Brake Rotors From the People's Republic of China: Initiation and Preliminary Results of Changed-Circumstances Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Initiation and Preliminary Results of Changed-Circumstances Antidumping Duty Administrative Review.

SUMMARY:

The Department of Commerce has received information sufficient to warrant initiation of a changed-circumstances administrative review of the antidumping duty order on brake rotors from the People's Republic of China. Based on this information, we preliminarily determine that Laizhou Auto Brake Equipment Co., Ltd. is the successor-in-interest to Laizhou Auto Brake Equipments Factory for purposes of determining antidumping liability. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

November 20, 2000.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

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. In addition, unless otherwise indicated, all citations to the Department of Commerce's (“the Department's”) regulations are to 19 CFR Part 351 (April 2000).

Background

On April 17, 1997, the Department published in the Federal Register the antidumping duty order on brake rotors from the People's Republic of China (“PRC”) (62 FR 18740). On September 29, 2000, Laizhou Auto Brake Equipment Co., Ltd. (“LABEC”) submitted information and documentation in support of its claim that it is the successor-in-interest to Laizhou Auto Brake Equipment Factory (“LABEF”) and requested that the Department conduct a changed-circumstances review to determine whether LABEC should receive the same antidumping duty treatment as is accorded to LABEF with respect to the subject merchandise.

Scope of Review

The products covered by this review 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, 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 rotors which have undergone some drilling and on which the surface is not entirely smooth. 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, and Volvo). Brake rotors covered in this review 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 the review 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 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 review is dispositive.

Separate Rates

In order to determine whether to initiate a changed-circumstances review with respect to LABEC, the Department as a matter of practice first must conduct a separate rates analysis of the company. 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.

Based on information contained in its September 29, 2000, submission, LABEC is registered in the People's Republic of China (“PRC”) as a limited liability company owned by private individuals. Thus, a separate rates analysis is necessary to determine whether LABEC is 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 19026 (April 30, 1996)).

To establish whether a firm is sufficiently independent from government control, and therefore entitled to a separate rate, the Department analyzes each exporting entity under a test arising out of the Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) 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

LABEC has placed on the administrative record documentation to demonstrate absence of de jure governmental control, including the 1994 “Foreign Trade Law of the People's Republic of China,” and the “Administrative Regulations of the People's Republic of China Governing the Registration of Legal Corporations,” promulgated on June 3, 1988.

As in prior cases, we have analyzed these laws and have found them to establish sufficiently an absence of de jure control of stock companies including limited liability companies. 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 LABEC.

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 a 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.

LABEC 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, statements contained in LABEC's September 29, 2000, submission indicate that the company does not coordinate its prices with other exporters. This information supports a preliminary finding that there is de facto absence of governmental control of the export functions of LABEC. See Pure Magnesium from the People's Republic of China: Preliminary Results of Antidumping Duty New Shipper Administrative Review, 62 FR 55215 (October 23, 1997). Consequently, we have preliminarily determined that LABEC has met the criteria for the application of a separate rate.

Initiation and Preliminary Results of the Review

In its September 29, 2000, submission, LABEF advised the Department that, effective January 2000, its owners changed the name of the company to LABEC. The company's name change resulted when two of the original five owners sold their shares in the company and the remaining three original owners then changed the registration of the company from a collectively-owned company to a limited liability company with the Laizhou Industrial and Commercial Administration Bureau (“LICAB”). In its submission, LABEF states that all personnel, operations, and facilities remain essentially unchanged as a result of changing the name of the company to LABEC.

Thus, in accordance with section 751(b) of the Act, the Department is initiating a changed-circumstances review to determine whether LABEC is the successor-in-interest to LABEF for purposes of determining antidumping duty liability with respect to the subject merchandise. In making such a successor-in-interest determination, the Department examines several factors including, but not limited to, changes in: (1) management; (2) production facilities; (3) supplier relationships; and (4) customer base. See, e.g., Brass Sheet and Strip from Canada: Final Results of Antidumping Duty Administrative Review, 57 FR 20460 (May 13, 1992). While no single factor or combination of these factors will necessarily provide a dispositive indication of a successor-in-interest relationship, the Department will generally consider the new company to be the successor to the previous company if the new company's resulting operation is not materially dissimilar to that of its predecessor. See, e.g., Industrial Phosphoric Acid from Israel: Final Results of Changed Circumstances Review, 59 FR 6944 (February 14, 1994); Canadian Brass, and Fresh and Chilled Atlantic Salmon from Norway: Initiation and Preliminary Results of Changed Circumstances Antidumping Duty Administrative Review, 63 FR 50880 (September 23, 1998). Thus, if the evidence demonstrates that, with respect to the production and sale of the subject merchandise, the new company operates as the same business entity as the former company, the Department will accord the new company the same antidumping treatment as its predecessor.

We preliminarily determine that LABEC is the successor-in-interest to LABEF, following LABEF's name change to LABEC and its change in company registration with LICAB as a result of decisions made by LABEF's original owners. LABEF has submitted documentation and statements in support of its claim that changing its name to LABEC has resulted in no significant changes in either production facilities, supplier relationships, customer base, or management. This documentation consisted of: (1) a letter to LICAB requesting its name to be changed to LABEC; (2) a letter from LICAB granting LABEF's proposed name change to LABEC; and (3) LABEC's business license issued by LICAB. Because LABEC has presented evidence to establish a prima facie case of its successorship status, we find it appropriate to issue the preliminary results in combination with the notice of initiation in accordance with 19 CFR 351.221(c)(3)(ii).

Thus, we preliminarily determine that LABEC should receive the same antidumping duty treatment with respect to brake rotors as the former LABEF. If these preliminary results are adopted in our final results of this changed-circumstances review, we will instruct the Customs Service to suspend shipments of subject merchandise made by LABEC at LABEF's cash deposit rate (i.e., zero percent). The shipments of subject merchandise to be suspended are those which are entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this changed-circumstances review.

Any interested party may request a hearing within 10 days of publication of this notice. Any hearing, if requested, will be held no later than 50 days after the date of publication of this notice, or the first workday thereafter. Case briefs from interested parties may be submitted not later than 57 days after the date of publication of this notice. Rebuttal briefs, limited to the issues raised in those comments, may be filed not later than 64 days after the date of publication of this notice. All written comments shall be submitted in accordance with 19 CFR 351.303. Persons interested in attending the hearing, if one is requested, should contact the Department for the date and time of the hearing. The Department will publish the final results of this changed-circumstances review, including the results of its analysis of issues raised in any written comments, within 270 days after the date of this initiation or within 80 days if all parties agree to our preliminary results.

We are issuing and publishing this determination and notice in accordance with sections 751(b)(1) and 777(i)(1) of the Act and section 351.216 of the Department's regulations.