01-15545. Initiation of Antidumping Duty Investigations: Structural Steel Beams From the People's Republic of China, Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

June 20, 2001.

FOR FURTHER INFORMATION CONTACT:

Thomas Schauer (Germany, Italy, Luxembourg) at [phone]; Davina Hashmi (Spain, South Africa, Taiwan) at [phone]; Rebecca Trainor (The People's Republic of China) at [phone]; or Dinah McDougall (Russia) at [phone], Import Administration-Room 1870, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Initiation of Investigations

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (“the Act”) by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department of Commerce's (“the Department's”) regulations are to the regulations codified at 19 CFR Part 351 (2001).

The Petition

On May 23, 2001, the Department received a petition filed in proper form by the Committee for Fair Beam Imports and its individual members, Northwestern Steel and Wire Company, Nucor Corporation, Nucor-Yamato Steel Company, and TXI-Chaparral Steel Company (“the petitioners”).

In accordance with section 732(b) of the Act, the petitioners allege that imports of structural steel beams from the People's Republic of China (the PRC), Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act and that such imports are materially injuring, or threatening material injury to, an industry in the United States.

The Department finds that the petitioners filed the petition on behalf of the domestic industry because they are interested parties as defined in section 771(9)(C) and (D) of the Act and they have demonstrated sufficient industry support with respect to the antidumping duty investigations they are requesting the Department to initiate (see “Determination of Industry Support for the Petitions,” below).

Scope of Investigations

For purposes of these investigations, the products covered are doubly-symmetric shapes, whether hot-or cold-rolled, drawn, extruded, formed or finished, having at least one dimension of at least 80 mm (3.2 inches or more), whether of carbon or alloy (other than stainless) steel, and whether or not drilled, punched, notched, painted, coated, or clad. These products (“structural steel beams”) include, but are not limited to, wide-flange beams (“W” shapes), bearing piles (“HP” shapes), standard beams (“S” or “I” shapes), and M-shapes.

All products that meet the physical and metallurgical descriptions provided above are within the scope of these investigations unless otherwise excluded. The following products are outside and/or specifically excluded from the scope of these investigations:

• Structural steel beams greater than 400 pounds per linear foot or with a web or section height (also known as depth) over 40 inches.

The merchandise subject to these investigations is classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) at subheadings 7216.32.0000, 7216.33.0030, 7216.33.0060, 7216.33.0090, 7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000, 7216.99.0000, 7228.70.3040, and 7228.70.6000. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise under investigation is dispositive.

During our review of the petition, we discussed with the petitioners whether the proposed scope was an accurate reflection of the product for which the domestic industry is seeking relief. The petitioners indicated that the scope in the petition accurately reflected the product for which they are seeking relief. Consistent with the preamble to its regulations (see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997)), the Department is setting aside a period for parties to raise issues regarding product coverage. The Department encourages all parties to submit such comments by 20 days after the publication of this notice. Comments should be addressed to Import Administration's Central Records Unit at Room 1870, U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, N.W., Washington, D.C. 20230. This period of scope consultation is intended to provide the Department with ample opportunity to consider all comments and to consult with parties prior to the issuance of the preliminary determinations.

Determination of Industry Support for the Petitions

Section 732(b)(1) of the Act requires that a petition be filed on behalf of a domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (1) at least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition.

Section 771(4)(A) of the Act defines the “industry” as the producers of a domestic like product. Thus, to determine whether the petition has the requisite industry support, the statute directs the Department to look to producers and workers who account for production of the domestic like product. The International Trade Commission (“ITC”), which is responsible for determining whether the domestic industry has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC are required to apply the same statutory provision regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the domestic like product, such differences do not render the decision of either agency contrary to law.^[1]

Section 771(10) of the Act defines domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition. The domestic like product referred to in the petition is the single domestic like product defined in the “Scope of Investigation” section, above. We consulted with the ITC, the U.S. Customs Service, and the petitioners and have, as a result of these discussions, adopted the definition of domestic like product definition set forth in the petition. We have not received comments from interested parties challenging the petitioners' definition of domestic like product.

The petitioners identified the total shipments of steel beams (including some merchandise that is not the domestic like product) from data gathered by the American Iron and Steel Institute (AISI). By comparing their own production with the total shipment of steel beams, the petitioners established that they accounted for well over 50 percent of production of the domestic like product in the United States. Furthermore, we find the petitioners' estimation of industry support to be conservative because the denominator in the calculation (the total shipment of steel beams) includes merchandise that is not the domestic like product, while the numerator (the petitioners' production) is comprised solely of production of the domestic like product.

The petitioners established industry support representing over 50 percent of the total production of the domestic like product. Therefore, the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product and, therefore, the requirements of section 732(c)(4)(A)(i) of the Act are met. Furthermore, because the Department received no opposition to the petitions, the domestic producers or workers who support the petitions account for 100 percent of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petitions. Therefore, the requirements of section 732(c)(4)(A)(ii) of the Act are met. Accordingly, the Department determines that the petitions were filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

Export Price and Constructed Export Price

The following are descriptions of the allegations of sales at less than fair value upon which we have based our decisions to initiate these investigations. Should the need arise to use any of this information in our preliminary or final determinations for purposes of facts available under section 776 of the Act, we may re-examine the information and revise the margin calculations, if appropriate.

With respect to sales to the U.S. market, the petitioners used a constructed export price (CEP) analysis in the Germany, Italy, Luxembourg and Spain petitions based on sales of the merchandise in the United States by a U.S. affiliate of the foreign producer. The petitioners used an export price (EP) analysis in the PRC and Russia petitions based on sales of the merchandise directly to unaffiliated customers in the United States by one of the foreign producers. The petitioners also used an export price (EP) analysis in the Germany, South Africa, and Taiwan petitions based on sales of the merchandise through unaffiliated distributors in the United States by one of the foreign producers. The petitioners based CEP and EP on affidavits supported by price quotes and offers. The petitioners calculated CEP in the German petition by subtracting ocean freight, U.S. Customs duties, and a distributor margin representing the U.S. selling expenses and profit. The petitioners calculated CEP in the Italy petition by subtracting ocean freight, U.S. port charges, U.S. Customs duties, and a distributor margin representing the U.S. selling expenses and profit. The petitioners calculated CEP in the Luxembourg petition by subtracting ocean freight, U.S. Customs duties, and a distributor margin representing the U.S. selling expenses and profit. The petitioners calculated CEP in the Spain petition by subtracting domestic inland freight, foreign port charges, ocean freight, U.S. Customs duties, and the distributor margin. The petitioners calculated EP in the Germany petition by subtracting ocean freight, U.S. port charges, U.S. Customs duties, and the distributor margin to account for the fact that the prices are quoted from an unaffiliated U.S. distributor. The petitioners calculated EP in the PRC petition by subtracting domestic inland freight, export charges, domestic wharfage, ocean freight, insurance, U.S. port charges, and U.S. duties. The petitioners calculated EP in the Russia petition by subtracting domestic inland freight, foreign port charges, ocean freight, insurance, U.S. port charges, and U.S. duties. The petitioners calculated EP in the South Africa petition by subtracting domestic inland freight, ocean freight, U.S. port charges, and the distributor margin. The petitioners calculated EP in the Taiwan petition by subtracting domestic inland freight, foreign port charges, ocean freight, U.S. port charges, U.S. Customs duties, and the distributor margin. The petitioners also calculated imputed credit expenses applicable to EP sales in the Taiwan petition and added the expense to NV. The data for these adjustments was based on U.S. Customs statistics, the Port of Houston Authority Tariff No. 8, affidavits, and the 2001 import duty rates. The petitioners did not deduct domestic inland freight, export port charges, or imputed credit expenses from CEP or EP in the Germany, Italy, or Luxembourg petitions because they were not able to obtain such data. No other adjustments to EP or CEP were necessary due to the terms of the sales. We restated some of the constructed export prices and export prices in the Germany, Italy, Luxembourg, Spain, and Taiwan petitions. See Memoranda to File titled Recalculation of Antidumping Margins for Germany, Italy, Luxembourg, Spain, and Taiwan dated June 11, 2001, for a complete discussion of the changes we made.

Home-Market and Third-Country Prices

The petitioners used home-market prices based on affidavits supported by price quotes and offers except in the PRC, Luxembourg, and Russia petitions. The petitioners used third-country prices based on affidavits supported by price quotes and offers in the Luxembourg petition because they were unable to obtain price information for sales in the home market. The petitioners selected Germany as the third-country market. The petitioners presented evidence that Germany is the largest third-country market for steel beams produced in Luxembourg. After examining this evidence, we found the petitioners' selection of Germany as the comparison market to be reasonable. Because the PRC and Russia are considered non-market economy countries, the petitioners did not obtain home-market or third-country prices. See the “Normal Value” section below.

The petitioners adjusted the home-market and third-country prices for CEP comparisons in the Germany, Italy, and Luxembourg petitions by deducting a distributor margin to represent a reseller's selling expenses. The petitioners adjusted the home-market prices for EP comparisons in the South Africa petition by deducting credit expense, discounts, and a distributor margin to represent a reseller's selling expenses. The petitioners adjusted the home-market prices for EP comparisons in the Taiwan petition by deducting inland freight and a distributor margin to represent a reseller's selling expenses.

The petitioners did not deduct inland freight in the Germany, Luxembourg, Spain, or Taiwan petitions because of the terms of sale. The petitioners did not deduct inland freight in the Italy or South Africa petitions because they were unable to calculate such expenses. With regard to the South Africa petition, the petitioners were able to make an adjustment so that the home-market prices would not be overstated. Because of the proprietary nature of this adjustment, please see the proprietary version of the Initiation Checklist dated June 12, 2001, for a description. With regard to the Italy petition, as described in the Normal Value section below, we found that each of the unadjusted home-market prices in the Italy petition was below the cost of production. Thus, even if the petitioners had been able to calculate inland freight expenses incurred on the home-market sales, we would continue to find that the home-market prices were below the cost of production. As a result, we used constructed value as the basis for normal value (NV) for the Italy petition. Because the constructed values that the petitioners calculated do not include freight expenses, we find the petitioners' approach to be reasonable.

The petitioners did not deduct credit expense from home-market or third-country prices in the Italy, Luxembourg, Spain, or Taiwan petitions and for one of the companies in the Germany petition because of the terms of sale. The petitioners did not deduct credit expense from home-market prices for the other company in the Germany petition because they had no information regarding the foreign producers' credit terms. However, the petitioners also did not adjust normal value for the credit expense incurred on EP sales for this company. Because the petitioners did not have information on the credit terms for home-market sales, we find the petitioners' approach to be a reasonable methodology given the information available to them.

The data for the adjustments the petitioners made to home-market and third-country prices were based on affidavits. No other adjustments to home-market or third-country prices were necessary due to the terms of the sales.

Normal Value

The petitioners based NV for the South Africa petition on home-market prices, which it calculated as described above. As discussed in the “Initiation of Cost Investigations” section below, the petitioners established that the comparison-market prices in the Germany, Italy, Luxembourg, Spain, and Taiwan petitions were below the cost of production. Because the comparison-market prices were below the cost of production, pursuant to sections 773(a)(4) and 773(e) of the Act, the petitioners also based NV for the Germany, Italy, Luxembourg, Spain, and Taiwan petitions on constructed value (CV). CV consists of the cost of manufacture (COM), selling, general and administrative expenses (SG&A), and profit (there is no packing cost for the subject merchandise). The petitioners based their calculations for COM, SG&A, and profit on costs obtained by affidavits from the petitioning companies' officials and foreign industry data compiled by the petitioners. We restated some of the costs in the Germany, Italy, Luxembourg, and Spain petitions. See Memoranda to File titled Recalculation of Antidumping Margins for Germany, Italy, Luxembourg, and Spain dated June 11, 2001, for a complete discussion of the changes we made.

Because Russia is considered a non-market-economy (NME) country under section 771(18) of the Act, the petitioners based NV on the factors of production valued in a surrogate country, in accordance with section 773(c)(3) of the Act. For purposes of the petition, the petitioners selected Thailand as the surrogate market economy. The petitioners calculated NV using publicly available Thai prices to value all unit costs associated with the factors of production. The petitioners established estimates for per-unit consumption based on the production experience of a U.S. producer of structural steel beams adjusted for known differences in the Russian production process according to information reasonably available to the petitioners.

The petitioners valued steel scrap using Thai prices obtained from publicly available information. The petitioners valued labor using the Department's regression-based wage rate for Russia, in accordance with 19 CFR 351.408(c)(3). The petitioners obtained the value for electricity from a report issued by Thailand's National Energy Policy Office. The petitioners valued natural gas using data based on a quote published in the Bangkok Post. To determine factory overhead, SG&A, and profit, the petitioners relied on data from a Thai producer of steel products.

Because the PRC is considered a NME country under section 771(18) of the Act, the petitioners based NV on the factors of production valued in a surrogate country, in accordance with section 773(c)(3) of the Act. For purposes of the petition, the petitioners selected India as the most appropriate surrogate market economy. The petitioners calculated NV using publicly available Indian prices to value all unit costs associated with the factors of production. The petitioners established estimates for per-unit consumption based on the production experience of a U.S. producer of structural steel beams adjusted for known differences in the PRC production process according to information reasonably available to the petitioners.

The petitioners valued steel scrap using Indian prices obtained from publicly available information published in Metal Bulletin, and adjusted using the wholesale price index (WPI) published in the International Financial Statistics. The petitioners valued labor using the Department's regression-based wage rate for the PRC, in accordance with 19 CFR 351.408(c)(3). The petitioners obtained the value for electricity from a publication of the International Energy Agency containing the prices applicable to India, and adjusted using the WPI published in the International Financial Statistics. The petitioners valued natural gas using data based on the quarterly report of a major Indian supplier, and adjusted using the WPI published in the International Financial Statistics. To determine factory overhead, SG&A, and profit, the petitioners relied on data from an Indian producer of steel products.

Based on comparisons of EP to NV, the petitioners estimate margins of 73.54 to 81.06 percent for South Africa. Based on our revisions to the petitioners' methodology, we calculated the estimated margins to be 61.09 to 94.73 percent for Germany, 83.80 percent for Italy, 38.45 to 44.43 percent for Luxembourg, 81.67 to 94.93 percent for Spain, 98.77 for the PRC, 133.12 percent for Russia, and 45.72 to 73.64 percent for Taiwan. Should the need arise to use any of this information in our preliminary or final determinations, we will re-examine the information and revise the margin calculations, if appropriate.

Initiation of Cost Investigations

Pursuant to section 773(b) of the Act, the petitioners alleged that sales in the home market of structural steel beams produced in Germany, Italy, Spain, and Taiwan were made at prices below the cost of production (COP) and, accordingly, requested that the Department conduct country-wide sales-below-COP investigations in these countries. Furthermore, the petitioners alleged that sales in the third country (Germany) of structural steel beams produced in Luxembourg were made at prices below the COP and, accordingly, requested that the Department conduct a country-wide sales-below-COP investigation in this country. The Statement of Administrative Action (“SAA”), submitted to Congress in connection with the Uruguay Round Agreements Act, states that an allegation of sales below COP need not be specific to individual exporters or producers. SAA, H.R. Doc. No. 316, 103d Cong., 2d Sess., at 833 (1994). The SAA states at 833 that “Commerce will consider allegations of below-cost sales in the aggregate for a foreign country, just as Commerce currently considers allegations of sales at less than fair value on a country-wide basis for purposes of initiating an antidumping investigation.”

The statute at section 773(b) of the Act states that the Department must have “reasonable grounds to believe or suspect” that below-cost sales have occurred before initiating such an investigation. “Reasonable grounds” exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices. See section 773(b)(2)(A) of the Act. Based upon the comparison of the adjusted prices from the petition of the foreign like product in Germany, Italy, Luxembourg, Spain, and Taiwan to the COP calculated in the petition (and adjusted in the Germany, Italy, Luxembourg, and Spain cases as described in Memoranda to File titled Recalculation of Antidumping Margins for Germany, Italy, Luxembourg, and Spain dated June 11, 2001), we find “reasonable grounds to believe or suspect” that sales of these foreign like products were made below their respective COPs within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating the requested country-wide cost investigations for Germany, Italy, Spain, and Taiwan. With regard to Luxembourg, the Department is initiating a country-wide cost investigation with respect to sales in Germany. In the event that we determine that Germany is the appropriate market upon which to base normal value, we will conduct a COP investigation.

Fair Value Comparisons

Based on the data provided by the petitioners, there is reason to believe that imports of structural steel beams from the PRC, Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic like product is being materially injured, and is threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise sold at less than NV. The allegations of injury and causation are supported by relevant evidence including business proprietary data from the petitioning firms and U.S. Customs import data. The Department assessed the allegations and supporting evidence regarding material injury and causation and determined that these allegations are sufficiently supported by accurate and adequate evidence and meet the statutory requirements for initiation.

Initiation of Antidumping Investigations

We have examined the petition on structural steel beams and have found that it meets the requirements of section 732 of the Act. Therefore, we are initiating antidumping duty investigations to determine whether imports of structural steel beams from the PRC, Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan are being, or are likely to be, sold in the United States at less than fair value. Unless the deadline is extended pursuant to section 733(b)(1)(A) of the Act, we will make our preliminary determinations for the antidumping duty investigations no later than October 30, 2001, which is 140 days after the date of initiation.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of each petition has been provided to the representatives of the governments of the PRC, Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan. We will attempt to provide a copy of the public version of each petition to each exporter named in the petition, as provided for under 19 CFR 351.203(c)(2).

International Trade Commission Notification

We have notified the ITC of our initiations, as required by section 732(d) of the Act.

Preliminary Determinations by the ITC

The ITC will determine by July 7, 2001, whether there is a reasonable indication that imports of structural steel beams from the PRC, Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan are causing material injury, or threatening to cause material injury, to a U.S. industry. Negative ITC determinations will result in the particular investigations being terminated; otherwise, the investigations will proceed according to statutory and regulatory time limits.

Dated: June 12, 2001.

Bernard T. Carreau,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 639, 642-44 (CIT 1988) ; High Information Content Flat Panel Displays and Display glass Therefor from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).