[Federal Register Volume 62, Number 91 (Monday, May 12, 1997)]
[Notices]
[Pages 25895-25898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12393]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-827]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Collated Roofing Nails
From Korea
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 12, 1997.
FOR FURTHER INFORMATION CONTACT: Everett Kelly or Ellen Grebasch,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone: (202) 482-4194 or (202) 482-3773,
respectively.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the 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).
Preliminary Determination
We preliminarily determine that collated roofing nails (``CRN'')
from Korea are being, or are likely to be, sold in the United States at
less than fair value (``LTFV''), as provided in section 733 of the Act.
The estimated margins of sales at LTFV are shown in the ``Suspension of
Liquidation'' section of this notice.
Case History
Since the initiation of this investigation (Notice of Initiation of
Antidumping Duty Investigations: Collated Roofing Nails from the
People's Republic of China, the Republic of Korea, and Taiwan (61 FR
67306, December 20, 1996)), the following events have occurred:
On January 17, 1997, the United States International Trade
Commission (``ITC'') issued an affirmative preliminary injury
determination in this case (see ITC Investigation Nos. 731-TA-757-759).
During November 1996 through January 1997, the Department obtained
information from various sources identifying producers/exporters of the
subject merchandise. (See Memo to the File, dated May 5, 1997, for a
detailed explanation of the Department's search for producers/exporters
of the subject merchandise.) During January, based on this information,
the Department issued antidumping questionnaires to Kabool Metals
(``Kabool''), Koram Steel Co., Ltd (``Koram''), Rewon Metals
(``Rewon''), Jisco Steel, Han Duk Industrial Co. (``Han Duk''), New
Korea, Jeil Steel, and Senco Korea (``Senco''). The questionnaire is
divided into four sections: Section A requests general information
concerning a company's corporate structure and business practices, the
merchandise under investigation that it sells, and the sales of the
merchandise in all of its markets. Sections B and C request home market
sales listings and U.S. sales listings, respectively. Section D
requests information on the cost of production (``COP'') of the foreign
like product and constructed value (``CV'') of the subject merchandise.
The Department received responses to Section A of the questionnaire
during February and March 1997. On March 13, 1997, pursuant to section
777A(c) of the Act, the Department determined that, due to the large
number of exporters/producers of the subject merchandise, it would
limit the number of mandatory respondents in this investigation. The
Department determined that the resources available to it for this
investigation and the two companion investigations limited our ability
to analyze any more than the responses of the two largest exporters/
producers of the subject merchandise in this investigation. Based on
Section A questionnaire responses, the Department chose Kabool and
Senco as mandatory respondents. (For detailed information regarding
this issue, see memo to Lou Apple from the CRN team, dated March 13,
1997.)
Kabool and Senco submitted questionnaire responses in February and
March 1997. We issued supplemental requests for information in March
and April 1997, and received supplemental responses to these requests
in April 1997.
On March 28, April 21 and 23, 1997, the Paslode Division of
Illinois Tool Works Inc. (``Petitioner'') filed comments on the Kabool
and Senco questionnaire responses.
Postponement of Final Determination and Extension of Provisional
Measures
On May 1, 1997, Senco requested that, pursuant to section
735(a)(2)(A) of the Act, in the event of an affirmative preliminary
determination in this investigation, the Department postpone its final
determination until not later than 135 days after the date of
publication of the affirmative preliminary determination in the Federal
Register. In accordance with section 735(a)(2)(A) of the Act and 19 CFR
353.20(b), inasmuch as our preliminary determination is affirmative,
Senco accounts for a significant proportion of exports of the subject
merchandise under investigation, and we are not aware of the existence
of any compelling reasons for denying the request, we are granting
Senco's request and postponing the final determination. Suspension of
liquidation will be extended accordingly. See Preliminary Determination
of Sales at Less Than Fair Value: Large Newspaper Printing Presses and
Components Thereof, Whether Assembled or Unassembled, from Japan (61 FR
8029, March 1, 1996).
Scope of Investigation
The product covered by this investigation is CR nails made of
steel, having a length of \13/16\ inch to 1\13/16\ inches (or 20.64 to
46.04 millimeters), a head diameter of 0.330 inch to 0.415 inch (or
8.38 to 10.54 millimeters), and a shank diameter of 0.100 inch to 0.125
inch (or 2.54 to 3.18 millimeters), whether or not galvanized, that are
collated with two wires.
CR nails within the scope of this investigation are classifiable
under the Harmonized Tariff Schedule of the United States (``HTSUS'')
subheading 7317.00.55.05. Although the HTSUS subheading is provided for
convenience and customs purposes, our written description of the scope
of this investigation is dispositive.
Period of Investigation
The period of this investigation (``POI'') comprises each
exporter's four most recent fiscal quarters prior to the filing of the
petition. In this case, the POI for both companies is October 1, 1995,
through September 30, 1996.
[[Page 25896]]
Fair Value Comparisons
Kabool and Senco
To determine whether sales of the subject merchandise by Kabool and
Senco to the United States were made at less than fair value, we
compared the Export Price (``EP'') or Constructed Export Price
(``CEP'') to the Normal Value (``NV''), as described in the EP, CEP,
and ``Normal Value'' sections of this notice, below. In accordance with
section 777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-
average EPs or CEPs to weighted-average NVs.
Kabool reported that it had no viable home market or third country
sales during the POI. Therefore, we made no price-to-price comparisons
for Kabool. See the ``Normal Value'' section of this notice, below, for
further discussion.
For certain U.S. sales Senco had no appropriate third country
matches. For purposes of calculating a unit margin for these sales, as
the ``facts available'' we are applying the highest rate calculated in
Senco's margin calculations for a control number.
(i) Physical Characteristics
In accordance with section 771(16) of the Act, we considered all
products covered by the description in the ``Scope of Investigation''
section of this notice, above, produced in Korea and sold in the home
market during the POI, to be foreign like products for purposes of
determining appropriate product comparisons to U.S. sales. Where there
were no sales of identical merchandise in the home market to compare to
U.S. sales, we compared U.S. sales to the next most similar foreign
like product on the basis of the characteristics listed in the
Department's antidumping questionnaire. In making the product
comparisons, we relied on the following criteria (listed in order of
preference): head size, type of collation (used to connect the wire to
the nail), shank size, length of the nail, steel type, number of nails
packed into a box or carton, type of coating, coating thickness (in
ounces per foot), and coating thickness (in microns).
(ii). Level of Trade and CEP Offset
As set forth in section 773(a)(1)(B)(i) of the Act and in the
Statement of Administrative Action accompanying the URAA, H.R. Doc. No.
316, 103d Cong., 2d Sess. (1994) (``SAA'') at 829-331, to the extent
practicable, the Department will calculate NV based on sales at the
same level of trade as the U.S. sales. When the Department is unable to
find sales in the comparison market at the same level of trade as the
U.S. sale (s), the Department may compare sales in the U.S. and foreign
markets at different levels of trade. Section 773(a)(7)(A) provides
that if we compare a U.S. sale with a home market sale made at a
different level of trade, when appropriate, we will adjust NV to
account for this difference. When NV is based on CV, the level of trade
is that of the sales from which we derive selling, general and
administrative (``SG&A'') expenses and profit.
For comparisons to CEP sales, section 773(a)(7)(B) of the Act
provides for making a CEP offset when two conditions are met. First,
the NV is established at a level of trade which constitutes a more
advanced stage of distribution than the level of trade of the CEP, and
second, the data available do not establish an appropriate basis for
calculating a level of trade adjustment.
In this case, however, Senco, the only respondent with a viable
home or third country market, did not claim that sales are made at
different levels of trade. Additionally, the information on the record
does not demonstrate that there are any differences in levels of trade.
We therefore preliminarily determine that all of Senco's sales are made
at a single level of trade. Because U.S. sales are at the same level as
home market sales, no level of trade adjustment or CEP offset is
warranted.
We have not applied a level of trade adjustment or CEP offset for
Kabool because Kabool did not claim a level of trade adjustment and we
are unable to determine whether the NVs are calculated at different
levels of trade than the U.S. sales. As explained below in the ``Normal
Value'' section of this notice, we calculated the NV for Kabool based
entirely on CV. We derived SG&A and profit from data from the
profitable companies' most recent financial statements contained in the
Section A responses (see memorandum to the file dated May 5, 1997, for
the CV profit rate calculation). This data does not permit an
appropriate level of trade analysis because we are unable to isolate
the particular selling expenses associated with the selling functions
for Kabool's NV. Therefore, we find insufficient evidence on the record
to justify a level of trade adjustment or CEP offset.
Export Price and Constructed Export Price
Kabool
We used EP in accordance with section 772(a) of the Act because the
subject merchandise was sold to unaffiliated customers before
importation and the CEP methodology was not indicated by the facts of
record. We calculated EP based on packed prices, either CIF or CNF to
the first unaffiliated purchaser in the United States. Where
appropriate, we made deductions from the starting price (gross unit
price) for inland freight--plant/warehouse to port of exit, brokerage
and handling in Korea, international freight, and marine insurance. We
added to EP reported duty drawback amounts.
Senco
We used EP in accordance with section 772(a) of the Act where the
subject merchandise was sold to unaffiliated customers prior to
importation and the CEP methodology was not indicated by the facts of
record. We used CEP in accordance with section 772(b) of the Act where
the subject merchandise was sold to unaffiliated customers after
importation. We calculated both EP and CEP, as appropriate, based on
packed prices, to the first unaffiliated purchaser in the United
States. For both EP and CEP sales we made deductions from the starting
price (gross unit price) for foreign inland freight, brokerage and
handling, U.S. inland freight from port to warehouse, U.S. inland
freight from warehouse to the unaffiliated customer, international
freight (including U.S. customs duties), marine insurance (including
U.S. inland insurance ), and other price adjustments (see memorandum to
the file dated May 5, 1997), where appropriate. With respect to foreign
inland freight and brokerage and handling expenses, Senco reported that
it incurred these expenses but did not report any amounts for these
expenses in its sales listing. As the ``facts available,'' for foreign
inland freight we are using the same freight amount reported for U.S.
inland freight from the warehouse to the unaffiliated customer, and for
brokerage and handling expenses we are using the brokerage and handling
expenses from a sample sales document supplied by Senco in its Section
A response and applying that amount to all U.S. sales.
For CEP sales, we made additional deductions, in accordance with
section 772(d) (1) and (2) of the Act, for credit expenses, advertising
expenses, other direct selling expenses, indirect selling expenses, and
inventory carrying costs incurred in the United States. Pursuant to
section 772(d)(3) of the Act, the price was further reduced by an
amount for profit, to arrive at the CEP. The amount of profit deducted
was calculated in accordance with section 772(f) of the Act. Because we
did not have cost information for Senco, that would permit us to
calculate total expenses (and total actual profit) under paragraph
772(f)(2)(C) (i) or (ii) we used the total
[[Page 25897]]
expenses incurred (and total actual profit earned) with respect to the
narrowest category of merchandise sold in all countries which includes
the subject merchandise, in accordance with paragraph
772(f)(2)(C)(iii). We have calculated profit as a percentage of the
cost of production as recorded in Senco's most recent financial
statement and applied that ratio to the CEP selling expenses to arrive
at an amount for CEP profit.
Normal Value
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
the aggregate volume of home market sales of the foreign like product
is greater than five percent of the aggregate volume of U.S. sales), we
compare each 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)(1)(C) of the Act.
Senco
Senco reported that it had no home market sales during the POI.
Therefore, in accordance with section 773(a)(1)(B)(ii), we based normal
value for Senco on sales to its largest third country market, Canada.
We calculated NV based on packed prices, to unaffiliated customers. In
accordance with section 773(a)(6) of the Act, we deducted third country
packing costs and added U.S. packing costs. However, we note that Senco
failed to report packing amounts in its sales listings. Therefore, in
accordance with section 776(a) of the Act, as the ``facts available''
we are applying the ratio of packing costs to gross unit price as
supplied in the petition. Where appropriate, we made deductions from
the starting price (gross unit price) for inland freight. With respect
to foreign inland freight expenses, Senco reported that it incurred
these expenses but did not report any amounts for these expenses in its
sales listing. As the ``facts available'' for foreign inland freight we
are using the same freight amount reported for U.S. inland freight from
the warehouse to the unaffiliated customer. In addition, where
appropriate, we adjusted for differences in circumstances of sale for
imputed credit expenses.
Kabool
Kabool reported that it had no viable home or third country sales
during the POI. Therefore, in accordance with section 773(a)(4) of the
Act, we based normal value for Kabool on CV. In accordance with section
773(e)(1) of the Act, we calculated CV based on the sum of the costs of
materials and fabrication, selling, general, and administrative
expenses (``SG&A''), profit and U.S. packing costs. We used Kabool's
costs of materials, fabrication and packing as reported in the U.S.
sales databases. In this case, Kabool had no home market selling
expenses or home market profit upon which to base CV.
Section 773(e)(2)(B) of the Act sets forth three alternatives for
computing profit and SG&A without establishing a hierarchy or
preference among the alternative methods. We did not have the necessary
cost data for methods one (calculating SG&A and profit incurred by the
producer on the sales of merchandise of the same general type as the
exports in question), or two (averaging SG&A and profit of other
producers of the foreign like product for sales in the home market).
The third alternative (section 773(e)(2)(B)(iii) of the Act) provides
that profit and SG&A may be computed by any other reasonable method,
capped by the amount normally realized on sales in the foreign country
of the general category of products. The SAA states that, if the
Department does not have the data to determine amounts for profit under
alternatives one and two or a profit cap under alternative three, it
still may apply alternative three (without the cap) on the basis of the
``facts available.'' SAA at 841. As the facts available, we are
calculating an average SG&A and profit rate from the most recent
financial statements of the profitable companies from which we received
Section A responses. We note that some financial statements were
unreadable; we did not include these numbers in our calculation. We
preliminarily determine this data to be a reasonable surrogate for SG&A
and profit of the subject merchandise. However, we will consider the
issue of appropriate SG&A and profit information further for the final
determination and invite comment on this issue.
Price to CV Comparisons
Because we based SG&A for CV on the financial statements of each
individual company, where we compared CV to EP, we did not make any
circumstance of sale adjustments for direct expenses, as we were unable
to split out from total SG&A the direct selling expenses.
Currency Conversion
We made currency conversions into U.S. dollars based on the
official exchange rates in effect on the dates of the U.S. sales as
certified by the Federal Reserve Bank.
Section 773A(a) of the Act directs the Department to convert
foreign currencies based on the dollar exchange rate in effect on the
date of sale of the subject merchandise, except if it is established
that a currency transaction on forward markets is directly linked to an
export sale. When a company demonstrates that a sale on forward markets
is directly linked to a particular export sale in order to minimize its
exposure to exchange rate losses, the Department will use the rate of
exchange in the forward currency sale agreement.
Section 773A(a) also directs the Department to use a daily exchange
rate in order to convert foreign currencies into U.S. dollars unless
the daily rate involves a fluctuation. It is the Department's practice
to find that a fluctuation exists when the daily exchange rate differs
from the benchmark rate by 2.25 percent. The benchmark is defined as
the moving average of rates for the past 40 business days. When we
determine a fluctuation to have existed, we substitute the benchmark
rate for the daily rate, in accordance with established practice.
Further, section 773A(b) directs the Department to allow a 60-day
adjustment period when a currency has undergone a sustained movement. A
sustained movement has occurred when the weekly average of actual daily
rates exceeds the weekly average of benchmark rates by more than five
percent for eight consecutive weeks. (For an explanation of this
method, Policy Bulletin 96-1: Currency Conversions (61 FR 9434, March
8, 1996)). Such an adjustment period is required only when a foreign
currency is appreciating against the U.S. dollar. The use of an
adjustment period was not warranted in this case because neither the
Korean Won nor the Canadian Dollar underwent a sustained movement.
Critical Circumstances
The petition contained a timely allegation that there is a
reasonable basis to believe or suspect that critical circumstances
exist with respect to imports of subject merchandise. Section 733(e)(1)
of the Act provides that the Department will determine that there is a
reasonable basis to believe or suspect that critical circumstances
exist if: (A)(i) there is a history of dumping and material injury by
reason of dumped imports in the United States or elsewhere of the
subject merchandise, or (ii) the person by whom, or for whose account,
the merchandise was imported
[[Page 25898]]
knows or should have known that the exporter was selling the subject
merchandise at less than its fair value and that there was likely to be
material injury by reason of such sales, and (B) there have been
massive imports of the subject merchandise over a relatively short
period.
To determine that there is a history of dumping of the subject
merchandise, the Department normally considers evidence of an existing
antidumping duty order on CRN in the United States or elsewhere to be
sufficient. See e.g., Preliminary Determinations of Critical
Circumstances: Brake Drums and Rotors from the People's Republic of
China, 61 FR 55269 (Oct. 25, 1996); Notice of Final Determinations of
Sales at Less Than Fair Value: Brake Drums and Rotors from the People's
Republic of China, 62 FR 9160 (Feb. 28, 1997). Currently, no countries
have outstanding antidumping duty orders on CRN from Korea. The
petitioner alleged a history of dumping based upon antidumping orders
on steel wire nails from Korea and the People's Republic of China, both
of which covered CRN. See Certain Steel Wire Nails From Korea; Final
Results of Changed Circumstances Administrative Review and Revocation
of Antidumping Duty Order, 50 FR 40045 (Oct. 1, 1985); Final Results of
Changed Circumstances Administrative Review and Revocation of
Antidumping Duty Order; Certain Steel Wire Nails from The People's
Republic of China, 52 FR 33463 (Sept. 3, 1987). We preliminarily
determine that these antidumping orders are not a sufficient basis to
find a history of dumping because both orders were revoked many years
ago. However, we will consider this issue further for the final
determination and we invite interested parties to comment on the issue.
In determining whether an importer knew or should have known that
the exporter was selling subject merchandise at less than fair value
and thereby causing material injury, the Department normally considers
margins over 15% for EP sales and 25% for CEP sales to impute knowledge
of dumping and of resultant material injury. Brake Drums and Rotors, 62
FR at 9164-65. When a company has both EP and CEP sales, we normally
weight-average the 15% and 25% benchmarks using the volume of EP and
CEP sales, respectively, to arrive at a weighted-average benchmark
percentage for imputing knowledge of dumping. In this investigation, of
the exporters/manufacturers has a margin over 15% for EP sales or 25%
for CEP sales. Based on these facts, we determine that the first
criterion for ascertaining whether or not critical circumstances exist
is not satisfied. Therefore, we have not analyzed the shipment data for
any of these companies to examine whether imports of CRN have been
massive over a relatively short period. Thus, because neither
alternative of the first criterion has been met, we preliminarily
determine that there is no reasonable basis to believe or suspect that
critical circumstances exist with respect to exports of CRN from Korea
by Kabool or Senco.
Regarding all other exporters, because we do not find that critical
circumstances exist for any of the investigated companies, we also
determine that critical circumstances do not exist for companies
covered by the ``All Others'' rate.
We will make a final determination concerning critical
circumstances when we make our final determination in this
investigation, if that final determination is affirmative.
Verification
As provided in section 782(i) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all imports of subject
merchandise--except those exported by Kabool--that are entered, or
withdrawn from warehouse, for consumption on or after the date of
publication of this notice in the Federal Register. We will instruct
the Customs Service to require a cash deposit or the posting of a bond
equal to the weighted-average amount by which the NV exceeds the export
price, as indicated in the chart below. These suspension of liquidation
instructions will remain in effect until further notice. The weighted-
average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
percentage
------------------------------------------------------------------------
Kabool.................................................... 0
Senco..................................................... 5.53
All Others................................................ 5.53
------------------------------------------------------------------------
Pursuant to section 735(c)(5)(A) of the Act, the Department has
excluded the zero margin from the calculation of the ``All Others
Rate.''
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
Case briefs or other written comments in at least ten copies must
be submitted to the Assistant Secretary for Import Administration no
later than July 29, 1997, and rebuttal briefs, no later than August 5,
1997. A list of authorities used and an executive summary of issues
should accompany any briefs submitted to the Department. Such summary
should be limited to five pages total, including footnotes. In
accordance with section 774 of the Act, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs. Tentatively, the hearing
will be held on August 6, at 9:00 a.m. in Room 1412 at the U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230. Parties should confirm by telephone the time,
date, and place of the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within ten days of the publication of this notice. Requests
should contain: (1) The party's name, address, and telephone number;
(2) the number of participants; and (3) a list of the issues to be
discussed. Oral presentations will be limited to issues raised in the
briefs. If this investigation proceeds normally, we will make our final
determination by 135 days after the publication of this notice in the
Federal Register.
This determination is published pursuant to section 733(d) of the
Act.
Dated: May 5, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-12393 Filed 5-9-97; 8:45 am]
BILLING CODE 3510-DS-P
