[Federal Register Volume 62, Number 122 (Wednesday, June 25, 1997)]
[Notices]
[Pages 34213-34216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16683]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-428-811; A-412-810; C-428-812; C-412-811]
Initiation of Anticircumvention Inquiry on Antidumping and
Countervailing Duty Orders on Hot-Rolled Lead and Bismuth Carbon Steel
Products From the United Kingdom and Germany
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of initiation of anticircumvention inquiry.
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SUMMARY: On the basis of an application filed with the Department of
Commerce (the Department) on April 14, 1997 and amended on May 14,
1997, we are initiating an anticircumvention inquiry to determine
whether imports of lead and bismuth carbon steel billets from Germany
and the United Kingdom are circumventing the antidumping and
countervailing duty orders on hot-rolled lead and bismuth carbon steel
products from Germany and the United Kingdom (See Antidumping Orders;
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from Brazil,
France, Germany and the United Kingdom 58 FR 15334 (March 22, 1993) and
Countervailing Duty Orders; Certain Hot-Rolled Lead and Bismuth Carbon
Steel Products from Germany and the United Kingdom 58 FR 15325, 15327
(March 22, 1993)).
EFFECTIVE DATES: June 25, 1997.
FOR FURTHER INFORMATION CONTACT: Anne D'Alauro, Russell Morris, or
Maria MacKay, Office of CVD/AD Enforcement VI, Import Administration,
International Trade Administration, U.S. Department of Commerce,
Washington, D.C. 20230; telephone (202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On April 14, 1997, the Department received an application (amended
on May 14, 1997) from Inland Steel Bar Company and USS/Kobe Steel
Company (the applicants), requesting that the Department conduct an
anticircumvention inquiry pursuant to section 781(a) of the Tariff Act
of 1930, as amended (the Act), with respect to the antidumping and
countervailing duty orders on certain hot-rolled lead and bismuth
carbon steel products from the United Kingdom and Germany. The
applicants allege that the principal German (Saarstahl A.G. and Thyssen
Stahl A.G.) and British (British Steel PLC) producers of hot rolled
leaded bar and rod are circumventing the respective orders by shipping
bloom-cast leaded-steel billets (leaded-steel billets) to the United
States, where they are easily and inexpensively converted into the hot-
rolled carbon steel products covered by the orders.
The Department received written comments opposing the request to
initiate the inquiry from Thyssen Stahl A.G. (Thyssen) on May 12, 1997,
from Saarstahl A.G. (Saarstahl) on May 16, 1997, from British Steel PLC
(British Steel) on May 23, 1997, and from the European Community (EC)
on May 27, 1997. Written comments in opposition to the initiation of
the inquiry were also received from four U.S. producers of subject
merchandise: Bar Technologies on May 19, 1997, Sheffield Steel
Corporation on June 2, 1997, Birmingham Steel Corporation on June 3,
1997 and Nucor Steel on June 5, 1997.
Initiation of Anticircumvention Proceeding
In accordance with section 781(a) of the Act, the Department may
find circumvention of an order when the following four conditions are
met:
(1) The merchandise sold in the United States is of the same class
or kind as the merchandise that is subject to the order,
(2) Such merchandise is completed or assembled in the United States
from parts or components produced in the foreign country to which the
order applies,
(3) The process of assembly or completion in the United States is
minor or insignificant, and
(4) The value of the parts or components produced in the foreign
country with respect to which the order applies, is a significant
portion of the total value of the merchandise sold in the United
States.
In order to determine whether a circumvention inquiry is warranted,
we evaluated the information submitted by the applicants using each of
the criteria listed above. We have concluded that the information
submitted is sufficient to warrant the initiation of an
anticircumvention inquiry. Each criterion is separately addressed
below.
(1) Is the Merchandise Sold in the United States of the Same Class or
Kind as the Merchandise That Is Subject to the Order?
The merchandise covered by the orders is described as ``hot-rolled
bars and rods of nonalloy or other alloy steel, whether or not
descaled, containing by weight 0.03 percent or more of lead or 0.05
percent or more of bismuth, in coils or cut lengths, and in numerous
shapes and sizes.'' The leaded-steel billets being imported into the
United States are alleged to contain 0.03 percent or more of lead or
0.05 percent or more of bismuth and, thus, meet the chemical
requirements specified for the merchandise subject to the antidumping
and countervailing duty orders. The applicants claim that the imported
leaded-steel billets are then converted, in the United States, into the
identical products that are covered by the orders.
(2) Is the Merchandise Completed or Assembled in the United States From
Parts or Components Produced in the Foreign Country to Which the Order
Applies?
The hot-rolled bars and rods allegedly are being completed in the
United States from leaded-steel billets produced in the
[[Page 34214]]
United Kingdom and Germany--countries which are subject to the
antidumping and countervailing duty orders on hot-rolled lead and
bismuth carbon steel products (lead bar).
(3) Is the Process of Assembly or Completion Minor or Insignificant?
When considering whether the process of assembly or completion is
minor or insignificant, section 781(a)(2) of the Act instructs the
Department to take into account: (1) The level of investment and
research and development in the United States; (2) the nature of the
production process in the United States; (3) the extent of production
facilities in the United States; and (4) whether the value of the
processing performed in the United States represents a small proportion
of the value of the merchandise sold in the United States. These
criteria are individually addressed below.
Investment
The applicants state that the production of leaded-steel billet
requires dedicated facilities and equipment. Thyssen, British Steel,
and Saarstahl, according to the applicants, have made this substantial
investment in their home countries. In contrast, rolling mills, which
roll the leaded-steel billet into bar and rod, are alleged to require
less capital investment and to be used to process other types of steel.
Thus, the applicants conclude, the concentration of investment in semi-
finished steel (i.e., billets) production facilities in the home
countries, relative to the rolling process performed in the United
States, indicates that the level of investment in the United States is
comparatively minor.
Research and Development (R&D)
Applicants also state that R&D costs are concentrated in the melt
shop facility where leaded-steel billets are produced. As these
facilities are located in the home countries, it follows that their
associated R&D costs are incurred in the home countries. The level of
R&D costs related to the U.S. rolling facilities is alleged to be minor
in comparison.
Nature of the Production Process in the United States
The applicants describe the production process of lead bar as
consisting of two stages. In the first stage, all raw material inputs
(such as iron ore, limestone, coal, flux, and scrap) are heated in a
furnace to become molten steel. The molten steel is then cast into
semi-finished products, in this case either blooms or billets. The
billets are cooled, before undergoing further shaping and finishing
processes.
The second stage consists of the conversion of the leaded-steel
billets into bar or rod in rolling mills. In this stage, billets are
reheated and then loaded into a series of roughing, intermediate, and
finishing stands or rolls. The information provided does not indicate
that additional raw materials are added in this stage of the process;
the chemical and physical characteristics of the steel have already
been imparted in the production of the billet. Rolling merely converts
the billet into a wide range of steel products of different shapes, for
instance of round, hexagonal, square, rectangular, or flat cross
section.
Extent of Production Facilities in the United States
The applicants claim to be the only U.S. steel makers which have
made the capital investment necessary to produce both leaded-steel
billets and lead bar. On this basis they conclude that the first stage
in the production process of the subject merchandise, the billet
production, occurs primarily abroad. The second stage of production,
the re-rolling process, occurs instead primarily in the United States.
The applicants note that many U.S. mills are capable of rolling
purchased leaded-steel billets; however, those mills have not invested
in melting and casting facilities.
Value of Rolling in the U.S. Compared to Value of Merchandise Sold in
the U.S.
The applicants provided six different calculations of the value of
the rolling operation performed in the United States. These
calculations were based on supporting cost data and price quotations
for both leaded-steel billets and finished bar and rod. Based upon
these calculations, the applicants conclude that the rolling process
represents an insignificant portion of the total value of the finished
bar and rod sold in the United States.
(4) Is the Value of the Parts or Components Produced in the Foreign
Country to Which the Antidumping and the Countervailing Duty Orders
Apply, a Significant Portion of the Total Value of the Merchandise Sold
in the United States?
As noted above, the applicants have presented six calculations of
the value attributable to the rolling process. The applicants do not
allege that any portion of the value added is attributable to third
country processing. Therefore, the calculations suggest that, based on
the value attributable to the processing in the United States, the
value of the imported leaded-steel billets constitutes a significant
portion of the total value of the merchandise sold in the United
States.
Additional Factors
In addition to the criteria discussed above, Sec. 781(a)(3) of the
Act instructs the Department to consider other factors before
determining whether to include the merchandise in question in an
antidumping or countervailing duty order. These are: (1) The pattern of
trade; (2) whether a relationship exists between the manufacturer or
exporter and the U.S. assembler of the product; and (3) whether imports
into the United States of the parts or components produced in the
foreign country increased after the initiation of the investigation
which resulted in the issuance of the order.
Pattern of Trade
The applicants claim that the pattern of trade has shifted
subsequent to the issuance of the antidumping and countervailing duty
orders, from the export of lead bars and rods to the export of leaded-
steel billets, which are now being finished in the United States. The
applicants argue that, by shifting exports to leaded-steel billets,
these producers have found a way to continue to sell lead bar in the
United States, without regard to the antidumping and countervailing
duty orders.
Relationship Between the Manufacturer or Exporter and the U.S.
Assembler
Applicants have stated that the U.S. re-rollers are not related to
the foreign producers.
Import Statistics
The applicants have provided statistics on the basis of which they
allege that imports of leaded-steel billets from Germany and the United
Kingdom have increased since the investigations in 1992, while imports
of bars and rods subject to the orders have markedly declined.
Based on our review of the foregoing allegations and supporting
information submitted in the application, we find that the application
contains sufficient evidence to warrant an anticircumvention inquiry.
Therefore, we are initiating an anticircumvention inquiry concerning
the antidumping and countervailing duty orders on lead and bismuth
carbon steel products from the United Kingdom and Germany, pursuant to
section 781(a) of the Act. For a more detailed discussion of the
Department's analysis, see Memorandum to the Principal Deputy
[[Page 34215]]
Assistant Secretary for Import Administration from the Team dated June
18, 1997, concerning Initiation of Anticircumvention Inquiry of
Antidumping and Countervailing Duty Orders on Certain Hot Rolled Lead
and Bismuth Carbon Steel Products from the United Kingdom and Germany,
public version, on file in the Central Record Unit, Room B-099, Main
Commerce Building.
The Department will not suspend liquidation at this time. However,
the Department will instruct the U.S. Customs Service (Customs) to
suspend liquidation in the event of an affirmative preliminary
determination of circumvention.
Several interested parties have challenged the initiation of this
anticircumvention inquiry. As discussed below their arguments do not
provide a legal basis for rejecting Inland's and USS/Kobe's application
for an inquiry.
(1) Whether There is an Industry Support Requirement for a
Circumvention Inquiry
Several interested parties have argued that the Department must
consider whether there is industry support for the anticircumvention
inquiry before deciding whether to initiate. One party stated that the
Department is required to ensure that the provisions of Article 11.4 of
the Agreement on Subsidies and Countervailing Measures (SCM) on the
standing of the domestic industry are adhered to. The parties contend
that members of the U.S. industry who may have supported the imposition
of antidumping and countervailing duties on lead bar may, in fact,
oppose the imposition of such duties on leaded-steel billets. They cite
a letter by a U.S. producer of lead bar opposing the initiation of an
anticircumvention inquiry.
There is no statutory requirement regarding industry support for
purposes of initiating a circumvention inquiry. See 19 U.S.C. 1677j(a).
The regulations provide that any interested party has standing to file
an application to determine whether a particular product is within the
scope of an order. 19 C.F.R. 353.29(b) (1996), 19 C.F.R. 355.29(b)
(1996). The requirement regarding interested party status has been
carried over into the new regulations. See Sec. 351.225(c). The statute
and regulations define an interested party, in relevant part, as ``a
manufacturer, producer, or wholesaler in the United States of a
domestic like product.'' 19 U.S.C. 1677(9)(C). See also 19 C.F.R.
353.2(k)(3) and 355.2(i)(3). In this instance, Inland meets the
definition of ``a manufacturer'' of the domestic like product. Although
USS/Kobe was not listed as one of the original petitioners, it was
listed as a domestic producer of the subject merchandise. Therefore, as
interested parties, Inland and USS/Kobe are entitled to request a
circumvention inquiry.
The statute requires a showing of industry support before an
investigation may be initiated to determine whether an antidumping or
countervailing duty order is warranted. 19 U.S.C. 1673a(c)(4) and
1671a(c)(4). In contrast, a circumvention inquiry is focused on the
enforcement of existing orders--i.e. it is designed to determine
whether merchandise is properly within the scope of an order that has
already been issued. See, e.g., Color Television Receivers From Korea;
Initiation of Anticircumvention Inquiry on Antidumping Duty Order, 61
FR 1339, 1342 (January 19, 1996) (Korean TV's Circumvention).
Significantly, neither the statute nor prior Department practice
requires that an interested party requesting a scope determination make
such a showing of industry support. Id. The fact that the statute
expressly requires a showing of industry support for initiating an
investigation, but does not require such a showing for initiating an
anticircumvention inquiry, is compelling evidence that no such
requirement exists. Moreover, the lack of such a requirement is also
indicated by the fact that the statute expressly prohibits
reconsideration of the issue of industry support at any stage of the
proceeding beyond initiation of the original investigation. 19 U.S.C.
1673a(c)(4)(E) and 1671a(c)(4)(E).
(2) Whether Leaded-steel Billets, Specifically Excluded From the Lead
Bar Orders, Can Now be Included in the Scope of the Same Orders Through
a Circumvention Inquiry
Several interested parties argue that the International Trade
Commission (ITC) specifically determined that leaded-steel billets were
excluded from its like product and domestic industry definitions, and,
therefore, were not subject to its injury finding. Similarly, the
Department expressly stated that ``semifinished steels'' were
``excluded'' from the scope of the lead bar orders. These parties argue
that, absent an injury finding on leaded-steel billets, the assessment
of antidumping and countervailing duties would be contrary to U.S.
antidumping and countervailing duty law and would contravene the
international obligation of the United States under the World Trade
Organization (WTO) Agreement. In addition, because the ITC found that
leaded-steel billets constitute a different like product, one party
argues that leaded-steel billets cannot be considered a ``part or
component'' of bar.
The Department faced a similar issue in Steel Wire Rope from
Mexico; Affirmative Final Determination of Circumvention of Antidumping
Duty Order, 60 FR 10831 (February 28, 1995). In that case, the
Department included within the scope of the order a component that
previously had been excluded. Specifically, the original Mexican wire
rope order expressly excluded steel wire strand which is used to
produce wire rope. Nevertheless, the Department made an affirmative
finding that steel wire strand imported into the United States for use
in the production of steel wire rope was circumventing the order
pursuant to section 781(a)(2) of the Act. While this was an ``old'' law
case, the current statutory provisions governing circumvention are the
same regarding this issue.
The same statutory analysis applies here as well. Simply put, the
theory that parts expressly excluded from the scope of an antidumping
or countervailing order can not be subject to an anticircumvention
inquiry is contrary to, and would undermine, the core principles of the
anticircumvention statute.
The underlying rationale of the anticircumvention statute is that,
where the criteria of section 781(a) are met, the parts and components
subject to the finding of circumvention are, in all meaningful
respects, being imported as the subject merchandise, not as parts or
components per se. The processing in the United States is of such a
minor or insignificant nature as to be irrelevant. In other words, an
affirmative finding of circumvention treats the parts and components as
constructively assembled into subject merchandise at the time of
import. As the legislative history states:
[T]he application of the U.S. finishing or assembly provision
will not require new injury findings as to each part or component.
The anti-circumvention provision is intended to cover efforts to
circumvent an order by importing disassembled or unfinished
merchandise for assembly in the United States. Hence, the ITC would
generally advise as to whether the parts or components ``taken as a
whole'' fall within the injury determination. If more than one part
or component is proposed for inclusion, the ITC would * * *
determine whether the imported parts or components can be
constructively assembled so as to constitute a like product for
purposes of the original order * * * . The ITC would advise as to
whether the inclusion of the parts or
[[Page 34216]]
components, taken as a whole, would be inconsistent with its
findings in the prior injury determination. H.R. Conf. Rep. No. 576,
100th Cong., 2d Sess. 603 (1988) (emphasis added).
In short, it is plain that Congress intended to allow
anticircumvention inquiries into parts or components such as the
leaded-steel billets at issue here. Of course, the anticircumvention
provisions are crafted to ensure compliance with the injury
requirements of the statute and the WTO agreements on antidumping and
countervailing measures. Thus, a circumvention finding can apply to
parts and components that meet the criteria of section 781(a).
(3) Whether There Are Threshold Standards That Must Be Met in
Requesting a Circumvention Inquiry
One interested party expresses a concern with respect to the
sufficiency of the evidence presented in the application submitted to
the Department and argues that, the application does not contain
information on subsidization and injury of the leaded-steel billets. In
their view, the Department should examine whether the leaded-steel
billets benefit from the subsidy established in the original
investigation on lead bar, before including this product in the scope
of the lead bar orders.
The regulatory provisions on circumvention, which fall within the
section on scope rulings, do not set forth specific requirements for
the information that must be included in an anticircumvention
application as compared to a petition for an investigation. Cf. 19
C.F.R. 353.12 and 355.12. The regulations simply state that
applications for scope rulings, which include circumvention inquiries,
must include:
(1) A detailed description of the product, including technical
characteristics and uses of the product, and its current U.S. Tariff
Classification Number;
(2) A statement of the interested party's position as to whether
the product is within the scope of an antidumping order, including
(i) A summary of the reasons for this conclusion,
(ii) Citations to any applicable statutory authority, and
(iii) Attachment of any factual support for this position,
including applicable portions of the Secretary's or the Commission's
investigation.
19 C.F.R. 353.29(b). See also 19 C.F.R. 355.29(b). These
requirements are essentially the same in the new regulations. See
Sec. 351.225(c).
The legislative history of the URAA provides some additional
guidance on the standards for initiation of anticircumvention
inquiries. The Senate Report states that ``the Committee expects
Commerce to initiate circumvention inquiries in a timely manner and
generally consistent with the standards for initiating antidumping or
countervailing duty investigations.'' S. Rep. 103-412, 103rd Cong., 2d
Sess. 83 (1994). The Department has interpreted that report language to
mean that the general evidentiary requirements for initiating petitions
(e.g., allege the elements necessary for relief, accompanied by
information reasonably available to support those allegations) apply to
anticircumvention requests. Korean TV's Circumvention, 61 FR 1342.
Furthermore, as described above, should the Department determine
that the criteria of section 781(a) are met, we would consider the
parts and components, in all meaningful respects, to be the subject
merchandise upon being imported. Therefore, the Department's original
subsidization and injury determinations reached with respect to the
subject merchandise will be equally valid for the parts and components
being completed or assembled in the United States which have been
determined to be included within the scope of the order. Pursuant to
section 781(e) of the Act, the ITC will be notified prior to any
proposed action that the Department may take which would result in a
final affirmative finding of circumvention.
(4) Whether a Company Excluded From an Order Can Be Included in a
Circumvention Inquiry
Thyssen notes that it was excluded from the countervailing duty
order on lead bar from Germany because it received a de minimis rate in
the investigation. Accordingly, it argues that its exports of leaded-
steel billets cannot be found to be within the scope of the
countervailing duty order on lead bar.
While we agree with Thyssen with respect to the countervailing duty
order, Thyssen remains covered by the antidumping duty order under the
``all other'' category. As such, Thyssen will be included in our
examination of the alleged circumvention of the antidumping duty order
on lead bar from Germany.
This notice is published in accordance with section 781(a) of the
Act (19 U.S.C. 1677j(a)) and 19 CFR 353.29 and 19 CFR 355.29.
Dated: June 18, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-16683 Filed 6-24-97; 8:45 am]
BILLING CODE 3510-DS-P