[Federal Register Volume 64, Number 42 (Thursday, March 4, 1999)]
[Notices]
[Pages 10445-10448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5396]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-833]
Stainless Steel Bar From Japan: Preliminary Results of
Antidumping Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping administrative
review.
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SUMMARY: The Department of Commerce is conducting an administrative
review of the antidumping duty order on stainless steel bar from Japan
in response to a request from a respondent, Aichi Steel Works, Ltd.
This review covers the period February 1, 1997, through January 31,
1998.
We preliminarily determine that sales have been made below normal
value (NV). Interested parties are invited to comment on these
preliminary results. Parties who submit argument are requested to
submit with the argument (1) a statement of the issue and (2) a brief
summary of the argument.
EFFECTIVE DATE: March 4, 1999.
FOR FURTHER INFORMATION CONTACT: Minoo Hatten or Robin Gray, Office of
AD/CVD Enforcement, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
1690 or (202) 482-4023, respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
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 the Department of Commerce's (the
Department's) regulations are to 19 CFR Part 351 (1998).
Background
On February 27, 1998, the Department received a request from Aichi
Steel Works, Ltd. (Aichi) to conduct an administrative review of the
antidumping duty order on stainless steel bar (SSB) from Japan. On
March 23, 1998, the Department published a notice of initiation of an
administrative review of Aichi, covering the period February 1, 1997,
through January 31, 1998, in the Federal Register (63 FR 13837).
On May 29, 1998, Al Tech Specialty Steel Corp., Dunkirk, N.Y.,
Carpenter Technology Corp., Reading, PA, Republic Engineered Steels,
Inc., Massillon, OH, Slater Steels Corp., Fort Wayne, IN, Talley Metals
Technology, Inc., Hartsville, SC, and the United Steel Workers of
America, AFL-CIO/CLC, collectively petitioners in the less-than-fair
value (LTFV) investigation (hereafter petitioners), requested that the
Department conduct an investigation to determine if Aichi made sales at
prices below its cost of production (COP) during the 1997-1998 review
period.
On July 10, 1998, based on petitioners' allegation and the evidence
on the record, the Department determined that there were reasonable
grounds to believe or suspect that Aichi made sales at prices below its
COP, in accordance with section 773(b)(2) (A)(i) of the Act, and
initiated a COP investigation of Aichi pursuant to section 773(b)(1) of
the Act (see the Memorandum To File (July 10, 1998) located in Room B-
099 of the main Commerce building).
On September 28, 1998, the Department conducted a sales
verification using standard verification procedures. Our verification
results are outlined in the public version of the verification report
(see verification report from analysts to file, dated December 21,
1998).
Scope of Review
The merchandise covered by this review is stainless steel bar
(SSB). For purposes of this review, the term ``stainless steel bar''
means articles of stainless steel in straight lengths that have been
either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise
cold-finished, or ground, having a uniform solid cross section along
their whole length in the shape of circles, segments of circles, ovals,
rectangles (including squares), triangles, hexagons, octagons or other
convex polygons. SSB includes cold-finished SSBs that are turned or
ground in straight lengths, whether cold-finished SSBs that are turned
or ground in straight lengths, whether produced from hot-rolled bar or
from straightened and cut rod or wire, and reinforcing bars that have
indentations, ribs, groves, or other deformations produced during the
rolling process.
Except as specified above, the term does not include stainless
steel semi-finished products, cut-length flat-rolled products (i.e.,
cut-length rolled products which if less than 4.75 mm in thickness have
a width measuring at least 10 times the thickness or if 4.75 mm or more
in thickness having a width which exceeds 150 mm and measures at least
twice the thickness), wire (i.e., cold-formed products in coils, of any
uniform solid cross section along their whole length, which do not
conform to the definition of flat-rolled products), and angles, shapes
and sections.
The SSB subject to this order is currently classifiable under
subheadings 7222.10.0005, 7222.10.0050, 7222.20.0005, 7222.20.0045,
7222.20.0075, and 7222.30.0000 of the Harmonized Tariff Schedule of the
United States (``HTSUS''). Although the HTSUS subheadings are provided
for convenience and customs purposes, our written description of the
scope of this order is dispositive.
United States Price
In calculating the price to the United States, we used export price
(EP) as defined in section 772(a) of the Act, because the subject
merchandise was sold to an unaffiliated U.S. purchaser in the United
States prior to the date of importation into the United States and the
use of constructed export price was not indicated by the facts of
record.
We calculated EP for U.S. sales based on F.O.B. Japan port prices
to the United States. We made adjustments, where appropriate, for
domestic inland freight, warehousing expenses, and brokerage and
handling, in accordance with section 772(c)(2)(A) of the Act.
Aichi claimed that an upward adjustment to EP was appropriate to
account for a ``duty drawback'' program. As stated in Certain Welded
Carbon Standard Steel Pipes and Tubes from India (62 FR 47632, 47635,
September 10, 1997), ``we determine whether an adjustment to U.S. price
for a respondent's claimed duty drawback is appropriate when the
respondent can demonstrate that it meets both parts of our two-part
test. There must be: (1) a sufficient link between the import duty
[[Page 10446]]
and the rebate, and (2) a sufficient amount of raw materials imported
and used in the production of the final exported product.'' As
discussed below, because the respondent met these criteria, we have
made an adjustment to EP.
Aichi participates in Japan's duty-drawback program through its
operation of a ``hozei area,'' which is similar to a bonded warehouse.
Aichi posts a bond on all materials that enter the warehouse. If Aichi
utilizes the imported materials for the production of merchandise that
is exported, Japanese Customs Authority then releases the bond. If the
imported materials are not used in the production of exported
merchandise, Aichi pays import duties on the materials.
We examined a listing Aichi sent to the hozei area as notification
of the export of merchandise that was manufactured using materials
entered under bond. We tied specific transactions from this listing to
the U.S. sales listing Aichi submitted to the Department. See
Verification Report dated December 21, 1998. Thus, we granted an upward
adjustment to EP because Aichi was able to show both (1) a link between
the import duty and the rebate, and (2) a sufficient amount of raw
materials imported and used in the production of the final exported
product.
No other adjustments to EP were claimed.
Normal Value
On April 27, 1998, Aichi requested that the Department not require
it to report home market sales that would not likely be needed for
matching purposes. Aichi claimed that there are a limited number of
home market sales of SSB during the period of review (POR) that will
match to U.S. sales for purposes of calculating dumping margins. In
addition, Aichi requested that it not be required to report resale
information for its affiliated customers (downstream sales), with the
exception of its subsidiary trading company, Aiko Corporation.
On May 1, 1998, the Department granted Aichi's request in part by
permitting Aichi to report only home market sales of hot-rolled
merchandise. In the letter of May 1, 1998, the Department requested
additional information from Aichi concerning its downstream sales. On
June 11, 1998, the Department issued additional questions seeking
further clarification of downstream-sales information.
After a complete analysis of all the information on the record, on
July 14, 1998, the Department informed Aichi that it was required to
report all downstream sales made by its affiliates.
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a basis for calculating NV, we compare
the respondent's volume of home market sales of the foreign like
product to the volume of U.S. sales of the subject merchandise, in
accordance with section 773(a) of the Act. Because the aggregate volume
of home market sales of the foreign like product was greater than five
percent of the aggregate volume of U.S. sales of the subject
merchandise, we determined that the home market provides a viable basis
for calculating NV. Therefore, in accordance with section
773(a)(1)(B)(i) of the Act, we based NV on the price at which the
foreign like product was first sold to unaffiliated customers for
consumption in the exporting country, in the usual commercial
quantities and in the ordinary course of trade. We matched EP sales to
sales at the same LOT in the home market and made no LOT adjustment.
(See Level of Trade below.)
After disregarding appropriate below-cost sales (see Cost-of-
Production Analysis below), pursuant to section 777A(d)(2) of the Act,
we compared the EP sales of individual transactions to the monthly
weighted-average price of sales of the most similar foreign like
product. Where possible, we based NV on delivered prices to
unaffiliated purchasers in the home market. Where applicable, we made
adjustments to home market price for billing adjustments, inland
freight, warehousing expenses, discounts and rebates. Subject
merchandise sold in the United States was compared to home market
products by applying the following criteria on a hierarchical basis:
general type of finish, grade, remelting, type of final finishing
operation, shape and size.
Home market prices were based on delivered prices to affiliated or
unaffiliated purchasers. When applicable, we made adjustments for
differences in packing and for movement expenses in accordance with
sections 773(a)(6)(A) and (B) of the Act. We also made adjustments for
differences in cost attributable to differences in physical
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii)
of the Act and for differences in circumstances of sale (COS) in
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR
351.410. To make COS adjustments, we reduced home market price by an
amount for home market credit and we increased it by an amount for U.S.
credit expenses.
Level of Trade
As set forth in section 773(a)(1)(B)(i) of the Act and in the
Statement of Administrative Action (SAA) accompanying the Uruguay Round
Agreements Act, at 829-831 (see H.R. Doc. No. 316, 103d Cong., 2d Sess.
829-831 (1994)), to the extent practicable, the Department calculates
NV based on sales at the same level of trade (LOT) as the U.S. sales
(either EP or Constructed Export Price). When the Department is unable
to find sale(s) in the comparison market at the same LOT as the U.S.
sale(s), the Department may compare sales in the U.S. and foreign
markets at different LOTs. The NV LOT is that of the starting-price
sales in the home market. When NV is based on CV, the LOT is that of
the sales from which we derive selling, general and administrative
expenses (SG&A) and profit.
To determine whether home market sales are at a different LOT than
U.S. sales, we examine stages in the marketing process and selling
functions along the chain of distribution between the producer and the
unaffiliated customer. If the comparison-market sales are at a
different LOT and the differences affect price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison-market sales at the LOT of
the export transaction, we make a LOT adjustment under section
773(a)(7)(A) of the Tariff 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 review, we examined
information from the respondent regarding the marketing stages involved
in the reported home market and EP sales, including a description of
the selling activities performed by Aichi for each channel of
distribution. Aichi reported three channels of distribution in the home
market and claimed five levels of trade for its home market sales--
consignment sales to trading companies, consignment sales to direct
distributors, non-consignment sales to trading companies, non-
consignment sales to distributors and non-consignment sales to end-
users. During verification, we examined Aichi's reported LOTs further.
Based on our analysis of information on the record, we determine
that there are no differences with respect to selling functions between
consignment and non-consignment sales. Specifically, there are no
differences between
[[Page 10447]]
consignment and non-consignment sales with respect to strategic and
economic planning, market research, computer, legal, accounting, audit,
business systems development assistance, personnel assistance,
engineering services, research and development technical programs,
advertising, procurement and sourcing, sales calls/assistance and post-
sale warehousing. The distinction between consignment and non-
consignment sales is that in consignment sales situations, Aichi
permits the customer to take possession of the product without
requiring that the customer pay for the product until the customer
sells to its downstream customer. This distinction, however, does not
relate to the nature of the selling activities provided. See
Preliminary results analysis memorandum from case analyst to file,
dated February 22, 1999, in room B-099.
Aichi reported sales to three types of customers in the home
market: trading companies, end-users, and distributors. Selling
functions performed with respect to sales to trading companies included
strategic and economic planning, market research, computer, legal and
business-systems development, engineering services and post-sale
warehousing. In addition to these functions, other functions performed
for sales to end-users included R&D technical programs, advertising,
and sales calls/assistance. Distributors were also offered personnel
training and manpower assistance in addition to the services offered to
trading companies and end-users. Based on these differences, we found
that the three types of home market customers constituted three
different levels of trade.
We found that Aichi made EP sales of various models of merchandise
through unaffiliated trading companies, a channel of distribution
similar to the home market channel involving sales to trading
companies. As with sales through the trading-company channel of
distribution in the home market, Aichi performed only a few selling
functions when selling merchandise to trading companies that exported
the merchandise to the United States. Thus, we found that the LOT for
this U.S. channel of distribution was the same as the LOT for the home
market trading company channel of distribution. See Id.
Cost-of-Production Analysis
As stated in the Background section of this notice, the Department
initiated a COP investigation for Aichi to determine whether Aichi made
home market sales during the POR at prices below their respective COPs
(as defined by section 773(b) of the Act). In accordance with section
773(b)(3) of the Act, we calculated the COP based on the sum of the
costs of materials and fabrication employed in producing the foreign
like product, plus SG&A expenses and all costs and expenses incidental
to packing the merchandise. In our COP analysis, we used the home
market sales and COP information Aichi provided in its questionnaire
responses.
After calculating the COP, in accordance with section 773(b)(1) of
the Act, we tested whether home market sales of SSB were made at prices
below the COP within an extended period of time in substantial
quantities and whether such prices permitted the recovery of all costs
within a reasonable period of time. We compared model-specific COPs to
the reported home market prices less any applicable movement charges,
discounts, and rebates.
Pursuant to section 773(b)(2)(C) of the Act, when less than 20
percent of Aichi's sales of a given product were at prices below the
COP, we did not disregard any below-cost sales of that product because
the below-cost sales were not made in substantial quantities within an
extended period of time. When 20 percent or more of Aichi's sales of a
given product during the POR were at prices less than the COP, we
disregarded the below-cost sales because they were made in substantial
quantities within an extended period of time. See sections 773(b)(2)(B)
and (C) of the Act. Additionally, based on comparisons of prices to
weighted-average COPs for the POR, we determined that the sales were at
prices which would not permit recovery of all costs within a reasonable
period of time, as defined by section 773(b)(2)(D) of the Act.
Constructed Value
In accordance with section 773(a)(4) of the Act, we used
constructed value (CV) as the basis for NV when there were no usable
sales of the foreign like product in the comparison market. We
calculated CV in accordance with section 773(e) of the Act. We included
the cost of materials and fabrication, SG&A expenses, and profit in the
calculation of CV. 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 Aichi in connection with the production and sale of the foreign like
product in the ordinary course of trade for consumption in the home
market.
When appropriate, we make adjustments to CV in accordance with
section 773(a)(8) of the Act and 19 CFR 351.410 for COS differences and
LOT differences. For comparisons to EP, we make COS adjustments by
deducting home market direct selling expenses from and adding U.S.
direct selling expenses to NV.
We calculated CV at the same LOT as the EP. Therefore we made no
LOT adjustment.
Preliminary Results of Review
As a result of our comparison of EP and NV, we preliminarily
determine a weighted-average dumping margin of 5.91 percent for Aichi
for the period February 1, 1997, through January 31, 1998.
Any interested party may request a hearing within 30 days of
publication of this notice. Any hearing, if requested, will be held 37
days after the date of publication of this notice, or the first workday
thereafter. Issues raised in hearings will be limited to those raised
in the respective case and rebuttal briefs. Interested parties may
submit case briefs within 30 days of the date of publication of this
notice. Rebuttal briefs, which must be limited to issues raised in the
case briefs, may be filed not later than 35 days after the date of
publication.
Parties who submit argument are requested to submit with the
argument (1) a statement of the issue, and (2) a brief summary of the
argument. The Department will publish a notice of final results of this
administrative review, which will include the results of its analysis
of issues raised in any such comments or at a hearing.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. In accordance
with 19 CFR 351.212(b)(1), we have calculated an exporter/customer-
specific assessment value for subject merchandise. Upon completion of
this review, the Department will issue appraisement instructions
directly to the Customs Service.
Furthermore, the following deposit rates will be effective upon
publication of the final results of this administrative review for all
shipments of SSB from Japan entered, or withdrawn from warehouse, for
consumption on or after the publication date, as provided for by
section 751(a)(2)(c) of the Act: (1) The cash deposit rate for Aichi
will be the rate established in the final results of this review; (2)
if the exporter is not a firm covered in this review, or the original
LTFV investigation, but the manufacturer is, the cash deposit rate
[[Page 10448]]
will be the rate established for the most recent period for the
manufacturer of the merchandise; and (3) for all other producers and/or
exporters of this merchandise, the cash deposit rate shall be 61.47
percent, the all-others rate established in the LTFV investigation (59
FR 66930, December 28, 1994).
This deposit rate, when imposed, shall remain in effect until
publication of the final results of the next administrative review.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f) 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.
We are issuing and publishing this determination in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: February 26, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-5396 Filed 3-3-99; 8:45 am]
BILLING CODE 3510-DS-P
