Final Determination of Sales at Less Than Fair Value: Nitromethane From the People's Republic of China |
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Joseph A. Spetrini
Department of Commerce
March 30, 1994
[Federal Register Volume 59, Number 61 (Wednesday, March 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 94-7564]
[[Page Unknown]]
[Federal Register: March 30, 1994]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-823]
Final Determination of Sales at Less Than Fair Value:
Nitromethane From the People's Republic of China
agency: Import Administration, International Trade Administration,
Commerce.
effective date: March 30, 1994.
for further information contact: Ellen Grebasch or Erik Warga, Office
of Antidumping Investigations, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
3773 or (202) 482-0922.
final determination: The Department of Commerce (``the Department'')
determines that nitromethane from the People's Republic of China
(``PRC'') is being, or is likely to be, sold in the United States at
less than fair value (``LTFV''), as provided in section 735 of the
Tariff Act of 1930, as amended (``the Act''). The estimated margin is
shown in the ``Suspension of Liquidation'' section of this notice.
Case History
Since making our preliminary determination on November 1, 1993 (58
FR 59237, November 8, 1993), the following events have occurred.
On November 8, 1993, respondent exporters Shanghai Native Produce
Import/Export Corporation, Sinochem Jiangsu Suzhou Import/Export
Corporation, and Sinochem Liaoning, along with their associated
manufacturers, requested that we postpone making our final
determination by 60 days pursuant to 19 CFR 353.20(b)(1). We published
a notice postponing the final determination on November 29, 1993 (58 FR
62644).
Various additional information from the five participating
companies was filed on December 17 and December 28, 1993, as well as on
January 6, 1994.
From January 10-29, 1994, we conducted verification of the
questionnaire responses of the following companies: exporters Shanghai
Native Produce (``SNP'') and Sinochem Jiangsu Suzhou (``SJS''); and
manufacturers Wujin Hongda Chemical Factory, Kunshan Synthetic Chemical
Factory, and Suzhou Wu Xian No. 2 Perfume Factory. We also visited the
facilities of another exporter, Shanghai Chemicals Import/Export
Corporation, because we determined that that company might have shared
ownership with one of the two exporters that were being verified.
Petitioner and respondents filed case briefs on February 24, 1994,
and rebuttal briefs on March 2, 1994. On March 3, 1994, we held a
public hearing in which petitioners and respondents participated.
Scope of Investigation
The product covered by this investigation is nitromethane, a
chemical compound with the formula CH3NO2. Nitromethane is a
nitroparaffin in which the nitro group is attached to the single carbon
atom of that number of the alkane family known as methane.
Nitroparaffins are any of a homologous series of compounds whose
generic formula is CnH2n+1NO2, the nitro groups being
attached to a carbon atom through the nitrogen.
Nitromethane has numerous industrial uses, including as a solvent
in polymers for coatings, as a component of special fuels for internal
combustion engines, as a stabilizer for chlorinated hydrocarbons, and
as an extraction solvent. Nitromethane is a raw material used in the
synthesis of other useful chemicals including chloropicrin, a primary
soil nematocide; tris (hydroxymethyl)-aminomethane, a pharmaceutical
and diagnostic buffer; and bronopol, a preservative for nonwoven moist
towelettes.
Nitromethane is currently classifiable under subheading
2904.20.50.00 of the Harmonized Tariff Schedule of the United States
(``HTSUS''). This subheading, a basket provision, is defined to include
sulfonated, nitrated, or nitrosated derivatives of hydrocarbons,
whether or not halogenated. Although the HTSUS subheading is provided
for convenience and customs purposes, our written description of the
scope of this investigation is dispositive.
Period of Investigation
The period of investigation (``POI'') is December 1, 1992, through
May 31, 1993.
Best Information Available
The PRC's Ministry of Foreign Trade and Economic Cooperation
(``MOFTEC'') identified four exporters who sold the subject merchandise
to the United States during the POI: Sinochem Hebei, Sinochem Liaoning,
SJS, and SNP. Sinochem Hebei submitted no information. Sinochem
Liaoning provided substantially incomplete information in response to
the Department's requests. Verification revealed that the other two
exporters, SJS and SNP, failed to provide adequate information on
foreign market value (See Comment 1 in the ``Interested Party
Comments'' section of this determination, below). Thus, all exporters
have failed to provide adequate responses to our questionnaire.
Accordingly, the Department has used the best information available
(``BIA''), in accordance with section 776(c) of the Act and 19 CFR
353.37, to calculate the margins for all exporters from the PRC.
In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower
margins to those respondents who cooperated in an investigation and
margins based on more adverse assumptions for those respondents who did
not cooperate in an investigation. See Final Determination of Sales at
Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products,
Certain Cold-Rolled Carbon Steel Flat Products, and Certain Cut-to-
Length Carbon Steel Plate From Belgium (58 FR 37083, July 9, 1993). In
this case, however, we do not need to determine whether SJS and SNP
were cooperative since there is no choice as to which margin should be
used. Accordingly, we are using as BIA 233.70 percent, which is the
sole margin calculated in the petition.
Separate Rates
Because all four exporters either provided insufficient responses
or failed to respond altogether, and because the same BIA margin
applies to all four exporters, we do not need to consider whether to
accept the claims for separate rates made by the participating
exporters.
Fair Value Comparisons
To determine whether sales of nitromethane from the PRC to the
United States were made at less than fair value, we compared, using
BIA, the United States price to the foreign market value, as provided
in the petition. See our notice of initiation of this proceeding (58 FR
33617, June 8, 1993) for a complete description of the methodology
used.
Verification
As provided in section 776(b) of the Act, we attempted to verify
all information submitted by respondents for use in our final
determination. We used standard verification procedures, including
examination of relevant accounting records and original source
documents provided by respondents.
Interested Party Comment
The petitioner contends that the respondents by their obfuscation
and substantial response inaccuracies have impeded the investigation so
thoroughly that the Department should use BIA for the final
determination. Petitioner listed, among others, the following reasons
as justification for their position:
Respondents' tardy disclosure of the use of, and
outright refusal to identify, two raw materials, which petitioner
notes could be a significant part of the cost of production; and
The general inaccuracy and unreliability of the
information reported, such as raw material usage; and energy usage.
Respondents contend that their questionnaire responses contained
sufficient information to permit margin calculations. Respondents make
the following essential arguments regarding their responses:
The names of the unreported ingredients, although
regarded by respondents as trade secrets and thus not mentioned in
responses to the questionnaire, were nevertheless informally
disclosed at verification both orally and by allowing verifiers to
review company documents and observe the manufacturing process; and
The companies' responses were verified in their most
significant respects, discrepancies discovered at verification were
not serious, and the Department does not have to verify every
reported fact in order to make an overall assessment that submitted
information is suitable for margin calculations. At most, certain
errors warrant ``non-punitive BIA''.
DOC Position
The responses of the manufacturers that supplied SJS and SNP with
nitromethane were largely inaccurate and unverifiable to the point of
being totally unusable. Accordingly, because their supplying
manufacturers' responses were incomplete, both exporters must be deemed
to have failed verification and be assigned margins based on BIA.
The most egregious deficiency is that all factories supplying the
nitromethane exporters failed to report certain materials (i.e., two
additives for each manufacturer) used in the manufacturing process.
In our July 26, 1993, questionnaire, we specifically required
respondents to furnish the identity and amount of every material used
in the production of nitromethane. See Section D (III-A) of our
questionnaire. Our regulations set out the time frame within which
questionnaire responses must be submitted. See 19 CFR 353.31. However,
at no time did any of the respondents identify the two additives used
in the production process (despite being permitted to file information
in response to the questionnaire as late as five months after the
questionnaire's issue).
Further, the companies did not, as they contend, disclose the
information at verification. Although Department verifiers traced the
existence of these additives through various records, they deliberately
did not attempt to translate into English the names because the
respondents insisted that the ingredients were trade secrets and could
not be divulged to the verifiers. The Department's role is not to
surreptitiously collect information that a respondent has characterized
as a trade secret and has refused to reveal. The fact, revealed for the
first time in respondents' case brief, that one of the three
manufacturers inadvertently included the Chinese characters for the
names of the additives in a verification exhibit (which, despite the
requirement set forth under 19 CFR 353.31(f), was untranslated) does
not alter the overall fact that respondents refused to reveal, much
less permit verification of, the additives' identities.
Respondents' explanation for their refusal to divulge this
information was that the additives were highly confidential and could
not be revealed even to the Department. The Department's procedures for
handling business proprietary information, which can include not
disclosing certain very sensitive information under administrative
protective order (``APO'') (see 19 CFR 353.32), were explained in the
cover letter to our questionnaire and were repeatedly reiterated at
verification. Nevertheless, each responding manufacturer chose not to
reveal the identity of the additives.
Although Department practice generally accepts minor corrections to
questionnaire responses during verification, the revelation of
unidentified materials is not a ``minor correction.'' In fact, it must
be considered significant new information. That the relative amounts
used per ton of nitromethane are small does not make the failure to
report the identity and use of the additives in the production process
a ``minor correction.'' See Tapered Roller Bearings from Japan
(Administrative Review) (56 FR 65228, December 16, 1991); Gray Portland
Cement from Mexico (Administrative Review) (56 FR 12156, March 22,
1991).
By refusing to identify these materials, respondents allow us no
means of determining their value in a surrogate economy. As petitioners
point out, these additives could be quite valuable and add
substantially to the overall production costs. Only in knowing the
precise identity and quantity can we judge the materials' importance,
and thereby the gravity of their omission. Relatively small per-batch
amounts cannot be considered a criterion for evaluating the gravity of
failing to report these materials.
In addition to the respondents' failure to report certain materials
used in the production process, two other significant deficiencies
exist. First, Wu Xian failed to report the fact it purchased crude
nitromethane from another PRC factory for use in its production of
refined nitromethane. Essentially, another significant ingredient in
the production process was unreported by Wu Xian. Second, SNP failed to
report information regarding an additional supplying manufacturer even
though our questionnaire specifically asked that factors data be
provided by all manufacturers that produced for merchandise sold to the
United States during the POI. This omission leaves us with no factor
information for some of SNP's POI sales.
We agree with the respondents that the Department does not have to
verify every reported fact. However, decisions regarding what is to be
verified are the Department's and not a respondent's. At no time were
the respondents relieved of their obligation to report in their
questionnaire response, and allow verification of, the additives'
identities and the other factors.
In light of the numerous significant deficiencies in the responses,
there is no acceptable alternative to disregarding the respondents'
responses. Additionally, the failure of both Sinochem Hebei and
Sinochem Liaoning to respond adequately to our questionnaire renders
incontrovertible the need to base our final determinations for those
two companies on BIA. Thus, the margin for all four exporters can only
be based on BIA. Therefore, we are using the only margin provided in
the petition, 233.7 percent.
Because our final determination is based on BIA, we do not need to
address interested party comments pertaining to issues other than the
basis for our final determination.
Critical Circumstances
The petitioner alleges that critical circumstances exist with
respect to imports of the subject merchandise from the PRC. Section
735(a)(3) of the Act provides that the Department will determine that
critical circumstances exist if we determine that there is a reasonable
basis to believe or suspect that:
(A)(i) There is a history of dumping in the United States or
elsewhere of the merchandise which is the subject of the investigation,
or
(ii) The person by whom, or for whose account, the merchandise was
imported knew, or should have known, that the exporter was selling the
merchandise which is the subject of the investigation at less than its
fair value, and
(B) There have been massive imports of the merchandise which is the
subject of the investigation over a relatively short period.
We normally consider margins of 15 percent or more sufficient to
impute knowledge of dumping under section 735(a)(3)(A)(ii) for
exporter's sales price sales, and margins of 25 percent or more for
purchase price sales. (See, e.g., Final Determination of Sales at Less
Than Fair Value; Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, from Italy, 52 FR 24198, June 29, 1987). Since the final
margin for nitromethane from the PRC is above 25 percent, we determine
in accordance with section 735(a)(3)(A)(ii) of the Act that there is
knowledge that dumping existed for nitromethane from the PRC. Since we
determined that importers knew, or should have known, that imports of
nitromethane from the PRC were being sold at LTFV prices, we do not
need to consider whether there is a history of dumping.
Under 19 CFR 353.16(f)(1), we normally consider the following
factors in determining whether imports have been massive over a short
period of time:
(1) The volume and value of the imports;
(2) Seasonal trends (if we find that they are applicable); and
(3) The share of domestic consumption accounted for by imports.
Because the overall integrity of the response was unreliable (see
March 23, 1994, Concurrence Memorandum for detailed discussion), we
have relied upon BIA for determining whether there have been massive
imports of nitromethane from the PRC. As BIA we are making the adverse
assumption that imports were massive over a relatively short period of
time in accordance with section 735(a)(3)(B) of the Act. Additionally,
we note that the unreliable company-specific information, if used,
would also lead to a finding of massive imports.
Accordingly, based on our analysis, we determine that critical
circumstances exist for imports of nitromethane from the PRC.
Suspension of Liquidation
In accordance with sections 773(d)(1) and 733(e)(2) of the Act, we
are directing the Customs Service to continue to suspend liquidation of
all entries of nitromethane from the PRC that are entered, or withdrawn
from warehouse, for consumption on or after August 10, 1993 (i.e., 90
days prior to the date of publication of our preliminary determination
in the Federal Register). The Customs Service shall require a cash
deposit or posting of a bond equal to 233.70 percentad valorem on all
entries of certain nitromethane from the PRC. This suspension of
liquidation will remain in effect until further notice.
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
International Trade Commission (``ITC'') of our determination. The ITC
will now determine, within 45 days, whether these imports are
materially injuring, or threaten material injury to, the U.S. industry.
If the ITC determines that material injury, or threat of material
injury, does not exist, the proceeding will be terminated and all
securities posted will be refunded or cancelled. If the ITC determines
that such injury does exist, the Department will issue an antidumping
duty order directing Customs officials to assess antidumping duties on
all imports of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the effective date of the
suspension of liquidation.
Notice to Interested Parties
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility, pursuant
to 19 CFR 353.34(d), concerning the return or destruction of
proprietary information disclosed under APO. Failure to comply is a
violation of the APO.
This determination is published pursuant to section 735(d) of the
Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).
Dated: March 23, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-7564 Filed 3-29-94; 8:45 am]
BILLING CODE 3510-DS-M