[Federal Register Volume 60, Number 237 (Monday, December 11, 1995)]
[Notices]
[Pages 63499-63507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30088]
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DEPARTMENT OF COMMERCE
[A-580-811]
Steel Wire Rope From the Republic of Korea; Final Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
[[Page 63500]]
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On March 17, 1995, the Department of Commerce (the Department)
issued the preliminary results of its 1992-94 administrative review of
the antidumping duty order on steel wire rope from Korea (60 FR 14421;
March 17, 1995). The review covers 25 manufacturers/exporters for the
period September 30, 1992, through February 28, 1994 (the POR). We gave
interested parties an opportunity to comment on our preliminary
results. Based on our analysis of the comments received, we have made
changes, including corrections of certain clerical errors, in the
margin calculations. Therefore, the final results differ from the
preliminary results. The final weighted-average dumping margins for
each of the reviewed firms are listed below in the section entitled
``Final Results of Review.''
EFFECTIVE DATE: December 11, 1995.
FOR FURTHER INFORMATION CONTACT: Thomas O. Barlow, Davina Friedmann,
Matthew Rosenbaum, or Michael Rill, Office of Antidumping Compliance,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue,
Washington, DC 20230; telephone: (202) 482-4733.
SUPPLEMENTARY INFORMATION:
Background
On March 17, 1995, the Department published in the Federal Register
the preliminary results of its 1992-94 administrative review of the
antidumping duty order on steel wire rope from the Republic of Korea
(60 FR 14421). There was no request for a hearing. The Department has
now conducted this review in accordance with section 751 of the Tariff
Act of 1930, as amended (the Tariff Act).
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are references to the provisions as they
existed on December 31, 1994.
Scope of Review
The product covered by this review is steel wire rope. Steel wire
rope encompasses ropes, cables, and cordage of iron or carbon steel,
other than stranded wire, not fitted with fittings or made up into
articles, and not made up of brass-plated wire. Imports of these
products are currently classifiable under the following Harmonized
Tariff Schedule (HTS) subheadings: 7312.10.9030, 7312.10.9060, and
7312.10.9090. Excluded from this review is stainless steel wire rope,
i.e., ropes, cables and cordage other than stranded wire, of stainless
steel, not fitted with fittings or made up into articles, which is
classifiable under HTS subheading 7312.10.6000. Although HTS
subheadings are provided for convenience and Customs purposes, our own
written description of the scope of this review is dispositive.
Best Information Available
In accordance with section 776(c) of the Act, we have determined
that the use of BIA is appropriate for certain firms. In determining
what to use as BIA, the Department employs a two-tiered methodology. In
the case of respondents who do not cooperate, or who significantly
impede the review, we use as BIA the higher of (1) the highest of the
rates found for any firm for the same class or kind of merchandise in
the LTFV investigation or prior administrative reviews; or (2) the
highest calculated rate in the current review for any firm. When a
company substantially cooperates with our requests for information, but
fails to provide all information requested in a timely manner or in the
form requested, we use as BIA the higher of (1) the highest rate
(including the ``all others'' rate) ever applicable to the firm for the
same class or kind of merchandise from the same country from either the
LTFV investigation or a prior administrative review; or (2) the highest
calculated rate in the current review for any firm for the class or
kind of merchandise from the same country (see Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From France, et
al.: Final Results of Antidumping Duty Administrative Reviews, 57 FR
28360 (June 24, 1992)). See also Allied-Signal Aerospace Co. v. United
States, 996 F.2d. 1185 (Fed. Cir. 1993) (Allied Signal); Krupp Stahl AG
et al. v. United States, 822 F. Supp 789 (CIT 1993).
For a discussion of our application of BIA regarding specific
firms, see comments one through five, below.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received case briefs and rebuttal briefs from
the petitioner, the Committee of Domestic Steel Wire Rope and Specialty
Cable Manufacturers (the Committee), and nine respondents including
Boo-Kook Corp. (Boo-Kook), Chung-Woo Rope Co., Ltd. (Chung Woo), Chun
Kee Steel & Wire Rope Co. Ltd. (Chun Kee), Hanboo Wire Rope, Inc.
(Hanboo), Manho Rope & Wire Ltd. (Manho), Kumho Wire Rope Mfg. Co.,
Ltd. (Kumho), Ssang Yong Steel Wire Co., Inc. (Ssang Yong), Sungjin
Company (Sungjin), and Yeonsin Metal Industrial Co., Ltd. (Yeonsin).
Comment 1: The Committee argues that the Department should not use
its two-tiered methodology for establishing the BIA rate for
uncooperative respondents, but instead should apply a dumping margin of
48.8 percent to these firms, as calculated by the Committee. Referring
to its letter of November 15, 1994, the Committee urges the Department
to establish a rate reflective of POR costs and values based on a
comparison of the constructed value of Korean steel wire rope and the
U.S. price of Korean wire rope. It claims that the U.S. price of steel
wire rope from Korea should be based upon an actual price quotation for
sales to the United States.
The Committee cites, in support of that proposition, Sodium
Thiosulfate from the People's Republic of China: Final Results of
Antidumping Duty Administrative Review, 59 FR 12934 (March 8, 1993)
(Sodium Thiosulfate from China). The Committee asserts that, in that
review, the Department used a BIA rate premised upon petitioner-
supplied information because the petitioner demonstrated that costs and
prices in the relevant industry had changed substantially since the
original investigation. The Committee argues that substantial evidence
indicates that Korean wire rope producers' raw material costs increased
dramatically over the POR, while the U.S. price of Korean imports of
carbon steel wire rope declined. The Committee also cites a decision by
the Court of Appeals for the Federal Circuit that states that first-
tier BIA ``merely establishes a presumption that the highest prior
margins are the best information available'' (Allied-Signal at 1185 and
1187). The Committee argues that the presumption may be rebutted with
evidence which included ``all information that is accessible or may be
obtained, whatever its sources,'' citing Timken Co. v. United States,
11 CIT 786, 673 F. Supp. 495, 500 (October 29, 1987).
In further support of its position, the Committee refers to Silicon
Metal From Argentina: Final Results of Antidumping Duty Administrative
Review, 58 FR 65336, 65337 (December 14, 1993) (Silicon Metal from
Argentina). The Committee argues that, in that decision, the Department
reiterated its position and explained that the BIA provision of the
statute
[[Page 63501]]
ensures that the antidumping duties assessed are not less than the
actual amounts might have been, had the Department received full and
accurate information. The Committee concludes that a respondent should
not find itself in a better position as a result of its noncompliance
than it would have had it provided the Department with complete,
accurate and timely data. The Committee argues that respondents are
likely to not submit any information to the Department after
considering the low dumping margin established in Steel Wire Rope from
Korea: Final Determination of Sales at Less Than Fair Value, 58 FR
11029, 11032 (February 23, 1993) (LTFV Final Determination), and the
possibility that the margins calculated in the review will also be low.
It states that the Court of International Trade has affirmed the
appropriateness of the Department's use of information from other
sources. The Committee quotes the Court as saying that BIA ``is not
necessarily accurate information, it is information which becomes
usable because the respondent has failed to provide accurate
information,'' citing Asociacion Colombiana de Exportadores de Flores
v. United States, 13 CIT 13, 28, 704 F. Supp. 1114, 1126.
Boo-Kook responds by arguing that the purpose of BIA is to set an
accurate assessment of current dumping margins. Since there are eight
respondents in this review and three companies in the LTFV Final
Determination for which the Department calculated individual dumping
margins, Boo-Kook asserts that the verified data of the companies for
which the Department calculated dumping margins should be the most
accurate assessment of current dumping margins.
Department's Position: We disagree with the Committee and find that
reliance on petitioner-supplied data as a basis for BIA would be
inappropriate in the context of this review. The Department has broad
discretion in determining what constitutes BIA in a given situation.
Krupp Stahl at 792; see also Allied Signal at 1191: ``[b]ecause
Congress has `explicitly left a gap for the agency to fill' in
determining what constitutes the best information available, the ITA's
construction of the statute must be accorded considerable deference,''
citing Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837, 833-44 (1984). The Department's two-tiered BIA
methodology has been upheld as ``a reasonable and permissible exercise
of the ITA's statutory authority to use the best information available
when a respondent refuses or is unable to provide requested
information.'' Allied Signal at 1192.
The Department has used the two-tiered methodology in the vast
majority of cases involving the application of BIA to non-responsive
companies since the adoption of this approach in the first
administrative review of Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof From Germany, et al.: Final Results
of Antidumping Duty Administrative Reviews (56 FR 31692, 31705 (July
11, 1991)). In such cases we have been satisfied that the two-tiered
methodology effectuates the purpose of the BIA provision of the Act,
which is to encourage compliance in our reviews.
In any given review, a respondent will have knowledge of the
antidumping rates from the investigation and past reviews but not of
the rates that will be established in the ongoing review. Because the
two-tiered approach incorporates the highest rate from the current
review as one source of BIA, potentially uncooperative respondents will
generally be less able to predict their BIA rate as the number of
participants in the ongoing review increases. Thus the two-tiered
methodology induces respondents to participate and receive their own
known rates as opposed to a potentially much higher unknown rate.
Therefore in most cases the BIA selection pursuant to the two-tiered
methodology satisfies the cooperation-inducing function of the BIA
provision. However, the Department recognizes that there are instances
in which the BIA resulting from the two-tiered methodology may not
induce respondents to cooperate. The rare cases in which we have not
relied on this approach have involved an extremely limited number of
participants, and a consequent small number of rates available for use
as BIA. For instance, in Sodium Thiosulfate, we used information
supplied by the petitioner to establish the BIA rate for the one
respondent that had shipments of subject merchandise during the POR.
Similarly, in Silicon Metal, we resorted to petitioner-supplied data
where we had a calculated rate for only one firm: ``[i]n this instance,
we have only Andina's rate from the LTFV investigation * * *. Because
Andina's rate is also the `all other' rate, Silarsa would be assured a
rate no higher than Andina's, the only respondent who cooperated fully
with the Department in this administrative review. The use of the two-
tier methodology, in this instance, restricts the field of potential
BIA rates to the rate established for one firm.'' Silicon Metal, 58 FR
65336, at 65337 (December 14, 1993) (emphasis added). The concern in
such cases with respect to the two-tiered methodology is that the lack
of past rates, as well as the small number of participants in the
current review, could allow a respondent in such a review to manipulate
the proceeding by choosing not to comply with our requests for
information. In such cases the cooperation-inducing function of the BIA
provision of the Act may not be achieved by use of the two-tiered BIA
methodology, in which case the Department will resort to alternatives
sources in determining the BIA rate for uncooperative respondents.
The cases cited by the Committee thus establish only that we will
consider, on a case-by-case basis as appropriate, petitioner-supplied
data in situations involving a number of calculated rates insufficient
to provide an adequate indication of the best information available and
to induce cooperation by respondents in the proceeding. In those cases,
we did not have rates for more than one company and therefore
determined that use of a BIA rate outside our two-tiered methodology
was appropriate to encourage future cooperation.
Our recent determination in Certain Malleable Cast Iron Pipe
Fittings from Brazil; Final Results of Antidumping Duty Administrative
Review is a further example of a situation in which the circumstances
of the case clearly demonstrated that the two-tiered BIA selection was
not sufficient to induce the respondent to cooperate. In Pipe Fittings,
we applied a petition- based BIA rate to a non-responsive company that
was the only company to have ever been investigated or reviewed: ``[we]
have only calculated one margin, which was in the less-than- fair-value
(LTFV) investigation. Due to the unusual situation, we have determined
to use as BIA the simple average of the rates from the petition * * *.
In not responding to our requests for information, Tupy could be
relying upon our normal BIA practice to lock in a rate that is capped
at its LTFV rate.'' Pipe Fittings, 60 FR 41876, 41877-78 (August 14,
1995).
Given the number of rates and respondents involved in both the LTFV
investigation and in this review, the concern over potential
manipulation of antidumping rates cited in Sodium Thiosulfate, Silicon
Metal, and Pipe Fittings does not exist in the present case, wherein we
have calculated rates from three companies in the LTFV final
determination and eight companies in this review. We are satisfied that
selection of the highest of these rates is appropriate for BIA for this
review, is consistent with our practice, and
[[Page 63502]]
effectuates the cooperation-inducing purpose of the BIA rule.
Comment 2: The Committee contends that Boo-Kook should be treated
as an uncooperative respondent in this review and receive a dumping
margin based on the best information available (BIA). It argues that
Boo-Kook was uncooperative since it did not respond to the Department's
cost of production (COP) questionnaire and canceled the scheduled
verification. The Committee states that the Department was unable to
substantiate the information submitted by Boo-Kook since the Department
did not verify the sales questionnaire response. Further, the Committee
claims that the Department has determined that a company which does not
permit verification of its response to the sales questionnaire and does
not respond to the COP questionnaire must be classified as an
``uncooperative'' respondent, citing Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From the Federal Republic of
Germany: Final Determinations of Sales at Less Than Fair Value, 54 FR
18992, 19033 (May 3, 1989) (AFBs from Germany).
In response, Boo-Kook argues that it filed timely responses to the
Department's initial sales questionnaire and to the supplemental
questionnaires. It states that during its preparation of the sales
response it discovered that it was the victim of misconduct, including
embezzlement, by the company's former chief director and the company's
accountant. Due to these circumstances, Boo-Kook contends that key
records were unavailable to it. Boo-Kook maintains that some of the key
records were missing and it assumes that they were destroyed by the
embezzler, while others were confiscated by Korean authorities as
evidence. Hence, Boo-Kook argues that it was unable to undergo
verification or respond to the COP questionnaire. It states further
that the uncooperative (first-tier) BIA rate is intended to induce
foreign manufacturers to respond and that Boo-Kook did respond to the
best of its ability.
Department's Position: We agree with Boo-Kook. Boo-Kook submitted a
timely response to our original and supplemental sales questionnaires.
Before its cost response was due and before the verification, Boo-Kook
informed us that a former president and the present chief accountant
had been arrested and prosecuted for embezzlement. Boo-Kook indicated
that it hoped to recover missing records and be able to respond to the
cost questionnaire in 90 days.
In addition, Boo-Kook also requested that we postpone the
verification for 60 to 90 days. In Allied Signal, the U.S. Court of
Appeals ruled that ``[i]n order to apply the first tier [BIA] to a
particular respondent, the ITA must conclude that the respondent
`refused to cooperate with the ITA or otherwise significantly impeded'
the review. However, if the respondent `substantially cooperated * * *
but failed to provide the information in a timely manner or in the
format required,' the second tier (cooperative rate) is applicable.''
(At 1192). The court concluded, in that case, that, because respondent
supplied as much of the requested information as it could and offered
to provide the remaining information in a simplified form, it was
unreasonable for the Department to have characterized respondent's
behavior as a refusal to cooperate. Therefore, because Boo-Kook
cooperated with the Department to the best of its ability, and given
the unusual and extenuating circumstances, we have applied second-tier
total BIA to Boo-Kook's U.S. sales.
Comment 3: The Committee contends that the Department's preliminary
results regarding Jinyang Wire Rope (Jinyang), Korope Co. (Korope), and
Sungsan Special Steel Processing Inc. (Sungsan) were erroneous. It
states that the Department incorrectly applied a zero dumping margin to
the companies based on the companies' claims that they had no shipments
or sales of subject merchandise during the POR. The Committee states
further that the Department must classify Jinyang and Korope as
uncooperative respondents because their submissions were not submitted
according to the Department's regulations. It claims that it was never
served with submissions from Jinyang and Korope. Petitioner argues that
it has seen in the public file a copy of a letter from the Department
to Jinyang that refers to a June 22, 1994 letter from Jinyang and a
copy of a letter from the Department referring to a July 28, 1994
letter from Korope. In these letters, the Committee further argues, the
Department asked Jinyang and Korope to resubmit their letters. Since
the companies neglected to do so, the petitioner believes that the
Department should consider them to be uncooperative respondents and
apply the first-tier BIA rate to their U.S. sales.
The Committee acknowledges that Sungsan submitted a letter on the
file indicating that it sold subject merchandise during the POR that
was not manufactured by Sungsan. However, the Committee notes, the
Department then sent Sungsan a letter, asking it to demonstrate that
the manufacturer had knowledge of the ultimate destination of the
merchandise. The Committee states that Sungsan failed to respond to the
above-mentioned inquiry and thus should also be treated as an
uncooperative respondent and receive the first-tier BIA rate.
Department's Position: We agree with the Committee regarding
Jinyang and Korope and we disagree regarding Sungsan. Sungsan submitted
for the record on August 5, 1994, a letter and attachment indicating
that the supplier of the steel wire rope that it shipped to the United
States during the POR was aware at the time of purchase that the
product was destined to the United States. The attached invoice from
the supplier to Sungsan indicates the destination as the United States.
Therefore, we have sufficient evidence on the record that the only
shipments of subject merchandise that Sungsan made to the United States
during the POR were manufactured by a supplier that had knowledge that
the product was destined to the United States. Hence, we have not
applied BIA to Sungsan's shipments.
Neither Jinyang nor Korope properly submitted a response to our
original questionnaire. In accordance with section 777(d) of the Tariff
Act, we do not accept documents that are not served on all interested
parties. In addition, section 777(e) of the Tariff Act states that all
submissions shall be submitted in a timely manner. Jinyang submitted a
letter, but did not serve it upon interested parties. Because Jinyang
did not serve interested parties, we have rejected Jinyang's response
and we have applied first-tier BIA to its sales of subject merchandise
to the United States. Korope submitted a late response which it also
did not serve upon interested parties. Therefore, we have rejected
Korope's submission and have applied first-tier BIA to Korope.
Comment 4: The Committee argues that Atlantic and Pacific, Dong-Il
Metal, Dong Yong Rope, Kwang Shin Industries and Seo Hae Industrial
(Seo Hae), which the Department classified as ``unlocated companies,''
should be assigned a BIA rate. It argues that the Department provided
no indication of whether these five companies remain functioning
entities or what efforts the Department took to locate them. Further,
it states that, for Dong-Il Metal, the address was set forth on the
service list for this administrative review. The Committee argues that,
in the absence of verified information, the Department must determine
that these companies are still functioning entities and that they have
refused to cooperate or have significantly impeded this proceeding
[[Page 63503]]
and should be treated as uncooperative respondents.
Department's Position: We disagree with the Committee and have
assigned the ``All Others'' rate to the unlocated companies. The U.S.
Embassy in Seoul, Korea, provided us with information for each company
and their response to our inquiry is in the public file. The Embassy
confirmed, with help from the Korea Iron and Steel Association, that
Atlantic and Pacific was bankrupt, Seo Hae was closed, and Kwang Shin
Industries was closed. None of these companies had forwarding
addresses. The Embassy initially provided us with addresses for Dong-Il
metal and Dong Yong and we sent them questionnaires. We did not receive
responses from these companies and later the questionnaires for these
companies were returned by the U.S. Postal Service as undeliverable.
Also, upon further inquiry, we learned through the Embassy that Dong
Yong Rope and Dong-Il Metal were closed. We are not applying BIA to
these companies because we use BIA as an adverse assumption for
companies that have refused to cooperate in the Department's
solicitation or verification of information. Therefore, we are
continuing to classify these companies as ``unlocated companies,'' and
are assigning them the ``All Others'' rate.
Comment 5: The Committee states that, because the Department did
not verify Chun Kee's COP information, it must use constructed value in
the calculation of the foreign market value for Chun Kee. The Committee
contends that the Department was obligated to verify Chun Kee's COP
response under the statute and the Department's regulations. Further,
it argues that Chun Kee's constructed value information cannot be
relied upon without a cost verification. Therefore, the Committee
asserts, the Department should base its calculation on information
submitted in the Committee's original petition, dated November 15,
1994, which constitutes BIA.
Chun Kee responds by stating that it was fully cooperative and
provided all of the cost information as requested. Further, it was
ready, willing, and able to substantiate its cost information through
verification. It cites Olympic Adhesives v. United States, 889 F.2d
1565, 1574 (Fed. Cir. 1990), to argue that the Department may not make
adverse inferences unless a respondent refuses or is unable to provide
information requested by the Department. Further, Chun Kee argues that
the Committee's request for a verification was untimely and in any case
there was not good cause for verification. Further, even if the
Department should have verified the COP information, Chun Kee asserts
that there would still not be a basis for making adverse inferences
against it.
Department's Position: We agree with Chun Kee. Although the
Committee cites 19 CFR 353.36(a)(1)(v) in arguing that we were required
to verify Chun Kee's submitted information, the statute and regulations
state that we will verify all factual information submitted if no
verification was conducted during either of the two immediately
preceding administrative reviews. Section 776(b)(3)(B) of the Act. See
also 19 CFR 353.36(a)(v)(B). Since this is only the first
administrative review, and no information has been placed on the record
indicating that Chun Kee's response is inaccurate, we are not obligated
to verify any responses. Hence, we have used the cost information Chun
Kee submitted in this review.
Comment 6: The Committee asserts that the Department should reject
the claimed circumstance-of-sale (COS) adjustment to foreign market
value for Chun Kee, Chung Woo, and Manho regarding home market credit
expenses. The Committee argues that these three respondents'
calculations for credit expenses are incorrect because they used the
total value of home market sales, including non-subject merchandise,
and divided this amount by the total accounts receivable balance. The
Committee asserts that these calculations must include non- subject
merchandise since the total sales values of subject merchandise for
each firm vary from the figures in the credit expense calculations. The
Committee argues that the Department has only allowed such an
adjustment when the calculations are exclusive of non-subject
merchandise, citing AFBs from Germany and Final Determination of Sales
at Less Than Fair Value: Polyethylene Terephthalate File, Sheet, and
Strip from the Republic of Korea, 56 FR 16305, 16310 (April 22, 1991)
(Pet Film from Korea).
All three respondents argue that they provided their home market
imputed credit expenses in accordance with well-established Department
policy. They argue further that the Department never asked any of the
respondents to revise their methodology, nor did the petitioner urge
the respondents to do so during the course of the review. They cite
Final Determination of Sales at Less than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel
Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products,
and Certain Cut-to Length Carbon Steel Plate from Korea, 58 FR 37176,
37184 (July 9, 1993) (Carbon Steel Flat Products from Korea), in which
the Department accepted credit expenses where company-wide credit
periods were used to calculate credit. They also state that, for Chun
Kee, Chung Woo, and Manho, the Department verified their methodology
and found no discrepancies. They state that, while the calculation
included data on non-subject merchandise, there is no difference
between the payment terms for subject and non-subject merchandise, nor
do terms of payment under the respondents' open accounting system
recognize a difference between subject and non-subject merchandise. Due
to the similarities among all of the products they sold and the
similarities of the payment, the respondents claim that there is no
business reason to maintain different accounts based on different types
of merchandise, and the payment methods do not even allow it. Hence,
respondents argue, they could not possibly provide information that
does not exist in their accounting records. Further, the respondents
claim that their case is not analogous to the cases petitioner cites
since, in AFBs from Germany, by including sales of non-subject
merchandise in the turnover rate calculation, the respondent distorted
the actual average credit period of the subject merchandise. In
addition, the respondents assert, at verification in AFBs from Germany,
the Department found that the average credit period for the subject
merchandise was much less than the respondent had originally reported.
Chun Kee, Chung Woo and Manho argue that there is no indication that
the inclusion of non-subject merchandise in their calculations of the
turnover period distorts the credit calculation. Further, respondents
claim that, in Pet Film from Korea, the Department accepted a
respondent's company-wide turnover calculation. Respondents claim that
the only difference between Pet Film from Korea and the present review
is that in the present case the accounts receivable balances for
subject and non-subject merchandise cannot be separated. Therefore,
respondents argue, the Department should accept their company-wide
turnover calculations.
Department's Position: We disagree with the Committee and have not
changed our adjustment for home market credit expenses. In AFBs from
Germany, as cited by the Committee, we rejected the respondent's
calculation of home market credit expenses because its calculation
distorted the actual average credit period on the products under
investigation and we discovered that the average credit period on sales
of subject
[[Page 63504]]
merchandise in the home market was consistently much less than
respondent had originally reported. In Pet Film from Korea, we accepted
respondent's reported home market credit expenses and at verification
we calculated all balances exclusive of non-subject merchandise. In
that case, we also indicated that reliance on an average collection
period method to determine home market credit expense is reasonable.
At verification of Chun Kee, Chung Woo, and Manho, we verified the
amounts of total sales and receivables and found no discrepancies and
have no reason to believe that the inclusion of sales not under review
distorted the actual average credit period on the products under
review. Moreover, it has been our practice to accept such calculations
where we are satisfied that a company has provided us reasonable
information, given its normal record-keeping system. See Carbon Steel
Flat Products from Korea. Therefore, we are accepting Chun Kee's, Chung
Woo's, and Manho's calculations of home market credit expenses.
Comment 7: The Committee argues that six respondents incorrectly
calculated the turnover ratio in their calculations of imputed credit
by including value added tax (VAT) in the accounts receivable (AR)
balance and the total home market sales amount. The Committee argues
that the Department should revise the home market credit expenses for
these respondents by excluding VAT. The Committee cites Pet Film from
Korea and argues that the Department determined in that case that an
adjustment for VAT payments was not warranted when the respondent did
not pay the VAT to the government at the time of sale, but instead
maintained a rolling account. Citing the LTFV Final Determination at
11032 for this case, the Committee asserts that the Department
determined that the calculation of home market credit expenses
inclusive of VAT was erroneous.
Respondents claim that they included the VAT both in the numerator
and the denominator in the calculation of the turnover ratio, resulting
in an ``apples-to-apples'' ratio and the same results would be achieved
by excluding VAT from total home market sales and the AR balance. They
also argue that VAT is part of the actual sales price respondents
charged to their customers and, therefore, they should receive an
imputed credit expense on the VAT. They claim that removing the VAT
would be equivalent to removing the profit from the sales price. They
cite Color Television Receivers from Korea: Final Results of
Antidumping Duty Determination, 51 FR 41365 (November 14, 1986), to
support their position that respondents justifiably may include VAT in
their total sale price when calculating credit expense.
Department's Position: We disagree with the Committee concerning
exclusion of VAT from the turnover ratio calculation. The respondents
calculated the turnover rates reasonably, including VAT in the AR
balance and the total home market sales amount, and, because VAT is
included in both the denominator and the numerator of the turnover
ratio, the resulting figure is not distorted. However, we agree with
the Committee concerning the adjustment to FMV for the imputed VAT
credit expenses. We find that there is no statutory or regulatory
requirement for making the proposed adjustment. While we recognize that
there may be a potential opportunity cost associated with the
respondents' prepayment of the VAT, this fact is not sufficient for us
to make an adjustment in price-to-price comparisons. Most charges or
expenses associated with price-to-price comparisons are either prepaid
or paid for at some point after the cost is incurred and they may each
involve an opportunity cost or gain. Therefore, to allow an adjustment
for the VAT in this case would imply that we make adjustments for every
charge and expense reported by the respondents. Such an exercise would
make our dumping calculations inordinately complicated, placing an
unreasonable and onerous burden on both respondents and the Department
(see LTFV Final Determination at 11032). Therefore, we have changed the
final results and adjusted the credit expense to not include VAT for
the final results, and we have not adjusted the potential opportunity
cost related to each expense.
Comment 8: The Committee asserts that the Department must revise
its calculations of the addition to United States price (USP) for
Korean VAT. Although the Department stated that it had applied its
methodology from Silicomanganese from Venezuela: Notice of Preliminary
Determination of Sales at Less Than Fair Value and Postponement of
Final Determination, 59 FR 31204 (June 17, 1994) (Silicomanganese from
Venezuela), the Committee asserts that, for some respondents, the
Department's calculations in this case contradicted Silicomanganese
from Venezuela. The committee claims that, although the Department
stated in Silicomanganese from Venezuela that the addition to USP
should be the result of applying the foreign market tax rate to the
price of the United States merchandise at the same point in the chain
of commerce that the foreign market tax was applied to foreign market
sales, in the preliminary results the Department performed the VAT
adjustment to the net unit price of subject merchandise, which includes
an adjustment for duty drawback. The Committee argues that the addition
of the amount for duty drawback to the base price against which the
Department applied VAT was inconsistent with earlier determinations. In
the Committee's view, the Department should not apply VAT to the duty
drawback adjustment because respondents do not receive duty drawback on
sales in the home market. Therefore, the Committee argues, to apply a
VAT adjustment after adjusting USP for duty drawback ignores the
importance of applying VAT at an analogous point in the chain of
commerce. In addition, the Committee argues that the Department must
limit the VAT adjustment to the USP at the absolute level of the VAT
adjustment it applies to the home market price of the subject
merchandise.
Respondents argue that the Court of International Trade has upheld
the Department's decision to include duty drawback in the USP base to
calculate the VAT adjustment in Avesta Sheffield v. United States,
Court No. 93-01-00062, Slip Op. 94-53 (1994). They state that the
Department, in that case, argued that it includes duty drawback in the
U.S. base to avoid the creation of fictitious margins. Respondents
argue that the cases the Committee cites are not relevant here and that
they simply explain that the tax base for the U.S. sale should be
calculated by applying the foreign market tax rate to the price of the
United States merchandise at the same point in the chain of commerce
that the foreign market tax was applied to the foreign market sale. The
respondents interpret Section 772(d) (1)(B) of the Tariff Act to mean
that USP is comparable to the home market price only when duty drawback
is added to USP, since this is the price which is comparable to the
home market price. Concerning the Committee's proposed limit on the VAT
adjustment, the respondents argue that the CIT presently requires the
Department to apply the home market tax rate to a U.S. tax base that is
appropriately adjusted rather than adjusting for the absolute amount of
the foreign tax. They further argue that it is not appropriate to limit
the adjustment under the new methodology in which the Department
applies the home market tax rate to the USP citing Zenith Electronics.
Corp. v. United
[[Page 63505]]
States, Consol. Ct. No. 88-07-00488, Slip op. 95-38 (1995). The
respondents also cite Zenith Electronic. Corp. v. United States, 10 CIT
268, 633 F. Supp. 1382 (1986), to argue that the Department's prior
methodology is no longer applicable.
Department's Position: In light of the Federal Circuit's decision
in Federal Mogul v. United States, CAFC No. 94-1097, the Department has
changed its treatment of home market consumption taxes. Where
merchandise exported to the United States is exempt from the
consumption tax, the Department will add to the U.S. price the absolute
amount of such taxes charged on the comparison sales in the home
market. This is the same methodology that the Department adopted
following the decision of the Federal Circuit in Zenith v. United
States, 988 F. 2d 1573, 1582 (1993), and which was suggested by that
court in footnote 4 of its decision. The Court of International Trade
(CIT) overturned this methodology in Federal Mogul v. United States,
834 F. Supp. 1391 (1993), and the Department acquiesced in the CIT's
decision. The Department then followed the CIT's preferred methodology,
which was to calculate the tax to be added to U.S. price by multiplying
the adjusted U.S. price by the foreign market tax rate; the Department
made adjustments to this amount so that the tax adjustment would not
alter a ``zero'' pre-tax dumping assessment.
The foreign exporters in the Federal Mogul case, however, appealed
that decision to the Federal Circuit, which reversed the CIT and held
that the statute did not preclude Commerce from using the ``Zenith
footnote 4'' methodology to calculate tax-neutral dumping assessments
(i.e., assessments that are unaffected by the existence or amount of
home market consumption taxes). Moreover, the Federal Circuit
recognized that certain international agreements of the United States,
in particular the General Agreement on Tariffs and Trade (GATT) and the
Tokyo Round Antidumping Code, required the calculation of tax-neutral
dumping assessments. The Federal Circuit remanded the case to the CIT
with instructions to direct Commerce to determine which tax methodology
it will employ.
The Department has determined that the ``Zenith footnote 4''
methodology should be used. First, as the Department has explained in
numerous administrative determinations and court filings over the past
decade, and as the Federal Circuit has now recognized, Article VI of
the GATT and Article 2 of the Tokyo Round Antidumping Code required
that dumping assessments be tax-neutral. This requirement continues
under the new Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade. Second, the Uruguay Round Agreements
Act (URAA) explicitly amended the antidumping law to remove consumption
taxes from the home market price and to eliminate the addition of taxes
to U.S. price, so that no consumption tax is included in the price in
either market. The Statement of Administrative Action (p. 159)
explicitly states that this change was intended to result in tax
neutrality.
While the ``Zenith footnote 4'' methodology is slightly different
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA
law required that the tax be added to United States price rather than
subtracted from home market price, it does result in tax- neutral duty
assessments. In sum, the Department has elected to treat consumption
taxes in a manner consistent with its longstanding policy of tax-
neutrality and with the GATT. Accordingly, in the final results, we
have not applied VAT to the adjustments for duty drawback.
Comment 9: Chung Woo, Hanboo, Kumho, Ssang Yong, Sungjin and
Yeonsin disagree with the Department's decision not to adjust USP for
duty drawback. They argue that it was inappropriate to deny the
adjustment simply because the respondents used the ``simplified fixed
amount duty drawback application'' method. Respondents argue that this
method, in which the Korean Customs Authority determines and refunds
duty drawback using a percentage of the export dollar amount, reflects
the Korean government's analysis of the average drawback amounts given
for particular products under the individual method (which refunds duty
drawback on a product-specific basis). They cite Article 2.6 of the
GATT Antidumping Code which states that ``due allowance shall be made
in each case, on its merits, for the difference in conditions and terms
of sale, for the differences in taxation, and for the other differences
affecting price comparability.'' In this case, the respondents view
duty drawback as a difference in taxation which affects comparability
of transactions. In addition, respondents argue, the Department
verified that they receive duty drawback under this simplified method.
The Committee argues that the respondents fail to meet the
requirements of the Department's two-pronged test for determining
whether a party is entitled to an adjustment to USP for duty drawback.
Under this test, according to the Committee, a respondent must
demonstrate that (1) the import duty and the rebate received under the
duty drawback program are directly linked to and dependent upon one
another, and (2) there were sufficient imports of raw materials to
account for the duty drawback received on exports of the manufactured
product. The Committee claims that this has been upheld by the Court of
International Trade, citing Far East Machinery Co. v. United States, 12
CIT 972, 699 F. Supp. 309 (1988), and Carlisle Tire & Rubber Co. v.
United States, 11 CIT 168 (1987). The Committee argues that, in this
case, the respondents received a fixed amount of duty drawback based on
the export dollar amount and did not demonstrate that the drawback
amounts they received were contingent upon the weight and value of
imported raw materials incorporated in the exported merchandise. The
Committee cites section 772(a)(1)(B) of the Tariff Act to support its
view that USP must be increased by ``the amount of any import duties
imposed by the country of exportation which have been rebated, or which
have not been collected, by reason of the exportation of the
merchandise to the United States.'' In this case, the Committee claims,
the Department is left without means for determining the amount of any
import duties rebated on particular export shipments because
respondents received duty drawback under the simplified method.
Department's Position: We agree with the Committee. As we stated in
the preliminary results, we did not adjust USP for duty drawback for
respondents that reported using the simplified method. Under this
method, the respondents were unable to demonstrate a connection between
imports for which they paid duties and exports of steel wire rope. The
second prong of our two- pronged test requires sufficient imports of
raw materials to account for the duty drawback received on exports of
the manufactured product (see Fourth Review of AFBs): ``[t]he second
prong requires the foreign producer to show that it imported a
sufficient amount of raw materials (upon which it paid import duties)
to account for the exports, based on which it claimed rebates.'' In its
supplemental questionnaire response of December 19, 1994, Sungjin
stated that it is not required to demonstrate to the Korean government
that the product it exports contains the actual imported product. All
of the respondents clearly stated in their questionnaire responses that
the
[[Page 63506]]
Korean government determines the drawback amount using its calculation
of the amount of duty each importer paid on average. Hence, although
respondents do not have to tie their imports to the exports in order to
receive duty drawback from the Korean government, this average drawback
approach does not satisfy the second prong of our duty drawback test.
Although we verified that respondents received duty drawback under the
simplified method, an adjustment to USP to determine the amount of
dumping of a specific product might be distorted if that adjustment has
not been calculated on a product-specific basis. Therefore, we have not
adjusted USP for duty drawback where the respondents used the
simplified method.
Comment 10: Ssang Yong asserts that the Department failed to adjust
its USP for drawback it received using the individual drawback system.
Ssang Yong further states that it received duty drawback under the
individual method and the simplified method. Ssang Yong states that the
Department verified its records for drawback and, citing the
verification report, was satisfied that there were no discrepancies.
Ssang Yong requests that the Department adjust USP for duty drawback in
the cases where it was received under the individual drawback system.
Department's Position: We are satisfied that Ssang Yong's
calculation of duty drawback under the individual method, as calculated
during a portion of the POR, meets our test and have adjusted USP for
duty drawback where appropriate.
Comment 11: Chun Kee asserts that the Department calculated the VAT
tax twice on its home market sales by multiplying the net home market
price (NETPRIH) by the VAT rate, and by multiplying the final foreign
market value (FUPDOL), which the Department derives from NETPRIH, by
the VAT rate later in the calculations. Chun Kee states that all
positive and negative adjustments to the gross unit price must be
multiplied by the VAT rate, but argues that the Department's
calculations inflate the entire net price by applying the VAT rate
twice.
The Committee responds, that, according to the Analysis Memorandum
for Chun Kee, all positive and negative adjustments to the gross unit
price must be multiplied by the VAT rate. The Committee further claims
that first the Department performs the VAT adjustment with respect to
negative adjustments and, later in the calculations, performs the
adjustment with respect to the positive adjustments, and, hence, there
was no double-counting of the VAT rate.
Department's Position: We agree with Chun Kee that we made a
ministerial error. However, for the final results we have made tax
adjustments based on our new methodology. See comment eight above.
Comment 12: Chun Kee and Manho contend that, in a number of cases,
they provided similar home market matches for U.S. sales, but the
Department calculated constructed value to determine the dumping
margin. They explain that this occurs in the model match portion of the
Department's program. Respondents suggest that, because the
Department's program retains only the first occurrence of each home
market model that matches a U.S. sale, even though a home market model
may be comparable to more than one U.S. model, subsequent U.S. sales
cannot find a match and, therefore, the Department relied on
constructed value. They recommend that one way to correct this would be
to ensure that every U.S. sale which does not have an identical home
market match, has a home market control number attached to the
observation so that a merge of databases and information can occur when
appropriate.
Department's Position: We agree with respondents and have ensured
that, where appropriate, each U.S. sale is matched to a home market
model.
Comment 13: Chun Kee claims that the Department inadvertently added
home market packing to FMV instead of subtracting the expense. It
claims that this had a very large impact on FMV and provides an example
of the effect of this error.
The Committee argues that Chun Kee's explanation of the error is
incorrect and that the Department's calculation of FMV is correct.
Department's Position: We agree with Chun Kee and have corrected
this ministerial error. In our calculations for Chun Kee we
inadvertently inserted a minus sign twice, which had the effect of
adding packing instead of subtracting it. We have corrected this by
deleting one of the minus signs.
Comment 14: Chun Kee claims that the Department failed to subtract
home market inspection fees and rebates from the home market net price
in its calculations.
Department's Position: We agree with Chun Kee and have corrected
this ministerial error.
Comment 15: Chun Kee and Manho assert that major errors exist in
the COP portion of the Department's calculations which affect the
integrity of the COP test. Respondents request that the Department
correct these errors for the final results.
Department's Position: We agree with Chun Kee and Manho. We have
corrected the error.
Comment 16: Chun Kee asserts that the Department neglected to apply
the 90/60 day contemporaneity guideline for finding home market sales
matches. It claims further that the Department's calculations relied
only on home market sales in the same month as the U.S. sale, and,
instead of examining the 90/60 window for home market sales, the
Department relied on constructed value to determine FMV.
Department's Position: We agree with Chun Kee and have applied our
90/60 day contemporaneity guideline in our calculations for Chun Kee.
Comment 17: Chun Kee claims that the Department failed to
incorporate the corrections which Chun Kee submitted in attachment 13
of its supplemental questionnaire response. Chun Kee requests that the
Department reflect these corrections in the final results.
Department's Position: We agree with Chun Kee and have made these
corrections.
Comment 18: Manho claims that the Department mistakenly added U.S.
packing to the FMV, even though the calculations for constructed value
contains U.S. packing costs. Respondent requests that the Department
correct this double-counting error.
Department's Position: We agree with Manho and have corrected this
ministerial error.
Comment 19: Manho claims that the Department incorrectly subtracted
duty drawback from USP rather than adding it, as the statute requires.
Manho requests that the Department correct this error.
Department's Position: We agree with Manho and have corrected this
ministerial error.
Final Results of Review
We determine the following percentage weighted-average margins
exist for the period September 30, 1992, through February 28, 1994:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Atlantic & Pacific......................................... 1.51
Boo Kook Corporation....................................... 1.51
Chun Kee Steel & Wire Rope Co., Ltd........................ 0.20
Chung Woo Rope Co., Ltd.................................... 0.14
Dae Heung Industrial Co.................................... (\1\)
Dae Kyung Metal............................................ 1.51
Dong-Il Metal.............................................. 1.51
Dong-Il Steel Manufacturing Co., Ltd....................... 1.51
Dong Young................................................. 1.51
[[Page 63507]]
Hanboo Wire Rope, Inc...................................... 0.51
Jinyang Wire Rope, Inc..................................... 1.51
Korea Sangsa Co............................................ (\1\)
Korope Co.................................................. 1.51
Kumho Rope................................................. 0.01
Kwang Shin Ind............................................. 1.51
Kwangshin Rope............................................. 1.51
Manho Rope & Wire, Ltd..................................... 0.00
Myung Jin Co............................................... 1.51
Seo Hae Ind................................................ 1.51
Seo Jin Rope............................................... 1.51
Ssang Yong Steel Wire Co., Ltd............................. 0.06
Sung Jin................................................... 0.04
Sungsan Special Steel Processing Inc....................... (\1\)
TSK (Korea) Co., Ltd....................................... (\1\)
Yeonsin Metal.............................................. 0.18
------------------------------------------------------------------------
\1\ No shipments or sales subject to this review.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between USP and FMV may vary from the percentages stated
above. The Department will issue appraisement instructions on each
exporter directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
for all shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date of these
final results of this administrative review, as provided by section
751(a)(1) of the Act: (1) The cash deposit rates for the reviewed
companies will be those rates established above (except that if the
rate for a firm is de minimis, i.e., less than 0.5 percent, a cash
deposit of zero will be required for that firm); (2) for previously
reviewed or investigated companies not listed above, the cash deposit
rate will continue to be the company-specific rate published for the
most recent period; (3) if the exporter is not a firm covered in this
review, a prior review, or the original LTFV investigation, but the
manufacturer is, the cash deposit rate will be the rate established for
the most recent period for the manufacturer of the merchandise; and (4)
if neither the exporter nor the manufacturer is a firm covered in this
or any previous review or the original investigation, the cash deposit
rate will be 1.51 percent, the ``All Others'' rate established in the
LTFV Final Determination (58 FR 11029).
These deposit requirements shall remain in effect until publication
of the final results of the next administrative review.
This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification
of the return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: December 4, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-30088 Filed 12-8-95; 8:45 am]
BILLING CODE 3510-DS-P
