[Federal Register Volume 62, Number 91 (Monday, May 12, 1997)]
[Notices]
[Pages 25895-25898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12393]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-827]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Collated Roofing Nails 
From Korea

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

EFFECTIVE DATE: May 12, 1997.

FOR FURTHER INFORMATION CONTACT: Everett Kelly or Ellen Grebasch, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4194 or (202) 482-3773, 
respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the 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).

Preliminary Determination

    We preliminarily determine that collated roofing nails (``CRN'') 
from Korea 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 Duty Investigations: Collated Roofing Nails from the 
People's Republic of China, the Republic of Korea, and Taiwan (61 FR 
67306, December 20, 1996)), the following events have occurred:
    On January 17, 1997, the United States International Trade 
Commission (``ITC'') issued an affirmative preliminary injury 
determination in this case (see ITC Investigation Nos. 731-TA-757-759).
    During November 1996 through January 1997, the Department obtained 
information from various sources identifying producers/exporters of the 
subject merchandise. (See Memo to the File, dated May 5, 1997, for a 
detailed explanation of the Department's search for producers/exporters 
of the subject merchandise.) During January, based on this information, 
the Department issued antidumping questionnaires to Kabool Metals 
(``Kabool''), Koram Steel Co., Ltd (``Koram''), Rewon Metals 
(``Rewon''), Jisco Steel, Han Duk Industrial Co. (``Han Duk''), New 
Korea, Jeil Steel, and Senco Korea (``Senco''). The questionnaire is 
divided into four sections: Section A requests general information 
concerning a company's corporate structure and business practices, the 
merchandise under investigation that it sells, and the sales of the 
merchandise in all of its markets. Sections B and C request home market 
sales listings and U.S. sales listings, respectively. Section D 
requests information on the cost of production (``COP'') of the foreign 
like product and constructed value (``CV'') of the subject merchandise.
    The Department received responses to Section A of the questionnaire 
during February and March 1997. On March 13, 1997, pursuant to section 
777A(c) of the Act, the Department determined that, due to the large 
number of exporters/producers of the subject merchandise, it would 
limit the number of mandatory respondents in this investigation. The 
Department determined that the resources available to it for this 
investigation and the two companion investigations limited our ability 
to analyze any more than the responses of the two largest exporters/
producers of the subject merchandise in this investigation. Based on 
Section A questionnaire responses, the Department chose Kabool and 
Senco as mandatory respondents. (For detailed information regarding 
this issue, see memo to Lou Apple from the CRN team, dated March 13, 
1997.)
    Kabool and Senco submitted questionnaire responses in February and 
March 1997. We issued supplemental requests for information in March 
and April 1997, and received supplemental responses to these requests 
in April 1997.
    On March 28, April 21 and 23, 1997, the Paslode Division of 
Illinois Tool Works Inc. (``Petitioner'') filed comments on the Kabool 
and Senco questionnaire responses.

Postponement of Final Determination and Extension of Provisional 
Measures

    On May 1, 1997, Senco requested that, pursuant to section 
735(a)(2)(A) of the Act, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of 
publication of the affirmative preliminary determination in the Federal 
Register. In accordance with section 735(a)(2)(A) of the Act and 19 CFR 
353.20(b), inasmuch as our preliminary determination is affirmative, 
Senco accounts for a significant proportion of exports of the subject 
merchandise under investigation, and we are not aware of the existence 
of any compelling reasons for denying the request, we are granting 
Senco's request and postponing the final determination. Suspension of 
liquidation will be extended accordingly. See Preliminary Determination 
of Sales at Less Than Fair Value: Large Newspaper Printing Presses and 
Components Thereof, Whether Assembled or Unassembled, from Japan (61 FR 
8029, March 1, 1996).

Scope of Investigation

    The product covered by this investigation is CR nails made of 
steel, having a length of \13/16\ inch to 1\13/16\ inches (or 20.64 to 
46.04 millimeters), a head diameter of 0.330 inch to 0.415 inch (or 
8.38 to 10.54 millimeters), and a shank diameter of 0.100 inch to 0.125 
inch (or 2.54 to 3.18 millimeters), whether or not galvanized, that are 
collated with two wires.
    CR nails within the scope of this investigation are classifiable 
under the Harmonized Tariff Schedule of the United States (``HTSUS'') 
subheading 7317.00.55.05. Although the HTSUS subheading is provided for 
convenience and customs purposes, our written description of the scope 
of this investigation is dispositive.

Period of Investigation

    The period of this investigation (``POI'') comprises each 
exporter's four most recent fiscal quarters prior to the filing of the 
petition. In this case, the POI for both companies is October 1, 1995, 
through September 30, 1996.

[[Page 25896]]

Fair Value Comparisons

Kabool and Senco
    To determine whether sales of the subject merchandise by Kabool and 
Senco 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 EP, CEP, 
and ``Normal Value'' sections of this notice, below. In accordance with 
section 777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-
average EPs or CEPs to weighted-average NVs.
    Kabool reported that it had no viable home market or third country 
sales during the POI. Therefore, we made no price-to-price comparisons 
for Kabool. See the ``Normal Value'' section of this notice, below, for 
further discussion.
    For certain U.S. sales Senco had no appropriate third country 
matches. For purposes of calculating a unit margin for these sales, as 
the ``facts available'' we are applying the highest rate calculated in 
Senco's margin calculations for a control number.
(i) Physical Characteristics
    In accordance with section 771(16) of the Act, we considered all 
products covered by the description in the ``Scope of Investigation'' 
section of this notice, above, produced in Korea and sold in the home 
market during the POI, to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. Where there 
were no sales of identical merchandise in the home market to compare to 
U.S. sales, we compared U.S. sales to the next most similar foreign 
like product on the basis of the characteristics listed in the 
Department's antidumping questionnaire. In making the product 
comparisons, we relied on the following criteria (listed in order of 
preference): head size, type of collation (used to connect the wire to 
the nail), shank size, length of the nail, steel type, number of nails 
packed into a box or carton, type of coating, coating thickness (in 
ounces per foot), and coating thickness (in microns).
(ii). Level of Trade and CEP Offset
    As set forth in section 773(a)(1)(B)(i) of the Act and in the 
Statement of Administrative Action accompanying the URAA, H.R. Doc. No. 
316, 103d Cong., 2d Sess. (1994) (``SAA'') at 829-331, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade as the U.S. sales. When the Department is unable to 
find sales in the comparison market at the same level of trade as the 
U.S. sale (s), the Department may compare sales in the U.S. and foreign 
markets at different levels of trade. Section 773(a)(7)(A) provides 
that if we compare a U.S. sale with a home market sale made at a 
different level of trade, when appropriate, we will adjust NV to 
account for this difference. When NV is based on CV, the level of trade 
is that of the sales from which we derive selling, general and 
administrative (``SG&A'') expenses and profit.
    For comparisons to CEP sales, section 773(a)(7)(B) of the Act 
provides for making a CEP offset when two conditions are met. First, 
the NV is established at a level of trade which constitutes a more 
advanced stage of distribution than the level of trade of the CEP, and 
second, the data available do not establish an appropriate basis for 
calculating a level of trade adjustment.
    In this case, however, Senco, the only respondent with a viable 
home or third country market, did not claim that sales are made at 
different levels of trade. Additionally, the information on the record 
does not demonstrate that there are any differences in levels of trade. 
We therefore preliminarily determine that all of Senco's sales are made 
at a single level of trade. Because U.S. sales are at the same level as 
home market sales, no level of trade adjustment or CEP offset is 
warranted.
    We have not applied a level of trade adjustment or CEP offset for 
Kabool because Kabool did not claim a level of trade adjustment and we 
are unable to determine whether the NVs are calculated at different 
levels of trade than the U.S. sales. As explained below in the ``Normal 
Value'' section of this notice, we calculated the NV for Kabool based 
entirely on CV. We derived SG&A and profit from data from the 
profitable companies' most recent financial statements contained in the 
Section A responses (see memorandum to the file dated May 5, 1997, for 
the CV profit rate calculation). This data does not permit an 
appropriate level of trade analysis because we are unable to isolate 
the particular selling expenses associated with the selling functions 
for Kabool's NV. Therefore, we find insufficient evidence on the record 
to justify a level of trade adjustment or CEP offset.

Export Price and Constructed Export Price

Kabool
    We used EP in accordance with section 772(a) of the Act because the 
subject merchandise was sold to unaffiliated customers before 
importation and the CEP methodology was not indicated by the facts of 
record. We calculated EP based on packed prices, either CIF or CNF to 
the first unaffiliated purchaser in the United States. Where 
appropriate, we made deductions from the starting price (gross unit 
price) for inland freight--plant/warehouse to port of exit, brokerage 
and handling in Korea, international freight, and marine insurance. We 
added to EP reported duty drawback amounts.
Senco
    We used EP in accordance with section 772(a) of the Act where the 
subject merchandise was sold to unaffiliated customers prior to 
importation and the CEP methodology was not indicated by the facts of 
record. We used CEP in accordance with section 772(b) of the Act where 
the subject merchandise was sold to unaffiliated customers after 
importation. We calculated both EP and CEP, as appropriate, based on 
packed prices, to the first unaffiliated purchaser in the United 
States. For both EP and CEP sales we made deductions from the starting 
price (gross unit price) for foreign inland freight, brokerage and 
handling, U.S. inland freight from port to warehouse, U.S. inland 
freight from warehouse to the unaffiliated customer, international 
freight (including U.S. customs duties), marine insurance (including 
U.S. inland insurance ), and other price adjustments (see memorandum to 
the file dated May 5, 1997), where appropriate. With respect to foreign 
inland freight and brokerage and handling expenses, Senco reported that 
it incurred these expenses but did not report any amounts for these 
expenses in its sales listing. As the ``facts available,'' for foreign 
inland freight we are using the same freight amount reported for U.S. 
inland freight from the warehouse to the unaffiliated customer, and for 
brokerage and handling expenses we are using the brokerage and handling 
expenses from a sample sales document supplied by Senco in its Section 
A response and applying that amount to all U.S. sales.
    For CEP sales, we made additional deductions, in accordance with 
section 772(d) (1) and (2) of the Act, for credit expenses, advertising 
expenses, other direct selling expenses, indirect selling expenses, and 
inventory carrying costs incurred in the United States. Pursuant to 
section 772(d)(3) of the Act, the price was further reduced by an 
amount for profit, to arrive at the CEP. The amount of profit deducted 
was calculated in accordance with section 772(f) of the Act. Because we 
did not have cost information for Senco, that would permit us to 
calculate total expenses (and total actual profit) under paragraph 
772(f)(2)(C) (i) or (ii) we used the total

[[Page 25897]]

expenses incurred (and total actual profit earned) with respect to the 
narrowest category of merchandise sold in all countries which includes 
the subject merchandise, in accordance with paragraph 
772(f)(2)(C)(iii). We have calculated profit as a percentage of the 
cost of production as recorded in Senco's most recent financial 
statement and applied that ratio to the CEP selling expenses to arrive 
at an amount for CEP profit.

Normal Value

    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 greater than five percent of the aggregate volume of U.S. sales), we 
compare each respondent'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.
Senco
    Senco reported that it had no home market sales during the POI. 
Therefore, in accordance with section 773(a)(1)(B)(ii), we based normal 
value for Senco on sales to its largest third country market, Canada. 
We calculated NV based on packed prices, to unaffiliated customers. In 
accordance with section 773(a)(6) of the Act, we deducted third country 
packing costs and added U.S. packing costs. However, we note that Senco 
failed to report packing amounts in its sales listings. Therefore, in 
accordance with section 776(a) of the Act, as the ``facts available'' 
we are applying the ratio of packing costs to gross unit price as 
supplied in the petition. Where appropriate, we made deductions from 
the starting price (gross unit price) for inland freight. With respect 
to foreign inland freight expenses, Senco reported that it incurred 
these expenses but did not report any amounts for these expenses in its 
sales listing. As the ``facts available'' for foreign inland freight we 
are using the same freight amount reported for U.S. inland freight from 
the warehouse to the unaffiliated customer. In addition, where 
appropriate, we adjusted for differences in circumstances of sale for 
imputed credit expenses.
Kabool
    Kabool reported that it had no viable home or third country sales 
during the POI. Therefore, in accordance with section 773(a)(4) of the 
Act, we based normal value for Kabool on CV. In accordance with section 
773(e)(1) of the Act, we calculated CV based on the sum of the costs of 
materials and fabrication, selling, general, and administrative 
expenses (``SG&A''), profit and U.S. packing costs. We used Kabool's 
costs of materials, fabrication and packing as reported in the U.S. 
sales databases. In this case, Kabool had no home market selling 
expenses or home market profit upon which to base CV.
    Section 773(e)(2)(B) of the Act sets forth three alternatives for 
computing profit and SG&A without establishing a hierarchy or 
preference among the alternative methods. We did not have the necessary 
cost data for methods one (calculating SG&A and profit incurred by the 
producer on the sales of merchandise of the same general type as the 
exports in question), or two (averaging SG&A and profit of other 
producers of the foreign like product for sales in the home market). 
The third alternative (section 773(e)(2)(B)(iii) of the Act) provides 
that profit and SG&A may be computed by any other reasonable method, 
capped by the amount normally realized on sales in the foreign country 
of the general category of products. The SAA states that, if the 
Department does not have the data to determine amounts for profit under 
alternatives one and two or a profit cap under alternative three, it 
still may apply alternative three (without the cap) on the basis of the 
``facts available.'' SAA at 841. As the facts available, we are 
calculating an average SG&A and profit rate from the most recent 
financial statements of the profitable companies from which we received 
Section A responses. We note that some financial statements were 
unreadable; we did not include these numbers in our calculation. We 
preliminarily determine this data to be a reasonable surrogate for SG&A 
and profit of the subject merchandise. However, we will consider the 
issue of appropriate SG&A and profit information further for the final 
determination and invite comment on this issue.

Price to CV Comparisons

    Because we based SG&A for CV on the financial statements of each 
individual company, where we compared CV to EP, we did not make any 
circumstance of sale adjustments for direct expenses, as we were unable 
to split out from total SG&A the direct selling expenses.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
official 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 convert 
foreign currencies based on the dollar exchange rate in effect on the 
date of sale of the subject merchandise, except if it is established 
that a currency transaction on forward markets is directly linked to an 
export sale. When a company demonstrates that a sale on forward markets 
is directly linked to a particular export sale in order to minimize its 
exposure to exchange rate losses, the Department will use the rate of 
exchange in the forward currency sale agreement.
    Section 773A(a) also 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) 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, 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 neither the 
Korean Won nor the Canadian Dollar underwent a sustained movement.

Critical Circumstances

    The petition contained a timely allegation that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to imports of subject merchandise. Section 733(e)(1) 
of the Act provides that the Department will determine that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist if: (A)(i) there is a history of dumping and material injury by 
reason of dumped imports in the United States or elsewhere of the 
subject merchandise, or (ii) the person by whom, or for whose account, 
the merchandise was imported

[[Page 25898]]

knows or should have known that the exporter was selling the subject 
merchandise at less than its fair value and that there was likely to be 
material injury by reason of such sales, and (B) there have been 
massive imports of the subject merchandise over a relatively short 
period.
    To determine that there is a history of dumping of the subject 
merchandise, the Department normally considers evidence of an existing 
antidumping duty order on CRN in the United States or elsewhere to be 
sufficient. See e.g., Preliminary Determinations of Critical 
Circumstances: Brake Drums and Rotors from the People's Republic of 
China, 61 FR 55269 (Oct. 25, 1996); Notice of Final Determinations of 
Sales at Less Than Fair Value: Brake Drums and Rotors from the People's 
Republic of China, 62 FR 9160 (Feb. 28, 1997). Currently, no countries 
have outstanding antidumping duty orders on CRN from Korea. The 
petitioner alleged a history of dumping based upon antidumping orders 
on steel wire nails from Korea and the People's Republic of China, both 
of which covered CRN. See Certain Steel Wire Nails From Korea; Final 
Results of Changed Circumstances Administrative Review and Revocation 
of Antidumping Duty Order, 50 FR 40045 (Oct. 1, 1985); Final Results of 
Changed Circumstances Administrative Review and Revocation of 
Antidumping Duty Order; Certain Steel Wire Nails from The People's 
Republic of China, 52 FR 33463 (Sept. 3, 1987). We preliminarily 
determine that these antidumping orders are not a sufficient basis to 
find a history of dumping because both orders were revoked many years 
ago. However, we will consider this issue further for the final 
determination and we invite interested parties to comment on the issue.
    In determining whether an importer knew or should have known that 
the exporter was selling subject merchandise at less than fair value 
and thereby causing material injury, the Department normally considers 
margins over 15% for EP sales and 25% for CEP sales to impute knowledge 
of dumping and of resultant material injury. Brake Drums and Rotors, 62 
FR at 9164-65. When a company has both EP and CEP sales, we normally 
weight-average the 15% and 25% benchmarks using the volume of EP and 
CEP sales, respectively, to arrive at a weighted-average benchmark 
percentage for imputing knowledge of dumping. In this investigation, of 
the exporters/manufacturers has a margin over 15% for EP sales or 25% 
for CEP sales. Based on these facts, we determine that the first 
criterion for ascertaining whether or not critical circumstances exist 
is not satisfied. Therefore, we have not analyzed the shipment data for 
any of these companies to examine whether imports of CRN have been 
massive over a relatively short period. Thus, because neither 
alternative of the first criterion has been met, we preliminarily 
determine that there is no reasonable basis to believe or suspect that 
critical circumstances exist with respect to exports of CRN from Korea 
by Kabool or Senco.
    Regarding all other exporters, because we do not find that critical 
circumstances exist for any of the investigated companies, we also 
determine that critical circumstances do not exist for companies 
covered by the ``All Others'' rate.
    We will make a final determination concerning critical 
circumstances when we make our final determination in this 
investigation, if that final determination is affirmative.

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 accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all imports of subject 
merchandise--except those exported by Kabool--that are entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. 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 export 
price, 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- 
                                                               average  
                   Exporter/manufacturer                       margin   
                                                             percentage 
------------------------------------------------------------------------
Kabool....................................................          0   
Senco.....................................................          5.53
All Others................................................          5.53
------------------------------------------------------------------------

    Pursuant to section 735(c)(5)(A) of the Act, the Department has 
excluded the zero margin from the calculation of the ``All Others 
Rate.''

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 July 29, 1997, and rebuttal briefs, no later than August 5, 
1997. 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 August 6, at 9:00 a.m. in Room 1412 at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 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 ten 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 135 days after the publication of this notice in the 
Federal Register.
    This determination is published pursuant to section 733(d) of the 
Act.

    Dated: May 5, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-12393 Filed 5-9-97; 8:45 am]
BILLING CODE 3510-DS-P