[Federal Register Volume 63, Number 116 (Wednesday, June 17, 1998)]
[Notices]
[Pages 33037-33041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16106]
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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 and Notice of Intent Not To Revoke Order in
Part
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Antidumping Duty Administrative
Review and Notice of Intent Not to Revoke Order in Part.
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SUMMARY: In response to a request by the respondent, the Department of
Commerce is conducting an administrative review of the antidumping duty
order on brass sheet and strip from Canada. The review covers one
manufacturer/exporter of this merchandise to the United States,
Wolverine Tube (Canada), Inc. The period covered is January 1, 1996
through December 31, 1996. As a result of the review, the Department
preliminarily determined that no dumping margins existed for this
respondent. However, upon consideration of petitioner's and
respondent's case briefs and rebuttal briefs, we have now determined
that a dumping margin does exist. Therefore, we are not revoking the
order with respect to brass sheet and strip from Canada manufactured by
Wolverine Tube (Canada), Inc.
EFFECTIVE DATE: June 17, 1998.
FOR FURTHER INFORMATION CONTACT: Paul Stolz or Tom Futtner, Office of
Antidumping/Countervailing Duty Enforcement, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
[[Page 33038]]
Street and Constitution Avenue, NW, Washington, DC 20230; telephone:
(202) 482-4474 or 482-3814, respectively.
Applicable Statute and Regulations
Unless otherwise stated, 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 references to the Department's regulations are to 19 CFR
part 353 (April 1, 1997).
SUPPLEMENTARY INFORMATION:
Background
The Department of Commerce (the Department) published an
antidumping duty order on brass sheet and strip from Canada on January
12, 1987 (52 FR 1217). On February 9, 1998, the Department published in
the Federal Register the preliminary results of its administrative
review of the antidumping duty order on brass sheet and strip from
Canada (63 FR 6519) (preliminary results). We gave interested parties
an opportunity to comment on our preliminary results. We received
written comments from 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); Merchandise Educational
Society of America, and United Steelworkers of America (AFL-CIO),
collectively, the petitioner, and Wolverine Tube (Canada), Inc., the
respondent.
Scope of Review
Imports covered by this review are shipments of brass sheet and
strip (BSS), other than leaded and tinned BSS. The chemical composition
of the covered products is currently defined in the Copper Development
Association (C.D.A.) 200 Series or the Unified Numbering System
(U.N.S.) C2000. This review does not cover products the chemical
compositions of which are defined by other C.D.A. or U.N.S. series. In
physical dimensions, the products covered by this review have a 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. Coiled, wound-on-reels (traverse wound), and cut-
to-length products are included. The merchandise is currently
classified under Harmonized Tariff Schedule (HTS) item numbers
7409.21.00 and 7409.29.00. Although the HTS item numbers are provided
for convenience and 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, covering the period September 1, 1990, through September 30,
1991, 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 period (POR) is January 1, 1996 through December 31,
1996. The review involves one manufacturer/exporter, Wolverine Tube
(Canada), Inc. (Wolverine).
Fair Value Comparisons
To determine whether sales of subject merchandise from Canada to
the United States were made at less than fair value, we compared the
Export Price (EP) to the Normal Value (NV), as described in the
``Export Price'' and ``Normal Value'' sections of the preliminary
results of review notice (see Preliminary Results, 63 FR at 6520). On
January 8, 1998, the Court of Appeals for the Federal Circuit issued a
decision in CEMEX v. United States, 1998 WL 3626 (Fed Cir.). In that
case, based on the pre-URAA version of the Act, the Court discussed the
appropriateness of using constructed value (CV) as the basis for
foreign market value when the Department finds home market sales to be
outside the ``ordinary course of trade.'' This issue was not raised by
any party in this proceeding. However, the URAA amended the definition
of sales outside the ``ordinary course of trade'' to include sales
below cost. See Section 771(15) of the Act. Consequently, the
Department has reconsidered its practice in accordance with this Court
decision and has determined that it would be inappropriate to resort
directly to CV, in lieu of foreign market sales, as the basis for NV if
the Department finds foreign market sales of merchandise identical or
most similar to that sold in the United States to be outside the
``ordinary course of trade''. We will match a given U.S. sale to
foreign market sales of the next most similar model when all sales of
the most comparable model are below cost. The Department will use CV as
the basis for NV only when there are no above-cost sales that are
otherwise suitable for comparison. Therefore, in this proceeding, when
making comparisons in accordance with section 771(16) of the Act, we
considered all products sold in the home market as described in the
``Scope of Review'' section of this notice, above, that were in the
ordinary course of trade for purposes of determining appropriate
product comparisons to U.S. sales. Where there were no sales of
identical merchandise in the home market made in the ordinary course of
trade to compare to U.S. sales, we compared U.S. sales to sales of the
most similar foreign like product made in the ordinary course of trade,
based on the characteristics listed in Sections B and C of our
antidumping questionnaire. We have implemented the Court's decision in
this case, to the extent that the data on the record permitted.
Revocation
Under the Department's regulations, the Department may revoke and
order in part if the Secretary concludes that: (1) ``one or more
producers or resellers covered by the order have sold the merchandise
at not less than fair value for a period of at least three consecutive
years''; (2) ``[i]t is not likely that those persons will in the future
sell the merchandise at less than fair value * * *; and (3) ``the
producers or resellers agree in writing to the immediate reinstatement
of the order as long as any producer or reseller is subject to the
order, if the Secretary concludes that the producer or reseller,
subsequent to the revocation, sold the merchandise at less than fair
value.'' See 19 CFR 353.25(a)(2).
Upon review of the three criteria described above, and of the case
briefs and rebuttal briefs, and on the basis of all the evidence on the
record, we determine for the final results of this review that the
Department's requirements for revocation have not been met.
The Department found that Wolverine's sales reviewed during the
eighth (1994) and ninth (1995) reviews under this order were made at
not less than NV. However, in this tenth review, we have determined
that Wolverine's sales were made at less than NV. We, therefore, do not
revoke in part the antidumping duty order with respect Wolverine.
Changes
In our preliminary results we inadvertently failed to make a
certain adjustment reported by the respondent. Since the adjustment
constitutes business proprietary information, it is described in our
analysis memorandum dated June 9, 1998.
Analysis of Comments Received
Comment 1: Wolverine claims that the Department erred in not taking
into
[[Page 33039]]
consideration, in matching home market and U.S. sales, the product code
information it submitted identifying reroll/nonreroll material.
Petitioner states that the Department properly disregarded non-physical
characteristics of Wolverine's product control numbering system, such
as whether the brass content was reroll material, and that the
Department should not accept a product matching system that is not
based on actual physical elements of the merchandise.
Department Position: We agree with the Petitioner. The Department
believes that the reroll/nonreroll designation, and its revision,
``type 1/type 2'' designation, indicates only whether Wolverine
purchased brass for further rolling or cast the material itself.
Wolverine maintains that brass it purchased from unrelated suppliers
and then rerolled itself resulted in an end product more chemically
pure and of a higher grain density than the end product produced from
brass it cast itself. The Department believes that, although this
designation may indicate a probability or tendency with respect to
purity and grain density of the final end product, this designation
does not objectively and scientifically describe actual purity and
grain density as measurable physical characteristics of the end
product. Wolverine has provided no quantifiable or verifiable data on
the differences in purity and grain density between BSS made from
reroll material and that made from non-reroll material. Therefore this
criterion should not be considered as a product matching
characteristic. Moreover, in its supplemental questionnaire, the
Department stated that Wolverine should delete the reroll/nonreroll
designation from its product matching criteria and report instead the
actual chemical purity and grain density of sales of subject
merchandise for the POR. Wolverine deleted the reroll/nonreroll
designation from its product description but then did not add chemical
purity and grain density designations to its product numbering system.
Instead, Wolverine simply designated reroll and nonreroll as ``type 1''
and ``type 2'' subject merchandise, respectively. This designation does
not provide an objective, measurable basis upon which to segregate the
end-product into separate product groups for purposes of creating
product matches. In addition, the record does not include details
supporting separation of the subject merchandise into separate product
groups on the basis of production process/costs and/or market selling
prices, additional factors the Department might consider in
establishing the product concordance.
Comment 2: Wolverine asserts that sales verification exhibit 19
should be included in the record of this proceeding. Wolverine
maintains that topics covered in this exhibit, covering revocation
issues, were listed in the verification outline, and it, therefore,
created and presented exhibit 19 to avoid the possibility of the
application of facts available by the Department in its analysis. In
addition, Wolverine claims that sales verification exhibit 19, which
the Department removed from the record as untimely submitted new
information, should be placed back on the record in accordance with
established rules of evidence because the petitioner, it claims, relied
on exhibit 19 in arguments made in its case brief.
Petitioner states that the Department properly removed sales
verification exhibit 19 from the administrative record as new
information. Petitioner asserts that the respondent had ample
opportunity to present company-specific information regarding
revocation but waited until verification to do so. Furthermore,
petitioner claims that the information presented in exhibit 19,
covering revocation topics, did not correspond to information
previously placed on the record and was not itself verified. Therefore,
this exhibit cannot be relied upon as part of the administrative
record.
Department Position: the Department believes that exhibit 19
contained untimely submitted new factual information. The Department
believes that this information should have been presented, at the
latest, when the Department opened the record for 30 days beginning on
October 16, 1998, so that such information could be presented. The
Department's verification outline stated only that the respondent
should be prepared to discuss revocation topics. The Department did not
request or solicit additional factual information pertaining to the
revocation issue from respondent. In addition, the verifier informed
respondent's counsel at the time exhibit 19 was presented that it could
be considered new information and did not verify this information when
it was presented for the first time at verification. Finally, we note
that, because it has rejected exhibit 19, the Department has not relied
on petitioner's reference in its case brief to exhibit 19 in reaching
its final determination and therefore that reference does not
incorporate exhibit 19 into the record of this proceeding.
Comment 3: Petitioner claims that Wolverine's per-unit cost of
materials was understated because the overall cost of materials was
divided by a quantity factor that included metals provided to Wolverine
at no cost by customers to whom Wolverine provided only fabrication
services. Wolverine did not purchase these metal input materials for
these customers; therefore, the quantities of these materials should
not have been added to quantities purchased by Wolverine for processing
to determine total cost of materials. Respondent states that it
reported material costs are accurate and require no adjustment.
Wolverine notes that a standard mill loss allowance was deducted from
tolled production quantity and was then added to non-tolled production
quantity to be incorporated into calculations showing mill loss, in
terms of quantity, including both tolled and non-tolled merchandise.
Respondent cites verification cost exhibit 9a, which shows that the
quantity of copper used for non-tolled production divided into the
total cost of copper equals the reported per pound copper cost.
Department Position: We agree with the respondent. The Department
verified that the reported per-unit materials cost was accurate.
Although a mill loss adjustment was made to the metal pools account
which reflected decreased quantities, this adjustment does not affect
the cost of materials account. We also verified that the mill loss
allowance was consistently applied in terms of quantity according to
company accounting procedures. Because proprietary information is
involved, please refer to our analysis memorandum dated June 9, 1998,
for further information.
Comment 4: Petitioner assets that net home market prices, as
calculated by the Department for purposes of the cost analysis,
included indirect selling expenses. However, by definition, the cost of
production (COP), to which net home market prices are compared for
purposes of the below COP test, did not include indirect selling
expenses. Petitioner claims, therefore, that the comparison of per unit
COP with home market net prices results in an understatement of number
of below cost sales. That is, home market prices are artificially high
with respect to COP since home market prices include indirect selling
expenses while COP does not. Respondent asserts that the COP already
includes indirect selling expenses as these expenses are grouped under
the general and administrative expenses (G&A) of the consolidated
company, Wolverine USA, which were
[[Page 33040]]
included in the Department's calculation of COP.
Department Position: We agree with the respondent. Respondent's
financial statements demonstrate that indirect selling expenses were
included in general and administrative expenses. Adding an additional
amount for indirect selling expenses to the COP would result in double-
counting.
Comment 5: Petitioner states that the Department's calculation
applied to Wolverine's general and administrative expenses to include
an allocated portion of the expenses of Wolverine's corporate
headquarters' included two minor errors with respect to the exchange
rate and the revised selling, general and administrative (SG&A) ratio:
(1) The Department used an incorrect exchange rate in calculating the
preliminary results, and (2) the Department slightly understated the
revision of the SG&A ratio. Wolverine did not specifically comment on
this issue.
Department Position: We agree with petitioner that the exchange
rate was rounded incorrectly and that the revised SG&A ratio was
inaccurately recorded. We have corrected these errors which were
clerical in nature. See our analysis memorandum dated 9, 1998; for the
proprietary version of this amount.
Comment 6: Petitioner states that the Department properly adjusted
Wolverine's general and administrative expenses to include an allocated
portion of the G&A expenses incurred by Wolverine's corporate
headquarters. Respondent asserts that no general expenses of the
corporate headquarters should be allocated to the Fergus plant.
Wolverine claims that the only U.S. operation of Wolverine that
provided services to the Fergus facility was Wolverine Finance USA,
which handles customer credit. Wolverine states that an appropriate
proportion of Wolverine Finance USA expenses were allocated to the
Fergus plant.
Department Position: We agree with petitioner that the adjustment
to Wolverine's general and administrative expenses to include an
allocated portion of expenses incurred by Wolverine's corporate
headquarters is appropriate.
For purposes of the below COP test conducted for home market
comparison sales we allocated a portion of SG&A expenses for the
corporate headquarters in Huntsville/Decatur, Alabama to Wolverine's
COP. This additional allocation was based on SG&A and cost of sales
information taken from Wolverine's financial statements. In its
questionnaire response, Wolverine did not allocate SG&A for its
Huntsville/Decatur corporate headquarters, although it did allocate
SG&A for its London, Ontario corporate offices. At verification,
however, discussions with company officials and a review of company
correspondence revealed that the Fergus, Ontario facility was subject
to significant guidance and control by corporate headquarters in
Huntsville/Decatur during the POR. Therefore, we calculated a ratio
based on the Fergus Facility's reported cost of sales and the U.S.
total cost of sales as follows. First we converted the reported Fergus
cost of sales from Canadian dollars to U.S. dollars. Second, we divided
the Fergus cost of sales (in U.S. dollars) by the U.S. total cost of
sales as reported in respondent's 1996 consolidated income statement
included in its April 28, 1997 questionnaire response as appendix. The
result represents the appropriate proportion of U.S. SG&A expense to be
applied to the Fergus operation. We then multiplied the appropriate
proportion of U.S. SG&A expense to be applied to the Fergus operation
by total SG&A taken from appendix A-5. We then converted this amount to
Canadian dollars and added the U.S. portion of SG&A expense to the
Canadian portion shown in exhibit H. Finally, we divided total G&A
allocable to Fergus by the total cost of sales of Wolverine Tube
(Canada), Inc. to yield the revised G&A factor. We adjusted the
computer program to apply this revised G&A factor. See our analysis
memorandum dated June 9, 1998, for the proprietary version of this
comment.
Comment 7: Petitioner claims that the Department erroneously
applied its revised SG&A ratio to Wolverine's originally reported SG&A
amount, whereas it should have applied the revised ratio to Wolverine's
reported cost of manufacture. Wolverine did not comment specifically on
this issue.
Department Position: The Department agrees with petitioner that the
revised SG&A should have been applied to Wolverine's cost of
manufacture in accordance with our usual practice. We have adjusted our
calculations to reflect this revision.
Comment 8: Petitioner claims that the Department failed to include
revised warranty expenses outlined in the respondent's pre-verification
submission of December 1, 1997. Respondent does not dispute
petitioner's claim regarding the inclusion of warranty expenses.
Department Position: We agree with petitioner. The Department
overloaded the submission of the revised warranty expenses in its
calculations. We have revised our computer program in include the
revised warranty expenses.
Comment 9: Petitioner argues that the Department erred by not
requiring that additional historical data be placed on the record to
inform the Department's decision with respect to the revocation issue.
Petitioner asserts that the Department, as the administering authority,
has not complied with its investigative responsibilities in this
respect. In addition, petitioner maintains that the burden is on
Wolverine to demonstrative that it is not likely to resume dumping if
the order were revoked, and that Wolverine has not been forthcoming
with company-specific information on this point. Furthermore,
petitioner claims that respondent should not be able to obtain
revocation based on a limited number of sales, of a limited product
range, to a limited number of customers. Respondent states that no
compelling need exists to place further information with respect to
revocation on the record. Respondent states that ample opportunity has
been provided for interested parties to place information on the
record. In addition, respondent claims that volume and value
information from previous proceedings would not have probative value in
this review. Wolverine claims that it is not likely to dump in the
future and rebuts petitioner's arguments that it is likely to do so.
Finally, Wolverine states that it takes its legal responsibilities
seriously and considers potential reinstatement of the order to be a
viable remedy were it to resume dumping following revocation.
Department Position: The Department does not need to reach the
issues raised by the parties in this review with respect to likelihood
of future following a revocation of an antidumping duty order because
it has determined on other grounds that the revocation of the order at
issue is not appropriate.
Comment 10: Petitioner argues that Wolverine is likely to dump in
the future because: (1) U.S. prices have been declining, (2)
Wolverine's preliminary margin was just barely de minimis, (0.042
percent), (3) Wolverine has economic incentive to dump as it must
replace certain lost business, and (4) the U.S. market is the most
likely target for dumping due to the openness of the market, strong
demand, and price competition. Wolverine denies that is likely to dump
in the future. It asserts that the U.S. and Canadian brass market
comprise a unified market, thus brass prices will rise and fall in
tandem. In addition, Wolverine claims that although it lost certain
business, that business involved non-subject merchandise which did not
include the production process of annealing. Therefore, the loss of
that business does not create additional capacity to
[[Page 33041]]
produce, and presumably dump, additional subject merchandise which
requires annealing.
Department Position: These issues were addressed in the preliminary
results wherein the Department indicated that it did not consider these
factors conclusive. Final determinations regarding these points need
not be reached in these final results since we not find that, due to
the extensive of a non-de-minimis dumping margin in this review,
Wolverine is not eligible for revocation pursuant to 19 CFR
353.25(a)(2).
Final Results for the Review
As a result of our comparison of EP to NV, we determine that a
dumping margin of 0.67 percent exists for Wolverine for the period
January 1, 1996 through December 31, 1996, and we determine, not to
revoke in part the antidumping duty order with respect to imports of
subject merchandise from Wolverine.
The Department will determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. For assessment
purposes, we have calculated importer-specific ad valorem duty
assessment rates for the merchandise based on the ratio of the total
amount of antidumping duties calculated for the examined sales during
the POR to the total quantity of sales examined during the POR. The
Department will issue appraisement instructions directly to the Customs
Service.
Furthermore, the following deposit requirements will be effective
upon publication of these final results for all shipments of the
subject merchandise entered, or withdrawn from warehouse, for
consumption on or after the publication date provided by section
751(a)(1) of the Act: (1) The cash deposit rate for Wolverine will be
the rate stated above; (2) 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 (3) the cash deposit rate for all
other manufacturers or exporters will continue to be 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.
Notification of Interested Parties
This notice also 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 the antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification
of the 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.
This administrative review and notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: June 9, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-16106 Filed 6-16-98; 8:45 am]
BILLING CODE 3510-DS-M
