[Federal Register Volume 62, Number 91 (Monday, May 12, 1997)]
[Notices]
[Pages 25891-25895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12386]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-421-701]


Brass Sheet and Strip From The Netherlands; Preliminary Results 
of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to a request by respondent Outokumpu Copper Strip 
B.V. (OBV) and its United States affiliate Outokumpu Copper (USA), Inc. 
(OCUSA), the Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on brass sheet and 
strip from the Netherlands (A-421-701). This review covers one 
manufacturer/exporter of the subject merchandise to the United States 
during the period August 1, 1995 through July 31, 1996. We 
preliminarily determine that sales of brass sheet and strip (BSS) from 
the Netherlands have not been made below the normal value (NV). If 
these preliminary results are adopted in our final results of 
administrative review, we will instruct the U.S. Customs Service to 
assess antidumping duties with respect to the entries of OBV. 
Interested parties are invited to comment on these preliminary results. 
Parties who submit comments are requested to submit with the argument: 
(1) A statement of the issues; and (2) a brief summary of the argument.

EFFECTIVE DATE: May 12, 1997.

FOR FURTHER INFORMATION CONTACT: Karla Whalen or Lisette Lach, Office 
of Antidumping/Countervailing Duty Enforcement, Group III, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC. 
20230; telephone: (202) 482-0408 or (202) 482-6412, respectively.

SUPPLEMENTARY INFORMATION: Applicable Statute and Regulations: Unless 
otherwise indicated, all citations to the Tariff Act of 1930, as 
amended (the Tariff Act), are to the provisions effective January 1, 
1995, the effective date of the amendments made to the Tariff Act by 
the Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations, as amended by the interim regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

Background

    On August 12, 1988, the Department published in the Federal 
Register the antidumping duty order on BSS from the Netherlands (53 FR 
30455). On August 12, 1996, the Department published the notice of 
``Opportunity to Request Administrative Review'' for the period August 
1, 1995 through July 31, 1996 on BSS from the Netherlands (61 FR 
41768). In accordance with 19 CFR 353.22 (a)(1), OBV requested that we 
conduct a review of its sales. On September 17, 1996, we published in 
the Federal Register a notice of initiation of this antidumping 
administrative review (61 FR 48882).

Verification

    From February 24 through February 28, 1997, in accordance with 
section 782(i) of the Act, we verified information provided by OBV 
using standard verification procedures including on-site inspection of 
the manufacturer's facilities, examination of relevant sales and 
financial records, and selection of original source documentation 
containing relevant information. Our verification results are outlined 
in the verification report, the public version of which is available in 
the Central Records Unit of the Department of Commerce, Room B-099.

Scope of the Review

    Imports covered by this review are brass sheet and strip, other 
than leaded and tin brass sheet and strip, from the Netherlands. 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 physical dimensions of the products 
covered by this review are brass sheet and strip of solid rectangular 
cross section over 0.006 inch (0.15 millimeter) through 0.188 inch (4.8 
millimeters) in gauge, regardless of width. Coiled, wound-on-reels 
(traverse wound), and cut-to-length products are included. The 
merchandise under investigation is currently classifiable under item 
7409.21.00 and 7409.29.20 of the Harmonized Tariff Schedule of the 
United States (HTSUS). Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.

Level of Trade

    To the extent practicable, we determine NV for sales at the same 
level of trade as the U.S. sales (either export price (EP) or 
constructed export price (CEP)). When there are no sales at the same 
level of trade, we compare U.S. sales to home market (or, if 
appropriate, third-country) sales at a different level-of-trade. The NV 
level of trade is that of the starting-price sales in the home market. 
When NV is based on CV, the level of trade is that of the sales from 
which we derive selling, SG&A and profit.
    For both EP and CEP, the relevant transaction for the level of 
trade analysis is the sale (or constructed sale) from the exporter to 
the importer. While the starting price for CEP is that of a

[[Page 25892]]

subsequent resale to an unaffiliated buyer, the construction of the CEP 
results in a price that would have been charged if the importer had not 
been affiliated. We calculate the CEP by removing from the first resale 
to an independent U.S. customer the expenses under section 772(d) of 
the Tariff Act and the profit associated with these expenses. These 
expenses represent activities undertaken by the affiliated importer. 
Because the expenses deducted under section 772(d) represent selling 
activities in the United States, the deduction of these expenses 
normally yields a different level of trade for the CEP than for the 
later resale (which we use for the starting price). Movement charges, 
duties and taxes deducted under section 772(c) do not represent 
activities of the affiliated importer, and we do not remove them to 
obtain the CEP level of trade.
    To determine whether home market sales are at a different level of 
trade than U.S. sales, we examine whether the home market sales are at 
different stages in the marketing process than the U.S. sales. The 
marketing process in both markets begins with goods being sold by the 
producer and extends to the sale to the final user, regardless of 
whether the final user is an individual consumer or an industrial user. 
The chain of distribution between the producer and the final user may 
have many or few links, and each respondent's sales occur somewhere 
along this chain. In the United States, the respondent's sales are 
generally to an importer, whether independent or affiliated. We review 
and compare the distribution systems in the home market and U.S. export 
markets, including selling functions, class of customer, and the extent 
and level of selling expenses for each claimed level of trade. Customer 
categories such as distributor, original equipment manufacturer (OEM), 
or wholesaler are commonly used by respondents to describe levels of 
trade, but, without substantiation, they are insufficient to establish 
that a claimed level of trade is valid. An analysis of the chain of 
distribution and of the selling functions substantiates or invalidates 
the claimed levels of trade. If the claimed levels are different, the 
selling functions performed in selling to each level should also be 
different. Conversely, if levels of trade are nominally the same, the 
selling functions performed should also be the same. Different levels 
of trade necessarily involve differences in selling functions, but 
differences in selling functions, even substantial ones, are not alone 
sufficient to establish a difference in the levels of trade. A 
different level of trade is characterized by purchasers at different 
stages in the chain of distribution and sellers performing 
qualitatively or quantitatively different functions in selling to them.
    When we compare U.S. sales to home market sales at a different 
level of trade, we make a level-of-trade adjustment if the difference 
in levels of trade affects price comparability. We determine any effect 
on price comparability by examining sales at different levels of trade 
in a single market, the home market. Any price effect must be 
manifested in a pattern of consistent price differences between home 
market sales used for comparison and sales at the equivalent level of 
trade of the export transaction. To quantify the price differences, we 
calculate the difference in the average of the net prices of the same 
models sold at different levels of trade. We use the average difference 
in net prices to adjust NV when NV is based on a level of trade 
different from that of the export sale. If there is a pattern of no 
consistent price differences, the difference in levels of trade does 
not have a price effect and, therefore, no adjustment is necessary.
     The statute also provides for an adjustment to NV when NV is based 
on a level of trade different from that of the CEP if the NV level is 
more remote from the factory than the CEP and if we are unable to 
determine whether the difference in levels of trade between CEP level 
and NV level affects the comparability of their prices. This latter 
situation can occur where there is no home market level of trade 
equivalent to the U.S. sales level or where there is an equivalent home 
market level but the data are insufficient to support a conclusion on 
price effect. This adjustment, the CEP offset, is identified in section 
773(7)(B) of the Tariff Act and is the lower of the following:
     The indirect selling expenses on the home market sale, or
     The indirect selling expenses deducted from the starting 
price used to calculate CEP. The CEP offset is not automatic each time 
we use CEP. The CEP offset is made only when the level of trade of the 
home market sale is more advanced than the level of trade of the U.S. 
(CEP) sale and there is not an appropriate basis for determining 
whether there is an effect on price comparability.
    In the present review, OBV did not request an LOT adjustment. To 
ensure that no such adjustment was necessary, we examined information 
regarding OVB's distribution system in both the United States and the 
Netherlands, including selling functions, class of customer and selling 
expenses. In the home market, OBV sold to two categories of customers, 
end-users and trading companies. However, OBV's HM sales were all 
manufactured to order and the merchandise was shipped directly from the 
mill to both types of customer. OBV's packing process was also similar 
for both markets, and the selling expenses for the POR were comparable 
for all sales, regardless of the type of customer. Evidence on the 
record also demonstrates that OBV did not have a formal policy for 
providing payment terms, including discounts to different types of 
customers. Based upon this evidence, we determine that the selling 
activities involved with these sales were the same, and that OBV's HM 
sales were all made at the same level of trade.
    OBV's sales in the United States, all of which were EP sales, were 
also at the same level of trade. All of OBV's United States customers 
were end-users and the sales were all manufactured to order. The 
packing process was basically the same as that of the HM sales, as was 
OBV's customer-specific approach to payment terms. Therefore, we 
conclude that no level of trade adjustment is warranted.

Export Price

    For sales to the United States, we used export price (EP) as 
defined in section 772(a) of the Act, because the subject merchandise 
was sold to an unaffiliated U.S. purchaser prior to the date of 
importation and the use of constructed export price was not indicated 
by the facts on the record. We calculated EP as the packed, delivered 
price to unaffiliated purchasers in the United States. In accordance 
with section 772(c)(2) of the Tariff Act, we reduced this price by 
post-sale warehousing, international freight, inland and marine 
insurance, U.S. brokerage and handling, U.S. duty, Customs Service 
fees, Department of Agriculture fees, and credit expenses, where 
appropriate.

Normal Value

A. Viability

    Based upon (i) the Department's comparison of the aggregate 
quantity of home market and U.S. sales, (ii) the absence of any 
information that a particular marketing situation in the Netherlands 
does not permit a proper comparison, and (iii) the fact that OBV's 
quantity of sales in the home market exceeded five percent of its sales 
to the U.S. market, we determined that the quantity of foreign like 
product OBV

[[Page 25893]]

sold in the Netherlands was sufficient to permit a proper comparison 
with the sales of subject merchandise to the United States pursuant to 
section 773(a) of the Tariff Act. Therefore, in accordance with section 
773(a)(1)(B)(i) of the Tariff Act, we based NV on the prices at which 
the foreign like products were first sold for consumption in the 
Netherlands.

B. Cost-of-Production Analysis

    Because we disregarded sales below the cost of production in the 
most recently completed review, we had reasonable grounds to believe or 
suspect that sales of the foreign like product under consideration for 
determining NV in this review may have been at prices below the cost of 
production (COP), as provided in section 773(b)(2)(A)(ii) of the Tariff 
Act. See Brass Sheet and Strip From the Netherlands; Final Results of 
Antidumping Duty Administrative Reviews (57 FR 9534, March 19, 1992). 
Therefore, pursuant to section 773(b)(1) of the Tariff Act, we 
initiated a COP investigation of sales by OBV.
    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated COP based on the sum of materials and fabrication employed 
in producing the foreign like product, plus selling, general, and 
administrative expenses (SG&A) and the cost of all expenses incidental 
to placing the foreign like product in condition packed ready for 
shipment. We relied on the home market sales and COP information OBV 
provided in its questionnaire responses.
    After calculating COP, we tested whether home market sales of 
subject BSS were made at prices below COP within an extended period of 
time in substantial quantities and whether such prices permitted the 
recovery of all costs within a reasonable period of time. We compared 
model-specific COP to the reported home market prices less any 
applicable movement charges and post-sale price adjustments (reported 
as early payments and credit adjustments), where appropriate.
    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
twenty percent of home market sales for a model were at prices less 
than the COP, we did not disregard any below-cost sales of that model 
because we determined that the below cost sales were not made within an 
extended period of time in ``substantial quantities.'' Where twenty 
percent or more of home market sales of a given product were at prices 
less than the COP, we determined that such sales were made within an 
extended period of time in substantial quantities in accordance with 
section 773(b)(2) (C) of the Tariff Act. To determine whether such 
sales were at prices which would not permit the full recovery of all 
costs within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Tariff Act, we compared home market prices to the 
weighted-average COPs for the POR.
    The results of our cost test for OBV indicated that for certain 
home market models less than twenty percent of the sales of the model 
were at prices below COP. We therefore retained all sales of these 
models in our analysis and used them as the basis for determining NV, 
where applicable. Our cost test also indicated that within an extended 
period of time (one year, in accordance with section 773(b)(2)(B) of 
the Tariff Act) for certain other home market models, more than twenty 
percent of the sales were at prices below COP which would not permit 
the full recovery of all costs within a reasonable period of time. In 
accordance with section 773(b)(1) of the Tariff Act, we therefore 
disregarded the below-cost sales of these models and used the remaining 
above-cost sales as the basis for determining NV, where applicable.
    In accordance with section 773(a)(4) of the Act, we used 
constructed value (CV) as the basis for NV when there were no usable 
sales of the foreign like product in the comparison market. We 
calculated CV in accordance with section 773(e) of the Act. We included 
the cost of materials and fabrication, SG&A expenses and profit. In 
accordance with section 773(e)(2)(A) of the Act, we based SG&A expenses 
and profit on the amounts incurred and realized by the respondent in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade for consumption in the foreign country. 
For selling expenses, we used the weighted average home market selling 
expenses. Where appropriate, we made adjustments to CV, in accordance 
with section 773(a)(8) of the Act and section 353.56(a) of the 
Department's regulations, for circumstances of sale (COS) differences. 
For comparisons to EP, we made COS adjustments by deducting home market 
direct selling expenses and adding U.S. direct selling expenses.

C. Product Comparisons

    We compared OBV's U.S. sales with contemporaneous sales of the 
foreign like product in the home market. We compared BSS based on the 
following hierarchy of physical characteristics: (1) Grade (alloy); (2) 
gauge (thickness); (3) width; (4) temper; (5) coating; and (6) packed 
form. For purposes of these preliminary results, we have used 
differences in merchandise adjustments based on the difference in the 
variable cost of manufacturing between each U.S. model and its most 
similar home market model.

D. Date of Sale

    The Department examined a number of distinct events in OBV's sales 
process to determine the appropriate date of sale. These included the 
frame agreement date, order entry date, and invoice date. OBV's sales 
listing included data permitting use of any of these for the date of 
sale. OBV argued that the appropriate date of sale methodology should 
be the order entry date. Petitioners 1 argued that the 
appropriate date of sale methodology should be the date of the frame 
agreement, as that date was used in the immediately preceding review. 
However, for purposes of these preliminary results, the Department has 
used the invoice date as the date of sale in determining the 
appropriate sales universe for comparison based upon the information 
provided by respondent and our findings at verification. (See 
Memorandum to the File Regarding Verification, dated April 16, 1997, 
from Lisette Lach and Lisa Yarbrough; and Analysis Memorandum to the 
File Regarding Preliminary Determination Analysis, dated May 6, 1997, 
from Lisette Lach and Karla Whalen.)
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    \1\ Hussey Copper, Ltd.; The Miller Company; Olin Corporation; 
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 United Steelworkers of America 
(AFL-CIO/CLC).
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E. Home Market Prices

    We based home market prices on the packed, ex-factory or delivered 
prices to unaffiliated purchasers in the home market or on CV, where 
applicable. For matching to home market prices, we made adjustments for 
differences in packing and for movement expenses in accordance with 
sections 773(a)(6)(A) and (B) of the Tariff Act. In addition, we made 
adjustments for differences in cost attributable to differences in 
physical characteristics of the merchandise pursuant to section 
773(a)(6)(C)(ii) of the Tariff Act, and for COS differences in 
accordance with section 773(a)(6)(C)(iii) of the Tariff Act and 
Sec. 353.56(2) of the Department's regulations.

Duty Absorption

    On October 3, 1996, petitioners requested that the Department

[[Page 25894]]

determine whether OBV had absorbed antidumping duties during the period 
of review pursuant to section 751(a)(4) of the Tariff Act. Section 
751(a)(4) requires the Department, if requested, to determine, during 
an administrative review initiated two years or four years after 
publication of the order, whether antidumping duties have been absorbed 
by a foreign producer or exporter subject to the order, if the subject 
merchandise is sold in the United States through an importer who is 
affiliated with such foreign producer or exporter. Section 751(a)(4) 
was added to the Tariff Act by the URAA. The Department's interim 
regulations do not address this provision of the Tariff Act. For 
transition orders as defined in section 751(c)(6)(C) of the Tariff Act, 
i.e., orders in effect as of January 1, 1995, Sec. 351.213(j)(2) of the 
Department's proposed antidumping regulations provides that the 
Department will make a duty absorption determination, if requested, for 
any administrative review initiated in 1996 or 1998. See Notice of 
Proposed Rulemaking, 61 FR 7308, 7366 (February 27, 1996). The preamble 
to the proposed antidumping regulations explains that reviews initiated 
in 1996 will be considered initiated in the second year and reviews 
initiated in 1998 will be considered initiated in the fourth year. Id. 
at 7317. Although these proposed regulations are not yet binding upon 
the Department, they do constitute a public statement of how the 
Department expects to proceed in applying section 751(a)(4) of the 
amended statute. This approach assures that interested parties will 
have the opportunity to request a duty absorption determination on 
entries for which the second and fourth years following an order have 
already passed, prior to the time for sunset review of the order under 
section 751(c).
    Because the order on BSS from the Netherlands has been in effect 
since 1988, this qualifies as a transition order. Therefore, based on 
the policy stated above, the Department will first consider a request 
for an absorption determination during a review initiated in 1996. This 
being a review initiated in 1996, we are making a duty-absorption 
determination as part of this segment of the proceeding. The statute 
provides for a determination on duty absorption if the subject 
merchandise is sold in the United States through an affiliated 
importer. In this case, OCUSA, OBV's wholly owned subsidiary, is the 
importer of record for OBV's U.S. sales. Therefore, the importer and 
the exporter are ``affiliated'' within the meaning of sections 
751(a)(4) and 771(33) of the Tariff Act. Furthermore, we have 
preliminarily determined that there is a dumping margin for OBV on 9.17 
percent (by quantity) of its U.S. sales during the period of review. In 
addition, we cannot conclude from the record that the unaffiliated 
purchaser in the United States will pay the ultimately assessed duty. 
Under these circumstances, we preliminarily find that there is a 
dumping margin on OBV's sales through its affiliate representing 1.13 
percent of its total U.S. sales and that antidumping duties have been 
absorbed by OBV.

Fair Value Comparison

    To determine whether OBV made sales of subject BSS in the United 
States at prices that were less than fair value, we compared the EP to 
NV, as described in the ``Export Price'' and ``Normal Value'' analysis 
sections of this notice. In accordance with section 777A(d)(2) of the 
Tariff Act, we calculated monthly weighted-average prices for NV or CV 
where appropriate, and compared these monthly averages to individual 
U.S. sales transactions.

Currency Conversion

    We made currency conversions in accordance with 19 CFR 353.60(a). 
All currency conversions were made at the rates certified by the 
Federal Reserve Bank.

Preliminary Results of Review

    As a result of our comparison of EP to NV, we preliminarily 
determine that the weighted-average dumping margin for OBV for this 
administrative review period is as follows:

------------------------------------------------------------------------
           Manufacturer/exporter                   Period        Margin 
------------------------------------------------------------------------
OBV........................................     8/1/95-7/31/96      0.10
------------------------------------------------------------------------

    Parties to these proceedings may request disclosure within five 
days of the date of publication of this notice and may request a 
hearing within ten days of publication. Any hearing, if requested, will 
be held 44 days after the date of publication, or the first business 
day thereafter. Case briefs and/or written comments from interested 
parties may be submitted no later than 30 days after the date of 
publication. Rebuttal briefs and rebuttals to written comments, limited 
to issues raised in the case briefs and comments, may be submitted no 
later than 37 days after the date of publication of this notice.
    Parties who submit arguments in these proceedings are requested to 
submit with the argument (1) a statement of the issues and (2) a brief 
summary of the argument. The Department will issue final results of 
these administrative reviews, including the results of our analysis of 
the issues in any such written comments or at a hearing, within 180 
days of issuance of these preliminary results.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and NV may vary from the percentage 
stated above. The Department will issue appraisement instructions 
directly to Customs.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of BSS from the Netherlands entered, or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review, as provided in section 751(a)(1) 
of the Tariff Act:
    (1) The cash deposit rate for OBV will be the rate established in 
the final results of this administrative review;
    (2) For previously reviewed or investigated companies other than 
OBV, 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 less-than-fair-value 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 the ``all others'' rate of 16.99 percent 
established in the less-than-fair-value investigation. See Antidumping 
Duty Order of Sales at Less-Than-Fair-Value; Brass Sheet and Strip From 
the Netherlands (53 FR 30455, August 12, 1988).
    All U.S. sales by the respondent OBV will be subject to one deposit 
rate according to the proceeding. The cash deposit rate has been 
determined on the basis of the selling price to the first unrelated 
customer in the United States. For appraisement purposes, where 
information is available, we will use the entered value of the subject 
merchandise to determine the appraisement rate.
    This notice serves as preliminary reminder to importers of their 
responsibility to file a certificate regarding the reimbursement of 
antidumping duties prior to liquidation of the relevant entries during 
this review period. Failure to comply with this requirement could 
result in the Secretary's presumption that

[[Page 25895]]

reimbursement of the antidumping duties occurred and the subsequent 
assessment of double antidumping duties. This administrative review and 
this notice are in accordance with section 751(a)(1) of the Tariff Act 
(19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: May 5, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-12386 Filed 5-9-97; 8:45 am]
BILLING CODE 3510-DS-P