1-Hydroxyethylidene-1,1-Diphosphonic Acid From the People's Republic of China: Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 62470-62477 [E8-25032]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 73, Number 204 (Tuesday, October 21, 2008)]
[Notices]
[Pages 62470-62477]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-25032]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-934]


1-Hydroxyethylidene-1,1-Diphosphonic Acid From the People's 
Republic of China: Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

DATES: Effective Date: October 21, 2008.
SUMMARY: The Department of Commerce (the ``Department'') preliminarily 
determines that 1-hydroxyethylidene-1, 1-diphosphonic acid (``HEDP'') 
from the People's Republic of China (``PRC'') is being, or is likely to 
be, sold in the United States at less than fair value (``LTFV''), as 
provided in section 733 of the Tariff Act of 1930, as amended (the 
``Act''). The estimated dumping margins are shown in the ``Preliminary 
Determination Margins'' section of this notice.

FOR FURTHER INFORMATION CONTACT: Maisha Cryor or Shawn Higgins, AD/CVD 
Operations, Office 4, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
5831 and (202) 482-0679, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On March 19, 2008, the Department received a petition concerning 
imports of HEDP from the PRC filed in proper form by Compass Chemical 
International LLC (``Petitioner''). See ``Request for the Imposition of 
Antidumping Duties on Imports of 1-Hydroxyethylidene-1, 1-Diphosphonic 
Acid from the People's Republic of China and Republic of India,'' dated 
March 19, 2008 (``Petition''). The Department initiated an antidumping 
duty investigation of HEDP from the PRC on April 8, 2008. See 1-
Hydroxyethylidene-1, 1-Diphosphonic Acid From the Republic of India and 
the People's Republic of China: Initiation of Antidumping Duty 
Investigations, 73 FR 20023 (April 14, 2008) (``Initiation Notice'').
    On April 9, 2008, the Department requested quantity and value 
(``Q&V'') information from the 10 companies that are identified in the 
Petition as potential producers or exporters of HEDP from the PRC. See 
Exhibit AD-3 of the Petition. The Department received timely responses 
to its Q&V questionnaire from the following companies: Changzhou Wujin 
Fine Chemical Factory Co., Ltd. (``Wujin Fine Chemical''), Changzhou 
Kewei Fine Chemical Factory (``Kewei''), BWA Water Additives U.S. LLC 
(``BWA''), Nanjing University of Chemical Technology Changzhou Wujin 
Water Quality Stabilizer Factory Ltd. (``Wujin Water''), and Jiangsu 
Jianghai Chemical Group Co., Ltd (``Jiangsu Jianghai'').\1\ Six 
companies to which the Department sent the Q&V questionnaire received 
the questionnaire but did not respond. These non-responsive companies 
were Kelien Chemical Co., Ltd., Cathay Pigments/Advanced Chemical Ltd., 
Jiangyin Boxin Chemical Co., Ltd., Changzhou Kejia Chemical Co., Ltd., 
Shandong Taihe Water Treatment Co., Ltd., and Hebei Fuhui Water 
Treatment Co., Ltd. (``Non-Responsive Companies'').
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    \1\ Because Jiangsu Jianghai was not identified in the Petition 
as a potential producer or exporter of HEDP from the PRC, the 
Department did not send Jiangsu a Q&V questionnaire publicly 
available on our Web site for producers and exporters of HEDP from 
the PRC that were not named in the Petition.
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    On May 2, 2008, the International Trade Commission (``ITC'') 
preliminarily determined that there is a reasonable indication that an 
industry in the United States is materially injured by reason of 
imports of HEDP from the PRC. See 1-Hydroxyethylidene-1, 1-Diphosphonic 
Acid From China and India, Investigation Nos. 731-TA-1146 and 731-TA-
1147 (Preliminary), 73 FR 28507 (May 16, 2008).
    On May 30, 2008, the Department selected Wujin Water and Kewei as 
mandatory respondents and issued antidumping questionnaires to the 
companies. See Memorandum regarding ``Selection of Respondents in the 
Antidumping Investigation of 1-Hydroxyethylidene, 1-Diphosphonic Acid 
from the People's Republic of China,'' dated May 30, 2008 (``Respondent 
Selection Memorandum''). See also letter regarding ``Public Treatment 
of BWA's Supplier,'' dated April 14, 2008. Wujin Water submitted timely 
responses to the Department's antidumping questionnaire on June 23, 
2008, and July 25, 2008. On June 10, 2008, the Department received 
separate-rate applications from Jiangsu Jianghai, Wujin Fine Chemical, 
and Kewei. On June 25, 2008, Kewei notified the Department that it 
decided to no longer participate in this investigation, and did not 
intend to submit responses to the Department's antidumping 
questionnaire. See memorandum regarding ``Phone Conversation with 
Counsel to Changzhou Kewei Fine Chemical Factory Co., Ltd.,'' dated 
June 30, 2008 (``Kewei Withdrawal Memorandum'').
    The Department issued supplemental questionnaires to, and received 
responses from, Wujin Water, Wujin Fine Chemical, and Jiangsu Jianghai 
from June through October 2008. Petitioner submitted comments to the 
Department regarding Wujin Water's responses to sections C and D of the 
antidumping questionnaire in August and September 2008.
    On June 17, 2008, the Department released a memorandum to 
interested parties which listed potential surrogate countries and 
invited interested parties to comment on surrogate country and 
surrogate value selection. From June through September 2008, Petitioner 
and Wujin Water submitted comments on the appropriate surrogate country 
and surrogate values.

[[Page 62471]]

    On July 30, 2008, the Petitioner made a request for a 50-day 
postponement of the preliminary determination. On August 22, 2008, the 
Department extended this preliminary determination by fifty days. See 
1-Hydroxyethylidene-1, 1-Diphosphonic Acid From the Republic of India 
and the People's Republic of China: Postponement of Preliminary 
Determinations of Antidumping Duty Investigations, 73 FR 49646 (August 
22, 2008).

Period of Investigation

    The period of investigation (``POI'') is July 1, 2007, through 
December 31, 2007. This period corresponds to the two most recent 
fiscal quarters prior to the month of the filing of the petition, i.e., 
March 2008. See 19 CFR 351.204(b)(1).

Scope of the Investigation

    The merchandise covered by each of these investigations includes 
all grades of aqueous, acidic (non-neutralized) concentrations of 1-
hydroxyethylidene-1, 1-diphosphonic acid,\2\ also referred to as 
hydroxethlylidenediphosphonic acid, hydroxyethanediphosphonic acid, 
acetodiphosphonic acid, and etidronic acid. The CAS (Chemical Abstract 
Service) registry number for HEDP is 2809-21-4. The merchandise subject 
to these investigations is currently classified in the Harmonized 
Tariff Schedule of the United States (``HTSUS'') at subheading 
2931.00.9043. It may also enter under HTSUS subheading 2811.19.6090. 
While HTSUS subheadings are provided for convenience and customs 
purposes only, the written description of the scope of these 
investigations is dispositive.
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    \2\ C2H8O7P2 or 
C(CH3)(OH)(PO3H2)2.
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Scope Comments

    In accordance with the preamble to the Department's regulations, we 
set aside a period of time in our Initiation Notice for parties to 
raise issues regarding product coverage, and encouraged all parties to 
submit comments within 20 calendar days of publication of that notice. 
See Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 
19, 1997) and Initiation Notice. We received no comments regarding the 
scope of this investigation.

Non-Market Economy Treatment

    The Department considers the PRC to be a non-market economy 
(``NME'') country. In accordance with section 771(18)(c)(i) of the Act, 
any determination that a country is an NME country shall remain in 
effect until revoked by the administering authority. See Tapered Roller 
Bearings and Parts Thereof (TRBs), Finished and Unfinished, From the 
People's Republic of China: Preliminary Results of 2001-2002 
Administrative Review and Partial Rescission of Review, 68 FR 7500 
(February 14, 2003), unchanged in TRBs, Finished and Unfinished, From 
the People's Republic of China: Final Results of 2001-2002 
Administrative Review and Partial Rescission of Review, 68 FR 70488 
(December 18, 2003). The Department has not revoked the PRC's status as 
an NME country. Therefore, in this preliminary determination, we have 
treated the PRC as an NME country and applied our current NME 
methodology.

Selection of a Surrogate Country

    In antidumping proceedings involving NME countries, the Department, 
pursuant to section 773(c)(1) of the Act, will generally base normal 
value (``NV'') on the value of the NME producer's factors of 
production. 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 
merchandise comparable to the subject merchandise. The Department has 
determined that India, Indonesia, the Philippines, Colombia, and 
Thailand are countries that are at a level of economic development 
comparable to that of the PRC. See memorandum regarding ``Antidumping 
Duty Investigation of 1-Hydroxyethylidene-1, 1-Diphosphonic Acid from 
the People's Republic of China: Request for a List of Surrogate 
Countries,'' dated June 10, 2008 (``Policy Memorandum'').
    As noted above, during June through September, Petitioner and the 
respondent, Wujin Water, submitted comments on the appropriate 
surrogate country. Petitioner argues that India is the most appropriate 
surrogate country because the PRC and India share comparable levels of 
economic development and that India is a significant producer of 
merchandise comparable to HEDP. See Petitioner's July 15, 2008, 
submission at 2.
    The respondent agreed that India satisfies the statutory criteria 
for surrogate country selection because it is at a comparable level of 
economic development with the PRC and it is a significant producer of 
HEDP. See the respondent's July 15, 2008, submission at 2. However, the 
respondent asserts that there are also several potential flaws in using 
India as the surrogate country in this investigation. Specifically, the 
respondent states that there are complications associated with deriving 
surrogate values from an industry subject to an ongoing companion 
antidumping duty investigation, i.e., the antidumping duty 
investigation of HEDP from India. Id. at 2-3. In addition, the 
respondent contends that India imports highly specialized chemicals 
that are not representative of the overall prices of phosphate-based 
chemicals in India.\3\ Id. at 3. Further, the respondent argues that 
the Indian electricity surrogate value obtained from the International 
Energy Agency, which is based upon data from the year 2000, used by the 
Department in PRC antidumping cases should not be used in this 
investigation because it is outdated and based on a single examination 
of the Indian market prior to a restructuring of the sale and 
distribution of electricity in India. Id. The respondent states that 
because of the issues discussed above, the Department should review 
alternate surrogate countries to determine if they present fewer 
problems. Id. Regarding Indonesia, the Philippines, Colombia, and 
Thailand, the respondent states that these countries do not satisfy the 
statutory criteria because, although they are at a comparable level of 
economic development with the PRC, they are not significant producers 
of HEDP. Id. at 3-5. However, the respondent contends that these 
countries do possess other large and/or developing chemical industries. 
Id. Therefore, the respondent asserts that if India were to be 
precluded, the use of Indonesia, the Philippines, Colombia, or 
Thailand, and a similar, but not identical, chemical production 
industry, would satisfy section 773(c)(4) of the Act. Id.
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    \3\ Phosphate-based chemicals are a major component of the 
chemical make-up of HEDP. See Petition at 12.
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    After evaluating interested parties' comments, the Department 
selected India as the surrogate country for this investigation. See 
Memorandum from Maisha Cryor, Senior International Trade Compliance 
Analyst, to Abdelali Elouaradia, Office Director, ``Antidumping Duty 
Investigation of 1-Hydroxyethylidene-1, 1-Diphosphonic Acid from the 
People's Republic of China: Selection of a Surrogate Country,'' dated 
August 22, 2008. The Department determined that: (1) India is at a 
level of economic development comparable to that of the PRC; and (2)

[[Page 62472]]

India is a significant producer of merchandise comparable to subject 
merchandise. Furthermore, on numerous occasions and without 
complication, the Department has selected India as the surrogate 
country when there have been companion antidumping duty investigations 
from the PRC and India. See, e.g., Notice of Final Determination of 
Sales at Less Than Fair Value, and Affirmative Critical Circumstances, 
In Part: Certain Lined Paper Products From the People's Republic of 
China, 71 FR 53079, 53082 (September 8, 2006); Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Frozen and 
Canned Warmwater Shrimp From the People's Republic of China, 69 FR 
70997, 71001 (December 8, 2004). Additionally, the respondent neither 
identified nor provided: (1) Evidence to demonstrate any complications 
that would arise from selecting India as the surrogate country in this 
investigation; and (2) an alternative Indian electricity source or a 
more suitable electricity source from Indonesia, the Philippines, 
Colombia, or Thailand. Moreover, the record indicates that India has 
readily-available and sufficient data which will allow the Department 
to use contemporaneous publicly-available data to value the factors of 
production.

Separate Rates

    In the Initiation Notice, the Department notified parties of the 
application process by which exporters and producers may obtain 
separate-rate status in NME investigations. See Initiation Notice, 73 
FR at 20026. The process requires exporters and producers to submit a 
separate-rate status application. See Policy Bulletin 05.1: Separate-
Rates Practice and Application of Combination Rates in Antidumping 
Investigations involving Non-Market Economy Countries, (April 5, 2005), 
(``Policy Bulletin 05.1'') available at https://ia.ita.doc.gov.\4\ 
However, the standard for eligibility for a separate rate, which is 
whether a firm can demonstrate an absence of both de jure and de facto 
governmental control over its export activities, has not changed.
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    \4\ Policy Bulletin 05.1 states: ``While continuing the practice 
of assigning separate rates only to exporters, all separate rates 
that the Department will now assign in its NME investigations will 
be specific to those producers that supplied the exporter during the 
period of investigation. Note, however, that one rate is calculated 
for the exporter and all of the producers which supplied subject 
merchandise to it during the period of investigation. This practice 
applied both to mandatory respondents receiving an individually 
calculated separate rate as well as the pool of non-investigated 
firms receiving the weighted-average of the individually calculated 
rates. This practice is referred to as the application of 
``combination rates'' because such rates apply to specific 
combinations of exporters and one or more producers. The cash-
deposit rate assigned to an exporter will apply only to merchandise 
both exported by the firm in question and produced by a firm that 
supplied the exporter during the period of investigation.'' See 
Policy Bulletin 05.1 at 6.
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    In proceedings involving NME countries, the Department begins with 
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. 
Exporters can demonstrate this independence through the absence of both 
de jure and de facto governmental control over export activities. The 
Department analyzes each entity exporting the subject merchandise under 
a test arising from the Final Determination of Sales at Less Than Fair 
Value: Sparklers From the People's Republic of China, 56 FR 20588 (May 
6, 1991) (``Sparklers''), as further developed 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-rate criteria, the 
Department assigns separate rates in NME cases only if respondents can 
demonstrate the absence of both de jure and de facto governmental 
control over export activities.
    In this case, Kewei submitted a separate rate response on June 10, 
2008. However, as noted above, on June 25, 2008, Kewei notified the 
Department that it would no longer participate in the investigation. 
Since Kewei's withdrawal prevented the Department from asking 
additional supplemental questions on its separate rate status, and 
prevents the Department from verifying its response, the Department has 
no basis upon which to grant Kewei a separate rate. Although Kewei 
remains a mandatory respondent, the Department considers Kewei part of 
the PRC-wide entity because it failed to demonstrate that it qualifies 
for a separate rate.
    The other mandatory respondent, Wujin Water, and both separate rate 
applicants, Jiangsu Jianghai and Wujin Fine Chemical, stated that they 
are wholly Chinese-owned companies. Therefore, the Department must 
analyze whether the respondent and separate rate applicants can 
demonstrate the absence of both de jure and de facto governmental 
control over export activities. Each company provided company-specific 
information to demonstrate that it operates free from de jure and de 
facto government control, and therefore, is entitled to a separate 
rate.

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.
    The evidence provided by Wujin Water, Jiangsu Jianghai, and Wujin 
Fine Chemical indicates that there are no restrictive stipulations 
associated with their exporter and/or business licenses and that there 
are legislative enactments decentralizing control of the companies. The 
Department's analysis of the record evidence supports a preliminary 
finding of absence of de jure control. See ``Separate Rate Application 
from Jiangsu Jianghai Chemical Group Co., Ltd.,'' dated June 10, 2008 
(``Jiangsu Jianghai SRA''); ``Separate Rate Application from Changzhou 
Wujin Fine Chemical Factory Co., Ltd.,'' dated June 10, 2008 (``Wujin 
Fine Chemical SRA''); and ``Response to Section A by Nanjing University 
of Chemical Technology Changzhou Wujin Water Quality Stabilizer 
Factory,'' dated June 21, 2008 (``Wujin Water Section A'').

Absence of De Facto Control

    Typically the Department considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by or are 
subject to the approval of a governmental 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

[[Page 62473]]

analysis of de facto control is critical in determining whether 
respondents are, in fact, subject to a degree of governmental control 
which would preclude the Department from assigning separate rates.
    In this case, we determine that the evidence on the record supports 
a preliminary finding of de facto absence of governmental control with 
respect to Wujin Water, Jiangsu Jianghai, and Wujin Fine Chemical based 
on record statements and supporting documentation showing that the 
companies: (1) Set their own export prices independent of the 
government and without the approval of a government authority; (2) 
retain their proceeds from sales and make independent decisions 
regarding disposition of profits or financing of losses; (3) have the 
authority to negotiate and sign contracts and other agreements; and (4) 
have autonomy from the government regarding the selection of 
management. See Jiangsu Jianghai SRA; Wujin Fine Chemical SRA; and 
Wujin Water Section A.
    The evidence placed on the record of this investigation by Wujin 
Water, Jiangsu Jianghai, and Wujin Fine Chemical demonstrates an 
absence of de jure and de facto government control with respect to 
these exporters' exports of the merchandise under investigation, in 
accordance with the criteria identified in Sparklers and Silicon 
Carbide. Therefore, we have granted a separate rate to all three 
exporters. Specifically, Wujin Water will receive its own calculated 
weighted-average margin. For Jiangsu Jianghai and Wujin Fine Chemical, 
we have granted these exporters a weighted-average margin based on the 
experience of mandatory respondents and excluding any de minimis or 
zero rates or rates based on total adverse facts available (``AFA'') 
for the purposes of this preliminary determination. Since Wujin Water 
is receiving a calculated margin above de minimis, and Kewei is 
receiving a margin based upon total AFA, see ``Adverse Facts 
Available'' section below, we have assigned Wujin Water's margin to the 
separate rate companies. Therefore, we have assigned 24.30 percent as 
the rate applicable to Jiangsu Jianghai and Wujin Fine Chemical.

Adverse Facts Available

    Sections 776(a)(1) and (2) of the Act provide that the Department 
shall apply ``facts otherwise available'' if, inter alia, necessary 
information is not on the record or an interested party: (A) Withholds 
information requested by the Department, (B) fails to provide such 
information by the deadline, or in the form or manner requested, (C) 
significantly impedes a proceeding, or (D) provides information that 
cannot be verified, as provided by section 782(i) of the Act.
    Where the Department determines that a response to a request for 
information does not comply with the request, section 782(d) of the Act 
provides that the Department will so inform the party submitting the 
response and will, to the extent practicable, provide that party the 
opportunity to remedy or explain the deficiency. If the party fails to 
remedy the deficiency within the applicable time limits and, subject to 
section 782(e) of the Act, the Department may disregard all or part of 
the original and subsequent responses, as appropriate. 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.
    On June 25, 2008, Kewei informed the Department that it would no 
longer participate in the instant investigation. See Kewei Withdrawal 
Memorandum. Because Kewei failed to submit a response to sections A, C, 
and D of the Department's antidumping duty questionnaire, it failed to 
provide information requested by the Department. Furthermore, by ending 
its participation, Kewei denied the Department the ability to ask 
supplemental questions and conduct its verification of responses. 
Verification is integral to the Department's analysis because it allows 
the Department to validate that it is relying upon accurate and 
complete information, and calculating dumping margins as accurately as 
possible. By refusing to provide requested information and withdrawing 
from the investigation, Kewei significantly impeded the proceeding. 
Moreover, by not allowing verification, Kewei failed to demonstrate 
that it operates free of government control and that it is entitled to 
a separate rate. Therefore, we find that Kewei has not demonstrated its 
entitlement to a separate rate, and consequently, we are treating it as 
part of the PRC-wide entity. Moreover, because Kewei, which is part of 
the PRC-wide entity, failed to respond to our questionnaire, we find 
that the use of facts available, pursuant to sections 776(a)(2)(A), 
(C), and (D), is appropriate in determining the applicable dumping 
margin for the PRC-wide entity.
    Although PRC exporters of subject merchandise to the United States 
were given an opportunity to provide Q&V information to the Department, 
not all exporters responded to the Department's request for Q&V 
information.\5\ Based upon our knowledge of the volume of imports of 
subject merchandise from the PRC, we have concluded that the companies 
that responded to the Q&V questionnaire do not account for all U.S. 
imports of subject merchandise from the PRC made during the POI. We 
have treated the non-responsive PRC producers/exporters as part of the 
PRC-wide entity because they did not qualify for a separate rate.
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    \5\ Of the 10 Q&V questionnaires the Department sent to 
potential exporters identified in the petition, the Department 
received only four timely responses. The record indicates the 
questionnaires were received by the Non-Responsive Companies. See 
Respondent Selection Memorandum and ``Background'' section above.
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    As noted above, the PRC-wide entity, including Kewei and the Non-
Responsive Companies, withheld information requested by the Department. 
As a result, pursuant to section 776(a)(2)(A) of the Act, we find it 
appropriate to base the PRC-wide dumping margin on facts available. See 
Notice of Preliminary Determination of Sales at Less Than Fair Value, 
Affirmative Preliminary Determination of Critical Circumstances and 
Postponement of Final Determination: Certain Frozen Fish Fillets From 
the Socialist Republic of Vietnam, 68 FR 4986 (January 31, 2003), 
unchanged in Notice of Final Antidumping Duty Determination of Sales at 
Less Than Fair Value and Affirmative Critical Circumstances: Certain 
Frozen Fish Fillets from the Socialist Republic of Vietnam, 68 FR 37116 
(June 23, 2003).
    Section 776(b) of the Act provides that, in selecting from among 
the facts otherwise available, the Department may employ an adverse 
inference 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 Uruguay Round Agreements Act, 
H.R. Rep. No. 103-316, Vol. I at 843 (1994) (``SAA''), reprinted in 
1994 U.S.C.C.A.N. 4040 at 870. Because the PRC-wide entity did not 
respond to the Department's request

[[Page 62474]]

for information, the Department has concluded that the PRC-wide entity, 
including Kewei and the Non-Responsive Companies, 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 appropriate.
    Section 776(b) of the Act authorizes the Department to use, as 
adverse facts available: (1) Information derived from the petition; (2) 
the final determination from the LTFV investigation; (3) a previous 
administrative review; or (4) any other information placed on the 
record. In selecting a rate for AFA, the Department selects one that is 
sufficiently adverse ``as to effectuate the purpose of the facts 
available rule to induce respondents to provide the Department with 
complete and accurate information in a timely manner.'' See Notice of 
Final Determination of Sales at Less Than Fair Value: Static Random 
Access Memory Semiconductors From Taiwan, 63 FR 8909 (February 23, 
1998). It is the Department's practice to select, as AFA, the higher 
of: (a) The highest margin alleged in the petition or (b) the highest 
calculated rate for any respondent in the investigation. See Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Flat-Rolled Carbon Quality Steel Products From the People's Republic of 
China, 65 FR 34660 (May 31, 2000) and accompanying Issues and Decisions 
Memorandum at ``Facts Available.'' In this case, the dumping margin 
alleged in the petition, as adjusted by the Department for initiation, 
is 72.42 percent. Since the dumping margin derived from the Petition, 
as revised by the Department, is higher than the calculated weighted-
average margin for mandatory respondent Wujin Water, we examined 
whether it was appropriate to base the PRC-wide dumping margin on the 
secondary information in the Petition.
    When the Department relies on secondary information, rather than 
information obtained in the course of an investigation, section 776(c) 
of the Act requires it to, to the extent practicable, corroborate that 
information from independent sources reasonably at its disposal.\6\ The 
SAA also states that the independent sources may include published 
price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation. See SAA at 870.
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    \6\ Secondary information is described in the SAA as 
``information derived from the petition that gave rise to the 
investigation or review, the final determination concerning subject 
merchandise, or any previous review under section 751 concerning the 
subject merchandise.'' See SAA at 870.
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    The SAA also clarifies that ``corroborate'' means that the 
Department will satisfy itself that the secondary information to be 
used has probative value. See SAA at 870. To corroborate secondary 
information, the Department will, to the extent practicable, examine 
the reliability and relevance of the information used. See Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, 
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, 
and Components Thereof, From Japan: Preliminary Results of Antidumping 
Duty Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 57391, 57392 (November 6, 1996), unchanged in Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, 
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, 
and Components Thereof, From Japan: Final Results of Antidumping Duty 
Administrative Reviews and Termination in Part, 62 FR 11825 (March 13, 
1997).
    To corroborate the Petition margin, we compared the U.S. prices and 
normal values calculated for Wujin Water to the U.S. prices and normal 
values alleged in the Petition. Based on this comparison, we have 
preliminarily corroborated the 72.42 percent dumping margin derived 
from information contained in the Petition. See Memorandum from Maisha 
Cryor, Senior International Trade Compliance Analyst, to the File, 
``Corroboration of the PRC-Wide Facts Available Rate for the 
Preliminary Determination in the Antidumping Duty Investigation of 1-
Hydroxyethylidene-1, 1-Diphosphonic Acid from the People's Republic of 
China,'' dated concurrently with this notice. The dumping margin for 
the PRC-wide entity applies to all entries of the merchandise under 
investigation except for entries of subject merchandise from Wujin 
Water, Jiangsu Jianghai, and Wujin Fine Chemical.

Fair Value Comparisons

    To determine whether Wujin Water sold HEDP to the United States at 
LTFV, we compared the weighted-average export price (``EP'') of the 
HEDP to the NV of the HEDP, 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 based the U.S. 
price of sales on EP because the first sale to unaffiliated purchasers 
was made prior to importation and the use of constructed export price 
methodology was not otherwise warranted.
    In accordance with section 772(c) of the Act, we calculated EP by 
deducting, where applicable, the following expenses from the starting 
price (gross unit price) charged to the first unaffiliated customer in 
the United States: Foreign movement expenses, marine insurance, 
international freight, and foreign brokerage and handling expenses. For 
details regarding our EP calculation, see Memorandum from Maisha Cryor, 
Senior International Trade Compliance Analyst, to the File, ``1-
Hydroxyethylidene-1, 1-Diphosphonic Acid from the People's Republic of 
China--Preliminary Analysis Memorandum for Nanjing University of 
Chemical Technology Changzhou Wujin Water Quality Stabilizer Factory 
Ltd.,'' dated concurrently with this notice.
    We based these movement expenses on surrogate values where a PRC 
company provided the service and was paid in Renminbi (``RMB''). \7\ We 
valued foreign inland truck freight expenses using a per-unit average 
rate calculated from data on the following Web site: https://
www.infobanc.com/logistics/logtruck.htm. The logistics section of this 
Web site contains inland freight truck rates between many large Indian 
cities. Since this value is from a time period after the POI, we 
deflated the rate using the Indian Wholesale Price Index (``WPI'').\8\ 
See Memorandum from Maisha Cryor, Senior International Trade Compliance 
Analyst, to the File, ``Investigation of 1-Hydroxyethylidene-1, 1-
Diphosphonic Acid from the People's Republic of China: Surrogate Values 
Selected for Wujin Water,'' dated concurrently with this notice 
(``Surrogate Value Memorandum'').
---------------------------------------------------------------------------

    \7\ Wujin Water reported that it purchased no transportation or 
movement services from market economy suppliers during the POI.
    \8\ WPI Web site available at https://eaindustry.nic.in.
---------------------------------------------------------------------------

    We valued brokerage and handling using a simple average of the 
brokerage and handling costs that were reported in public submissions 
that were filed in the antidumping duty investigation of HEDP from 
India. Specifically, we averaged the public brokerage and handling 
expenses reported by Aquapharm Chemicals Pvt. Ltd. (``Aquapharm'') on 
September 19, 2008. See Surrogate Value Memorandum at 7-8, containing 
the public summary of Aquapharm's September 19, 2008, response at 1. 
Since the resulting value is contemporaneous with the POI, we did not 
inflate the rate using the WPI.

[[Page 62475]]

Similarly, we valued international freight and marine insurance using a 
simple average of these costs as reported by Aquapharm. Id. We used 
Aquapharm's data for surrogate value purposes in this case given that 
Aquapharm is a respondent in the contemporaneous companion HEDP from 
India antidumping investigation and sold identical merchandise.

Normal Value

    In accordance with section 773(c) of the Act, we constructed NV 
from the factors of production employed by Wujin Water to manufacture 
subject merchandise during the POI. Specifically, we calculated NV by 
adding together the value of the factors of production, general 
expenses, profit, and packing costs, as well as an adjustment for 
byproducts. We valued the factors of production using prices and 
financial statements from India, the surrogate country selected for 
this investigation.\9\ In selecting surrogate values, we followed, to 
the extent practicable, the Department's practice of choosing values 
which are non-export average values, product-specific, tax-exclusive, 
and contemporaneous with, or closest in time to, the POI. See, e.g., 
Notice of Preliminary Determination of Sales at Less Than Fair Value, 
Negative Preliminary Determination of Critical Circumstances and 
Postponement of Final Determination: Certain Frozen and Canned 
Warmwater Shrimp From the Socialist Republic of Vietnam, 69 FR 42672, 
42682 (July 16, 2004), unchanged in Final Determination of Sales at 
Less Than Fair Value: Certain Frozen and Canned Warmwater Shrimp from 
the Socialist Republic of Vietnam, 69 FR 71005 (December 8, 2004). We 
also considered the quality of the source of surrogate information in 
selecting surrogate values.
---------------------------------------------------------------------------

    \9\ Wujin Water reported that it purchased no factors of 
production from market economy suppliers during the POI.
---------------------------------------------------------------------------

    We valued material inputs and packing materials by multiplying the 
amount of the factor consumed in producing subject merchandise by the 
average unit value of the factor. In addition, we added freight costs 
to the surrogate costs that we calculated for material inputs. We 
calculated freight costs by multiplying surrogate freight rates by the 
shorter of the reported distance from the domestic supplier to the 
factory that produced the subject merchandise or the distance from the 
nearest seaport to the factory that produced the subject merchandise, 
as 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, 1407 (Fed. Cir. 1997). Where we could only 
obtain surrogate values that were not contemporaneous with the POI, we 
inflated (or deflated) the surrogate values using the WPI.
    Further, in calculating surrogate values from Indian imports, we 
disregarded imports from Indonesia, South Korea, and Thailand because 
in other proceedings the Department found that these countries maintain 
broadly available, non-industry-specific export subsidies. Therefore, 
it is reasonable to infer that all exports to all markets from these 
countries may be subsidized. See Final Determination of Sales at Less 
Than Fair Value: Certain Automotive Replacement Glass Windshields from 
the People's Republic of China, 67 FR 6482 (February 12, 2002) and 
accompanying Issues and Decision Memorandum at Comment 1; see also 
Final Determination of Sales at Less Than Fair Value and Negative Final 
Determination of Critical Circumstances: Certain Color Television 
Receivers From the People's Republic of China, 69 FR 20594 (April 16, 
2004).\10\ Thus, we have not used prices from these countries in 
calculating the Indian import-based surrogate values.
---------------------------------------------------------------------------

    \10\ In addition, we note that legislative history explains that 
the Department is not required to conduct a formal investigation to 
ensure that such prices are not subsidized. See Omnibus Trade and 
Competitiveness Act of 1988, Conference Report to Accompanying H.R. 
Rep. 100-576 at 590 (1988). As such, it is the Department's practice 
to base its decision on information that is available to it at the 
time it makes its determination.
---------------------------------------------------------------------------

    We valued raw materials and packing materials using Indian import 
statistics. See Surrogate Value Memorandum. We valued water using data 
from the Maharashtra Industrial Development Corporation \11\ because it 
includes a wide range of industrial water tariffs. This source provides 
378 industrial water rates within the Maharashtra province from July 
2007: 189 for the ``inside industrial areas'' usage category, and 189 
for the ``outside industrial areas'' usage category. See Surrogate 
Value Memorandum.
---------------------------------------------------------------------------

    \11\ Web site available at https://www.midcindia.org.
---------------------------------------------------------------------------

    We valued electricity using price data for small, medium, and large 
industries, as published by the Central Electricity Authority of the 
Government of India in its publication titled Electricity Tariff & Duty 
and Average Rates of Electricity Supply in India, dated July 2006. 
These electricity rates represent actual country-wide, publicly-
available information on tax-exclusive electricity rates charged to 
industries in India. Since the rates are not contemporaneous with the 
POI, we inflated the values using the WPI. See Surrogate Value 
Memorandum.
    The Department valued steam using a surrogate value for natural gas 
obtained from the Web site of the Gas Authority of India Ltd., a 
supplier of natural gas in India. We used natural gas because there is 
no surrogate value for steam on the record of this investigation. The 
Department has used natural gas to value steam in past cases. See 
Certain New Pneumatic Off-The-Road Tires from the People's Republic of 
China: Final Affirmative Determination of Sales at Less Than Fair Value 
and Partial Affirmative Determination of Critical Circumstances, 73 FR 
40485, 40486 (July 15, 2008), and accompanying Issues and Decision 
Memorandum at Comment 11; see also Preliminary Determination of Sales 
at Less Than Fair Value and Partial Affirmative Determination of 
Critical Circumstances: Certain Polyester Staple Fiber from the 
People's Republic of China, 71 FR 77373, 77380 (December 26, 2006). The 
natural gas value relates to the period February 2005. Therefore, we 
inflated the value using the WPI. See Surrogate Value Memorandum.
    For direct labor, indirect labor, and packing labor, consistent 
with 19 CFR 351.408(c)(3), we used the most recently calculated 
regression-based wage rate, which relies on 2005 data. This wage rate 
can be found on the Import Administration's home page. See ``Expected 
Wages of Selected NME Countries,'' available at https://ia.ita.doc.gov/
wages/ (revised May 2008). The source of these wage rate data 
on the Import Administration's Web site is the International Labour 
Organization, Geneva, Labour Statistics Database Chapter 5B: Wages in 
Manufacturing. Since this regression-based wage rate does not separate 
the labor rates into different skill levels or types of labor, we have 
applied the same wage rate to all skill levels and types of labor 
reported by Wujin Water. See Surrogate Value Memorandum.
    As noted above, we valued inland truck freight expenses using a 
deflated per-unit average rate calculated from data on the following 
Web site: https://www.infobanc.com/logistics/logtruck.htm. See Surrogate 
Value Memorandum.
    We valued factory overhead, selling, general, and administrative 
(``SG&A'') expenses, and profit, using a simple average of the 
financial ratios calculated from the 2007-2008 audited financial 
statements of two Indian producers of HEDP: Excel Industries Limited 
and United Phosphorus Limited. See Surrogate Value Memorandum.

[[Page 62476]]

    In accordance with 19 CFR 351.301(c)(3)(i), interested parties may 
submit publicly available information with which to value factors of 
production in the final determination within 40 days after the date of 
publication of the preliminary determination.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales as certified by the Federal Reserve Bank.

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.

Combination Rates

    In the Initiation Notice, the Department stated that it would 
calculate combination rates for respondents that are eligible for a 
separate rate in this investigation. See Initiation Notice. This change 
in practice is described in Policy Bulletin 05.1, which states:

    {w{time} hile continuing the practice of assigning separate 
rates only to exporters, all separate rates that the Department will 
now assign in its NME investigations will be specific to those 
producers that supplied the exporter during the period of 
investigation. Note, however, that one rate is calculated for the 
exporter and all of the producers which supplied subject merchandise 
to it during the period of investigation. This practice applies both 
to mandatory respondents receiving an individually calculated 
separate rate as well as the pool of non-investigated firms 
receiving the weighted-average of the individually calculated rates. 
This practice is referred to as the application of ``combination 
rates'' because such rates apply to specific combinations of 
exporters and one or more producers. The cash-deposit rate assigned 
to an exporter will apply only to merchandise both exported by the 
firm in question and produced by a firm that supplied the exporter 
during the period of investigation.

    See Policy Bulletin 05.1.

Preliminary Determination Margins

    The Department has determined that the following weighted-average 
dumping margins exist for the POI:

------------------------------------------------------------------------
                                                              Weighted-
                                                               Average
                   Manufacturer/Exporter                        margin
                                                              (percent)
------------------------------------------------------------------------
Nanjing University of Chemical Technology Changzhou Wujin          24.30
 Water Quality Stabilizer Factory Ltd.\12\.................
Changzhou Wujin Fine Chemical Factory Co., Ltd.\13\........        24.30
Jiangsu Jianghai Chemical Group Co., Ltd.\14\..............        24.30
PRC-wide Entity (including Kewei)..........................        72.42
------------------------------------------------------------------------

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).
---------------------------------------------------------------------------

    \12\ Nanjing University of Chemical Technology Changzhou Wujin 
Water Quality Stabilizer Factory Ltd. manufactures and exports 
subject merchandise.
    \13\ Changzhou Wujin Fine Chemical Factory Co., Ltd. 
manufactures and exports subject merchandise.
    \14\ Jiangsu Jianghai Chemical Group Co., Ltd. manufactures and 
exports subject merchandise.
---------------------------------------------------------------------------

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we will instruct CBP 
to suspend liquidation of all entries of HEDP from the PRC as described 
in the ``Scope of Investigation'' section, 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 the normal value exceeds U.S. price, as follows: (1) The rate 
for the exporter/producer combinations listed in the chart above will 
be the rate we have determined in this preliminary determination; (2) 
for all PRC exporters of subject merchandise which have not received 
their own rate, the cash-deposit rate will be the PRC-wide rate; and 
(3) for all non-PRC exporters of subject merchandise which have not 
received their own rate, the cash-deposit rate will be the rate 
applicable to the PRC exporter/producer combination that supplied that 
non-PRC exporter. These suspension-of-liquidation instructions 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 our preliminary affirmative determination of sales at LTFV. 
Section 735(b)(2) of the Act requires the ITC to make its final 
determination as to whether the domestic industry in the United States 
is materially injured, or threatened with material injury, by reason of 
imports of HEDP, or sales (or the likelihood of sales) for importation, 
of the subject merchandise 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 the final verification report is issued in this 
proceeding and rebuttal briefs, limited to issues raised in case 
briefs, no later than five days after the deadline for submitting case 
briefs. See 19 CFR 351.309(c)(1)(i) and 19 CFR 351.309(d)(1). 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 Ave., NW., Washington, DC 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 that 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.

[[Page 62477]]

Postponement of Final Determination

    Pursuant to section 735(a)(2) of the Act, on September 23, 2008, 
Wujin Water requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination by 60 days.\15\ At the same time, Wujin Water agreed that 
the Department may extend the application of the provisional measures 
prescribed under 19 CFR 351.210(e)(2) from a 4-month period to a 6-
month period. In accordance with section 733(d) of the Act and 19 CFR 
351.210(b), we are granting the request and are postponing the final 
determination until no later than 135 days after the publication of 
this notice in the Federal Register because: (1) Our preliminary 
determination is affirmative, (2) the requesting exporter accounts for 
a significant proportion of exports of the subject merchandise, and (3) 
no compelling reasons for denial exist. Suspension of liquidation will 
be extended accordingly.
---------------------------------------------------------------------------

    \15\ On October 6, 2008, Petitioner requested that in the event 
that the Department issues a negative preliminary determination in 
this investigation, it postpone the final determination until not 
later than 135 days after the publication of the preliminary 
determination in the Federal Register.
---------------------------------------------------------------------------

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

    Dated: October 15, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-25032 Filed 10-20-08; 8:45 am]
BILLING CODE 3510-DS-P