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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6175individual company’s independence inits export activities. The analysis isnarrowly focused and the result, ifindependence is found, is accordinglynarrow—we analyze that singlecompany’s U.S. sales of the subjectmerchandise separately and calculate acompany-specific antidumping rate.Thus, for purposes of calculatingmargins, we analyze whether specificexporters are free of government controlover their export activities, using thecriteria set forth in Silicon Carbide at22585. Those exporters who establishtheir independence from governmentcontrol are entitled to a separate margincalculation. Thus, a finding that acompany is entitled to a separate rateindicates that the company hassufficient control over its exportactivities such that the manipulation ofsuch activities by a government seekingto channel exports through companieswith relatively low dumping rates is nota concern. See Disposable PocketLighters from the PRC, 60 FR 22359,22363 (May 5, 1995) (DisposableLighters); Tapered Roller Bearings andParts Thereof, Finished and Unfinished,from the PRC, 61 FR 65527, 65527–65528 (December 13, 1996) (TRBs IV–VI); TRBs VII, Comment 1.Having rejected the CDIW positionthat state ownership per se eliminatesthe possibility of a company gaining aseparate rate, we do not acceptPetitioner’s argument that the statutorydefinition of affiliated persons at section771(33) of the Act should determine ourseparate-rates analysis. The applicationof this standard is overly broad for thepurpose of determining whether toassign separate rates to the PRC-ownedcompanies under review.First, the type of state ‘‘ownership’’involved (ownership by ‘‘all of thepeople’’) is not the type of ‘‘ownership’’addressed by section 771(33).Ownership by all of the people signifiesonly that ‘‘no individual can take thecompany . . . it belongs to thecommunity.’’ Silicon Carbide at 22586.It does not mean that a single entity‘‘controls’’ all such firms. Id.Second, even if such firms did meetthe section 771(33) ‘‘affiliated party’’standard, this definition does notdetermine the issue of whether weshould calculate separate rates for thestate-owned firms in this review.Instead, in order to make thatdetermination, we must consider thespecific issue of de jure and de factogovernment control over exportactivities. This is analogous to ourpractice in market-economy cases ofcalculating individual dumping rates foraffiliated parties unless we determinethat there is a significant potential formanipulation of pricing or productiondecisions. With respect to NME firms,we examine the potential formanipulation by the government usingthe de jure and de facto test set forth inSilicon Carbide. Thus, if the SiliconCarbide test shows that no governmententity controls the export activities ofthe firms in question so as to present asignificant potential for manipulation ofsuch activities, it is not appropriate toassign a single rate.In investigating the extent ofgovernment control over these firms’’export activities, we obtainedinformation regarding this specificissue, and the PRC companies thatresponded to our questionnairesubmitted information indicating a lackof both de jure and de facto governmentcontrol over their export activities.Contrary to Petitioner’s assertions, ourdetermination in this regard did nothinge on the fact that the term ‘‘TRBs’’does not appear on the ‘‘TemporaryProvisions for Administration of ExportCommodities.’’ Further, we are notpersuaded to change our separate-ratesdeterminations based on the fact thatthe term ‘‘bearings’’ appears on the list,particularly since the term ‘‘bearings’’appears on a section of the list thatsimply indicates that an exporter mustobtain an ‘‘ordinary’’ license in order toexport bearings. Instead, as detailed inthe Preliminary Results (at 40611), therecord evidence in this case, includingour verification findings, clearlyindicates a lack of both de jure and defacto government control over theexport activities of the firms to whichwe have assigned separate rates.We also do not accept Petitioner’sargument that we have misapplied thepresumption of state control in thiscase. Given the information thatrespondents provided in this review,our statement in the Preliminary Resultsthat ‘‘there is no evidence ofgovernment control over exports’’ isequivalent to an affirmative statementthat ‘‘the government does not controlthe export activities of thesecompanies.’’ We were able to make thisdetermination because the companiesprovided information affirmativelyindicating a lack of government control.Finally, contrary to Petitioner’s claimthat the necessary informationconcerning the de facto portion of theanalysis is inaccessible to bothPetitioner and to the Department, suchinformation was, in fact, subject toverification and was discussed in therelevant verification reports. Based onour analysis of the Silicon Carbidefactors, the verified information on therecord supports our determination thatthese respondents are, both in law andin fact, free of government control overtheir export activities. Thus, it would beinappropriate to treat these firms as asingle enterprise and assign them asingle margin. Accordingly, we havecontinued to calculate separate marginsfor these companies. See TRBs IV–VI at65528.Comment 2Petitioner claims that the Departmentimproperly granted Shandong andWanxiang separate rates based onvoluntary responses to the separate-ratesquestionnaire, although thesecompanies did not request review anddid not respond to any other part of theDepartment’s questionnaire. Petitionerstates that the result of this finding,which will allow these companies tohave their POR entries assessed at theirPOR deposit rates, is an abuse of thesingle-rate methodology. Petitionerstates that it is inappropriate that these‘‘non-respondents’’ are able to obtainmore favorable treatment than othernon-respondents. Petitioner claims thatthis approach is unfair because it didnot know of the existence of thesecompanies and could not have askedthat the review cover them. Petitionersuggests that the Department defergranting separate rates for Shandongand Wanxiang until it conducts a reviewin which they are named in a reviewrequest, in which case they must fullyparticipate in the review. Petitionermakes the same suggestion for GreatWall, a company that requested aseparate rate but whose separate-ratesresponse the Department did notanalyze in the preliminary results.Petitioner adds that, even if these threefirms are permitted to establishseparate-rate entitlement in this review,the rate applicable for this periodshould be the rate applicable had theynot submitted their voluntary separaterates responses, which is the PRC rate.Guizhou Machinery et al. respondthat Petitioner provides no support forits objection to the Department’s statedintention to liquidate Shandong andWanxiang’s POR entries at the depositrate in effect at the time of entry.Guizhou Machinery et al. and L&S statethat, since the Department did notreview these companies’’ entries duringthis segment of the proceeding, the Actrequires the liquidation of their PORentries at the deposit rate in effect at thetime of entry. Guizhou Machinery et al.state no party requested review ofShandong and Wanxiang nor did theDepartment name them in the notice ofinitiation. Citing 19 CFR 353.22(e),Guizhou Machinery et al. contend that,pursuant to the Department’sregulations, non-reviewed companies
6176 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesare subject to assessment ofantidumping duties at the rate in effectat the time of entry which, for thesecompanies, is 8.83 percent.Great Wall requests that theDepartment analyze the information thatit submitted during the course of thereview regarding the extent ofgovernment control over exportactivities and grant Great Wall aseparate rate, thereby permittingassessment of Great Wall’s POR entriesat its POR deposit rate.Department’s PositionWe disagree with Petitioner. For thesefinal results, we have determined thatthe export activities of Shandong,Wanxiang, and Great Wall are notsubject to de jure or de factogovernment control. Accordingly, thesefirms are not part of the ‘‘PRCenterprise’’ under review and, becauseno interested party requested a reviewof these firms, they are not subject tothis review. Because we did not includethese firms in this review, we willinstruct Customs to apply the respectivedeposit rates to these companies’’ PORentries for purposes of assessment.As explained in our response tocomment 1, it is our policy to treat allexporters of subject merchandise inNME countries as a single governmentcontrolledenterprise in the absence ofsufficient evidence to the contrary. Weassign that enterprise a single rate (the‘‘PRC rate’), except for those exportersthat demonstrate an absence ofgovernment control over export activity.Pursuant to this policy, if any companyfor which a review was requested isfound to be part of the ‘‘PRCenterprise,’’ the entire enterprise(including those companies that we donot name in the initiation) is subject tothe review. Thus, we request that thePRC government identify all firms thatexported during the POR and contactsuch firms regarding their participationin the review. This ensures that we fullycapture the presumed ‘‘PRC enterprise’’(further explained in our response tocomment 27). Any company that doesnot place information on the recordindicating that it is separate from thePRC government with respect to exportactivities will be covered by the reviewas part of the PRC enterprise and willreceive the PRC rate as an assessmentrate for POR entries. The PRC enterpriseis not subject to review only if all firmsfor which a review is requested respondand demonstrate that they areindependent from government controlover exports. That is not the case in thisreview.The three firms at issue havedemonstrated that they are independentfrom PRC-government control over theirexport activities. See PreliminaryResults at 40611–12 regarding Shandongand Wanxiang; see Memorandum fromAnalyst to File: Separate-RateDetermination for Great Wall BearingCompany, February 3, 1997, regardingGreat Wall. Thus, we have determinedthat they are not part of the PRCenterprise. Because these companies arenot part of the PRC enterprise and noreview of these companies wasrequested, they are not subject to thisreview. Therefore, the automaticassessment provisions (19 CFR353.22(e)) apply. Petitioner’s contentionthat we should, in effect, reviewcompanies for which no review wasrequested is inconsistent with ournormal practice of conducting reviewsupon request only, as provided insection 751(a) of the Act. Accordingly,as with all unreviewed companies, PORentries of Shandong, Wanxiang andGreat Wall will be liquidated at thedeposit rates.2. Valuation of Factors of ProductionComment 3Petitioner argues that the Departmentshould base the values of all factors ofproduction (FOP) on the annual reportof SKF India (SKF). Petitioner notesthat, for the preliminary results, theDepartment used the SKF report tovalue three factors (overhead; selling,general, and administrative expenses(SG&A); and profit), whereas theDepartment derived values for the directlabor and raw-material factors from twoother, unrelated, sources (Investing,Licensing & Trading Conditions Abroad,India (IL&T India) statistics and Indianimport statistics, respectively).Petitioner claims that it is inherentlydistortive to use sources other than theSKF report to value labor and rawmaterials because SKF’s labor and rawmaterialcosts are included in the costsused in calculating SKF’s overhead,SG&A, and profit ratios, which theDepartment uses in its surrogatecalculation.Petitioner also contends that SKF’smaterials and labor costs are the ‘‘bestinformation’’ with respect to thesefactors because they represent actualcosts in the preferred surrogate country,whereas the steel-import statistics andlabor data have little connection withcosts related to production of TRBs.Thus, Petitioner argues, whereasSKF’s costs and expenses representthose of a producer of the class or kindof merchandise subject to review, thesurrogate data for raw materials anddirect labor which the Department usedcover a broad range of industries andproducts. With respect to raw materials,Petitioner asserts that the ‘‘other’’ alloysteelcategory from the Indian importstatistics, which the Department used tovalue material costs for the preliminaryresults, is broad and may or may notinclude imports of the steel used toproduce bearings. Petitioner contendsthat, even if this category includes steelused to produce bearings, such steellikely represents only a small part ofsteel imports in the basket category.With respect to direct labor, Petitionerclaims that the classification theDepartment used covers, in addition tobearings producers, hundreds ofindustry sectors under broad headingsunrelated to bearings production andargues that there is no rational basis forusing such a non-specific source as asurrogate. Petitioner states that it isappropriate to apply SKF’s average laborcost to all types of labor, includingdirect production, production overhead,and SG&A, since all of these laborcategories would be part of the aggregatelabor cost in SKF’s annual report.Petitioner states that the use of theSKF report for all FOP values isconsistent with the importance thecourts attach to internal coherence andthe use of a single source when possible(citing Timken Co. v. United States, 699F. Supp. 300, 306, 307 (1988), affirmed,894 F.2d 385 (Fed. Cir. 1990)(collectively Timken)). Petitioner urgesthe Department to use the same annualreport.Petitioner argues in the alternativethat, in the event the Department doesnot use the SKF report to value all FOP,the Department must adjust theoverhead, SG&A, and profit rates toreflect the use of lower materials andlabor values from the separate sources.Petitioner claims that the Department’spreliminary calculations were distortivebecause the Department used SKF’s fullmaterial and labor costs in the cost ofmanufacturing (COM) denominator butapplied this ratio to material and laborfactors that it developed using lowervaluedsources (Indian import statisticsand ILT labor data, respectively).Petitioner concludes that, because ofSKF’s overhead, SG&A and profitpercentages are linked to SKF’s ownmaterials and labor costs, thosepercentages must be adjusted upward(by reducing the denominators used toderive these percentages) if theDepartment multiplies these ratios bymaterial and labor costs from othersources to derive the per-unit overhead,SG&A, and profit rates.Petitioner proposes that, in order toderive non-distortive material and laborportions of the overhead and SG&A ratiodenominators, the Department should
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