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

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (“the Department”) is currently conducting a changed circumstances review of the antidumping duty order on brake rotors from the People's Republic of China (“PRC”). We have preliminarily determined that Shandong Huanri Group Co., Ltd. (“Huanri Group”) is the successor-in-interest to Shandong Huanri Group General Company (“Huanri Group General”) for purposes of determining antidumping liability.

Interested parties are invited to comment on these preliminary results. The Department will issue the final results of this antidumping duty changed circumstances review not later than November 7, 2005, as the Department plans to issue the final results of this changed circumstance review at the same time as the final results of the concurrent administrative review.

EFFECTIVE DATE:

September 20, 2005.

FOR FURTHER INFORMATION CONTACT:

Catherine Bertrand or Carrie Blozy, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-3207 or (202) 482-5403, respectively.

SUPPLEMENTARY INFORMATION:

Background

On October 28, 2004, Huanri Group requested that the Department determine that it is the successor-in-interest to Huanri Group General for purposes of determining antidumping liability. On December 13, 2004, the Department initiated a changed circumstances review of Huanri Group's claim that it is the successor-of-interest to Huanri Group General. See Brake Rotors from the People's Republic of China: Notice of Initiation of Changed Circumstances Review, 69 FR 75508 (December 17, 2004).

On February 2, 2005, the Department issued a supplemental questionnaire to Huanri Group. On February 23, 2005, Huanri Group submitted a supplemental questionnaire response. On March 26, 2005, the Department verified the information submitted by the Huanri Group to support its successorship claim at Huanri's Group's office in Laizhou, China. See Verification Report, dated June 17, 2005 (“Verification Report”).

Scope of the Order

The products covered by the 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, 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 the order is dispositive.

Preliminary Results

The Department is currently conducting an administrative review regarding Huanri Group General. In the preliminary results of the administrative review, the Department preliminarily determined that Huanri Group General did not demonstrate that it was entitled to a separate rate under the Department's test. See Brake Rotors From the People's Republic of China: Preliminary Results and Partial Rescission of the Seventh Administrative Review and Preliminary Results of the Eleventh New Shipper Review, 70 FR 24382 (May 9, 2005). The final results of the administrative review are due on November 7, 2005. The Department will issue the final results of this changed circumstance review at the same time as the concurrent administrative review as both segments involve the company at issue. The separate rate issue will be decided in the context of the administrative review. However, the final results of the administrative review with respect to separate rates will be incorporated into the changed circumstance review final. The Department's decision in this changed circumstance preliminary results will focus solely on the successor-in-interest issue discussed below.

In its February 23, 2005, supplemental questionnaire response, Huanri Group provided documentation to support further its claim that effective June 9, 2004, it received approval from the local bureau to change its name to “Shandong Huanri Group General Company.” The company stated that the reason for the name change was based on the shareholders' decision to change the legal structure of the company from a collectively owned company to a limited liability company. Specifically, this documentation consisted of: (1) shareholders' meeting minutes detailing the company's reasoning for the name change; (2) Notice of Advanced Approval to Enterprise Name; (3) approval for the name change application; and (4) Huanri Group's business license issued on June 9, 2004 (see Exhibit 1 of the February 23, 2005, supplemental questionnaire response).

In its responses to the Department's supplemental questionnaires, Huanri Group also provided information in support of its statements that all personnel, operations, and facilities remain essentially unchanged as a result of changing the name of the company. The Department verified this information, and found that the managers, production facilities, equipment, suppliers, operations, and customer base remained unchanged after the name change.

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.

Data placed on the record and verified by the Department indicates that Huanri Group has the same management, production facilities, customer base, and supplier relationships as Huanri Group General. At verification, the Department examined the issue of whether the two companies had the same management. The Department examined payroll records and appointment records before and after the name change. The Department found that there were no changes in the paid employees and that three of the five board members remained the same after the name change. See Verification Report at 9. The Department examined the production and sales activities at verification as well. The Department found that there were no changes in equipment or facilities after the name change. See Verification Report at 10. At verification, the Department also analyzed whether the suppliers were the same before and after the name change. The Department examined purchase entries and the material sub-ledger and found that there was no significant change in the names of the suppliers before and after the name change. See Verification Report at 11. The Department also analyzed whether the customer base was the same before and after the name change by examining the sales sub-ledger and invoices from selected months. The Department found that Huanri General continued to sell subject merchandise to two of its five U.S. customers. Id.

We find that there were no significant changes to the management, production facilities, supplier relationships and customer base after the name change. Further, we find that the operations of Huanri Group are essentially the same as Huanri Group General. Therefore, for the reasons stated above, we preliminarily determine that Huanri Group should receive the same antidumping duty treatment with respect to brake rotors as the former entity Huanri Group General.

If these preliminary results are adopted in our final results of this changed circumstances review, we will instruct the U.S. Customs and Border Protection (“CBP”) to assign Huanri Group the antidumping duty cash deposit rate applicable to Huanri Group General. The cash deposit determination from this changed circumstances review will apply to all entries of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this changed circumstances review. This deposit rate shall remain in effect until publication of the final results of the next administrative review in which Huanri Group participates.

Any interested party may request a hearing within 30 days of publication of this notice. Any hearing, if requested, will be held no later than 40 days after the date of publication of this notice, or the first workday thereafter. 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. 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 30 days after publication of this notice. Rebuttal briefs, limited to the issues raised in the case briefs, may be filed not later than five days after the submission of case briefs. 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 encouraged to provide a summary of the arguments not exceeding five pages and a table of statutes, regulations, and cases cited.

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, not later than November 7, 2005.

We are issuing and publishing this determination and notice in accordance with sections 751(b)(1) and 777(i)(1) of the Act and 19 CFR 351.216.