Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Chlorinated Isocyanurates From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

December 16, 2004.

FOR FURTHER INFORMATION CONTACT:

Cindy Lai Robinson or Brian C. Smith, 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) 482-3797, or 482-1766, respectively.

Preliminary Determination

We preliminarily determine that chlorinated isocyanurates from the People's Republic of China (“PRC”) are being, or is likely to be, sold in the United States at less than fair value (“LTFV”), as provided in section 733 of the Tariff Act of 1930, as amended (“the Act”). The estimated margins of sales at LTFV are shown in the “Suspension of Liquidation” section of this notice.

Interested parties are invited to comment on this preliminary determination. We will make our final determination not later than 135 days after the date of publication of this preliminary determination.

Case History

On May 14, 2004, the Department of Commerce (“the Department”) received petitions for the imposition of antidumping duties on imports of chlorinated isocyanurates from the PRC and Spain, filed, in proper form, by Clearon Corporation and Occidental Chemical Corporation (hereafter known as the “Petitioners”). On May 24 and 28, 2004, the Petitioners filed amendments to their petition.

On June 4, 2004, the Department initiated antidumping duty investigations on chlorinated isocyanurates from the PRC and Spain. See Notice of Initiation of Antidumping Duty Investigations: Chlorinated Isocyanurates from the People's Republic of China and Spain, 69 FR 32488 (June 10, 2004) (“Initiation Notice”). The Department set aside a period for all interested parties to raise issues regarding product coverage. See Initiation Notice, 69 FR at 32489. We received comments regarding product coverage from interested parties. For a detailed discussion of the comments regarding the scope of the merchandise under investigation, please see the “Scope Comments” section below.

On June 4, 2004, the Department notified the International Trade Commission (“ITC”) of the antidumping investigation initiation and the intent to publish in the Federal Register a notice of such initiation. On June 17, 2004, the Department issued initiation instructions to U.S. Customs and Border Protection (“CBP”).

On June 28, 2004, the ITC issued its affirmative preliminary determination that there is a reasonable indication that an industry in the United States is threatened with material injury by reason of imports from the PRC of chlorinated isocyanurates. See Chlorinated Isocyanurates from China and Spain, 69 FR 40417 (July 2, 2004).

On September 16, 2004, the Petitioners made a timely request pursuant to 19 CFR 351.205(e) for a fifty-day postponement of the preliminary determination, or until December 10, 2004. On October 15, 2004, the Department published in the Federal Register the notice of postponement of the preliminary determination for this antidumping duty investigation. See Notice of Postponement of Preliminary Determination of Antidumping Duty Investigations: Chlorinated Isocyanurates from the People's Republic of China (A-570-893) and Spain (A-469-814), 69 FR 61202 (October 15, 2004).

Scope Comments

In accordance with the preamble to our regulations (see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997), we set aside a period of time for parties to raise issues regarding product coverage and encouraged all parties to submit comments within 20 calendar days of publication of the Initiation Notice. See Initiation Notice, 69 FR 32488 (June 10, 2004).

Arch Chemicals, Inc. (“Arch”) submitted comments on July 1, 2004, and rebuttal comments on July 12, 2004, and July 30, 2004, in which it argued that its patented chlorinated isocyanurates tablet should be excluded from the scope of this investigation. The Petitioners submitted comments on June 30, 2004, and rebuttal comments on July 21, 2004, in which they stated their opposition to excluding Arch's patented chlorinated isocyanurates tablet from the scope. On October 21, 2004, we met with Arch's representatives to discuss its scope exclusion request. See ex-parte memoranda to the file dated October 22, and 28, 2004.

Based on the information presented by interested parties, the Department determines that Arch's patented chlorinated isocyanurates tablet is included within the scope of this investigation. See Memorandum to Barbara E. Tillman, Acting Deputy Assistant Secretary for Import Administration, from Holly A. Kuga, Senior Office Director, Office 4, Re: Scope of the Antidumping Duty Investigations of Chlorinated Isocyanurates from the People's Republic of China and Spain, dated December 10, 2004, which is on file in the Central Records Unit (“CRU”), Room B-099 of the Main Commerce Building, for a detailed discussion of comments submitted by Arch and the Petitioners, as well as the basis for the Department's decision that Arch's patented chlorinated isocyanurates tablet is included in the scope of this investigation.

CONNUM Comments

On June 29, 2004, the Department provided all interested parties in this proceeding the opportunity to submit comments on its proposed matching control number (“CONNUM”) characteristics. From July 7 through 26, 2004, the Department received comments on its proposed product-CONNUM characteristics (“CONNUM characteristics”) from the Petitioners and from the following PRC exporters of the subject merchandise: Hebei Jiheng Chemical Co., Ltd. (“Jiheng”); Nanning Chemical Industry Co., Ltd. (“Nanning”); Liaocheng Huaao Chemical Industry Co., Ltd. (“Huaao”); Shanghai Tian Yuan International Trading Co., Ltd., (“Tian Yuan”); and Changzhou Clean Chemical Co., Ltd. (“Clean Chemical”).

On July 21, 2004, Jiheng placed on the record of the companion investigation involving chlorinated isocyanurates from Spain its July 16, 2004, CONNUM comments submitted in this proceeding.

Quantity and Value Questionnaires

On June 15, 2004, the Department requested quantity and value (“Q&V”) information from a total of 18 producers of chlorinated isocyanurates in the PRC which were identified in the Petition and other sources and for which the Department was able to locate contact information. On June 15, 2004, the Department also sent a letter to the Government of the PRC requesting assistance locating all known producers/exporters of chlorinated isocyanurates in the PRC which exported chlorinated isocyanurates to the United States during the period October 1, 2003, through March 31, 2004.

On June 30, July 1 and 2, 2004, the Department received Q&V responses from seven PRC producers/exporters of chlorinated isocyanurates. The Department did not receive any type of communication from the Government of the PRC in response to its June 15, 2004, letter.

On July 20, 2004, the Department issued its respondent selection memorandum, selecting Jiheng and Nanning as mandatory respondents in this investigation. See Memorandum to Edward Yang, Director, from James Doyle, Program Manager, Re: Selection of Respondents for the Antidumping Duty Investigation of Chlorinated Isocyanurates from the People's Republic of China (“Respondent Selection Memo”) at 4, dated July 20, 2004, which is on file in CRU. See the “Selection of Respondents” section below for further detail.

Mandatory Respondents

On July 20, 2004, the Department issued its Section A questionnaire to Jiheng and Nanning. On July 20, 2004, we also issued a Section A questionnaire to the Government of the PRC (i.e., Ministry of Commerce).

On July 22, 2004, the Department issued its Sections C and D questionnaire to Jiheng and Nanning. On July 23, 2004, the Department issued a Section E and a “Non-market Economy” version of the Section D questionnaire to Jiheng and Nanning because the Department had inadvertently issued a “Market Economy” version Section D questionnaire on July 22, 2004.

On August 23, 2004, the Department granted Jiheng and Nanning a one-week extension of time until September 2, 2004, to submit their Section A questionnaire responses, which they submitted in a timely manner. Additionally, we provided a two-week extension to the two mandatory respondents to respond to sections C and D of our questionnaire, which they submitted on September 10 and 13, 2004, respectively.

On September 2 and 9, 2004, the Department issued supplemental Section A questionnaires to Nanning and Jiheng, respectively. The Department granted a one-week extension to Nanning and Jiheng to submit their supplemental Section A questionnaire responses, which they submitted on September 17 and 23, 2004, respectively.

On October 14 and 18, 2004, the Department issued supplemental Section A, C, and D questionnaires to Jiheng and Nanning, respectively. The Department granted a one-week extension to Nanning and Jiheng to submit their supplemental Section A, C, and D questionnaire responses, which they submitted on November 5 and 8, 2004, respectively.

On November 5, 2004, Jiheng submitted revised business proprietary and public versions for its bracketing and public summarizations provided in its September 10, 2004, Section C and D questionnaire response.

On November 10 and 12, 2004, the Department issued a second supplemental Section C and D questionnaire to Nanning and Jiheng, respectively. Nanning submitted its response on November 17, 2004. Jiheng submitted a portion of its response on November 19, 2004 (and the remaining portion on December 10, 2004, in accordance with the Department's instructions).

On November 23, 2004, Jiheng submitted, among other things, a revised U.S. sales database, previously unreported factors of production data for certain additional by-products which it now claims it self-produced, and proposed surrogate values for these by-products. On November 29, 2004, the Petitioners filed comments on Jiheng's November 23, 2004, submission. On December 7, 2004, Jiheng submitted rebuttal comments to the Petitioner's November 29, 2004, letter. Because Jiheng's November 23, 2004, submission was received so close to the date of the preliminary determination, we are unable to consider it for the preliminary determination. However, we intend to examine the information in the submission and will consider how to treat it for the final determination.

Section A Respondents

In August 2004, the Department received an extension request from the following five companies who wished to submit voluntary Section A questionnaire responses (hereafter known as “Section A Respondents”): Sinochem Hebei Import & Export Corporation (“Sinochem Hebei”), Sinochem Shanghai Import & Export Corporation (“Sinochem Shanghai”), Clean Chemical, Huaao, and Tian Yuan. On August 23, 2004, the Department granted certain Section A Respondents a one-week extension to submit their Section A questionnaire responses. From August 26 to September 3, 2004, we received Section A questionnaire responses from all Section A Respondents.

From September 3 through 9, 2004, the Department issued supplemental Section A questionnaires to Clean Chemical, Sinochem Shanghai, Sinochem Hebei, Huaao, and Tian Yuan, respectively. The Department granted a one-week extension to all Section A Respondents for submitting a response to its supplemental Section A questionnaire and received responses from all five Section A Respondents from September 17 to September 23, 2004.

Surrogate Country and Factors

On July 1, 2004, the Department determined that India is among the countries comparable to the PRC in terms of overall economic development to use in this investigation. On July 12, 2004, the Department solicited comments on surrogate country selection from interested parties. On July 26, 2004, we received comments regarding our selection of a surrogate country from Jiheng, Nanning, Huaao, and Tian Yuan, and the Petitioners. See the “Surrogate Country” Section below for further detail.

On August 23, 2004, we received requests from Jiheng, Nanning, Huaao, and Tian Yuan for a two-week extension until September 9, 2004, to submit surrogate-value information. In addition, on September 3, 2004, the Petitioners requested an extension until September 17, 2004, to submit factor valuation information. On September 8, 2004, we extended the time period for all interested parties to provide surrogate values for the factors of production until September 15, 2004.

On September 15, 2004, we received surrogate-value information from Jiheng, Nanning, and the Petitioners. Jiheng and the Petitioners also submitted surrogate financial data from Indian companies. For a detailed discussion of the Department's selection of surrogate values and financial ratios, see “Factor Valuation” Section below. See also Memorandum from Steve Winkates, Case Analyst, to Brian C. Smith, Program Manager, Re: Investigation of Chlorinated Isocyanurates from the People's Republic of China—Factors Valuation for the Preliminary Determination (“Factor Valuation Memo”), dated December 10, 2004, which is on file in CRU.

On November 24, 2004, Jiheng submitted additional surrogate-value information which the Department was unable to consider for use in the preliminary determination. We will consider it for the final determination.

Pre-Preliminary Determination Comments

On November 29, 2004, the Petitioners requested that the Department reject Jiheng's November 23, 2004, submission as untimely unsolicited new factual information in accordance with 19 CFR 351.301 and remove it from the record of this proceeding. On December 7, 2004, Jiheng submitted rebuttal comments to the Petitioner's November 29, 2004, letter. As discussed above in the “Mandatory Respondents” section of this notice, because Jiheng's November 23, 2004, submission was received so close to the date of the preliminary determination, we are unable to consider it for the preliminary determination. However, we intend to examine the information in the submission and will consider how to treat it for the final determination.

Postponement of Final Determination

Section 735(a) of the Act provides that a final determination may be postponed until no later than 135 days after the date of the publication of the preliminary determination if, in the event of an affirmative preliminary determination, a request for such postponement is made by exporters who account for a significant proportion of exports of the subject merchandise or, in the event of a negative preliminary determination, a request for such postponement is made by the petitioners. In accordance with the Department's regulations, any requests by respondents for a postponement of a final determination must be accompanied by a request for an extension of the provisional measures from a four-month period to not more than six months. See 19 CFR 351.210(e)(2).

On November 24 and 30, 2004, Nanning and Jiheng requested that, in the event of an affirmative preliminary determination in this investigation, the Department postpone its final determination until 135 days after the publication of the preliminary determination. Both requests included a request to extend the provisional measures to not more than six months after the publication of the preliminary determination. Accordingly, because we have made an affirmative preliminary determination and the requesting parties account for a significant proportion of the exports of the subject merchandise, we have postponed the final determination until no later than 135 days after the date of publication of the preliminary determination and are extending the provisional measures accordingly as requested by Jiheng and Nanning.

Period of Investigation

The period of investigation (“POI”) is October 1, 2003, through March 31, 2004. This period corresponds to the two most recent fiscal quarters prior to the month of the filing of the Petition (May 14, 2004). See 19 CFR 351.204(b)(1).

Scope of Investigation

The products covered by this investigation are chlorinated isocyanurates. Chlorinated isocyanurates are derivatives of cyanuric acid, described as chlorinated s-triazine triones. There are three primary chemical compositions of chlorinated isocyanurates: (1) Trichloroisocyanuric acid (Cl₃ (NCO)₃), (2) sodium dichloroisocyanurate (dihydrate) (NaCl₂ (NCO)₃· 2H₂ O), and (3) sodium dichloroisocyanurate (anhydrous) (NaCl₂ (NCO)₃). Chlorinated isocyanurates are available in powder, granular, and tableted forms. These investigations cover all chlorinated isocyanurates.

Chlorinated isocyanurates are currently classifiable under subheading 2933.69.6050 of the Harmonized Tariff Schedule of the United States (“HTSUS”). This tariff classification represents a basket category that includes chlorinated isocyanurates and other compounds including an unfused triazine ring. Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the scope of this investigation is dispositive.

As stated above in the “Scope Comments” Section of this notice, Arch's patented chlorinated isocyanurates tablet is also included in the scope of this investigation.

Selection of Respondents

Section 777A(c)(1) of the Act directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. Section 777A(c)(2) of the Act provides the Department discretion, when faced with a large number of exporters/producers, however, to limit its examination to a reasonable number of such companies if it is not practicable to examine all companies. Where it is not practicable to examine all known producers/exporters of subject merchandise, this provision permits the Department to investigate either (1) a sample of exporters, producers, or types of products that is statistically valid based on the information available to the Department at the time of selection or (2) exporters/producers accounting for the largest volume of the merchandise under investigation that can reasonably be examined. After considering the current available resources of the Department, the Department determined that it was not practicable in this investigation to examine all known producers/exporters of subject merchandise. See Respondent Selection Memo at 2. Instead, we limited our examination to the two exporters and producers accounting for the largest volume of the subject merchandise pursuant to section 777A(c)(2)(B) of the Act. Because the PRC producers/exporters, Jiheng and Nanning, accounted for a significant percentage of all exports of the subject merchandise from the PRC during the POI, the Department selected these two companies as mandatory respondents. See Respondent Selection Memo at 4.

Non-Market Economy Country

For purposes of initiation, the Petitioners submitted LTFV analyses for the PRC as a non-market economy (“NME”). See Initiation Notice, 69 FR at 32489. In every case conducted by the Department involving the PRC, the Department has treated the PRC 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 also Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Circular Welded Carbon Quality Line Pipe from the People's Republic of China, 69 FR 60353, 60354 (October 8, 2004). When the Department is investigating imports from an NME, section 773(c)(1) of the Act directs us to base the normal value on the NME producer's factors of production, valued in an economically comparable market economy that is a significant producer of comparable merchandise. The sources of individual factor prices are discussed under the “Factor Valuations” section, below.

Surrogate Country

When the Department is investigating imports from an NME country, section 773(c)(1) of the Act directs it to base normal value (“NV”), in most circumstances, on the NME producer's factors of production, 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 factors of production in one or more market-economy countries that are at a level of economic development comparable to that of the NME country and are significant producers of comparable merchandise. The sources of the surrogate values we have used in this investigation are discussed under the NV section below.

The Department determined that India, Indonesia, Sri Lanka, the Philippines, Morocco, and Egypt are countries comparable to the PRC in terms of economic development. See Memorandum to James Doyle, Program Manager, from Ron Lorentzen, Acting Director, Office of Policy, Re: Antidumping Duty Investigation on Chlorinated Isocyanurates from the People's Republic of China (“Surrogate Country Memo”), dated July 10, 2004, which is on file in CRU.

On July 26, 2004, we received comments regarding our selection of a surrogate country from Jiheng, Nanning, Huaao, Tian Yuan, and the Petitioners. Jiheng stated that it is unable to find a suitable surrogate country for use in the Department's factors-of-production analysis for chlorinated isocyanurates. According to Jiheng, India is a deficient choice as surrogate country for a number of reasons: (1) India does not produce chlorinated isocyanurates; (2) although the petition proposed calcium hypochlorite as an appropriate comparable merchandise for chlorinated isocyanurates, the appropriateness of calcium hypochlorite as comparable merchandise to chlorinated isocyanurates has not been established; and (3) there is a lack of adequate appropriate Indian price data to value the factors of production of chlorinated isocyanurates. Although Jiheng did not propose another proper surrogate country, Jiheng contends that the search for an appropriate surrogate should not stop with India and it reserves the right to comment further on this issue during the course of this proceeding. Nanning, Huaao, and Tian Yuan state that none of the five countries proposed by the Department manufactures chlorinated isocyanurates. They claim that the only similarly situated country which produces the subject merchandise is Mexico. However, they did not propose that we use Mexico for this proceeding. The Petitioners state that India is the appropriate market-economy surrogate for the PRC in the chlorinated isocyanurates investigation and urge the Department to select India as the surrogate country. The Petitioners did not rebut Nanning, Huaao, and Tian Yuan's comment regarding the Mexico claim.

We select an appropriate surrogate country based on the availability and reliability of data from the countries. See Department Policy Bulletin No. 04.1: Non-Market Economy Surrogate Country Selection Process, dated March 1, 2004. In this case, we find that India is at a similar level of economic development pursuant to section 773(c)(4) of the Act. See Surrogate Country Memo at 2. Although none of the six surrogate countries produces merchandise identical to chlorinated isocyanurates, data placed on the record of this investigation indicates that calcium hypochlorite is comparable to the subject merchandise because calcium hypochlorite, like chlorinated isocyanurates, has a similar chemical makeup (i.e., chlorine) and similar applications (i.e., both are used to sanitize swimming pools). See Initiation Notice and the Petitioners' May 14, 2004, antidumping duty petition at page 10 (which cites Calcium Hypochlorite from Japan SITC Inv. No. 731-TA-189 (Final), Pub. No. 1672 at 2 (April 1985)). Furthermore, data placed on the record of this investigation also indicates that India is a significant producer of calcium hypochlorite. See also Surrogate Country Memo at Attachment 4. Therefore, we find that India is a significant producer of comparable merchandise pursuant to section 773(c)(4)(B) of the Act. Accordingly, we have preliminarily selected India as the surrogate country for purposes of valuing the factors of production because it meets the Department's criteria for surrogate country selection.

Separate Rates

In proceedings involving NME countries, the Department has a rebuttable presumption that all companies within the country are subject to government control and thus should be assessed a single antidumping duty rate. It is the Department's policy to assign all exporters of merchandise subject to investigation in an NME country this single rate unless an exporter can demonstrate that it is sufficiently independent so as to be entitled to a separate rate. The two mandatory respondents and the Section A Respondents have provided company-specific information and each has stated that it has met the standards for the assignment of a separate rate.

We have considered whether each mandatory and Section A Respondent noted above is eligible for a separate rate. The Department's separate rates test is not concerned, in general, with macroeconomic/border-type controls (e.g., export licenses, quotas, and minimum export prices, particularly if these controls are imposed to prevent dumping). The test focuses, rather, on controls over the investment, pricing, and output decisionmaking process at the individual firm level. See Certain Cut-to-Length Carbon Steel Plate from Ukraine: Final Determination of Sales at Less than Fair Value, 62 FR 61754, 61757 (November 19, 1997); and Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 62 FR 61276, 61279 (November 17, 1997).

To establish whether a company is sufficiently independent from government control of its export activities to be entitled to a separate rate, the Department analyzes each entity exporting the subject merchandise under a test established in Notice of Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) (“Sparklers”), and later expanded upon in 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”). In accordance with the separate-rates criteria, the Department assigns separate rates in NME cases only if respondents can demonstrate the absence of both de jure and de facto government control over export activities.

1. 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) other formal measures by the government decentralizing control of companies. See Sparklers, 56 FR at 20589.

Our analysis shows that the evidence on the record supports a preliminary finding of de jure absence of government control based on the following: (1) An absence of restrictive stipulations associated with the individual exporter's business and export licenses; (2) the applicable legislative enactments decentralizing control of the companies; and (3) any other formal measures by the government decentralizing control of companies. See Memorandum to James C. Doyle, Director, from Hallie Zink, Case Analyst, Re: Chlorinated Isocyanurates from the People's Republic of China: Separate Rates for Producers/Exporters that Submitted Questionnaire Responses (“Separate Rates Memo”), dated December 10, 2004, which is on file in CRU.

2. Absence of De Facto Control

Typically the Department considers four factors in evaluating whether each respondent is subject to de facto government control of its export functions: (1) Whether the export prices are set by, or are subject to the approval of, a government agency; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether the respondent retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of losses. See Silicon Carbide, 59 FR at 22586-87; 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). The Department has determined that an analysis of de facto control is critical in determining whether respondents are, in fact, subject to a degree of government control which would preclude the Department from assigning separate rates.

We determine that, for the mandatory respondents and Section A Respondents, the evidence on the record supports a preliminary finding of de facto absence of government control based on record statements and supporting documentation showing the following: (1) Each exporter sets its own export prices independent of the government and without the approval of a government authority; (2) each exporter retains the proceeds from its sales and makes independent decisions regarding disposition of profits or financing of losses; (3) each exporter has the authority to negotiate and sign contracts and other agreements; and (4) each exporter has autonomy from the government regarding the selection of management.

Therefore, the evidence placed on the record of this investigation by the mandatory respondents and Section A Respondents demonstrates an absence of government control, both in law and in fact, with respect to each of the exporter's exports of the merchandise under investigation, in accordance with the criteria identified in Sparklers and Silicon Carbide. As a result, for the purposes of this preliminary determination, we have granted separate, company-specific rates to the mandatory respondents and Section A Respondents which shipped chlorinated isocyanurates to the United States during the POI (see Separate Rates Memo for a full discussion of this issue and list of Section A Respondents).

PRC-Wide Rate

Information on the record indicates that there are more known exporters of chlorinated isocyanurates from the PRC during the POI than those exporters who responded to our Q&V questionnaire. See Respondent Selection Memo. Although we issued the Q&V questionnaire to eighteen known PRC exporters of subject merchandise (as identified in the petition), we received seven Q&V questionnaire responses, including those from the two mandatory respondents. Also, on July 20, 2004, we issued a Section A questionnaire to the Government of the PRC (i.e., Ministry of Commerce). Although all known exporters were given an opportunity to provide information showing they qualify for separate rates, not all of these other exporters provided a response to the Department's Section A questionnaire. Further, the Government of the PRC did not respond to the Department's questionnaire. Therefore, the Department preliminarily determines that there were exports of the merchandise under investigation from other PRC producers/exporters, which have not demonstrated that they are separate from the government and, therefore, are considered part of the NME entity.

Section 776(a)(2) of the Act provides that, if an interested party: (A) Withholds information that has been requested by the Department; (B) fails to provide such information in a timely manner or in the form or manner requested, subject to subsections 782(c)(1) and (e) of the Act; (C) significantly impedes a determination under the antidumping statute; or (D) provides such information but the information cannot be verified, the Department shall, subject to subsection 782(d) of the Act, use facts otherwise available in reaching the applicable determination.

Pursuant to section 782(e) of the Act, the Department shall not decline to consider submitted information if all of the following requirements are met: (1) The information is submitted by the established deadline; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability; and (5) the information can be used without undue difficulties.

Information on the record of this investigation indicates that there are numerous producers/exporters of chlorinated isocyanurates in the PRC. As described above, all exporters were given the opportunity to respond to the Department's Section A questionnaire. Based upon information on the record concerning the volume of imports of subject merchandise from the PRC and the fact that the information indicates that the responding companies did not account for all imports into the United States from the PRC, we have preliminary determined that certain PRC exporters of chlorinated isocyanurates failed to respond to our questionnaires. As a result, use of adverse facts available (“AFA”) pursuant to section 776(a)(2)(A) of the Act is appropriate. Additionally, in this case, the Government of the PRC did not respond to the Department's questionnaire, thereby necessitating the use of AFA to determine the PRC-wide rate. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Wooden Bedroom Furniture from the People's Republic of China, 69 FR 35312, 35321 (June 24, 2004) (“Bedroom Furniture”).

Section 776(b) of the Act provides that, in selecting from among the facts available, the Department may employ adverse inferences if an interested party fails to cooperate by not acting to the best of its ability to comply with requests for information. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from the Russian Federation, 65 FR 5510, 5518 (February 4, 2000); see also “Statement of Administrative Action” accompanying the URAA, H.R. Rep. No. 103-316, 870 (1994) (“SAA”). We find that, because the NME entity did not respond to our request for information, it failed to cooperate to the best of its ability. Therefore, the Department preliminarily finds that, in selecting from among the facts available, an adverse inference is warranted.

Section 776(b) of the Act authorizes the Department to use AFA information derived from the petition, the final determination from the LTFV investigation, a previous administrative review, or any other information placed on the record. As AFA, we have assigned to the PRC-wide entity a margin based on a calculated margin derived from information obtained in the course of the investigation and placed on the record of this proceeding. In this case, we have applied a rate of 179.48 percent. Consequently, we are applying a single antidumping rate—the PRC-wide rate—to producers/exporters that failed to respond to the Q&V questionnaire or Section A questionnaire. This rate will also apply to exporters which did not demonstrate entitlement to a separate rate. See, e.g., Final Determination of Sales at Less Than Fair Value: Synthetic Indigo from the People's Republic of China, 65 FR 25706, 25707 (May 3, 2000). The PRC-wide rate applies to all entries of the merchandise under investigation except for entries from the two mandatory respondents and the Section A Respondents. Because this is a preliminary margin, the Department will consider all margins on the record at the time of the final determination for the purpose of determining the most appropriate final PRC-wide margin. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Saccharin from the People's Republic of China, 67 FR 79049, 79054 (December 27, 2002), and Preliminary Determination of Sales at Less Than Fair Value and Postponement of the Final Determination: Magnesium Metal From the People's Republic of China, 69 FR 59187, (October 4, 2004).

Margins for Section A Respondents

The exporters which submitted responses to Section A of the Department's antidumping questionnaire and had sales of the subject merchandise to the United States during the POI but were not selected as mandatory respondents in this investigation (i.e., the Section A Respondents) have applied for separate rates and provided information for the Department to consider for this purpose. Therefore, for the Section A Respondents which provided sufficient evidence that they are separate from the NME entity, we have established a weighted-average margin based on the rates we have calculated for the two mandatory respondents, excluding any rates that are zero, de minimis, or based entirely on AFA. Companies receiving this rate are identified by name in the “Suspension of Liquidation” section of this notice.

Date of Sale

Section 351.401(i) of the Department's regulations states that “in identifying the date of sale of the subject merchandise or foreign like product, the Secretary normally will use the date of invoice, as recorded in the exporter or producer's records kept in the normal course of business.” Nanning reported the invoice date as the date of sale. After examining the sales documentation placed on the record by Nanning, we preliminarily determine that the invoice date is the most appropriate date of sale for Nanning. Jiheng reported the shipment date as the date of sale because it claims that, for its U.S. sales of subject merchandise made during the POI, the material terms of sale were established on the shipment date and its shipment date was on or before the invoice date. We have preliminarily determined that the shipment date is the most appropriate date to use as Jiheng's date of sale in accordance with our long-standing practice. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Cold-Rolled Carbon Steel Flat Products From Brazil, 67 FR 31200 (May 9, 2002); Notice of Final Determination of Sales at Less Than Fair Value: Structural Steel Beams From Luxembourg, 67 FR 35488 (May 20, 2002); and Notice of Final Determinations of Sales at Less Than Fair Value: Certain Durum Wheat and Hard Red Spring Wheat from Canada, 68 FR 52741 (September 5, 2003).

Fair Value Comparisons

To determine whether sales of chlorinated isocyanurates to the United States of the two mandatory respondents were made at LTFV, we compared export price (“EP”) to NV, as described in the “U.S. Price” and “Normal Value” sections of this notice.

U.S. Price

In accordance with section 772(a) of the Act, we used EP for the two mandatory respondents because the subject merchandise was first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, and because the use of CEP was not otherwise indicated.

We calculated EP based on the packed FOB, C&F, or FCA price to unaffiliated purchasers in, or for exportation to, the United States. We made deductions, as appropriate, for any movement expenses (e.g., foreign inland freight from the plant to the port of exportation, domestic brokerage and handling charges, and international freight) in accordance with section 772(c)(2)(A) of the Act. Because foreign inland freight and foreign brokerage and handling fees were provided by PRC service providers or paid for in renminbi, we based those charges on surrogate rates from India. See “Surrogate Country” section above for further discussion of our surrogate-country selection. To value foreign inland trucking charges, we used Indian truck freight rates published in Chemical Weekly and distance information obtained from the following Web sites: http://www.infreight.com,, and http://www.sitaindia.com/Packages/CityDistance.php. To value foreign brokerage and handling expenses, we relied on 1999-2000 public information reported in the LTFV investigation on certain hot-rolled carbon steel flat products from India and placed on the record of this case. See Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products from India, 67 FR 50406 (October 3, 2001). For a detailed description of all adjustments, see the company-specific analysis memoranda dated December 10, 2004.

Normal Value

Section 773(c)(1) of the Act provides that the Department shall determine NV using a factors-of-production methodology if the merchandise is exported from an NME country 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 will base NV on the factors of production because the presence of government controls on various aspects of these economies renders price comparisons and the calculation of production costs invalid under its normal methodologies.

For purposes of calculating NV, we valued the PRC factors of production in accordance with section 773(c)(1) of the Act. Factors of production include, but are not limited to, hours of labor required, quantities of raw materials employed, amounts of energy and other utilities consumed, and representative capital costs, including depreciation. See Section 773(c)(3) of the Act. In examining surrogate values, we selected, where possible, the publicly available value which was an average non-export value, representative of a range of prices within the POI or most contemporaneous with the POI, product-specific, and tax-exclusive. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value, Partial Affirmative Determination of Critical Circumstances, and Postponement of Final Determination: Certain Frozen and Canned Warmwater Shrimp from the People's Republic of China, 69 FR 42654, 42666 (July 16, 2004) (“Warmwater Shrimp”). We used the usage rates reported by the respondents for materials, energy, labor, by-products, and packing. See Factor Valuation Memo for a more detailed explanation of the methodology used in calculating various surrogate values.

Factor Valuations

In accordance with section 773(c) of the Act, we calculated NV based on the factors of production reported by the respondents for the POI. To calculate NV, we multiplied the reported per-unit factor quantities by publicly available Indian surrogate values (except where noted below). In selecting the surrogate values, we considered the quality, specificity, and contemporaneity of the data. See also Warmwater Shrimp, 69 FR at 42666. 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 or the distance from the nearest seaport to the factory, 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 (Fed. Cir. 1997). Due to the extensive number of surrogate values it was necessary to assign in this investigation, we present a discussion of the main factors. For a detailed description of all surrogate values used for respondents, see Factor Valuation Memo. For a detailed description of all actual values used for market-economy inputs (i.e., Nanning's market-economy purchases of sodium chloride during the POI), see also the December 10, 2004, Nanning analysis memorandum.

Except where discussed below, we valued raw material inputs using October 2003-March 2004 weighted-average Indian import values derived from the World Trade Atlas online (“WTA”) (see also Factor Valuation Memo). The Indian import statistics we obtained from the WTA were published by the DGCI&S, Ministry of Commerce of India, which were reported in rupees and are contemporaneous with the POI. Indian surrogate values denominated in foreign currencies were converted to U.S. dollars using the applicable average exchange rate for India for the POI. The average exchange rate was based on exchange rate data from the Department's Web site. Where we could not obtain publicly available information contemporaneous with the POI with which to value factors, we adjusted the surrogate values for inflation using Indian wholesale price indices (“WPIs”) as published in the International Monetary Fund's International Financial Statistics.

Furthermore, with regard to both the Indian import-based surrogate values and the market-economy input 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 conclude that there is reason to believe or suspect all exports to all markets from these countries are subsidized. See Final Determination of Sales at Less Than Fair Value: Certain Helical Spring Lock Washers From The People's Republic, 61 FR 66255 (February 12, 1996), and accompanying Issues and Decision Memorandum at Comment 1. We are also directed by the legislative history not to conduct a formal investigation to ensure that such prices are not subsidized. See H.R. Rep. 100-576 at 590 (1988). Rather, Congress directed the Department to base its decision on information that is available to it at the time it makes its determination. Therefore, we have not used prices from these countries either in calculating the Indian import-based surrogate values or in calculating market-economy input values. In instances where a market-economy input was obtained solely from suppliers located in these countries, we used Indian import-based surrogate values to value the input. See Certain Hot-Rolled Carbon Steel Flat Products from Romania: Preliminary Results of Antidumping Duty Administrative Review, 69 FR 70644 (Dec. 7, 2004). Our practice of excluding subsidized prices has been upheld in China National Machinery Import and Export Corporation v. United States and the Timken Company, 293 F. Supp. 2d 1334 (CIT 2003), aff'd, 104 Fed. Appx. 183 (Fed. Cir. 2004). Because Nanning's reported purchase prices for sodium chloride during the POI were paid solely to suppliers located in a market-economy country which we have no reason to believe or suspect have been subsidized, we have used Nanning's reported market-economy purchase prices for this input in the preliminary determination.

Finally, imports that were labeled as originating from an “unspecified” country were excluded from the average value, because the Department could not be certain that they were not from either an NME or a country with general export subsidies.

Cyanuric Acid Surrogate Value

We used an October 2003-March 2004 Indian import value from WTA because we find that the Indian import data from WTA, unlike the Infodrive India data and Indian price quotes submitted for this input by the parties, ensures that the margins we calculate are as accurate as possible. See Bedroom Furniture, 69 FR at 35312, and accompanying Issues and Decision Memorandum at Comment 10.

Other Surrogate Values

To value chlorine gas and magnesium oxide, we used a January 2003-December 2003 weighted-average value based on imports of these inputs into the Philippines and Sri Lanka from WTA, because we find that the import value for these inputs into India and other possible surrogate countries is aberrational.

To value calcium chloride, hydrochloric acid and sulfuric acid, we used an average Indian domestic price based on October 2003-March 2004 data contained in Chemical Weekly. Because the domestic prices for calcium chloride and sulfuric acid from Chemical Weekly included Indian excise taxes, we adjusted those prices by subtracting excise taxes to derive tax-exclusive prices for these two inputs. See Factor Valuation Memo for further discussion.

To value water, we used the water tariff rate for the greater Municipality of Mumbai, India (“Mumbai Municipality”), that was formerly available on the Municipal Corporation of Greater Mumbai's Web site and was used in the Final Determination of Sales at Less Than Fair Value: Tetrahydrofurfuryl Alcohol From the People's Republic of China, 69 FR 34130 (June 18, 2004). See also http://www.mcgm.gov.in/Stat%20&%20Fig/Revenue.htm. The latest available data covers the period from February 2001 through November 2002. The cost of water during this period ranged from 1.0 to 35.00 Rs/1,000 liters (1,000 liters of water is equivalent to 1 cubic meter of water and 1 cubic meter of water is equivalent to 1 metric ton of water). We used the highest value from the water price range data from the Mumbai Municipality.

We valued electricity using the 2000 total average price per kilowatt hour for “Electricity for Industry” as reported in the International Energy Agency's publication, Energy Prices and Taxes, Second Quarter, 2002.

Section 351.408(c)(3) of the Department's regulations requires the use of a regression-based wage rate. Therefore, to value the labor input, the Department used the regression-based wage rate for the PRC published by Import Administration on our Web site. The source of the wage rate data is the Yearbook of Labour Statistics 2002, published by the International Labour Office (“ILO”), (Geneva: 2002), Chapter 5B: Wages in Manufacturing. See the Import Administration Web site: http://ia.ita.doc.gov/wages/02wages/02wages.html.

Both respondents reported certain by-products in producing the subject merchandise which each either re-sold or re-used to produce the subject merchandise during the POI. Therefore, in those instances where the respondent provided documentation to support its by-product claim, we allowed a recovery/by-product credit. Our treatment of by-products in this proceeding is in accordance with the Department's practice. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Steel Flat Products from the People's Republic of China, 66 FR 49632 (September 28, 2001), and accompanying Issues and Decision Memorandum at Comment 3.

To value packing materials, we used October 2003-March 2004 weighted-average Indian import values derived from WTA.

To value PRC inland freight for inputs shipped by truck, we used Indian freight rates published in the October 2003-March 2004 issues of Chemical Weekly and obtained distances between cities from the following Web sites: http://www.infreight.com and http://www.sitaindia.com/Packages/CityDistance.php.

To value factory overhead (“FOH”), selling, general & administrative (“SG&A”) expenses, and profit for Jiheng and Nanning, we used data from the 2002-2003 financial reports of Bihar Caustic & Chemicals Ltd. (“Bihar”) and Kanoria Chemicals Industries (“Kanoria”). The companies are Indian producers of caustic soda (i.e., an intermediate product used to produce chlorinated isocyanurates based on the information reported by the respondents in this proceeding in response to the Department's antidumping questionnaire). The Department is using these companies' expenses and profit because there are no Indian producers of the subject merchandise and because we were unable to obtain financial reports for Indian producers of calcium hypochlorite, which we consider merchandise comparable to chlorinated isocyanurates as discussed above in the “Surrogate Country” section of this notice. We derived the FOH, SG&A, and profit ratios by averaging the factory overhead costs, SG&A expenses, and profits, respectively, of both companies, Bihar and Kanoria.

Verification

As provided in section 782(i)(1) of the Act, we intend to verify the information upon which we will rely in making our final determination.

Preliminary Determination

The weighted-average dumping margins are as follows:

Disclosure

We will disclose the calculations performed within five days of the date of publication of this notice to parties in this proceeding in accordance with 19 CFR 351.224(b).

Suspension of Liquidation

In accordance with section 733(d) of the Act, we will instruct CBP to suspend liquidation of all entries of subject merchandise, entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We will instruct CBP to require a cash deposit or the posting of a bond equal to the weighted-average amount by which NV exceeds U.S. price, as indicated above for Jiheng, Nanning, the five Section A Respondents, and the NME entity. The suspension of liquidation will remain in effect until further notice.

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the ITC of the Department's preliminary affirmative determination of sales at LTFV. Section 735(b)(2) of the Act requires that the ITC make a final determination before the later of 120 days after the date of the Department's preliminary determination or 45 days after the Department's final determination whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of chlorinated isocyanurates, or sales (or the likelihood of sales) for importation, of the subject merchandise. Because we have postponed the deadline for our final determination to 135 days from the date of publication of this preliminary determination, the ITC will make its final determination within 45 days of our final determination.

Public Comment

Case briefs or other written comments may be submitted to the Assistant Secretary for Import Administration no later than seven days after the date of the final verification report issued in this proceeding and rebuttal briefs limited to issues raised in case briefs, no later than five days after the deadline date for case briefs. A list of authorities used and an executive summary of issues should accompany any briefs submitted to the Department. This 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. If a request for a hearing is made, we intend to hold the hearing three days after the deadline of submission of rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C. 20230, at a time and location to be determined. Parties should confirm by telephone the date, time, and location of the hearing two days before the scheduled date.

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 1870, within 30 days after the date of publication of this notice. See 19 CFR 351.310(c). Requests should contain the party's name, address, and telephone number, the number of participants, and a list of the issues to be discussed. At the hearing, each party may make an affirmative presentation only on issues raised in that party's case brief and may make rebuttal presentations only on arguments included in that party's rebuttal brief.

We will make our final determination no later than 135 days after the date of publication of this preliminary determination, pursuant to section 735(a)(2) of the Act.

This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act.