[Federal Register Volume 64, Number 1 (Monday, January 4, 1999)]
[Notices]
[Pages 101-108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34462]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-583-831]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Stainless Steel Sheet
and Strip in Coils From Taiwan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: January 4, 1999.
FOR FURTHER INFORMATION CONTACT: Carrie Blozy (Chang Mien), Doreen Chen
(Tung Mung), Gideon Katz (YUSCO) or Michael Panfeld, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230; telephone: (202) 482-0165, (202) 482-0408, (202) 482-5255, and
(202) 482-0172, respectively.
THE APPLICABLE STATUTE: Unless otherwise indicated, all citations to
the Tariff Act of 1930, as amended (``the Act''), are references to the
provisions effective January 1, 1995, the effective date of the
amendments made to the Act by the Uruguay Round Agreements Act (URAA).
In addition, unless otherwise indicated, all citations to the
Department's regulations are to the regulations at 19 CFR part 351, 62
FR 27296 (May 19, 1997).
PRELIMINARY DETERMINATION: We preliminarily determine that stainless
steel sheet and strip in coils (``SSSS'') from Taiwan 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 Act. The estimated
margins of sales at LTFV are shown in the ``Suspension of Liquidation''
section of this notice.
Case History
On July 13, 1998, the Department initiated antidumping duty
investigations of imports of SSSS from France, Germany, Italy, Japan,
Mexico, South Korea, Taiwan, and the United Kingdom. See Initiation of
Antidumping Duty Investigations: Stainless Steel Sheet and Strip in
Coils From France, Germany, Italy, Japan, Mexico, South Korea, Taiwan,
and the United Kingdom, 63 FR 37521, (July 13, 1998) (``Initiation'').
Since the initiation of this investigation the following events have
occurred.
The Department set aside a period for all interested parties to
raise issues regarding product coverage. On July 27, 1998, petitioners,
Allegheny Ludlum Corporation, Armco Inc., J&L Specialty Steel, Inc.,
Washington Steel Division of Bethlehem Steel Corporation (formerly
Lukens, Inc.), the United Steelworkers of America, AFL-CIO/CLC, the
Butler Armco Independent Union, and the Zanesville Armco Independent
Organization, Inc., filed comments proposing clarifications to the
scope of these investigations. From July October, 1998, the Department
received numerous responses from respondents aimed at clarifying the
scope of the investigations. See Memorandum for Joseph A. Spetrini,
Scope Issues, dated December 14, 1998.
On July 31, 1998, the Department requested information from the
American Institute in Taiwan (``AIT'') to identify producers/exporters
of the subject merchandise. On August 2, 1998, AIT responded to the
Department's request for information. On July 27 and July 28, 1998,
petitioners and Yieh United Steel Corporation (YUSCO), respectively,
submitted comments on our proposed model matching criteria.
On July 24, 1998, the United States International Trade Commission
(ITC) notified the Department of its affirmative preliminary injury
determination in this case. On August 3, 1998, the Department issued
antidumping questionnaires to YUSCO, Chia Far Industrial Factory Co.,
Ltd. (``Chia Far''), Tang Eng Iron Works Co., Ltd. (``Tang Eng''), Tung
Mung Development Co., Ltd. (``Tung Mung''), Ta Chen International (``Ta
Chen''), and Chang Mien Industries, Co., Ltd. (``Chang Mien''). On
September 21, 1998, the Department selected YUSCO and Tung Mung
(collectively ``respondents'') as respondents in this investigation. On
November 3, 1998, the Department amended its decision to include Chang
Mien as a mandatory respondent. See ``Selection of Respondents,''
below.
On September 8, 1998, we received the section A questionnaire
response from Chang Mien. On September 21, 1998, we received sections
B, C, and D of the questionnaire from Chang Mien. Petitioners filed
comments on Chang Mien's questionnaire responses on September 24, and
November 12, 1998. We issued supplemental questionnaires for sections
A, B, C and D to Chang Mien on November 13, 1998, and December 3, 1998,
and received responses to these questionnaires on November 27, 1998 and
December 10, 1998. Additionally, on December 4, 1998, petitioners
submitted comments concerning adjustments that the Department should
make in its preliminary determination.
On September 8, 1998, we received the section A questionnaire
response from Tung Mung. On September 24, 1998, we received sections B,
C, and D of the questionnaire from Tung Mung. Petitioners filed
comments on Tung Mung's questionnaire responses on September 24, and
October 16, 1998. We issued a supplemental questionnaire for sections
A, B, C and D to Tung Mung on October 26, 1998, and received responses
to this questionnaire on November 12, 1998. On November 18, 1998, we
requested that Tung Mung report the date or order, which Tung Mung
describes as ``initial estimates,'' and also requested that Tung Mung
ensure that all those home market sales for which ``initial estimates''
were finalized during the period of the investigation are included in
the revised home market sales listing. On December 2, Tung Mung
provided the requested information.
On September 8, 1998, we received the section A questionnaire
response from YUSCO. On September 25, 1998, we received sections B and
C of the questionnaire, and on September 28, 1998, we received section
D of the questionnaire from YUSCO. Petitioners filed comments on
YUSCO's questionnaire responses on September 25, 1998 and October 19,
1998. We issued a supplemental questionnaire for sections A, B, and C
to YUSCO on October 26, 1998, and received a response to this
questionnaire on November 18, 1998. We issued a supplemental
questionnaire for section D on November 2, 1998 and received a response
on November 16, 1998. We issued a second supplemental questionnaire for
sections A, B, and C on November 25, 1998 and received a response on
December 3, 1998.
On October 6, 1998, petitioners made a timely request for a thirty-
day postponement of the preliminary determination pursuant to section
733(c)(1)(A) of the Act. The Department determined that these
concurrent investigations are extraordinarily complicated and warranted
the thirty-day postponement requested by petitioners. On October 23,
1998, we
[[Page 102]]
postponed the preliminary determination until no later than December
17, 1998. See Stainless Steel Sheet and Strip in Coils From Italy,
France, Germany, Mexico, Japan, the Republic of South Korea, the United
Kingdom and Taiwan; Notice of Postponement of Preliminary
Determinations in Antidumping Duty Investigations, 63 FR 56909 (October
23, 1998). On October 30, 1998, petitioners alleged that there is a
reasonable basis to believe or suspect that critical circumstances
exist with respect to imports of SSSS from Taiwan. The critical
circumstances analysis for the preliminary determination is discussed
in the ``Critical Circumstances'' section of the notice below.
Finally, on December 3, 1998, petitioners submitted comments
regarding the product concordance. For specific adjustments to the
product concordance information submitted by Chang Mien, see Memorandum
to the File: Analysis of Chang Mien in the Preliminary Determination of
Stainless Steel Sheet and Strip in Coils from Taiwan, December 17,
1998.
On October 14 and 15, 1998, petitioners alleged that Ta Chen is
reselling subject merchandise by certain respondents in the United
States at prices less than Ta Chen's cost of acquisition and related
selling and movement expenses. On December 3, 1998, we initiated a
middleman dumping investigation against Ta Chen. The results of that
investigation will be incorporated in the final determination of this
investigation.
Postponement of Final Determination
Pursuant to section 735(a)(2) of the Act, on December 9, 1998,
YUSCO requested that, in the event of an affirmative preliminary
determination in this investigation, the Department postpone its final
determination until not later than 135 days after the date of the
publication of an affirmative preliminary determination in the Federal
Register. YUSCO also requested to extend the provisional measures to
not more than six months. Additionally, on December 11 and 15, 1998,
Tung Mung and Chang Mien, respectively requested a postponement of the
deadline for the Final Determination and an extension of provisional
measures, if found that their margins are higher than de minimis. In
accordance with 19 CFR 351.210(b), because (1) our preliminary
determination is affirmative, (2) YUSCO and Tung Mung account for a
significant proportion of exports of the subject merchandise, and (3)
no compelling reasons for a denial exists, we are granting the
respondent's request and are postponing the final determination until
no later than 135 days after the publication of this notice in the
Federal Register. Suspension of liquidation will be extended
accordingly.
Scope of the Investigation
For purposes of this investigation, the products covered are
certain stainless steel sheet and strip in coils. Stainless steel is an
alloy steel containing, by weight, 1.2 percent or less of carbon and
10.5 percent or more of chromium, with or without other elements. The
subject sheet and strip is a flat-rolled product in coils that is
greater than 9.5 mm in width and less than 4.75 mm in thickness, and
that is annealed or otherwise heat treated and pickled or otherwise
descaled. The subject sheet and strip may also be further processed
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that
it maintains the specific dimensions of sheet and strip following such
processing.
The merchandise subject to this investigation is classified in the
Harmonized Tariff Schedule of the United States (``HTSUS'') at
subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70,
7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90,
7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35,
7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44,
7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35,
7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44,
7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30,
7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30,
7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25,
7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00,
7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80,
7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60,
7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15,
7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30,
7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and
7220.90.00.80. Although the HTS subheadings are provided for
convenience and Customs purposes, the Department's written description
of the merchandise under investigation is dispositive.
Excluded from the scope of this investigation are the following:
(1) sheet and strip that is not annealed or otherwise heat treated and
pickled or otherwise descaled; (2) sheet and strip that is cut to
length; (3) plate (i.e., flat-rolled stainless steel products of a
thickness of 4.75 mm or more); (4) flat wire (i.e., cold-rolled
sections, with a prepared edge, rectangular in shape, of a width of not
more than 9.5 mm); and (5) razor blade steel. Razor blade steel is a
flat rolled product of stainless steel, not further worked than cold-
rolled (cold-reduced), in coils, of a width of not more than 23 mm and
a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5
percent chromium, and certified at the time of entry to be used in the
manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional
U.S. Note'' 1(d).
In response to comments by interested parties the Department has
determined that certain specialty stainless steel products are also
excluded from the scope of this investigation. These excluded products
are described below:
Flapper valve steel is excluded. It is defined as stainless steel
strip in coils containing, by weight, between 0.37 and 0.43 percent
carbon, between 1.15 and 1.35 percent molybdenum, and between 0.20 and
0.80 percent manganese. This steel also contains, by weight, phosphorus
of 0.025 percent or less, silicon of between 0.20 and 0.50 percent, and
sulfur of 0.020 percent or less. The product is manufactured by means
of vacuum arc remelting, with inclusion controls for sulphide of no
more than 0.04 percent and for oxide of no more than 0.05 percent.
Flapper valve steel has a tensile strength of between 210 and 300 ksi,
yield strength of between 170 and 270 ksi, plus or minus 8 ksi, and a
hardness (Hv) of between 460 and 590. Flapper valve steel is most
commonly used to produce specialty flapper valves in compressors.
Also excluded is a product referred to as suspension foil, a
specialty steel product used in the manufacture of suspension
assemblies for computer disk drives. Suspension foil is described as
302/304 grade or 202 grade stainless steel of a thickness between 14
and 127 microns, with a thickness tolerance of plus-or-minus 2.01
microns, and surface glossiness of 200 to 700 percent Gs. Suspension
foil must be supplied in coil widths of not more than 407 mm, and with
a mass of 225 kg or less. Roll marks may only be visible on one side,
with no scratches of measurable depth. The material must exhibit
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm
over 685 mm length.
Certain stainless steel foil for automotive catalytic converters
also is excluded from the scope of this investigation. This stainless
steel strip
[[Page 103]]
in coils is a specialty foil with a thickness of between 20 and 110
microns used to produce a metallic substrate with a honeycomb structure
for use in automotive catalytic converters. The steel contains, by
weight, carbon of no more than 0.030 percent, silicon of no more than
1.0 percent, manganese of no more than 1.0 percent, chromium of between
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of
no more than 0.045 percent, sulfur of no more than 0.03 percent,
lanthanum of between 0.002 and 0.05 percent, and total rare earth
elements of more than 0.06 percent, with the balance iron.
Permanent magnet iron-chromium-cobalt alloy stainless strip also is
excluded from the scope of this investigation. This ductile stainless
steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10
percent cobalt, with the remainder of iron, in widths 228.6 mm or less,
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic
remanence between 9,000 and 12,000 gauss, and a coercivity of between
50 and 300 oersteds. This product is most commonly used in electronic
sensors and is currently available under proprietary trade names such
as ``Arnokrome III.'' 1
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\1\ ``Arnokrome III'' is a trademark of the Arnold Engineering
Company.
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Certain electrical resistance alloy steel also is excluded from the
scope of this investigation. This product is defined as a non-magnetic
stainless steel manufactured to American Society of Testing and
Materials (ASTM) specification B344 and containing, by weight, 36
percent nickel, 18 percent chromium, and 46 percent iron, and is most
notable for its resistance to high temperature corrosion. It has a
melting point of 1390 degrees Celsius and displays a creep rupture
limit of 4 kilograms per square millimeter at 1000 degrees Celsius.
This steel is most commonly used in the production of heating ribbons
for circuit breakers and industrial furnaces, and in rheostats for
railway locomotives. The product is currently available under
proprietary trade names such as ``Gilphy 36.'' 2
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\2\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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Certain martensitic precipitation-hardenable stainless steel also
is excluded from the scope of this investigation. This high-strength,
ductile stainless steel product is designated under the Unified
Numbering System (UNS) as S45500-grade steel, and contains, by weight,
11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon,
manganese, silicon and molybdenum each comprise, by weight, 0.05
percent or less, with phosphorus and sulfur each comprising, by weight,
0.03 percent or less. This steel has copper, niobium, and titanium
added to achieve aging, and will exhibit yield strengths as high as
1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after
aging, with elongation percentages of 3 percent or less in 50 mm. It is
generally provided in thicknesses between 0.635 and 0.787 mm, and in
widths of 25.4 mm. This product is most commonly used in the
manufacture of television tubes and is currently available under
proprietary trade names such as ``Durphynox 17.'' 3
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\3\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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Finally, three specialty stainless steels typically used in certain
industrial blades and surgical and medical instruments also are
excluded from the scope of this investigation. These include stainless
steel strip in coils used in the production of textile cutting tools
(e.g., carpet knives).4 This steel is similar to ASTM grade
440F, but containing, by weight, 0.5 to 0.7 percent of molybdenum. The
steel also contains, by weight, carbon of between 1.0 and 1.1 percent,
sulfur of 0.020 percent or less, and includes between 0.20 and 0.30
percent copper and between 0.20 and 0.50 percent cobalt. This steel is
sold under proprietary names such as ``GIN4 Mo.'' The second excluded
stainless steel strip in coils is similar to AISI 420-J2 and contains,
by weight, carbon of between 0.62 and 0.70 percent, silicon of between
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent,
phosphorus of no more than 0.025 percent and sulfur of no more than
0.020 percent. This steel has a carbide density on average of 100
carbide particles per square micron. An example of this product is
``GIN5'' steel. The third specialty steel has a chemical composition
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent,
molybdenum of between 1.15 and 1.35 percent, but lower manganese of
between 0.20 and 0.80 percent, phosphorus of no more than 0.025
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no
more than 0.020 percent. This product is supplied with a hardness of
more than Hv 500 guaranteed after customer processing, and is supplied
as, for example, ``GIN6''. 5
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\4\ This list of uses is illustrative and provided for
descriptive purposes only.
\5\ ``GIN4 Mo'', ``GIN5'' and ``GIN6'' are the proprietary
grades of Hitachi Metals America, Ltd.
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Period of Investigation
The period of investigation (``POI'') is April 1, 1997 through
March 31, 1998.
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. However, section 777A(c)(2) of the Act gives the
Department discretion, when faced with a large number of exporters/
producers, 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 at the time
of selection; or (2) exporters and producers accounting for the largest
volume of the subject merchandise that can reasonably be examined.
After consideration of the complexities expected to arise in this
proceeding and the resources available to the Department, we determined
that it was not practicable in this investigation to examine all known
producers/exporters of subject merchandise. Instead, we found that,
given our resources, we would be able to investigate the Taiwanese
producers/exporters with the greatest export volume, as identified
above. In total, these companies (YUSCO, Tung Mung and Chang Mien)
accounted for more than 85 percent of all known exports of the subject
merchandise from Taiwan during the POI. For a more detailed discussion
of respondent selection in this investigation, see Respondent Selection
Memorandum, September 24, 1998.
Fair Value Comparisons
To determine whether sales of SSSS from Taiwan to the United States
were made at less than fair value, we compared the export price
(``EP'') to the normal value (``NV''), as described in the ``export
price'' section of this notice below. In accordance with section
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs for
comparison to weighted-average NVs.
On January 8, 1998, the Court of Appeals for the Federal Circuit
issued a decision in CEMEX v. United States, 1998 WL 3626 (Fed Cir.).
In that case, based on the pre-URAA version of the Act, the Court
discussed the appropriateness of using constructed value (CV) as the
basis for foreign market value when the Department finds home market
sales to be outside the ``ordinary course of trade.'' The
[[Page 104]]
URAA amended the definition of sales outside the ``ordinary course of
trade'' to include sales below cost. See Section 771(15) of the Act.
Consequently, the Department has reconsidered its practice in
accordance with this court decision and has determined that it would be
inappropriate to resort directly to CV, in lieu of foreign market
sales, as the basis for NV if the Department finds foreign market sales
of merchandise identical or most similar to that sold in the United
States to be outside the ``ordinary course of trade.'' Instead, the
Department will use sales of similar merchandise, if such sales exist.
The Department will use CV as the basis for NV only when there are no
above-cost sales that are otherwise suitable for comparison.
Transactions Investigated
YUSCO
For its home market sales, YUSCO reported the Government Uniform
Invoice (``GUI'') date as the date of sale, while for its U.S. market
sales, YUSCO reported the commercial invoice date as the date of sale.
YUSCO stated that the sale dates submitted for each market represented
the date when the essential terms of sales, i.e., price and quantity,
are definitively set, and that until the invoice date, these terms were
subject to change. Petitioners alleged that the questionnaire response
by YUSCO does not support YUSCO's claim that price and quantity may
change at any time between the order acceptance date (confirmation
date) and the final invoice date. Given the relevance of petitioners'
comments and the nature of marketing these types of made-to-order
products, petitioners' claims have some merit. Consequently, on October
26, 1998, the Department requested that YUSCO provide additional
information concerning the nature and frequency of price and quantity
changes occurring between order and invoice. In addition, we requested
that YUSCO report sales during the POI for which YUSCO had issued an
order acceptance, in addition to those sales invoiced during the POI.
Based on our analysis of the information submitted by YUSCO, we have
preliminarily determined that for home market and U.S. sales, the GUI
and commercial invoice dates, respectively, are the appropriate
indicators of the actual date of sale because a large percentage of
orders in each market were modified or canceled during the time between
order and invoice dates.
YUSCO reported that it made sales of subject merchandise to several
end-users during the POI, including Yieh Mau, to which YUSCO claims an
affiliation. With respect to Yieh Mau, there is no equity ownership of
five percent or more between the two companies and YUSCO did not
provide record evidence sufficient to demonstrate either financial or
operational control of Yieh Mau. Therefore, the Department
preliminarily determines that Yieh Mau is not affiliated with YUSCO.
See Proprietary Analysis Memorandum: YUSCO. With respect to the other
allegedly affiliated parties, the Department has likewise conducted an
analysis of these parties' affiliation with YUSCO. Because the
identities of these parties, as well as all pertinent information
regarding the affiliations, is proprietary information, please refer to
the Proprietary Analysis Memorandum: YUSCO. We note that the Department
intends to examine closely all affiliation issues at verification.
Sales to affiliated customers in the home market not made at arm's-
length prices were excluded from our analysis because we considered
them to be outside the ordinary course of trade. See 19 CFR 351.102. To
test whether these sales were made at arm's-length prices, we compared
on a model-specific basis the starting prices of sales to affiliated
and unaffiliated customers net of all movement charges, direct selling
expenses, and packing. Where, for the tested models of subject
merchandise, prices to the affiliated party were on average 99.5
percent or more of the price to the unaffiliated parties, we determined
that sales made to the affiliated party were at arm's length. See 19
CFR 351.403(c). In instances where no price ratio could be constructed
for an affiliated customer because identical merchandise was not sold
to unaffiliated customers, we were unable to determine that these sales
were made at arm's-length prices and, therefore, excluded them from our
less than fair value (``LTFV'') analysis. See Final Determination of
Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat
Products from Argentina, 58 FR 37062, 37077 (July 9, 1993); Notice of
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination: Emulsion Styrene-Butadiene Rubber
from Brazil, 63 Fed. Reg. 59509 (Nov. 8, 1998). Where the exclusion of
such sales eliminated all sales of the most appropriate comparison
product, we made a comparison to the next most similar model.
Tung Mung
For its home market, Tung Mung reported the date of invoice as the
date of sale, while for its U.S. market sales, Tung Mung reported the
contract date as the date of sale. Tung Mung stated that the sale dates
submitted for each market represented the date when the essential terms
of sales, i.e., price and quantity, are definitively set, and that up
to the invoice date, these terms were subject to change. Petitioners
alleged that the questionnaire response by Tung Mung did not support
Tung Mung's claim that for home market sales, price and quantity may
change at any time between the order acceptance date (confirmation
date) and the final invoice date. Given the relevance of petitioners'
comments and the nature of marketing these types of made-to-order
products, petitioners' claims have some merit. Consequently, on October
26 and November 18, 1998, the Department requested that Tung Mung
provide additional information concerning the nature and frequency of
price and quantity changes occurring between the confirmation date and
date of invoice. In addition, we requested that Tung Mung report sales
during the POI for which Tung Mung had issued an order acceptance, in
addition to those sales invoiced during the POI. Based on our analysis
of the information submitted by Tung Mung, we have preliminarily
determined that the sales contract date is the appropriate date of sale
because the sale contract date is the date on which the terms are
finalized. With respect to home market sales, we have preliminarily
determined that the date of invoice is the appropriate date of sale
since it is the date on which the terms are set and not changed
thereafter. For a further discussion of this issue, see Analysis
Memorandum: Tung Mung.
Chang Mien
In its original questionnaire response, Chang Mien reported that
for home market transactions it was using the date of invoice as the
date of sale because Chang Mien's accounting books treated date of sale
in this manner. In petitioners' November 12, 1998 submission, they
stated that it appeared that Chang Mien was using the wrong date of
sale. Given the relevance of petitioners' comments and the nature of
marketing these types of made-to-order products, petitioners' claims
have some merit. Consequently, on November 13, 1998, the Department
requested that Chang Mien provide additional information concerning the
nature and frequency of price and quantity changes occurring between
the confirmation date and date of invoice. In its November 27, 1998
supplemental response Chang Mien stated that because home market
customers purchase from inventory, ``there usually is no price change
or
[[Page 105]]
change in quantity between order confirmation date (day 0) and shipping
(invoice date) (day 1-3).'' See Chang Mien's November 27, 1998
supplemental response at 8. Therefore, we preliminarily determine that
the date of the order confirmation is the more appropriate sale date.
Accordingly, on December 3, 1998, the Department requested that Chang
Mien submit a revised home market sales listing using date of order
confirmation as the sale date.
Also, in its November 27, 1998 supplemental response, Chang Mien
reported that for its U.S. transactions it was using the date of sale
employed in its accounting system, i.e., the export declaration date
for sales through August 31, 1997, and after August 31, 1997, the date
of shipment. In the preamble to the regulations, the Department
addressed the issue of why it was appropriate normally to use date of
invoice, not date of shipment as the uniform date of sale.
Specifically, the Department noted in the preamble that: (1) date of
shipment is not among the possible dates of sale specified in note 8 of
the AD Agreement; (2) date of shipment rarely represents the date on
which the material terms of sale are established; (3) firms rarely use
shipment documents as the basis for preparation of financial reports,
thus making reliance on date of shipment at verification more
difficult; and (4) concerns regarding possible manipulation by using
date of invoice do not warrant substituting date of shipment for date
of invoice.'' Antidumping Duties; Countervailing Duties: Final Rule, 62
FR 27297, 27349 (May 19, 1997). In this case, Chang Mien has reported
that the terms of sale changed between the order date and the invoice
date. Specifically, an analysis of all U.S. sales of subject
merchandise in the POI reveals that for approximately 94 percent of the
sales there was a change between the quantity ordered and the quantity
shipped, and that for approximately 30 percent of the sales, the change
between the quantity ordered and the quantity shipped was greater than
the accepted industry tolerances. Therefore, we preliminarily determine
that the invoice date is the appropriate date of sale for U.S.
transactions. Accordingly, on December 3, 1998, the Department
requested that Chang Mien submit a revised U.S. sales listing using
date of invoice as the sale date. For a further discussion of this
issue, see Memorandum to the File: Analysis of Chang Mien in the
Preliminary Determination of Stainless Steel Sheet and Strip in Coils
from Taiwan, December 17, 1998.
Product Comparisons
In accordance with section 771(16) of the Tariff Act, we considered
all products produced by respondents, covered by the description in the
``Scope of Investigation'' section, above, and sold in the home market
during the POI, to be foreign like products for purposes of determining
appropriate product comparisons to U.S. sales. Where there were no
sales of identical merchandise in the home market to compare to U.S.
sales, we compared U.S. sales to the next most similar foreign like
product on the basis of the characteristics and reporting instructions
listed in the Department's August 3, 1998 questionnaire.
Level of Trade
In accordance with section 773(a)(1)(B)(i) of the Act, to the
extent practicable, we determine NV based on sales in the comparison
market at the same level of trade (``LOT'') as the EP or constructed
export price (``CEP'') transaction. The NV LOT is that of the starting
price sales in the comparison market or, when NV is based on CV, that
of the sales from which we derive selling, general and administrative
expenses (``SG&A'') and profit. For EP, the LOT is also the level of
the starting price sale, which is usually from the exporter to the
importer. For CEP, it is the level of the constructed sale from the
exporter to the importer.
To determine whether NV sales are at a different LOT than EP or CEP
sales, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison market sales at the LOT of
the export transaction, we make a LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is
more remote from the factory than the CEP level and there is no basis
for determining whether the differences in the levels between NV and
CEP sales affects price comparability, we adjust NV under section
773(A)(7)(B) of the Act (the CEP offset provision). See Notice of Final
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length
Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).
In this investigation, none of the respondents requested a LOT
adjustment. To ensure that no such adjustment was necessary, in
accordance with principles discussed above, we examined information
regarding the distribution systems in both the United States and Taiwan
markets, including the selling functions, classes of customer and
selling expenses for each respondent.
YUSCO
YUSCO reported one LOT in the home market and one LOT in the U.S.
market. YUSCO reported that it made sales in the home market through
one channel of distribution, directly from the plant to distributors,
end users, and further manufacturers. In the U.S. market, YUSCO
reported that it made sales through one channel of distribution,
directly from the plant to trading companies and distributors.
The Department examined the selling activities performed within
each LOT reported. YUSCO's selling activities in the home market were
comprised of technical advice, warranty services and freight and
delivery arrangements. YUSCO claimed that there were no other sales
support activities. None of YUSCO's home market selling activities
differed by customer category. YUSCO's selling activities in the U.S.
market were comprised of warranty services and freight and delivery
arrangements. Sales to trading companies were made on an FOB, FOR, or
C&F basis and sales to distributors were made on an FOB or CIF basis.
YUSCO claims that its selling activities did not differ by customer
category in any other way in the U.S. market. Because there are only
insignificant differences between the selling functions on sales made
to home market and U.S. customers, we preliminarily conclude that there
is one LOT in both the U.S. and home market and that sales to these
customers constitute the same LOT in each market. Therefore a LOT
adjustment for YUSCO is not appropriate. For a further discussion of
the Department's LOT analysis with respect to YUSCO, see Memorandum to
the File: Analysis of YUSCO in the Preliminary Determination of
Stainless Steel Sheet and Strip in Coils from Taiwan, December 17,
1998.
Tung Mung
Tung Mung claimed that there was only one LOT in the home market.
Tung Mung reported that in the home market it made sales to
distributors, service centers, and end-users through one channel of
distribution. Tung Mung offered freight and delivery arrangements and
warranty services to all customers in the home market. Based
[[Page 106]]
on our analysis, we preliminarily determine that Tung Mung had one LOT
in its home market.
In the U.S. market, Tung Mung reported that it sold at one LOT
through two channels of distribution, (1) a foreign distributor and (2)
domestic trading companies. In the U.S. market, Tung Mung reported only
one LOT to customers. Tung Mung reported that it performed identical
selling functions in the United States and in the home market. These
selling functions include freight and delivery arrangements and
warranty services. Therefore, we preliminary conclude that there is one
LOT in the U.S. and that sales to these customers constitute the same
LOT in the comparison market and the United States. Therefore a LOT
adjustment for Tung Mung is not appropriate. For a further discussion
of the Department's LOT analysis with respect to Tung Mung, see
Memorandum to the File: Analysis of Tung Mung in the Preliminary
Determination of Stainless Steel Sheet and Strip in Coils from Taiwan,
December 17, 1998.
Chang Mien
Chang Mien reported two LOTs in the home market and two channels of
distribution. Within both channels of distribution, the merchandise is
either shipped immediately to the customer or stored in Chang Mien's
warehouse. In the home market, Chang Mien stated that it performed
identical selling activities for both channels of distribution such as
providing inventory maintenance, technical advice, warranty services,
delivery arrangements, and advertising. Although the selling activities
offered are identical for each of its customers, an additional selling
activity is performed for those sales which are stored in inventory.
However, we preliminarily determine that sales on which inventory
maintenance is performed do not involve significantly greater resources
than sales on which inventory maintenance is not performed and,
therefore, do not constitute a separate LOT. Therefore, because Chang
Mien performs identical selling activities for each claimed LOT, we
preliminarily find that the two claimed LOTs constitute one LOT.
In the U.S. market, Chang Mien reported that it sold at one LOT,
through one channel of distribution, and to one type of customer
(trading company). For sales in the U.S. market, Chang Mien performed
the following activities: packing, delivery arrangements (i.e.,
transportation, brokerage and handling, and marine insurance),
advertising, and warranty services. Based on a comparison of the
selling activities performed in the U.S. market to the selling
activities in the home market, we preliminarily conclude that there is
not a significant difference in the selling functions performed in both
markets. We preliminarily conclude that U.S. sales are made at the same
LOT as the home market. Therefore, a LOT adjustment is not appropriate.
For a further discussion of the Department's LOT analysis with respect
to Chang Mien, see Memorandum to the File: Analysis of Chang Mien in
the Preliminary Determination of Stainless Steel Sheet and Strip in
Coils from Taiwan, December 17, 1998.
Export Price
For all respondents, we based our calculation on EP, in accordance
with section 772(a) of the Act, because the subject merchandise was
sold by the producer or exporter directly to the first unaffiliated
purchaser in the United States prior to importation, and CEP
methodology was not otherwise indicated. Furthermore, we calculated EP
based on packed prices charged to the first unaffiliated customer in
the United States.
We made company-specific adjustments as follows:
YUSCO
We made deductions from the starting price, where appropriate, for
the following movement expenses, in accordance with section
772(c)(2)(A) of the Act: foreign inland freight; international freight;
marine insurance; brokerage and handling expenses; container handling
fees; and certification fees. No other adjustments were claimed or
allowed.
Tung Mung
We made deductions from the starting price, where appropriate, for
the following movement expenses, in accordance with section
772(c)(2)(A) of the Act: foreign inland freight; containerization
expenses; brokerage and handling expenses; harbor duty fees, and bank
charges. Additionally, we added to the U.S. price an amount for duty
drawback pursuant to section 772(c)(1)(B) of the Act.
Chang Mien
We made deductions for foreign inland freight, brokerage and
handling, ocean freight, and marine insurance, in accordance with
section 772(c)(2)(A) of the Act. Additionally, we added to the U.S.
price an amount for duty drawback pursuant to section 772(c)(1)(B) of
the Act. For further information, see Memorandum to the File: Analysis
of Chang Mien in the Preliminary Determination of Stainless Steel Sheet
and Strip in Coils from Taiwan, December 17, 1998.
Normal Value
After testing home market viability and whether home market sales
were at below-cost prices, we calculated NV as noted in the ``Price-to-
Price Comparisons'' and ``Price-to-CV Comparison'' sections of this
notice.
Home Market Viability
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
the aggregate volume of home market sales of the foreign like product
is equal to or greater than five percent of the aggregate volume of
U.S. sales), we compared each of the respondent's volume of home market
sales of the foreign like product to the volume of U.S. sales of the
subject merchandise, in accordance with section 773(a)(1)(B) of the
Act. Since each of the respondent's aggregate volume of home market
sales of the foreign like product was greater than five percent of its
aggregate volume of U.S. sales for the subject merchandise, we
determined that the home market was viable for all respondents.
Therefore, we have based NV on home market sales in the usual
commercial quantities and in the ordinary course of trade.
Cost of Production (COP) Analysis
Based on the cost allegation submitted by petitioners in the
petition, the Department found reasonable grounds to believe or suspect
that respondents had made sales in the home market at prices below the
cost of producing the merchandise, in accordance with section
773(b)(2)(A) of the Act. As a result, the Department initiated an
investigation to determine whether respondents made home market sales
during the POI at prices below their respective COPs within the meaning
of section 773(b) of the Act. See Initiation.
We conducted the COP analysis described below.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP
based on the sum of the cost of materials and fabrication for the
foreign like product, plus amounts for home market SG&A, interest
expenses, and packing costs. We relied on the COP data submitted by
each respondent in its cost questionnaire response.
[[Page 107]]
B. Test of Home Market Prices
We compared the weighted-average COP for each respondent, adjusted
where appropriate (see above), to home market sales of the foreign like
product as required under section 773(b) of the Act. In determining
whether to disregard home market sales made at prices less than the
COP, we examined whether (1) within an extended period of time, such
sales were made in substantial quantities, and (2) such sales were made
at prices which permitted the recovery of all costs within a reasonable
period of time in the normal course of trade. On a product-specific
basis, we compared the COP to home market prices, less any applicable
movement charges and direct and indirect selling expenses.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20
percent of respondent's sales of a given product were at prices less
than the COP, we did not disregard any below-cost sales of that product
because we determined that the below-cost sales were not made in
``substantial quantities.'' Where 20 percent or more of a respondent's
sales of a given product during the POI were at prices less than the
COP, we determined such sales to have been made in ``substantial
quantities,'' pursuant to section 773(b)(2)(c)(i), and within an
extended period of time in accordance with section 773(b)(2)(B) of the
Act. In such cases, because we compared prices to weighted-average COPs
for the POI , we also determined that such sales were not made at
prices which would permit recovery of all costs within a reasonable
period of time, in accordance with section 773(b)(2)(D) of the Act.
Therefore, we disregarded the below-cost sales. Where all sales of a
specific product were at prices below the COP, we disregarded all sales
of that product.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of respondent's cost of materials, fabrication, SG&A,
interest expenses, profit and U.S. packing costs. In accordance with
section 773(e)(2)(A) of the Act, we based SG&A and profit on the
amounts incurred and realized by respondent in connection with the
production and sale of the foreign like product in the ordinary course
of trade for consumption in Taiwan.
Price-to-Price Comparisons
We performed price-to-price comparisons where there were sales of
comparable merchandise in the home market that did not fail the cost
test. There were no sales to affiliated customers in the home market
for any respondent. We made adjustments, where appropriate, for
physical differences in the merchandise in accordance with section
773(a)(6)(c)(ii) of the Act.
YUSCO
For YUSCO's home market sales of products that were above COP, we
based NV on prices to home market customers. YUSCO classified certain
home market customers as affiliated, and one of these customers, Yieh
Mau, reported its downstream sales in the home and U.S. markets. We
have preliminarily determined that these customers were not affiliated
because five percent or more ownership does not exist between YUSCO and
any of these companies. Additionally, the record does not show that
these customers meet any other of the ``affiliated persons'' criteria
set forth in Section 771(33) of the Act. Therefore, we did not conduct
an arm's-length test on any of YUSCO's sales.
We calculated NV based on prices to unaffiliated home market
customers. We made deductions for inland freight and two post-sale
price adjustments (these adjustments were originally reported as a
quantity discount and sales promotion discount). In addition, we made
circumstance-of-sale (COS) adjustments for differences in direct
selling expenses (i.e., credit, warranty, and a document handling fee)
incurred on U.S. and home market sales, where appropriate. In
accordance with section 773(a)(6), we deducted home market packing
costs and added U.S. packing costs.
Tung Mung
For Tung Mung's home market sales of products that were above COP,
we based NV on prices to home market customers. We made a deduction for
inland freight and two post-sale price adjustments (these adjustments
were originally reported as a quantity discount and other discounts)
pursuant to Section 351.401(c) of the Department's Regulations. We
calculated NV based on prices to unaffiliated home market customers. In
addition, we made COS adjustments for differences in direct selling
expenses (i.e., credit and warranty expenses), where appropriate. In
accordance with section 773(a)(6), we deducted home market packing
costs and added U.S. packing costs.
Chang Mien
For Chang Mien's home market sales of products that were above the
COP, we based NV on prices to home market customers.
We calculated NV based on prices to unaffiliated home market
customers. We made a deduction for inland freight. In its December 4,
1998 submission, petitioners argued that the Department should deny
Chang Mien's reported home market credit expense and reclassify Chang
Mien's claimed advertising expenses as indirect selling expenses. For
the preliminary determination, the Department has accepted Chang Mien's
home market credit expenses and continued to classify Chang Mien's
advertising expenses in both the U.S. and home market as direct selling
expenses. We made COS adjustments for direct selling expenses (i.e.,
credit, warranty, advertising, and bank charges), where appropriate. In
accordance with section 773(a)(6), we deducted home market packing
costs and added U.S. packing costs.
Price-to-CV Comparisons
In accordance with section 773(a)(4) of the Tariff Act, we based NV
on CV if we were unable to find a home market match of such or similar
merchandise. We made adjustments to CV in accordance with section
773(a)(8) of the Tariff Act. For these EP comparisons, we made COS
adjustments by deducting home market direct selling expenses and adding
U.S. direct selling expenses.
Currency Conversion
We made currency conversions into U.S. dollars based on the
exchange rates in effect on the dates of the U.S. sales, as certified
by the Federal Reserve Bank, in accordance with section 773A(a) of the
Tariff Act.
Critical Circumstances
On October 30, 1998, petitioners alleged that there is a reasonable
basis to believe or suspect that critical circumstances exist with
respect to imports of SSSS from Taiwan. In accordance with 19 CFR
351.206(c)(2)(i), since this allegation was filed at least 20 days
prior to the Department's preliminary determination, we must issue our
preliminary critical circumstances determination not later than the
preliminary determination.
Section 733(e)(1) of the Act provides that if a petitioner alleges
critical circumstances, the Department will determine whether there is
a reasonable basis to believe or suspect that: (A)(i) there is a
history of dumping and material injury by reason of dumped imports in
the United States or elsewhere of the subject merchandise; or
[[Page 108]]
(ii) the person by whom, or for whose account, the merchandise was
imported knew or should have known that the exporter was selling the
subject merchandise at less than its fair value and that there was
likely to be material injury by reason of such sales; and (B) there
have been massive imports of the subject merchandise over a relatively
short period.
To determine that there is a history of dumping of the subject
merchandise, the Department normally considers evidence of an existing
antidumping duty order on SSSS in the United States or elsewhere to be
sufficient. Petitioners did not provide any information indicating a
history of dumping of SSSS from Taiwan. Furthermore, we investigated
the existence of antidumping duty orders on SSSS from Taiwan in the
United States or elsewhere, and did not find any. We were also unable
to find other information that would have indicated a history of
dumping of SSSS from Taiwan.
In determining whether an importer knew or should have known that
the exporter was selling subject merchandise at less than fair value
and thereby causing material injury, the Department normally considers
estimated dumping margins of 25 percent or greater for EP sales to
impute knowledge of dumping and of resultant material injury. In this
investigation, we have not established calculated estimated dumping
margins of 25 percent or greater. Based on these facts, we determine
that the first criterion for ascertaining whether critical
circumstances exist is not satisfied. Therefore, we preliminarily
determine that there is no reasonable basis to believe or suspect that
critical circumstances exist with respect to exports of SSSS from
Taiwan by respondents (see, e.g., Notice of Preliminary Determination
of Sales at Less Than Fair Value and Postponement of Final
Determination: Collated Roofing Nails From Korea, 62 FR 25895, 25898
(May 12, 1997)). We have not analyzed the shipment data for respondents
to examine whether imports of SSSS have been massive over a relatively
short period. Because we do not find that critical circumstances exist
for all other respondents, we determine that critical circumstances do
not exist for companies covered by the ``All Others'' rate. We will
make a final determination concerning critical circumstances when we
make our final determination in this investigation, if that final
determination is affirmative.
Verification
As provided in section 782(i) of the Tariff Act, we will verify all
information relied upon in making our final determination.
All Others Rate
In accordance with Section 735(c)(5) of the Act, the estimated all-
others rate shall be an amount equal to the calculated estimated
weight-average dumping margins established for producers individually
investigated, excluding any zero and de minimis margins, and any
margins determined entirely under section 776. As a result, the all-
others rate is 2.94 percent.
Suspension of Liquidation
In accordance with section 733(d) of the Tariff Act, we are
directing the U.S. Customs Service to suspend liquidation of all
imports of subject merchandise that are entered, or withdrawn from
warehouse, for consumption on or after the date of publication of this
notice in the Federal Register. We will instruct the U.S. Customs
Service to require a cash deposit or the posting of a bond equal to the
weighted-average amount by which the NV exceeds the export price, as
indicated below. These suspension-of-liquidation instructions will
remain in effect until further notice. The weighted-average dumping
margins are as follows:
------------------------------------------------------------------------
Weighted-average
Exporter/manufacturer margin percentage
------------------------------------------------------------------------
Chang Mien........................................... .57
Tung Mung............................................ .07
YUSCO................................................ 2.94
All Others........................................... 2.94
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Tariff Act, we have
notified the ITC of our determination. If our final determination is
affirmative, the ITC will determine before the later of 120 days after
the date of this preliminary determination or 45 days after our final
determination whether imports of SSSS are materially injuring, or
threaten material injury to, the U.S. industry.
Public Comment
Case briefs or other written comments may be submitted to the
Assistant Secretary for Import Administration no later than fifty days
after the date of publication of this notice, and rebuttal briefs,
limited to issues raised in case briefs, no later than fifty-five days
after the date of publication of this preliminary determination. 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 Tariff Act, we will hold a public hearing, if requested, to
afford interested parties an opportunity to comment on arguments raised
in case or rebuttal briefs. Tentatively, any hearing will be held
fifty-seven days after publication of this notice at the U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
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 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the date of publication of this notice.
Requests should contain: (1) the party's name, address, and telephone
number; (2) the number of participants; and (3) a list of the issues to
be discussed. 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. See 19 CFR 351.310(c). We intend to issue our final
determination in this investigation no later than 135 days after
publication of this notice.
This determination is issued and published in accordance with
sections 733(d) and 777(i)(1) of the Tariff Act.
Dated: December 17, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-34462 Filed 12-31-98; 8:45 am]
BILLING CODE 3510-DS-P