[Federal Register Volume 63, Number 66 (Tuesday, April 7, 1998)]
[Notices]
[Pages 16979-16982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8973]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-810]
Certain Welded Stainless Steel Pipe From Korea; Final Results of
Antidumping Duty Changed Circumstances Review
AGENCY: International Trade Administration/Import Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty changed
circumstances review.
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SUMMARY: On February 6, 1998, the Department of Commerce (the
Department) published in the Federal Register the preliminary results
of its antidumping duty changed circumstances review on certain welded
stainless steel pipe from Korea (63 FR 6153) to examine whether SeAH
Steel Corporation (SeAH) is the successor to Pusan Steel Pipe (PSP),
the successor to Sammi Metal Products Co. (Sammi), or neither. We have
now completed this review and determine that, for purposes of applying
the antidumping duty law, SeAH is the successor to PSP, and as such,
should be assigned the antidumping deposit rate applicable to PSP.
EFFECTIVE DATE: April 7, 1998.
FOR FURTHER INFORMATION CONTACT: Lesley Stagliano or Maureen Flannery,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington D.C. 20230; telephone (202) 482-0648, (202) 482-3020.
SUPPLEMENTARY INFORMATION:
Background
On February 6, 1998, the Department of Commerce (the Department)
published in the Federal Register the preliminary results of its
antidumping duty changed circumstances review on certain welded
stainless steel pipe from Korea (63 FR 6153). We have now completed
this changed circumstances review in accordance with section 751(b) of
the Tariff Act of 1930, as amended (the Act).
Scope of Review
Imports covered by the review are shipments of welded austenitic
stainless steel pipe (WSSP) that meets the standards and specifications
of the American Society for Testing and Materials (ASTM) for the welded
form of chromium-nickel pipe designated ASTM A-312. The merchandise
covered by the scope of this order also includes WSSP made according to
the standards of other nations which are comparable to ASTM A-312.
WSSP is produced by forming stainless steel flat-rolled products
into a tubular configuration and welding along the seam. WSSP is a
commodity product generally used as a conduit to transmit liquids or
gases. Major applications for WSSP include, but are not limited to,
digester lines, blow lines, pharmaceutical lines, petrochemical stock
lines, brewery process and transport lines, general food processing
lines, automotive paint lines and paper process machines. Imports of
WSSP are currently classifiable under the following Harmonized Tariff
Schedules of the United States (HTSUS) subheadings: 7306.40.5005,
7306.40.5015, 7306.40.5040, 7306.40.5065, and 7306.40.5085. Although
these subheadings include both pipes and tubes, the scope of this
review is limited to welded austenitic stainless steel pipes. Although
the HTSUS subheadings are provided for convenience and Customs
purposes, the written description of the scope of this order is
dispositive.
This changed circumstances administrative review covers SeAH and
any parties affiliated with SeAH.
Successorship
According to SeAH, PSP legally changed its name to SeAH on December
28, 1995, which change became effective on January 1, 1996. SeAH claims
that its name change from PSP was a change in name only, and that the
legal structure of the company, its management, and ownership were not
affected by the name change. SeAH also claims that it is a part of a
larger group of related companies, certain members of which had SeAH in
their names prior to January 1, 1996.
In its request for a changed circumstances review, SeAH indicated
that PSP had acquired certain production assets formerly owned by Sammi
Metal Products Co. (Sammi). SeAH asserts that the acquisition, which
occurred more than a year before the name change and was effective
January 3, 1995, is not related to the name change. SeAH claims that
its acquisition of the products and facilities of Sammi is functionally
no different from PSP expanding its existing facilities or contracting
a new manufacturing facility.
Based on the information submitted by SeAH, petitioners have argued
that SeAH is, at a minimum, a hybrid of PSP and Sammi.
In determining whether one company is the successor to another for
purposes of applying the antidumping duty law, the Department examines
a number of factors including, but not limited to, changes in (1)
management, (2) production facilities, (3) suppliers, and (4) customer
base. See, e.g., Brass Sheet and Strip from Canada; Final Results of
Antidumping Duty Administrative Review, (57 FR 20460, May 13, 1992);
Steel Wire Strand for Prestressed Concrete from Japan; Initiation and
Preliminary Results of Changed Circumstances Antidumping Duty
Administrative Review, (55 FR 7759, March 5, 1990); and Industrial
Phosphoric Acid From Israel; Final Results of Antidumping Duty Changed
Circumstances Review (59 FR 6944, February 14, 1994). While no one or
several of these factors will necessarily provide a dispositive
indication of succession, the Department will generally consider one
company to be a successor to a second if its resulting operation is
essentially the same as that of its predecessor. See Brass Sheet and
Strip from Canada; Final Results of Antidumping Duty Administrative
Review, (55 FR 20460, 20461, May 13, 1992). Thus, if the evidence
demonstrates that, with respect to the production and sale of the
subject merchandise, the new company operates as the same business
entity, the Department will assign the new company the cash deposit
rate of its predecessor.
The record in this review, as demonstrated by the following
factors, indicates that SeAH is the successor to PSP for the production
of subject
[[Page 16980]]
merchandise, and is not a successor to Sammi, nor a new hybrid entity.
Analysis of Comments Received
Comment 1
Petitioners argue that it is not the change in name from PSP to
SeAH that supports a finding of changed circumstances but rather the
acquisition of the production operations for WSSP from Sammi in
Changwon, and the closure of the PSP Seoul facility. Consequently,
petitioners state that whether or not PSP ever changed its name, the
fundamental changes in PSP that resulted from acquiring Sammi's WSSP
Changwon facility justify a finding of changed circumstances in this
review. Petitioners point out that the agency must recognize that
although changes in names provide grounds for a changed-circumstances
review, the law does not require that a name change occur in order to
support a finding of changed circumstance. In support of this
statement, petitioners cite Industrial Phosphoric Acid from Israel, (59
FR 6944, 6945, (1994)). Petitioners state that in its preliminary
analysis, the Department erroneously focused on whether there was a
change in factors such as production facilities, customers, suppliers
and management following the name change, not following the
acquisition. Thus, petitioners argue that the Department focused on the
wrong time period with respect to this analysis. Instead of comparing
PSP's operations in 1995 to SeAH's operations in 1996, petitioners
argue that the Department should examine the operations of PSP in 1994
as contrasted with PSP's operations in 1995 and SeAH's operations in
1996.
Respondents maintain that the Department correctly applied the
successorship test used in Brass Sheet and Strip from Canada, (57 FR
20460, 20461, May 13, 1992), Sugar and Syrups from Canada, (61 FR
51275, October 1, 1996), Large Power Transformers from Italy, (52 FR
46806, December 10, 1987), and Industrial Phosphoric Acid from Israel,
(59 FR 6944, February 14, 1994), to the facts of this review in order
to conclude that SeAH's business operation for production of the
subject merchandise was that of its predecessor PSP. Furthermore,
respondents argue that petitioners ignore that the administrative
record includes multiple questionnaire responses which focused on PSP's
acquisition of the Changwon plant and cover over three years of
information regarding PSP and SeAH's (1) management, (2) production
facilities, (3) suppliers, and (4) customer base. In addition,
respondents assert that the Department's conclusion in the Preliminary
Results does indeed address the effects of the plant acquisition.
Department's Position: The Department disagrees with petitioners'
argument that the Department did not inquire about or consider the
successorship factors following the acquisition of the Changwon plant.
While our preliminary results may not have detailed the breadth of our
inquiry, the Department did, in fact, consider the effects of the
acquisition of the Changwon plant including: (1) The changes in
production facilities at the Changwon plant after January 1, 1995. See
August 27, 1997 Response; (2) all documentation pertaining to the
acquisition of the Changwon plant (i.e., contracts, sales agreements,
non-compete agreements, deeds of transfer, meeting notes, articles of
incorporation, etc.); (3) whether Sammi's employees were transferred to
PSP as a result of the acquisition of the Changwon plant. See October
3, 1997 Response; (4) the number of workers that are currently employed
at the Changwon facility, (5) the percentage that the transferred
employees make up of the total employees at the Changwon plant, (6) the
functions that are performed by the ninety employees that were
transferred from Seoul to work in the Changwon facility. See December
2, 1997 Response; (7) the process through which PSP acquired the
Changwon plant, the negotiation process time-line, and all documents
associated with the negotiation, (8) the factory layouts of the Seoul
plant before and after the relocation, as well as the factory layouts
of the Changwon plant before and after PSP acquired it, and (9)
marketing practices and marketing changes after PSP acquired the
Changwon plant. In addition, the Department analyzed information from
1994, 1995 and 1996 with respect to the customers and suppliers of PSP/
SeAH. As a result of the Department's analysis of the effects of the
acquisition of the Changwon plant, the Department stated in its
preliminary results:
We preliminarily find that SeAH is not the successor to Sammi as
suggested by the petitioner. While the plant is a former Sammi
facility, the plant was overhauled and redesigned. Further, none of
Sammi's former managers work for SeAH, with the exception of two plant
managers, who ceased working for Sammi long before the plant
acquisition, and, therefore, were not hired as a result of that
acquisition. PSP's suppliers did not change in a way that would be
attributed to PSP's acquisition of the Changwon plant, and PSP did not
acquire a significant number of new customers or substantial new
business from such customers as a result of the Changwon acquisition.
(63 FR 6155; February 6, 1998)
Thus, the record establishes that the Department thoroughly considered
PSP's acquisition of the Sammi facility and the effect of that
acquisition on PSP's operations.
Comment 2
Petitioners argue that the Department impermissibly shifted focus
of the inquiry to a change in the corporation as a whole rather than a
change solely with respect to production of subject merchandise by
focusing on the change in the name rather than on the acquisition of
Sammi's Changwon facility. Petitioners cite Industrial Phosphoric Acid
from Israel, (59 FR 6945), when arguing that the successor company
question must be resolved ``in terms of the operations that produce the
subject merchandise.'' Petitioners also cite Brass Sheet and Strip from
Canada, (57 FR 20460, 20461, (1992)), which states that ``the point of
comparison is the type of business, not the legal entity itself.''
Moreover, petitioners argue that by focusing on the company name
change, the Department has departed from its legal precedent requiring
that successorship inquiries analyze changes at the level of production
of subject merchandise, not based on an overall corporate entity.
Department's Position: The Department agrees with petitioners that
the focus of the changed circumstances should be the production of
subject merchandise. However, both the name change and the acquisition
of the Sammi facility relate to the production of the subject
merchandise. Thus, the Department correctly considered the name change
as a changed circumstance giving rise to the issue of successorship. As
stated in response to Comment 1, the Department considered both the
name change and the effects of the acquisition of Changwon as they
relate to the successorship factors.
Comment 3
Petitioners argue that the Department has failed to examine whether
SeAH is a hybrid of PSP and Sammi. Petitioners contend that at a
minimum, SeAH must be viewed as a combination of PSP and Sammi with
respect to the production of WSSP and, thus, should be subject to the
``all others'' cash deposit rate. Petitioners assert that the
additional information obtained at verification provides further
support for the conclusion that SeAH is a hybrid of PSP
[[Page 16981]]
WSSP production and Sammi WSSP production.
Although petitioners acknowledge that overhauling of the Changwon
facility may support the Department's conclusion that SeAH is not the
successor to Sammi, petitioners argue that these facts do not support
the conclusion that SeAH is the successor to PSP. Petitioners'
arguments focus on the change in production facilities that since (1)
PSP's WSSP operations were physically relocated from Seoul and
integrated with Sammi production lines, in Sammi's pre-existing
Changwon facility, and (2) SeAH shut down the Seoul facility, SeAH is
not the successor to PSP with respect to WSSP production facilities.
Petitioners argue that the acquisition of raw materials, supplies and
inventory, and retention of certain production lines in addition to
physical facilities at Changwon prove that the resulting WSSP
production at the Changwon facility is now a combination of PSP and
Sammi.
Petitioners argue that evidence on the record indicates that the
production facilities of PSP are not the same as those of SeAH.
Petitioners argue that instead of focusing on the March 26, 1996 shut
down of the WSSP facility in Seoul, the agency focused on differences
that exist at the Changwon facility today in comparison to the Changwon
facility when it was run by Sammi.
Respondents argue that many companies frequently buy equipment,
occasionally expand and/or move their facilities, and sometimes they
increase production and grow. Thus, none of the changes that
accompanied PSP's acquisition of Sammi's Changwon plant were
extraordinary. Respondents note that the only difference between this
case and the normal changes that most companies experience is that PSP
purchased the physical assets of a company that also produced subject
merchandise and had its own company-specific rate. Respondents argue
that there is no difference with respect to equipment purchased from
Sammi or any other source because no equipment nor a specific facility
has an antidumping deposit rate inviolably attached to it. While SeAH's
production facility at Changwon may be a combination of equipment from
Sammi and PSP's Seoul plant, it does not logically follow that in
purchasing the plant and equipment from Sammi that PSP became something
other than itself.
Department's Position: The Department disagrees with petitioners.
The Department considers the acquisition of the Changwon facility and
the above mentioned materials as asset acquisitions and nothing more.
Although the hybrid issue may not be detailed in the preliminary
results, the Department addressed it in its analysis of the management,
production facilities, customers and suppliers. We collected and
analyzed PSP/SeAH information regarding these factors for 1994, 1995,
and 1996. After reviewing these four factors, the Department determined
that with the purchase of the Changwon plant, PSP remained PSP.
Contrary to petitioners' argument, the Department's findings did
resolve the hybrid issue. Specifically, we found that (1) PSP did not
change into a new corporate entity, (2) the management team remained
the same, and (3) even though PSP's production facility changed with
the acquisition of the Changwon plant and the relocation of the Seoul
facility, the new Changwon facility came under the PSP corporate
structure. With the exception of the acquisition of the new facility,
PSP (and hence SeAH) continued to operate essentially as it had prior
to the acquisition. Subsumed in the Department's conclusion that SeAH
operates essentially the same as PSP is the conclusion that it is not a
hybrid operation.
Comment 4
Petitioners claim that although SeAH has attempted to focus on the
fact that it did not ``transfer'' production workers from Sammi's
Changwon facility as part of its contractual agreements, the agency
didn't ask whether there was a contractual agreement to transfer
workers. In addition, petitioners argue that the agency incorrectly
focused on whether the number of people employed at the Changwon plant
changed after PSP changed its name to SeAH and not whether the number
of people in Changwon's facility changed after PSP acquired Changwon
and shifted employees from Seoul to Changwon. Moreover, petitioners
state that the agency fails to contrast the number of newly-hired
workers with the number of transferred workers.
Respondents contend that the number of newly-hired employees and
the proportion of total workers at Changwon that these employees
represent are stated on the record.
Department's Position: At verification, the Department analyzed the
original contract to buy the Changwon plant and found no evidence of an
agreement to transfer workers from Sammi to PSP. Moreover, as mentioned
in the preliminary determination, at verification the Department looked
at personnel files of current SeAH employees at the Changwon plant and
found only one new hire who had worked for Sammi prior to 1989, and for
an unaffiliated entity between 1989 and 1996, before coming to
Changwon. There was no evidence that any other employees had worked for
Sammi. Thus, the Department finds no reason to suspect that any
Changwon employees were transferred to PSP. As this issue contains
proprietary information, refer to the Memorandum to the File from
Lesley Stagliano, dated March 30, 1998 for further information.
Comment 5
Petitioners argue that facts on the record contradict the agency's
conclusion that SeAH is the successor to PSP with respect to the
domestic customer base. Petitioners cite SeAH as stating ``that the
majority of its customers are small customers'' and ``that it is likely
that most of its (SeAH's) new smaller customers were customers of
Sammi.'' Based on these two statements, petitioners assert that SeAH's
operations in Changwon served not only the home market customer base of
PSP but also the home market customer base of Sammi, thus, proving that
SeAH is not the successor to PSP.
Respondents maintain that the Department's findings regarding the
change in customers was correct. Respondents argue that with Sammi's
disappearance from the market, the new small customers would be just as
likely to seek material from any of the several other producers of
subject merchandise in Korea.
Department's Position: At verification, the Department did not find
any evidence of customer lists or contracts transferring customers from
Sammi to PSP. We believe PSP's addition of customers who were former
customers of Sammi is a normal consequence of Sammi's departure from
the market. For further discussion of this issue, refer to the
Memorandum to the File from Lesley Stagliano, dated March 30, 1998.
Comment 6
Petitioners state that SeAH has never submitted for the record
either PSP's or SeAH's list of United States customers even though the
Department asked SeAH to report data on ``all'' customers, see Request
for Information from SeAH Steel Corp., dated July 24, 1997, question
12. Petitioners assert that because the focus of a changed-
circumstances review is on whether the company (PSP) that was subject
to the antidumping finding by the Department in its original order is
the same as the company (SeAH) now requesting successorship status, it
is critical that the Department examine the U.S. customer base, for it
was on the basis of
[[Page 16982]]
U.S. sales to U.S. customers at particular prices that the dumping
findings were made. Furthermore, petitioners state that the weighted-
average margins resulting from the case reflect that Sammi accounted
for the majority of U.S. sales of WSSP from Korea; therefore,
petitioners argue that as the only other exporter of WSSP to the United
States previously identified, SeAH is now supplying Sammi's former U.S.
customer base. Thus, petitioners conclude that SeAH is not the
successor to PSP.
Respondents state that PSP/SeAH sells the vast majority of its
subject merchandise in the domestic market, and that petitioners have
no basis for claiming that ``SeAH is now supplying Sammi's former U.S.
customer base.'' Moreover, respondents argue that Sammi did not, and
could not, transfer its U.S. customers to PSP. In addition, respondents
contend that it is unreasonable to assume that, among all of the
potential suppliers to the U.S. customer, both domestic and foreign,
that all of Sammi's former customers would choose PSP/SeAH.
Department's position: As noted above, PSP purchased only Sammi's
production assets. PSP did not succeed to any rights or obligations
Sammi had with its U.S. or domestic customers. With Sammi's absence
from the market, it is natural that U.S. customers would seek business
from other suppliers of subject merchandise in order to fill the void
that was created. Further, as noted by respondents, PSP's/SeAH's U.S.
sales consist of a small percentage of the total sales of WSSP, a fact
admitted by petitioners as well.
Comment 7
Petitioners disagree with the agency's conclusion that the changes
in suppliers were not ``significant''.
Department's Position: The Department maintains its position that
the changes in suppliers were not significant. For further elaboration
of the Department's position, as it contains proprietary information,
refer to the Memorandum to the File from Lesley Stagliano, dated March
30, 1998.
Comment 8
Petitioners argue that the Department incorrectly focused on the
change in management following the name change and not on the
acquisition of Changwon. In addition, petitioners assert that
respondents' statement that ``management dictates and controls the
production of subject merchandise, and, most important, sets prices''
is an unfounded overemphasis of just one factor and that production
facilities, suppliers, and customers are relevant factors as well.
Respondents argue that not only did the Department address the
issue of management specifically with respect to the Changwon
acquisition, but that it also analyzed management on a corporate-wide
level. Consequently, respondents state that the Department verified all
of the information pertaining to the period before and after the
acquisition of Sammi's Changwon plant, and that such information is
reflected in the verification report. Respondents quote the
Department's verification report which states that there were ``no
significant organizational changes after the acquisition of the
Changwon plant.'' See Verification Report at 5.
Department's Position: The Department agrees with respondents. The
Department did address the relevant changes in management. In the
Memorandum to Joseph Spetrini from Edward Yang, dated January 29, 1998,
the Department states, ``[a]ll of the managers of the Changwon plant
were transferred from PSP plants after the January 1, 1995 acquisition
of the Changwon plant.'' In addition, the Department states, ``(t)he
headquarters for the sales and marketing division remained at the head
office in Seoul, and very little changed with respect to the
individuals holding these management positions.'' See Preliminary
Results, (63 FR 6154). In its analysis, the Department specifically
looked at the period following the acquisition as well as the name
change with respect to management. Thus, the Department maintains its
original position in the preliminary results regarding this issue.
Comment 9
Petitioners argue that SeAH attempted to circumvent the antidumping
duty laws by combining operations with another company (Sammi) subject
to a higher dumping rate, but nonetheless continued to produce and
export subject merchandise to the United States without divulging this
information and relying instead on the lower (PSP's) rate.
Respondents argue that PSP could in no way improve its position
vis-a-vis the applicable cash deposit rate by purchasing Sammi's
Changwon plant, a company with a higher deposit rate than PSP.
Furthermore, respondents argue that for PSP to try to circumvent the
antidumping order by purchasing the production facilities of the
company with the highest cash deposit rate, when PSP already had the
lowest cash deposit rate of any company subject to the antidumping
order, would defy logic.
Department's position: The Department disagrees with petitioners.
Petitioners cite to no evidence on the record to support their
contention. The Department has thoroughly reviewed the facts on the
record and did not find that Respondent has intentionally attempted to
mislead the Department.
Final Results of the Review
After reviewing the comments received, we determine that SeAH is
the successor to PSP for antidumping duty cash deposit purposes.
SeAH will, therefore, be assigned the PSP antidumping deposit rate
of 2.67 percent.
The following deposit requirements will be effective upon
publication of this notice of final results of administrative review
for all shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date as provided
by section 751(a)(2)(c) of the Act: The case deposit rate for the
reviewed company will be as outlined above.
These deposit rates, when imposed, shall remain in effect until
publication of the final results of the next administrative review.
This notice 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 subsequent assessment
of double antidumping duties.
This determination is issued and published in accordance with
section 777(i)(1) of the Act and 19 CFR 353.22(f).
Dated: March 30, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-8973 Filed 4-6-98; 8:45 am]
BILLING CODE 3510-DS-P
