[Federal Register Volume 59, Number 27 (Wednesday, February 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2995]


[[Page Unknown]]

[Federal Register: February 9, 1994]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-351-821]

 

Final Determination of Sales at Less Than Fair Value: Certain 
Carbon and Alloy Steel Wire Rod from Brazil

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

FOR FURTHER INFORMATION CONTACT: Ellen Grebasch or Erik Warga, Office 
of Antidumping Investigations, Import Administration, U.S. Department 
of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone (202) 482-3773 or 482-0922, respectively.

FINAL DETERMINATION: We determine that imports of certain carbon and 
alloy steel wire rod (``steel wire rod'') from Brazil are being, or are 
likely to be, sold in the United States at less than fair value (LTFV), 
as provided in section 735 of the Tariff Act of 1930, as amended (the 
Act). The estimated margins are shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since our November 19, 1993, preliminary determination (58 FR 
62636, November 29, 1993), the following events have occurred:
    On December 8, 1993, interested party Michelin Tire Corporation 
requested a public hearing.
    Petitioners (Connecticut Steel Corporation, Georgetown Steel 
Corporation, Keystone Steel & Wire Company, and North Star Steel Texas, 
Inc.), respondent Siderurgica Mendes Junior (``SMJ''), and other 
interested parties (``the Barnes Group''--comprised of Barnes Group 
Inc., Associated Spring, and NHK-Associated Spring Suspension 
Components Inc.--and Amercord Inc.) filed case briefs on January 5, and 
rebuttal briefs on January 10, 1994. The other mandatory respondent, 
Cia Siderurgica de Guanabara (``Cosigua''), did not file a brief or a 
rebuttal.
    A public hearing took place on January 12, 1994. At our request, 
interested parties in the companion investigation of wire rod from 
Canada also submitted case and rebuttal briefs and attended the hearing 
to discuss the scope of the three ongoing investigations of certain 
carbon and alloy steel wire rod.

Scope of Investigation

    The products covered by this investigation are hot-rolled carbon 
steel and alloy steel wire rod, in coils, of approximately round cross 
section, between 0.20 and 0.75 inches in solid cross-sectional 
diameter. The following products are excluded from the scope of this 
investigation:

     Steel; wore rod 5.5 mm or less in diameter, with 
tensile strength greater than or equal to 1040 MPa, and the 
following chemical content, by weight: carbon greater than or equal 
to 0.79%, aluminum less than or equal to 0.005%, phosphorous plus 
sulfur less than or equal to 0.040%, and nitrogen less than or equal 
to 0.006%;
     Free-machining steel containing 0.03% or more of lead, 
0.05% or more of bismuth, 0.08% or more of sulfur, more than 0.4% of 
phosphorus, more than 0.05% of selenium, and/or more than 0.01% of 
tellurium;
     Stainless steel rods, tool steel rods, free-cutting 
steel rods, sulfurized steel rods, ball bearing steel rods, high-
nickel steel rods, and concrete reinforcing bars and rods; and
     Wire rod 7.9 to 18 mm in diameter, containing 0.43 to 
0.73% carbon by weight, and having partial decarburization and seams 
no more than 0.75 mm in depth.

    The products under investigation are currently classifiable under 
subheadings 7213.31.3000, 7213.31.6000. 7213.39.0030, 7213.39.0090, 
7213.41.3000, 7213.41.6000, 7213.49.0030, 7213.49.0090, 7213.50.0020, 
7213.50.0040, 7213.50.0040, 7213.50.0080, 7227.20.0000, 7227.90.6000, 
and 7227.90.6050 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and customs purposes, our written description of the scope of this 
investigation is dispositive.

Period of Investigation

    The period of investigation is October 1, 1992, through March 31, 
1993.

Such or Similar Comparisons

    We have determined that the merchandise covered by this 
investigation constitutes a single category of ``such or similar'' 
merchandise.

Best Information Available

    Because both mandatory respondents failed to respond to our 
questionnaire, we based our determination on best information available 
(BIA) pursuant to section 776(c) of the Act.
    In determining what rate to use as BIA, the Department of Commerce 
(``the Department'') follows a two-tiered methodology, whereby the 
Department normally assigns lower margins to those respondents who 
cooperated in an investigation and margins based on more adverse 
assumptions for those respondents who did not cooperate in an 
investigation. According to the Department's two-tiered BIA methodology 
outlined in the Final Determination of Sales at Less Than Fair Value: 
Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled 
Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel 
Plate From Belgium, 58 FR 37083, (July 9, 1993), when a company refuses 
to provide the information requested in the form required, or otherwise 
significantly impedes the Department's investigation, it is appropriate 
for the Department to assign to that company the higher of (1) the 
margin alleged in the petition, or (2) the highest calculated rate of 
any respondent in the investigation. Because there were no cooperative 
respondents in this investigation, we are assigning to all exporters, 
as BIA, a margin of 36.02 percent, the highest margin calculated based 
on information in the petition on merchandise that is within the scope 
of this investigation (as amended).

Fair Value Comparisons

    To determine whether respondents made sales of steel wire rod from 
Brazil in the United States at less than fair value, we compared the 
United States price (USP) to the foreign market value (FMV), as 
specified in the ``United States Price'' and ``Foreign Market Value'' 
sections of this notice.

United States Price

    We calculated USP using the methodology described in the 
preliminary determination, except that we calculated taxes on U.S. 
sales in accordance with our revised tax methodology. Our revised 
methodology consisted of applying the home market tax rate to USP. See, 
e.g., Stainless Steel Wire Rod from France (58 FR 68865, December 29, 
1993) (Final Determination) (``French Wire Rod'').

Foreign Market Value

    We calculated FMV using the methodology described in the 
preliminary determination, except that the ICMs value-added tax was not 
deducted from FMV. In addition, we calculated a readjustment of the 
amount of tax on the U.S. credit expenses added to FMV by applying the 
tax rate to those expenses. This readjustment amount was also added to 
FMV (See French Wire Rod).

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the dates of the U.S. sales as certified by the Federal 
Reserve Bank.

Interested Party Comments

    Comment 1. Michelin contends that the Department must exclude from 
the scope of the investigation tire cord quality 1070 steel wire rod 
(``TCQ 1070''), which Michelin imports, because Michelin has been 
unable to obtain that product in commercial quantities from any U.S. 
manufacturer. Additionally, Michelin suggests that the Flat Panel 
Displays case\1\ (``FPDs'') established that the Department is required 
to determine, within a class or kind of merchandise, whether ``there 
are any distinct products for which U.S. manufactures do not 
manufacture a like product.'' Michelin contends that TCQ 1070 is a 
distinct product, and that the portion of the petition pertaining to 
TCQ 1070 should be dismissed for lack of standing on the part of 
petitioners. If TCQ 1070 is not found to be a distinct product Michelin 
suggests that TCQ 1070 is essentially the same as tire cord quality 
1080 steel wire rod (``TCQ 1080''), which is already excluded from the 
scope of the investigation pursuant to petitioners' October 19, 1993, 
petition amendment. Accordingly, Michelin argues, TCQ 1070 and TCQ 1080 
should be evaluated jointly. Based on this premise, Michelin contends 
that the Department should determine that the two subsets of all steel 
wire rod--tire cord quality and non-tire cord quality--constitute two 
distinct classes or kinds of merchandise based on the Diversified 
Products criteria,\2\ and class-or-kind-specific dumping margins should 
be calculated.
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    \1\Final Determination and Partial Rescission: Flat Panel 
Displays from Japan (56 FR 32376, July 16, 1991).
    \2\The Diversified Products Corp. v. United States (572 F. Supp. 
883 (CIT 1983)) case upheld a class-or-kind decision which 
considered the following criteria: (1) The product's general 
physical characteristics; (2) its ultimate use; (3) the expectations 
of the ultimate purchaser; (4) the channels of trade; and (5) cost.
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    Stelco Inc., commenting on scope in the context of the companion 
investigation of wire rod from Canada,\3\ argues that the antidumping 
law does not permit the Department to accept without explanation or 
analysis petitioners' October 18, 1993, amendment to the petition 
(excluding TCQ 1080) over the objection of an interested party. To 
grant a contested exclusion request, Stelco suggests, requires an 
explicit finding that the product in question be ``* * * co-extensive 
with a rational class or kind of wire rod product subcategory.'' A 
reasonable analysis, according to Stelco, can lead only to the joint 
consideration and disposition of petitioners' amendment (excluding TCQ 
1080) and Michelin's request (to exclude TCQ 1070).
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    \3\Stelco, a Canadian wire rod producer, is not an interested 
party in this proceeding. However, the scope issues in the three 
concurrent wire rod investigations are essentially the same and thus 
best disposed of together. Therefore, we have placed Stelco's scope 
comments on the record in this proceeding.
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    Petitioners object to the request to exclude TCQ 1070 because the 
precedent of other antidumping investigations of wire rod, as well as 
the Diversified Products criteria and the criteria used to determine 
like products, demonstrate no ``bright line'' upon which to base a 
decision to treat TCQ 1070 as a distinct product or to find that wire 
rod products comprise multiple classes or kinds. Petitioners also 
contend that the request is untimely.
    Petitioners claim that there is substitutability between the 
products that Michelin would exclude on the one hand and products that 
would remain within the scope on the other hand (e.g., tire bead 
quality wire rod). Petitioners further claim that the description of 
the product that Michelin proposes to exclude encompasses products that 
petitioners produce. Finally, petitioners suggest that, even if the 
Department determines tire cord quality wire rod to be a distinct 
product or a separate class or kind, petitioners' standing must be 
accepted unless challenged by a domestic producer.
    With respect to Stelco's argument that the Department's acceptance 
of petitioners' amendment was unlawful, petitioners contend that 
Department precedent requires only that scope amendments ``be timely 
and consistent with the intent of the petitioner.''
    DOC Position. We agree with petitioners. Accordingly, we have not 
excluded TCQ 1070 from the scope of this investigation but will 
continue to exclude TCQ 1080.
    The Act and our regulations do not provide for consideration of 
domestic availability in determining whether a product should or should 
not fall within the scope of an investigation. See, e.g., Appendix to 
Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Carbon Steel Flat Products from Argentina (58 FR 37062, July 9, 
1993) (``Flat-Rolled Steel''). Additionally, our acceptance of 
petitioners' amendment excluding TCQ 1080 from the scope of the 
petition was lawful and appropriate. Under our regulations, section 
353.12(b)(4) requires a petitioner to describe the scope in filing a 
petition and section 353.12(e) provides that a petitioner may amend the 
petition.
    We agree that we must evaluate scope amendments. Generally, when a 
petitioner asks to amend the scope of a petition, our chief concern is 
the administrative feasibility of granting the request (see, e.g., 
Flat-Rolled Steel cases, where petitioners' late plate scope amendment 
was rejected)--including such factors as whether time permits 
soliciting any required new information and practicality for customs 
purposes. In addition, we will evaluate on its merits any opposition to 
an exclusion request. However, the act on the part of a petitioner of 
making such a request is generally sufficient justification for 
granting such an exclusion, because it is a statement by petitioner 
that it does not need relief from a product's competition. Further, 
this view of a petitioner's important role in determining the scope is 
supported by Department practice in past cases (e.g., Flat-Rolled Steel 
cases).
    In this case, Stelco opposes the exclusion of TCQ 1080 on the 
grounds that this product should not be considered separately from TCQ 
1070. While we agree that TCQ 1070 and TCQ 1080 are similar in many 
respects, these similarities do not require that the two products' 
fates be inextricably intertwined. The two products have different 
minimum carbon contents, and the matching criteria in the three 
companion wire rod cases (upon which all interested parties were 
afforded an opportunity to comment) rank grade/carbon content highest 
among relevant characteristics of wire rod. Thus, the two are 
meaningfully distinct products, only one of which (TCQ 1070) 
petitioners have chosen to include in the scope of their petition.
    Notwithstanding Stelco's unsupported allegations concerning 
petitioners' exclusion request, neither the statute nor the regulations 
requires the Department to determine that products whose exclusion is 
contested represent a distinct class or kind of merchandise or a 
distinct like product, nor did the FPDs case establish a requirement 
for a like product analysis. In FPDs, a like product analysis was 
conducted in order to evaluate the petitioner's standing with respect 
to one class or kind of merchandise.
    With respect to whether TCQ 1070 can be excluded over petitioners' 
opposition, such exclusions are possible only if the product is 
determined to be part of a separate class or kind of merchandise which 
petitioners do not produce. TCQ and non-TCQ wire rod do not constitute 
separate classes or kinds of merchandise--even applying the Diversified 
Products criteria (which, we note, are guidelines, not mandatory 
criteria for defining class or kind).\4\ In short, there is no bright 
line among the product groups at issue in this case. Further, there is 
no precedent for separate classes or kind in other investigations or 
wire rod, and no party broached this issue when asked to comment on 
matching criteria. In any case, since petitioners claim that they 
produce TCQ 1070, a separate class or kind finding would not result in 
a finding that petitioners lack standing.
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    \4\Wire rod has in past cases been broadly defined in terms of 
the same general physical characteristics and range of ultimate 
users. Customers expect to draw or stamp the product into various 
other downstream products. While different technical specifications 
and uses exist, it would be prohibitively difficult to identify each 
unique combination as defining a separate class or kind of 
merchandise. No differences in channels of trade, such as sale to 
end users versus sales to resellers, distinguish groups of wire rod. 
Although tire cord quality wire rod has a relatively high cost, it 
is not the only type of wire rod included in the scope that has a 
high cost.
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    In conclusion, petitioners have requested a scope amendment that 
can be administered. Petitioners oppose the exclusion of TCQ 1070, and 
TCQ 1070 is neither a distinct product for which petitioners lack 
standing nor part of a separate tire cord quality class or kind of 
merchandise. While similar to TCQ 1080, TCQ 1070 differs in terms of a 
characteristic recognized as significant: Carbon content. Challenges to 
like product or class-or-kind determinations are subject to very high 
standards and are difficult for the Department to sustain. Petitioners' 
scope definition is afforded great weight because petitioners can best 
determine from what products they require relief. Moreover, in 
administering the law the Department may not take into account 
potential shortages in domestic supply.
    Comment 2. Petitioners and the Barnes Group request the exclusion 
of valve spring quality wire rod from the scope of this investigation, 
in accordance with petitioners' November 1993 petition amendment.
    DOC Position. We agree that valve spring quality wire rod should, 
in accordance with petitioners' amendment, be excluded from the scope. 
This amendment has not been contested, and nothing on the record in 
this proceeding gives rise to concern over feasibility.
    Comment 3. SMJ alleges that, in the petition margin calculations on 
which the preliminary LTFV margin calculations were based, the 
adjustment to USP for foreign inland freight charges was overstated as 
a result of an erroneous inflation adjustment. SMJ also alleges that 
the margin calculations do not properly account for the 12-percent ICMS 
tax that is assessed on home market sales of the subject merchandise.
    Petitioners counter that SMJ has misinterpreted information on the 
record and arrived at an unsubstantiated conclusion. The only 
appropriate change to the preliminary LTFV margin calculations is that, 
in calculating the LTFV margin, the Department should revise its 
treatment of Brazilian indirect taxes to be consistent with the Court 
of International Trade's holding in Federal-Mogul Corporation v. United 
States, Court Nos. 91-07-00530 and 91-08-00569, Slip. Op 93-194 (CIT 
October 7, 1993). (The Court ordered that, to calculate the addition to 
United States price, the home market tax rate be applied to United 
States price at the same point in the stream of commerce where the tax 
is applied to home market sales.)
    DOC Position. We agree with petitioners. The information upon which 
the petition margin calculations were based was accepted for purposes 
of initiating this investigation. When a respondent has chosen not to 
cooperate with our investigation, the BIA margins calculated are not 
open to cross-examination unless a plain clerical error or 
methodological inconsistency is involved. SMJ has drawn conclusions 
based on their own speculation, but not explicitly supported by the 
information on the record. With respect to taxes, petitioners have 
pointed out a methodological inconsistency (inasmuch as the 
Department's treatment of taxes changed after the preliminary 
determination). Therefore, we have adjusted USP and FMV according to 
the Federal-Mogul CIT decision in order to be consistent with current 
practice (see ``United States Price'' section of this notice, above).

Suspension of Liquidation

    In accordance with section 733(d)(1) of the Act, we are directing 
the Customs Service to continue to suspend liquidation of all entries 
of steel wire rod from Brazil that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. The Customs Service shall require a 
cash deposit or posting of a bond equal to the estimated dumping 
margins, as shown below. The suspension of liquidation will remain in 
effect until further notice. The weighted-average margins are as 
follows:

------------------------------------------------------------------------
                                                                Margin  
               Manufacturer/producer/exporter                 percentage
------------------------------------------------------------------------
All companies...............................................      36.02 
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. The ITC will now determine whether these 
imports are materially injuring, or threaten material injury to, the 
U.S. industry within 45 days. If the ITC determines that material 
injury, or threat of material injury, does not exist with respect to 
the subject merchandise, the proceeding will be terminated and all 
securities posted will be refunded or cancelled. If the ITC determines 
that such injury does exist, the Department will issue an antidumping 
duty order directing Customs officials to assess antidumping duties on 
all imports of the subject merchandise from Brazil entered, or 
withdrawn from warehouse, for consumption on or after the effective 
date of the suspension of liquidation.

Notice to Interested Parties

    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility, pursuant 
to 19 CFR 353.34(d), concerning the return or destruction of 
proprietary information disclosed under APO. Failure to comply is a 
violation of the APO.
    This determination is published pursuant to section 735(d) of the 
Act (19 U.S.C. 1673(d)) and 19 CFR 353.20(a)(4).

    Dated: February 2, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-2995 Filed 2-8-94; 8:45 am]
BILLING CODE 3510-DS-M