[Federal Register Volume 62, Number 91 (Monday, May 12, 1997)]
[Notices]
[Pages 25891-25895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12386]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-421-701]
Brass Sheet and Strip From The Netherlands; Preliminary Results
of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: In response to a request by respondent Outokumpu Copper Strip
B.V. (OBV) and its United States affiliate Outokumpu Copper (USA), Inc.
(OCUSA), the Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on brass sheet and
strip from the Netherlands (A-421-701). This review covers one
manufacturer/exporter of the subject merchandise to the United States
during the period August 1, 1995 through July 31, 1996. We
preliminarily determine that sales of brass sheet and strip (BSS) from
the Netherlands have not been made below the normal value (NV). If
these preliminary results are adopted in our final results of
administrative review, we will instruct the U.S. Customs Service to
assess antidumping duties with respect to the entries of OBV.
Interested parties are invited to comment on these preliminary results.
Parties who submit comments are requested to submit with the argument:
(1) A statement of the issues; and (2) a brief summary of the argument.
EFFECTIVE DATE: May 12, 1997.
FOR FURTHER INFORMATION CONTACT: Karla Whalen or Lisette Lach, Office
of Antidumping/Countervailing Duty Enforcement, Group III, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC.
20230; telephone: (202) 482-0408 or (202) 482-6412, respectively.
SUPPLEMENTARY INFORMATION: Applicable Statute and Regulations: Unless
otherwise indicated, all citations to the Tariff Act of 1930, as
amended (the Tariff Act), are to the provisions effective January 1,
1995, the effective date of the amendments made to the Tariff Act by
the Uruguay Round Agreements Act (URAA). 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).
Background
On August 12, 1988, the Department published in the Federal
Register the antidumping duty order on BSS from the Netherlands (53 FR
30455). On August 12, 1996, the Department published the notice of
``Opportunity to Request Administrative Review'' for the period August
1, 1995 through July 31, 1996 on BSS from the Netherlands (61 FR
41768). In accordance with 19 CFR 353.22 (a)(1), OBV requested that we
conduct a review of its sales. On September 17, 1996, we published in
the Federal Register a notice of initiation of this antidumping
administrative review (61 FR 48882).
Verification
From February 24 through February 28, 1997, in accordance with
section 782(i) of the Act, we verified information provided by OBV
using standard verification procedures including on-site inspection of
the manufacturer's facilities, examination of relevant sales and
financial records, and selection of original source documentation
containing relevant information. Our verification results are outlined
in the verification report, the public version of which is available in
the Central Records Unit of the Department of Commerce, Room B-099.
Scope of the Review
Imports covered by this review are brass sheet and strip, other
than leaded and tin brass sheet and strip, from the Netherlands. The
chemical composition of the products under review is currently defined
in the Copper Development Association (C.D.A.) 200 Series or the
Unified Numbering System (U.N.S.) C20000 series. This review does not
cover products the chemical compositions of which are defined by other
C.D.A. or U.N.S. series. The physical dimensions of the products
covered by this review are brass sheet and strip of solid rectangular
cross section over 0.006 inch (0.15 millimeter) through 0.188 inch (4.8
millimeters) in gauge, regardless of width. Coiled, wound-on-reels
(traverse wound), and cut-to-length products are included. The
merchandise under investigation is currently classifiable under item
7409.21.00 and 7409.29.20 of the Harmonized Tariff Schedule of the
United States (HTSUS). Although the HTSUS subheading is provided for
convenience and customs purposes, the written description of the
merchandise under investigation is dispositive.
Level of Trade
To the extent practicable, we determine NV for sales at the same
level of trade as the U.S. sales (either export price (EP) or
constructed export price (CEP)). When there are no sales at the same
level of trade, we compare U.S. sales to home market (or, if
appropriate, third-country) sales at a different level-of-trade. The NV
level of trade is that of the starting-price sales in the home market.
When NV is based on CV, the level of trade is that of the sales from
which we derive selling, SG&A and profit.
For both EP and CEP, the relevant transaction for the level of
trade analysis is the sale (or constructed sale) from the exporter to
the importer. While the starting price for CEP is that of a
[[Page 25892]]
subsequent resale to an unaffiliated buyer, the construction of the CEP
results in a price that would have been charged if the importer had not
been affiliated. We calculate the CEP by removing from the first resale
to an independent U.S. customer the expenses under section 772(d) of
the Tariff Act and the profit associated with these expenses. These
expenses represent activities undertaken by the affiliated importer.
Because the expenses deducted under section 772(d) represent selling
activities in the United States, the deduction of these expenses
normally yields a different level of trade for the CEP than for the
later resale (which we use for the starting price). Movement charges,
duties and taxes deducted under section 772(c) do not represent
activities of the affiliated importer, and we do not remove them to
obtain the CEP level of trade.
To determine whether home market sales are at a different level of
trade than U.S. sales, we examine whether the home market sales are at
different stages in the marketing process than the U.S. sales. The
marketing process in both markets begins with goods being sold by the
producer and extends to the sale to the final user, regardless of
whether the final user is an individual consumer or an industrial user.
The chain of distribution between the producer and the final user may
have many or few links, and each respondent's sales occur somewhere
along this chain. In the United States, the respondent's sales are
generally to an importer, whether independent or affiliated. We review
and compare the distribution systems in the home market and U.S. export
markets, including selling functions, class of customer, and the extent
and level of selling expenses for each claimed level of trade. Customer
categories such as distributor, original equipment manufacturer (OEM),
or wholesaler are commonly used by respondents to describe levels of
trade, but, without substantiation, they are insufficient to establish
that a claimed level of trade is valid. An analysis of the chain of
distribution and of the selling functions substantiates or invalidates
the claimed levels of trade. If the claimed levels are different, the
selling functions performed in selling to each level should also be
different. Conversely, if levels of trade are nominally the same, the
selling functions performed should also be the same. Different levels
of trade necessarily involve differences in selling functions, but
differences in selling functions, even substantial ones, are not alone
sufficient to establish a difference in the levels of trade. A
different level of trade is characterized by purchasers at different
stages in the chain of distribution and sellers performing
qualitatively or quantitatively different functions in selling to them.
When we compare U.S. sales to home market sales at a different
level of trade, we make a level-of-trade adjustment if the difference
in levels of trade affects price comparability. We determine any effect
on price comparability by examining sales at different levels of trade
in a single market, the home market. Any price effect must be
manifested in a pattern of consistent price differences between home
market sales used for comparison and sales at the equivalent level of
trade of the export transaction. To quantify the price differences, we
calculate the difference in the average of the net prices of the same
models sold at different levels of trade. We use the average difference
in net prices to adjust NV when NV is based on a level of trade
different from that of the export sale. If there is a pattern of no
consistent price differences, the difference in levels of trade does
not have a price effect and, therefore, no adjustment is necessary.
The statute also provides for an adjustment to NV when NV is based
on a level of trade different from that of the CEP if the NV level is
more remote from the factory than the CEP and if we are unable to
determine whether the difference in levels of trade between CEP level
and NV level affects the comparability of their prices. This latter
situation can occur where there is no home market level of trade
equivalent to the U.S. sales level or where there is an equivalent home
market level but the data are insufficient to support a conclusion on
price effect. This adjustment, the CEP offset, is identified in section
773(7)(B) of the Tariff Act and is the lower of the following:
The indirect selling expenses on the home market sale, or
The indirect selling expenses deducted from the starting
price used to calculate CEP. The CEP offset is not automatic each time
we use CEP. The CEP offset is made only when the level of trade of the
home market sale is more advanced than the level of trade of the U.S.
(CEP) sale and there is not an appropriate basis for determining
whether there is an effect on price comparability.
In the present review, OBV did not request an LOT adjustment. To
ensure that no such adjustment was necessary, we examined information
regarding OVB's distribution system in both the United States and the
Netherlands, including selling functions, class of customer and selling
expenses. In the home market, OBV sold to two categories of customers,
end-users and trading companies. However, OBV's HM sales were all
manufactured to order and the merchandise was shipped directly from the
mill to both types of customer. OBV's packing process was also similar
for both markets, and the selling expenses for the POR were comparable
for all sales, regardless of the type of customer. Evidence on the
record also demonstrates that OBV did not have a formal policy for
providing payment terms, including discounts to different types of
customers. Based upon this evidence, we determine that the selling
activities involved with these sales were the same, and that OBV's HM
sales were all made at the same level of trade.
OBV's sales in the United States, all of which were EP sales, were
also at the same level of trade. All of OBV's United States customers
were end-users and the sales were all manufactured to order. The
packing process was basically the same as that of the HM sales, as was
OBV's customer-specific approach to payment terms. Therefore, we
conclude that no level of trade adjustment is warranted.
Export Price
For sales 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 prior to the date of
importation and the use of constructed export price was not indicated
by the facts on the record. We calculated EP as the packed, delivered
price to unaffiliated purchasers in the United States. In accordance
with section 772(c)(2) of the Tariff Act, we reduced this price by
post-sale warehousing, international freight, inland and marine
insurance, U.S. brokerage and handling, U.S. duty, Customs Service
fees, Department of Agriculture fees, and credit expenses, where
appropriate.
Normal Value
A. Viability
Based upon (i) the Department's comparison of the aggregate
quantity of home market and U.S. sales, (ii) the absence of any
information that a particular marketing situation in the Netherlands
does not permit a proper comparison, and (iii) the fact that OBV's
quantity of sales in the home market exceeded five percent of its sales
to the U.S. market, we determined that the quantity of foreign like
product OBV
[[Page 25893]]
sold in the Netherlands was sufficient to permit a proper comparison
with the sales of subject merchandise to the United States pursuant to
section 773(a) of the Tariff Act. Therefore, in accordance with section
773(a)(1)(B)(i) of the Tariff Act, we based NV on the prices at which
the foreign like products were first sold for consumption in the
Netherlands.
B. Cost-of-Production Analysis
Because we disregarded sales below the cost of production in the
most recently completed review, we had reasonable grounds to believe or
suspect that sales of the foreign like product under consideration for
determining NV in this review may have been at prices below the cost of
production (COP), as provided in section 773(b)(2)(A)(ii) of the Tariff
Act. See Brass Sheet and Strip From the Netherlands; Final Results of
Antidumping Duty Administrative Reviews (57 FR 9534, March 19, 1992).
Therefore, pursuant to section 773(b)(1) of the Tariff Act, we
initiated a COP investigation of sales by OBV.
In accordance with section 773(b)(3) of the Tariff Act, we
calculated COP based on the sum of materials and fabrication employed
in producing the foreign like product, plus selling, general, and
administrative expenses (SG&A) and the cost of all expenses incidental
to placing the foreign like product in condition packed ready for
shipment. We relied on the home market sales and COP information OBV
provided in its questionnaire responses.
After calculating COP, we tested whether home market sales of
subject BSS were made at prices below 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 COP to the reported home market prices less any
applicable movement charges and post-sale price adjustments (reported
as early payments and credit adjustments), where appropriate.
Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than
twenty percent of home market sales for a model were at prices less
than the COP, we did not disregard any below-cost sales of that model
because we determined that the below cost sales were not made within an
extended period of time in ``substantial quantities.'' Where twenty
percent or more of home market sales of a given product were at prices
less than the COP, we determined that such sales were made within an
extended period of time in substantial quantities in accordance with
section 773(b)(2) (C) of the Tariff Act. To determine whether such
sales were at prices which would not permit the full recovery of all
costs within a reasonable period of time, in accordance with section
773(b)(2)(D) of the Tariff Act, we compared home market prices to the
weighted-average COPs for the POR.
The results of our cost test for OBV indicated that for certain
home market models less than twenty percent of the sales of the model
were at prices below COP. We therefore retained all sales of these
models in our analysis and used them as the basis for determining NV,
where applicable. Our cost test also indicated that within an extended
period of time (one year, in accordance with section 773(b)(2)(B) of
the Tariff Act) for certain other home market models, more than twenty
percent of the sales were at prices below COP which would not permit
the full recovery of all costs within a reasonable period of time. In
accordance with section 773(b)(1) of the Tariff Act, we therefore
disregarded the below-cost sales of these models and used the remaining
above-cost sales as the basis for determining NV, where applicable.
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
accordance with section 773(e)(2)(A) of the Act, we based SG&A expenses
and profit on the amounts incurred and realized by the respondent in
connection with the production and sale of the foreign like product in
the ordinary course of trade for consumption in the foreign country.
For selling expenses, we used the weighted average home market selling
expenses. Where appropriate, we made adjustments to CV, in accordance
with section 773(a)(8) of the Act and section 353.56(a) of the
Department's regulations, for circumstances of sale (COS) differences.
For comparisons to EP, we made COS adjustments by deducting home market
direct selling expenses and adding U.S. direct selling expenses.
C. Product Comparisons
We compared OBV's U.S. sales with contemporaneous sales of the
foreign like product in the home market. We compared BSS based on the
following hierarchy of physical characteristics: (1) Grade (alloy); (2)
gauge (thickness); (3) width; (4) temper; (5) coating; and (6) packed
form. For purposes of these preliminary results, we have used
differences in merchandise adjustments based on the difference in the
variable cost of manufacturing between each U.S. model and its most
similar home market model.
D. Date of Sale
The Department examined a number of distinct events in OBV's sales
process to determine the appropriate date of sale. These included the
frame agreement date, order entry date, and invoice date. OBV's sales
listing included data permitting use of any of these for the date of
sale. OBV argued that the appropriate date of sale methodology should
be the order entry date. Petitioners 1 argued that the
appropriate date of sale methodology should be the date of the frame
agreement, as that date was used in the immediately preceding review.
However, for purposes of these preliminary results, the Department has
used the invoice date as the date of sale in determining the
appropriate sales universe for comparison based upon the information
provided by respondent and our findings at verification. (See
Memorandum to the File Regarding Verification, dated April 16, 1997,
from Lisette Lach and Lisa Yarbrough; and Analysis Memorandum to the
File Regarding Preliminary Determination Analysis, dated May 6, 1997,
from Lisette Lach and Karla Whalen.)
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\1\ Hussey Copper, Ltd.; The Miller Company; Olin Corporation;
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 United Steelworkers of America
(AFL-CIO/CLC).
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E. Home Market Prices
We based home market prices on the packed, ex-factory or delivered
prices to unaffiliated purchasers in the home market or on CV, where
applicable. For matching to home market prices, we made adjustments for
differences in packing and for movement expenses in accordance with
sections 773(a)(6)(A) and (B) of the Tariff Act. In addition, we 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 Tariff Act, and for COS differences in
accordance with section 773(a)(6)(C)(iii) of the Tariff Act and
Sec. 353.56(2) of the Department's regulations.
Duty Absorption
On October 3, 1996, petitioners requested that the Department
[[Page 25894]]
determine whether OBV had absorbed antidumping duties during the period
of review pursuant to section 751(a)(4) of the Tariff Act. Section
751(a)(4) requires the Department, if requested, to determine, during
an administrative review initiated two years or four years after
publication of the order, whether antidumping duties have been absorbed
by a foreign producer or exporter subject to the order, if the subject
merchandise is sold in the United States through an importer who is
affiliated with such foreign producer or exporter. Section 751(a)(4)
was added to the Tariff Act by the URAA. The Department's interim
regulations do not address this provision of the Tariff Act. For
transition orders as defined in section 751(c)(6)(C) of the Tariff Act,
i.e., orders in effect as of January 1, 1995, Sec. 351.213(j)(2) of the
Department's proposed antidumping regulations provides that the
Department will make a duty absorption determination, if requested, for
any administrative review initiated in 1996 or 1998. See Notice of
Proposed Rulemaking, 61 FR 7308, 7366 (February 27, 1996). The preamble
to the proposed antidumping regulations explains that reviews initiated
in 1996 will be considered initiated in the second year and reviews
initiated in 1998 will be considered initiated in the fourth year. Id.
at 7317. Although these proposed regulations are not yet binding upon
the Department, they do constitute a public statement of how the
Department expects to proceed in applying section 751(a)(4) of the
amended statute. This approach assures that interested parties will
have the opportunity to request a duty absorption determination on
entries for which the second and fourth years following an order have
already passed, prior to the time for sunset review of the order under
section 751(c).
Because the order on BSS from the Netherlands has been in effect
since 1988, this qualifies as a transition order. Therefore, based on
the policy stated above, the Department will first consider a request
for an absorption determination during a review initiated in 1996. This
being a review initiated in 1996, we are making a duty-absorption
determination as part of this segment of the proceeding. The statute
provides for a determination on duty absorption if the subject
merchandise is sold in the United States through an affiliated
importer. In this case, OCUSA, OBV's wholly owned subsidiary, is the
importer of record for OBV's U.S. sales. Therefore, the importer and
the exporter are ``affiliated'' within the meaning of sections
751(a)(4) and 771(33) of the Tariff Act. Furthermore, we have
preliminarily determined that there is a dumping margin for OBV on 9.17
percent (by quantity) of its U.S. sales during the period of review. In
addition, we cannot conclude from the record that the unaffiliated
purchaser in the United States will pay the ultimately assessed duty.
Under these circumstances, we preliminarily find that there is a
dumping margin on OBV's sales through its affiliate representing 1.13
percent of its total U.S. sales and that antidumping duties have been
absorbed by OBV.
Fair Value Comparison
To determine whether OBV made sales of subject BSS in the United
States at prices that were less than fair value, we compared the EP to
NV, as described in the ``Export Price'' and ``Normal Value'' analysis
sections of this notice. In accordance with section 777A(d)(2) of the
Tariff Act, we calculated monthly weighted-average prices for NV or CV
where appropriate, and compared these monthly averages to individual
U.S. sales transactions.
Currency Conversion
We made currency conversions in accordance with 19 CFR 353.60(a).
All currency conversions were made at the rates certified by the
Federal Reserve Bank.
Preliminary Results of Review
As a result of our comparison of EP to NV, we preliminarily
determine that the weighted-average dumping margin for OBV for this
administrative review period is as follows:
------------------------------------------------------------------------
Manufacturer/exporter Period Margin
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OBV........................................ 8/1/95-7/31/96 0.10
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Parties to these proceedings may request disclosure within five
days of the date of publication of this notice and may request a
hearing within ten days of publication. Any hearing, if requested, will
be held 44 days after the date of publication, or the first business
day thereafter. Case briefs and/or written comments from interested
parties may be submitted no later than 30 days after the date of
publication. Rebuttal briefs and rebuttals to written comments, limited
to issues raised in the case briefs and comments, may be submitted no
later than 37 days after the date of publication of this notice.
Parties who submit arguments in these proceedings are requested to
submit with the argument (1) a statement of the issues and (2) a brief
summary of the argument. The Department will issue final results of
these administrative reviews, including the results of our analysis of
the issues in any such written comments or at a hearing, within 180
days of issuance of these preliminary results.
The Department shall determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between export price and NV may vary from the percentage
stated above. The Department will issue appraisement instructions
directly to Customs.
Furthermore, the following deposit requirements will be effective
upon completion of the final results of this administrative review for
all shipments of BSS from the Netherlands entered, or withdrawn from
warehouse, for consumption on or after the publication of the final
results of this administrative review, as provided in section 751(a)(1)
of the Tariff Act:
(1) The cash deposit rate for OBV will be the rate established in
the final results of this administrative review;
(2) For previously reviewed or investigated companies other than
OBV, 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 less-than-fair-value 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 conducted by the Department, the cash
deposit rate will be the ``all others'' rate of 16.99 percent
established in the less-than-fair-value investigation. See Antidumping
Duty Order of Sales at Less-Than-Fair-Value; Brass Sheet and Strip From
the Netherlands (53 FR 30455, August 12, 1988).
All U.S. sales by the respondent OBV will be subject to one deposit
rate according to the proceeding. The cash deposit rate has been
determined on the basis of the selling price to the first unrelated
customer in the United States. For appraisement purposes, where
information is available, we will use the entered value of the subject
merchandise to determine the appraisement rate.
This notice serves as preliminary reminder to importers of their
responsibility 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
[[Page 25895]]
reimbursement of the antidumping duties occurred and the subsequent
assessment of double antidumping duties. This administrative review and
this 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: May 5, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-12386 Filed 5-9-97; 8:45 am]
BILLING CODE 3510-DS-P
