[Federal Register Volume 65, Number 5 (Friday, January 7, 2000)]
[Notices]
[Pages 1095-1103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-297]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-583-834]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Certain Cold-Rolled
Flat-Rolled Carbon-Quality Steel Products From Taiwan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: January 7, 2000.
FOR FURTHER INFORMATION CONTACT: Abdelali Elouaradia or Keir Whitson at
(202) 482-0498 and (202) 482-1777, respectively; Import Administration,
Room 1870, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230.
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to Department of Commerce (Department)
regulations refer to the regulations codified at 19 CFR part 351 (April
1999).
Preliminary Determination
We preliminarily determine that certain cold-rolled flat-rolled
carbon-quality steel products (cold-rolled steel products) from Taiwan
are being sold, or are likely to be sold, in the United States at less
than fair value (LTFV), as provided in section 733 of the Act. The
estimated margins of sales at LTFV are shown in the Suspension of
Liquidation section of this notice.
Case History
This investigation was initiated on June 21, 1999. 1 See
Initiation of Antidumping Duty Investigations: Certain Cold-Rolled
Flat-Rolled Carbon-Quality Steel Products from Argentina, Brazil, the
People's Republic of China, Indonesia, Japan, the Russian Federation,
Slovakia, South Africa, Taiwan, Thailand, Turkey, and Venezuela, 64 FR
34194 (June 25, 1999) (Initiation Notice). Since the initiation of the
investigation, the following events have occurred.
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\1\ The petitioners in this investigation are Bethlehem Steel
Corporation, Gulf States Steel, the Independent Steelworkers Union,
Ispat Inland Steel, LTV Steel Company Inc., National Steel
Corporation (not a petitioner in the Japan case), Steel Dynamics,
U.S. Steel Group (a unit of USX Corporation), Weirton Steel
Corporation, and United Steelworkers of America.
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On June 22, 1999, the Department issued Section A antidumping
questionnaires to all known exporters of subject merchandise in Taiwan,
including all of those named in the original petition. 2
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\2\ Section A of the questionnaire requests general information
concerning a company's corporate structure and business practices,
the merchandise under investigation that it sells, and the manner in
which it sells that merchandise in all of its markets. Section B
requests a complete listing of all home market sales, or, if the
home market is not viable, of sales in the most appropriate third-
country market. Section C requests a complete listing of U.S. sales.
Section D requests information on the cost of production (COP) of
the foreign like product and the constructed value (CV) of the
merchandise under investigation.
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On July 9, 1999, the Department selected China Steel Corporation
(CSC) as a mandatory respondent in this investigation and issued
Sections B, C, and D of the antidumping questionnaire to CSC. See
Respondent Selection Memo, July 9, 1999. In addition, on July 19, 1999,
we received a request from Taiwan Tokkin Co., Ltd. (Taiwan Tokkin) that
it be included as a voluntary respondent in this investigation.
Subsequently, on August 6, 1999, we accepted Taiwan Tokkin as a
voluntary respondent. However, we did not issue the questionnaire to
Taiwan Tokkin because on July 22, 1999, the company informed us that it
had already obtained copies of each section.
Responses to various sections of the Department's questionnaire
were received from Taiwan Tokkin and CSC between July and September
1999. We issued supplemental questionnaires where appropriate.
On July 16, 1999, the United States International Trade Commission
(the ITC) preliminarily determined that there is a reasonable
indication that imports of the products under investigation are
materially injuring the United States industry. See Certain Cold-Rolled
Steel Products From Argentina, Brazil, China, Indonesia, Japan, Russia,
Slovakia, South Africa, Taiwan, Thailand, Turkey, and Venezuela:
Determinations, 64 FR 41458 (July 30, 1999).
In their comments on Taiwan Tokkin's questionnaire responses,
petitioners raised the issue of whether the country of origin of Taiwan
Tokkin's exports to the United States was actually Japan. Subsequently,
Taiwan Tokkin submitted comments on this issue on September 27, 1999.
Additional comments were submitted by petitioners and Taiwan Tokkin on
October 15, 1999, and, October 21, 1999, respectively. See Taiwan
Tokkin--Country of Origin, below.
On November 5, 1999, the Department postponed the preliminary
determination in this case for 30 days in accordance with section
733(c) of the Act and 19 CFR 351.205(b)(2). See Notice of Postponement
of Preliminary Antidumping Duty Determinations: Certain Cold-Rolled
Flat-Rolled Carbon-Quality Steel Products from Indonesia, the People's
Republic of China, Taiwan and Turkey, 64 FR 61825 (November 15, 1999).
Postponement of Final Determination and Extension of Provisional
Measures
Section 735(a)(2) of the Act provides that a final determination
may be postponed until not later than 135 days after the date of the
publication of the preliminary determination if, in the event of an
affirmative preliminary determination, a request for such
[[Page 1096]]
postponement is made by exporters who account for a significant
proportion of exports of the subject merchandise or if, in the event of
a negative preliminary determination, a request for such postponement
is made by the petitioners. The Department's regulations, at 19 CFR
351.210(e)(2), require that requests by respondents for postponement of
a final determination be accompanied by a request for extension of
provisional measures from a four-month period to not more than six
months.
On October 25, 1999, CSC 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. CSC also included a request to
extend the provisional measures to not more than six months.
Accordingly, since we have made an affirmative preliminary
determination, we have postponed the final determination until not
later than 135 days after the date of the publication of the
preliminary determination.
Period of Investigation
The period of the investigation (POI) is April 1, 1998, through
March 31, 1999.
This period corresponds to each respondent's four most recent
fiscal quarters prior to the month of the filing of the petition (i.e.,
June 1999).
Scope of Investigation
For purposes of this investigation, the products covered are
certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel
products, neither clad, plated, nor coated with metal, but whether or
not annealed, painted, varnished, or coated with plastics or other non-
metallic substances, both in coils, 0.5 inch wide or wider (whether or
not in successively superimposed layers and/or otherwise coiled, such
as spirally oscillated coils), and also in straight lengths, which, if
less than 4.75 mm in thickness having a width that is 0.5 inch or
greater and that measures at least 10 times the thickness; or, if of a
thickness of 4.75 mm or more, having a width exceeding 150 mm and
measuring at least twice the thickness. The products described above
may be rectangular, square, circular or other shape and include
products of either rectangular or non-rectangular cross-section where
such cross-section is achieved subsequent to the rolling process (i.e.,
products which have been ``worked after rolling'')--for example,
products which have been beveled or rounded at the edges.
Specifically included in this scope are vacuum degassed, fully
stabilized (commonly referred to as interstitial-free (IF)) steels,
high strength low alloy (HSLA) steels, and motor lamination steels. IF
steels are recognized as low carbon steels with micro-alloying levels
of elements such as titanium and/or niobium added to stabilize carbon
and nitrogen elements. HSLA steels are recognized as steels with micro-
alloying levels of elements such as chromium, copper, niobium,
titanium, vanadium, and molybdenum. Motor lamination steels contain
micro-alloying levels of elements such as silicon and aluminum.
Steel products included in the scope of this investigation,
regardless of definitions in the Harmonized Tariff Schedules of the
United States (HTSUS), are products in which: (1) Iron predominates, by
weight, over each of the other contained elements; (2) the carbon
content is 2 percent or less, by weight, and; (3) none of the elements
listed below exceeds the quantity, by weight, respectively indicated:
1.80 percent of manganese, or
2.25 percent of silicon, or
1.00 percent of copper, or
0.50 percent of aluminum, or
1.25 percent of chromium, or
0.30 percent of cobalt, or
0.40 percent of lead, or
1.25 percent of nickel, or
0.30 percent of tungsten, or
0.10 percent of molybdenum, or
0.10 percent of niobium (also called columbium), or
0.15 percent of vanadium, or
0.15 percent of zirconium.
All products that meet the written physical description, and in
which the chemistry quantities do not exceed any one of the noted
element levels listed above, are within the scope of this investigation
unless specifically excluded. The following products, by way of
example, are outside and/or specifically excluded from the scope of
this investigation:
SAE grades (formerly also called AISI grades) above 2300;
Ball bearing steels, as defined in the HTSUS;
Tool steels, as defined in the HTSUS;
Silico-manganese steel, as defined in the HTSUS;
Silicon-electrical steels, as defined in the HTSUS, that are
grain-oriented; Silicon-electrical steels, as defined in the HTSUS,
that are not grain-oriented and that have a silicon level exceeding
2.25 percent;
All products (proprietary or otherwise) based on an alloy ASTM
specification (sample specifications: ASTM A506, A507);
Silicon-electrical steels, as defined in the HTSUS, that are
not grain-oriented and that have a silicon level less than 2.25
percent, and
a) fully-processed, with a core loss of less than 0.14 watts/pound
per mil (.001 inches), or
b) semi-processed, with core loss of less than 0.085 watts/pound per
mil (.001 inches);
Certain shadow mask steel, which is aluminum killed cold-
rolled steel coil that is open coil annealed, has an ultra-flat,
isotropic surface, and which meets the following characteristics:
Thickness: 0.001 to 0.010 inches
Width: 15 to 32 inches
Chemical Composition
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Element................................................ C
Weight %............................................... <0.002% ------------------------------------------------------------------------=""> Certain flapper valve steel, which is hardened and tempered,
surface polished, and which meets the following characteristics:
Thickness: 1.0 mm
Width: 152.4 mm
Chemical Composition
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Element........................... C Si Mn P S
Weight %.......................... 0.90-1.05 0.15-0.35 0.30-0.50 0.03 0.006
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[[Page 1097]]
Mechanical Properties
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Tensile Strength....................... 162 Kgf/mm \2\
Hardness............................... 475 Vickers
hardness number
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Physical Properties
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Flatness............................... <0.2% of="" nominal="" strip="" width="" ------------------------------------------------------------------------="" microstructure:="" completely="" free="" from="" decarburization.="" carbides="" are="" spheroidal="" and="" fine="" within="" 1%="" to="" 4%="" (area="" percentage)="" and="" are="" undissolved="" in="" the="" uniform="" tempered="" martensite.="" non-metallic="" inclusion="" ------------------------------------------------------------------------="" area="" percentage="" ------------------------------------------------------------------------="" sulfide="" inclusion.......................................="">
0.04%
Oxide Inclusion.........................................
0.05%
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Compressive Stress: 10 to 40 Kgf/mm \2\
Surface Roughness
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Roughness
Thickness (mm) (m)
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t0.209....................................... Rz0
.5
0.209<>0.310................................. Rz0
.6
0.310<>0.440................................. Rz0
.7
0.440<>0.560................................. Rz0
.8
0.5601
.0
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Certain ultra thin gauge steel strip, which meets the
following characteristics:
Thickness: 0.100 mm +/-7%
Width: 100 to 600 mm
Chemical Composition
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Element........................ C Mn P S Al Fe
Weight %....................... 0.07 0.2-0.5 0.05 0.05 0.07 Balance
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Mechanical Properties
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Hardness............................... Full Hard (Hv 180 minimum)
Total Elongation....................... <3% tensile="" strength.......................="" 600="" to="" 850="" n/mm="" \2\="" ------------------------------------------------------------------------="" physical="" properties="" ------------------------------------------------------------------------="" ------------------------------------------------------------------------="" surface="" finish.........................="">0.3 micron
Camber (in 2.0 m)...................... <3.0 mm="" flatness="" (in="" 2.0="" m)....................="">0.5 mm
Edge Burr.............................. <0.01 mm="" greater="" than="" thickness="" coil="" set="" (in="" 1.0="" m)....................=""><75.0 mm="" ------------------------------------------------------------------------=""> Certain silicon steel, which meets the following
characteristics:
Thickness: 0.024 inches +/-.0015 inches
Width: 33 to 45.5 inches
Chemical Composition
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Element........................ C Mn P S Si Al
Min. Weight %.................. 0.65
Max. Weight %.................. 0.004 0.4 0.09 0.009 0.4
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Mechanical Properties
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Hardness............................... B 60-75 (AIM 65)
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[[Page 1098]]
Physical Properties
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Finish................................. Smooth (30-60 microinches)
Gamma Crown (in 5 inches).............. 0.0005 inches, start measuring
\1/4\ inch from slit edge
Flatness............................... 20 I-UNIT max.
Coating................................ C3A-.08A max. (A2 coating
acceptable)
Camber (in any 10 feet)................ \1/16\ inch
Coil Size I.D.......................... 20 inches
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Magnetic Properties
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Core Loss (1.5T/60 Hz) NAAS............ 3.8 Watts/Pound max.
Permeability (1.5T/60 Hz) NAAS......... 1700 gauss/oersted typical
1500 minimum
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Certain aperture mask steel, which has an ultra-flat surface
flatness and which meets the following characteristics:
Thickness: 0.025 to 0.245 mm
Width: 381-1000 mm
Chemical Composition
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Element............................. C N Al
Weight %............................ <0.01 0.004="" to="" 0.007=""><0.007 ----------------------------------------------------------------------------------------------------------------=""> Certain tin mill black plate, annealed and temper-rolled,
continuously cast, which meets the following characteristics:
Chemical Composition
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Element...................... C Mn P S Si Al As Cu B N
Min. Weight %................ 0.02 0.20 0.03 0.003
Max. Weight %................ 0.06 0.40 0.02 0.023 0.03 0.08 0.02 0.08 0.008
(Aiming (Aiming (Aiming
0.018 0.05) 0.005)
Max.)
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Non-metallic Inclusions: Examination with the S.E.M. shall not
reveal individual oxides > 1 micron (0.000039 inches) and inclusion
groups or clusters shall not exceed 5 microns (0.000197 inches) in
length.
Surface Treatment as follows:
The surface finish shall be free of defects (digs, scratches, pits,
gouges, slivers, etc.) and suitable for nickel plating.
Surface Finish
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Roughness, RA Microinches (Micrometers)
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Aim Min. Max.
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Extra Bright........................ 5(0.1) 0(0) 7(0.2)
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Certain full hard tin mill black plate, continuously cast,
which meets the following characteristics:
Chemical Composition
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Element...................... C Mn P S Si Al As Cu B N
Min. Weight %................ 0.02 0.20 0.03 0.003
Max. Weight %................ 0.06 0.40 0.02 0.023 0.03 0.08 0.02 0.08 0.008
(Aiming (Aiming (Aiming
0.018 0.05) 0.005)
Max.)
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Non-metallic Inclusions: Examination with the S.E.M. shall not
reveal individual oxides > 1 micron (0.000039 inches) and inclusion
groups or clusters shall not exceed 5 microns (0.000197 inches) in
length.
Surface Treatment as follows:
The surface finish shall be free of defects (digs, scratches, pits,
gouges, slivers, etc.) and suitable for nickel plating.
[[Page 1099]]
Surface Finish
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Roughness, RA Microinches (Micrometers)
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Aim Min. Max.
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Stone Finish........................ 16(0.4) 8(0.2) 24(0.6)
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Certain ``blued steel'' coil (also know as ``steamed blue
steel'' or ``blue oxide'') with a thickness and size of 0.38 mm x 940
mm x coil, and with a bright finish;
Certain cold-rolled steel sheet, which meets the following
characteristics:
Thickness (nominal): 0.019 inches
Width: 35 to 60 inches
Chemical Composition
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Element............................. C O B
Max. Weight %....................... 0.004
Min. Weight %....................... 0.01 00.012
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Certain band saw steel, which meets the following
characteristics:
Thickness: 1.31 mm
Width: 80 mm
Chemical Composition
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Element........................ C Si Mn P S Cr Ni
Weight %....................... 1.2 to 1.3 0.15 to 0.35 0.20 to 0.35 0.03 0.007 0.3 to 0.5 0.25
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Other properties:
Carbide: fully spheroidized having >80% of carbides, which are
0.003 mm and uniformly dispersed
Surface finish: bright finish free from pits, scratches, rust,
cracks, or seams
Smooth edges
Edge camber (in each 300 mm of length): 7 mm arc height
Cross bow (per inch of width): 0.015 mm max.
The merchandise subject to this investigation is typically
classified in the HTSUS at subheadings: 7209.15.0000, 7209.16.0030,
7209.16.0060, 7209.16.0090, 7209.17.0030, 7209.17.0060, 7209.17.0090,
7209.18.1530, 7209.18.1560, 7209.18.2550, 7209.18.6000. 7209.25.0000,
7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000,
7210.90.9000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500,
7211.23.6030, 7211.23.6060, 7211.23.6085, 7211.29.2030, 7211.29.2090,
7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000,
7212.40.5000, 7212.50.0000, 7225.19.0000, 7225.50.6000, 7225.50.7000,
7225.50.8010, 7225.50.8085, 7225.99.0090, 7226.19.1000, 7226.19.9000,
7226.92.5000, 7226.92.7050, 7226.92.8050, and 7226.99.0000.
Although the HTSUS subheadings are provided for convenience and
U.S. Customs Service (U.S. Customs) purposes, the written description
of the merchandise under investigation is dispositive.
The Department set aside a period for all interested parties to
raise issues regarding product coverage. From July through October
1999, the Department received responses from a number of parties
including importers, respondents, consumers, and petitioners, aimed at
clarifying the scope of the investigation. See Memorandum to Joseph A.
Spetrini (Scope Memorandum), November 1, 1999, for a list of all
persons submitting comments and a discussion of all scope comments.
There are several scope exclusion requests for products which are
currently covered by the scope of this investigation that are still
under consideration by the Department. These items are considered to be
within the scope for this preliminary determination; however, these
requests will be reconsidered for the final determination. See Scope
Memorandum.
Facts Available
In its response to Section B of the Department's antidumping
questionnaire, CSC reported a code designated ``X'' for certain home
market sales observations in response to requested categories for yield
strength, standard thicknesses, and standard widths. The Department
issued a supplemental questionnaire requesting, in part, that CSC re-
code these observations in conformity with the categories provided in
the original questionnaire. CSC replied that it did not have the
necessary information in its records to comply with the Department's
questionnaire categories and that it had used the ``X'' code to
designate those areas where it did not have the necessary information.
In order to avoid introducing any distortions from product
misclassification in the fair value comparison of CSC's home market
sales to its U.S. sales, we have determined that we cannot use the
product characteristics with a code designated as ``X'' for certain
home market sales and, therefore, the use of facts otherwise available
is necessary in this situation, pursuant to section 776(a) of the Act.
Section 776(a) of the Act provides that ``if an interested party or
any other person--(A) withholds information that has been requested by
the administering authority; (B) fails to provide such information by
the deadlines for the submission of the information or in the form and
manner requested, subject to subsections (c)(1) and (e) of section 782;
(C) significantly impedes a proceeding under this title; or (D)
provides such information but the information cannot be verified as
provided in section 782(i), the administering authority and the
Commission shall, subject to section 782(d), use the facts otherwise
available
[[Page 1100]]
in reaching the applicable determination under this title.'' The
statute requires that certain conditions be met before the Department
may resort to the facts otherwise available. 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, the Department may, subject to
section 782(e), disregard all or part of the original and subsequent
responses, as appropriate. Briefly, section 782(e) provides that the
Department ``shall not decline to consider information that is
submitted by an interested party and is necessary to the determination
but does not meet all the applicable requirements established by the
administering authority'' if the information is timely, can be
verified, is not so incomplete that it cannot be used, and if the
interested party acted to the best of its ability in providing the
information. Where all of these conditions are met, and the Department
can use the information without undue difficulties, the statute
requires it to do so.
As noted above, we determined that we cannot rely on home market
sales for which certain product characteristics were designated as
``X.'' Therefore, in accordance with section 776(a) of the Act, we have
determined that use of facts available is appropriate. Since it is not
possible to determine the extent to which these sales might have served
as comparison merchandise for U.S. sales, we have assigned to any U.S.
sales that did not have identical matches the weighted-average margin
calculated for all identical matches.
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 be reasonably 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 a large
number of producers/exporters of subject merchandise. Instead, we found
that, given our resources, we would be able to investigate the
producer/exporter with the greatest export volume, as identified above.
Because CSC accounted for more than 50 percent of all known exports of
the subject merchandise from Taiwan during the POI, we selected CSC as
the sole respondent. Additionally, on August 6, 1999, we granted a
request from Taiwan Tokkin that it be included as a voluntary
respondent in this investigation.
Product Comparisons
In accordance with section 771(16) of the Act, all products
produced by the respondents covered by the description in the Scope of
Investigation section, above, and sold in Taiwan during the POI are
considered to be foreign like products for purposes of determining
appropriate product comparisons to U.S. sales. We have relied on 14
criteria to match U.S. sales of subject merchandise to comparison-
market sales of the foreign like product: hardening and tempering,
paint, carbon level, quality, yield strength, minimum thickness,
thickness tolerance, width, edge finish, form, temper rolling,
leveling, annealing, and surface finish. These characteristics have
been weighted by the Department where appropriate. 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 as listed above.
Fair Value Comparisons
To determine whether sales of cold-rolled steel products from
Taiwan were made in the United States at less than fair value, we
compared the export price (EP) to the normal value (NV), as described
in the Export Price and Normal Value sections of this notice. In
accordance with section 777A(d)(1)(A)(i) of the Act, we calculated
weighted-average EPs for comparison to weighted-average NVs.
Export Price
In accordance with section 772 of the Act, we calculated an EP for
each sale. Section 772(a) of the Act defines EP as the price at which
the subject merchandise is first sold before the date of importation by
the exporter or producer outside the United States to an unaffiliated
purchaser in the United States or to an unaffiliated purchaser for
exportation to the United States. Consistent with this definition, we
have found that CSC and Taiwan Tokkin made only EP sales during the
POI.
For CSC and Taiwan Tokkin, we calculated EP based on packed prices
charged to the first unaffiliated customer in the United States. We
based EP on ex-factory and FOB prices to unaffiliated customers in the
United States. We made deductions from the starting price, where
appropriate, for movement expenses including foreign brokerage, loading
and inland freight from the factory to the foreign port. Finally, for
Taiwan Tokkin, we increased the starting price by the amount of duty
drawback.
Taiwan Tokkin based its duty drawback calculation on a ratio of
kilograms of raw material required to produce one kilogram of finished
cold-rolled strip. We note that the ratio permitted under the drawback
scheme appears to be at odds with Taiwan Tokkin's own production
information. Accordingly, we will examine this issue closely at
verification to determine whether we should continue to include the
reported amount for duty drawback in our calculation of EP for the
final determination.
Taiwan Tokkin--Country of Origin
Taiwan Tokkin's reported U.S. sales were for merchandise that was
first imported into Taiwan from Japan as cold-rolled coil, processed by
Taiwan Tokkin, and then exported to the United States as cold-rolled
strip. As previously mentioned, petitioners raised the issue of whether
the country of origin of Taiwan Tokkin's exports to the United States
is actually Japan. In their comments on this issue, petitioners argued
that Taiwan Tokkin's production process does not substantially
transform the merchandise and, therefore, it retains Japanese country
of origin. In support of this contention, they put forth the following
arguments: (1) Taiwan Tokkin's imported and exported material are both
cold-rolled products and stay within the same class or kind of
merchandise; (2) under U.S. Customs regulations 19 CFR 120.20 dealing
with the country of origin, a change in HTSUS heading from 7209 to
7211, as
[[Page 1101]]
occurs in this case, does not change the country of origin; and (3)
Taiwan Tokkin's production process does not make any dramatic changes
to the product, and the substantial transformation of the merchandise
occurs in Japan where it was processed from slabs into hot bands and
then cold-rolled into coils.
Taiwan Tokkin contends that the imported merchandise is
substantially transformed in Taiwan and, therefore, acquires Taiwanese
country of origin. Taiwan Tokkin argues that (1) Taiwan Tokkin's
production process of slitting and repeated cold-rolling and annealing
significantly changes the physical characteristics of the imported
material and imparts a spring like-quality to the product, with higher
tensile strength and flexibility; (2) while the raw material has no
other use than for conversion into cold-rolled strip, the finished
product is used in the production of end-products such as tape
measures, springs and parts of electronic machinery; and (3) the value
added to the merchandise through its production process is significant.
We have preliminarily accepted Taiwan Tokkin's claim that its
merchandise sold to the United States is of Taiwanese origin. However,
we intend to continue our analysis of this issue based on our findings
at verification and comments submitted by the interested parties. We
invite interested parties in this proceeding to submit comments or
information concerning this issue, including arguments for the
appropriate treatment of Taiwan Tokkin's sales if the Department
determines that the country of origin of the merchandise in question is
Japan.
Normal Value
A. Selection of Comparison Markets
Section 773(a)(1) of the Act directs that NV be based on the price
at which the foreign like product is sold in the home market, provided
that the merchandise is sold in sufficient quantities (or value, if
quantity is inappropriate) and that there is no particular market
situation that prevents a proper comparison with the EP. The statute
contemplates that quantities (or value) will normally be considered
insufficient if they are less than five percent of the aggregate
quantity (or value) of sales of the subject merchandise to the United
States.
CSC and Taiwan Tokkin had viable home markets of cold-rolled steel
products, and they reported home market sales data for purposes of the
calculation of NV.
In deriving NV, we made adjustments as detailed in Calculation of
Normal Value Based on Home-Market Prices and Calculation of Normal
Value Based on Constructed Value, below.
B. Cost of Production Analysis
Based on allegations contained in the petition and in accordance
with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to
believe or suspect that sales of cold-rolled steel products made in
Taiwan were made at prices below the COP. See Initiation Notice, 64 FR
34194 (June 25, 1999). As a result, the Department conducted an
investigation to determine whether CSC and Taiwan Tokkin made home
market sales during the POI at prices below their respective COPs,
within the meaning of section 773(b) of the Act. We conducted the COP
analysis described below.
1. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated a
weighted-average COP based on the sum of CSC's and Taiwan Tokkin's
respective costs of materials and fabrication for the foreign like
product, plus amounts for general and administrative expenses (G&A),
selling expenses, commissions, packing expenses and interest expenses.
We relied on the COP data submitted by CSC and Taiwan Tokkin in their
respective supplemental cost questionnaire responses, except as noted
below, where the submitted costs were not appropriately quantified or
valued.
CSC
We adjusted CSC's reported scarp recovery values to account for the
overstatement of scrap credits resulting from the inclusion of
downgraded products. Secondly, we adjusted CSC's G&A and financial
expense rations. For the G&A expense ratio, we included certain
revenues and expenses that had been excluded from the reported amount.
In addition, we adjusted the cost of goods sold figure to be on the
same basis as the reported cost of manufacturing. For the financial
expense ratio, we adjusted the cost of goods sold figure to be on the
same basis as the reported cost of manufacturing.
Taiwan Tokkin. Taiwan Tokkin adjusted its reported conversion costs
by excluding costs associated with packing, freight, royalties, and
including costs associated with direct labor. Tokkin calculated this
adjustment as a percentage of conversion costs, but applied the
adjustment to the total cost of manufacturing. We revised Taiwan
Tokkin's cost adjustment percentage to one based on total cost of
manufacturing, so that the adjustment percentage matches the basis to
which it is applied.
Taiwan Tokkin did not submit revised conversion costs for one
control number (CONNUM) for merchandise produced prior to the POI but
sold during the POI. Therefore, we assigned to that CONNUM the reported
direct material costs and the conversion costs of a CONNUM with the
most similar product characteristics.
We adjusted Taiwan Tokkin's G&A and financial expense ratios by
excluding certain costs from the cost of goods sold used in the
denominator to ensure that the denominator is on the same basis as the
cost of manufacturing to which the ratios are being applied. We
adjusted Taiwan Tokkin's financial expense ratio to include certain
financial expenses that had been omitted from the submitted
calculation.
2. Test of Home-Market Sales Prices
We compared the weighted-average COP for Taiwan Tokkin and CSC,
adjusted where appropriate (see above), to home market sales of the
foreign like product, as required under section 773(b) of the Act, in
order to determine whether these sales had been made at prices below
the COP within an extended period of time (i.e., a period of one year)
in substantial quantities 3 and whether such prices were
sufficient to permit the recovery of all costs within a reasonable
period of time.
---------------------------------------------------------------------------
\3\ In accordance with section 773(b)(2)(C)(i) of the Act, we
determined that sales made below the COP were made in substantial
quantities if the volume of such sales represented 20 percent or
more of the volume of sales under consideration for the
determination of NV.
---------------------------------------------------------------------------
On a model-specific basis, we compared the revised COP to the home
market prices, less any applicable movement charges, discounts and
rebates.
3. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of a 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'' 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 POI average costs,
[[Page 1102]]
we also determined that such sales were not made at prices that would
permit recovery of all costs within a reasonable period of time, in
accordance with section 773(b)(2)(D) of the Act. We therefore
disregarded the below-cost sales and used the remaining sales as the
basis for determining NV, in accordance with section 773(b)(1) of the
Act. For those U.S. sales of cold-rolled steel products for which there
were no comparable home-market sales in the ordinary course of trade,
we compared EPs to CV in accordance with section 773(a)(4) of the Act.
See Calculation of Normal Value Based on Constructed Value, below.
C. Calculation of Normal Value Based on Home-Market Prices
We performed price-to-price comparisons where there were sales of
comparable merchandise in the home market that did not fail the cost
test.
For CSC and Taiwan Tokkin, we calculated NV based on delivered or
FOB prices and made deductions from the starting price, where
appropriate, for inland freight. In addition, we made circumstance-of-
sale (COS) adjustments for direct expenses, where appropriate, in
accordance with section 773(a)(6)(C)(iii) of the Act. These included
imputed credit expenses and warranty expenses. For CSC, we also
adjusted for discounts and rebates. In accordance with sections
773(a)(6)(A) and (B) of the Act, for both CSC and Taiwan Tokkin, we
deducted home market packing costs and added U.S. packing costs.
In addition, the Department notes that CSC, during the fourth
quarter of the POI, instituted a ``special incentive program'' for
certain customers in the home market. These sales were included for
purposes of calculating NV for the preliminary determination. At
verification, the Department will conduct a detailed examination of
this program in order to determine whether or not the Department should
continue to include these sales in its calculation of NV for the final
determination.
D. Calculation of Normal Value Based on Constructed Value
Section 773(a)(4) of the Act provides that, where NV cannot be
based on comparison-market sales, NV may be based on CV. Accordingly,
for those models of cold-rolled steel products for which we could not
determine the NV based on comparison-market sales, either because there
were no sales of a comparable product or all sales of the comparison
products failed the COP test, we based NV on CV.
Section 773(e)(1) of the Act provides that CV shall be based on the
sum of each respondent's cost of materials, fabrication, interest
expense, selling, general and administrative (SG&A) expenses and
profit. We made adjustments to each respondent's reported cost as
indicated above in the COP section. In accordance with section
773(e)(2)(A) of the Act, we based SG&A expenses and profit on the
amounts incurred and realized by each respondent in connection with the
production and sale of the foreign like product in the ordinary course
of trade, for consumption in the foreign country.
In addition, for each respondent we used U.S. packing costs as
described in the Export Price section of this notice, above.
We made adjustments to CV for differences in COS in accordance with
section 773(a)(8) of the Act and 19 CFR 351.410. These involved the
deduction of direct selling expenses incurred on home market sales
from, and the addition of U.S. direct selling expenses to, CV.
Level of Trade
In accordance with section 773(a)(1)(B) 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 transaction. The normal-value
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 SG&A
expenses and profit. The U.S. LOT for EP sales is also the level of the
starting-price sale, which is usually from exporter to importer.
To determine whether NV sales are at a different LOT than EP, 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
level-of-trade adjustment under section 773(a)(7)(A) of the Act. 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 implementing these principles in this investigation, we obtained
information from each respondent about the marketing stages involved in
the reported U.S. and home market sales, including a description of the
selling activities performed by the respondents for each channel of
distribution. In identifying LOTs for EP and home market sales, we
considered the selling functions reflected in the starting price before
any adjustments.
With respect to each respondent's EP sales, in this investigation
we found a single LOT in the United States, and a single, identical LOT
in the home market. It was thus unnecessary to make any level-of-trade
adjustment for comparison of EP and home market prices. See Memorandum
to the File: Preliminary Determination Calculation Memorandum for
Taiwan Tokkin Co., Ltd., November 8, 1999, and Memorandum to the File:
Preliminary Determination Calculation Memorandum for China Steel
Corporation, November 8, 1999.
Currency Conversions
We made currency conversions into U.S. dollars in accordance with
section 773A(a) of the Act based on exchange rates in effect on the
dates of the U.S. sales, as certified by the Federal Reserve Bank.
Verification
In accordance with section 782(i) of the Act, we intend to verify
all information relied upon in making our final determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing U.S.
Customs to suspend liquidation of all entries of cold-rolled steel
products from Taiwan, that are entered, or withdrawn from warehouse,
for consumption on or after the date of publication of this notice in
the Federal Register. We are also instructing U.S. Customs to require a
cash deposit or the posting of a bond equal to the weighted-average
amount by which the NV exceeds the EP, as indicated in the chart below.
These instructions suspending liquidation will remain in effect until
further notice.
The weighted-average dumping margins are provided below.
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
CSC........................................................ 14.80
Taiwan Tokkin.............................................. 4.72
All Others................................................. 14.80 \4\
------------------------------------------------------------------------
\4\ In accordance with section 735(c)(5) of the Act and section
351.204(d)(3) of the Department's regulations, we excluded the
weighted-average dumping margin for Taiwan Tokkin, a voluntary
respondent in this investigation, from the calculation of the all-
others rate.
[[Page 1103]]
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final antidumping determination is
affirmative, the ITC will determine whether these imports are
materially injuring, or threaten material injury to, the U.S. industry.
The deadline for that ITC determination would be the later of 120 days
after the date of these preliminary determination or 45 days after the
date of our final determination.
Public Comment
Case briefs for this investigation must be submitted no later than
one week after the issuance of the verification reports. Rebuttal
briefs must be filed within five days after the deadline for submission
of case briefs. A list of authorities used, a table of contents, and an
executive summary of issues should accompany any briefs submitted to
the Department. Executive summaries should be limited to five pages
total, including footnotes.
Section 774 of the Act provides that the Department will hold a
hearing to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs, provided that such a
hearing is requested by any interested party. If a request for a
hearing is made in an investigation, the hearing will tentatively be
held two days after the deadline for submission of the rebuttal briefs,
at the U.S. Department of Commerce, 14th Street and Constitution
Avenue, NW, Washington, D.C. 20230. In the event that the Department
receives requests for hearings from parties to several cold-rolled
cases, the Department may schedule a single hearing to encompass all
those cases. Parties should confirm by telephone the time, date, and
place of the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request within 30 days of
the publication of this notice. Requests should specify the number of
participants and provide a list of the issues to be discussed. Oral
presentations will be limited to issues raised in the briefs.
If this investigation proceeds normally, we will make our final
determination no later than 135 days after the date of publication of
this notice in the Federal Register.
This determination is issued pursuant to sections 733(d) and
777(i)(1) of the Act.
Dated: December 28, 1999.
Holly A. Kuga,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-297 Filed 1-6-00; 8:45 am]
BILLING CODE 3510-DS-P
