[Federal Register Volume 61, Number 164 (Thursday, August 22, 1996)] [Notices] [Pages 43341-43345] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-21465] ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE [A-583-825] Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Melamine Institutional Dinnerware Products From Taiwan AGENCY: Import Administration, International Trade Administration, Department of Commerce. EFFECTIVE DATE: August 22, 1996. FOR FURTHER INFORMATION CONTACT: Everett Kelly, David J. Goldberger, or Barbara Wojcik-Betancourt, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 482-4194, (202) 482-4136, or (202) 482-0629, respectively. The Applicable Statute Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (``the Act'') are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act (``URAA''). Preliminary Determination We preliminarily determine that melamine institutional dinnerware products (``MIDPs'') from Taiwan are being, or are likely to be, sold in the United States at less than fair value (``LTFV''), as provided in section 733 of the Act. The estimated margins of sales at LTFV are shown in the ``Suspension of Liquidation'' section of this notice. Case History Since the initiation of this investigation (Notice of Initiation of Antidumping Duty Investigations: Melamine Institutional Dinnerware Products from Indonesia, Taiwan and the People's Republic of China (61 FR 8039, March 1, 1996), the following events have occurred: On March 22, 1996, the United States International Trade Commission (``ITC'') issued an affirmative preliminary injury determination in this case (see ITC Investigation Nos. 731-TA-741, -742, and -743). In March 1996, through counsel, the Department identified Chen Hao Plastic Industrial Co., Ltd (``Chen Hao Taiwan''); Taiwan Melamine Products Industrial Co., Ltd (``Taiwan Melamine''); Yu Cheer Industrial Co., Ltd (``Yu Cheer''); Gin Harvest Enterprises (``Gin Harvest'') and Tar Hong Melamine (``Tar Hong'') as producers/exporters of the subject merchandise. In addition, Taiwan's Association of Plastic Producers identified to the Department, Gallant Chemical Corporation (``Gallant''); Hao Way Enterprise Co., Ltd (``Hao Way''); Sun Rudder Ind. (``Sun Rudder''); Win Great Trading Co., Ltd (``Win Great''); and IKEA Trading Far East Ltd. (``IKEA''), as producers/exporters of the subject merchandise. On March 29, 1996, we requested sales information regarding exports of the subject merchandise to the United States from the above- referenced companies. During April and May 1996, Hao Way, Win Great, and Sun Rudder informed the Department that they did not ship the subject merchandise to the United States during the period of investigation (``POI''). In addition, in information submitted in the concurrent MIDP investigation from the People's Republic of China, Gin Harvest and Tar Hong reported that they made no sales of Taiwan- produced MIDP to the United States during the POI. On April 15, 1996, the Department issued an antidumping duty questionnaire to the following companies, as exporters of the subject [[Page 43342]] merchandise: Taiwan Melamine, Chen Hao Taiwan, Yu Cheer, IKEA, Gallant, and Sun Rudder. The questionnaire is divided into four sections: Section A requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the sales of the merchandise in all of its markets. Sections B and C request home market sales listings and U.S. sales listings, respectively. Section D requests information on the cost of production (``COP'') of the foreign like product and constructed value (``CV'') of the subject merchandise. On May 30, 1996, after responding to section A of the antidumping questionnaire, Taiwan Melamine requested that the Department exclude it as a mandatory respondent and not require it to respond to the remainder of the questionnaire in this investigation based on its small volume of exports of the subject merchandise to the United States during the POI. On June 3, 1996, petitioner stated that, based on the small volume of exports and its desire for an expeditious determination, it had no objection to Taiwan Melamine's request. Accordingly, on June 7, 1996, the Department excluded Taiwan Melamine as a mandatory respondent and excused it from completing the antidumping questionnaire. On May 31, and June 12, 1996, IKEA requested that the Department exclude it as a mandatory respondent in this investigation and excuse it from the obligation to respond to the questionnaire because it had shipped only a small volume of Taiwan-produced MIDPs to the United States during the POI. IKEA's request came after IKEA had already missed the deadline for responding to section A of the antidumping questionnaire. Further, petitioner did not indicate that it had no objection to IKEA's request. Accordingly, the Department has not granted IKEA's request. On June 6, 1996, the Department postponed the preliminary determination of this investigation and the companion investigations on MIDPs from the People's Republic of China and Indonesia until August 14, 1996, in accordance with section 733(c)(1)(B) of the Act (61 FR 30219, June 14, 1996). Based on a timely allegation by the petitioner, the American Melamine Institutional Tableware Association (``AMITA''), the Department began an investigation into whether Chen Hao Taiwan had made sales in the home market at prices that were below COP, pursuant to section 773(b) of the Act (see July 11, 1996, Memorandum from MIDP Team to Louis Apple). Yu Cheer and Chen Hao Taiwan submitted questionnaire responses in May and June 1996. We issued a supplemental request for information in June 1996, and received the supplemental responses to this request in July 1996, respectively. Chen Hao Taiwan provided its response to the COP section of the questionnaire on July 26, 1996. Petitioner filed comments on the Chen Hao Taiwan and Yu Cheer questionnaire responses in May and July 1996. Postponement of Final Determination On August 5, 1996, Chen Hao Taiwan and Yu Cheer requested that, pursuant to section 735(a)(2)(A) of the Act, in the event of an affirmative preliminary determination in this investigation, the Department postpone its final determination until not later than 135 days after the publication of the affirmative preliminary determination in the Federal Register. In accordance with 19 U.S.C. 1673d(a)(2) and 19 CFR 353.20(b), inasmuch as our preliminary determination is affirmative, the respondents account for a significant proportion of exports of the subject merchandise, and we are not aware of the existence of any compelling reasons for denying the request, we are granting the respondents' request and postponing the final determination. Suspension of liquidation will be extended accordingly. See Preliminary Determination of Sales at Less Than Fair Value: Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, from Japan (61 FR 8029, March 1, 1996). Scope of Investigation This investigation covers all items of dinnerware (e.g., plates, cups, saucers, bowls, creamers, gravy boats, serving dishes, platters, and trays) that contain at least 50 percent melamine by weight and have a minimum wall thickness of 0.08 inch. This merchandise is classifiable under subheadings 3924.10.20, 3924.10.30, and 3924.10.50 of the Harmonized Tariff Schedule of the United States (HTSUS). Excluded from the scope of investigation are flatware products (e.g., knives, forks, and spoons). Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this investigation is dispositive. Period of Investigation The POI is January 1, 1995, through December 31, 1995. Fair Value Comparisons A. IKEA and Gallant We did not receive a response to our questionnaire from either IKEA or Gallant. Section 776(a)(2) of the Act provides that if an interested party withholds information that has been requested by the Department, fails to provide such information in a timely manner and in the form requested, significantly impedes a proceeding, or provides such information but the information cannot be verified, the Department shall use the facts otherwise available in reaching the applicable determination. Because IKEA and Gallant failed to submit the information that the Department specifically requested, we must base our determinations for those companies on the facts available. Section 776(b) of the Act provides that adverse inferences may be used against a party that has failed to cooperate by not acting to the best of its ability to comply with a request for information. The Department has determined that, in selecting from among the facts otherwise available, an adverse inference is warranted. Section 776(c) of the Act provides that where the Department selects from among the facts otherwise available and relies on ``secondary information,'' the Department shall, to the extent practicable, corroborate that information from independent sources reasonably at the Department's disposal. The Statement of Administrative Action accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994) (hereinafter, the ``SAA''), states that the petition is ``secondary information'' and that ``corroborate'' means to determine that the information used has probative value. See SAA at 870. In this proceeding, we considered the petition as the most appropriate information on the record to form the basis for a dumping calculation for these uncooperative respondents. In accordance with section 776(c) of the Act, we sought to corroborate the data contained in the petition. The petitioner based its allegation of both normal value and export price in the petition on a market research report which utilized price quotations from a manufacturer/exporter of MIDPs in Taiwan. The petitioner also submitted a published price list of comparable merchandise sold during the POI in Taiwan. The Department has determined that the price list corroborates normal value used in the petition. The export price in the petition is consistent with export prices reported [[Page 43343]] by responding companies on the record of this investigation. Therefore, we determine that further corroboration of the facts available margin is unnecessary. B. Chen Hao Taiwan and Yu Cheer To determine whether sales of the subject merchandise by Chen Hao Taiwan and Yu Cheer to the United States were made at less than fair value, we compared the Export Price (``EP'') to the Normal Value (``NV''), as described in the ``Export Price'' and ``Normal Value'' sections of this notice. In accordance with section 777A(d)(1)(A)(i), we compared POI-wide weighted-average EPs to weighted-average NVs. In determining averaging groups for comparison purposes, we considered the appropriateness of such factors as physical characteristics and level of trade. (i) Physical Characteristics In accordance with section 771(16) of the Act, we considered all products covered by the description in the Scope of Investigation section, above, produced in Taiwan and sold in the home market during the POI, to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. Where there were no sales of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the characteristics listed in the Department's antidumping questionnaire. In making the product comparisons, we relied on the following criteria (listed in order of preference): shape type (i.e., flat--e.g., plates, trays, saucers etc.; or container--e.g., bowls, cups, etc.), specific shape, diameter (where applicable), length (where applicable), capacity (where applicable, thickness, design (i.e., whether or not a design is stamped into the piece), and glazing (i.e., where a design is present, whether or not it is also glazed). See also Model Match Methodology for the Preliminary Determinations, memorandum from MIDP team to Louis Apple, Acting Office Director, dated August 12, 1996. (ii). Level of Trade As set forth in section 773(a)(1)(B)(i) of the Act and in the SAA at 829-831, to the extent practicable, the Department will calculate normal values based on sales at the same level of trade as the U.S. sales. When the Department is unable to find sales in the comparison market at the same level of trade as the U.S. sale(s), the Department may compare sales in the U.S. and foreign markets at different levels of trade. See also Final Determination of Sales at Less Than Fair Value: Certain Pasta from Italy (61 FR 30326, June 14, 1996) (``Pasta from Italy''). See, also, Final Determination of Sales at Less Than Fair Value: Certain Pasta from Italy (61 FR 30326, June 14, 1996) (``Pasta from Italy''). In accordance with section 773(a)(7)(A), if sales at different levels of trade are compared, the Department will adjust the normal value to account for the difference in level of trade if two conditions are met. First, there must be differences between the actual selling functions performed by the seller at the level of trade of the U.S. sale and the level of trade of the normal value sale. Second, the difference must affect price comparability as evidenced by a pattern of consistent price differences between sales at the different levels of trade in the market in which normal value is determined. Pursuant to section 773(a)(1)(B)(i) of the Act, and the SAA at 827, in identifying levels of trade for directly observed (i.e., not constructed) export price and normal values sales, we considered the selling functions reflected in the starting price, before any adjustments. Where possible, we further examined whether the selling function was performed on a substantial portion of sales. Chen Hao Taiwan and Yu Cheer reported that sales within both the home and U.S. markets involve essentially the same selling functions. We examined the record evidence and confirmed that selling functions in the aggregate are the same despite customer categories--trading company and distributor--being somewhat different (see Notice of Proposed Rulemaking and Request for Public Comments, 61 FR 7303, 7348 (February 27, 1996)) (``Proposed Regulations''). Accordingly, we preliminarily find that no level of trade differences exist for either company between any sales in either the home market or the U.S. market. Therefore, all price comparisons are at the same level of trade and an adjustment pursuant to section 773(a)(7)(A) is unwarranted. Export Price We calculated EP, in accordance with subsections 772(a) and (c) of the Act, where the subject merchandise was sold directly to the first unaffiliated purchaser in the United States prior to importation and where CEP was not otherwise warranted based on the facts of record. We made company-specific adjustments as follows: Chen Hao Taiwan We calculated EP based on packed, ex-works, FOB port, and delivered prices to unaffiliated customers in the United States. Where appropriate, we made deductions from the starting price (gross unit price) for foreign inland freight and Taiwan brokerage and handling. We also deducted reported discounts. Yu Cheer We calculated EP based on packed, FOR customer's warehouse prices to unaffiliated customers in the United States. Where appropriate, we made deductions from the starting price (gross unit price) for foreign inland freight. Normal Value Cost of Production Analysis As noted in the ``Case History'' section above, based on the petitioner's allegation, on July 11, 1996, the Department found reasonable grounds to believe or suspect that Chen Hao Taiwan sales in the home market were made at prices below the cost of producing the merchandise. As a result, the Department initiated an investigation to determine whether Chen Hao Taiwan made home market sales during the POI at prices below their respective cost of production within the meaning of section 773(b) of the Act. Before making any fair value comparisons, we conducted the COP analysis described below. A. Calculation of COP We calculated the COP based on the sum of Chen Hao Taiwan's cost of materials and fabrication for the foreign like product, plus amounts for home market general and administrative expenses (``G&A'') and packing costs in accordance with section 773(b)(3) of the Act. B. Test of Home Market Prices We used Chen Hao Taiwan's adjusted weighted-average COP for the POI. We compared the weighted-average COP figures to home market sales of the foreign like product as required under section 773(b) of the Act in order to determine whether these sales had been made at below-cost prices within an extended period of time in substantial quantities, and were not at prices which permit recovery of all costs within a reasonable period of time. On a model-specific basis, we compared the COP to the home market prices, less any applicable movement charges and direct selling expenses. We did not deduct indirect selling expenses from the home [[Page 43344]] market price because these expenses were included in the G&A portion of COP. C. Results of COP Test In determining whether to disregard home-market sales made at prices below COP, we examine (1) whether, within an extended period of time, such sales were made in substantial quantities and (2) whether such sales were made at prices which permitted the recovery of all costs within a reasonable period of time in the normal course of trade. Where less than 20 percent (by quantity) of a respondent's sales of a given product were at prices less than the COP, we do not disregard any below-cost sales of that product. Where 20 percent (by quantity) or more of a respondent's sales of a given product during the POI were at prices less than the COP, we determine such sales to have been made in substantial quantities within an extended period; where we determine that such sales were also not made at prices that permit recovery of cost within a reasonable period, we disregard the below-cost sales. In this case, we found that some products had no above-cost sales available for matching purposes. Accordingly, export prices that would have been compared to home market prices for these models were instead compared to CV. D. Calculation of CV In accordance with section 773(e)(1) of the Act, we calculated CV based on the sum of a respondent's cost of materials, fabrication, selling, general, and administrative expenses (``SG&A''), profit and U.S. packing costs as reported in the U.S. sales databases. In accordance with section 773(e)(2)(A) of the Act, we based SG&A and profit on the amounts incurred and realized by the respondent in connection with the production and sale of the foreign like product in the ordinary course of trade for consumption in the foreign country. Where appropriate, we calculated each respondent's CV based on the methodology described in the calculation of COP above. Adjustments to Prices We made company-specific adjustments to prices used as NV, as follows: Chen Hao Taiwan We calculated NV based on packed, delivered prices to unaffiliated customers. Where appropriate, we made deductions from the starting price (gross unit price) for discounts and inland freight. In addition, where appropriate, we adjusted for differences in circumstances of sale for imputed credit expenses, and royalty expenses (home market). Yu Cheer We calculated NV based on packed, delivered prices to unaffiliated customers. Where appropriate, we made deductions from the starting price (gross unit price) for inland freight. In addition, where appropriate, we adjusted for differences in circumstances of sale for imputed credit expenses. Yu Cheer's sales to the United States as well as those in the home market, were made in Taiwan dollars. Accordingly, Yu Cheer calculated its credit expenses in both markets by applying the average short term interest rates in Taiwan. For each respondent, we made adjustments, where appropriate, for physical differences in the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. Where the difference in merchandise adjustment for every comparison product exceeded 20 percent, we based NV on CV. In addition, in accordance with section 773(a)(6)(B), we deducted home market packing costs and added U.S. packing costs for all respondents. Price to CV Comparisons Where we compared CV to export prices, we deducted from CV the weighted-average home market direct selling expenses and added the weighted-average U.S. product-specific direct selling expenses (where appropriate) in accordance with section 773(a)(8) of the Act. Currency Conversion We made currency conversions into U.S. dollars based on the official exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank. Section 773A(a) of the Act directs the Department to convert foreign currencies based on the dollar exchange rate in effect on the date of sale of the subject merchandise, except if it is established that a currency transaction on forward markets is directly linked to an export sale. When a company demonstrates that a sale on forward markets is directly linked to a particular export sale in order to minimize its exposure to exchange rate losses, the Department will use the rate of exchange in the forward currency sale agreement. Section 773A(a) also directs the Department to use a daily exchange rate in order to convert foreign currencies into U.S. dollars unless the daily rate involves a fluctuation. It is the Department's practice to find that a fluctuation exists when the daily exchange rate differs from the benchmark rate by 2.25 percent. The benchmark is defined as the moving average of rates for the past 40 business days. When we determine a fluctuation to have existed, we substitute the benchmark rate for the daily rate, in accordance with established practice. Further, section 773A(b) directs the Department to allow a 60-day adjustment period when a currency has undergone a sustained movement. A sustained movement has occurred when the weekly average of actual daily rates exceeds the weekly average of benchmark rates by more than five percent for eight consecutive weeks. (For an explanation of this method, see Policy Bulletin 96-1: Currency Conversions (61 FR 9434, March 8, 1996).) Such an adjustment period is required only when a foreign currency is appreciating against the U.S. dollar. The use of an adjustment period was not warranted in this case because the New Taiwan dollar did not undergo a sustained movement, nor were there currency fluctuations during the POI. Verification As provided in section 782(i) of the Act, we will verify all information determined to be acceptable for use in making our final determination. Suspension of Liquidation In accordance with section 733(d) of the Act, we are directing the Customs Service to suspend liquidation of all imports--with the exception of those exported by Chen Hao Taiwan, Yu Cheer, or any other company except IKEA and Gallant--of subject merchandise that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We will instruct the Customs Service to require a cash deposit or the posting of a bond equal to the weighted-average amount by which the NV exceeds the export price, as indicated in the chart below. These suspension of liquidation instructions will remain in effect until further notice. ------------------------------------------------------------------------ Weighted-average margin Exporter/manufacturer percentage ------------------------------------------------------------------------ Chen Hao Taiwan...................... 1.53 (de minimis). Yu Cheer............................. 0. IKEA................................. 53.13. Gallant.............................. 53.13. All Others........................... 1.55 (de minimis). ------------------------------------------------------------------------ [[Page 43345]] Pursuant to section 733(d)(1)(A) and section 735(c)(5) of the Act, the Department normally may not include zero and de minimis weighted- average dumping margins and margins determined entirely under section 776 of the Act, in the calculation of the ``all-others'' deposit rate. However, such rates were the only margins available in this determination. Accordingly, the Department may, pursuant to section 735(c)(5)(B) of the Act, use ``any reasonable method'' to calculate the all-others rate. In this case, the Department calculated the all-others rate by using a weighted average of the rates applicable to Chen Hao Taiwan, Yu Cheer, and IKEA (Gallant's deposit rate was not included in the all-others rate calculation because no weighting factor was available and our examination of PIERS import data and other record evidence indicates that Gallant's exports--if any--do not appear to be significant). See SAA at 873. ITC Notification In accordance with section 733(f) of the Act, we have notified the ITC of our determination. If our final determination is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after our final determination whether these imports are materially injuring, or threaten material injury to, the U.S. industry. Public Comment Case briefs or other written comments in at least ten copies must be submitted to the Assistant Secretary for Import Administration no later than November 26, 1996, and rebuttal briefs, no later than December 3, 1996. A list of authorities used and an executive summary of issues should accompany any briefs submitted to the Department. Such summary should be limited to five pages total, including footnotes. In accordance with section 774 of the Act, we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs. Tentatively, the hearing will be held on December 5, 1996, at 10:00 a.m. in Room 1412 at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time. 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, U.S. Department of Commerce, Room B-099, within ten days of the 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 the issues to be discussed. Oral presentations will be limited to issues raised in the briefs. If this investigation proceeds normally, we will make our final determination by 135 days after the publication of this notice in the Federal Register. This determination is published pursuant to section 733(d) of the Act. Dated: August 14, 1996. Jeffrey P. Bialos, Acting Assistant Secretary for Import Administration. [FR Doc. 96-21465 Filed 8-21-96; 8:45 am] BILLING CODE 3510-DS-P