[Federal Register Volume 62, Number 134 (Monday, July 14, 1997)]
[Notices]
[Pages 37543-37556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18448]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-583-815]
Certain Welded Stainless Steel Pipe From Taiwan; Final Results of
Administrative Review
July 8, 1997
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Administrative Review.
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SUMMARY: On January 10, 1997 the Department of Commerce (the
Department) published in the Federal Register the preliminary results
of the 1994--1995 administrative review of the antidumping duty order
on certain welded stainless steel pipe from Taiwan (A-583-815). This
review covers one
[[Page 37544]]
manufacturer/exporter of the subject merchandise during the period
December 1, 1994 through November 30, 1995.
We gave interested parties an opportunity to comment on the
preliminary results. Based upon our analysis of the comments received
we have changed the results from those presented in our preliminary
results of review.
EFFECTIVE DATE: July 14, 1997.
FOR FURTHER INFORMATION CONTACT: Robert James at (202) 482-5222 or John
Kugelman at (202) 482-0649, Antidumping and Countervailing Duty
Enforcement Group III, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230.
Applicable Statute and Regulations: Unless otherwise indicated, all
citations to the Tariff Act of 1930, as amended (the Tariff Act), are
to the provisions effective January 1, 1995, the effective date of the
amendments made to the Tariff Act by the Uruguay Round Agreements Act
(URAA). In addition, unless otherwise indicated, all citations to the
Department's regulations are to the 1995 regulations, as amended by the
interim regulations published in the Federal Register on May 11, 1995
(60 FR 25130).
SUPPLEMENTARY INFORMATION:
Background
On December 30, 1992, the Department published in the Federal
Register the antidumping duty order on welded stainless steel pipe
(WSSP) from Taiwan (57 FR 62300). On December 4, 1995, the Department
published the notice of ``Opportunity to Request Administrative
Review'' for the period December 1, 1994 through November 30, 1995 (60
FR 62070). In accordance with 19 CFR 353.22(a)(1) (1995), respondent Ta
Chen Stainless Pipe Co., Ltd. and its wholly-owned U.S. subsidiary, Ta
Chen International (collectively, Ta Chen), requested that we conduct a
review of its sales. On February 1, 1996, we published in the Federal
Register our notice of initiation of this antidumping duty
administrative review covering the period December 1, 1994 through
November 30, 1995 (61 FR 3670).
We published the preliminary results of this review in the Federal
Register on January 10, 1997 (Certain Welded Stainless Steel Pipe From
Taiwan; Notice of Preliminary Results of Administrative Review, 62 FR
1435 (Preliminary Results)). Because it was not practicable to complete
this review within the normal time frame, on February 27, 1997, we
published in the Federal Register our notice of extension of time
limits for these final results (62 FR 11825). The Department held a
hearing on April 28, 1997; at petitioners' request, a portion of this
hearing was held in camera. Because we determined that the case briefs
filed by both parties, and petitioners' rebuttal brief, contained new
factual information, we returned these documents to the parties. As
instructed, both parties timely submitted corrected versions of their
case briefs, and petitioners resubmitted their rebuttal brief.
Furthermore, on June 11 and 12, 1997, the Department conducted a
verification of Ta Chen's U.S. sales data at the premises of Ta Chen
International. Due to our findings during that verification we have
amended our application of facts available for these final results (see
``Results of Verification,'' below). The full results of our
verification are detailed in the Department's verification report. A
public version of this, and all public information referenced in this
notice, is on file in Room B-099 of the Main Commerce Building.
The Department has now completed this review in accordance with
section 751 of the Tariff Act.
Scope of the Review
The merchandise subject to this administrative review is certain
welded austenitic stainless steel pipe (WSSP) that meets the standards
and specifications set forth by the American Society for Testing and
Materials (ASTM) for the welded form of chromium-nickel pipe designated
ASTM A-312. The merchandise covered by the scope of the order also
includes austenitic welded stainless steel pipes made according to the
standards of other nations which are comparable to ASTM A-312.
WSSP is produced by forming stainless steel flat-rolled products
into a tubular configuration and welding along the seam. WSSP is a
commodity product generally used as a conduit to transmit liquids or
gases. Major applications for WSSP include, but are not limited to,
digester lines, blow lines, pharmaceutical lines, petrochemical stock
lines, brewery process and transport lines, general food processing
lines, automotive paint lines, and paper process machines.
Imports of WSSP are currently classifiable under the following
Harmonized Tariff Schedule of the United States (HTS) subheadings:
7306.40.5005, 7306.04.5015, 7306.40.5040, 7306.40.5065, and
7306.40.5085. Although these subheadings include both pipes and tubes,
the scope of this investigation is limited to welded austenitic
stainless steel pipes. Although the HTS subheadings are provided for
convenience and Customs purposes, our written description of the scope
of this order is dispositive.
The period for this review is December 1, 1994 through November 30,
1995. This review covers one manufacturer/exporter, Ta Chen.
Results of Verification
On June 11 and 12, 1997, the Department conducted a verification of
Ta Chen's U.S. sales data at the headquarters of Ta Chen International
(TCI) in Long Beach, California. In discussing its U.S. sales process
with the Department's verifiers, Ta Chen revealed for the first time
that some of its sales to one U.S. customer (not the ``Company B''
discussed later) were, in fact, to another person, with the reported
U.S. customer acting as a commissionaire. The actual, final customer is
not among those listed in Ta Chen's U.S. sales data nor did Ta Chen
previously identify the named customer as a commissionaire. In
addition, no commission amounts were reported for these sales.
Therefore, as a result of our findings at verification, we have
concluded that Ta Chen misreported an unknown number of sales to this
customer. We find that Ta Chen failed to act to the best of its ability
in reporting its U.S. sales to these persons and, in fact, by its own
admission withheld the identity of the second person until six months
after our preliminary results of review. Because Ta Chen's data do not
permit us to identify which sales were made to which person, we cannot
segregate the misreported sales for purposes of our final margin
calculation. Therefore, we have determined to apply adverse facts
available to all of Ta Chen's sales made to this customer, pursuant to
section 776(b) of the Tariff Act. For further discussion of this issue,
see the public version of the Department's final analysis memorandum.
Analysis of Comments Received
We received case briefs from Ta Chen and petitioners on April 10,
1997. Ta Chen and petitioners timely filed rebuttal briefs on April 24,
1997. We returned both parties' case briefs and petitioners' rebuttal
brief and asked that the parties remove certain information
inappropriate for the record of this review. Both parties complied with
our request; our analysis addresses the issues raised in these revised
briefs below.
[[Page 37545]]
Many of the comments that follow concern two of Ta Chen's U.S.
customers, referred to here as Company A and Company B. According to Ta
Chen, prior to June 1992, Ta Chen had sold pipe from the U.S. inventory
of its subsidiary, TCI. In June 1992, TCI and Company A (a U.S. company
established in 1988 by the president of another Taiwanese firm), signed
an agreement whereby Company A would purchase all of TCI's U.S.
inventory and would effectively replace TCI as the principal
distributor of Ta Chen pipe products in the United States. Company A
also committed itself to purchasing substantial dollar values of Ta
Chen products over the next two years. According to Ta Chen, in
September 1993, a member of Ta Chen's board of directors sold all of
his Ta Chen stock, severed all ties with Ta Chen, and incorporated a
new entity, Company B. This new Company B purchased all of Company A's
assets, including inventory, and assumed all of Company A's obligations
regarding its lease of space from Ta Chen's president, purchase
commitments, credit arrangements, etc. The Department cited Ta Chen's
affiliation to Company B, and Ta Chen's failure to report sales made by
Company B to the first unaffiliated customer in the United States as
grounds for the use of adverse facts available as to these sales in our
Preliminary Results for the instant period of review (62 FR 1435,
January 10, 1997). A more detailed discussion of these issues, which
necessitates extensive reference to business proprietary information,
is included in the Department's Final Results Analysis Memorandum, a
public version of which is on file in Room B-099 of the Main Commerce
Building.
Comment 1: Ta Chen asserts that since the events of the third
period of review (POR) took place prior to enactment of the URAA,
``fundamental fairness'' demands that the Department use the statutory
and regulatory provisions in force at that time (i.e., in 1994).
Because its sales to Company B pre-dated enactment of the URAA, Ta Chen
argues, application of the URAA's definition of affiliation through
control represents an unfair, retroactive application of a new
statutory provision. Ta Chen notes that all of its sales to Company B
in this third POR occurred in August 1994 and were subject to this
third review only because the merchandise did not enter the United
States until after December 1, 1994 (i.e., after the start of the third
POR). Therefore, Ta Chen argues, its August 1994 sales should be
examined under the statutory provisions in effect at the time of the
sales. Ta Chen insists that under the pre-URAA statute, two parties
could only be deemed related if common equity ownership were found. Ta
Chen further argues that its actions during the third review were based
on its best understanding of U.S. antidumping law then in force. The
retroactive application of statutory revisions which came into effect
four months after the sales at issue is, Ta Chen believes, manifestly
unfair.
Ta Chen further insists that Company B is not a ``related party''
as defined by the pre-URAA statute which was in effect at the time of
all of Ta Chen's sales to Company B. First, Ta Chen maintains that
under the 1994 statute, section 771(13) of the Tariff Act defines an
``exporter'' as including ``the person by whom or for whose account the
merchandise is imported into the United States, and the exporter,
manufacturer, or producer owns or controls * * * any interest in the
business conducted by such person * * *''. Under this statutory
framework, Ta Chen argues, the inquiry should focus upon whether Ta
Chen as the foreign exporter and Ta Chen International (TCI) as the
importer of record are related, not whether Ta Chen and TCI's customer,
Company B, are related. This latter question ``is not relevant for
purposes of U.S. dumping law.'' According to Ta Chen, TCI, not Company
B, is the person ``by whom'' the subject merchandise was imported.
Because Company B is not ``the person by whom or for whose account the
merchandise is imported into the United States,'' Ta Chen claims that a
threshold condition for application of the related-party provisions of
the pre-URAA statute has not been met. See Ta Chen's Case Brief at 3.
Further, Ta Chen maintains that Ta Chen and Company B cannot be
considered related because Ta Chen did not own or hold any part of
Company B, nor did Company B own any part of Ta Chen, nor did the two
firms share common directors or officials. Ta Chen cites Dynamic Random
Access Memories from Korea; Final Results of Administrative Review, 58
FR 15467 (March 23, 1993) (DRAMs), and Disposable Pocket Lighters from
Thailand; Final Results of Administrative Review, 60 FR 14263, 14268
(March 16, 1995) as supporting its contention that, under the pre-URAA
statute, two parties cannot be considered related absent common stock
ownership. Ta Chen also notes to the Department's findings in several
cases that despite the close operational control of parties linked
through a Japanese keiretsu, these parties were not related for
purposes of the statute. See Ta Chen's Case Brief at 6, citing Cellular
Mobile Telephones and Subassemblies from Japan, 54 FR 48011, 48016
(November 20, 1989).
Ta Chen also notes judicial precedent supporting its interpretation
of the related-party provision of the pre-URAA statute, including the
Court of International Trade's (the Court's) decision in Zenith v.
United States 606 F. Supp. 695, 699 (CIT 1985), aff'd Zenith v. United
States, 783 F. 2d. 184 (Fed. Cir. 1986) (Zenith). There, the Court
found that ``the requirements of our law are satisfied when (the
Department) investigates whether there is any financial relationship *
* *. The discernment of relationships which do not find expression in
concrete financial terms is not something which can be posited as a
mandatory duty, and is not required by [the statute].'' Ta Chen's Case
Brief at 5. And, Ta Chen maintains, in Torrington Company v. United
States, Slip Op. 97-29 (CIT March 7, 1997), the Court found there was
no requirement for the Department to look beyond the statute's
``bright-line test for defining related parties.''
Ta Chen argues that its interpretation of the related-party
provisions of the pre-URAA statute is further supported by the
Statement of Administrative Action (SAA) which accompanied the URAA. In
explaining the need for refining the statutory definition of affiliated
persons, Ta Chen continues, the SAA stressed that ``including control
in the definition of `affiliated' will permit a more sophisticated
analysis which better reflects the realities of the marketplace.'' Ta
Chen's Case Brief at 7, quoting the SAA at 78; see also Large Newspaper
Printing Presses and Components Thereof From Japan; 61 38139 (July 23,
1996) and Engineering Process Gas Turbo-Compressor Systems from Japan,
61 FR 65013 (December 10, 1996).
Further, Ta Chen argues that when the pre-URAA statute refers to
related parties controlling, through stock ownership, directly or
indirectly, ``any interest'' in the business of the other, the interest
referred to is stock ownership. According to Ta Chen, the Department
has consistently defined an ``interest'' as representing ``no less than
five percent ownership.'' Ta Chen's Case Brief at 10, quoting from a
February 1, 1996 Concurrence Memorandum in Certain Fresh Cut Flowers
from Colombia. Ta Chen maintains that petitioners' cites to pre-URAA
determinations are not on point; each of these cases involved either
equity ownership or common directors. For
[[Page 37546]]
example, in Roller Chain, Other Than Bicycle Chain, From Japan, 57 FR
43697 (September 22, 1992), Ta Chen claims that the parties were
related through common directors, and, in fact, through common
ownership by the respondent of 60 percent of the related firm's stock.
Ta Chen avers that petitioners' reliance on Fresh Cut Flowers from
Colombia (61 FR 42833, 42861 (August 19, 1996)) (Flowers) is also
misplaced. While the Department found in that case that control was
sufficient to establish affiliation, Ta Chen stresses that the control
at issue consisted of common board members controlling voting power in
both entities, a situation which, Ta Chen asserts, does not obtain in
the instant review.
As to the proper statutory provisions governing this administrative
review, petitioners suggest that ``Ta Chen's assertions are
inconsistent with the plain language of the statute and must be
rejected.'' Petitioners note that section 291 of the URAA mandates that
this review be conducted according to the Tariff Act, as amended by the
URAA, since the review was initiated after January 1, 1995 (the
effective date for the changes mandated by the URAA). Further,
petitioners aver that all administrative reviews conducted pursuant to
U.S. law involve the retrospective examination of sales made; the URAA
did not alter this aspect of the antidumping statute. Petitioners also
note that Ta Chen requested the instant administrative review in
December 1995, or nearly a year after the URAA took effect; Ta Chen was
``on full notice'' as to the applicable statutory provisions.
Finally, petitioners maintain that since Ta Chen is both an
``affiliated person'' under section 771(33) of the URAA-amended statute
and a ``related party'' in accordance with section 771(13) of the pre-
URAA statute, Ta Chen's complaint about fairness is infirm. Petitioners
note that the definition of ``exporter'' for purposes of determining
U.S. price found at section 771(13) of the pre-URAA statute refers
explicitly to one person controlling ``through stock ownership or
control or otherwise'' any interest in the business conducted by the
other person. Petitioners' Rebuttal Brief at 29, quoting section
771(13)(B) and (C) of the Tariff Act. Thus, petitioners assert, under
``the plain terms'' of the pre-URAA statute, ``stock ownership was not
the sine qua non to finding parties to be related for purposes of
identifying the U.S. party as an `exporter.'' '
Petitioners further assail Ta Chen's ``quest to prove that Ta Chen
was not related to (Company B) by virtue of its control over (Company
B's) activities under the pre-1995 law.'' According to petitioners, the
focus of the related-party definition of ``exporter'' is not solely
upon the person by whom the merchandise is imported into the United
States, but also upon the person ``for whose account'' the merchandise
is imported. In the instant case, petitioners argue, Company B was the
person ``for whose account'' subject WSSP was imported during the POR.
Additionally, Ta Chen's own representations during this review that TCI
was a mere ``facilitator'' for its U.S. sales is, petitioners believe,
further proof that TCI was not the party ``for whose account'' the
merchandise was imported.
As to the need for an equity ownership to demonstrate two parties
are related, petitioners concede that in the past the Department has
focused primarily upon stock ownership in rendering its related-party
determinations. However, petitioners aver that Ta Chen's interpretation
``carefully omits the statutory reference to control outside equity
ownership.'' Petitioners' Rebuttal Brief at 31. According to
petitioners, the reference to control of a company other than through
stock ownership makes clear that equity ownership was not the sole
prerequisite to finding two parties related.
Petitioners cite to past Departmental and judicial determinations
as supporting a conclusion that parties may be found to be related
absent equity ownership. Petitioners point to Flowers, where the
Department ``recognized that section 771(13) ``establishes a standard
for relationship based on association, ownership or control.' ''
Petitioners' Case Brief at 32. Petitioners also cite to the Court's
decision in E.I. DuPont de Nemours & Co. v. United States (841 F. Supp.
1237, 1248 (CIT 1993)) wherein the Court found that ``[t]he ITA is not
constrained to examine only financial relationships in making the
determination,'' and that ``[t]he requirements of U.S. law were
satisfied when the ITA investigated both financial and non-financial
connections.'' Id.; see also Sugiyama Chain Co., Ltd. v. United States,
852 F. Supp. 1103, 1110 (CIT 1994).
Department's Position: We agree with petitioners that the Tariff
Act, as amended by the provisions of the URAA, clearly governs this
third administrative review. As the URAA and its accompanying SAA make
clear, ``amendments to the (Tariff) Act will apply to investigations
and reviews based on petitions or requests received after the WTO
Agreement enters into force with respect to the United States,'' i.e.,
January 1, 1995. See SAA at 225. Therefore, the Department has no
discretion to apply selectively the amendments effected by the URAA. As
petitioners note, Ta Chen was the sole party to request this
administrative review, which it did on December 12, 1995, or nearly one
year after the URAA took effect. Thus, any argument that Ta Chen is
being subjected to an unfair, retroactive application of the statute is
clearly without merit.
Furthermore, we have preliminarily determined in the first and
second administrative reviews of this order, conducted under the pre-
URAA Tariff Act, that Ta Chen is, in fact, related to Company A and
Company B, using the definition of ``related'' found in Section 771(13)
of the old statute. See Certain Welded Stainless Steel Pipe From
Taiwan; Preliminary Results of Administrative Reviews, 62 FR 26776 (May
15, 1997); see also Certain Stainless Steel Butt-Weld Pipe Fittings
From Taiwan; Preliminary Results of Administrative Review, 62 FR 26773
(May 15, 1997). As we note in those reviews, section 771(13) of the
Tariff Act defines the ``exporter'' as including the ``person by whom
or for whose account the merchandise is imported into the United States
if * * * the exporter, manufacturer, or producer owns or controls,
directly or indirectly, through stock ownership or control or
otherwise, any interest in the business conducted by such person.''
Section 771(13)(C) of the 1994 Tariff Act (emphasis added). Thus, the
plain language of the statute clearly authorizes the Department to
consider relationships other than those arising through direct equity
ownership. Our preliminary determination in the first and second
reviews of WSSP is that Company B should properly be included as the
``person by whom or for whose account'' the merchandise was imported
into the United States during the relevant periods of review.
In addition, Ta Chen's reliance on the Court's finding in Zenith is
misplaced. There, the Court found that there was no statutory
requirement that the Department examine ``relationships which do not
find expression in concrete financial terms.'' Nowhere in its decision,
however, did the Court suggest that the Department was statutorily
barred from an examination of such non-financial relationships. Nor
could it be so barred, as the statute expressly permits such an
examination.
Ta Chen also exaggerates the changes in the statutory treatment of
``related parties'' versus ``affiliated persons'' under the URAA. As Ta
Chen notes, the
[[Page 37547]]
SAA stresses that subparagraph (G) of the new section 771(33) provides
for situations wherein one person ``controls'' another, and explains
that this addition ``will permit a more sophisticated analysis which
better reflects the realities of the marketplace.'' Contrary to Ta
Chen's argument, however, subparagraph (G) of section 771(33) does not
represent a fundamental change in the statute's intent. Rather, this
subparagraph merely reinforces the old statute's definition of parties
being ``related'' when one ``controls, directly or indirectly, through
stock ownership or control or otherwise'' an interest in the other.
This comports with past Departmental precedent on this issue. For
example, in Antifriction Bearings (Other Than Tapered Roller Bearings)
and Parts Thereof From France, et al., we noted that we could find
parties related if ``the nature of their relationship allows the
possibility of price and cost manipulation.'' 60 FR 10900, 10945
(February 28, 1995). Likewise, in Certain Iron Construction Castings
From Canada, we stated explicitly that our related party determinations
were ``not based solely on the extent of [the parties'] financial
relationships.'' 60 FR 9009 (February 16, 1995); see also Final
Determination of Sales at Less Than Fair Value; Coated Groundwood Paper
From Finland, 56 FR 56363, 56369 (November 4, 1991).
Comment Two: Ta Chen maintains that, even if the URAA-amended
Tariff Act controls this administrative review, the Department
nevertheless erred in concluding that Ta Chen and Company B are
``affiliated persons.'' Ta Chen insists that the Department's
preliminary determination that ``Ta Chen effectively exercised
operational control over this putatively unaffiliated customer'' is
contrary to the record evidence, the statute, the Department's
regulations, and Departmental practice on this issue. Citing the
Department's proposed regulations, Ta Chen notes four factors the
Department will consider in determining affiliation. These are: (i)
Corporate or family groupings; (ii) Franchise or joint venture
agreements; (iii) Debt financing; and (iv) Close supplier
relationships. See Notice of Proposed Rulemaking, Section 351.102, 61
FR 7308, 7310 (February 27, 1996). Ta Chen insists that the first two
are irrelevant, as the Department has not suggested that Ta Chen and
Company B are constituents of a single corporate or family group.
Likewise, Ta Chen argues, Company B is not a franchisee of Ta Chen, nor
has it entered into a joint venture arrangement with Ta Chen. Ta Chen
dismisses the third point, stating that Ta Chen did not finance any
debt of Company B. Thus, Ta Chen maintains, only the last indicium,
close supplier relationships, is relevant in this review, and this
factor, as it is commonly interpreted by the Department, also does not
support the preliminary finding of affiliation.
Ta Chen argues that in the instant case the Department's concern is
whether one party enjoys ``the ability to exercise restraint or
direction over another party's pricing, cost, or production
decisions.'' 61 FR 7308, 7310 (February 27, 1996). Because Company B is
a pipe distributor, Ta Chen avers, control over cost and production
decisions is not at issue; therefore, the Department's present inquiry
focuses solely upon control over pricing. Ta Chen claims that the
Department did not explain in its Preliminary Results any such control
exercised by Ta Chen over Company B. According to Ta Chen, the ``lack
of an adequate connection between a crucial determination and the
record evidence renders the determination unlawful.'' Ta Chen's Case
Brief at 18; see also Daewoo Electronics Co., Ltd. v. United States 760
F.Supp. 200 (1991). Ta Chen maintains that the Department's dictum,
without sufficient explanation, that Ta Chen's control of Company B was
``clearly evident'' runs counter to past judicial instruction. Id. at
19, citing NACCO Materials Handling Group v. United States, 932 F.Supp.
304, 312 (CIT June 18, 1996), and FAG Kugelfischer Georg Schafer KGaA
v. United States, Slip Op. 96-108 (CIT July 10, 1996).
Ta Chen further argues that the factors which the Department does
cite in its Preliminary Results do not support a finding of
affiliation. For example, Ta Chen maintains that, contrary to our
preliminary determination, Ta Chen did not control the disbursements of
Company B. Ta Chen claims that physical custody of Company B's
signature stamp did not constitute control over Company B's
disbursements. Rather, Ta Chen argues, custody of the signature stamp
merely permitted Ta Chen's bookkeeper, with prior authorization from
Company B, to sign checks for Company B when its executives were
``otherwise occupied.'' According to Ta Chen, Company B could, and did,
write checks without first seeking Ta Chen's permission, nor could Ta
Chen prevent such disbursements. Thus, Ta Chen insists, physical
custody of the signature stamp permitted Ta Chen to monitor, not
control, Company B's disbursements.
Ta Chen also avers that its credit monitoring ``is typical of that
found between unaffiliated parties.'' Pointing to statements provided
by Ta Chen on the record of this review, Ta Chen insists that pipe
distributors typically allow their unaffiliated suppliers complete and
unfettered access to every aspect of their business operations. Ta Chen
further argues that the published literature on the Uniform Commercial
Code makes clear that creditors often employ monitoring of a debtor's
activities as ``the only effective mechanism'' for uncovering
misfeasance by the debtor which would harm the creditor's interests.
Besides, Ta Chen concludes, the Department ``has never found credit
monitoring relevant for purposes of determining if parties are
affiliated.'' Ta Chen's Case Brief at 23.
Ta Chen also disagrees with the Department's preliminary finding
that Ta Chen's computer monitoring of Company B constituted an element
of control over this customer. Ta Chen avers that as it extends
``substantial credit'' to Company B, it is necessary for Ta Chen to
institute such monitoring to ``provide early warning of cash flow
problems which could adversely affect ability to pay debt.'' Ta Chen's
Case Brief at 28, citing to Ta Chen's January 13, 1997 submission.
Further, according to Ta Chen, such access facilitated ``just-in-time''
deliveries of merchandise. Ta Chen claims that Ta Chen's monitoring of
Company B's inventory did ``not provid[e] any information that is not
publicly provided in the metals industry anyway.'' And the ``just-in-
time'' delivery arrangements have never been grounds for finding two
parties affiliated, Ta Chen argues, citing to Steel Wheels From Brazil,
54 FR 21456, 21457 (1989), and Polyethylene Terephthalate Film, Sheet,
and Strip From Japan, 56 FR 16300 (1991). Finally, such computer links
do not constitute control of prices, and are, in Ta Chen's view,
irrelevant.
As to shared sales department personnel, Ta Chen states that ``Ta
Chen and Company B had no common employees, at any time.'' Id. Ta Chen
asserts that its assistance to Company B was limited to ``clerical
assistance,'' performed for Ta Chen's benefit and only incidentally for
Company B's benefit. Furthermore, Ta Chen argues, such assistance is
not sufficient grounds for finding parties affiliated. Ta Chen cites
the following examples of the assistance these parties provided for
each other: clerical assistance, training, use of office equipment,
answering inquiries and forwarding messages, accounting training and
assistance, suggestions on working with customs
[[Page 37548]]
brokers, training on shipping procedures, data entry, and ``other
clerical book-keeping type [sic] assistance.'' Id. at 24. According to
Ta Chen, ``the Department has never found such cooperation is
control.'' Id., citing Large Newspaper Printing Presses and Components
Thereof From Japan, 61 FR 38139, 38156 (1996). Ta Chen asserts that for
the Department to find affiliation, the common employees must ``share
in the day-to-day management.'' In fact, the Department's standard
antidumping questionnaires asks respondents to address ``computer,
legal, accounting, audit and or business system development assistance,
personnel training, personnel exchange and manpower assistance'' in
making level-of-trade determinations; this indicates the Department's
recognition that respondents will provide such services to unaffiliated
persons.
With respect to the participation of Ta Chen's president in
negotiating prices between Company B and its subsequent customers, Ta
Chen argues that ``a distributor's credibility significantly depends
upon its customers' belief that the mill supports the distributor.'' Ta
Chen's Case Brief at 30. In that capacity, Ta Chen asserts, Ta Chen
officials would meet with Company B's customers. Ta Chen also states
that ``Ta Chen officials knew the prices which would be accepted by Ta
Chen's distributor,'' (i.e., Company B). According to Ta Chen, if the
distributor's customer indicated interest in purchasing Ta Chen
products at prices it knew were acceptable to Company B, the Ta Chen
official would instruct the customer to prepare a purchase order for
Company B. See Ta Chen's Case Brief at 30, citing to its January 13,
1997 submission. In these contacts, Ta Chen insists, Ta Chen was acting
solely on its own behalf, as was Company B. Such activities as cited,
Ta Chen argues, do not ``constitute negotiation or control of prices.''
Ta Chen maintains that there are no Departmental determinations on this
point pursuant to the URAA statute. Old-law precedent, Ta Chen
suggests, favors Ta Chen's interpretation. In Certain Residential Door
Locks From Taiwan, for example, the Department concluded that despite
one party's ability to exercise control over prices, the entities were
unrelated because they operated as ``separate and distinct entities,''
and were ``separately owned and operated.'' Id.
As to the debt financing arrangement, Ta Chen claims that
``(Company B) did not offer its accounts receivable and inventory as
security for a loan obtained by TCI. Rather, Ta Chen requested, and
(Company B) agreed to grant, a UCC security interest in (Company B's)
accounts receivable in addition to the inventory which was the subject
of the credit arrangement.'' Ta Chen's Case Brief at 33. Ta Chen argues
that the fact that the lien was intended to secure TCI's debt ``is not
relevant to these proceedings.'' According to Ta Chen, the UCC
recognizes the assignability of security interests by contract. Ta Chen
further argues that Company B's assigning its inventory to TCI's
creditor had the same effect as if TCI had exercised its right to
assign its security interests to the bank. Furthermore, Ta Chen
insists, such assignments ``occur between, and are consistent with the
actions of, unaffiliated parties.'' Id. Under the URAA-amended statute,
the Department has not held that a respondent's loans to a customer
make the parties affiliated for purposes of the Tariff Act.
Furthermore, as to close supplier relationships, Ta Chen argues
that while Company B may have relied exclusively upon Ta Chen as a
supplier of WSSP, it was free to do business with other companies. Ta
Chen asserts that under the URAA, the Department has never found an
exclusive-supplier relationship sufficient to deem the supplier and
customer affiliated. See Ta Chen's Case Brief at 40, citing Cold-Rolled
and Corrosion Resistant Carbon Steel Flat Products From Korea, 61 FR
51882, 51885 (October 4, 1996) (Carbon Steel Flat Products); Open-End
Spun Rayon Singles Yarn From Austria, 62 FR 14399, 14403 (March 26,
1997) (Rayon Yarn); Melamine Institutional Dinnerware From Indonesia,
62 FR 1719, 1726 (January 13, 1997) (Melamine Dinnerware). With respect
to old-law precedent, Ta Chen argues that, a fortiori, exclusive-
supplier relationships do not render two parties related. Portable
Electric Typewriters From Japan, 48 FR 7768, 7770 (1983); Certain
Residential Door Locks From Taiwan, 54 FR 53153 (Comment 18) (1989).
Finally, Ta Chen notes that its audited financial statements do not
treat Company B as a related party, and that its prices to Company B
were ``always less than its net ex-factory price to other U.S.
customers.'' Id. at 43 (emphasis in original). Ta Chen continues:
``[i]f Ta Chen had wanted to use an affiliated party to manipulate its
dumping margin, * * * Ta Chen would have charged that party more than
the average. It did not.'' Id. at 44.
Petitioners maintain that the Department correctly determined that
Ta Chen and Company B were affiliated during the third administrative
review, arguing that the evidence of affiliation presented by Ta Chen
in its November 12, 1996 supplemental questionnaire response is ``clear
and overwhelming.'' Petitioners'' Case Brief at 3. Petitioners assert
that Company B ``was not at liberty to act in any meaningful commercial
sense apart from Ta Chen,'' and that the record evidence demonstrates
that Ta Chen, in fact, ``completely directed (Company B's)
operations.'' Id. Petitioners note that Ta Chen's attempts to buttress
its assertion that its ties to Company B are common in the welded
stainless steel pipe trade consist solely of ``statements'' from
various individuals; each of these statements lack any examples
demonstrating where other unaffiliated companies were so inextricably
linked. Thus, the Department should treat these ``statements'' as
``baseless ipse dixits'' and should continue to treat Ta Chen and
Company B as affiliated persons. Id. at 4. According to petitioners, Ta
Chen has failed to show how any of the circumstances cited by the
Department in its Preliminary Results as indicia of Ta Chen's
affiliation to Company B are typical practices in the stainless steel
pipe industry; in fact, petitioners maintain, these practices are not
typical. Rather, petitioners charge, Ta Chen continues to dissemble in
arguing that all of its U.S. sales in this review were to unaffiliated
persons.
Furthermore, petitioners aver, the Department's conclusion that Ta
Chen and Company B are affiliated persons is supported by the plain
language of the Tariff Act and the SAA which accompanied the URAA.
According to petitioners, Ta Chen, in referring to the four indicia of
control cited in the SAA (see above), does violence to the actual
meaning of that passage by omitting the words ``for example.'' Thus,
the four factors listed are ``not intended to identify the only means
by which control could occur.'' Petitioners' Rebuttal Brief at 23.
Rather, petitioners contend, the statute and SAA direct the Department
to base its determinations of affiliation on the specific facts of each
case, with an emphasis upon whether one person was ``legally or
operationally in a position to exercise restraint or control over the
other person.''
Petitioners also take issue with Ta Chen's characterization of the
affiliated persons provisions of the Tariff Act. Contrary to Ta Chen's
assertions, petitioners argue, the statute does not require a
demonstration that one person set prices or costs for the other, but
only that one person be ``in a position'' to control prices or costs.
Evidence of this operational control, petitioners contend, is clear in
Ta Chen's exclusive-supplier
[[Page 37549]]
relationship with Company B, in its control over Company B's
disbursements through physical custody of Company B's signature stamp,
in the two entities' shared sales department personnel, in Ta Chen's
complete access to Company B's computer system, in Ta Chen's direct
participation in negotiating subsequent resales by Company B, and in
Company B's assigning its inventory and accounts receivable to TCI's
creditor. Petitioners aver that these ties ``establish[ ] a degree of
control that is un-paralleled, to petitioners'' knowledge, in any other
case.'' Petitioners' Rebuttal Brief at 27. Even where the Department
previously has found any one of these ties insufficient to establish
affiliation, petitioners conclude, ``in no case has there ever been
this collection of activities demonstrating operational control by a
supplier over its customer.'' Id. (original emphasis). Petitioners
suggest that this combination of factors ``more than satisfies the
statutory requirement that Ta Chen be in a position to exercise legal
or operational control over (Company B).'' Id.
Department's Position: We disagree with Ta Chen's analysis of the
affiliated persons provisions of section 771(33) of the Tariff Act. Ta
Chen, through selective quotes from the SAA and our Notice of Proposed
Rulemaking attempts to posit a bright-line standard to which the
Department must adhere in analyzing the relationships between entities.
However, as the Notice of Proposed Rulemaking makes clear, the
Department has deliberately refrained from establishing any precise
thresholds for a finding of control:
some indicia of the ability to exercise restraint or direction over
another party's pricing, cost, or production decisions may not lend
themselves to the use of simple black-and-white thresholds.
Therefore, the Department intends to apply this new definition on a
case-by-case basis considering all relevant factors including the
indicia included in the regulatory definition. Mere identification
of the presence of one or more of these or other indicia of control
does not end our task. We will examine these indicia in light of
business and economic reality to determine whether they are, in
fact, evidence of control.
Notice of Proposed Rulemaking at 61 FR 7310 (emphases added).
Thus, it is clear that neither the statute, the SAA, nor the
Department's proposed regulations restrict the Department's inquiry to
four specific factors. Rather, these were listed as illustrative
examples of the types of relationships which might lead to a
determination that two or more parties are affiliated within the
meaning of section 771(33) of the Tariff Act. This is borne out by the
limited corpus of Departmental precedent under the 1995 statute. Thus,
in Certain Cut-to-Length Carbon Steel Plate From Brazil (62 FR 18486,
18490 (April 15, 1997)) we stated the statute requires the Department
``to base its findings of control on several factors, not merely the
level of stock ownership.'' And in Large Newspaper Printing Presses and
Components Thereof From Japan, after noting that close supplier
relationships could be sufficient evidence of control, we stated that
the Department would make its affiliated party determinations after
taking ``into account all factors which, by themselves, or in
combination, may indicate affiliations.'' 61 FR 38139 (July 23, 1996);
see also Notice of Final Determination; Engineered Process Gas Turbo-
Compressor Systems From Japan, 62 FR 24394, 24403 (May 5, 1997).
In addition, as we explained in the Preliminary Results, we
conclude that the record evidence amply supports our determination that
Ta Chen was affiliated with Company B. In reviewing the record, the
Department finds no evidence of any distinct operational personality
for Company B apart from Ta Chen and Ta Chen International: Company B
was established at Ta Chen's behest, by current or former managers and
officers of Ta Chen; was staffed entirely by current or former Ta Chen
employees; and distributed only Ta Chen products in the United States.
With respect to Ta Chen's physical custody of Company B's signature
stamp, Ta Chen's custody of this stamp is prima facie evidence that it
either exercised, or was in a position to exercise, control over
Company B's disbursements. Ta Chen has not presented any evidence to
the contrary.
As for the credit monitoring of Company B by Ta Chen, we agree that
it is common for a creditor to obtain reports regarding the status of a
debtor's business activities. See, e.g., Nassberg, Richard T. The
Lenders Handbook, American Law Institute, American Bar Association
Committee on Continuing Professional Education, Philadelphia, 1994 at
Chapter 7. However, we reject Ta Chen's claim that its dedicated
computer connection to Company B represented a common example of such
monitoring. Rather, the full-time and unlimited access to Company B's
computer system afforded Ta Chen a far more invasive mechanism for
monitoring than would be expected between unaffiliated parties. We note
further that Ta Chen officials stated at the Department's recent
verification at TCI that Company B maintained no security system or
passwords with which to limit or terminate Ta Chen's access to its
records; Ta Chen's access to Company B's accounting system was
complete.
With respect to common employees, in its case brief Ta Chen
attempts to minimize this sharing of personnel. However, in its
November 12, 1996 supplemental questionnaire response, Ta Chen stressed
that Company A and Company B had no experience or knowledge regarding
the U.S. market for WSSP. Ta Chen also claimed that ``TCI provided
[Company A] with assistance from its personnel and, from time to time,
the use of TCI office equipment,'' and noted that TCI ``could help fill
any gaps in the know how or experience of the back-office personnel,''
dealing with such vital activities as billing, invoicing, accounts
receivable, assistance in Customs matters, ``and other clerical
functions.'' Ta Chen's November 12, 1996 Response at 51 and 53. We also
note the movement of Ta Chen's former sales manager among Ta Chen,
Company A, and Company B. Given the longstanding and intimate business
dealings between this individual and the president of Ta Chen, we must
question the degree of operational autonomy of Company A and Company B
while under this individual's stewardship. We also note that this
individual received substantial compensation from Ta Chen well after
his claimed severance date of 1992. Further, Ta Chen's president met
with Company B's customers, and participated directly in the
negotiation of prices for Company B's subsequent resales of WSSP. Ta
Chen's statement that it ``knew the prices which would be accepted by
Ta Chen's distributor'' raises additional questions about the extent to
which Company B was free to act in its own interest.
With respect to debt financing (an indicium specifically mentioned
in the SAA and Notice of Proprosed Rulemaking), whether Company B can
be said to have ``offered'' its accounts receivable and inventory as
collateral for a bank loan to TCI, or that TCI ``requested'' and
Company B ``agreed'' to take such a step is not germane to our
analysis. Either way, as we stated in our Preliminary Results, Company
B ``placed its continued ability to operate in the hands of a
putatively unaffiliated party.'' Preliminary Results at 1436. Despite
the statements of various individuals which Ta Chen has placed on the
record of this review, neither Ta Chen nor any of these individuals is
able to cite to a single case where an unaffiliated party would accept
this risk. We also disagree with Ta Chen's claim that Company B's
pledging its
[[Page 37550]]
accounts receivable and inventory to TCI's bank was essentially akin to
TCI securing a lien upon Company B and, in turn, assigning its rights
to the bank. We note that the actual transaction involved a significant
qualitative difference. In the latter case, TCI's security interest
would be limited to the amount Company B owed against purchases of
inventory. In the former case, Company B unilaterally, and without
consideration, assigned its entire inventory and accounts receivable
directly to TCI's bank to facilitate a loan for TCI. That Company B
would accept this risk without any consideration--without even a
written agreement memorializing the terms and duration of the
agreement--does not comport with the commercial realities of dealings
between unaffiliated companies. Nor has Ta Chen offered convincing
evidence that this arrangement is, in fact, commonplace. As a final
note, Ta Chen itself undermines the stated reason for this arrangement:
to ensure payment by Company B to Ta Chen for purchases of stainless
steel products. In its November 12, 1996 submission, Ta Chen asserts
that the risk of default by Company B ``was not significant, since bad
debt has not been a problem.'' The absence of a genuine credit risk
would, in fact, attenuate the need for this extraordinary financial
relationship. See Ta Chen's November 12, 1996 Supplemental Response at
81.
The existence of close supplier relationships is another factor
specifically mentioned in the SAA. Here, too, our examination of Ta
Chen's role as supplier to Company B supports a finding of affiliation.
While Ta Chen claims that Company B was free to purchase stainless
steel pipe from other suppliers, Ta Chen has not provided evidence to
suggest that Company B ever looked to any producer other than Ta Chen
as its supplier. In fact, Ta Chen has allowed that ``to the best of its
knowledge'' (which we must presume was extensive, given Ta Chen's
computer access and custody of the signature stamp), Ta Chen was the
exclusive supplier of stainless steel pipe products to Company B.
Furthermore, the cases Ta Chen cites on this point are inapposite. In
each case, we did not conclude that a close supplier relationship was
insufficient grounds for a finding of affiliation; rather, we concluded
that no close supplier relationship of any kind existed. In Carbon
Steel Flat Products, for example, we found that no exclusive supplier
relationship existed between the respondents and the named entities.
See Final Results of Administrative Review, 62 FR 18404, 18417 (April
15, 1997). Likewise, in Rayon Yarn and Melamine Dinnerware, the
Department found that, unlike in the instant review, there were no
close supplier relationships. Furthermore, the Department has stated
explicitly that it may consider close supplier relationships sufficient
basis for a finding of affiliation. See Large Newspaper Printing
Presses and Components Thereof From Japan, 61 FR 38139 (July 23, 1996).
Comment Three: Ta Chen maintains that the Department's use of
adverse facts available was unlawful. Ta Chen insists that it
cooperated fully with the Department throughout these proceedings and
responded immediately to each of the Department's requests for
information. The new information Ta Chen provided in its November 12,
1996 Supplemental Response was in direct response to the Department's
request, made for the first time, that Ta Chen explain ``all
relationships'' between Ta Chen and Company B. Ta Chen cites to the
Department's verification reports issued in the first administrative
review as evidence of its complete cooperation with the Department;
``[n]o verifier question went unanswered.''
Furthermore, Ta Chen submits, even if the Department concludes that
Ta Chen and Company B were affiliated during this third review, Ta Chen
had a reasonable basis for believing that no such affiliation existed
under the law in effect at the time of the relevant sales to Company B
(i.e., in August 1994). In four separate verifications the Department
limited its related party inquiries to common equity ownership or
shared directors. Thus, Ta Chen argues, it had ``well-founded and
reasonable'' grounds for believing that Ta Chen and Company B were
unaffiliated for purposes of the Tariff Act.
As to the Department's choice of facts available, Ta Chen avers
that Ta Chen's current cash deposit rate (from the less than fair value
[LTFV] investigation) would provide ``sufficient motivation'' for Ta
Chen to cooperate fully with the Department. Ta Chen reasons that it
requested the three pending administrative reviews in order to lower
its antidumping liabilities; if the Department continued its imposition
of its existing cash deposit rate of 3.27 percent, ``Ta Chen's purpose
in participating in these reviews will have been completely
undermined.'' Ta Chen's Case Brief at 48. Ta Chen draws a distinction
between the pending reviews of WSSP and other cases wherein a
respondent is required to participate in an administrative review
sought by a petitioner; in the latter case, Ta Chen argues, the threat
of a higher margin suggested by petitioner serves to induce
respondents' cooperation. In light of these facts, Ta Chen argues, use
of the 31.90 percent margin from the Preliminary Results is entirely
inappropriate.
In addition to being unduly punitive, Ta Chen continues, use of
adverse facts available is especially unwarranted where ``novel, vague
issues are involved.'' Ta Chen insists that adverse facts available
would be called for only if three conditions had been met: (i) the
respondent could reasonably have been expected to know that the data it
did not provide had been requested by the Department, (ii) the
requested data were not a new requirement of the 1995 statute, nor a
new concept under the statute, and (iii) the questionnaire was not
vague. See Ta Chen's Case Brief at 43, citing Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From France, et
al. (AFBs From France) 62 FR 2081, 2088, 2090 (January 15, 1997); Fresh
Cut Flowers From Colombia 62 FR 16772 1776 (1997). Pointing to the
Court's decision in Daewoo Electronics Co., Ltd. v. U.S. 712 F. Supp.
931, 945 (CIT 1989), Ta Chen maintains that the Department must engage
in ``clear and adequate communication'' with a respondent before
applying facts available. Ta Chen stresses that prior to the
Department's issuance of its Preliminary Results Ta Chen could not
foresee that the Department would consider Ta Chen and Company B to be
affiliated persons. Thus, Ta Chen argues, it had no reason to report
Company B's sales to its customers, rather than Ta Chen's sales to
Company B.
Ta Chen argues that the Department has applied ``cooperative''
facts available in another case involving the failure properly to
report subsequent U.S. sales made by an affiliated person. See Ta
Chen's Case Brief at 51, citing Certain Small Business Telephones From
Taiwan, 59 FR 66912 (December 28, 1994) and Certain Fresh Cut Flowers
From Colombia, 59 FR 15159 (March, 31, 1994). Despite the respondents
in these cases having clear knowledge that they were related, and
failing to report properly their U.S. sales, the Department responded
with ``second-tier'' BIA. Here too, Ta Chen argues, the Department
should treat Ta Chen with non-adverse facts available.
Ta Chen also maintains that the judicial precedents cited by
petitioners do not support the use of adverse facts available. In
Sugiyama Chain v. United States, 852 F. Supp. 1105, 1111 (CIT 1994),
for example, Ta Chen notes that
[[Page 37551]]
the Department applied cooperative BIA to a respondent in six of the
seven administrative reviews at bar, despite the Department's belief
that the respondent ``attempted to intentionally deceive the
Department.'' Ta Chen's Case Brief at 54. The application of non-
cooperative BIA in the seventh review was based on the respondent's
failure at verification, and refusal to supply other requested
information (including the subsequent home market sales to unrelated
customers). Ta Chen holds that none of these conditions exists here. At
worst, Ta Chen submits, it ``mischaracterized the situation'' with
respect to Company B; it did not ``misrepresent the situation.'' Id. at
55 (original emphasis).
In addition, Ta Chen notes that while petitioners cite to Certain
Stainless Steel Wire Rod From India (58 FR 54110, 54111 (October 20,
1993)) (Steel Wire Rod) as supporting the use of adverse facts
available, petitioners do not mention the respondent's numerous
shortcomings in that review. In that case Ta Chen points out that the
respondent Mukand initially and repeatedly denied any relationship with
the related customer, claimed that the customer was free to purchase
from others and later retracted that claim, first denied control over
the customer and later admitted the same, contradicted almost all of
the information in its earlier submissions, and failed to state
initially that one of its officials ran the customer's day-to-day
business operations. Furthermore, the same Mukand official certified as
correct certain inconsistent and contradictory responses.
Petitioners, on the other hand, ask that the Department look beyond
the ``factually unsubstantiated and legally unsound'' arguments
presented in Ta Chen's case brief, and look instead to the chronology
of events unfolding throughout the five-year history of this case.
According to petitioners, this chronology demonstrates that Ta Chen
repeatedly and deliberately lied to the Department regarding its sales
in the United States; this pattern of dissembling warrants assignment
of total adverse facts available. Petitioners dismiss Ta Chen's
suggestions in its case brief that this review involves ``novel, vague
issues,'' and that the Department itself is struggling to interpret the
affiliated persons provisions of section 771(33) of the Tariff Act.
Petitioners also contend that, contrary to Ta Chen's arguments, Ta Chen
``has been on notice at least since verification ... in October 1994 of
the Department's intense interest in Ta Chen's relationship with
certain customers in the United States.'' Petitioners' Rebuttal Brief
at 2. Therefore, petitioners aver, it is ``farcical'' for Ta Chen to
insist that it ``had absolutely no reason to think the Department would
consider Ta Chen and [certain U.S. customers] affiliated parties.''
Id., (quoting from Ta Chen's Case Brief). Rather, petitioners claim,
the unique facts of this case permit no doubt that Ta Chen is
affiliated with these U.S. customers, which were, for all intents and
purposes, ``Ta Chen's alter ego and tool.'' Id.
Petitioners assert that the Department's interest in Ta Chen's
affiliated entities in this review is evident from the Department's
initial antidumping questionnaire, which quotes from section 771(33) of
the Tariff Act in defining ``affiliated person.'' Petitioners also note
that the Department's questionnaire queries the respondent specifically
as to affiliations ``through means other than stock ownership,'' thus
leaving no doubt that the Department did not define affiliation as
being limited to, per se, an equity interest in the other person.
Furthermore, petitioners maintain, the Department's intense
scrutiny of these specific customers was clearly evident during the
still-pending first and second reviews, as well. According to
petitioners, the Department's reports on the verifications of Ta Chen
and TCI, conducted in October 1994, detail at length the extraordinary
attention focused by the Department on these customers. Therefore,
petitioners argue, it is absurd for Ta Chen to profess, as it has in
its case brief, that Ta Chen had no indication that the Department
might consider these U.S. customers as ``affiliated persons.'' Rather,
petitioners insist, Ta Chen's grudging disclosure of information, and
its active efforts to misrepresent the information it has disclosed,
are indicative of a pattern of ``fraudulent deception.'' Id. at 6.
For example, petitioners continue, Ta Chen concealed the
significant role of Company A in Ta Chen's activities during the first
review until petitioners uncovered Company A's existence and insisted
on a full discussion of its relationships with Ta Chen. And,
petitioners observe, just three weeks after petitioners' disclosure of
Company A's existence, the firm's corporate charter was dissolved, and
Company A was effectively replaced by Company B.
Furthermore, petitioners argue that Ta Chen has consistently
withheld vital information from the Department, disclosing piecemeal
its affiliations only under duress. Petitioners maintain that, rather
than volunteering key information concerning its relationships with
U.S. customers, Ta Chen has instead divulged this information only
following petitioners' allegations that Ta Chen was related to, or
affiliated with, these parties. According to petitioners, ``Ta Chen has
quickly reacted to cover its fraud and thereby has compounded its fraud
... . In essence, the same group of individuals ... have simply used
different corporate names to conduct their common business, jettisoning
one name and moving on to the next whenever their charade was in
jeopardy of being uncovered.'' Petitioners' Rebuttal Brief at 11.
Were Ta Chen genuinely cooperating with the Department, petitioners
argue,
Ta Chen would have volunteered the existence of Company A
and its ``dba''s, rather than waiting until petitioners ferreted out
this information on their own;
Ta Chen would have provided a truthful explanation
concerning Company A and its ``dba''s, rather than claiming, falsely,
that the ``dba'' names were prior customers of Ta Chen's;
Ta Chen would have ``had Company A come forth and answer
questions ... as Ta Chen has asked others ... to do,'' rather than
dissolving Company A's corporate charter roughly two weeks after
petitioners' first calling attention to Company A's existence;
Ta Chen would not have precipitously rerouted its business
away from Company B, with sales to this customer dropping sharply
between the second and third periods of review. As with Company A's
dissolution, petitioners maintain, the shifts in Ta Chen's U.S. sales
pattern were ``undoubtedly reactions by Ta Chen'' to petitioners''
allegations concerning Company A, its ``dba''s, and Company B;
Ta Chen would have volunteered information at the October
1994 verification in the first review concerning its extensive
commercial and financial ties to Company B, which were clearly relevant
to that extraordinary verification. Likewise, Ta Chen would have
volunteered this information in the body of its second and third review
questionnaire responses. Petitioners aver that Ta Chen did not do so.
Petitioners' Case Brief at 9 and 10.
According to petitioners, the record before the Department with
respect to Ta Chen is so replete with inconsistencies, unsubstantiated
claims, ``gaps in logic,'' and the withholding of accurate information,
that the only proper course for the Department is to apply total
adverse facts available. Petitioners assert that Ta Chen's U.S.
[[Page 37552]]
sales database is ``both incomplete and untrustworthy,'' and that Ta
Chen's protestations that it has cooperated with the Department are
``unpersuasive.'' Id. at 11. Petitioners claim that the situation in
the instant review is akin to that of respondent Nippon Pillow Block
Sales (NPB) in Antifriction Bearings From France, 62 FR 2081, 2086
(January 15, 1997). In that review the Department applied facts
available to NPB for its failure to report accurately all home market
and U.S. sales of subject merchandise. Because of omissions by NPB in
its sales listings the Department determined that NPB's questionnaire
responses were unreliable in toto and disregarded all of NPB's sales
data. Further, the Department concluded that NPB had not acted to the
best of its ability in reporting the relevant sales data and, thus,
applied an adverse inference in choosing the facts otherwise available.
Petitioners also object to Ta Chen's efforts to ``maintain the
fiction'' that the extraordinary ties detailed in the Department's
preliminary results are commonplace between unaffiliated persons. With
respect to TCI's physical custody of certain customers' signature
stamps, dedicated modem lines to the customers' computerized accounting
systems, shared sales department personnel, TCI's direct negotiations
with these distributors' subsequent customers, and the distributors'
pledging of their inventory to secure TCI's debts, petitioners insist
that these practices ``are not common and do not exist,'' nor has Ta
Chen been able to point to a single instance of such intimate ties
between unaffiliated entities. Petitioners suggest that Ta Chen's
arguments are ``laughable'' and ``ludicrous.'' Petitioners' Rebuttal
Brief at 14. Petitioners suggest that the reason the Department has
never found parties to be affiliated based on these facts is not
because these ties are insufficient to establish affiliation but,
rather, because the Department has never before been confronted with a
similar fact pattern. Petitioners brand as ``specious'' Ta Chen's
``discrete parsing'' of the Department's preliminary finding of
affiliation. Petitioners assert that Ta Chen's interpretation is
thrice-flawed in its assumptions that (i) Ta Chen's ties with certain
U.S. customers, including Company B, are common in the industry, (ii)
Ta Chen has cooperated with the Department in all three administrative
reviews, and (iii) Ta Chen's unsubstantiated and unsupported claims
establish that it had no affiliation with Company B. Petitioners claim
that Ta Chen's statement that physical custody of distributors'
signature stamps does not indicate control over these distributors'
disbursements is ``nonsense.'' Similarly, Ta Chen's claim that its
computer access to these distributors' financial records is common is
not supported by any other instance of unaffiliated parties being so
linked. Furthermore, in response to Ta Chen's argument that Ta Chen had
no control over these distributors' prices, petitioners note that Ta
Chen has stated that ``Ta Chen officials knew the prices which would be
accepted by Ta Chen's distributor.'' Petitioners' Rebuttal Brief at 17
(quoting Ta Chen's Case Brief). ``Arm's-length companies do not and are
not supposed to operate in this manner.'' Id. at 18. Further, Ta Chen
has not provided a single instance of these distributors rejecting the
price Ta Chen established for subsequent re-sales of WSSP.
Finally, petitioners assail Ta Chen's characterization of its
credit arrangements as ``absurd.'' Asserting that the pledging of one's
inventory and accounts receivable ``are not normal between arm's-length
parties,'' petitioners point to Ta Chen's failure to provide any
documentation of an agreement establishing these arrangements and
conclude that the suggestion that an unaffiliated party would
voluntarily accept such an obligation is ``preposterous in itself.''
Id. at 19.
Department's Position: In this third review Ta Chen concealed
relevant information pertaining to its sales to Company B, and only
revealed other relevant information concerning sales to another U.S.
customer when the Department opted to verify Ta Chen's U.S.
questionnaire responses. Furthermore, this is a respondent which has on
three occasions made substantial changes to its U.S. sales operations
(in 1992, 1993 and 1994); Ta Chen has acknowledged that it made many of
these changes as a direct result of the order. Given the sophistication
of its behavior and its legal arguments before the Department, we find
unpersuasive Ta Chen's assertion that it ``had absolutely no reason to
think the Department would consider Ta Chen'' and certain of its U.S.
customers as affiliated persons.
We also disagree with Ta Chen's suggestion that this review
addresses ``novel, vague issues.'' The governing statutory provisions
for this review took effect on January 1, 1995. Our Notice of Proposed
Rulemaking, with its exhaustive commentary and analysis, appeared in
February, 1996, or fully two months prior to Ta Chen's initial
questionnaire response in this review. Thus, the affiliated party
provisions of section 771(33), as well as the Department's proposed
interpretation of these provisions, had been comprehensively vetted
before Ta Chen submitted any factual information in this third review.
Further, the Department's February 13, 1996 questionnaire specifically
asked Ta Chen to report its first sales to unaffiliated customers in
the United States. Appendix I of the questionnaire provided the new
definition of ``affiliated person'' found at section 771(33) of the
Tariff Act, including the new emphasis on affiliation through
``control.'' See the Department's questionnaire at Appendix I-1. The
request to provide the first U.S. sales to unaffiliated customers
imposed no new reporting burden upon Ta Chen. Finally, as noted above,
there was no ambiguity in the questionnaire's language as to which
sales the Department sought.
We also find that Ta Chen's citations to past Departmental
determinations in support of using cooperative, non-adverse facts
available are not on point. In Fresh Cut Flowers From Colombia, for
example, the respondent's related entities had either gone out of
business entirely, or were in the process of liquidation, and thus the
firms were unable to provide sales data to the Department. Similarly,
in Certain Small Business Telephones From Taiwan, the affiliated U.S.
customer of respondent Bitronics was out of business. We concluded that
``(s)ince Bitronics made substantial attempts to submit information to
the Department,'' second-tier, or cooperative, BIA would be most
appropriate. See Certain Small Business Telephones From Taiwan; Final
Results of Administrative Review, 60 FR 16606 (March 31, 1995). In the
instant case, despite the 1995 sale of Company B to another party, Ta
Chen has never indicated any such difficulty in accessing Company B's
records, and has even submitted Company B's federal income tax returns
in the record of this review.
As to Ta Chen's argument that it merely ``mischaracterized'' (as
distinguished from ``misrepresented'') its sales to Company B, Ta
Chen's distinction is without a difference. The facts remain that Ta
Chen misled the Department as to the nature of its transactions with
Company B and that it failed to report properly Company B's sales to
the first truly unaffiliated person in the United States.
With respect to the precedent set in Steel Wire Rod, we disagree
with Ta Chen's interpretation of this case. In fact, we find a number
of similarities between Ta Chen's summary of the
[[Page 37553]]
Department's findings in that case and the facts of the instant review.
Like Mukand in Steel Wire Rod, Ta Chen initially and repeatedly denied
any relationship with Company B, claimed that Company B was free to
purchase from others but later acknowledged that it never attempted to
do so, and submitted certain contradictory information. All of this
information was certified as accurate by the same official, the
president of Ta Chen. While we cannot state authoritatively that a Ta
Chen official ran Company B, as was the case with Mukand in Steel Wire
Rod, the individual who did run Company B formerly worked for Ta Chen
and continued to have intimate business ties to Ta Chen before and
after his employment with Company B. Unlike Mukand in Steel Wire Rod,
however, Ta Chen has never admitted any control over Company B, nor has
it attempted to correct its earlier misreporting of its U.S. sales
data.
We also disagree with petitioners' argument that the record
evidence supports use of total adverse facts available for Ta Chen's
margin. We verified Ta Chen's U.S. sales questionnaire responses after
issuing the Preliminary Results and examined Ta Chen's customer
relationships in detail. While we did find misreported sales to one
previously-unnamed customer, we did not find evidence to suggest that
Ta Chen is affiliated in a fashion similar to the relationships between
Ta Chen and Companies A and B with any of its other U.S. customers in
this review. Therefore, while we have applied adverse facts available
to those misreported sales, we have not based Ta Chen's margin on total
adverse facts available. We agree with petitioners, however, that there
is an issue concerning the reliability and consistency of the
information supplied by Ta Chen dating back to the first administrative
review (see Certain Welded Stainless Steel Pipe From Taiwan;
Preliminary Results of Administrative Reviews, 62 FR 26776 (May 15,
1997)). Accordingly, we will address the specific circumstances
surrounding Ta Chen's relationships with Company A and Company B within
the context of the ongoing reviews which cover periods predating this
POR. In addition, we intend to closely scrutinize this issue within the
context of the pending fourth review of this order.
Comment Four: Ta Chen argues that the margin used as adverse facts
available in the Preliminary Results ``is not relevant, calculated or
corroborated, and thus is unlawful.'' According to Ta Chen, the
Department's proposed regulations and the SAA both call for the
Department, when using facts available which are based on secondary
information, to corroborate these facts as such information ``may not
be entirely reliable because, for example, as in the case of a
petition, it is based on unverified allegations, or * * * it concerns a
different timeframe than the one at issue.'' Ta Chen's Case Brief at
58, quoting the SAA at 870. Ta Chen insists that the Department has
already ``verified'' that the facts available margin is wrong. In the
underlying LTFV investigation, Ta Chen argues, the Department
calculated a margin of 3.27 percent for Ta Chen, based on data which
were subject to verification. Ta Chen maintains that the 31.90 percent
margin (the ``all others'' rate from the LTFV investigation) resulted
from the Department's rejection of one respondent's data in favor of
best information available.
In addition, Ta Chen argues that the facts available margin was
applied to producers other than Ta Chen and is, thus, ``irrelevant and
unlawful.'' Ta Chen cites to an antidumping case from Canada wherein
Canada's International Trade Tribunal noted Ta Chen's lower margins
(and the refusal of other Taiwanese respondents to participate in the
proceeding) as indicative of a pattern of lawful and cooperative
behavior by Ta Chen which resulted in lower dumping margins.
Ta Chen also faults the 31.90 percent facts available margin as
being unrepresentative of current conditions in the stainless steel
pipe market. Ta Chen insists that the Department must use the most up-
to-date information as facts available as it carries greater probative
value. In addition, Ta Chen notes what it sees as significant changes
in the U.S. market since publication of the antidumping duty order.
According to Ta Chen, Ta Chen is no longer forced to compete against
other Taiwanese producers of WSSP, who largely withdrew from the U.S.
market after the imposition of antidumping duties. In support of this
contention, Ta Chen quotes from a 1996 determination by the Canadian
International Trade Tribunal which concludes that ``Taiwanese producers
other than Ta Chen have been excluded from the U.S. market.'' Ta Chen's
Case Brief at 63. Ta Chen also insists that the health of the U.S.
industry has improved markedly since the original investigation in this
case. Id. at 64, citing Welded Stainless Steel Pipe From Malaysia, ITC
Pub. No. 2744 (March 1994).
According to Ta Chen, the Department erred by disregarding
independent sources for more probative dumping margins for use as facts
available. Ta Chen suggests that petitioners in the investigation of
welded stainless steel pipe from Malaysia testified to the
International Trade Commission that the imposition of antidumping
duties on WSSP from Taiwan had effectively eliminated dumping by
Taiwanese producers. See ITC Pub. No. 2744 (Final) (March 1994). In a
similar vein, Ta Chen cites the testimony of an official of Bristol
Metals, a U.S. producer of WSSP, insisting that ``Taiwan imports have
been checked by the antidumping laws.'' Ta Chen's Case Brief at 67,
quoting from Economic Effects of Antidumping and Countervailing Duty
Orders and Suspension Agreements, ITC Pub. No. 2900 (June 1995). Ta
Chen argues that these statements offered by representatives of the
U.S. pipe industry ``support a [zero] percent dumping finding for Ta
Chen.'' Id. at 68. Furthermore, Ta Chen suggests that these statements,
coming after the original petition in this case, are more indicative of
present market conditions. Ta Chen also cites to statements submitted
by Ta Chen into the record of this review, one from the same individual
from Bristol Metals, and another by a U.S. purchaser of WSSP and
stainless steel butt-weld pipe fittings, both claiming that Ta Chen was
not dumping at 31.90 percent margins through Company A and Company B.
Ta Chen also suggests that the failure of petitioners in this case
to request a review of Ta Chen for the first three PORs is indicative
of petitioners' belief that Ta Chen is not dumping WSSP into the U.S.
market. ``By reason of their failure to act, it is a fair inference
that the [petitioners] do not believe that Ta Chen is dumping in the
USA beyond the previously found dumping margin( ) of 3.27%.'' Ta
Chen's Case Brief at 69.
Ta Chen next turns to what it views as ``other independent
sources'' for Ta Chen's dumping margins. Ta Chen notes that for its
remaining U.S. sales, the Department's preliminary margin calculation
found dumping margins of zero percent. Ta Chen submits that similar
analysis in the first two PORs will, likewise, result in margins of
zero percent. Finally, Ta Chen suggests, the Department could turn to
antidumping proceedings in other countries as evincing Ta Chen's
``proclivity not to dump.'' Ta Chen cites to a margin of 3.5 percent
found in an Australian investigation of WSSP, and zero percent margins
found in similar investigations conducted by Canada and the European
Union. Further, in its investigation of Class 150 Pound Fittings From
Taiwan, Ta Chen notes, the Department found a
[[Page 37554]]
zero-percent margin for Ta Chen. Ta Chen suggests using these margins
to determine the facts available margin to apply in this third
administrative review.
Further, Ta Chen argues, since it is a fungible, commodity product,
the market for A-312 WSSP is driven primarily by price. Had Ta Chen
been dumping through Company B at 31.90 percent margins, Ta Chen
reasons, ``there would have been a ``giant sucking sound,'' as all the
business went to Company B. There was no such sound.'' Ta Chen's Case
Brief at 75. Finally, Ta Chen asserts that petitioners have
consistently overestimated the actual margins in cases involving
Taiwan. As proof of this, Ta Chen notes that the final margins
published in the Department's LTFV determination were consistently much
lower than those originally presented in the petition. Therefore, a
margin drawn from the petition should not serve as the basis for facts
available in the instant review.
Petitioners counter that the URAA ``expressly approves of the use
of data from the petition and an original investigation's final
determination for facts available,'' and note that the LTFV
investigation is the only source of margins for use as facts available.
Petitioners maintain that ``[t]he Department is not required to conduct
an economic analysis of the industry whenever it determines that
dumping margins should be based on facts available,'' and argues that
Ta Chen's citations to ITC testimony in an unrelated case, and to
antidumping proceedings in other nations, are ``not relevant.'' Noting
that the Department has not completed either the first or second
administrative reviews in this case, petitioners aver that the
Department has little choice but to turn to the highest margin from the
original LTFV investigation (i.e., 31.90 percent) as adverse facts
available. Petitioners also dismiss Ta Chen's argument that petitioners
themselves have concluded that Ta Chen was not selling merchandise at
dumped prices during the instant POR. Ta Chen's argument, petitioners
insist, is based upon statements made before the ITC in an injury
investigation concerning pipe from Malaysia; that proceeding had
nothing to do with calculating dumping margins with respect to sales of
WSSP from Taiwan.
Petitioners also dismiss Ta Chen's argument that the 31.90 percent
margin is flawed because this margin is significantly higher than the
calculated rates for respondents during the LTFV proceeding.
Petitioners aver that ``cooperative respondents that timely and
completely submit verifiable data are entitled to whatever rates
result,'' whereas in the instant case, Ta Chen has ``lie(d) to the
Department and * * * fraudulently pose[d] as being cooperative.''
Where, as here, the Department has determined that the withholding of
information is deliberate, petitioners stress, the Department has ``
`heavily favored using alternative ``best information available'' least
favorable to a respondent.' '' Petitioners' Rebuttal Brief at 48
(quoting from Chinsung Industries Co., Ltd. v. United States, 705 F.
Supp. 598, 600 (CIT 1989)). Furthermore, petitioners argue, use of the
highest margin from the LTFV investigation is fully consistent with the
Department's longstanding practice of applying a two-tiered BIA
methodology whereby an uncooperative respondent will receive a higher
margin than would a respondent who genuinely cooperated with the
Department but failed to timely submit requested factual information.
Finally, petitioners argue that in the absence of rates issuing from
any administrative review the highest margin from the LTFV
investigation stands as ``most probative of current conditions.''
Reliance upon Ta Chen's own rate from the original investigation,
petitioners maintain, would ``essentially reward Ta Chen for
withholding information from the Department.'' Id. at 49.
Department's Position: We agree with petitioners and disagree, in
part, with Ta Chen. We cannot accede to Ta Chen's suggestion that we
apply its existing cash deposit rate as adverse facts available, as
this would amount to rewarding Ta Chen for its failure to disclose
essential facts to the Department and to report the proper body of its
U.S. sales. Were we to consider Ta Chen's existing margin, which was
calculated in a segment of these proceedings wherein Ta Chen was deemed
cooperative and its responses fully verified, as adverse facts
available, we would effectively cede control of this review to Ta Chen.
The respondent would be free to submit selective, misleading, or
inaccurate information, secure in its knowledge that the worst fate it
could expect would be to receive its existing cash deposit rate as
facts available. See Olympic Adhesives, Inc. v. United States, 899 F.2d
1565, 1571 (Fed. Cir. 1990). As the Court stated in Industria de
Fundicao Tupy, et al. v. United States 936 F. Supp 1009 (CIT 1996),
``the Court will not allow respondent to cap its antidumping rate by
refusing to provide updated information to the (the Department).''
Similarly, margins from other Departmental proceedings or from Canadian
or European antidumping cases, wherein Ta Chen cooperated fully, are
likewise irrelevant to this third administrative review where Ta Chen
impeded our investigation. Contrary to Ta Chen's suggested approach,
our aim in selecting facts available for non-cooperative respondents is
to choose a margin which is sufficiently adverse ``to induce
respondents to provide (the Department) with complete and accurate
information in a timely fashion.'' See National Steel Corp., et al., v.
United States, 13 F. Supp 593 (CIT 1996).
We also reject Ta Chen's assertion that the 31.90 percent facts
available margin is inappropriate because it was drawn from an earlier
segment of these proceedings. In Mitsuboshi Belting Corp., Ltd. v.
United States, the Court, relying upon the findings in Rhone Poulenc
Inc. v. United States (899 F.2d 1185 (Fed Cir. 1990)), found that the
Department's use of a margin drawn from a LTFV investigation was
reasonable and, further, that ``best information'' doesn't necessarily
mean ``most recent information.'' The Court also rejected plaintiff's
claim that the Department's choice of BIA was unreasonably harsh:
to be properly characterized as ``punitive,'' the agency would have
had to reject low margin information in favor of high margin
information that was demonstrably less probative of current
conditions. Here, the agency only presumed that the highest prior
margin was the best information of current margins. * * * We believe
a permissible interpretation of the statute allows the agency to
make such a presumption and that the presumption is not
``punitive.'' Rather, it reflects a common sense inference that the
highest prior margin is the most probative evidence of current
margins because, if it were not so, the importer, knowing of the
rule, would have produced current information showing the margin to
be less.
Mitsuboshi Belting Ltd. and MBL (USA) Corp. v. United States., Court
No. 93-09-00640 (CIT March 12, 1997).
Likewise, in Sugiyama Chain Co., Ltd. et al., v. United States, the
defendant contested our selection of best information available as
having no probative value concerning Sugiyama's current margins because
the rate taken from the LTFV investigation had ``only a tenuous link to
Sugiyama Chain's margins in the instant review.'' The Court approved of
our use of the highest prior margin as BIA, noting that the Department
``can make a common sense inference --indeed, there is a rebuttable
presumption--that the highest prior margin is the most probative
evidence indicative of the current margin.'' Sugiyama Chain Co., Ltd.,
et al. v.
[[Page 37555]]
United States, 13 CIT 218; see also Rhone Polenc, Inc., et al. v.
United States, 710 F. Supp. 341 (CIT 1989) (``There is no mention in
the statute or regulations that the best information available is the
most recent information available.''). Furthermore, our use of a margin
drawn from data supplied by the petitioners comports fully with section
776(b) of the 1995 Tariff Act.
In addition, we note that in the instant review we have calculated
individual transaction margins for Ta Chen which are comparable to the
31.90 percent, which was chosen from the LTFV investigation as facts
available. See the Department's Final Margin Program, ``Minimum and
Maximum Margins.'' Thus, we have available contemporaneous and
calculated margins, based on Ta Chen's own third POR data, which serve
to corroborate the petition margin, and which reflect Ta Chen's
practices during this third administrative review. For the purpose of
these final results, therefore, we have continued to use 31.90 percent
as adverse facts available.
As to Ta Chen's comments regarding the present state of the market
for Taiwanese stainless steel pipe, we find these comments irrelevant
in this review. Ta Chen stresses its claim that the antidumping duty
order has driven other Taiwanese pipe producers from the playing field,
eliminating the need for Ta Chen to sell WSSP at less than normal
value. However, Ta Chen's continued presence in the United States
market cannot be seen as indicative that it has not engaged in dumping
of WSSP in this country.
We also find inapposite Ta Chen's argument that, since petitioners
did not request this third review, petitioners are satisfied with Ta
Chen's existing cash deposit rate. Whether or not petitioners requested
this review is, at this point, irrelevant, and cannot be construed in
any way as evidence of Ta Chen's present dumping activities, or lack
thereof. Furthermore, any number of factors may lead a domestic
industry to eschew the administrative review process, including, for
example, insufficient resources to participate in a review, or a belief
that it cannot ``prevail'' in an administrative review.
Finally, as to ``Ta Chen's proclivity not to dump,'' Ta Chen could
best have demonstrated such proclivity by extending its full
cooperation in the first three reviews of this antidumping duty order.
We can only conclude in this third review, as we have preliminarily
determined in the first and second reviews, that Ta Chen's refusal to
provide the complete body of appropriate U.S. sales, as requested, is
because these sales represent significant dumping margins. As it is,
the Department has no choice but to make the negative inference
specifically called for by the facts available provisions of the Tariff
Act.
Comment Five: Petitioners argue that if the Department continues to
use the bulk of Ta Chen's sales data for its final results of review,
the Department must adjust its cost-of-production (COP) test to account
for import duties paid by Ta Chen on its imports of stainless steel
coil (the raw material used in the production of A-312 welded stainless
steel pipe). According to petitioners, the Department in its
preliminary results increased U.S. price by the amount of home market
import duties rebated or not collected by reason of exportation of the
finished WSSP to the United States. This was necessary, petitioners
suggest, because Ta Chen's home market prices were inclusive of import
duties. However, Ta Chen's COP data were reported exclusive of import
duties, because Ta Chen's mill is a customs bonded facility. The
Department, therefore, compared COP amounts which do not include import
duties to home market prices which do. This had the effect, petitioners
conclude, of ``understating the extent that Ta Chen's home market sales
were made at prices that were below the cost of production.''
Petitioners' Case Brief at 14. Petitioners suggest that the Department
either deduct home market import duties from home market sales prices,
or add these duties to Ta Chen's reported COP prior to conducting our
cost test.
In rebuttal, Ta Chen confirmed that it paid import duties on
imports of stainless steel coil, and that its home market prices
include these import duties.
Department's Position: We agree with petitioners. In conducting our
cost test, we inadvertently compared net home market prices inclusive
of import duties on stainless steel to COP totals exclusive of these
duties. We have adjusted our calculation of the net home market price
used in our COP test to deduct the amount of the import duties.
Comment Six: Ta Chen urges the Department to correct two ``clerical
errors'' in the preliminary results margin program. The first involves
the Department's calculation of Ta Chen's COP. Ta Chen suggests that
the Department inadvertently double-counted Ta Chen's indirect selling
expenses in calculating total COP. The preliminary margin program
includes two variables, ISELCOP and INDSELEX, both of which represent
indirect selling expenses. At different points in the preliminary
margin program, Ta Chen notes, the Department added both to Ta Chen's
COP, thereby overstating these expenses.
Ta Chen also argues that the Department double-counted Ta Chen's
U.S. packing expenses by subtracting these expenses from U.S. price
while adding them to foreign unit price in dollars (FUPDOL). Ta Chen
suggests altering the calculation of net U.S. price to eliminate the
deduction for U.S. packing expenses.
Department's Position: We agree with Ta Chen on both points. With
respect to indirect selling expenses, we inadvertently double-counted
these expenses in calculating Ta Chen's COP. As for packing expenses,
we erroneously subtracted these from U.S. price while simultaneously
adding them to FUPDOL. We have corrected both errors for these final
results of review.
Comment Seven: Ta Chen maintains that it has not been dumping for
three consecutive periods of review and, therefore, requests that the
Department revoke Ta Chen from the antidumping duty order covering
welded stainless steel pipe from Taiwan.
Petitioners, in a footnote in their rebuttal brief, maintain that,
``viewed overall,'' Ta Chen's behavior throughout these proceedings
demonstrates that Ta Chen is not entitled to revocation from the
antidumping duty order.
Department's Position: Given the existence of a calculated margin
for Ta Chen in these third review final results, we determine that Ta
Chen has not met the requirements of three consecutive years of zero
(or de minimus) margins as called for in section 19 CFR 353.25 of the
Department's regulations. Therefore, we cannot consider a partial
revocation of the antidumping duty order as to Ta Chen at this time.
Comment Eight: Ta Chen, noting the three ongoing administrative
reviews of WSSP, asks that the Department use the final results dumping
margin from the third administrative review to establish Ta Chen's cash
deposit rate for future entries of subject merchandise. Ta Chen cites
the Department's approach in Silicon Metal From Brazil, where the
Department issued final results of several ongoing reviews
simultaneously, using the margins calculated for the most recent POR as
the respondents' new cash deposit rates.
Petitioners argue that the Department should assign Ta Chen a
margin in all three administrative reviews of 31.90 percent as total
adverse facts available, thus obviating the need to address the issue
of which final results margin should establish Ta Chen's new cash
deposit rate.
[[Page 37556]]
Department's Position: Consistent with past Departmental practice,
we will use as Ta Chen's new cash deposit rate the weighted-average
dumping margin found in these final results of the third POR. Our
practice is to adopt the dumping margin from the final results for the
most recent POR to serve as a respondent's new cash deposit rate.
Final Results of Review
Based on our review of the arguments presented above, for these
final results we have made changes in our margin calculations for Ta
Chen. After comparison of Ta Chen's EP to normal value (NV), we have
determined that Ta Chen's weighted-average margin for the period
December 1, 1994 through November 30, 1995 is 6.06 percent.
The Department shall determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between U.S. price and NV may vary from the percentage
stated above. The Department will issue appraisement instructions
directly to Customs.
Furthermore, the following deposit requirements will be effective
upon completion of the final results of this administrative review for
all shipments of WSSP from Taiwan entered, or withdrawn from warehouse,
for consumption on or after the publication of the final results of
this administrative review, as provided in section 751(a)(1) of the
Tariff Act:
(1) The cash deposit rate for Ta Chen will be the rate established
in the final results of this administrative review;
(2) For previously reviewed or investigated companies other than Ta
Chen, the cash deposit rate will continue to be the company-specific
rate published for the most recent period;
(3) If the exporter is not a firm covered in this review, a prior
review, or the 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
(4) If neither the exporter nor the manufacturer is a firm covered
in this or any previous review conducted by the Department, the cash
deposit rate will be 19.84 percent. See Amended Final Determination and
Antidumping Duty Order; Certain Welded Stainless Steel Pipe From
Taiwan, 57 FR 62300 (December 30, 1992).
All U.S. sales by the respondent Ta Chen will be subject to one
deposit rate according to the proceeding. The cash deposit rate has
been determined on the basis of the selling price to the first
unrelated customer in the United States. For appraisement purposes,
where information is available, we will use the entered value of the
subject merchandise to determine the appraisement rate.
This notice 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). Timely written notification of
the return or 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 this notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: July 8, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18448 Filed 7-11-97; 8:45 am]
BILLING CODE 3510-DS-P
