[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Notices]
[Pages 41218-41224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19304]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-847]
Preliminary Determination of Sales at Less Than Fair Value:
Certain Cut-to-Length Carbon-Quality Steel Plate Products From Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: July 29, 1999.
FOR FURTHER INFORMATION CONTACT: Mark Manning or Wendy J. Frankel,
Office 4, Group II, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
3936 or (202) 482-5849, respectively.
The Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (``the Act'') by
the Uruguay Round Agreements Act (``URAA''). In addition, unless
otherwise indicated, all references are made to the Department's
regulations at 19 CFR Part 351 (1998).
Preliminary Determination
We preliminarily determine that certain cut-to-length carbon-
quality steel
[[Page 41219]]
plate products (``CTL plate'') from Japan are being, or are likely to
be, sold in the United States at less than fair value (``LTFV''), as
provided in section 733 of the Act. The estimated margins of sales at
LTFV are shown in the ``Suspension of Liquidation'' section of this
notice.
Case History
Since the initiation of this investigation (Notice of Initiation of
Antidumping Investigations: Certain Cut-To-Length Carbon-Quality Steel
Plate from Czech Republic, France, India, Italy, Japan, Republic of
Korea, and Former Yugoslav Republic of Macedonia (64 FR 12959, March
16, 1999)) (``Initiation Notice''), the following events have occurred:
In their petition, the petitioners 1 identified Kawasaki
Steel Corporation (``Kawasaki''), Kobe Steel, Ltd. (``Kobe''), Nippon
Steel Corporation (``Nippon''), NKK Corporation (``NKK''), and Sumitomo
Metal Industries, Ltd. (``Sumitomo'') as possible exporters of CTL
plate from Japan. Though we requested on March 12, 1999, data on all
producers and exporters of the subject merchandise during the period of
investigation (``POI'') from the U.S. embassy in Tokyo, the U.S.
embassy was unable to provide us with any additional information on
producers or exporters of the subject merchandise to the United States.
Based on information contained in the petition, the Department issued
antidumping questionnaires to Kawasaki, Kobe, Nippon, NKK, and Sumitomo
on March 17, 1999. 2
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\1\ The petitioners are Bethlehem Steel Corporation, Gulf States
Steel, Inc., IPSCO Steel Inc., Tuscaloosa Steel Corporation, the
United Steelworkers of America, and the U.S. Steel Group (a unit of
USX Corporation).
\2\ Section A of the questionnaire requested general information
concerning the company's corporate structure and business practices,
the merchandise under investigation that it sells, and the sales of
that merchandise in all markets. Sections B and C of the
questionnaire requested home market sales listings and U.S. sales
listings. Section D of the questionnaire requested information
regarding the cost of production of the foreign like product and the
constructed value of the merchandise under investigation. Section E
of the questionnaire requested information regarding the cost of
further manufacture or assembly performed in the United States.
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In April 1999, the United States International Trade Commission
(``ITC'') issued an affirmative preliminary injury determination in
this case (see ITC Investigation No. 731-TA-815-822). Also, the
Department received a response to all applicable sections of the
questionnaire from Kawasaki and responses to question 1.a.1. of Section
A from Kobe, NKK, and Sumitomo. On April 12, 1999, Nippon submitted a
letter stating that it would not be responding to the Department's
antidumping questionnaire. On April 26, 1999, Sumitomo submitted a
letter to the Department stating that it would not be providing any
further questionnaire responses with respect to this antidumping
investigation. Kobe and NKK did not respond further to the Department's
requests for information.
On April 26, 1999, the Department published its preliminary
determination of critical circumstances for certain cut-to-length
carbon-quality steel plate from Japan. In that determination, we
preliminarily found that there is a reasonable basis to believe or
suspect that critical circumstances exist for imports of CTL plate from
Japan. See Preliminary Determination of Critical Circumstances: Certain
Cut-To-Length Carbon-Quality Steel Plate From Japan (April 26, 1999),
64 FR 2025.
On April 26, 1999, Kawasaki requested that it be allowed to exclude
certain home market sales made during the period of investigation
(``POI''), of merchandise produced at Kawasaki's universal mill at
Mizushima and its hot-strip mill at Chiba, from its home market sales
listing. Kawasaki further requested that it be excused from reporting
the costs associated with producing this same merchandise.
Kawasaki stated that these sales constitute an insignificant amount
of its total home market sales, that subject merchandise produced at
these two mills was not sold in the United States, and that no
merchandise identical to that produced at these mills was sold in the
United States. Kawasaki stated that it would be very difficult and
burdensome to report the costs associated with the production of
subject merchandise at these facilities, especially in light of the
fact that the relevant sales represent such an insignificant portion of
sales during the POI. On May 14, 1999, the Department denied Kawasaki's
request with respect to the sales of subject merchandise produced at
the universal mill at Mizushima and the hot-strip mill at Chiba, and
instructed Kawasaki to include these sales in its home market sales
listing. However, on June 15, 1999, the Department granted Kawasaki's
request not to report costs of producing merchandise associated with
these two facilities. In granting this request, the Department notified
Kawasaki that the Department reserves the right to request additional
information concerning these costs and that in the event that we find
that there is a need to use the cost data, we may rely on the facts
available, as required by section 776 of the Act, including, if
appropriate, adverse inferences.
We issued supplemental questionnaires for Sections A, B, C and D to
Kawasaki in May 1999 and received responses to these questionnaires
along with revised home market and U.S. sales listings in June 1999. In
June 1999, Kawasaki submitted clarifications to its responses and the
petitioners submitted comments for the Department's consideration in
the preliminary determination. In July 1999, Kawasaki submitted
additional clarifications to its responses. Also, the petitioners
submitted further comments for the Department's consideration in the
preliminary determination.
Facts Available
Section 776(a)(2) of the Act provides that ``if an interested party
or any other person--(A) withholds information that has been requested
by the administering authority; (B) fails to provide such information
by the deadlines for the submission of the information or in the form
and manner requested, subject to subsections (c)(1) and (e) of section
782; (C) significantly impedes a proceeding under this title; or (D)
provides such information but the information cannot be verified as
provided in section 782(i), the administering authority * * * shall,
subject to section 782(d), use the facts otherwise available in
reaching the applicable determination under this title.''
Moreover, section 776(b) of the Act provides that adverse
inferences may be used when a party has failed to cooperate by not
acting to the best of its abilities to comply with a request for
information. Kobe, Nippon, NKK, and Sumitomo all declined to respond to
the Department's antidumping questionnaire. Because these respondents
have withheld requested information, we must use facts available, in
accordance with section 776(a) of the Act. We have also determined that
these respondents have not cooperated to the best of their abilities.
Therefore, pursuant to 776(b) of the Act, we used an adverse inference
in selecting a margin from the facts available. As facts available, the
Department has applied a margin rate of 59.12 percent, the highest
alleged margin in the petition.
Section 776(c) of the Act provides that where the Department
selects from among the facts otherwise available and relies on
``secondary information,'' such as the petition, the Department shall,
to the extent practicable, corroborate that information from
independent sources reasonably at the Department's disposal. The
Statement of Administrative Action
[[Page 41220]]
accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994)
(hereinafter, the ``SAA'') states that ``corroborate'' means to
determine that the information used has probative value. See SAA at
870.
In this proceeding, we considered the petition information the most
appropriate record information to use to establish the dumping margins
for these uncooperative respondents. In accordance with section 776(c)
of the Act, we sought to corroborate the data contained in the
petition. We reviewed the adequacy and accuracy of the information in
the petition during our pre-initiation analysis of the petition, to the
extent appropriate information was available for this purpose (e.g.,
import statistics and foreign market research reports). See Initiation
Notice.
For purposes of the preliminary determination, we attempted to
corroborate the information in the petition. We reexamined the export
price and CV data which formed the basis for the highest margin in the
petition in light of information obtained during the investigation and,
to the extent practicable, found that it has probative value (see the
July 19, 1999, memorandum to the file regarding Corroboration of the
Petition Data, on file in the Central Records Unit (CRU) of the Main
Commerce Department building).
Scope of Investigation
The products covered by the scope of this investigation are certain
hot-rolled carbon-quality steel: (1) Universal mill plates (i.e., flat-
rolled products rolled on four faces or in a closed box pass, of a
width exceeding 150 mm but not exceeding 1250 mm, and of a nominal or
actual thickness of not less than 4 mm, which are cut-to-length (not in
coils) and without patterns in relief), of iron or non-alloy-quality
steel; and (2) flat-rolled products, hot-rolled, of a nominal or actual
thickness of 4.75 mm or more and of a width which exceeds 150 mm and
measures at least twice the thickness, and which are cut-to-length (not
in coils). Steel products to be included in this scope are of
rectangular, square, circular or other shape and of rectangular or non-
rectangular cross-section where such non-rectangular cross-section is
achieved subsequent to the rolling process (i.e., products which have
been ``worked after rolling'')--for example, products which have been
beveled or rounded at the edges. Steel products that meet the noted
physical characteristics that are painted, varnished or coated with
plastic or other non-metallic substances are included within this
scope. Also, specifically included in this scope are high strength, low
alloy (HSLA) steels. HSLA steels are recognized as steels with micro-
alloying levels of elements such as chromium, copper, niobium,
titanium, vanadium, and molybdenum. Steel products to be included in
this scope, regardless of Harmonized Tariff Schedule of the United
States (HTSUS) definitions, are products in which: (1) Iron
predominates, by weight, over each of the other contained elements, (2)
the carbon content is two percent or less, by weight, and (3) none of
the elements listed below is equal to or exceeds the quantity, by
weight, respectively indicated: 1.80 percent of manganese, or 1.50
percent of silicon, or 1.00 percent of copper, or 0.50 percent of
aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or
0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of
tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or
0.41 percent of titanium, or 0.15 percent of vanadium, or 0.15 percent
zirconium. All products that meet the written physical description, and
in which the chemistry quantities do not equal or exceed any one of the
levels listed above, are within the scope of these investigations
unless otherwise specifically excluded. The following products are
specifically excluded from these investigations: (1) Products clad,
plated, or coated with metal, whether or not painted, varnished or
coated with plastic or other non-metallic substances; (2) SAE grades
(formerly AISI grades) of series 2300 and above; (3) products made to
ASTM A710 and A736 or their proprietary equivalents; (4) abrasion-
resistant steels (i.e., USS AR 400, USS AR 500); (5) products made to
ASTM A202, A225, A514 grade S, A517 grade S, or their proprietary
equivalents; (6) ball bearing steels; (7) tool steels; and (8) silicon
manganese steel or silicon electric steel.
The merchandise subject to these investigations is classified in
the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030,
7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000,
7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045,
7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050,
7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000,
7226.91.8000, 7226.99.0000.
Although the HTSUS subheadings are provided for convenience and
Customs purposes, the written description of the merchandise under
investigation is dispositive.
Scope Comments
As stated in our notice of initiation, we set aside a period for
parties to raise issues regarding product coverage. In particular, we
sought comments on the specific levels of alloying elements set out in
the description above, the clarity of grades and specifications
excluded from the scope, and the physical and chemical description of
the product coverage.
On March 29, 1999, Usinor, a respondent in the French antidumping
and countervailing duty investigations and Dongkuk Steel Mill Co., Ltd.
and Pohang Iron and Steel Co., Ltd., respondents in the Korean
antidumping and countervailing duty investigations (collectively ``the
Korean respondents''), filed comments regarding the scope of the
investigations on CTL plate and the Department's model matching
criteria. On April 14, 1999, the petitioners filed rebuttal comments
regarding model matching. In addition, on May 17, 1999, ILVA SpA
(``ILVA''), a respondent in the Italian antidumping and countervailing
duty investigations, requested guidance on whether certain products are
within the scope of these investigations.
Usinor requested that the Department modify the scope to exclude:
(1) Plate that is cut to non-rectangular shapes or that has a total
final weight of less than 200 kilograms; and (2) steel that is 4'' or
thicker and which is certified for use in high-pressure, nuclear or
other technical applications; and (3) floor plate (i.e., plate with
``patterns in relief'') made from hot-rolled coil. Further, Usinor
requested that the Department provide clarification of scope coverage
with respect to what it argues are over-inclusive HTSUS subheadings
included in the scope language.
The Department has not modified the scope of these investigations
because the current language reflects the product coverage requested by
the petitioners, and Usinor's products meet the product description.
With respect to Usinor's clarification request, we do not agree that
the scope language requires further elucidation with respect to product
coverage under the HTSUS. As indicated in the scope section of every
Department antidumping and countervailing duty proceeding, the HTSUS
subheadings are provided for convenience and Customs purposes only; the
written description of the merchandise under investigation or review is
dispositive.
The Korean respondents requested confirmation whether the maximum
alloy percentages listed in the scope
[[Page 41221]]
language are definitive with respect to covered HSLA steels.
At this time, no party has presented any evidence to suggest that
these maximum alloy percentages are inappropriate. Therefore, we have
not adjusted the scope language. As in all proceedings, questions as to
whether or not a specific product is covered by the scope and, hence,
must be reported, should be timely raised with Department officials.
ILVA requested guidance on whether certain merchandise produced
from billets is within the scope of the current CTL plate
investigations. According to ILVA, the billets are converted into wide
flats and bar products (a type of long product). ILVA notes that one of
the long products, when rolled, has a thickness range that falls within
the scope of these investigations. However, according to ILVA, the
greatest possible width of these long products would only slightly
overlap the narrowest category of width covered by the scope of the
investigations. Finally, ILVA states that these products have different
production processes and properties than merchandise covered by the
scope of the investigations and therefore are not covered by the scope
of the investigations.
As ILVA itself acknowledges, the particular products in question
appear to fall within the parameters of the scope and, therefore, we
are preliminarily treating them as covered merchandise for purposes of
these investigations.
Period of Investigation
The POI is January 1, 1998, through December 31, 1998.
Fair Value Comparisons
To determine whether sales of CTL plate from Japan to the United
States were made at less than fair value, we compared the export price
(``EP'') or constructed export price (``CEP'') to the Normal Value
(``NV''), as described in the ``Export Price and Constructed Export
Price'' and ``Normal Value'' sections of this notice, below. In
accordance with section 777A(d)(1)(A)(i) of the Act, we calculated
weighted-average EPs and CEPs for comparison to weighted-average NVs.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by Kawasaki covered by the description in the ``Scope
of Investigation'' section, above, and sold in Japan during the POI to
be foreign like products for purposes of determining appropriate
product comparisons to U.S. sales. We compared U.S. sales to sales made
in the home market, where appropriate. Where there were no sales of
identical merchandise in the home market made in the ordinary course of
trade to compare to U.S. sales, we compared U.S. sales to sales of the
most similar foreign like product made in the ordinary course of trade.
In making the product comparisons, we matched foreign like products
based on the physical characteristics reported by the respondents in
the following order of importance (which are identified in Appendix V
of the questionnaire): painting, quality, grade specification, heat
treatment, nominal thickness, nominal width, patterns in relief, and
descaling.
Because Kawasaki had no sales of non-prime merchandise in the
United States during the POI, we did not use home market sales of non-
prime merchandise in our product comparisons (see, e.g., Final
Determination of Sales at Less Than Fair Value: Stainless Steel Wire
Rod from Sweden (63 FR 40449, 40450, July 29, 1998) (``SSWR'')).
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (``LOT'') as the EP or CEP transaction. The NV
LOT is that of the starting-price sales in the comparison market or,
when NV is based on constructed value (``CV''), that of the sales from
which we derive selling, general and administrative (``SG&A'') expenses
and profit. With respect to U.S. price or EP transactions, the LOT is
also the level of the starting-price sale, which is usually from the
exporter to the importer. For CEP, the LOT is the level of the
constructed sale from the exporter to the importer.
To determine whether NV sales are at a different LOT than EP or
CEP, we examined stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison-market sales are at a
different LOT and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison-market sales at the LOT of
the export transaction, we make a LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is
more remote from the factory than the CEP level and there is no basis
for determining whether the difference in the levels between NV and CEP
affects price comparability, we adjust NV under section 773(a)(7)(B) of
the Act (the CEP-offset provision). See Notice of Final Determination
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel
Plate from South Africa, 62 FR 61731 (November 19, 1997).
Kawasaki reported two customer categories (i.e., trading companies
and original equipment manufacturers) and what it claimed were three
channels of distribution (i.e., sales to unaffiliated trading
companies, direct sales to original equipment manufacturers, and sales
to an affiliated trading company, Kawasho Corporation (``Kawasho
Japan'')) for its home market sales. Kawasaki reported EP and CEP sales
in the U.S. market. For EP sales, Kawasaki reported one customer
category and one channel of distribution (i.e., direct sales to
unaffiliated Japanese trading companies, for sale to the U.S. market).
Kawasaki claimed in its response that its EP sales were made at the
same LOT as home market sales to unaffiliated trading companies. For
this reason, Kawasaki has not asked for a LOT adjustment to NV for
comparison to its EP sales. For CEP sales, Kawasaki reported one
customer category and one channel of distribution (i.e., Kawasaki sales
through Kawasho International (``KI''), which is the U.S. affiliate of
Kawasho Japan, Kawasaki's affiliated trading company that sells in the
home market and, for U.S. sales purposes, to KI). Kawasaki stated that
there is no LOT in the home market that is comparable to the CEP LOT in
the United States. Kawasaki claims that when comparing the selling
activities of Kawasaki's affiliated trading company, Kawasho Japan, for
home market sales (channel three) and for CEP sales, Kawasho provides a
higher level of selling services in home market than for CEP sales.
Kawasaki asserts that because Kawasho performs greater selling
activities in the home market, Kawasho incurs higher selling expenses
for home market sales. In addition, Kawasaki argues that the home
market LOTs are more remote (further from production) than the CEP LOT.
Kawasaki stated that since there is no comparable LOT in the home
market, it could not demonstrate a pattern of consistent differences in
price due to sales at different LOTs in the home market and therefore
did not claim a LOT adjustment. Kawasaki has requested a CEP offset
instead.
In determining whether separate LOTs actually existed in the home
market and U.S. market, we examined whether Kawasaki's sales involved
different marketing stages (or their
[[Page 41222]]
equivalent) based on the channel of distribution, customer categories
and selling functions.
For sales in the home market we found that Kawasaki performed
essentially the same selling activities for each of the three channels
of distribution. These include: technical advice, warranty service,
advertising, marketing services, freight and delivery, warehousing,
inputting a specification control number, sales processing, rebate
administration, and demand forecasting. Based on our analysis of these
factors, we found that Kawasaki's home market sales comprise a single
LOT.
In analyzing Kawasaki's selling activities for its EP sales, we
noted that the sales involved basically the same selling functions
associated with the home market LOT described above. These selling
activities include technical advice, warranty service, advertising,
marketing services, inputting a specification control number, sales
processing, rebate administration, and demand forecasting. Therefore,
based upon this information, we have determined that the LOT for all EP
sales is the same as that in the home market.
Kawasaki failed to provide any factual support for its argument
that the LOT of its home market sales is more remote than the LOT of
its CEP sales. Our analysis indicates that the selling functions
performed at the CEP level are essentially the same as those performed
in the home market. Specifically, after having excluded selling
functions of its U.S. affiliate from our analysis, in accordance with
sections 772(d) and 773(a)(7)(A) of the Act, we determined that
Kawasaki and/or Kawasho Japan performed the following selling
activities for its CEP sales: technical advice, warranty service,
advertising, marketing services, freight and delivery, inputting a
specification control number, sales processing, and demand forecasting.
Therefore, based upon this analysis, we determine that Kawasaki's CEP
and home market sales are made at the same LOT.
Accordingly, because we find the U.S. sales and home market sales
to be at the same LOT, no LOT adjustment under section 773(a)(7)(A) and
no CEP offset pursuant to 773(a)(7)(B) of the Act are warranted.
Export Price and Constructed Export Price
Kawasaki reported as EP transactions sales of subject merchandise
sold to unaffiliated U.S. customers prior to importation through
multiple unaffiliated Japanese trading companies. Kawasaki reported as
CEP transactions sales of subject merchandise to an affiliated trading
company, Kawasho Japan, which resold the merchandise to KI (Kawasho
Japan's U.S. affiliate), which then resold the subject merchandise to
unaffiliated customers in the United States.
We calculated EP, in accordance with section 772(a) of the Act, for
those sales where the merchandise was sold to the first unaffiliated
purchaser in the United States prior to importation and CEP methodology
was not otherwise warranted, based on the facts of record. We based EP
on the packed FOB stowed and trimmed or FAS price to unaffiliated
purchasers in the United States, as appropriate. We made deductions to
the starting price for rebates, where applicable. We also made
deductions for movement expenses in accordance with section
772(c)(2)(A) of the Act; these included, where appropriate, foreign
inland freight, foreign brokerage and handling charges, and foreign
insurance.
We calculated CEP, in accordance with subsection 772(b) of the Act,
for those sales to the first unaffiliated purchaser that took place
after importation into the United States. We based CEP on the packed
ex-dock, duty paid, U.S. port prices to unaffiliated purchasers in the
United States. We made deductions from the starting price for movement
expenses in accordance with section 772(c)(2)(A) of the Act; these
included, where appropriate, foreign inland freight, foreign brokerage
and handling, foreign insurance, ocean freight, marine insurance, and
U.S. customs duties. In accordance with section 772(d)(1) of the Act,
we deducted those selling expenses associated with economic activities
occurring in the United States, including direct selling expenses
(credit costs, technical service costs and advertising expenses) and
indirect selling expenses (including inventory carrying costs). We also
made an adjustment for profit in accordance with section 772(d)(3) of
the Act.
Normal Value
After testing (1) home market viability, (2) whether sales to
affiliates were at arm's-length prices, and (3) whether home market
sales were at below-cost prices, we calculated NV as noted in the
``Price-to-Price Comparisons'' section of this notice.
1. Home Market Viability
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
the aggregate volume of home market sales of the foreign like product
is equal to or greater than five percent of the aggregate volume of
U.S. sales), we compared Kawasaki's volume of home market sales of the
foreign like product to the volume of U.S. sales of the subject
merchandise, in accordance with section 773(a)(1)(C) of the Act.
Because Kawasaki's aggregate volume of home market sales of the foreign
like product was greater than five percent of its aggregate volume of
U.S. sales for the subject merchandise, we determined that the home
market was viable for Kawasaki.
2. Affiliated-Party Transactions and Arm's-Length Test
Kawasaki is affiliated with two home market trading companies--
Kawasho Japan and a second trading company, which we will refer to as
company X. Kawasaki stated in its questionnaire responses that company
X, who purchases both Kawasaki-produced subject merchandise and subject
merchandise produced by other manufacturers, is unable to link its
sales of subject merchandise to unaffiliated home market customers with
its purchases of Kawasaki-produced subject merchandise. For this
reason, Kawasaki states that it is unable to report the downstream sale
from company X to the first unaffiliated home market customer.
Therefore, Kawasaki has reported only its sales to company X.
Kawasaki also stated that Kawasho sells subject merchandise to
several affiliated processors and resellers in the home market.
According to Kawasaki, these affiliated processors and resellers
purchase both Kawasaki-produced subject merchandise and subject
merchandise produced by other manufacturers. Kawasaki states that it
cannot report the downstream sales by these affiliates because these
companies do not link the original subject merchandise produced with
the product sold. For this reason, Kawasaki has reported only sales
from Kawasho to the affiliated processors and resellers.
Because Kawasaki is affiliated with company X and Kawasho's
affiliated processors and resellers, we applied the arm's-length test
to sales from Kawasaki to company X, and to sales made by Kawasho to
its affiliated processors and resellers, by comparing them to sales of
identical merchandise from Kawasaki to its unaffiliated home market
customers. If these affiliated party sales satisfied the arm's-length
test, we used them in our analysis. Sales to affiliated customers in
the home market which were not made at arm's-length prices were
excluded from our analysis because we considered them to be
[[Page 41223]]
outside the ordinary course of trade. See 19 CFR 351.102.
To test whether these sales were made at arm's-length prices, we
compared on a model-specific basis the starting prices of sales to
affiliated and unaffiliated customers net of all movement charges,
rebates, direct selling expenses, and home market packing. We added
interest revenue and billing adjustments to the gross unit price in the
amounts reported by Kawasaki. Where, for the tested models of subject
merchandise, prices to the affiliated party were on average 99.5
percent or more of the price to the unaffiliated parties, we determined
that sales made to the affiliated party were at arm's length. See 19
CFR 351.403(c) and 62 FR at 27355, Preamble--Department's Final
Antidumping Regulations (May 19, 1997). In instances where no price
ratio could be constructed for an affiliated customer because identical
merchandise was not sold to unaffiliated customers, we were unable to
determine that these sales were made at arm's-length prices and,
therefore, excluded them from our LTFV analysis. See SSWR at 63 FR
40451. Where the exclusion of such sales eliminated all sales of the
most appropriate comparison product, we made a comparison to the next
most similar model.
3. Cost of Production Analysis
In their petition, the petitioners submitted an allegation pursuant
to section 773(b) of the Act that Kawasaki and the other named
respondents had made sales in the home market at less than the cost of
production (``COP''). Our analysis of the allegation indicated that
there were reasonable grounds to believe or suspect that Kawasaki had
sold CTL plate in the home market at prices at less than the COP.
Accordingly, we initiated a COP investigation with respect to each
respondent to determine whether sales were made at prices less than the
COP pursuant to section 773(b) of the Act (see Initiation Notice at 64
FR 12959, 12963).
We conducted the COP analysis described below.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP
based on the sum of Kawasaki's cost of materials and fabrication for
the foreign like product, direct and indirect selling expenses, plus an
amount for home market SG&A, interest expenses, and packing costs.
Kawasaki produced a small quantity of subject merchandise at its
universal mill at Mizushima and its hot-strip mill at Chiba. According
to Kawasaki, both of these mills primarily produce non-subject
merchandise. For this reason, Kawasaki claimed that it would be
burdensome to calculate actual production costs for the subject
merchandise originating at these mills. After examining this issue, we
granted Kawasaki's request not to report the actual costs from both
mills, but required Kawasaki to report the standard costs for subject
merchandise produced at these mills. We made the following adjustments
to respondents' reported costs:
1. For certain models of merchandise produced at both the hot-strip
mill at Mizushima and the hot-strip mill at Chiba, we calculated
CONNUM-specific weighted-average total costs of manufacture (TOTCOM)
using the quantities produced at the respective mills and the actual
TOTCOMs from the Mizushima hot-strip facility and the standard costs
from the hot-strip mill at Chiba.
2. For certain CONNUMs of merchandise produced only at the
universal mill at Mizushima, and for additional other models of
merchandise produced only at the hot-strip mill at Chiba, we used as
the TOTCOM the standard costs for each product, as reported by
Kawasaki.
3. The Department requested in the antidumping questionnaire that
Kawasaki provide CONNUM-specific variable cost of manufacturing
(``VCOMH'') data for home market sales. For certain home market sales,
Kawasaki failed to provide this information. Therefore, we applied the
CONNUM-specific variable cost of manufacturing data that Kawasaki
reported in its cost of production database as the VCOMH for these
sales in Kawasaki's home market sales database.
4. Kawasaki failed to provide cost information for a small number
of home market sales. Our analysis of these sales indicates that none
are of a specification that would be considered identical or similar to
any specification sold in the U.S. market during the POI. For this
reason, none of these sales are eligible to be matched to a U.S. sale.
Consequently, we have not included them in our analysis.
B. Test of Home Market Sales Prices
We compared the weighted-average COP figures to home market sales
of the foreign like product as required under section 773(b) of the
Act, in order to determine whether these sales had been made at prices
below COP. In determining whether to disregard home market sales made
at prices less than the COP, we examined whether (1) within an extended
period of time, such sales were made in substantial quantities, and (2)
such sales were made at prices which permitted the recovery of all
costs within a reasonable period of time. On a product-specific basis,
we compared the COP to the home market prices, less any applicable
movement charges and rebates.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C), where less than 20 percent of
respondent's sales of a given product were at prices less than the COP,
we did not disregard any below-cost sales of that product because we
determined that the below-cost sales were not made in ``substantial
quantities.'' Where 20 percent or more of a respondent's sales of a
given product during the POI were at prices less than the COP, we
determined such sales to have been made in ``substantial quantities''
within an extended period of time in accordance with section
773(b)(2)(B) of the Act. In such cases, because we compared prices to
weighted-average COPs for the POI, we also determined that such sales
were not made at prices which would permit recovery of all costs within
a reasonable period of time, in accordance with section 773(b)(2)(D) of
the Act. Therefore, we disregarded the below-cost sales.
We found that, for certain grades of CTL plate, more than 20
percent of Kawasaki's home market sales within an extended period of
time were at prices less than COP. Further, the prices did not provide
for the recovery of costs within a reasonable period of time. We
therefore excluded these sales and used the remaining above-cost sales
as the basis for determining NV if such sales existed, in accordance
with section 773(b)(1) of the Act.
Price-to-Price Comparisons
We calculated NV based on delivered prices to unaffiliated
customers or prices to affiliated customers that we determined to be at
arm's-length prices, where appropriate. We added to the starting price
the amount Kawasaki reported for interest revenue and billing
adjustments. We made deductions, where appropriate, from the starting
price for rebates, inland freight, warehousing, and inland freight
insurance. We made adjustments for differences in the merchandise in
accordance with section 773(a)(6)(C)(ii) of the Act. In its
questionnaire responses, Kawasaki reported a certain fee it regularly
incurs as a rebate. We reclassified this fee as a direct expense
because the amount Kawasaki reported
[[Page 41224]]
under this category is for the fees Kawasaki paid to a service provider
rather than a rebate Kawasaki paid to its customers. We made
adjustments under section 773(a)(6)(C)(iii) of the Act for differences
in circumstances of sale for imputed credit expenses, advertising,
warranty expenses, technical service expenses, and the above-referenced
fee. Finally, we deducted home market packing costs and added U.S.
packing costs in accordance with section 773(a)(6)(A) and (B) of the
Act.
Currency Conversion
We made currency conversions into U.S. dollars based on the
exchange rates in effect on the dates of the U.S. sales as certified by
the Federal Reserve Bank.
Section 773A(a) of the Act directs the Department to use a daily
exchange rate in order to convert foreign currencies into U.S. dollars
unless the daily rate involves a fluctuation. It is the Department's
practice to find that a fluctuation exists when the daily exchange rate
differs from the benchmark rate by 2.25 percent. The benchmark is
defined as the moving average of rates for the past 40 business days.
When we determine a fluctuation to have existed, we substitute the
benchmark rate for the daily rate, in accordance with established
practice. Further, section 773A(b) of the Act directs the Department to
allow a 60-day adjustment period when a currency has undergone a
sustained movement. A sustained movement has occurred when the weekly
average of actual daily rates exceeds the weekly average of benchmark
rates by more than five percent for eight consecutive weeks. (For an
explanation of this method, see Policy Bulletin 96-1: Currency
Conversions (61 FR 9434, March 8, 1996).) Such an adjustment period is
required only when a foreign currency is appreciating against the U.S.
dollar. The use of an adjustment period was not warranted in this case
because the yen did not undergo a sustained movement.
Verification
As provided in section 782(i) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In April 1999, the Department made an early determination of
critical circumstances with respect to imports of subject merchandise
from Japan. See Preliminary Determination of Critical Circumstances:
Certain Cut-To-Length Carbon-Quality Steel Plate From Japan (April 26,
1999), 64 FR 2025. Thus, in accordance with section 733(e)(2) of the
Act, the Department will direct the U.S. Customs Service to suspend
liquidation of all entries of CTL plate from Japan, that are entered,
or withdrawn from warehouse, for consumption on or after 90 days prior
to the date of publication in the Federal Register of our preliminary
determination of sales at LTFV.
We will instruct the Customs Service to require a cash deposit or
the posting of a bond equal to the weighted-average amount by which the
NV exceeds the EP or CEP, as indicated in the chart below. These
suspension-of-liquidation instructions will remain in effect until
further notice. The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
Exporter/manufacturer average margin
percentage
------------------------------------------------------------------------
Kawasaki Steel Corporation.............................. 11.70
Kobe Steel, Ltd......................................... 59.12
Nippon Steel Corporation................................ 59.12
NKK Corporation......................................... 59.12
Sumitomo Metal Industries, Ltd.......................... 59.12
All Others.............................................. 11.70
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
Case briefs or other written comments in at least ten copies must
be submitted to the Assistant Secretary for Import Administration no
later than August 25, 1999, and rebuttal briefs no later than September
1, 1999. A list of authorities used and an executive summary of issues
should accompany any briefs submitted to the Department. Such summary
should be limited to five pages total, including footnotes. In
accordance with section 774 of the Act, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs. Tentatively, the hearing
will be held on September 13, 1999, time and room to be determined, at
the U.S. Department of Commerce, 14th Street and Constitution Avenue,
NW, Washington, DC 20230. Parties should confirm by telephone the time,
date, and place of the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the publication of this notice. Requests should
contain: (1) The party's name, address, and telephone number; (2) the
number of participants; and (3) a list of the issues to be discussed.
Oral presentations will be limited to issues raised in the briefs. If
this investigation proceeds normally, we will make our final
determination by no later than 75 days after the date of this
preliminary determination.
This determination is issued and published pursuant to sections
733(d) and 777(i)(1) of the Act.
Dated: July 19, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-19304 Filed 7-28-99; 8:45 am]
BILLING CODE 3510-DS-P
