[Federal Register Volume 62, Number 67 (Tuesday, April 8, 1997)]
[Notices]
[Pages 16759-16763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8953]
[[Page 16759]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-122-601]
Brass Sheet and Strip From Canada; Final Results of Antidumping
Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Antidumping Duty Administrative
Review.
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SUMMARY: On December 6, 1996, the Department of Commerce (the
Department) published the preliminary results of its administrative
review of the antidumping duty order on brass sheet and strip (BSS)
from Canada (61 FR 64666). This review covers exports of this
merchandise to the United States by one manufacturer/exporter,
Wolverine Tube (Canada) Inc. (Wolverine), during the period January 1,
1995 through December 31, 1995. The review indicates the existence of
no dumping margins.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have changed our results from those published in the preliminary
results.
EFFECTIVE DATE: April 8, 1997.
FOR FURTHER INFORMATION CONTACT:
Maureen McPhillips or Linda Ludwig, Office of AD/CVD Enforcement, Group
III, Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone: (202) 482-3019 or 482-3833,
respectively.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Tariff Act), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Tariff Act by the Uruguay Round Agreements Act. In addition, unless
otherwise indicated, all citations to the Department's regulations are
to the current regulations, as amended by the interim regulations
published in the Federal Register on May 11, 1995 (60 FR 25130).
Scope of the Review
Imports covered by this review are shipments of BSS, other than
leaded and tin BSS. The chemical composition of the covered products is
currently defined in the Copper Development Association's (C.D.A.) 200
series or the Unified Numbering System (U.N.S.) C2000. Products whose
chemical composition is defined by other C.D.A. or U.N.S. series are
not covered by this order.
The physical dimensions of the products covered by this review are
BSS of solid rectangular cross section over 0.006 inches (0.15
millimeters) through 0.188 inches (4.8 millimeters) in finished
thickness or gauge, regardless of width. Coil, wound-on-reels (traverse
wound), and cut-to-length products are included. These products are
currently classifiable under Harmonized Tariff Schedule (HTS)
subheadings 7409.21.00 and 7409.29.00. Although the HTS subheadings are
provided for convenience and for Customs Service (Customs) purposes,
the written description of the scope of this order remains dispositive.
Pursuant to the final affirmative determination of circumvention of
the antidumping duty order, we determined that brass plate used in the
production of BSS falls within the scope of the antidumping duty order
on BSS from Canada. See Brass Sheet and Strip from Canada: Final
Affirmative Determination of Circumvention of Antidumping Duty Order,
58 FR 33610 (June 18, 1993).
The review covers one manufacturer/exporter, Wolverine, and the
period January 1, 1995 through December 31, 1995.
Analysis of Comments Received
On January 6, 1997, we received a case brief from the petitioners,
Hussey Copper, Ltd., the Miller Company, Olin Corporation--Brass Group,
Outokumpu American Brass, Revere Copper Products, Inc., International
Association of Machinists and Aerospace Workers, International Union,
Allied Industrial Workers of America (AFL-CIO), Mechanics Educational
Society of America (Local 56), and the United Steelworkers of America
(AFL-CIO/CLC). We received a rebuttal brief from the respondent,
Wolverine, on January 13, 1997.
Comment 1: The petitioners challenge Wolverine's assertion that it
sold its merchandise at three distinct levels of trade in its home
market during the period of review (POR). According to the petitioners,
the fact that Wolverine only provided information on selling
(supporting) functions to two customer groups reflects the lack of
evidence to distinguish general jobber distributors from processing
distributors. The petitioners also contend that Wolverine failed to
provide evidence to substantiate its assertion that sufficiently
dissimilar selling functions were performed by the two remaining
customer categories, distributors vs. OEMs. The petitioners maintain
that Wolverine's own data show that OEMs and distributors purchased
comparable quantities of reroll and non-reroll materials. Thus,
according to the petitioners, there is no distinction in the level of
trade based on the types of products purchased by Wolverine's
customers.
In response to Wolverine's claim that OEM customers purchase cut-
to-length material which requires a distinct packaging from coils
because of its rectangular shape, the petitioners argue that the type
of packing used is based on the form of the material, not the customer
category. In addition, the petitioners point out that although
Wolverine packs the subject merchandise for the U.S. and home market in
four forms, it reported one packing cost by dividing total packing
costs by the number of pounds shipped. The petitioners conclude that if
Wolverine did not make a distinction among the forms when it reported
its per-unit packing costs, the Department should not use differences
in packing as the basis for distinguishing levels of trade.
The petitioners maintain that the information submitted by
Wolverine does not show that it provided different technical services
and product support for different level of customers. In fact, the
petitioners point out that Wolverine, in its initial response to the
Department's questionnaire, stated that it incurred no technical
service expenses on its sales of the subject merchandise. Wolverine's
assertion, in its supplemental questionnaire response, that it provides
a higher level of product support to its OEM customers is not supported
by evidence on the record in the petitioners' view. They point out that
Wolverine's home market sales listing shows that both customer
categories purchase products with identical physical characteristics
and that the quantities purchased by Wolverine's OEM customers were
comparable to, and sometimes greater than, those purchased by
distributors.
As for Wolverine's contention that as one of the two remaining
producers of brass sheet and strip in Canada, it is an established
custom producer with an established client base, petitioners state that
logically these established customers should not require technical/
product support from Wolverine.
The petitioners state that Wolverine's claim that it provided a
significantly
[[Page 16760]]
greater level of freight and delivery services to its OEM customers
than to its distributor customers is not supported by Wolverine's
reported inland freight expenses, which did not reflect a cost
difference based on the customer category. In petitioners' view, the
selection of different terms of delivery by the two customer categories
is meaningless. Moreover, the fact that Wolverine is reimbursed by the
customer for one shipment method and not another is irrelevant because,
according to petitioners, Wolverine would simply pass on its freight
expense in the form of higher prices.
Contrary to Wolverine's contention that it devotes more
administrative resources (i.e., for traffic, sales, and accounting
work) to its OEM customers, the petitioners assert that this is due to
the volume of sales to that group and not the customized nature of the
products sold to OEMs.
In response to Wolverine's argument that during the POR all of its
return/credits were to OEM customers, the petitioners contend that
Wolverine would follow the same return policy with distributors, and,
therefore Wolverine's warranty policy is the same regardless of the
customer category.
The petitioners state that Wolverine failed to differentiate the
selling function it performed for its OEM and distributor customers,
providing identical or similar services to its alleged two customer
levels. The petitioners state that in Dynamic Random Access Memory
Semiconductors of One Megabit or Above from the Republic of Korea:
Preliminary Results of Antidumping Administrative Review, 61 FR 36029,
36031, 36032 (July 9, 1996) the Department identified one level of
trade in the respondent's home market because the respondents' direct
sales to its home market customers, whether made to OEMs or to
distributors, included the same functions. Therefore, the petitioners
conclude, the Department must deny Wolverine's claimed level-of-trade
adjustment.
Wolverine counters that in its response to the Department's
supplemental questionnaire, it provided substantial and detailed
information that distinguished between sales made to customers in two
distinct levels of trade, (i.e., original equipment manufacturers
(OEMs) and distributors). The petitioners' arguments, according to
Wolverine, are based exclusively on their own ``analysis'' of the
Wolverine's submitted data, and rely on no other information in the
record.
Wolverine states that the example cited by the petitioners to
support their contention that both OEMs and distributors buy products
made from non-reroll and reroll material, and thus, customer category
is irrelevant, is consistent with its position that the OEM customer
tends to purchase more re-rolled product compared to the distributor
customer. Wolverine maintains that it is not contending that one
customer group never purchases products from non-reroll material and
the other customer group never purchases products made from reroll
material, and vice versa. According to Wolverine, it has simply stated
that when customers purchase heavy gauge material, the OEM customer is
likely to require a more customized product, while the less demanding
technical requirements of the distributor will typically allow the
product to be produced from non-reroll material.
Wolverine contends that the petitioners have missed the point
regarding the distinctions in packing and freight between the two
customer groups. With respect to packing, Wolverine states that the
Department allows packing adjustments only for costs directly
attributable to the packing operation (i.e., materials, labor, and
related overhead). According to Wolverine, the packing adjustment does
not take into account other indirect expenses (e.g., the need to
maintain inventories of different packing materials, to establish
packing codes for different packing types, to track product packed
differently through the production process, to institute different
quality control and inspection standards, etc.). Wolverine concludes
that the fact that having to manufacture and sell product in both cut-
to-length and coil form requires Wolverine to provide other services to
its customers in addition to those accounted for in the Department's
packing cost adjustment.
Similarly, Wolverine contends that petitioners' conjecture that
Wolverine is reimbursed for the freight costs that it incurs on sales
that are sold on pre-paid and delivered terms is irrelevant because
``[T]he process of establishing whether separate levels of trade exist
is distinct from both the margin calculation and the level of trade
adjustment (see, Certain Pasta from Italy, Final Determination of Sales
at Less-Than-Fair-Value, 61 FR 30326, 30338 June 6, 1996)(Pasta)).
Wolverine rejects the petitioners' argument that Wolverine's
failure to request a circumstance-of-sale (COS) adjustment for
differences in technical service expenses between the U.S. and home
markets is evidence that the additional product support that Wolverine
provides its OEM customers is irrelevant to the Department's level of
trade analysis. Wolverine claims this is inconsistent with the
requirements of the statute and the Department's policy. Wolverine
states that in conducting its LOT analysis, the Department considers
the specific types of sales functions and services that the producer
provides to its customers and is not concerned with whether the
particular service or function in question is sufficiently well-defined
to rise to the level of a COS adjustment. According to Wolverine, the
Department generally considers travel expenses and contract services as
an example of a technical service eligible for a COS adjustment and the
fact that it did not claim such expenses does not compromise the
Department's ability to consider the higher level of product support
that Wolverine provides to its OEM customers.
In regard to warranty expenses, Wolverine points out that the
petitioners do not dispute the fact that all of Wolverine's home market
warranty expenses were incurred on sales to OEM customers. In addition,
Wolverine states that petitioners claim that Wolverine would incur the
same warranty expenses with respect to distributors is pure speculation
on their part.
Wolverine concludes that the petitioners have failed to identify
any legitimate points that undermine the integrity of the Department's
level-of-trade analysis and urges the Department to conduct the same
analysis made in the Preliminary Results of this review.
Department's Position: We agree with the petitioners. Section
773(a)(7)(A) of the Act directs the Department to make an adjustment
for differences in level of trade only if the following two conditions
are met: (1) there is a difference in the levels of trade, involving
the performance of different selling activities, and (2) the difference
in level of trade affects price comparability, as demonstrated by a
pattern of consistent price differences between the sales at the
different levels of trade in the market in which normal value is
determined.
In order to determine whether sales in the comparison market are at
a different level of trade than the export price or CEP, we examine
whether the comparison sales were at different stages in the marketing
process than the export price or CEP. We make this determination on the
basis of a review of the distribution system in the comparison market,
including selling functions, class of customer, and the level of
selling expenses for each type of sale. Different stages of marketing
necessarily involve differences in
[[Page 16761]]
selling functions, but differences in selling functions, even
substantial ones, are not alone sufficient to establish a difference in
the level of trade. Similarly, while customer categories such as
``distributor'' and ``wholesaler'' may be useful in identifying
different levels of trade, they are insufficient in themselves to
establish that there is a difference in the level of trade. See Certain
Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-
Length Carbon Steel Plate from Canada; Preliminary Results of
Antidumping Duty Administrative Review, 61 FR 51891, 51896 (October 4,
1996); Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof from France, et al., Final Results of Antidumping Duty
Administrative Reviews, 62 FR 2081, 2105 (January 15, 1997) (AFBs VI).
While neither the statute nor the Statement of Administrative
Action (SAA) defines level of trade, the structure of the relevant
provision in the statute (section 773(a)(7)(A)) uses the term ``level
of trade'' as a concept distinct from selling activities. Specifically,
this sub-section allows for a level-of-trade adjustment where there is
a difference in levels of trade and that difference ``involves'' the
performance of different selling activities. The SAA (at 829) also
ascribes a meaning to level of trade that suggests that an analysis of
selling activities alone is insufficient to establish the level of
trade by stating that two sales with some common selling activities
could be at different levels of trade, See, e.g., AFBs VI, at 2107.
Although the customer type is an important indicator in identifying
differences in levels of trade, the existence of different classes of
customers is not sufficient to establish a difference in the levels of
trade. Accordingly, we consider the class of customer as one factor,
along with selling functions and the selling expenses associated with
these functions, in determining the stage of marketing, i.e., the level
of trade associated with the sales in question, Id.
Although Wolverine has documented differences in costs between the
selling activities performed for OEM customers and distributor
customers, it has not made the requisite showing that there is a
difference in the selling functions provided on sales to OEMs and sales
to distributors. While Wolverine sells to different classes of
customers, nothing on the record indicates that its sales are made at
different marketing stages, as evidenced by an additional layer of
selling activities provided to one customer category as opposed to the
other. For example, Wolverine argues that the packing for OEM
merchandise is more expensive than the packing needed for the
merchandise sold to distributors. Since both OEM and distributors
bought cut-to-length material and coils, the distinct packaging
characteristics of each product do not distinguish Wolverine's OEM
customers from its distributor customers. In addition, Wolverine
reported only one per-unit packing cost for its four forms of
packaging, implying that there was no significant difference between
the packaging provided to the two different classes of customers.
Wolverine's statement in its original response to the Department's
questionnaire that it incurred no technical service expenses on its
sales of the subject merchandise does not support its claim of two
different levels of trade based on the greater product support it
offered to its OEM customers as opposed to that provided to its
distributor customers. Furthermore, the fact that all three terms of
payment (i.e., pre-paid and delivered, pre-paid and charged, collect)
were not only available but used by both distributors and OEMs, does
not support Wolverine's claim of two distinct levels of trade based on
the terms each class of customer selects. Wolverine has also failed to
claim any specific differences between the warranty policy offered to
its OEM customers and that offered to its distributor customers.
Wolverine states that due to the customized nature of the products
demanded by OEMs, it expends a greater proportion of the company's
administrative resources (i.e., for traffic, sales, and accounting
work) on OEM sales than it does for distributor sales. First, the
relative time spent on servicing one customer type as opposed to
another is not necessarily a basis for determining that there are
different levels of trade, especially since Wolverine has not
quantified these differences on a level-of-trade basis. Secondly,
Wolverine's statement that it produces all brass sheet and strip
material to order appears to contradict its implication that only the
OEM merchandise is customized (see Supplemental Questionnaire Response,
October 24, 1996, p. 8).
We note that Wolverine has demonstrated that there are some
differences in the selling functions it performs for its OEM customers
and those it performs for its distributor customers. However, the fact
that there are two different classes of customers and that one class
may sometimes require a greater degree of administrative resources or
technical and product support, or more costly packing requirements and
freight expenses on Wolverine's part, is not in itself sufficient to
determine that there are different levels of trade. None of these
services involve an additional layer of selling activity performed by
Wolverine for sales of the subject merchandise to an OEM customer as
opposed to a distributor customer. For example, if one class of
customer required packaging for its merchandise and the other class
required none, this may suggest that there is an additional layer of
activity involved. As a further example, if Wolverine's OEM customer
required technical training support, while its distributor customer
provided its own technical training, this could also serve as support
for an argument that the sale of the subject merchandise would occur at
different marketing stages for the two classes of customers. Wolverine,
however, has not established any such clear, quantifiable distinctions
between its claimed levels of trade. Since it has not been established
that different levels of trade exist, there is no need to determine
whether there is a quantifiable price difference between levels of
trade that would warrant an adjustment. Therefore, for these final
results the Department has used home market sales to both OEMs and
distributors for comparison purposes. This represents a change from our
Preliminary Results.
Comment 2: The petitioners urge the Department not to use
Wolverine's entire product control numbers to match Wolverine's U.S.
and home market sales because Wolverine's product control numbering
system includes an element in the third position that does not reflect
the physical characteristics of the finished brass sheet and strip.
Specifically, in petitioners' view, the alloy code in Wolverine's
product coding system is not based exclusively on the physical
characteristics (i.e., the chemical composition) of the finished brass
sheet and strip, but is partially based on the source of the input
materials that were used to produce the subject merchandise.
The petitioners question Wolverine's contention that the brass
reroll stock it claims it purchases from unrelated suppliers in order
to meet the requirements of low impurities and heavy gauges for certain
applications undergoes a very high reduction which, in turn, imparts a
uniform fine grain to the finished product. The petitioners cite an
industry expert (see October 7, 1996 Letter from Copper & Brass
Fabricators Council, Inc. to the Secretary of Commerce) who states that
the distinction between non-reroll and
[[Page 16762]]
reroll material and the attendant claim of differing purity levels is
incorrect and that regardless of whether brass sheet and strip is
produced from non-reroll or reroll material, the product is identical
in alloy, sold in the same markets, and consumed in the same end uses.
The petitioners maintain that the industry expert's opinion is
supported by Wolverine's reported sales data which shows that during
the POR the same customers purchased brass sheet and strip from both
reroll and non-reroll materials for their end uses. The petitioners
state that even if Wolverine's claim that certain of its customers
require brass sheet and strip of a finer grain size is true, this has
no bearing on whether the finished product was produced from reroll or
non-reroll materials because the same customers purchased brass sheet
and strip made from reroll input materials and non-reroll input
materials. Moreover, the petitioners assert that the grain sizes of
finished brass sheet and strip depends on the rolling and annealing
process used to produce the product, rather than the source of the raw
materials. According to the petitioners, a reroll vs. non-reroll
designation is redundant and does not serve to distinguish the physical
characteristics of the finished brass sheet and strip and, therefore,
must not be used as a criterion for matching purposes.
The petitioners note that Section 771(16)(A) of the Tariff Act of
1930, amended, defines the term ``foreign like product'' as ``the
subject merchandise and other merchandise which is identical in
physical characteristics with, and was produced in the same country by
the same person as that merchandise.'' (emphasis added). The
petitioners point out that the Department has conducted nine
investigations of brass sheet and strip products from nine countries
and has never considered the differentiation between reroll and non-
reroll inputs in product matching. According to the petitioners,
producers' selection of scrap materials and virgin materials for the
production of brass sheet and strip depends largely on the availability
and the cost of each raw material rather than physical property of the
finished products.
The petitioners conclude that the Department, for this
administrative review, must follow its stated practice of matching
Wolverine's U.S. sales to foreign like products based on the physical
characteristics of the finished brass sheet and strip, and thus,
disregard the third position of Wolverine's reported product control
numbers.
The respondent argues that the Department properly included all
reported physical characteristics, including grain size, in its product
comparisons. Respondent states that the petitioners themselves
acknowledge that grain size is a relevant commercial factor for brass
consumers, but appear to limit the Department's ability to account for
grain size to the criteria contained in ASTM specifications. According
to the respondent, nothing in the U.S. antidumping law or the
Department's own regulations or precedents restricts the Department
from using factors in addition to those specified by ASTM in
determining appropriate product comparison criteria. The respondent
maintains that it has repeatedly demonstrated to the Department's
satisfaction that grain size differences are relevant to customers that
require smooth polished surfaces in their finished products and that it
can achieve this required quality product only with re-roll material.
The respondent concludes, therefore, that Wolverine's product codes and
control numbers which differentiate reroll and non-reroll material do
properly reflect all relevant product characteristics.
The respondent terms the petitioners' argument that the same
customers purchase brass sheet and strip made from both re-roll and
non-reroll input materials irrelevant, stating that the same customers,
at any given time, may require both reroll and non-reroll inputs,
depending upon the desired grain quality required. Wolverine urges the
Department to continue to use, in its final results, the same analysis
with respect to re-roll products as was applied in the preliminary
results.
Department's Position: Upon further study of the product code
designations and the comments submitted by the interested parties, we
do not feel that Wolverine has adequately made its case for the
necessity or appropriateness of introducing an additional element in
its product coding system which distinguishes reroll from non-reroll
raw material input. In this instance, the reroll vs. non-reroll
designation of the raw material input does not describe a physical
difference in the finished product per se. This is a change from the
preliminary results.
The Department does not normally consider the source of a given
input material as a model match characteristic. For example, if two
different plants supply a particular feedstock used in the production
of a particular product, it is our longstanding practice to consider
both feedstock materials to be identical, regardless of the difference
in production costs. Similarly, we do not distinguish between two input
materials if one feedstock is purchased and the other is produced
internally. Thus, as a general matter, it would be inconsistent with
the Department's practice to segregate reroll from non-reroll material
on this basis alone.
Respondent appears to be trying to use the distinction between
reroll and non-reroll material as a proxy for differences in grain size
or purity of the finished product. While we agree that grain size or
purity could potentially be a relevant commercial factor for brass
sheet and strip consumers, respondent did not report information on
either of these physical characteristics. Respondent provided no
quantitative or statistical data describing differences in grain size
or purity between various brass products, how these differences relate
to customer requirements, or how these differences relate to the source
of the raw material input (i.e., reroll vs. non-reroll).
Finally, Wolverine fails to distinguish, in any quantifiable way,
how the reroll vs. non-reroll code designates a physical characteristic
different from those codes assigned for temper and gauge.
Final Results of Review
As a result of our review, we have determined that no margin exists
for Wolverine during the period 1/1/95 through 12/31/95. The Department
will issue appraisement instructions directly to the Customs Service.
------------------------------------------------------------------------
Manufacturer/Exporter Period of review Margin
------------------------------------------------------------------------
Wolverine Tube (Canada), Inc.......... 01/01/95-12/31/95 0.22
------------------------------------------------------------------------
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of review for all
shipments of brass sheet and strip from Canada within the scope of the
order entered, or withdrawn from warehouse, for consumption on or after
the publication date, as provided by section 751(a)(1) of
[[Page 16763]]
the Tariff Act: (1) The cash deposit rate for the reviewed company will
be zero; (2) for previously reviewed or investigated companies not
listed above, the 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 less-than-fair-
value (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) for all other producers and/or
exporters of this merchandise, the cash deposit rate of 8.10 percent,
the ``all others'' rate established in the LTFV investigation. These
deposit requirements, 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 Sec. 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.
Notification of Interested Parties
This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR Sec. 353.34(d). Timely written
notification of 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.
Timely written notification of the return/destruction of APO materials
or conversion to judicial protective order is hereby requested. 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: April 1, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-8953 Filed 4-7-97; 8:45 am]
BILLING CODE 3510-DS-M
