Glycine from the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review and Preliminary Rescission, in Part

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a request from Geo Speciality Chemicals, Inc. (“GSC”), a domestic glycine producer, the Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on glycine from the People's Republic of China (“PRC”). This review covers Nantong Dongchang Chemical Industry Corporation (“Nantong Dongchang”) and Baoding Mantong Fine Chemistry Co., Ltd. (“Baoding Mantong”). The period of review (“POR”) is March 1, 2005, through February 28, 2006. We preliminarily find that sales have been made below normal value (“NV”) by Nantong Dongchang, and that Baoding Mantong did not make sales of subject merchandise during the POR. We are preliminary rescinding this review with respect to Baoding Mantong. The preliminary results are listed below in the section titled “Preliminary Results of Review.” If these preliminary results are adopted in our final results, we will instruct U.S. Customs and Border Protection (“CBP”) to assess the ad valorem margins against the entered value of each entry of the subject merchandise during the POR.

EFFECTIVE DATE:

April 12, 2007.

FOR FURTHER INFORMATION CONTACT:

Matthew Renkey or Alex Villanueva, 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) 482-2312, or (202) 482-3208, respectively.

SUPPLEMENTARY INFORMATION:

Background

On March 29, 1995, the Department published in the Federal Register an antidumping duty order on glycine from the PRC. See Antidumping Duty Order: Glycine from the People's Republic of China, 60 FR 16116 (March 29, 1995). On March 1, 2004, the Department published a Notice of Opportunity to Request an Administrative Review of Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation, 69 FR 9584 (March 1, 2004). On March 29, 2006, GEO Speciality Chemicals, Inc., requested that the Department conduct an administrative review of Baoding Mantong's sales of subject merchandise to the United States during the POR, in accordance with section 351.213(b) of the Department's regulations. On March 31, 2006, GEO Speciality Chemicals, Inc., requested that the Department conduct an administrative review of Nantong Dongchang's sales of subject merchandise to the United States during the POR, in accordance with section 351.213(b) of the Department's regulations. On April 28, 2006, the Department initiated the antidumping duty administrative review with respect to Nantong Donchang and Baoding Mantong. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 71 FR 25145 (April 28, 2006).

Questionnaires

On May 5, 2006, the Department issued standard non-market economy (“NME”) antidumping duty questionnaires to Baoding Mantong and Nantong Dongchang. On May 11, 2006, Baoding Mantong reported that it had no shipments of subject merchandise during the POR. Between June 5, 2006, and January 3, 2007, Nantong Dongchang submitted responses to the Department's original and supplemental Section A, C and D questionnaires.

Surrogate Country and Factors

On October 17, 2006, we invited interested parties to comment on the Department's surrogate country selection and/or significant production in the other potential surrogate countries and to submit publicly available information to value the factors of production (“FOPs”). On November 7, 2006, GSC submitted comments regarding surrogate country selection. On January 8, 2007, both GSC and Nantong Dongchang submitted information for the Department to consider in valuing the FOPs. On March 5, 2007, along with its comments regarding the upcoming preliminary results, GSC re-submitted the surrogate value data it had originally filed on January 8, 2007. All surrogate value data submitted by both parties were from Indian sources.

Scope of the Order

The product covered by the order is glycine, which is a free-flowing crystalline material, like salt or sugar. Glycine is produced at varying levels of purity and is used as a sweetener/taste enhancer, a buffering agent, reabsorbable amino acid, chemical intermediate, and a metal complexing agent. This review covers glycine of all purity levels. Glycine is currently classified under subheading 2922.49.4020 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 merchandise under the order is dispositive.

Separate Rate

A designation of a country as an NME remains in effect until it is revoked by the Department. See section 771(18)(C) of the Tariff Act of 1930, as amended (“the Act”). Accordingly, there is a rebuttable presumption that all companies within the PRC are subject to government control and, thus, should be assessed a single antidumping duty rate. It is the Department's standard policy to assign all exporters of the merchandise subject to review in NME countries a single rate unless an exporter can affirmatively demonstrate an absence of government control, both in law (de jure) and in fact (de facto), with respect to exports. To establish whether a company is sufficiently independent to be entitled to a separate, company-specific rate, the Department analyzes each exporting entity in an NME country under the test established in the Final Determination of Sales at Less than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991), as amplified by the Notice of 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”).

A. Absence of De Jure Control

The Department considers the following de jure criteria in determining whether an individual company may be granted a separate rate: 1) an absence of restrictive stipulations associated with an individual exporter's business and export licenses; 2) any legislative enactments decentralizing control of companies; and 3) any other formal measures by the government decentralizing control of companies. See Sparklers, 56 FR at 20589. In a prior new shipper review for this case, the Department granted a separate rate to Nantong Dongchang. See Glycine from the People's Republic of China: Final Results of New Shipper Administrative Review, 66 FR 8383 (January 31, 2001). However, it is the Department's policy to evaluate requests for a separate rate individually, regardless of whether the respondent received a separate rate in the past. See Manganese Metal From the People's Republic of China: Final Results and Partial Rescission of Antidumping Duty Administrative Review, 63 FR 12440 (March 13, 1998).

In this review, Nantong Dongchang submitted a complete response to the separate rates section of the Department's NME questionnaire. The evidence submitted by this company includes government laws and regulations on corporate ownership, business licenses, and narrative information regarding the companies' operations and selection of management. The evidence provided by this company supports a finding of a de jure absence of governmental control over their export activities based on: (1) an absence of restrictive stipulations associated with the exporter's business license; and (2) the legal authority on the record decentralizing control over the respondents, as demonstrated by the PRC laws placed on the record of this review. No party submitted information to the contrary. Accordingly, we preliminarily find an absence of de jure control.

B. Absence of De Facto Control

The absence of de facto governmental control over exports is based on whether the respondent: (1) sets its own export prices independent of the government and other exporters; (2) retains the proceeds from its export sales and makes independent decisions regarding the disposition of profits or financing of losses; (3) has the authority to negotiate and sign contracts and other agreements; and (4) has autonomy from the government regarding the selection of management. See Silicon Carbide, 59 FR at 22587; Sparklers, 56 FR at 20589; see also Notice of Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol from the People's Republic of China, 60 FR 22544, 22545 (May 8, 1995).

In its questionnaire responses, Nantong Dongchang submitted evidence indicating an absence of de facto governmental control over its export activities. Specifically, this evidence indicates that: (1) Nantong Dongchang sets its own export prices independent of the government and without the approval of a government authority; (2) Nantong Dongchang retains the proceeds from its sales and makes independent decisions regarding the disposition of profits or financing of losses; (3) Nantong Dongchang has a general manager, branch manager or division manager with the authority to negotiate and bind the company in an agreement; (4) the general manager is selected by the board of directors or company employees, and the general manager appoints the deputy managers and the manager of each department; and (5) there is no restriction on the company's use of export revenues. Therefore, the Department preliminarily finds that Nantong Dongchang has established prima facie that it qualifies for a separate rate under the criteria established by Silicon Carbide and Sparklers.

Preliminary Partial Rescission of Review

In accordance with 19 CFR 351.213(d)(3), we are preliminarily rescinding this administrative review with respect to Baoding Mantong. As noted above, Baoding Mantong reported that it made no shipments of subject merchandise to the United States during the POR. Our examination of shipment data from CBP for Baoding Mantong confirmed that there were no entries of glycine during the POR. Consequently, because there is no evidence on the record to indicate that Baoding Mantong had sales of subject merchandise during the POR, we are preliminarily rescinding the review for Baoding Mantong.

NME Country Status

In every case conducted by the Department involving the PRC, the PRC has been treated as an NME country. In accordance with 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 Brake Rotors From the People's Republic of China: Final Results and Partial Rescission of the 2004/2005 Administrative Review and Notice of Rescission of 2004/2005 New Shipper Review, 71 FR 66304 (November 14, 2006). None of the parties to this proceeding have contested such treatment. Accordingly, we calculated NV in accordance with section 773(c) of the Act, which applies to NME countries.

Normal Value Comparisons

To determine whether Nantong Dongchang's sale of the subject merchandise to the United States was made at a price below NV, we compared its United States price to a normal value, as described in the “United States Price” and “Normal Value” section of this notice.

Surrogate Country

When the Department is investigating imports from an NME country, section 773(c)(1) of the Act directs it to base NV, in most circumstances, on the NME producer's FOPs, valued in a surrogate market economy country or countries considered to be appropriate by the Department. In accordance with section 773(c)(4) of the Act, in valuing the factors of production, the Department shall utilize, to the extent possible, the prices or costs of FOPs in one or more market economy countries that are: (1) at a level of economic development comparable to that of the NME country; and (2) significant producers of comparable merchandise. The sources of the surrogate factor values are discussed under the “Normal Value” section below and in Memorandum to the File through Alex Villanueva, Program Manager, Office 9 from Matthew Renkey, Senior Analyst, Office 9: Antidumping Duty Administrative Reviews of Glycine from the People's Republic of China: Surrogate Values for the Preliminary Results, April 2, 2007 (“Surrogate Values Memo”).

India is among the countries comparable to the PRC in terms of overall economic development, as noted in the Department's October 17, 2006, letter to interested parties requesting surrogate country and surrogate value comments. In its November 7, 2006, letter commenting on surrogate country selection, GSC suggested that India be the primary surrogate country because it is a significant producer of glycine (whereas the other countries are not), and also because of the availability of surrogate value data from Indian sources. In addition, based on publicly available information placed on the record (i.e., export data), India is a significant producer of the subject merchandise. See Memorandum to the File, through James C. Doyle, Office Director, Office 9, Import Administration, from Matthew Renkey, Senior Analyst, Subject: Antidumping Duty Administrative Review of Glycine from the People's Republic of China: Selection of a Surrogate Country, (April 2, 2007) (“Surrogate Country Memo”). Furthermore, we note that India has been the primary surrogate country in past segments of this case, and both GSC and Nantong Dongchang submitted surrogate values based on Indian data that are contemporaneous to the POR, which gives further credence to the use of India as a surrogate country.

U.S. Price

A. Export Price

In accordance with section 772(a) of the Act, we calculated the export price (“EP”) for certain sales to the United States for Nantong Dongchang because the first sale to an unaffiliated party was made before the date of importation and the use of constructed EP (“CEP”) was not otherwise warranted. We calculated EP based on the price to unaffiliated purchasers in the United States. In accordance with section 772(c) of the Act, as appropriate, we deducted from the starting price to unaffiliated purchasers foreign inland freight, brokerage and handling, international freight, and marine insurance. Each of these services was either provided by an NME vendor or paid for using an NME currency. Thus, we based the deduction of these movement charges on surrogate values. Additionally, for international freight provided by a market economy provider and paid in U.S. dollars (“USD”), we used the actual cost per kilogram of the freight. See Surrogate Values Memo for details regarding the surrogate values for movement expenses.

B. Constructed Export Price

Also for Nantong Dongchang, we based U.S. price for certain sales on CEP in accordance with section 772(b) of the Act, because sales were made by Nantong Donchang's U.S. affiliate, Wavort, Inc. (“Wavort”) to unaffiliated purchasers. For such sales to certain U.S. customers, we based CEP on prices to the first unaffiliated purchaser in the United States. Where appropriate, we made deductions from the starting price (gross unit price) for foreign movement expenses, international movement expenses, U.S. movement expenses, and appropriate selling adjustments, in accordance with section 772(c)(2)(A) of the Act. Due to the proprietary nature of the facts regarding the CEP treatment for certain sales, for further details, see Memorandum to the File, through Alex Villanueva, Program Manager, Office 9, from Matthew Renkey, Senior Analyst, Office 9; Administrative Review of Gylcine from the People's Republic of China: Analysis for the Preliminary Results of Nantong Dongchang Chemical Industry Corp. (“Nantong Dongchang”) , dated April 2, 2007 (“Prelim Analysis Memo”).

In accordance with section 772(d)(1) of the Act and 19 CFR 351.402(b), we also deducted those selling expenses associated with economic activities occurring in the United States. We deducted, where appropriate, commissions, credit expenses, and indirect selling expenses. Where foreign movement expenses, international movement expenses, or U.S. movement expenses were provided by NME service providers or paid for in an NME currency, we valued these services using surrogate values (see Surrogate Values Memo for further discussion). For those expenses that were provided by a market economy provider and paid for in market economy currency, we used the reported expense. Due to the proprietary nature of certain adjustments to U.S. price, for a detailed description of all adjustments made to U.S. price for Nantong Dongchang, see Prelim Analysis Memo.

Normal Value

1. Methodology

Section 773(c)(1)(B) of the Act provides that the Department shall determine the NV using a factors-of-production methodology if the merchandise is exported from an NME and the information does not permit the calculation of NV using home-market prices, third-country prices, or constructed value under section 773(a) of the Act. The Department bases NV on the FOPs because the presence of government controls on various aspects of NMEs renders price comparisons and the calculation of production costs invalid under the Department's normal methodologies.

2. Factor Valuations

In accordance with section 773(c) of the Act, we calculated NV based on factors of production reported by respondent for the POR. To calculate NV, we multiplied the reported per-unit factor-consumption rates by publicly available Indian surrogate values. In selecting the surrogate values, we considered the quality, specificity, and contemporaneity of the data. As appropriate, we adjusted input prices by including freight costs to make them delivered prices. Specifically, we added to Indian import surrogate values a surrogate freight cost using the shorter of the reported distance from the domestic supplier to the factory of production or the distance from the nearest seaport to the factory of production where appropriate. This adjustment is in accordance with the Court of Appeals for the Federal Circuit's decision in Sigma Corp. v. United States, 117 F. 3d 1401, 1407-1408 (Fed. Cir. 1997). Where we did not use Indian import data, we calculated freight based on the reported distance from the supplier to the factory.

With regard to surrogate values, we have disregarded prices that we have reason to believe or suspect may be subsidized. We have reason to believe or suspect that prices of inputs from Indonesia, South Korea and Thailand may have been subsidized. We have found in other proceedings that these countries maintain broadly available, non-industry-specific export subsidies and, therefore, it is reasonable to infer that all exports to all markets from these countries may be subsidized See Notice of Final Determination of Sales at Less Than Fair Value and Negative Final Determination of Critical Circumstances: Certain Color Television Receivers From the People's Republic of China, 69 FR 20594 (April 16, 2004) (“CTVs from the PRC”) and accompanying issues and decision memorandum at Comment 7; see also Certain Cut-to-Length Carbon Steel Plate from Romania: Notice of Final Results and Final Partial Rescission of Antidumping Duty Administrative Review, 70 FR 12651 (March 15, 2005) and accompanying Issues and Decision Memorandum at Comment 4. The legislative history provides that in making its determination as to whether input values may be subsidized, the Department is not required to conduct a formal investigation; rather, Congress directed the Department to base its decision on information that is available to it at the time it makes its determination. See H.R. Rep. 100-576 at 590 (1988). Therefore, based on the information currently available, we have not used prices from these countries in calculating the surrogate values based on Indian import data. See Memorandum from Office of Policy to DAS and Office Directors: NME investigations: procedures for disregarding subsidized factor input prices, (February 2002), which has been placed on the record of this review. We have also disregarded Indian import data from countries that the Department has previously determined to be NME countries, as well as imports from unspecified countries. See CTVs from the PRC. For a comprehensive list of the sources and data used to determine the surrogate vales for the FOPs, by-products, and the surrogate financial ratios for factory overhead, selling, general and administrative expenses, and profit, see Surrogate Values Memo.

It is the Department's practice to calculate price index adjustors to inflate or deflate, as appropriate, surrogate values that are not contemporaneous with the POR using the wholesale price index for the subject country. See Certain Preserved Mushrooms from the People's Republic of China: Final Results of the Antidumping Duty New Shipper Review, 71 FR 66910 (November 17, 2006). Therefore, where publicly available information contemporaneous with the POR with which to calculate surrogate values could not be obtained, surrogate values were adjusted using the Wholesale Price Index (“WPI”) for India, as published in the International Financial Statistics (“IFS”) of the International Monetary Fund (“IMF”).

Surrogate values denominated in foreign currencies were converted to USD using the applicable average exchange rate based on exchange rate data from the Department's website.

Preliminary Results of the Review

The Department has determined that the following preliminary dumping margins exist for the period March 1, 2005, through February 28, 2006:

The Department will disclose calculations performed for these preliminary results to the parties within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).

Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of review. See 19 CFR 351.309(c)(1)(ii). Rebuttal briefs and rebuttals to written comments, limited to issues raised in such briefs or comments, may be filed no later than five days after the time limit for filing the case briefs. See 19 CFR 351.309(d).

Any interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Requests should contain the following information: (1) the party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs. If we receive a request for a hearing, we intend to hold the hearing seven days after the deadline for submission of the rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

The Department intends to issue the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, within 120 days of publication of these preliminary results, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

Upon issuance of the final results, the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department intends to issue assessment instructions to CBP 15 days after the date of publication of the final results of review. If these preliminary results are adopted in our final results of review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), we will calculate importer-specific (or customer) 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

Further, the following cash deposit requirements will be effective upon publication of the final results of the administrative review for shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results, as provided by section 751(a)(2)(C) of the Act: (1) for subject merchandise exported by Nantong Dongchang, the cash-deposit rate will be that established in the final results of review; (2) for previously reviewed or investigated companies not listed above that have separate rates, the cash-deposit rate will continue to be the company-specific rate published for the most recent period; (3) for all other PRC exporters of subject merchandise, which have not been found to be entitled to a separate rate, the cash-deposit rate will be PRC-wide rate of 155.89 percent; (4) for all non-PRC exporters of subject merchandise, the cash-deposit rate will be the rate applicable to the PRC exporter that supplied that exporter. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Importers

This notice also 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 administrative review and this notice are in accordance with sections 751(a)(1) and 777(i) of the Act, 19 CFR 351.213, and 19 CFR 351.221(b)(4).