Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Preliminary Results of 2001-2002 Administrative Review and Partial Rescission of Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of 2001-2002 Administrative Review and Partial Rescission of the Review.

SUMMARY:

We preliminarily determine that sales of tapered roller bearings and parts thereof, finished and unfinished, from the People's Republic of China, were made below normal value during the period June 1, 2001, through May 31, 2002. We are also rescinding the review, in part, in accordance with 19 CFR 351.213(d)(3).

If these preliminary results are adopted in our final results of review, we will instruct the Customs Service to assess antidumping duties based on the differences between the constructed export price and normal value on all appropriate entries. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

February 14, 2003.

FOR FURTHER INFORMATION CONTACT:

Andrew Smith or Daniel Alexy, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-1276 and (202) 482-1540, respectively.

SUPPLEMENTARY INFORMATION:

Background

On May 27, 1987, the Department of Commerce (“the Department”) published in the Federal Register (52 FR 19748) the antidumping duty order on tapered roller bearings and parts thereof, finished and unfinished (”TRBs”), from the People's Republic of China (”PRC”). The Department notified interested parties of the opportunity to request an administrative review of this order on June 5, 2002 (67 FR 38640). On June 25, 2002, Peer Bearing Company - Changshan (“CPZ”) requested an administrative review. On June 27, 2002, Wanxiang Group Corporation (“Wanxiang”), China National Machinery Import & Export Corporation (“CMC”), Tianshui Hailin Import and Export Corporation (“Hailin”), Luoyang Bearing Corporation (Group) (“Luoyang”), and Liaoning MEC Group Co. Ltd. (“Liaoning”) also requested administrative reviews. On June 28, 2002, the Koyo Corporation of U.S.A., an interested party in this proceeding pursuant to 19 CFR 351.213(b)(1), requested that the Department conduct an administrative review of Yantai Timken Co., Ltd. (“Yantai Timken”). In accordance with 19 CFR 351.221(b)(1), we published a notice of initiation of this antidumping duty administrative review on July 24, 2002 (67 FR 48435).

On August 6, 2002, we sent a questionnaire to the Secretary General of the Basic Machinery Division of the Chamber of Commerce for Import & Export of Machinery and Electronics Products and requested that the questionnaire be forwarded to all PRC companies identified in our initiation notice and to any subsidiary companies of the named companies that produce and/or export the subject merchandise. In this letter, we also requested information relevant to the issue of whether the companies named in the initiation notice are independent from government control. See the “Separate Rates Determination” section, below. On August 6, 2002, courtesy copies of the questionnaire were also sent to companies with legal representation.

On September 10, 2002, the following companies requested that the Department rescind the administrative review with respect to these companies: Hailin, Wanxiang, Luoyang, Liaoning, and CMC. Pursuant to 19 CFR 351.213(d)(1), because these companies withdrew their requests for review within 90 days of the date of publication of the notice of initiation of this review and no other party requested a review of these companies, we are rescinding the review with respect to Hailin, Wanxiang, Luoyang, Liaoning, and CMC.

We received responses to the questionnaire in August, September, and October 2002 from CPZ and Yantai Timken. We sent out supplemental questionnaires to CPZ and Yantai Timken in November, December 2002, and January 2003, and received responses to these supplemental questionnaires in December 2002 and January 2003.

Scope of the Order

Merchandise covered by this order includes TRBs and parts thereof, finished and unfinished, from the PRC; flange, take up cartridge, and hanger units incorporating tapered roller bearings; and tapered roller housings (except pillow blocks) incorporating tapered rollers, with or without spindles, whether or not for automotive use. This merchandise is currently classifiable under Harmonized Tariff Schedule of the United States (“HTSUS”) item numbers 8482.20.00, 8482.91.00.50, 8482.99.30, 8483.20.40, 8483.20.80, 8483.30.80, 8483.90.20, 8483.90.30, 8483.90.80, 8708.99.80.15, and 8708.99.80.80. Although the HTSUS item numbers are provided for convenience and customs purposes, the written description of the scope of the order is dispositive.

Separate Rates Determination

The Department has treated the PRC as a nonmarket economy (“NME”) country in all previous antidumping cases. In accordance with section 771(18)(C)(i) of the Tariff Act of 1930, as amended (“the Act”), any determination that a foreign country is an NME shall remain in effect until revoked by the Department. None of the parties to this proceeding has contested such treatment in this review. Moreover, parties to this proceeding have not argued that the PRC TRBs industry is a market-oriented industry.

Therefore, we are treating the PRC as an NME country within the meaning of section 773(c) of the Act. We allow companies in NME countries to receive separate antidumping duty rates for purposes of assessment and cash deposits when those companies can demonstrate an absence of government control, both in law and in fact, with respect to export activities.

To establish whether a company operating in an NME country is sufficiently independent to be entitled to a separate rate, the Department analyzes each exporting entity 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) (“Sparklers”), as amplified by 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”). Evidence supporting, though not requiring, a finding of de jure absence of government control over export activities includes: 1) an absence of restrictive stipulations associated with the 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 20589. De facto absence of government control over exports is based on four factors: 1) whether each exporter sets its own export prices independently of the government and without the approval of a government authority; 2) whether each exporter retains the proceeds from its sales and makes independent decisions regarding the disposition of profits or financing of losses; 3) whether each exporter has the authority to negotiate and sign contracts and other agreements; and 4) whether each exporter has autonomy from the government regarding the selection of management. See Silicon Carbide, 59 FR 22587; Sparklers, 56 FR 20589.

In Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Final Results of New Shipper Reviews, 67 FR 10665 (March 8, 2002), we determined that CPZ and Yantai Timken should receive separate rates. We preliminarily determine that the evidence on the record of this review also demonstrates an absence of government control, both in law and in fact, with respect to these companies' exports according to the criteria identified in Sparklers and Silicon Carbide. The evidence includes, among other things, the companies' business licenses and copies of relevant PRC laws on trade and incorporation. Therefore, we have continued to assign each of these companies a separate rate.

Constructed Export Price

For all sales made by CPZ and Yantai Timken to the United States, we used constructed export price (“CEP”) in accordance with section 772(b) of the Act. Section 772(b) of the Act defines CEP as the price at which the subject merchandise is first sold in the United States before or after the date of importation, by or for the account of the producer or exporter of the merchandise, or by a seller affiliated with the producer or exporter, to an unaffiliated purchaser, as adjusted under sections 772(c) and (d) of the Act.

We calculated CEP based on the packed, ex-warehouse prices from CPZ's and Yantai Timken's U.S. subsidiaries to unaffiliated customers. We made deductions, where appropriate, from the starting price for CEP for international freight, foreign brokerage and handling, foreign inland freight, marine insurance, customs duties, U.S. warehousing, and U.S. inland freight. When foreign brokerage and handling, marine insurance, and ocean freight were provided directly by market-economy companies and paid for in a market-economy currency, we deducted the market-economy values reported by the responding companies for these services.

In accordance with section 772(d)(1) of the Act, we made further deductions from the CEP starting price for the following selling expenses that related to economic activity in the United States: commissions, credit expenses, discounts, further manufacturing, rebates, repacking costs, and indirect selling expenses (including inventory carrying costs). For CPZ, we made an upward adjustment to its reported indirect selling expenses. For more information, see Preliminary Results Calculation Memorandum for CPZ (February 7, 2003), which is on file in the Department's Central Records Unit, which is located in Room B-099 of the main Department building (“CRU”). Additionally, in accordance with section 772(d)(3) of the Act, we have deducted from the starting price an amount for profit. For information on how profit was calculated, see “Overhead, SG&A Expenses, and Profit” in the “Normal Value” section below.

Normal Value

Section 773(c)(1) of the Act provides that the Department shall determine normal value (“NV”) using a factors-of-production (“FOP”) methodology if: (1) the subject merchandise is exported from an NME country, and (2) the Department finds that the available information does not permit the calculation of NV under section 773(a) of the Act. We have no basis to determine that the available information would permit the calculation of NV using PRC prices or costs. Therefore, we calculated NV based on factors data in accordance with sections 773(c)(3) and (4) of the Act and 19 CFR 351.408(c).

Under the FOP methodology, we are required to value, to the extent possible, the NME producer's inputs in a market-economy country that is at a comparable level of economic development and that is a significant producer of comparable merchandise. We chose India as the surrogate country on the basis of the criteria set out in 19 CFR 351.408(b). See the October 21, 2002, Memorandum to File: “Requests for Surrogate Values,” which includes the August 6, 2002, Memorandum to Melani Miller from Jeff May: “Administrative Review on Tapered Roller Bearings from the People's Republic of China,” and the February 7, 2003, Memorandum to John Brinkmann: “Selection of a Surrogate Country and Steel Value Sources” (“Steel Values Memorandum”) for a further discussion of our surrogate selection. (Both memoranda are on file in the CRU.)

We used publicly available information from India to value the various factors. Pursuant to the Department's FOP methodology, we valued each respondent's reported factors of production by multiplying them by the values described below. For a complete description of the factor values used, see the Memorandum to John Brinkmann: “Factors of Production Values Used for the Preliminary Results,” dated February 7, 2003, which is on file in the Department's CRU.

1. Steel and Scrap. For hot-rolled alloy steel bars used in the production of cups, we used an adjusted weighted-average of Japanese export values to India from the Japanese Harmonized Schedule (“HS”) category 7228.30.900 obtained from Official Japan Ministry of Finance statistics. We adjusted this data to include costs incurred on ocean freight and marine insurance. This is the same valuation methodology used in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China: Final Results of 2000-2001 Administrative Review, Partial Rescission of Review, and Determination to Revoke Order, in Part 67 FR 68990 (November 14, 2002) and Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Amended Final Results of 2000-2001 Administrative Review 67 FR 72147 (December 4, 2002) (collectively, “TRBs XIV”) and Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Final Results of 1999-2000 Administrative Review, Partial Rescission of Review, and Determination Not to Revoke Order in Part, 66 FR 57420 (November 15, 2001) (“TRBs XIII”). For further discussion of our calculation of this value, see Steel Values Memorandum.

We valued scrap recovered from the production of cups, cones, and rollers using Indian import statistics from Indian HS category 7204.2909. As in previous administrative reviews of this order, we eliminated from our scrap calculations imports from NME countries and small quantity imports from market-economy countries. See TRBs XIII and TRBs XIV. We also excluded, imports from countries that do not produce bearing-quality steel (see, e.g., TRBs XIV). We made adjustments to the import values to include freight costs using the shorter of the reported distances from either the closest PRC port to the PRC respondent or the domestic supplier to the PRC respondent. See Notice of Final Determination of Sales at Less Than Fair Value: Collated Roofing Nails From the People's Republic of China, 62 FR 51410 (October 1, 1997) and Sigma Corporation v. United States, 117 F. 3d 1401 (Fed. Cir. 1997) and 86 F. Supp. 2d 1344, 1348 (CIT 2000).

Additionally, certain steel and steel parts used to make TRBs or TRB parts during the period of review (“POR”) were purchased from market-economy suppliers and paid for with market-economy currency. In accordance with 19 CFR 351.408(c)(1), we valued these steel inputs using the actual price reported by the PRC respondent, except as noted below.

As explained in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Final Results of 1998-1999 Administrative Review, Partial Rescission of Review, and Notice of Intent to Revoke Order in Part, 66 FR 1953 (January 10, 2001) and Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Amended Final Results of 1998-1999 Administrative Review and Determination to Revoke Order in Part, 66 FR 11562 (February 26, 2001) (collectively, “TRBs XII”) and TRBs XIII, we found a reasonable basis to believe or suspect that certain market-economy steel inputs purchased by PRC TRBs manufacturers for the production of TRBs were subsidized. Consistent with our treatment of subsidized inputs in TRBs XIV, TRBs XIII, and TRBs XII, we have not used the prices paid by PRC producers of TRBs for steel which we have continuing reason to believe or suspect is subsidized. Instead, we relied on surrogate values. (See individual company calculation memoranda for a more detailed company-specific discussion of this issue.)

2. Labor. Section 19 CFR 351.408(c)(3) of the Department's regulations requires the use of a regression-based wage rate. We have used the regression-based wage rate available on Import Administration's internet website at www.ia.ita.doc.gov/wages.

3. Overhead, SG&A Expenses, and Profit. For factory overhead, selling, general, administrative expenses, and profit, we used information obtained from the fiscal year 2001-2002 annual reports of five Indian bearing producers. We calculated factory overhead and selling, general, and administrative expenses as percentages of direct inputs and applied these ratios to the PRC respondent's direct input costs. These expenses were calculated exclusive of labor and electricity, but included employer provident funds and welfare expenses not reflected in the Department's regressed wage rate. This is consistent with the methodology we utilized in TRBs XIV and TRBs XIII. For profit, we totaled the reported profit before taxes for three of the five Indian bearing producers and divided by the total calculated cost of production (“COP”) of goods sold. Consistent with TRBs XIV, we excluded from our profit calculation the two companies that reported profit losses. This percentage was applied to each respondent's total COP to derive a company-specific profit value.

4. Packing. Consistent with our methodology in prior reviews (see, e.g., TRBs XIV), we calculated packing costs as a percentage of COP for CPZ based on company-specific information submitted in a previous review. This ratio was applied to CPZ's COP for the current review to calculate its packing costs.

We calculated surrogate values for the packing materials reported by Yantai Timken (e.g., wooden pallet, plastic bag, steel strip) using import statistics reported in Monthly Statistics of the Foreign Trade of India, Vol. II - Imports by Commodity. We multiplied these surrogate values by the reported usage factor to calculate Yantai Timken's packing costs.

5. Electricity. We calculated our surrogate value for electricity based on electricity rate data from the Energy Data Directory and Yearbook (1999/2000) published by Tata Energy Research Institute. We calculated a simple average of the rates for the “industrial” category listed for 19 Indian states or electricity boards. We adjusted the electricity value to the POR using the Reserve Bank of India electricity-specific price index.

6. Natural Gas. Consistent with Structural Steel Beams from the People's Republic of China; Final Determination of Sales at Less than Fair Value, 67 FR 35479 (May 20, 2002) and Notice of Amended Final Determination of Sales at Less Than Fair Value: Structural Steel Beams From the People's Republic of China, 67 FR 41397 (June 18, 2002), we used publicly available information pertaining to natural gas prices in India derived from the “India Infoline” website which can be found at www.indiainfoline.com. The website reported an average market price for natural gas in India for June 2000, the most recent year for which natural gas data was available for India. We converted this value to dollars per cubic meter and adjusted the value to the current POR using the Indian wholesale price index (“WPI”) published by the International Monetary Fund.

7. Foreign Inland Freight. We valued truck freight using an average of November 1999 truck freight rate quotes collected from Indian trucking companies by the Department and used in the Final Determination of Sales at Less than Fair Value: Bulk Aspirin from the People's Republic of China, 65 FR 33805 (May 25, 2000) and in past TRBs reviews (see, e.g., TRBs XIV and TRBs XIII). We inflated this truck freight rate to the POR using the Indian WPI.

8. Brokerage and Handling. We used the public version of a U.S. sales listing reported in the questionnaire response submitted by Meltroll Engineering for 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). Because this information is not contemporaneous with the POR, we adjusted the data to the POR by using the Indian WPI.

Preliminary Results of the Review

We preliminarily determine that the following dumping margins exist for the period June 1, 2001, through May 31, 2002:

Public Comment

Interested parties may request a hearing within 30 days of the date of publication of this notice. Any hearing, if requested, will be held two days after the scheduled date for submission of rebuttal briefs (see below). Interested parties may submit written arguments in case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in case briefs, may be filed no later than five days after the date of filing the case briefs. Parties who submit briefs in these proceedings should provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f)(3).

The Department will publish the final results of this administrative review, including the results of its analysis of issues raised in any such written briefs or hearing, within 120 days of publication of these preliminary results.

Assessment Rates

Upon completion of this administrative review, the Department will determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an exporter/importer (or customer)-specific assessment rate for merchandise subject to this review. We calculated importer (or customer)-specific ad valorem rates by aggregating the dumping duties due for all U.S. sales to each importer (or customer) and dividing this amount by the total entered value of the sales to that importer (or customer). In accordance with the requirement set forth in 19 CFR 351.106(c)(2), where an importer (or customer)-specific ad valorem rate is less than de minimis, we will direct the Customs Service to liquidate without regard to antidumping duties. Where an importer (or customer)-specific ad valorem rate is greater than de minimis, we will direct the Customs Service to apply the ad valorem assessment rates against the entered value of each of the importer's/customer's entries during the review period.

All other entries of the subject merchandise during the POR will be liquidated at the antidumping duty rate in place at the time of entry.

Cash Deposit Requirements

The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(1) of the Act: (1) for the PRC companies named above, the cash deposit rates will be the rates for these firms established in the final results of this review, except that, for exporters with de minimis rates, i.e., less than 0.50 percent, no deposit will be required; (2) for previously-reviewed PRC and non-PRC exporters with separate rates, the cash deposit rate will be the company-specific rate established for the most recent period during which they were reviewed; (3) for all other PRC exporters, the rate will be the PRC country-wide rate, which is 33.18 percent; and (4) for all other non-PRC exporters of subject merchandise from the PRC, the cash deposit rate will be the rate applicable to the PRC supplier of 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) 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.

We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.