[Federal Register Volume 63, Number 133 (Monday, July 13, 1998)]
[Notices]
[Pages 37521-37528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18602]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-427-814, A-428-825, A-475-824, A-588-845, A-201-822, A-580-834, A-
583-831, A-412-818]
Initiation of Antidumping Duty Investigations: Stainless Steel
Sheet and Strip in Coils From France, Germany, Italy, Japan, Mexico,
South Korea, Taiwan, and the United Kingdom
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: July 13, 1998.
FOR FURTHER INFORMATION CONTACT: Abdelali Elouaradia (France), at (202)
482-2243; Robert James (Germany), at (202) 482-5222; Rick Johnson
(Italy, Republic of Korea, and Taiwan) at (202) 482-3818; Dorothy
Woster (Japan), at (202) 482-3362; Tom Killiam (Mexico), at (202) 482-
2704; Nancy Decker (United Kingdom), at (202) 482-0196, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230.
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's regulations are references
to the provisions codified at 19 CFR Part 351 (62 FR 27296, May 19,
1997).
The Petition
On June 10, 1998, the Department of Commerce (``the Department'')
received petitions filed in proper form by Allegheny Ludlum
Corporation, Armco, Inc.,1 J&L Specialty Steel,
Inc.,2 Washington Steel Division of Bethlehem Steel
Corporation (formerly Lukens, Inc.), the United Steelworkers of
America, AFL-CIO/CLC, the Butler Armco Independent Union 3
and the Zanesville Armco Independent Organization, Inc.4
(petitioners). The Department received supplemental information to the
petitions on June 15, 16, 17, 19 and 24, 1998.
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\1\ Armco, Inc. is not a petitioner in the Mexico case.
\2\ J& L Specialty Steel, Inc. is not a petitioner in the France
case.
\3\ Butler Armco Independent Union is not a petitioner in the
Mexico case.
\4\ Zanesville Armco Independent Organization, Inc. is not a
petitioner in the Mexico case.
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In accordance with section 732(b) of the Act, petitioners allege
that imports of stainless steel sheet and strip in coils (SSSS) from
France, Germany, Italy, Japan, Mexico, the Republic of Korea, Taiwan,
and the United Kingdom 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 an industry
in the United States.
The Department finds that petitioners filed these petitions 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 each of the
antidumping investigations they are requesting the Department to
initiate (see Discussion below).
Scope of Investigations
For purposes of these investigations, the products covered are
certain stainless steel sheet and strip in coils. Stainless steel is an
alloy steel containing, by weight, 1.2 percent or less of carbon and
10.5 percent or more of chromium, with or without other elements. The
subject sheet and strip is a flat-rolled product in coils that is
greater than 9.5 mm in width and less than 4.75 mm in thickness, and
that is annealed or otherwise heat treated and pickled or otherwise
descaled. The subject sheet and strip may also be further processed
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that
it maintains the specific dimensions of sheet and strip following such
processing.
The merchandise subject to this investigation is classified in the
Harmonized Tariff Schedule of the United States (``HTSUS'') at
subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70,
7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90,
7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35,
7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44,
7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35,
7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44,
7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30,
7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30,
7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25,
7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00,
[[Page 37522]]
7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80,
7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60,
7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15,
7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30,
7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and
7220.90.00.80. Although the HTS subheadings are provided for
convenience and Customs purposes, the written description of the
merchandise under investigation is dispositive.
Excluded from the scope of this petition are the following: (1)
sheet and strip that is not annealed or otherwise heat treated and
pickled or otherwise descaled, (2) sheet and strip that is cut to
length, (3) plate (i.e., flat-rolled stainless steel products of a
thickness of 4.75 mm or more), (4) flat wire, and (5) razor blade
steel. Razor blade steel is a flat-rolled product of stainless steel,
not further worked than cold-rolled (cold-reduced), in coils, of a
width of 9.5 to 23 mm and a thickness of 0.266 mm or less, containing
by weight 12.5 to 14.5 percent chromium, and certified at the time of
entry to be used in the manufacture of razor blades. See Chapter 72 of
the HTSUS, ``Additional U.S. and Note'' 1(d).
During our review of the petitions, we discussed scope with
petitioners to insure that the scope in the petitions accurately
reflect the product for which they are seeking relief. Moreover, as
discussed in the preamble to the new regulations (62 FR 27323), we are
setting aside a period for parties to raise issues regarding product
coverage. The Department encourages all parties to submit such comments
by July 20, 1998. Comments should be addressed to Import
Administration's Central Records Unit at Room 1870, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230. The period of scope consultations is intended to provide the
Department with ample opportunity to consider all comments and consult
with parties prior to the issuance of our preliminary determinations.
Determination of Industry Support for the Petition
Section 732(b)(1) of the Act requires that a petition be filed on
behalf of the 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 must apply the same statutory definition 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
like product, such differences do not render the decision of either
agency contrary to the law.5
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\5\ 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 Therefore from Japan: Final Determination;
Rescission of Investigation and Partial Dismissal of Petition, 56 FR
32376, 32380-81 (July 16, 1991).
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Section 771(10) of the Act defines the domestic like product as ``a
product that 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 petitions is the
single domestic like product defined in the ``Scope of Investigation''
section, above. The Department has no basis on the record to find
petitioners' definition of the domestic like product to be inaccurate.
The Department, therefore, has adopted the domestic like product
definition set forth in the petitions. In this case the Department has
determined that the petitions and supplemental information contained
adequate evidence of sufficient industry support, and, therefore,
polling is unnecessary (See Attachment to the Initiation Checklist, Re:
Industry Support, June 30, 1998). For France, Germany, Italy, Japan,
Mexico, South Korea, Taiwan, and the United Kingdom, petitioners
established industry support representing over 50 percent of total
production of the domestic like product.
Additionally, no member of the domestic industry pursuant to
section 771(9)(C) (D) or (E) has expressed opposition on the record to
the petition. Therefore, to the best of the Department's knowledge, the
producers who support the petitions account for 100 percent of the
production of the domestic like product produced by the portion of the
industry expressing an opinion regarding the petitions. Accordingly,
the Department determines that these petitions are filed on behalf of
the domestic industry within the meaning of section 732(b)(1) of the
Act.
Nippon Steel Corp. Japan (NSC) submitted a letter claiming that
petitioners do not manufacture suspension foil, and thus, do not have
standing to file an antidumping petition against such product. However,
there is no requirement that petitioners manufacture all merchandise
within the like product designation, only that they are producers of
the like product. See Notice of Final Determination of Sales at Less
Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from
Argentina, 58 FR 37062 (1993). Because petitioners produce the domestic
like product they are interested parties within the meaning of sections
771(9)(C) (D) and (E). Therefore, in accordance with section 732(b)(1),
they have standing to file the petition. Based on the foregoing, the
Department determines that these petitions are filed on behalf of the
domestic industry within the meaning of section 732(b)(1) of the Act.
Export Price and Normal Value
The following are descriptions of the allegations of sales at less
than fair value upon which our decisions to initiate these
investigations are based. 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.
France
Petitioners identified Ugine, a division of Usinor, S.A. (Usinor),
and Imphy, S.A. as possible exporters of SSSS from France. Petitioners
further stated that Usinor accounts for nearly all of the production in
France. Petitioners based export price (EP) for Usinor on prices at
which the merchandise was
[[Page 37523]]
first sold to unaffiliated purchasers in the United States in December
1997. See petitioners' affidavit at Exhibit 6. Because the terms of
Usinor's U.S. sales were delivered to the U.S. customer, petitioners
calculated a net U.S. price by subtracting estimated costs for shipment
from Usinor's factory in France to the port of export. See Declaration
of (Foreign Market Researcher) Regarding Sales and Production Cost in
France of Stainless Steel Sheet and Strip in Coils, Exhibit 1 of
petitioners' June 15, 1998 submission. In addition, petitioners
subtracted ocean freight and insurance based on official U.S. import
statistics, and estimated costs for U.S. import duties and fees based
on the 1997 HTSUS schedule. Petitioners also subtracted amounts for
U.S. merchandise processing fees and U.S. harbor maintenance fees (19
CFR 24.23 and 24.24, respectively). Finally, petitioners obtained net
U.S. prices by subtracting U.S. inland freight costs (for a discussion
of the freight cost estimate, see petitioners' affidavit at Exhibit
23), and credit expenses.
With respect to normal value (NV), based on foreign market
research, petitioners determined that the volume of French home market
sales was sufficient to form a basis for NV, pursuant to section
773(a)(1)(B)(i) of the Act. Petitioners obtained from foreign market
research gross unit prices for products offered for sale during the
second and third quarter of 1997 and first quarter of 1998, to
customers in France which are either identical or similar to those sold
to the United States. Petitioners adjusted these prices by subtracting
estimated average delivery costs and credit expenses, and by adding an
amount for alloy surcharge. See Declaration of (Foreign Market
Researcher) Regarding Sales and Production Cost in France of Stainless
Steel Sheet and Strip in Coils, Exhibit 1 of petitioners' June 15, 1998
submission. These net home market prices were then converted to U.S.
dollar prices using the official exchange rate in effect for the month
of the comparison U.S. sale.
Petitioners provided information demonstrating reasonable grounds
to believe or suspect that certain of the home market sales of SSSS
provided in the petition were made at prices below the cost of
production (COP), within the meaning of section 773(b) of the Act, and
requested that the Department conduct a country-wide sales below cost
investigation. Pursuant to section 773(b)(3) of the Act, COP consists
of the cost of manufacturing (``COM''), selling, general, and
administrative expenses (``SG&A''), and packing costs. To calculate
COP, petitioners relied on foreign market research and their own
production experience, adjusted for known differences between costs
incurred to produce SSSS in the United States and in the foreign
market. We relied on the cost data contained in the petition except in
the following instances: (1) rather than rely on the foreign market
research for raw material consumption rates, we recalculated raw
material costs using the submitted average domestic industry material
costs in the petition adjusted for known differences in raw material
input prices between the U.S. and France based on market research (in
this regard, we consider it more appropriate to rely on actual raw
material usage rates from a producer of the merchandise rather than
hypothetical rates derived from foreign market research); (2) we
recalculated fixed overhead using Usinor's 1996 audited financial
statements; and (3) we recalculated SG&A and financial expenses using
Usinor's 1997 consolidated financial statements.
Based on our analysis, certain of the home market sales reported in
the petition were shown to be made at prices below the cost of
production (see Initiation of Cost Investigations). For these sales,
petitioners based NV on the constructed value (``CV'') of the
merchandise, pursuant to sections 773(a)(4) and 773(e) of the Act.
Pursuant to section 773(e) of the Act, CV consists of the COM, SG&A
expenses, packing costs and profit of the merchandise. To calculate the
COM, SG&A expenses, and packing costs for CV, petitioners followed the
same methodology used to determine COP. Accordingly, we relied on this
methodology after adjusting certain cost elements as noted above.
Petitioners derived profit for CV based on amounts reported in Usinor's
1997 financial statements.
The estimated dumping margins, based on a comparison between
Usinor's U.S. prices and adjusted CV, range from 23.74 to 24.76
percent. Based on a comparison of EP to home market prices, petitioners
calculated dumping margins range from 10.02 to 39.20 percent.
Germany
Petitioners identified Krupp Thyssen Nirosta GmbH (Krupp) as a
possible exporter of SSSS from Germany. Petitioners further identified
Krupp as the only substantial producer of subject merchandise in
Germany. Petitioners based EP for Krupp on prices at which the
merchandise was first sold to unaffiliated purchasers in the United
States (sales were made in the second and third quarters of 1997, and
the second quarter of 1998). See petitioners' affidavit, submitted as
petition Exhibit 21. The terms of Krupp's sales were either delivered
or FOB duty-paid U.S. port. Therefore, petitioners calculated FOB
prices for these U.S. sales by subtracting amounts for U.S. inland
freight, international freight and marine insurance based on official
U.S. import statistics, U.S. import duties based on the 1997 HTSUS
schedule, and foreign inland freight estimated based on foreign market
research (see Declaration of (Foreign Market Researcher) Regarding
Sales and Production Cost in Germany of Stainless Steel Sheet and Strip
in Coils, Exhibit 2 of petitioners' June 15, 1998 submission).
Petitioners also subtracted amounts for U.S. merchandise processing
fees and U.S. harbor maintenance fees (19 CFR, sections 24.23 and
24.24, respectively). Finally, petitioners obtained net U.S. prices by
subtracting credit expenses and adding alloy surcharges to applicable
sales from petitioners' affidavit (see petition at Exhibit 21, and
submission dated June 17, 1998, Exhibit E).
With respect to NV, based on foreign market research, petitioners
determined that the volume of German home market sales was sufficient
to form a basis for NV, pursuant to section 773(a)(1)(B)(i) of the Act.
Petitioners obtained from foreign market research gross unit prices for
products offered for sale (sales were made in the second and third
quarters of 1997) to customers in Germany which are either identical or
similar to those sold to the United States. Petitioners adjusted these
prices by subtracting amounts for foreign inland freight (see
Declaration of {Foreign Market Researcher} Regarding Sales and
Production Cost in Germany of Stainless Steel Sheet and Strip in Coils,
Exhibit 2 of petitioners' June 15, 1998 submission) and imputed credit
expenses (based on ``International Financial Statistics'' of the
International Monetary Fund, April 1998) and added an alloy surcharge
(See petitioners' affidavit, submitted as petition Exhibit 21) for
applicable sales. These net home market prices were then converted to
U.S. dollar prices using the official exchange rate in effect for the
month of the comparison U.S. sale.
Petitioners provided information demonstrating reasonable grounds
to believe or suspect that the certain of the home market sales of SSSS
provided in the petition were made at prices below the COP, within the
meaning of section 773(b) of the Act, and requested that the Department
conduct a country-wide sales-below-cost investigation. Pursuant to
section 773(b)(3) of the Act, COP consists of the COM, SG&A, and
[[Page 37524]]
packing costs. To calculate COP, petitioners relied on foreign market
research and their own production experience, adjusted for known
differences between costs incurred to produce SSSS in the United States
and in the foreign market. We relied on the cost data contained in the
petition except in the following instances: (1) rather than rely on the
foreign market research for raw material consumption rates, we
recalculated raw materials costs using the submitted average domestic
industry material costs in the petition adjusted for known differences
in raw material input prices between the U.S. and Germany based on
market research (in this regard, we consider it more appropriate to
rely on actual raw material usage rates from a producer of the
merchandise rather than hypothetical rates derived from foreign market
research); and (2) we recalculated fixed overhead using Krupp's 1997
audited financial statements.
Based on our analysis, certain of the home market sales reported in
the petition were shown to be made at prices below the cost of
production (see Initiation of Cost Investigations). For these sales,
petitioners based NV on the CV of the merchandise, pursuant to sections
773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of the Act,
CV consists of the COM, SG&A expenses, packing costs and profit of the
merchandise. To calculate the COM, SG&A, and packing costs for CV,
petitioners followed the same methodology used to determine COP.
Accordingly, we relied on this methodology after adjusting certain cost
elements as noted above. Petitioners derived profit for Krupp based on
amounts reported in Krupp's 1997 financial statements.
The estimated dumping margins, based on a comparison between
Krupp's U.S. price and the adjusted CV, range from 32.67 to 41.98
percent. Based on a comparison of EP to home market price, petitioners
calculated dumping margins ranging from 11.81 to 17.46 percent.
Italy
Petitioners identified Arinox Srl (Arinox) and Acciai Speciali
Terni SpA (AST) as possible exporters and producers of SSSS from Italy.
Petitioners relied on price information for AST, which, according to
petitioners, accounts for 99 percent of exports of SSSS exported to the
United States from Italy. Petitioners based EP on U.S. sales prices
obtained by petitioners for sales to an unaffiliated purchaser from
June through October 1997. See petitioners' affidavit, submitted as
petition Exhibit 20. Petitioners calculated a net U.S. price by
subtracting amounts for foreign inland freight (see Declaration of
{Foreign Market Researcher} Regarding Sales and Production Cost in
Italy of Stainless Steel Sheet and Strip in Coils, Exhibit 3 of
petitioners' June 15, 1998 submission), U.S. inland freight (see
petitioners' affidavit, submitted as petition Exhibit 20),
international freight and insurance based on average import charges
reported in the official U.S. import statistics for 1997 for HTSUS
categories 7219 and 7220, U.S. merchandise processing fees and U.S.
harbor maintenance fees (19 CFR 24.23 and 24.24, respectively), and
estimated costs for U.S. import duties based on 1997 and 1998 HTSUS
schedules. Imputed credit was also deducted from export price for the
price-to-price comparison, using the lending rate as published in
``International Financial Statistics'' of the International Monetary
Fund, April 1998. Petitioners added an alloy surcharge for certain U.S.
sales (see petitioners' affidavit submitted as Attachment 1 of
Stainless Steel Sheet and Strip in Coils from Italy, June 19, 1998).
With respect to NV, based on foreign market research, petitioners
determined that the volume of Italian home market sales was sufficient
to form a basis for NV, pursuant to section 773(a)(1)(B)(i) of the Act.
Petitioners obtained from foreign market research gross unit prices for
products offered for sale in the second, third and fourth quarters of
1997 to customers in Italy which are either identical or similar to
those sold to the United States. Petitioners adjusted these prices by
subtracting inland freight (see Declaration of {Foreign Market
Researcher} Regarding Sales and Production Cost in Italy of Stainless
Steel Sheet and Strip in Coils, Exhibit 1 of petitioners' June 15, 1998
submission), and imputed credit expenses based on ``International
Financial Statistics'' of the International Monetary Fund, April 1998.
Petitioners added an alloy surcharge for certain home market sales (see
petitioners' affidavit submitted as Attachment 1 of Stainless Steel
Sheet and Strip in Coils from Italy, June 19, 1998). Petitioners did
not adjust for packing costs because petitioners claim that data for
packing for U.S. sales is not available. These net home market prices
were then converted to U.S. dollar prices using the official exchange
rate in effect for the month of the comparison U.S. sale.
Petitioners provided information demonstrating reasonable grounds
to believe or suspect that certain of the home market sales of SSSS
provided in the petition were made at prices below COP, within the
meaning of section 773(b) of the Act, and requested that the Department
conduct a country-wide sales-below-cost investigation. Pursuant to
section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses,
and packing costs. To calculate COP, petitioners relied on foreign
market research and their own production experience, adjusted for known
differences between costs incurred to produce SSSS in the United States
and in the foreign market. We relied on the cost data contained in the
petition except in the following instance. We did not rely on the
foreign market research for raw material consumption rates. Instead, we
recalculated raw materials costs in the petition using the submitted
average domestic industry material costs adjusted for known differences
in raw material input prices between the U.S. and Italy based on market
research (in this regard, we consider it more appropriate to rely on
actual raw material usage rates from a producer of the merchandise
rather than hypothetical rates derived from foreign market research).
Based on our analysis, certain of the home market sales reported in
the petition were shown to be made at prices below the cost of
production (see Initiation of Cost Investigations). For these sales,
petitioners based NV on the CV of the merchandise, pursuant to sections
773(a)(4) and 773(b) of the Act. Pursuant to section 773(e) of the Act,
CV consists of the COM, SG&A expenses, packing costs and profit for the
merchandise. To calculate the COM, SG&A expenses, and packing costs for
CV, petitioners followed the same methodology used to determine COP.
Accordingly, we relied on this methodology after adjusting certain cost
elements as noted above. Petitioners derived profit AST based on
amounts reported in AST's financial statements.
The estimated dumping margins, based on a comparison between AST's
U.S. price and the adjusted CV, range from 0.15 to 35.54 percent. Based
on a comparison of EP to home market price, petitioners calculate
dumping margins ranging from 6.02 to 18.77 percent.
Japan
Petitioners identified Kawasaki Steel Corp., Nippon Steel
Corporation, Nisshin Steel Co. Ltd., Nippon Yakin Kogyo, Nippon Metal
Industries, and Sumitomo Metal Industries as possible exporters of SSSS
from Japan. Petitioners further identified Nisshin, Kawasaki, and
Nippon Steel as the three largest producers of subject merchandise in
Japan. Petitioners based
[[Page 37525]]
EP on U.S. sales prices from Sumitomo Metal Industries and Marubeni of
America, a Japanese trading company that sells on behalf of Japanese
producers in the United States, to unaffiliated trading companies in
the United States in the fourth quarter of 1997 and the first quarter
of 1998. See petitioners' affidavit, submitted as Exhibit 3 of
Stainless Steel Sheet and Strip in Coils from France and Japan, June 9,
1998. Because the terms of the U.S. sales were delivered to the U.S.
customer, petitioners calculated a net U.S. price by subtracting
estimated costs for shipment from the Japanese factory to the port of
export based on foreign market research. See Declaration of {Foreign
Market Researcher} Regarding Sales in Japan of Stainless Steel Sheet
and Strip in Coils, Exhibit 4 of petitioners' June 15, 1998 submission.
In addition, petitioners subtracted ocean freight and insurance based
on official U.S. import statistics, and estimated costs for U.S. import
duties and fees based on the 1997 and 1998 HTSUS schedules. Petitioners
also subtracted amounts for the U.S. merchandise processing fees and
U.S. harbor maintenance fees (19 CFR 24.23 and 24.24, respectively).
Finally, petitioners obtained net U.S. prices by subtracting costs
incurred to transport the merchandise from the U.S. port to the
customer's location in the United States (see petitioners' affidavit
submitted as petition Exhibit 11), and credit expenses.
With respect to NV, based on foreign market research, petitioners
determined that volume of Japan home market sales from Kawasaki Steel
Corp., Nippon Steel Corporation, and Nisshin Steel Co. Ltd. was
sufficient to form a basis for NV, pursuant to section 773(a)(1)(B)(i)
of the Act. See Declaration of {Foreign Market Researcher} Regarding
Sales in Japan of Stainless Steel Sheet and Strip in Coils, Exhibit 4
of petitioners' June 15, 1998 submission. Petitioners obtained gross
unit prices from foreign market research for the products offered for
sale in the fourth quarter of 1997 and the first quarter of 1998 to
customers in Japan which are identical to those sold to the United
States. Petitioners adjusted these prices by subtracting estimated
average delivery costs and credit expenses based on foreign market
research. See Declaration of {Foreign Market Researcher} Regarding
Sales in Japan of Stainless Steel Sheet and Strip in Coils, Exhibit 4
of petitioners' June 15, 1998 submission. These net home market prices
were then converted to U.S. dollar prices using the official exchange
rate in effect for the month of the comparison U.S. sale.
The estimated dumping margins in the petition, based on a
comparison of EP to home market prices, range from 19.9 to 57.87
percent.
Mexico
Petitioners identified Mexinox, S.A. de C.V. (Mexinox) as the
exporter of subject merchandise from Mexico. Petitioners further
identified Mexinox as the sole producer of subject merchandise in
Mexico.
Petitioners based EP on prices obtained from foreign market
researchers for sales by Mexinox of grades 304 and 430 stainless steel
in coils to the United States between the third quarter of 1997 and the
first quarter of 1998. See petitioners' affidavit, submitted as
petition Exhibit 13. One sale had an alloy surcharge.
For the delivered sales, petitioners subtracted estimated U.S.
inland freight charges, based on the experience of one petitioner. For
all the U.S. sales, petitioners subtracted amounts for international
freight and insurance, based on ``import charges'' in IM146 import
statistics. Petitioners subtracted amounts for U.S. import duties based
on the 1997 import duty rate of 6 percent of dutiable value, or the
1998 rate of 5 percent, as appropriate. Petitioners also subtracted
amounts for U.S. merchandise processing fees of 0.19 percent of
dutiable value (19 CFR section 24.23). Petitioners did not adjust for
the U.S. harbor maintenance fee on the assumption that the exported
product would have been shipped overland. Petitioners did not adjust
for U.S. handling or packing costs, though these charges were included
in the quoted U.S. prices, and did not adjust for imputed credit
expenses.
With regard to NV, based on foreign market research, petitioners
determined that the volume of Mexican home market sales was sufficient
to form a basis for NV, pursuant to section 773(a)(1)(B)(i) of the Act.
See Declaration of {Foreign Market Researcher}, Exhibit 5 of
petitioners' June 15, 1998 submission. Petitioners obtained from
foreign market research gross unit prices for products offered for sale
in the first quarter of 1998 to customers in Mexico which are either
identical or similar to those sold in the United States. Petitioners
did not subtract credit expenses or make any adjustments to price,
other than converting the unit of measure from metric tons to pounds.
These net home market prices were then converted to U.S. dollar prices
using the official exchange rate in effect for the month of the
comparison U.S. sale.
Petitioners provided information demonstrating reasonable grounds
to believe or suspect that certain of the home market sales of SSSS
provided in the petition were made at prices below COP, within the
meaning of section 773(b) of the Act, and requested that the Department
conduct a country-wide sales-below-cost investigation. Pursuant to
section 773(b)(3) of the Act, COP consists of the COM, SG&A, and
packing costs. To calculate COP, petitioners relied on their own
production experience, adjusted for known differences between costs
incurred to produce SSSS in the United States and the foreign market.
For certain costs, petitioners used the financial statement information
from Hylsamex, a Mexican steel producer, because they were unable to
obtain Mexinox's financial statements. For raw material costs,
petitioners used their own operating experience as the only information
reasonably available. Petitioner's calculated SG&A, and financial
expenses from Hylsamex's 1997 consolidated financial statements.
Based on our analysis, certain of the home market sales reported in
the petition were shown to be made at prices below the cost of
production (see Initiation of Cost Investigations). For these sales,
petitioners based NV on the CV of the merchandise, pursuant to sections
773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of the Act,
CV consists of the COM, SG&A expenses, packing costs and profit of the
merchandise. To calculate the COM, SG&A expenses, and packing costs for
CV, petitioners followed the same methodology used to determine COP.
Accordingly, we relied on the methodology presented in the June 24,
1998 submission. Petitioners derived profit based on amounts reported
in Hylsamex's 1997 consolidated financial statements.
The estimated dumping margins in the petition (as amended), based
on a comparison between Mexinox's U.S. prices and CV, range from 30.09
to 41.17 percent. Based on a comparison of EP to home market prices,
petitioners' calculated dumping margins range from 37.58 to 51.95
percent.
Republic of Korea
Petitioners identified Pohang Iron and Steel Company (POSCO), Sammi
Steel Company (Sammi), and Inchon Iron and Steel Company (Inchon) as
producers and possible exporters of SSSS from the Republic of Korea.
Petitioners based EP on price quotations obtained by petitioning
companies for sales to
[[Page 37526]]
unaffiliated U.S. purchasers of SSSS manufactured by POSCO. See
petitioners' affidavit, submitted as petition Exhibit 24. The quoted
prices were for delivered, duty paid SSSS sold during the third quarter
of 1997. Petitioners calculated a net U.S. price by subtracting from
the reported U.S. price shipment costs from POSCO's factory in Korea to
the port of export estimated from foreign market research (see
Declaration of {Foreign Market Researcher} Regarding Sales in Korea of
Stainless Steel Sheet and Strip in Coils, Exhibit 6 of petitioners'
June 15, 1998 submission), costs for ocean freight and insurance based
on the average import charges reported in official U.S. import
statistics for Korea, import duties based on the 1997 HTSUS schedule,
merchandise processing and harbor maintenance fees (19 CFR 24.23 and
24.24, respectively) and domestic inland freight (see petitioners'
affidavit, submitted as petition Exhibit 27).
With regard to NV, based on foreign market research, petitioners
determined that the volume of South Korean home market sales in 1997
was sufficient to form a basis for NV, pursuant to section 773(a)(1)(B)
(ii)(II) of the Act. See Declaration of {Foreign Market Researcher}
Regarding Sales in Korea of Stainless Steel Sheet and Strip in Coils,
Exhibit 6 of petitioners' June 15, 1998 submission. Petitioners
obtained from foreign market research gross unit prices for SSSS
manufactured by POSCO and offered for sale to customers in the Republic
of Korea which are either identical or similar to those sold to the
United States. Petitioners adjusted these prices by subtracting
estimated average delivery costs based on foreign market research. See
Declaration of {Foreign Market Researcher} Regarding Sales in Korea of
Stainless Steel Sheet and Strip in Coils, Exhibit 6 of petitioners'
June 15, 1998 submission. These net home market prices were then
converted to U.S. dollar prices using the official exchange rate in
effect for the month of the comparison U.S. sale.
Petitioners provided information demonstrating reasonable grounds
to believe or suspect that certain of the home market sales of SSSS
provided in the petition were made at prices below COP, within the
meaning of section 773(b) of the Act, and requested that the Department
conduct a country-wide sales-below-cost investigation. Pursuant to
section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses,
and packing costs. To calculate COP, petitioners relied on foreign
market research and their own production experience, adjusted for known
differences between costs incurred to produce SSSS in the United States
and in the foreign market. We relied on the cost data contained in the
petition except in the following instances: (1) rather than rely on the
foreign market research for raw material consumption rates, we
recalculated raw materials costs in the petition using the submitted
average domestic industry material costs adjusted for known differences
in raw material input prices between the U.S. and Korea based on market
research (in this regard, we consider it more appropriate to rely on
actual raw material usage rates from a producer of the merchandise
rather than hypothetical rates derived from foreign market research);
and (2) we revised the SG&A and net financing expenses based on POSCO's
1997 audited financial statements.
Based on our analysis, certain of the home market sales reported in
the petition were shown to be made at prices below the cost of
production (see Initiation of Cost Investigations). For these sales,
petitioners based NV on the CV of the merchandise, pursuant to sections
773(a)(4) and 773. (e) of the Act. Pursuant to section 773(e) of the
Act, CV consists of the COM, SG&A expenses, packing costs and profit of
the merchandise. To calculate the COM, SG&A expenses, and packing costs
for CV, petitioners followed the same methodology to determine COP.
Accordingly, we relied on this methodology after adjusting certain cost
elements as noted above. Petitioners derived profit for POSCO based on
amounts reported in POSCO's 1997 financial statements.
Based on comparisons of EP to adjusted CV, estimated margins range
from 18.40 to 58.79 percent. Based on a comparison of EP to home market
price, estimated dumping margins range from 5.58 to 13.05 percent.
Taiwan
Petitioners identified Tang Eng Iron Works, Co., Ltd. (Tang Eng),
Tung Mung Development Co. Ltd. (Tung Mung), and Yieh United Steel Corp.
(Yieh United) as exporters and producers of SSSS from Taiwan.
Petitioners based EP on price quotations made to unaffiliated U.S.
purchasers prior to the date of importation. See petitioners'
affidavit, submitted as petition Exhibit 22. The quoted prices were for
delivered and duty paid SSSS produced by Tung Mung, Yieh United and
Tang Eng during the third and fourth quarter of 1997 and the first
quarter of 1998. Petitioners calculated net U.S. price by subtracting
amounts for U.S. inland freight (see petitioners' affidavit, submitted
as petition Exhibit 22), international freight and marine insurance
based on the average import charges reported in the official U.S.
import statistics for stainless steel products under the 1997 HTSUS
categories 7219 and 7220, U.S. import duties based on the 1997 HTSUS
schedule, and foreign inland freight (see Declaration of {Foreign
Market Researcher} Regarding Sales in Taiwan of Stainless Steel Sheet
and Strip in Coils, Exhibit 7 of petitioners' June 15, 1998
submission). Petitioners also subtracted amounts for U.S. merchandise
processing fees and U.S. harbor maintenance fees (19 CFR 24.23 and
24.24, respectively). Petitioners calculated imputed credit expenses
for these U.S. sales by using 30 days as the term of payment (see
petitioners' affidavit, submitted as petition Exhibit 22) and the
average lending rate of 8.25 percent for the period April 1997 through
March 1998, as published in ``International Financial Statistics'' of
the International Monetary Fund, April 1998. Finally, petitioners did
not adjust for differences in U.S. and home market packing expenses
because those data were not available for U.S. sales.
With respect to NV, based on foreign market research, petitioners
determined that the volume of Taiwanese home market sales was
sufficient to form a basis for NV, pursuant to section 773(a)(1)(B)(i)
of the Act. See Declaration of {Foreign Market Researcher} Regarding
Sales in Taiwan of Stainless Steel Sheet and Strip in Coils, Exhibit 7
of petitioners' June 15, 1998 submission. Petitioners obtained from
foreign market research gross unit prices for sales of SSSS by Tung
Mung, Yieh United, and Tang Eng which are either identical or similar
to those sold to the United States. To arrive at each net home market
price for price-to-price comparison purposes, petitioners adjusted the
gross prices by subtracting amounts for foreign inland freight (see
Declaration of {Foreign Market Researcher} Regarding Sales in Taiwan of
Stainless Steel Sheet and Strip in Coils, Exhibit 7 of petitioners'
June 15, 1998 submission) and imputed credit expenses. Finally,
petitioners converted the home market prices from New Taiwan dollars to
U.S. dollars based on the exchange rate published by the Federal
Reserve Bank of New York for the month in which each sale took place.
Petitioners provided information demonstrating reasonable grounds
to believe or suspect that certain of the home market sales of SSSS
provided in the petition were made at prices below COP, within the
meaning of section 773(b) of the Act, and requested that the
[[Page 37527]]
Department conduct a country-wide sales-below-cost investigation.
Pursuant to section 773(b)(3) of the Act, COP consists of COM, SG&A,
and packing costs. To calculate COP, petitioners relied on foreign
market research and their own production experience, adjusted for known
differences between costs incurred to produce SSSS in the United States
and in the foreign market. We relied on the cost data contained in the
petition except in the following instances: (1) rather than rely on the
foreign market research for raw material consumption rates for Tang Eng
and Yieh United, we recalculated raw materials costs in the petition
using the submitted average domestic industry material costs adjusted
for known differences in raw material input prices between the U.S. and
Taiwan based on market research for Tang Eng and Yieh United (in this
regard, we consider it more appropriate to rely on actual raw material
usage rates from a producer of the merchandise rather than hypothetical
usage rates derived from foreign market research); and (2) we have not
relied on the costs for Tang Mung because petitioners failed to address
market price differences between the U.S. and Taiwan for the type of
raw material used by Tang Mung. For amounts where there was no company
specific information we used the average of the amounts for companies
where there was information available.
Based on our analysis, certain of the home market sales reported in
the petition were shown to be made at prices below the cost of
production (see Initiation of Cost Investigations). For these sales,
petitioners based NV on the CV of the merchandise, pursuant to sections
773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of the Act,
CV consists of the COM, SG&A expenses, packing costs and profit. To
calculate the COM, SG&A expenses, and packing costs for CV, petitioners
followed the same methodology used to determine COP. Accordingly, we
relied on this methodology after adjusting certain cost elements as
noted above. We derived profit for Tang Eng and Yieh United using the
company-specific financial statements where the financial statements
showed a profit, otherwise we used the average profit from the other
companies showing a profit on their financial statements.
Based on comparisons of EP to adjusted CV, estimated margins range
from 12.74 to 55.01 percent. The estimated dumping margins in the
petition, based on a comparison between U.S. prices and home market
price, range from 8.23 to 77.08 percent.
United Kingdom
Petitioners identified two United Kingdom producers and exporters
of SSSS: Avesta Sheffield Ltd. (AS) and Lee Steel Strip Ltd. (Lee).
Petitioners noted that, to the best of their knowledge, AS accounted
for 90 percent of the exports of subject merchandise from the United
Kingdom. Petitioners based EP for AS on U.S. sales to unaffiliated U.S.
purchasers in the third and fourth quarter of 1997. See petitioners'
affidavit, submitted as petition Exhibit 15. Because the terms of AS's
U.S. sales were delivered to the U.S. customer, petitioners calculated
the net U.S. price by adding alloy surcharges (see petitioners'
affidavit, submitted as petition Exhibit 15) and subtracting estimated
costs of shipment from AS's factory in the United Kingdom to the port
of export (see Declaration of Foreign Market Researcher Regarding Sales
in the United Kingdom of Stainless Steel Sheet and Strip in Coils,
Exhibit 8 of petitioners' June 15, 1998 submission). Petitioners also
subtracted ocean freight and insurance based on official U.S. import
statistics, U.S. import duties based on the 1997 HTSUS schedule, and
U.S. merchandise processing fees and U.S. harbor maintenance fees (19
CFR, sections 24.23 and 24.24, respectively). Finally, petitioners
calculated net U.S. price for AS by subtracting costs incurred to
transport the stainless steel sheet and strip from the U.S. port to the
customer's location in the United States (see petitioners' affidavit,
submitted as petition Exhibit 18).
With respect to NV, based on information available to them,
petitioners determined that volume in the United Kingdom in 1997 is
sufficient to form a basis for normal value, pursuant to Section
773(a)(1) of the Act. Petitioners obtained from foreign market research
gross unit prices for AS for representative grades, thicknesses,
finishes, and widths of subject merchandise. Petitioners adjusted these
prices by adding an amount for alloy surcharge and subtracting amounts
for foreign inland freight and imputed home market credit expenses. See
Declaration of Foreign Market Researcher Regarding Sales in the United
Kingdom of Stainless Steel Sheet and Strip in Coils, Exhibit 8 of
petitioners' June 15, 1998 submission. Imputed U.S. credit was added to
the net home market price for the price-to-price comparisons. These net
home market prices were then converted to U.S. dollar prices using the
official exchange rate in effect for the month of the comparison U.S.
sale.
Petitioners provided information demonstrating reasonable grounds
to believe or suspect that certain of the home market sales of SSSS
provided in the petition were made at prices below COP, within the
meaning of section 773(b) of the Act, and requested that the Department
conduct a country-wide sales-below-cost investigation. Pursuant to
section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses,
and packing costs. To calculate COP, petitioners relied on foreign
market research and their own production experience, adjusted for known
differences between costs incurred to produce SSSS in the United States
and in the foreign market. We relied on the cost data contained in the
petition except in the following instances: (1) we did not rely on the
foreign market research for raw material consumption rates. Instead, we
recalculated raw materials costs in the petition using the submitted
average domestic industry material costs adjusted for known differences
in raw material input prices between the U.S. and the United Kingdom
based on market research. In this regard, we consider it more
appropriate to rely on actual raw material usage rates from a producer
of the merchandise rather than hypothetical rates derived from foreign
market research; (2) we revised the SG&A expense using British Steel's
1997 audited financial statements; (3) we revised net financing
expenses to include an offset for short term interest income.
Based on an analysis, certain of the home market sales reflected in
the petition were shown to be made at prices below the cost of
production (see Initiation of Cost Investigations). For these sales,
petitioners based NV on the CV of the merchandise, pursuant to sections
773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of the Act,
CV consists of the COM, SG&A, packing costs, and profit of the
merchandise. To calculate COM, SG&A, and packing costs for CV,
petitioners followed the same methodology used to determine COP.
Accordingly, we relied on this methodology after adjusting certain cost
elements as noted above. Petitioners derived profit based on amounts
reported in British Steel's 1997 financial statements.
Based on comparisons of EP to adjusted CV, estimated margins range
from 5.42 to 14.76 percent. Based on a comparison of EP to home market
prices, estimated dumping margins range from 9.99 to 29.37 percent.
[[Page 37528]]
Initiation of Cost Investigations
Pursuant to section 773(b) of the Act, petitioners provided
information demonstrating reasonable grounds to believe or suspect that
sales in the home markets of France, Germany, Italy, Mexico, South
Korea, Taiwan, and the United Kingdom were made at prices below the
fully allocated COP and, accordingly, requested that the Department
conduct a country-wide sales-below-COP investigation in connection with
the requested antidumping investigations in each of these countries.
The Statement of Administrative Action (SAA), submitted to the Congress
in connection with the interpretation and application of the Uruguay
Round Agreements, 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, at 833, states 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.''
Further, the SAA provides that ``new section 773(b)(2)(A) retains
the current requirement that Commerce 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.'' Id. Based upon the
comparison of the adjusted prices from the petition of the
representative foreign like products in their respective home markets
to their costs of production, we find the existence of ``reasonable
grounds to believe or suspect'' that sales of these foreign like
products in each of the listed countries 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 (see country-specific sections above).
Fair Value Comparisons
Based on the data provided by petitioners, there is reason to
believe that imports of SSSS from France, Germany, Italy, Japan,
Mexico, the Republic of Korea, Taiwan, and the United Kingdom are
being, or are likely to be, sold at less than fair value.
Allegations and Evidence of Material Injury and Causation
The petitions allege 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. Petitioners explained
that the industry's injured condition is evident in the declining
trends in net operating profits, net sales volumes, profit to sales
ratios, and capacity utilization. The allegations of injury and
causation are supported by relevant evidence including U.S. Customs
import data, lost sales, and pricing information. The Department
assessed the allegations and supporting evidence regarding material
injury and causation and determined that these allegations are
supported by accurate and adequate evidence and meet the statutory
requirements for initiation (see Attachments to Initiation Checklist,
Re: Material Injury, June 30, 1998).
Initiation of Antidumping Investigations
Based upon our examination of the petitions on SSSS, as well as our
discussion with the authors of the foreign market research reports
(See, memoranda to the file, dated June 30, 1998), we have found that
the petitions meet the requirements of section 732 of the Act.
Therefore, we are initiating antidumping duty investigations to
determine whether imports of SSSS from France, Germany, Italy, Japan,
Mexico, the Republic of Korea, Taiwan, and the United Kingdom are
being, or are likely to be, sold in the United States at less than fair
value. Unless this deadline is extended, we will make our preliminary
determinations by November 17, 1998.
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 France, Germany, Italy, Japan, Mexico, the Republic
of Korea, Taiwan, and the United Kingdom. We will attempt to provide a
copy of the public version of each petition to each exporter named in
the petition (as appropriate).
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 27, 1998, whether there is a
reasonable indication that imports of SSSS from France, Germany, Italy,
Japan, Mexico, the Republic of Korea, Taiwan, and the United Kingdom
are causing material injury, or threatening to cause material injury,
to a U.S. industry. A negative ITC determination for any country will
result in the investigations being terminated with respect to that
country; otherwise, these investigations will proceed according to
statutory and regulatory time limits.
This notice is published pursuant to section 777 (i) of the Act.
Dated: June 30, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-18602 Filed 7-10-98; 8:45 am]
BILLING CODE 3510-DS-P
