[Federal Register Volume 60, Number 142 (Tuesday, July 25, 1995)]
[Notices]
[Pages 38031-38035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18262]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-428-602]
Brass Sheet and Strip From Germany; Final Results of Antidumping
Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On January 17, 1995, the Department of Commerce (the
Department) published the preliminary results of its administrative
review of the antidumping duty order on brass sheet and strip from
Germany. The review covers exports of this merchandise to the United
States by one manufacturer/exporter, Wieland-Werke AG (Wieland), during
the period March 1, 1993 through February 28, 1994.
The review indicates the existence of de minimis dumping margins
for this period.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have adjusted Wieland's margin for these final results.
EFFECTIVE DATE: July 25, 1995.
FOR FURTHER INFORMATION CONTACT: Thomas Killiam, Chip Hayes, or John
Kugelman, Office of Antidumping Compliance, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW., Washington, DC 20230; telephone:
(202) 482-5253.
SUPPLEMENTARY INFORMATION:
Background
On January 17, 1995, the Department published in the Federal
Register (60 FR 3392) the preliminary results of its 1993-94
administrative review of the antidumping duty order on brass sheet and
strip from Germany (52 FR 6997, March 6, 1987).
Applicable Statute and Regulations
The Department has now completed this administrative review in
accordance with section 751 of the Tariff Act of 1930, as amended (the
Act). Unless otherwise indicated, all citations to the statute and to
the Department's regulations are in reference to the provisions as they
existed on December 31, 1994.
Scope of the Review
Imports covered by this review are sales or entries of brass sheet
and strip, other than leaded and tinned brass sheet and strip. The
chemical composition of the products under review is currently defined
in the Copper Development Association (C.D.A.) 200 Series or the
Unified Numbering System (U.N.S.) C20000 series. This review does not
cover products the chemical compositions of which are defined by other
C.D.A. or U.N.S. series. The merchandise is currently classified under
Harmonized Tariff Schedule (HTS) item numbers 7409.21.00 and
7409.29.20. The HTS item numbers are provided for convenience and
Customs purposes. The written description remains dispositive.
[[Page 38032]]
The review period is March 1, 1993 through February 28, 1994. The
review involves one manufacturer/ exporter, Wieland.
Analysis of Comments Received
We received case and rebuttal briefs from Wieland and from the
petitioners, Hussey Copper, Ltd., The Miller Company, Outokumpu
American Brass, Revere Copper Products, Inc., International Association
of Machinists and Aerospace Workers, International Union, Allied
Industrial Workers of America (AFL-CIO), Mechanics Educational Society
of America (Local 56), and the United Steelworkers of America.
Model-matching Methodology
Comment 1: Wieland disputes the Department's use of specific alloy
grades in matching U.S. to home market sales. Wieland would have the
Department use only two classes of alloys, above or below 75 percent
copper content, instead of using exact alloy grades. The respondent
states that the exact-alloy comparison method which we used in the
preliminary results is a change from the method used in the prior
review.
The respondent further alleges that the Department used the exact-
alloy method in order to conform the model-matching criteria with other
orders, and that in so doing the Department ignored record evidence
demonstrating that Wieland's U.S. sales cannot be ``appropriately
matched'' to home market sales of identical alloys. Wieland claims that
``using alloy groups . . . provides the most practical means of
achieving reasonable comparisons''.
Wieland claims that our approach is contrary to Department practice
in other cases involving brass sheet and strip, because the Department
failed, in this review, to determine the appropriate matching criteria
on the basis of the specific nature of Wieland's sales. The respondent
alleges that by relying on specific alloy grades rather than using
Wieland's two alloy groups, the Department ``fails to take account of
the nature of Wieland's sales''. Wieland does not make clear how our
approach neglects to take account of the nature of its sales, but
implies that its sales are made more often on the basis of whether
products are above or below 75 percent in copper content than on the
basis of exact alloys.
The respondent also asserts that, since certain other model-
matching criteria, namely gauge and width, are grouped by classes,
alloys should also be grouped.
The petitioners note in rebuttal that there is no industry standard
to distinguish alloys for high copper content (i.e., greater than 75
percent), that customers specify exact alloys in placing their orders,
that in all other antidumping proceedings involving brass sheet and
strip the Department has always made exact-alloy matches, and that
Wieland's alloy groupings disregard the Department's conclusion in an
earlier review that it should abandon the grouping methodology and
instead make matches on an exact-alloy basis. The petitioners further
assert that Wieland failed to establish that its home market sales,
when matched to U.S. sales on the basis of exact alloys, ought not to
be taken as representative of home market prices.
Department's Position: We disagree with the respondent. We did not
employ the alloy-specific approach merely to conform to approaches used
in reviews of other brass sheet and strip orders, but in order to
follow section 771(16)(B) of the Act, which requires us to compare U.S.
sales to home market merchandise which is identical or, when not
identical, is ``like that (U.S.) merchandise in component material or
materials and in the purposes for which used,'' prior to resorting, if
necessary, to less similar merchandise as described in 771(16)(C)(i)-
(iii).
Wieland does not identify which U.S. sales, if any, are not
``appropriately'' matched to home market merchandise by our method, or
otherwise explain how its less specific standard would be more
appropriate. Nor does Wieland explain how its grouped alloy approach
would be ``the most practical means of achieving reasonable
comparisons'', other than by arguing that it would make the number of
home market sales used in sales comparisons ``sufficient''.
Regarding Wieland's claim that matching by alloy groups would more
appropriately reflect the nature of Wieland's sales, nothing in the
record supports this claim. On the contrary, according to Wieland, its
customers generally specify exact alloys in their orders. While its
customers may sometimes choose the lowest-cost combination of metals
within a narrow range, no information on the record suggests that
Wieland's customers use the standard of 75 percent copper content in
ordering merchandise.
In arguing that grouping alloys would be appropriate because
grouping is used for gauge and width ranges, Wieland glosses over the
distinction between the gauge and width measures on the one hand, and
alloy grades on the other. Gauge and width are both infinitely variable
and therefore must be divided into tiers to permit any comparisons.
Alloy grades, by contrast, are discretely defined proportions of
metals. Matching by specific alloys provides more precision than merely
differentiating between merchandise which contains above or below 75
percent copper.
The respondent's grouped-alloy approach would assign all home
market merchandise to one of two groupings, would compare each U.S.
sale to home market merchandise containing up to seven different
alloys, and would not necessarily result in comparisons of U.S. sales
to home market merchandise made of only the identical alloy, or of only
the single most similar alloy. The respondent's suggested groupings
could result in understated or overstated dumping margins, due to the
mix of home market models which would form the basis of foreign market
value (FMV). Matching by specific alloys, on the other hand, ensures
that we use the most similar merchandise possible to establish FMV in
our dumping calculations. Therefore, the Department has continued to
use the alloy-specific matching method.
Comment 2: The respondent complains that the Department's change in
model-matching methodology reduces the dumping analysis to ``little
more than a game of chance,'' since, according to Wieland, the margin
depends far more on the chance occurrence that a home market customer
will place an order for an alloy identical to one sold in the United
States than on Wieland's general pricing policies for its U.S. and home
market sales. Where a single home market sale serves as the basis for
comparison, Wieland argues, the results of the U.S./home market price
comparison will depend completely on the date on which that home market
sale was made, or, more particularly, on the metal pricing date for the
metal component of the home market sale. Thus, Wieland argues,
differences between U.S. and home market prices are caused by
volatility in the market prices for copper, zinc, and tin, rather than
by Wieland's brass sheet and strip pricing strategies. Wieland suggests
that as an alternative the Department should use alloy groups for
model-matching purposes. Wieland points out that differences in alloy
costs could then be adjusted for with a sale-specific metal adjustment.
Department's Position: We disagree with the respondent. Wieland's
``game of chance'' complaint is not supported by the facts of the case
or the methodology we used. This complaint hinges on Wieland's implicit
suggestion that individual home market sales, or pairs of sales,
somehow may not conform to its pricing policies. Wieland offers no
evidence on the record that
[[Page 38033]]
any home market sale prices should be excluded as unrepresentative.
Wieland has not argued or demonstrated that some of its home market
sales are outside the ordinary course of trade or are, for some other
reason, inappropriate as the basis of FMV.
While Wieland has alleged that there is a danger that price
differences for identical merchandise comparisons might result from
changes in commodity prices of components, it has not demonstrated that
such price fluctuations should affect the model-match methodology.
In the statutory definition of such or similar merchandise (section
771(16) of the Act) there is a clear preference for matching U.S. sales
to home market merchandise which is composed of the same materials,
before resorting to comparisons to less similar merchandise. Our
approach reflects this preference; the respondent's approach would
ignore it. We are not permitted to ignore contemporaneous sales of
identical merchandise. Wieland's suggested approach simply does not
conform to the requirements of the antidumping law and regulations.
The risk of price differences caused by changes in the prices of
commodities used as components is not unique to this proceeding but is
inherent in price comparisons in many industries. That risk has not
heretofore served as justification for omitting comparisons of U.S.
sales to contemporaneous home market sales of identical or most similar
merchandise. Yet the respondent's approach would make comparisons to
identical or most similar merchandise impossible, by defining models so
broadly that all comparisons would potentially include similar
merchandise as well as identical merchandise (and would thus be subject
to adjustments for differences in alloy values under 19 CFR 353.57(b)).
But this grouped-alloy approach would not be warranted by the
regulations cited above or by the facts of this review; using exact
alloy comparisons, we were able to match a substantial portion of U.S.
sales to home market merchandise of identical alloys, and all the
remaining U.S. sales with home market merchandise containing one of the
three most similar alloys.
Comment 3: Wieland states that the Court of International Trade
(CIT), addressing the model-matching issue in remanding the final
results in the first administrative review, did not require the
Department to abandon the use of two alloy groups, but merely asked the
Department to articulate the reasons why it did not use the exact-alloy
method. See Hussey Copper Ltd., v. United States, 834 F. Supp. 413 (CIT
1993).
Department's Position: As explained in our response to Comment 2
above, the Department has concluded that the exact-alloy matching
methodology more closely follows the statute, which requires us to make
comparisons of identical merchandise, when this is possible, before
making comparisons with similar merchandise.
Comment 4: The petitioners request that the Department alter the
hierarchy of traits used in matching U.S. sales to home market sales.
In particular, the petitioners ask the Department to place alloy in the
third position, instead of the fifth position. According to the
petitioners, alloy was placed in the third position in certain other
brass sheet and strip cases, and alloy specifications are more
important to customers than gauge and width differences.
Department's Position: The petitioners argue that the model-match
methodology used in this review is a departure from the methodology
used in reviews of brass sheet and strip from other countries. In fact,
although there are many similarities in the methodologies used in the
various brass sheet and strip cases, they are not identical. Because
the facts of each case are distinct from those of other cases,
different hierarchies are applied to the criteria to define home market
sales of the most similar merchandise.
In this review, as in preceding reviews under this order, the
Department used five criteria to define models in order to compare
sales: Form, coating, gauge, width, and alloy. For those U.S. sales for
which we did not find sales of identical home market merchandise, we
determined that the most similar home market merchandise for comparison
purposes was merchandise which was identical in form, coating, gauge,
and width, and similar in alloy content. Therefore, we used specific
programming instructions to search for contemporaneous home market
sales of merchandise which was identical except for alloy. Thus, the
only criterion for which we considered differences was alloy, no matter
what the order of the criteria as listed in the program. Consequently,
we do not agree with the petitioner's suggestion that we change the
ordering of the criteria in a search for similar merchandise.
Concerning the question of whether alloy is more important to
customers than gauge and width specification, as the petitioners
allege, we note that Wieland states in its February 23, 1995 Rebuttal
Brief (p. 3) that ``generally customers must have very precise gauges
and widths to serve their particular purpose and to use with their
particular equipment, and no gauge or width substitutes would be
acceptable''. Notwithstanding the petitioners' allegation, there is
nothing in the record of this review to confirm or support the
petitioners' suggestion that customers have less flexibility in alloy
than in gauge and width specifications, which typically have narrow
tolerances reflecting the customers' machining or assembly
requirements. Thus, the petitioners' assertion that alloy is more
important than gauge and width to the respondent's customers is without
foundation in the record of this review.
Therefore, we have determined for these final results to use the
model-matching methodology used for the preliminary results.
Differences in Average Order Size
Comment 5: Defending its claim for adjustments in price to reflect
the different average order sizes of its U.S. sales, Wieland contests
our preliminary finding that it has not demonstrated a relationship
between order size and price. In support of the claimed adjustment,
Wieland cites the price lists in its questionnaire responses, the
Department's verification report in the 1991-1992 administrative
review, section 773(a)(4)(A) of the Act, and the regulations (19 CFR
353.55).
In rebuttal, the petitioners point to the Department's disallowance
in the first review, as upheld by the CIT, concerning the same cost
adjustment claim for different order sizes. The petitioners also note
Wieland's failure to show that it met the regulatory requirement for
such an adjustment, i.e., that Wieland must show that it ``granted
quantity discounts of at least the same magnitude on 20 percent or more
of sales of such or similar merchandise * * *'' (19 CFR 353.55(b)(1)).
Department's Position: We disagree with the respondent. The
regulations do not allow for adjustments to price based merely on
claimed differences in per-pound costs according to order size. The
adjustments allowed are only for differences in price or discounts for
different quantities produced. The regulations (19 CFR 353.55(b)(2))
provide for adjustments if ``the producer demonstrates * * * that the
discounts reflect savings specifically attributable to the production
of the different quantities.'' In its questionnaire response Wieland
complied in part, by showing the savings, in the form of differences in
per-kilogram costs for processing different order quantities. But
Wieland did not place on the record any evidence of quantity discounts
actually given, or information showing
[[Page 38034]]
that prices were affected by different production quantities. Indeed,
Wieland's questionnaire response states unequivocally: ``Wieland does
not provide price-based quantity discounts''.
The price list Wieland cites in this regard is not an adequate
basis for this claim since it is a matter of record that the
respondent's prices are negotiated ad-hoc and do not necessarily follow
the price list. The verification report for a prior review, in which we
noted variations in prices for varying quantities in one particular
contract, is not dispositive; our inspection of a contract in a
verification does not signal our acceptance of a claimed adjustment to
price. Wieland has the burden, in each review, of showing how its
actual prices varied according to quantity, as required by 19 CFR
353.55.
Value-added Tax
Comment 6: While conceding that the practice is consistent with
current Department policy on value-added tax (VAT), Wieland contests
the Department's application of a 14-percent VAT adjustment to both
U.S. and home market sales in this review, and requests that the
Department instead add the actual home market VAT amount to U.S. price.
Wieland alleges that the use of the VAT rate on sales in both markets
introduces a multiplier effect. Wieland urges the Department to instead
adopt its alternative solution, at least until this issue can be
resolved more definitively by the U.S. Court of Appeals for the Federal
Circuit (CAFC), once an appeal is heard in the case of Federal Mogul
Corporation v. United States, 834 F.Supp 1391 (Fed. Cir. 1993).
Department's Position: We disagree with Wieland. We adjusted U.S.
Price (USP) and FMV for VAT in accordance with our practice, pursuant
to the decision of the CIT in Federal-Mogul Corporation and the
Torrington Company v. United States, 813 F. Supp. 856 (October 7, 1993)
(Federal-Mogul) and as outlined in Silicomanganese From Venezuela;
Preliminary Determination of Sales at Less than Fair Value, 59 FR
31204, June 17, 1994, where we address the multiplier effect issue in
detail.
Comment 7: Citing 19 U.S.C. 1677a(d)(1)(C), the petitioners state
that for U.S. sales not found to be sold at less than fair value, the
Department must cap the absolute tax amount added to U.S. price,
limiting it to the absolute amount of taxes in the home market. The
petitioners argue that the absolute net U.S. price that becomes the
denominator in our calculation of dumping duties is otherwise
overstated, and that ad valorem margins are consequently reduced
improperly.
The respondent, in rebuttal, argues that the petitioners cannot
have it both ways, and that the Department cannot selectively apply the
tax rate to sales which may have dumping margins and apply the absolute
tax amount only to those sales which do not have margins.
Department Position: We disagree with the petitioners. The
Department's methodology consists of applying the home market tax rate
to the U.S. price at the same point in the chain of distribution at
which the home market tax base is determined and then reducing the tax
in each market by that portion of the tax attributable to expenses
which are deducted from each price. For example, because we deduct
ocean freight from U.S. price, ocean freight is also eliminated from
the U.S. tax base. This is consistent with the decision of the CIT in
Federal-Mogul. The effect of these adjustments is the same as initially
calculating the tax in each market on the basis of adjusted prices.
The ``cap'' was devised at a time when the Department was not
effectively calculating the tax in each market on the basis of adjusted
prices. It was intended to keep differences in expenses which were
eliminated through adjustments to the price in each market from
continuing to affect the dumping margin by remaining in the basis upon
which the tax in each market was determined. The Department's current
practice of effectively using adjusted prices in each market as the tax
base automatically achieves this purpose. The imputed U.S. tax will
exceed the tax on home market comparison sales only where the adjusted
U.S. price is higher than the adjusted home market price, i.e., where
there is no dumping margin. A tax cap is irrelevant for such sales,
because no duties are assessed upon them and they do not contribute to
the weighted-average margin. Consequently, the absolute margins
obtained under the Department's current approach are identical to those
which would have been obtained after imposing the tax cap.
Although applying a tax cap may affect the relative weighted-
average margins, and hence deposit rates, we decline to reapply the tax
cap solely to achieve this purpose. The Department includes the U.S.
prices that exceed foreign market prices in the denominator of the
deposit rate equation. It would be inconsistent to include that portion
of the U.S. price that exceeds the home market price in that
denominator, but to remove the tax on this amount. Just as we treat the
tax on ocean freight consistently with ocean freight itself, where we
include the full adjusted U.S. price in the denominator of the deposit
rate equation, we must also leave the tax on that full U.S. price in
the denominator.
Interest Rates Used in Credit Expenses
Comment 8: The petitioners claim that the Department should correct
for Wieland's use of Wieland-America's short-term borrowing rate to
calculate direct expenses for U.S. sales, since during the period of
review U.S. customers were billed by Wieland-Werke in Germany. The
petitioners argue that the U.S. imputed credit expenses should have
been calculated on the basis of Wieland-Werke' short-term interest
rates, rather than on the basis of Wieland-America's short-term
interest rate.
The respondent argues in rebuttal that the Department correctly
measured the cost of financing sales made in dollars by applying a
dollar interest rate, citing Department policy in Final Determination
of Sales at Less than Fair Value: Fresh Cut Roses from Colombia, 60 FR
6980, 6998 (1995) (Comment 21) (Roses). Wieland also notes that in
Final Determination of Sales at Less than Fair Value: Class 150
Stainless Steel Threaded Pipe Fittings from Taiwan (59 FR 38432 (July
28, 1994) (Class 150 Stainless Steel Pipe), the Department stated that
it ``is required to use the lowest rate at which the respondent has
borrowed or to which the respondent has access.''
Department's Position: We disagree with the petitioners and concur
with the respondent that it is reasonable to use local, dollar-
denominated borrowing rates in this case. The respondent is correct in
arguing that the interest rate used for credit expenses should match
the currency in which the sales are denominated, as stated in Roses. On
the question of whether the parent's or the U.S. subsidiary's dollar-
denominated borrowing rate should be applied, where a company had
access, directly or through its U.S. affiliate, to two different
dollar-denominated rates, the lower of the two rates is presumed to
have been used. See, for example, Class 150 Stainless Steel Pipe, where
the Department calculated imputed credit for purchase price sales using
the lower of two U.S. interest rates available to the respondent. In
this case we are aware of only the U.S. subsidiary having U.S.
borrowings during this POR. See also Notice of Final Determinations of
Sales at Less than Fair Value: Certain Hot-Rolled Carbon Steel Flat
Products,
[[Page 38035]]
Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain
Cut-to-Length Carbon Steel Plate from France, 58 FR 37125
(1993)(Comment 30); the Department does not concern itself with
determining which of the corporate entities related to the respondent
actually incurs the cost of financing.
Sales to Related Parties
Comment 9: The petitioners state that the Department failed to
exclude sales to related parties from home market sales, or test such
sales for arm's-length pricing. In rebuttal, the respondent states that
all sales between related parties are at arm's length, but that, in any
case, excluding related-party sales will not significantly affect sales
matching.
Department's Position: We agree with the petitioners and have
included an arm's-length test in our analysis. We compared prices net
of difference-in-merchandise adjustments, movement expenses, early
payment discounts, commissions and after-sale rebates. The results of
that test indicate that a substantial number of sales to affiliates
were at lower prices than those to unrelated parties. In accordance
with 19 CFR 353.45(a), we have therefore excluded those sales to
related parties that were not at arm's length, and have used home
market sales by Wieland to unrelated customers, and home market sales
to related parties that were at arm's length, as the basis for FMV.
Clerical and Programming Errors
Comment 10: The respondent points out that adjustments for
different alloys were not converted to pounds.
Department's Position: We agree with the respondent and have
converted the adjustments for different alloys to pounds.
Comment 11: The petitioners state, and Wieland agrees, that for
U.S. sales, the Department neglected to adjust the difference-in-
merchandise data for physical characteristics and for different alloys
by the VAT rate.
Department Position: We agree with the petitioners and have
adjusted these data by the VAT rate.
Final Results of Review
As a result of our analysis of the comments received, we determine
that the following margin exists for Wieland:
------------------------------------------------------------------------
Percent
Manufacturer/exporter Period margin
------------------------------------------------------------------------
Wieland-Werke AG................................... 3/1/93-
2/28/94 \1\ 0.49
5
------------------------------------------------------------------------
\1\ We have not rounded this result to two places, as is our usual
practice, since doing so would indicate a margin above de minimis,
where the actual margin is de minimis.
Individual differences between the USP and FMV may vary from the
above percentage. The Department shall instruct the U.S. Customs
Service to assess antidumping duties on all appropriate entries.
Furthermore, the following deposit requirements will be effective
for all shipments of subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date of these
final results, as provided for by section 751(a)(1) of the Act.
(1) Because the rate for Wieland is de minimis, the Department
shall not require cash deposits on shipments from Wieland;
(2) For previously reviewed or investigated companies not listed
above, 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 original less-than-fair-value (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 8.87 percent, the ``all others'' rate established
in the LTFV investigation.
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 the review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective order (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/destruction of APO materials or conversion to judicial
protective order is hereby requested.
Failure to comply with the regulations and terms of an APO is a
violation which is subject to sanction. This administrative review and
this notice are in accordance with section 751(a)(1) of the Act (19
U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: July 11, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-18262 Filed 7-24-95; 8:45 am]
BILLING CODE 3510-DS-P