003, the U.S. Customs Service has been renamed the U.S. Bureau of Customs and Border Protection.

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2.  The petitioner is the Coalition for the Preservation of American Brake Drum and Rotor Aftermarket Manufacturers.

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[FR Doc. 03-13878 Filed 6-2-03; 8:45 am]

BILLING CODE 3510-DS-S