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

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results the tenth new shipper review.

SUMMARY:

The Department of Commerce (“the Department”) is currently conducting the tenth new shipper review of the antidumping duty order on brake rotors from the People's Republic of China (“PRC”) covering the period April 1, 2003, through September 30, 2003. This review covers one exporter.

We have preliminarily determined that sales have been made at not less than normal value (“NV”) with respect to the exporter who participated fully in this review. If the preliminary results are adopted in our final results of this review, we will instruct Customs and Border Protection (“CBP”) not to assess antidumping duties on entries of merchandise subject to this review.

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

EFFECTIVE DATE:

June 1, 2004.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

Background

On October 31, 2003, the Department received a timely request from Shenyang Yinghao Machinery Co., Ltd. (“Shenyang Yinghao”) for a new shipper review of this antidumping duty order in accordance with 19 CFR 351.214(c). In its request for a new shipper review and in accordance with 19 CFR 351.214(b)(2)(i) and (iii)(A), Shenyang Yinghao 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”). Shenyang Yinghao also certified that its 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), Shenyang Yinghao 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 November 25, 2003, the Department initiated a new shipper review of Shenyang Yinghao (see Brake Rotors from the People's Republic of China: Initiation of the Tenth New Shipper Antidumping Duty Review, 68 FR 67402 (December 2, 2003)).

On December 8, 2003, we issued the antidumping duty questionnaire to Shenyang Yinghao.

On January 15, 2004, Shenyang Yinghao submitted its questionnaire response. On January 16, 2004, the Department provided the parties an opportunity to submit publicly available information for consideration in the preliminary results. Also on January 16, 2004, the Department requested from CBP copies of all customs documents pertaining to the entry of brake rotors from the PRC produced/exported by Shenyang Yinghao during period of April 1, 2003, through September 30, 2003 (see January 16, 2002, memorandum to Michael S. Craig of CBP). On February 12, 2004, we issued a supplemental questionnaire.

On March 2, 2004, the petitioner ¹ submitted a letter requesting that the Department conduct a verification of the responses submitted by Shenyang Yinghao. On March 12, 2004, we received documentation from CBP regarding our January 16, 2004, request for information. On March 15, 2004, we issued Shenyang Yinghao a supplemental questionnaire regarding the documentation we received from CBP. On March 16, 2004, we placed on the record the documentation we obtained from CBP (see March 16, 2004, memorandum to the file from Terre Keaton, International Trade Compliance Specialist). On March 17, 2004, we notified Shenyang Yinghao of our intent to conduct verification of its responses and provided it with a verification outline for purposes of familiarizing the company with the verification process. On March 18, 2004, the petitioner submitted publicly available information to be used in the calculation of normal value. On March 22 and 24, 2004, Shenyang Yinghao and its U.S. importer submitted their responses to our March 15, 2004, supplemental questionnaire. Also on March 24, 2004, the petitioner submitted comments on the verification outline. From March 29 to April 1, 2004, the Department conducted verification of the information submitted by Shenyang Yinghao in accordance with 19 CFR 351.307.

On April 1, 2004, Shenyang Yinghao submitted the minor corrections to its responses it presented to the Department's verifiers at the start of verification. On April 14, 2004, we issued the verification report.

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 period of review (“POR”) covers April 1, 2003, through September 30, 2003.

Verification

As provided in section 782(i) of the Act, we verified information provided by Shenyang Yinghao. We used standard verification procedures, including on-site inspection of Shenyang Yinghao's facility and examination of relevant sales and financial records. Our verification results are outlined in the verification report (see April 14, 2004, verification report 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).

As stated in Shenyang Yinghao's questionnaire responses and as verified by the Department, Shenyang Yinghao is wholly foreign-owned (see Shenyang Yinghao's October 2003 and January 2004 responses, and the verification report). Thus, because we have no evidence indicating that it is under the control of the PRC government, a separate rates analysis is not necessary to determine whether it is independent from government control (see Notice of Final Determination of Sales at Less Than Fair Value: Creatine Monohydrate from the People's Republic of China, 64 FR 71104, 71105 (December 20, 1999); Preliminary Results of First New Shipper Review and First Antidumping Duty Administrative Review: Certain Preserved Mushrooms from the People's Republic of China, 65 FR 66703, 66705 (November 7, 2000); and Notice of Final Determination of Sales at Less Than Fair Value: Bicycles From the People's Republic of China, 61 FR 19026 (April 30, 1996)(“Bicycles”)).

Normal Value Comparisons

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

Export Price

We used export price (“EP”) methodology in accordance with section 772(a) of 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 (“CEP”) was not otherwise indicated.

We calculated EP 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. Based on our verification findings, we revised the inland freight distance Shenyang Yinghao reported from its factory to the port of exportation. 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 further 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,, http://www.abcindia.com,, http://www.eindiatourism.com,, and http://www.mapsofindia.com. To value foreign brokerage and handling expenses, we relied on October 1999- September 2000 information reported in the public U.S. sales listing submitted by Essar Steel Ltd. in the antidumping investigation of Certain Hot-Rolled Carbon Steel Flat Products from India: Final Determination of Sales at Less Than Fair Value, 67 FR 50406 (October 3, 2001).

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 NV 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 an 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 Memorandum from the Office of Policy to Irene Darzenta Tzafolias, dated January 14, 2004). 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 NV 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 Shenyang Yinghao which produced the brake rotors it exported to the United States during the POR. To calculate NV, we multiplied the reported unit factor quantities by publicly available Indian values.

Based on our verification findings, we revised the following data in Shenyang Yinghao's response: (1) the consumption factor for lubrication oil; (2) the distance from the factory to the seaport; (3) the direct labor allocation ratio; and (4) the distances reported for the lubrication oil and ferrosilicon suppliers (see pages 3, 8, 11 and 14 of the 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 24, 2004, for a detailed explanation of the methodology used to calculate surrogate values.)

To value pig iron, steel scrap, ferrosilicon, ferromanganese and lubrication oil, we used April 2003- September 2003 average import values downloaded from the World Trade Atlas Trade Information System (Internet Version 4.3e) (“WTA”). We relied on the factor specification data submitted by Shenyang Yinghao for the above-mentioned inputs in their questionnaire and supplemental questionnaire responses, as verified by the Department, where applicable, for purposes of selecting surrogate values from WTA.

We based our surrogate value for electricity on 2001 data from the International Energy Agency's (“IEA”) report, “Electricity Prices for Industry,” contained in the 2002 Key World Energy Statistics from the IEA.

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 2002-2003 financial data of Kalyani Brakes Limited (“Kalyani”) and Mando Brake Systems India Limited (“Mando”). Where appropriate, we removed from the surrogate factory overhead and SG&A calculations the excise duty amount listed in the financial reports. In addition, we made certain changes to our calculation methodology used in prior brake rotor reviews for determining the surrogate SG&A percentage (which also affected the surrogate profit percentage) (see preliminary results factors valuation memorandum for further details.)

To value pallet wood, tape, plastic bags and plastic sheets, we used April 2003-September 2003 average import values from WTA. To value corrugated paper cartons, nails, and steel strip, we used October 2002-March 2003 average import values from WTA because we were unable to obtain POR price data from the WTA for these packing materials.

All inputs were shipped by truck. Therefore, to value PRC inland freight, we used 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,, http://www.abcindia.com,, http://eindiatourism.com,, and http://www.mapsofindia.com.

Preliminary Results of the Review

We preliminarily determine that the following margin exists during the period April 1, 2003, through September 30, 2003:

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 June 30, 2004.

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 no later than June 21, 2004. Rebuttal briefs, limited to issues raised in the case briefs, will be due no later than June 28, 2004. 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 the 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 the preliminary results.

Assessment Rates

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate appraisement instructions for the company subject to this review directly to CBP within 15 days of publication of the final results of this review. Pursuant to 19 CFR 351.212(b)(1), we will calculate importer- specific ad valorem duty assessment rates based on the ratio of the total amount of the dumping margins calculated for the examined sales to the total entered value of those same sales. We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rate calculated in the final results of this review is above de minimis.

Cash Deposit Requirements

Upon completion of this review, we will require cash deposits at the rate established in the final results as further described below.

Bonding will no longer be permitted to fulfill security requirements for shipments of brake rotors from the PRC produced and exported by Shenyang Yinghao that are entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of the new shipper review. The following cash deposit requirements will be effective upon publication of the final results of this review for all shipments of subject merchandise from Shenyang Yinghao entered, or withdrawn from warehouse, for consumption on or after the publication date: (1) for subject merchandise manufactured and exported by Shenyang Yinghao, no cash deposit will be required if the cash deposit rate calculated in the final results is zero or de minimis; and (2) for subject merchandise exported by Shenyang Yinghao but not manufactured by Shenyang Yinghao, the cash deposit rate will continue to be the PRC-wide rate (i.e., 43.32 percent).

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 review and notice are in accordance with sections 751(a)(1) of the Act and 19 CFR 351.214.