[Federal Register Volume 62, Number 134 (Monday, July 14, 1997)]
[Notices]
[Pages 37543-37556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18448]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-815]


Certain Welded Stainless Steel Pipe From Taiwan; Final Results of 
Administrative Review

July 8, 1997
AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Final Results of Administrative Review.

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SUMMARY: On January 10, 1997 the Department of Commerce (the 
Department) published in the Federal Register the preliminary results 
of the 1994--1995 administrative review of the antidumping duty order 
on certain welded stainless steel pipe from Taiwan (A-583-815). This 
review covers one

[[Page 37544]]

manufacturer/exporter of the subject merchandise during the period 
December 1, 1994 through November 30, 1995.
    We gave interested parties an opportunity to comment on the 
preliminary results. Based upon our analysis of the comments received 
we have changed the results from those presented in our preliminary 
results of review.

EFFECTIVE DATE: July 14, 1997.

FOR FURTHER INFORMATION CONTACT: Robert James at (202) 482-5222 or John 
Kugelman at (202) 482-0649, Antidumping and Countervailing Duty 
Enforcement Group III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.
    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 1995 regulations, as amended by the 
interim regulations published in the Federal Register on May 11, 1995 
(60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

    On December 30, 1992, the Department published in the Federal 
Register the antidumping duty order on welded stainless steel pipe 
(WSSP) from Taiwan (57 FR 62300). On December 4, 1995, the Department 
published the notice of ``Opportunity to Request Administrative 
Review'' for the period December 1, 1994 through November 30, 1995 (60 
FR 62070). In accordance with 19 CFR 353.22(a)(1) (1995), respondent Ta 
Chen Stainless Pipe Co., Ltd. and its wholly-owned U.S. subsidiary, Ta 
Chen International (collectively, Ta Chen), requested that we conduct a 
review of its sales. On February 1, 1996, we published in the Federal 
Register our notice of initiation of this antidumping duty 
administrative review covering the period December 1, 1994 through 
November 30, 1995 (61 FR 3670).
    We published the preliminary results of this review in the Federal 
Register on January 10, 1997 (Certain Welded Stainless Steel Pipe From 
Taiwan; Notice of Preliminary Results of Administrative Review, 62 FR 
1435 (Preliminary Results)). Because it was not practicable to complete 
this review within the normal time frame, on February 27, 1997, we 
published in the Federal Register our notice of extension of time 
limits for these final results (62 FR 11825). The Department held a 
hearing on April 28, 1997; at petitioners' request, a portion of this 
hearing was held in camera. Because we determined that the case briefs 
filed by both parties, and petitioners' rebuttal brief, contained new 
factual information, we returned these documents to the parties. As 
instructed, both parties timely submitted corrected versions of their 
case briefs, and petitioners resubmitted their rebuttal brief.
    Furthermore, on June 11 and 12, 1997, the Department conducted a 
verification of Ta Chen's U.S. sales data at the premises of Ta Chen 
International. Due to our findings during that verification we have 
amended our application of facts available for these final results (see 
``Results of Verification,'' below). The full results of our 
verification are detailed in the Department's verification report. A 
public version of this, and all public information referenced in this 
notice, is on file in Room B-099 of the Main Commerce Building.
    The Department has now completed this review in accordance with 
section 751 of the Tariff Act.

Scope of the Review

    The merchandise subject to this administrative review is certain 
welded austenitic stainless steel pipe (WSSP) that meets the standards 
and specifications set forth by the American Society for Testing and 
Materials (ASTM) for the welded form of chromium-nickel pipe designated 
ASTM A-312. The merchandise covered by the scope of the order also 
includes austenitic welded stainless steel pipes made according to the 
standards of other nations which are comparable to ASTM A-312.
    WSSP is produced by forming stainless steel flat-rolled products 
into a tubular configuration and welding along the seam. WSSP is a 
commodity product generally used as a conduit to transmit liquids or 
gases. Major applications for WSSP include, but are not limited to, 
digester lines, blow lines, pharmaceutical lines, petrochemical stock 
lines, brewery process and transport lines, general food processing 
lines, automotive paint lines, and paper process machines.
    Imports of WSSP are currently classifiable under the following 
Harmonized Tariff Schedule of the United States (HTS) subheadings: 
7306.40.5005, 7306.04.5015, 7306.40.5040, 7306.40.5065, and 
7306.40.5085. Although these subheadings include both pipes and tubes, 
the scope of this investigation is limited to welded austenitic 
stainless steel pipes. Although the HTS subheadings are provided for 
convenience and Customs purposes, our written description of the scope 
of this order is dispositive.
    The period for this review is December 1, 1994 through November 30, 
1995. This review covers one manufacturer/exporter, Ta Chen.

Results of Verification

    On June 11 and 12, 1997, the Department conducted a verification of 
Ta Chen's U.S. sales data at the headquarters of Ta Chen International 
(TCI) in Long Beach, California. In discussing its U.S. sales process 
with the Department's verifiers, Ta Chen revealed for the first time 
that some of its sales to one U.S. customer (not the ``Company B'' 
discussed later) were, in fact, to another person, with the reported 
U.S. customer acting as a commissionaire. The actual, final customer is 
not among those listed in Ta Chen's U.S. sales data nor did Ta Chen 
previously identify the named customer as a commissionaire. In 
addition, no commission amounts were reported for these sales. 
Therefore, as a result of our findings at verification, we have 
concluded that Ta Chen misreported an unknown number of sales to this 
customer. We find that Ta Chen failed to act to the best of its ability 
in reporting its U.S. sales to these persons and, in fact, by its own 
admission withheld the identity of the second person until six months 
after our preliminary results of review. Because Ta Chen's data do not 
permit us to identify which sales were made to which person, we cannot 
segregate the misreported sales for purposes of our final margin 
calculation. Therefore, we have determined to apply adverse facts 
available to all of Ta Chen's sales made to this customer, pursuant to 
section 776(b) of the Tariff Act. For further discussion of this issue, 
see the public version of the Department's final analysis memorandum.

Analysis of Comments Received

    We received case briefs from Ta Chen and petitioners on April 10, 
1997. Ta Chen and petitioners timely filed rebuttal briefs on April 24, 
1997. We returned both parties' case briefs and petitioners' rebuttal 
brief and asked that the parties remove certain information 
inappropriate for the record of this review. Both parties complied with 
our request; our analysis addresses the issues raised in these revised 
briefs below.

[[Page 37545]]

    Many of the comments that follow concern two of Ta Chen's U.S. 
customers, referred to here as Company A and Company B. According to Ta 
Chen, prior to June 1992, Ta Chen had sold pipe from the U.S. inventory 
of its subsidiary, TCI. In June 1992, TCI and Company A (a U.S. company 
established in 1988 by the president of another Taiwanese firm), signed 
an agreement whereby Company A would purchase all of TCI's U.S. 
inventory and would effectively replace TCI as the principal 
distributor of Ta Chen pipe products in the United States. Company A 
also committed itself to purchasing substantial dollar values of Ta 
Chen products over the next two years. According to Ta Chen, in 
September 1993, a member of Ta Chen's board of directors sold all of 
his Ta Chen stock, severed all ties with Ta Chen, and incorporated a 
new entity, Company B. This new Company B purchased all of Company A's 
assets, including inventory, and assumed all of Company A's obligations 
regarding its lease of space from Ta Chen's president, purchase 
commitments, credit arrangements, etc. The Department cited Ta Chen's 
affiliation to Company B, and Ta Chen's failure to report sales made by 
Company B to the first unaffiliated customer in the United States as 
grounds for the use of adverse facts available as to these sales in our 
Preliminary Results for the instant period of review (62 FR 1435, 
January 10, 1997). A more detailed discussion of these issues, which 
necessitates extensive reference to business proprietary information, 
is included in the Department's Final Results Analysis Memorandum, a 
public version of which is on file in Room B-099 of the Main Commerce 
Building.
    Comment 1: Ta Chen asserts that since the events of the third 
period of review (POR) took place prior to enactment of the URAA, 
``fundamental fairness'' demands that the Department use the statutory 
and regulatory provisions in force at that time (i.e., in 1994). 
Because its sales to Company B pre-dated enactment of the URAA, Ta Chen 
argues, application of the URAA's definition of affiliation through 
control represents an unfair, retroactive application of a new 
statutory provision. Ta Chen notes that all of its sales to Company B 
in this third POR occurred in August 1994 and were subject to this 
third review only because the merchandise did not enter the United 
States until after December 1, 1994 (i.e., after the start of the third 
POR). Therefore, Ta Chen argues, its August 1994 sales should be 
examined under the statutory provisions in effect at the time of the 
sales. Ta Chen insists that under the pre-URAA statute, two parties 
could only be deemed related if common equity ownership were found. Ta 
Chen further argues that its actions during the third review were based 
on its best understanding of U.S. antidumping law then in force. The 
retroactive application of statutory revisions which came into effect 
four months after the sales at issue is, Ta Chen believes, manifestly 
unfair.
    Ta Chen further insists that Company B is not a ``related party'' 
as defined by the pre-URAA statute which was in effect at the time of 
all of Ta Chen's sales to Company B. First, Ta Chen maintains that 
under the 1994 statute, section 771(13) of the Tariff Act defines an 
``exporter'' as including ``the person by whom or for whose account the 
merchandise is imported into the United States, and the exporter, 
manufacturer, or producer owns or controls * * * any interest in the 
business conducted by such person * * *''. Under this statutory 
framework, Ta Chen argues, the inquiry should focus upon whether Ta 
Chen as the foreign exporter and Ta Chen International (TCI) as the 
importer of record are related, not whether Ta Chen and TCI's customer, 
Company B, are related. This latter question ``is not relevant for 
purposes of U.S. dumping law.'' According to Ta Chen, TCI, not Company 
B, is the person ``by whom'' the subject merchandise was imported. 
Because Company B is not ``the person by whom or for whose account the 
merchandise is imported into the United States,'' Ta Chen claims that a 
threshold condition for application of the related-party provisions of 
the pre-URAA statute has not been met. See Ta Chen's Case Brief at 3.
    Further, Ta Chen maintains that Ta Chen and Company B cannot be 
considered related because Ta Chen did not own or hold any part of 
Company B, nor did Company B own any part of Ta Chen, nor did the two 
firms share common directors or officials. Ta Chen cites Dynamic Random 
Access Memories from Korea; Final Results of Administrative Review, 58 
FR 15467 (March 23, 1993) (DRAMs), and Disposable Pocket Lighters from 
Thailand; Final Results of Administrative Review, 60 FR 14263, 14268 
(March 16, 1995) as supporting its contention that, under the pre-URAA 
statute, two parties cannot be considered related absent common stock 
ownership. Ta Chen also notes to the Department's findings in several 
cases that despite the close operational control of parties linked 
through a Japanese keiretsu, these parties were not related for 
purposes of the statute. See Ta Chen's Case Brief at 6, citing Cellular 
Mobile Telephones and Subassemblies from Japan, 54 FR 48011, 48016 
(November 20, 1989).
    Ta Chen also notes judicial precedent supporting its interpretation 
of the related-party provision of the pre-URAA statute, including the 
Court of International Trade's (the Court's) decision in Zenith v. 
United States 606 F. Supp. 695, 699 (CIT 1985), aff'd Zenith v. United 
States, 783 F. 2d. 184 (Fed. Cir. 1986) (Zenith). There, the Court 
found that ``the requirements of our law are satisfied when (the 
Department) investigates whether there is any financial relationship * 
* *. The discernment of relationships which do not find expression in 
concrete financial terms is not something which can be posited as a 
mandatory duty, and is not required by [the statute].'' Ta Chen's Case 
Brief at 5. And, Ta Chen maintains, in Torrington Company v. United 
States, Slip Op. 97-29 (CIT March 7, 1997), the Court found there was 
no requirement for the Department to look beyond the statute's 
``bright-line test for defining related parties.''
    Ta Chen argues that its interpretation of the related-party 
provisions of the pre-URAA statute is further supported by the 
Statement of Administrative Action (SAA) which accompanied the URAA. In 
explaining the need for refining the statutory definition of affiliated 
persons, Ta Chen continues, the SAA stressed that ``including control 
in the definition of `affiliated' will permit a more sophisticated 
analysis which better reflects the realities of the marketplace.'' Ta 
Chen's Case Brief at 7, quoting the SAA at 78; see also Large Newspaper 
Printing Presses and Components Thereof From Japan; 61 38139 (July 23, 
1996) and Engineering Process Gas Turbo-Compressor Systems from Japan, 
61 FR 65013 (December 10, 1996).
    Further, Ta Chen argues that when the pre-URAA statute refers to 
related parties controlling, through stock ownership, directly or 
indirectly, ``any interest'' in the business of the other, the interest 
referred to is stock ownership. According to Ta Chen, the Department 
has consistently defined an ``interest'' as representing ``no less than 
five percent ownership.'' Ta Chen's Case Brief at 10, quoting from a 
February 1, 1996 Concurrence Memorandum in Certain Fresh Cut Flowers 
from Colombia. Ta Chen maintains that petitioners' cites to pre-URAA 
determinations are not on point; each of these cases involved either 
equity ownership or common directors. For

[[Page 37546]]

example, in Roller Chain, Other Than Bicycle Chain, From Japan, 57 FR 
43697 (September 22, 1992), Ta Chen claims that the parties were 
related through common directors, and, in fact, through common 
ownership by the respondent of 60 percent of the related firm's stock. 
Ta Chen avers that petitioners' reliance on Fresh Cut Flowers from 
Colombia (61 FR 42833, 42861 (August 19, 1996)) (Flowers) is also 
misplaced. While the Department found in that case that control was 
sufficient to establish affiliation, Ta Chen stresses that the control 
at issue consisted of common board members controlling voting power in 
both entities, a situation which, Ta Chen asserts, does not obtain in 
the instant review.
    As to the proper statutory provisions governing this administrative 
review, petitioners suggest that ``Ta Chen's assertions are 
inconsistent with the plain language of the statute and must be 
rejected.'' Petitioners note that section 291 of the URAA mandates that 
this review be conducted according to the Tariff Act, as amended by the 
URAA, since the review was initiated after January 1, 1995 (the 
effective date for the changes mandated by the URAA). Further, 
petitioners aver that all administrative reviews conducted pursuant to 
U.S. law involve the retrospective examination of sales made; the URAA 
did not alter this aspect of the antidumping statute. Petitioners also 
note that Ta Chen requested the instant administrative review in 
December 1995, or nearly a year after the URAA took effect; Ta Chen was 
``on full notice'' as to the applicable statutory provisions.
    Finally, petitioners maintain that since Ta Chen is both an 
``affiliated person'' under section 771(33) of the URAA-amended statute 
and a ``related party'' in accordance with section 771(13) of the pre-
URAA statute, Ta Chen's complaint about fairness is infirm. Petitioners 
note that the definition of ``exporter'' for purposes of determining 
U.S. price found at section 771(13) of the pre-URAA statute refers 
explicitly to one person controlling ``through stock ownership or 
control or otherwise'' any interest in the business conducted by the 
other person. Petitioners' Rebuttal Brief at 29, quoting section 
771(13)(B) and (C) of the Tariff Act. Thus, petitioners assert, under 
``the plain terms'' of the pre-URAA statute, ``stock ownership was not 
the sine qua non to finding parties to be related for purposes of 
identifying the U.S. party as an `exporter.'' '
    Petitioners further assail Ta Chen's ``quest to prove that Ta Chen 
was not related to (Company B) by virtue of its control over (Company 
B's) activities under the pre-1995 law.'' According to petitioners, the 
focus of the related-party definition of ``exporter'' is not solely 
upon the person by whom the merchandise is imported into the United 
States, but also upon the person ``for whose account'' the merchandise 
is imported. In the instant case, petitioners argue, Company B was the 
person ``for whose account'' subject WSSP was imported during the POR. 
Additionally, Ta Chen's own representations during this review that TCI 
was a mere ``facilitator'' for its U.S. sales is, petitioners believe, 
further proof that TCI was not the party ``for whose account'' the 
merchandise was imported.
    As to the need for an equity ownership to demonstrate two parties 
are related, petitioners concede that in the past the Department has 
focused primarily upon stock ownership in rendering its related-party 
determinations. However, petitioners aver that Ta Chen's interpretation 
``carefully omits the statutory reference to control outside equity 
ownership.'' Petitioners' Rebuttal Brief at 31. According to 
petitioners, the reference to control of a company other than through 
stock ownership makes clear that equity ownership was not the sole 
prerequisite to finding two parties related.
    Petitioners cite to past Departmental and judicial determinations 
as supporting a conclusion that parties may be found to be related 
absent equity ownership. Petitioners point to Flowers, where the 
Department ``recognized that section 771(13) ``establishes a standard 
for relationship based on association, ownership or control.' '' 
Petitioners' Case Brief at 32. Petitioners also cite to the Court's 
decision in E.I. DuPont de Nemours & Co. v. United States (841 F. Supp. 
1237, 1248 (CIT 1993)) wherein the Court found that ``[t]he ITA is not 
constrained to examine only financial relationships in making the 
determination,'' and that ``[t]he requirements of U.S. law were 
satisfied when the ITA investigated both financial and non-financial 
connections.'' Id.; see also Sugiyama Chain Co., Ltd. v. United States, 
852 F. Supp. 1103, 1110 (CIT 1994).
    Department's Position: We agree with petitioners that the Tariff 
Act, as amended by the provisions of the URAA, clearly governs this 
third administrative review. As the URAA and its accompanying SAA make 
clear, ``amendments to the (Tariff) Act will apply to investigations 
and reviews based on petitions or requests received after the WTO 
Agreement enters into force with respect to the United States,'' i.e., 
January 1, 1995. See SAA at 225. Therefore, the Department has no 
discretion to apply selectively the amendments effected by the URAA. As 
petitioners note, Ta Chen was the sole party to request this 
administrative review, which it did on December 12, 1995, or nearly one 
year after the URAA took effect. Thus, any argument that Ta Chen is 
being subjected to an unfair, retroactive application of the statute is 
clearly without merit.
    Furthermore, we have preliminarily determined in the first and 
second administrative reviews of this order, conducted under the pre-
URAA Tariff Act, that Ta Chen is, in fact, related to Company A and 
Company B, using the definition of ``related'' found in Section 771(13) 
of the old statute. See Certain Welded Stainless Steel Pipe From 
Taiwan; Preliminary Results of Administrative Reviews, 62 FR 26776 (May 
15, 1997); see also Certain Stainless Steel Butt-Weld Pipe Fittings 
From Taiwan; Preliminary Results of Administrative Review, 62 FR 26773 
(May 15, 1997). As we note in those reviews, section 771(13) of the 
Tariff Act defines the ``exporter'' as including the ``person by whom 
or for whose account the merchandise is imported into the United States 
if * * * the exporter, manufacturer, or producer owns or controls, 
directly or indirectly, through stock ownership or control or 
otherwise, any interest in the business conducted by such person.'' 
Section 771(13)(C) of the 1994 Tariff Act (emphasis added). Thus, the 
plain language of the statute clearly authorizes the Department to 
consider relationships other than those arising through direct equity 
ownership. Our preliminary determination in the first and second 
reviews of WSSP is that Company B should properly be included as the 
``person by whom or for whose account'' the merchandise was imported 
into the United States during the relevant periods of review.
    In addition, Ta Chen's reliance on the Court's finding in Zenith is 
misplaced. There, the Court found that there was no statutory 
requirement that the Department examine ``relationships which do not 
find expression in concrete financial terms.'' Nowhere in its decision, 
however, did the Court suggest that the Department was statutorily 
barred from an examination of such non-financial relationships. Nor 
could it be so barred, as the statute expressly permits such an 
examination.
    Ta Chen also exaggerates the changes in the statutory treatment of 
``related parties'' versus ``affiliated persons'' under the URAA. As Ta 
Chen notes, the

[[Page 37547]]

SAA stresses that subparagraph (G) of the new section 771(33) provides 
for situations wherein one person ``controls'' another, and explains 
that this addition ``will permit a more sophisticated analysis which 
better reflects the realities of the marketplace.'' Contrary to Ta 
Chen's argument, however, subparagraph (G) of section 771(33) does not 
represent a fundamental change in the statute's intent. Rather, this 
subparagraph merely reinforces the old statute's definition of parties 
being ``related'' when one ``controls, directly or indirectly, through 
stock ownership or control or otherwise'' an interest in the other. 
This comports with past Departmental precedent on this issue. For 
example, in Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al., we noted that we could find 
parties related if ``the nature of their relationship allows the 
possibility of price and cost manipulation.'' 60 FR 10900, 10945 
(February 28, 1995). Likewise, in Certain Iron Construction Castings 
From Canada, we stated explicitly that our related party determinations 
were ``not based solely on the extent of [the parties'] financial 
relationships.'' 60 FR 9009 (February 16, 1995); see also Final 
Determination of Sales at Less Than Fair Value; Coated Groundwood Paper 
From Finland, 56 FR 56363, 56369 (November 4, 1991).
    Comment Two: Ta Chen maintains that, even if the URAA-amended 
Tariff Act controls this administrative review, the Department 
nevertheless erred in concluding that Ta Chen and Company B are 
``affiliated persons.'' Ta Chen insists that the Department's 
preliminary determination that ``Ta Chen effectively exercised 
operational control over this putatively unaffiliated customer'' is 
contrary to the record evidence, the statute, the Department's 
regulations, and Departmental practice on this issue. Citing the 
Department's proposed regulations, Ta Chen notes four factors the 
Department will consider in determining affiliation. These are: (i) 
Corporate or family groupings; (ii) Franchise or joint venture 
agreements; (iii) Debt financing; and (iv) Close supplier 
relationships. See Notice of Proposed Rulemaking, Section 351.102, 61 
FR 7308, 7310 (February 27, 1996). Ta Chen insists that the first two 
are irrelevant, as the Department has not suggested that Ta Chen and 
Company B are constituents of a single corporate or family group. 
Likewise, Ta Chen argues, Company B is not a franchisee of Ta Chen, nor 
has it entered into a joint venture arrangement with Ta Chen. Ta Chen 
dismisses the third point, stating that Ta Chen did not finance any 
debt of Company B. Thus, Ta Chen maintains, only the last indicium, 
close supplier relationships, is relevant in this review, and this 
factor, as it is commonly interpreted by the Department, also does not 
support the preliminary finding of affiliation.
    Ta Chen argues that in the instant case the Department's concern is 
whether one party enjoys ``the ability to exercise restraint or 
direction over another party's pricing, cost, or production 
decisions.'' 61 FR 7308, 7310 (February 27, 1996). Because Company B is 
a pipe distributor, Ta Chen avers, control over cost and production 
decisions is not at issue; therefore, the Department's present inquiry 
focuses solely upon control over pricing. Ta Chen claims that the 
Department did not explain in its Preliminary Results any such control 
exercised by Ta Chen over Company B. According to Ta Chen, the ``lack 
of an adequate connection between a crucial determination and the 
record evidence renders the determination unlawful.'' Ta Chen's Case 
Brief at 18; see also Daewoo Electronics Co., Ltd. v. United States 760 
F.Supp. 200 (1991). Ta Chen maintains that the Department's dictum, 
without sufficient explanation, that Ta Chen's control of Company B was 
``clearly evident'' runs counter to past judicial instruction. Id. at 
19, citing NACCO Materials Handling Group v. United States, 932 F.Supp. 
304, 312 (CIT June 18, 1996), and FAG Kugelfischer Georg Schafer KGaA 
v. United States, Slip Op. 96-108 (CIT July 10, 1996).
    Ta Chen further argues that the factors which the Department does 
cite in its Preliminary Results do not support a finding of 
affiliation. For example, Ta Chen maintains that, contrary to our 
preliminary determination, Ta Chen did not control the disbursements of 
Company B. Ta Chen claims that physical custody of Company B's 
signature stamp did not constitute control over Company B's 
disbursements. Rather, Ta Chen argues, custody of the signature stamp 
merely permitted Ta Chen's bookkeeper, with prior authorization from 
Company B, to sign checks for Company B when its executives were 
``otherwise occupied.'' According to Ta Chen, Company B could, and did, 
write checks without first seeking Ta Chen's permission, nor could Ta 
Chen prevent such disbursements. Thus, Ta Chen insists, physical 
custody of the signature stamp permitted Ta Chen to monitor, not 
control, Company B's disbursements.
    Ta Chen also avers that its credit monitoring ``is typical of that 
found between unaffiliated parties.'' Pointing to statements provided 
by Ta Chen on the record of this review, Ta Chen insists that pipe 
distributors typically allow their unaffiliated suppliers complete and 
unfettered access to every aspect of their business operations. Ta Chen 
further argues that the published literature on the Uniform Commercial 
Code makes clear that creditors often employ monitoring of a debtor's 
activities as ``the only effective mechanism'' for uncovering 
misfeasance by the debtor which would harm the creditor's interests. 
Besides, Ta Chen concludes, the Department ``has never found credit 
monitoring relevant for purposes of determining if parties are 
affiliated.'' Ta Chen's Case Brief at 23.
    Ta Chen also disagrees with the Department's preliminary finding 
that Ta Chen's computer monitoring of Company B constituted an element 
of control over this customer. Ta Chen avers that as it extends 
``substantial credit'' to Company B, it is necessary for Ta Chen to 
institute such monitoring to ``provide early warning of cash flow 
problems which could adversely affect ability to pay debt.'' Ta Chen's 
Case Brief at 28, citing to Ta Chen's January 13, 1997 submission. 
Further, according to Ta Chen, such access facilitated ``just-in-time'' 
deliveries of merchandise. Ta Chen claims that Ta Chen's monitoring of 
Company B's inventory did ``not provid[e] any information that is not 
publicly provided in the metals industry anyway.'' And the ``just-in-
time'' delivery arrangements have never been grounds for finding two 
parties affiliated, Ta Chen argues, citing to Steel Wheels From Brazil, 
54 FR 21456, 21457 (1989), and Polyethylene Terephthalate Film, Sheet, 
and Strip From Japan, 56 FR 16300 (1991). Finally, such computer links 
do not constitute control of prices, and are, in Ta Chen's view, 
irrelevant.
    As to shared sales department personnel, Ta Chen states that ``Ta 
Chen and Company B had no common employees, at any time.'' Id. Ta Chen 
asserts that its assistance to Company B was limited to ``clerical 
assistance,'' performed for Ta Chen's benefit and only incidentally for 
Company B's benefit. Furthermore, Ta Chen argues, such assistance is 
not sufficient grounds for finding parties affiliated. Ta Chen cites 
the following examples of the assistance these parties provided for 
each other: clerical assistance, training, use of office equipment, 
answering inquiries and forwarding messages, accounting training and 
assistance, suggestions on working with customs

[[Page 37548]]

brokers, training on shipping procedures, data entry, and ``other 
clerical book-keeping type [sic] assistance.'' Id. at 24. According to 
Ta Chen, ``the Department has never found such cooperation is 
control.'' Id., citing Large Newspaper Printing Presses and Components 
Thereof From Japan, 61 FR 38139, 38156 (1996). Ta Chen asserts that for 
the Department to find affiliation, the common employees must ``share 
in the day-to-day management.'' In fact, the Department's standard 
antidumping questionnaires asks respondents to address ``computer, 
legal, accounting, audit and or business system development assistance, 
personnel training, personnel exchange and manpower assistance'' in 
making level-of-trade determinations; this indicates the Department's 
recognition that respondents will provide such services to unaffiliated 
persons.
    With respect to the participation of Ta Chen's president in 
negotiating prices between Company B and its subsequent customers, Ta 
Chen argues that ``a distributor's credibility significantly depends 
upon its customers' belief that the mill supports the distributor.'' Ta 
Chen's Case Brief at 30. In that capacity, Ta Chen asserts, Ta Chen 
officials would meet with Company B's customers. Ta Chen also states 
that ``Ta Chen officials knew the prices which would be accepted by Ta 
Chen's distributor,'' (i.e., Company B). According to Ta Chen, if the 
distributor's customer indicated interest in purchasing Ta Chen 
products at prices it knew were acceptable to Company B, the Ta Chen 
official would instruct the customer to prepare a purchase order for 
Company B. See Ta Chen's Case Brief at 30, citing to its January 13, 
1997 submission. In these contacts, Ta Chen insists, Ta Chen was acting 
solely on its own behalf, as was Company B. Such activities as cited, 
Ta Chen argues, do not ``constitute negotiation or control of prices.'' 
Ta Chen maintains that there are no Departmental determinations on this 
point pursuant to the URAA statute. Old-law precedent, Ta Chen 
suggests, favors Ta Chen's interpretation. In Certain Residential Door 
Locks From Taiwan, for example, the Department concluded that despite 
one party's ability to exercise control over prices, the entities were 
unrelated because they operated as ``separate and distinct entities,'' 
and were ``separately owned and operated.'' Id.
    As to the debt financing arrangement, Ta Chen claims that 
``(Company B) did not offer its accounts receivable and inventory as 
security for a loan obtained by TCI. Rather, Ta Chen requested, and 
(Company B) agreed to grant, a UCC security interest in (Company B's) 
accounts receivable in addition to the inventory which was the subject 
of the credit arrangement.'' Ta Chen's Case Brief at 33. Ta Chen argues 
that the fact that the lien was intended to secure TCI's debt ``is not 
relevant to these proceedings.'' According to Ta Chen, the UCC 
recognizes the assignability of security interests by contract. Ta Chen 
further argues that Company B's assigning its inventory to TCI's 
creditor had the same effect as if TCI had exercised its right to 
assign its security interests to the bank. Furthermore, Ta Chen 
insists, such assignments ``occur between, and are consistent with the 
actions of, unaffiliated parties.'' Id. Under the URAA-amended statute, 
the Department has not held that a respondent's loans to a customer 
make the parties affiliated for purposes of the Tariff Act.
    Furthermore, as to close supplier relationships, Ta Chen argues 
that while Company B may have relied exclusively upon Ta Chen as a 
supplier of WSSP, it was free to do business with other companies. Ta 
Chen asserts that under the URAA, the Department has never found an 
exclusive-supplier relationship sufficient to deem the supplier and 
customer affiliated. See Ta Chen's Case Brief at 40, citing Cold-Rolled 
and Corrosion Resistant Carbon Steel Flat Products From Korea, 61 FR 
51882, 51885 (October 4, 1996) (Carbon Steel Flat Products); Open-End 
Spun Rayon Singles Yarn From Austria, 62 FR 14399, 14403 (March 26, 
1997) (Rayon Yarn); Melamine Institutional Dinnerware From Indonesia, 
62 FR 1719, 1726 (January 13, 1997) (Melamine Dinnerware). With respect 
to old-law precedent, Ta Chen argues that, a fortiori, exclusive-
supplier relationships do not render two parties related. Portable 
Electric Typewriters From Japan, 48 FR 7768, 7770 (1983); Certain 
Residential Door Locks From Taiwan, 54 FR 53153 (Comment 18) (1989).
    Finally, Ta Chen notes that its audited financial statements do not 
treat Company B as a related party, and that its prices to Company B 
were ``always less than its net ex-factory price to other U.S. 
customers.'' Id. at 43 (emphasis in original). Ta Chen continues: 
``[i]f Ta Chen had wanted to use an affiliated party to manipulate its 
dumping margin, * * * Ta Chen would have charged that party more than 
the average. It did not.'' Id. at 44.
    Petitioners maintain that the Department correctly determined that 
Ta Chen and Company B were affiliated during the third administrative 
review, arguing that the evidence of affiliation presented by Ta Chen 
in its November 12, 1996 supplemental questionnaire response is ``clear 
and overwhelming.'' Petitioners'' Case Brief at 3. Petitioners assert 
that Company B ``was not at liberty to act in any meaningful commercial 
sense apart from Ta Chen,'' and that the record evidence demonstrates 
that Ta Chen, in fact, ``completely directed (Company B's) 
operations.'' Id. Petitioners note that Ta Chen's attempts to buttress 
its assertion that its ties to Company B are common in the welded 
stainless steel pipe trade consist solely of ``statements'' from 
various individuals; each of these statements lack any examples 
demonstrating where other unaffiliated companies were so inextricably 
linked. Thus, the Department should treat these ``statements'' as 
``baseless ipse dixits'' and should continue to treat Ta Chen and 
Company B as affiliated persons. Id. at 4. According to petitioners, Ta 
Chen has failed to show how any of the circumstances cited by the 
Department in its Preliminary Results as indicia of Ta Chen's 
affiliation to Company B are typical practices in the stainless steel 
pipe industry; in fact, petitioners maintain, these practices are not 
typical. Rather, petitioners charge, Ta Chen continues to dissemble in 
arguing that all of its U.S. sales in this review were to unaffiliated 
persons.
    Furthermore, petitioners aver, the Department's conclusion that Ta 
Chen and Company B are affiliated persons is supported by the plain 
language of the Tariff Act and the SAA which accompanied the URAA. 
According to petitioners, Ta Chen, in referring to the four indicia of 
control cited in the SAA (see above), does violence to the actual 
meaning of that passage by omitting the words ``for example.'' Thus, 
the four factors listed are ``not intended to identify the only means 
by which control could occur.'' Petitioners' Rebuttal Brief at 23. 
Rather, petitioners contend, the statute and SAA direct the Department 
to base its determinations of affiliation on the specific facts of each 
case, with an emphasis upon whether one person was ``legally or 
operationally in a position to exercise restraint or control over the 
other person.''
    Petitioners also take issue with Ta Chen's characterization of the 
affiliated persons provisions of the Tariff Act. Contrary to Ta Chen's 
assertions, petitioners argue, the statute does not require a 
demonstration that one person set prices or costs for the other, but 
only that one person be ``in a position'' to control prices or costs. 
Evidence of this operational control, petitioners contend, is clear in 
Ta Chen's exclusive-supplier

[[Page 37549]]

relationship with Company B, in its control over Company B's 
disbursements through physical custody of Company B's signature stamp, 
in the two entities' shared sales department personnel, in Ta Chen's 
complete access to Company B's computer system, in Ta Chen's direct 
participation in negotiating subsequent resales by Company B, and in 
Company B's assigning its inventory and accounts receivable to TCI's 
creditor. Petitioners aver that these ties ``establish[  ] a degree of 
control that is un-paralleled, to petitioners'' knowledge, in any other 
case.'' Petitioners' Rebuttal Brief at 27. Even where the Department 
previously has found any one of these ties insufficient to establish 
affiliation, petitioners conclude, ``in no case has there ever been 
this collection of activities demonstrating operational control by a 
supplier over its customer.'' Id. (original emphasis). Petitioners 
suggest that this combination of factors ``more than satisfies the 
statutory requirement that Ta Chen be in a position to exercise legal 
or operational control over (Company B).'' Id.
    Department's Position: We disagree with Ta Chen's analysis of the 
affiliated persons provisions of section 771(33) of the Tariff Act. Ta 
Chen, through selective quotes from the SAA and our Notice of Proposed 
Rulemaking attempts to posit a bright-line standard to which the 
Department must adhere in analyzing the relationships between entities. 
However, as the Notice of Proposed Rulemaking makes clear, the 
Department has deliberately refrained from establishing any precise 
thresholds for a finding of control:

some indicia of the ability to exercise restraint or direction over 
another party's pricing, cost, or production decisions may not lend 
themselves to the use of simple black-and-white thresholds. 
Therefore, the Department intends to apply this new definition on a 
case-by-case basis considering all relevant factors including the 
indicia included in the regulatory definition. Mere identification 
of the presence of one or more of these or other indicia of control 
does not end our task. We will examine these indicia in light of 
business and economic reality to determine whether they are, in 
fact, evidence of control.

Notice of Proposed Rulemaking at 61 FR 7310 (emphases added).
    Thus, it is clear that neither the statute, the SAA, nor the 
Department's proposed regulations restrict the Department's inquiry to 
four specific factors. Rather, these were listed as illustrative 
examples of the types of relationships which might lead to a 
determination that two or more parties are affiliated within the 
meaning of section 771(33) of the Tariff Act. This is borne out by the 
limited corpus of Departmental precedent under the 1995 statute. Thus, 
in Certain Cut-to-Length Carbon Steel Plate From Brazil (62 FR 18486, 
18490 (April 15, 1997)) we stated the statute requires the Department 
``to base its findings of control on several factors, not merely the 
level of stock ownership.'' And in Large Newspaper Printing Presses and 
Components Thereof From Japan, after noting that close supplier 
relationships could be sufficient evidence of control, we stated that 
the Department would make its affiliated party determinations after 
taking ``into account all factors which, by themselves, or in 
combination, may indicate affiliations.'' 61 FR 38139 (July 23, 1996); 
see also Notice of Final Determination; Engineered Process Gas Turbo-
Compressor Systems From Japan, 62 FR 24394, 24403 (May 5, 1997).
    In addition, as we explained in the Preliminary Results, we 
conclude that the record evidence amply supports our determination that 
Ta Chen was affiliated with Company B. In reviewing the record, the 
Department finds no evidence of any distinct operational personality 
for Company B apart from Ta Chen and Ta Chen International: Company B 
was established at Ta Chen's behest, by current or former managers and 
officers of Ta Chen; was staffed entirely by current or former Ta Chen 
employees; and distributed only Ta Chen products in the United States.
    With respect to Ta Chen's physical custody of Company B's signature 
stamp, Ta Chen's custody of this stamp is prima facie evidence that it 
either exercised, or was in a position to exercise, control over 
Company B's disbursements. Ta Chen has not presented any evidence to 
the contrary.
    As for the credit monitoring of Company B by Ta Chen, we agree that 
it is common for a creditor to obtain reports regarding the status of a 
debtor's business activities. See, e.g., Nassberg, Richard T. The 
Lenders Handbook, American Law Institute, American Bar Association 
Committee on Continuing Professional Education, Philadelphia, 1994 at 
Chapter 7. However, we reject Ta Chen's claim that its dedicated 
computer connection to Company B represented a common example of such 
monitoring. Rather, the full-time and unlimited access to Company B's 
computer system afforded Ta Chen a far more invasive mechanism for 
monitoring than would be expected between unaffiliated parties. We note 
further that Ta Chen officials stated at the Department's recent 
verification at TCI that Company B maintained no security system or 
passwords with which to limit or terminate Ta Chen's access to its 
records; Ta Chen's access to Company B's accounting system was 
complete.
    With respect to common employees, in its case brief Ta Chen 
attempts to minimize this sharing of personnel. However, in its 
November 12, 1996 supplemental questionnaire response, Ta Chen stressed 
that Company A and Company B had no experience or knowledge regarding 
the U.S. market for WSSP. Ta Chen also claimed that ``TCI provided 
[Company A] with assistance from its personnel and, from time to time, 
the use of TCI office equipment,'' and noted that TCI ``could help fill 
any gaps in the know how or experience of the back-office personnel,'' 
dealing with such vital activities as billing, invoicing, accounts 
receivable, assistance in Customs matters, ``and other clerical 
functions.'' Ta Chen's November 12, 1996 Response at 51 and 53. We also 
note the movement of Ta Chen's former sales manager among Ta Chen, 
Company A, and Company B. Given the longstanding and intimate business 
dealings between this individual and the president of Ta Chen, we must 
question the degree of operational autonomy of Company A and Company B 
while under this individual's stewardship. We also note that this 
individual received substantial compensation from Ta Chen well after 
his claimed severance date of 1992. Further, Ta Chen's president met 
with Company B's customers, and participated directly in the 
negotiation of prices for Company B's subsequent resales of WSSP. Ta 
Chen's statement that it ``knew the prices which would be accepted by 
Ta Chen's distributor'' raises additional questions about the extent to 
which Company B was free to act in its own interest.
    With respect to debt financing (an indicium specifically mentioned 
in the SAA and Notice of Proprosed Rulemaking), whether Company B can 
be said to have ``offered'' its accounts receivable and inventory as 
collateral for a bank loan to TCI, or that TCI ``requested'' and 
Company B ``agreed'' to take such a step is not germane to our 
analysis. Either way, as we stated in our Preliminary Results, Company 
B ``placed its continued ability to operate in the hands of a 
putatively unaffiliated party.'' Preliminary Results at 1436. Despite 
the statements of various individuals which Ta Chen has placed on the 
record of this review, neither Ta Chen nor any of these individuals is 
able to cite to a single case where an unaffiliated party would accept 
this risk. We also disagree with Ta Chen's claim that Company B's 
pledging its

[[Page 37550]]

accounts receivable and inventory to TCI's bank was essentially akin to 
TCI securing a lien upon Company B and, in turn, assigning its rights 
to the bank. We note that the actual transaction involved a significant 
qualitative difference. In the latter case, TCI's security interest 
would be limited to the amount Company B owed against purchases of 
inventory. In the former case, Company B unilaterally, and without 
consideration, assigned its entire inventory and accounts receivable 
directly to TCI's bank to facilitate a loan for TCI. That Company B 
would accept this risk without any consideration--without even a 
written agreement memorializing the terms and duration of the 
agreement--does not comport with the commercial realities of dealings 
between unaffiliated companies. Nor has Ta Chen offered convincing 
evidence that this arrangement is, in fact, commonplace. As a final 
note, Ta Chen itself undermines the stated reason for this arrangement: 
to ensure payment by Company B to Ta Chen for purchases of stainless 
steel products. In its November 12, 1996 submission, Ta Chen asserts 
that the risk of default by Company B ``was not significant, since bad 
debt has not been a problem.'' The absence of a genuine credit risk 
would, in fact, attenuate the need for this extraordinary financial 
relationship. See Ta Chen's November 12, 1996 Supplemental Response at 
81.
    The existence of close supplier relationships is another factor 
specifically mentioned in the SAA. Here, too, our examination of Ta 
Chen's role as supplier to Company B supports a finding of affiliation. 
While Ta Chen claims that Company B was free to purchase stainless 
steel pipe from other suppliers, Ta Chen has not provided evidence to 
suggest that Company B ever looked to any producer other than Ta Chen 
as its supplier. In fact, Ta Chen has allowed that ``to the best of its 
knowledge'' (which we must presume was extensive, given Ta Chen's 
computer access and custody of the signature stamp), Ta Chen was the 
exclusive supplier of stainless steel pipe products to Company B. 
Furthermore, the cases Ta Chen cites on this point are inapposite. In 
each case, we did not conclude that a close supplier relationship was 
insufficient grounds for a finding of affiliation; rather, we concluded 
that no close supplier relationship of any kind existed. In Carbon 
Steel Flat Products, for example, we found that no exclusive supplier 
relationship existed between the respondents and the named entities. 
See Final Results of Administrative Review, 62 FR 18404, 18417 (April 
15, 1997). Likewise, in Rayon Yarn and Melamine Dinnerware, the 
Department found that, unlike in the instant review, there were no 
close supplier relationships. Furthermore, the Department has stated 
explicitly that it may consider close supplier relationships sufficient 
basis for a finding of affiliation. See Large Newspaper Printing 
Presses and Components Thereof From Japan, 61 FR 38139 (July 23, 1996).
    Comment Three: Ta Chen maintains that the Department's use of 
adverse facts available was unlawful. Ta Chen insists that it 
cooperated fully with the Department throughout these proceedings and 
responded immediately to each of the Department's requests for 
information. The new information Ta Chen provided in its November 12, 
1996 Supplemental Response was in direct response to the Department's 
request, made for the first time, that Ta Chen explain ``all 
relationships'' between Ta Chen and Company B. Ta Chen cites to the 
Department's verification reports issued in the first administrative 
review as evidence of its complete cooperation with the Department; 
``[n]o verifier question went unanswered.''
    Furthermore, Ta Chen submits, even if the Department concludes that 
Ta Chen and Company B were affiliated during this third review, Ta Chen 
had a reasonable basis for believing that no such affiliation existed 
under the law in effect at the time of the relevant sales to Company B 
(i.e., in August 1994). In four separate verifications the Department 
limited its related party inquiries to common equity ownership or 
shared directors. Thus, Ta Chen argues, it had ``well-founded and 
reasonable'' grounds for believing that Ta Chen and Company B were 
unaffiliated for purposes of the Tariff Act.
    As to the Department's choice of facts available, Ta Chen avers 
that Ta Chen's current cash deposit rate (from the less than fair value 
[LTFV] investigation) would provide ``sufficient motivation'' for Ta 
Chen to cooperate fully with the Department. Ta Chen reasons that it 
requested the three pending administrative reviews in order to lower 
its antidumping liabilities; if the Department continued its imposition 
of its existing cash deposit rate of 3.27 percent, ``Ta Chen's purpose 
in participating in these reviews will have been completely 
undermined.'' Ta Chen's Case Brief at 48. Ta Chen draws a distinction 
between the pending reviews of WSSP and other cases wherein a 
respondent is required to participate in an administrative review 
sought by a petitioner; in the latter case, Ta Chen argues, the threat 
of a higher margin suggested by petitioner serves to induce 
respondents' cooperation. In light of these facts, Ta Chen argues, use 
of the 31.90 percent margin from the Preliminary Results is entirely 
inappropriate.
    In addition to being unduly punitive, Ta Chen continues, use of 
adverse facts available is especially unwarranted where ``novel, vague 
issues are involved.'' Ta Chen insists that adverse facts available 
would be called for only if three conditions had been met: (i) the 
respondent could reasonably have been expected to know that the data it 
did not provide had been requested by the Department, (ii) the 
requested data were not a new requirement of the 1995 statute, nor a 
new concept under the statute, and (iii) the questionnaire was not 
vague. See Ta Chen's Case Brief at 43, citing Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof From France, et 
al. (AFBs From France) 62 FR 2081, 2088, 2090 (January 15, 1997); Fresh 
Cut Flowers From Colombia 62 FR 16772 1776 (1997). Pointing to the 
Court's decision in Daewoo Electronics Co., Ltd. v. U.S. 712 F. Supp. 
931, 945 (CIT 1989), Ta Chen maintains that the Department must engage 
in ``clear and adequate communication'' with a respondent before 
applying facts available. Ta Chen stresses that prior to the 
Department's issuance of its Preliminary Results Ta Chen could not 
foresee that the Department would consider Ta Chen and Company B to be 
affiliated persons. Thus, Ta Chen argues, it had no reason to report 
Company B's sales to its customers, rather than Ta Chen's sales to 
Company B.
    Ta Chen argues that the Department has applied ``cooperative'' 
facts available in another case involving the failure properly to 
report subsequent U.S. sales made by an affiliated person. See Ta 
Chen's Case Brief at 51, citing Certain Small Business Telephones From 
Taiwan, 59 FR 66912 (December 28, 1994) and Certain Fresh Cut Flowers 
From Colombia, 59 FR 15159 (March, 31, 1994). Despite the respondents 
in these cases having clear knowledge that they were related, and 
failing to report properly their U.S. sales, the Department responded 
with ``second-tier'' BIA. Here too, Ta Chen argues, the Department 
should treat Ta Chen with non-adverse facts available.
    Ta Chen also maintains that the judicial precedents cited by 
petitioners do not support the use of adverse facts available. In 
Sugiyama Chain v. United States, 852 F. Supp. 1105, 1111 (CIT 1994), 
for example, Ta Chen notes that

[[Page 37551]]

the Department applied cooperative BIA to a respondent in six of the 
seven administrative reviews at bar, despite the Department's belief 
that the respondent ``attempted to intentionally deceive the 
Department.'' Ta Chen's Case Brief at 54. The application of non-
cooperative BIA in the seventh review was based on the respondent's 
failure at verification, and refusal to supply other requested 
information (including the subsequent home market sales to unrelated 
customers). Ta Chen holds that none of these conditions exists here. At 
worst, Ta Chen submits, it ``mischaracterized the situation'' with 
respect to Company B; it did not ``misrepresent the situation.'' Id. at 
55 (original emphasis).
    In addition, Ta Chen notes that while petitioners cite to Certain 
Stainless Steel Wire Rod From India (58 FR 54110, 54111 (October 20, 
1993)) (Steel Wire Rod) as supporting the use of adverse facts 
available, petitioners do not mention the respondent's numerous 
shortcomings in that review. In that case Ta Chen points out that the 
respondent Mukand initially and repeatedly denied any relationship with 
the related customer, claimed that the customer was free to purchase 
from others and later retracted that claim, first denied control over 
the customer and later admitted the same, contradicted almost all of 
the information in its earlier submissions, and failed to state 
initially that one of its officials ran the customer's day-to-day 
business operations. Furthermore, the same Mukand official certified as 
correct certain inconsistent and contradictory responses.
    Petitioners, on the other hand, ask that the Department look beyond 
the ``factually unsubstantiated and legally unsound'' arguments 
presented in Ta Chen's case brief, and look instead to the chronology 
of events unfolding throughout the five-year history of this case. 
According to petitioners, this chronology demonstrates that Ta Chen 
repeatedly and deliberately lied to the Department regarding its sales 
in the United States; this pattern of dissembling warrants assignment 
of total adverse facts available. Petitioners dismiss Ta Chen's 
suggestions in its case brief that this review involves ``novel, vague 
issues,'' and that the Department itself is struggling to interpret the 
affiliated persons provisions of section 771(33) of the Tariff Act. 
Petitioners also contend that, contrary to Ta Chen's arguments, Ta Chen 
``has been on notice at least since verification ... in October 1994 of 
the Department's intense interest in Ta Chen's relationship with 
certain customers in the United States.'' Petitioners' Rebuttal Brief 
at 2. Therefore, petitioners aver, it is ``farcical'' for Ta Chen to 
insist that it ``had absolutely no reason to think the Department would 
consider Ta Chen and [certain U.S. customers] affiliated parties.'' 
Id., (quoting from Ta Chen's Case Brief). Rather, petitioners claim, 
the unique facts of this case permit no doubt that Ta Chen is 
affiliated with these U.S. customers, which were, for all intents and 
purposes, ``Ta Chen's alter ego and tool.'' Id.
    Petitioners assert that the Department's interest in Ta Chen's 
affiliated entities in this review is evident from the Department's 
initial antidumping questionnaire, which quotes from section 771(33) of 
the Tariff Act in defining ``affiliated person.'' Petitioners also note 
that the Department's questionnaire queries the respondent specifically 
as to affiliations ``through means other than stock ownership,'' thus 
leaving no doubt that the Department did not define affiliation as 
being limited to, per se, an equity interest in the other person.
    Furthermore, petitioners maintain, the Department's intense 
scrutiny of these specific customers was clearly evident during the 
still-pending first and second reviews, as well. According to 
petitioners, the Department's reports on the verifications of Ta Chen 
and TCI, conducted in October 1994, detail at length the extraordinary 
attention focused by the Department on these customers. Therefore, 
petitioners argue, it is absurd for Ta Chen to profess, as it has in 
its case brief, that Ta Chen had no indication that the Department 
might consider these U.S. customers as ``affiliated persons.'' Rather, 
petitioners insist, Ta Chen's grudging disclosure of information, and 
its active efforts to misrepresent the information it has disclosed, 
are indicative of a pattern of ``fraudulent deception.'' Id. at 6.
    For example, petitioners continue, Ta Chen concealed the 
significant role of Company A in Ta Chen's activities during the first 
review until petitioners uncovered Company A's existence and insisted 
on a full discussion of its relationships with Ta Chen. And, 
petitioners observe, just three weeks after petitioners' disclosure of 
Company A's existence, the firm's corporate charter was dissolved, and 
Company A was effectively replaced by Company B.
    Furthermore, petitioners argue that Ta Chen has consistently 
withheld vital information from the Department, disclosing piecemeal 
its affiliations only under duress. Petitioners maintain that, rather 
than volunteering key information concerning its relationships with 
U.S. customers, Ta Chen has instead divulged this information only 
following petitioners' allegations that Ta Chen was related to, or 
affiliated with, these parties. According to petitioners, ``Ta Chen has 
quickly reacted to cover its fraud and thereby has compounded its fraud 
... . In essence, the same group of individuals ... have simply used 
different corporate names to conduct their common business, jettisoning 
one name and moving on to the next whenever their charade was in 
jeopardy of being uncovered.'' Petitioners' Rebuttal Brief at 11.
    Were Ta Chen genuinely cooperating with the Department, petitioners 
argue,
     Ta Chen would have volunteered the existence of Company A 
and its ``dba''s, rather than waiting until petitioners ferreted out 
this information on their own;
     Ta Chen would have provided a truthful explanation 
concerning Company A and its ``dba''s, rather than claiming, falsely, 
that the ``dba'' names were prior customers of Ta Chen's;
     Ta Chen would have ``had Company A come forth and answer 
questions ... as Ta Chen has asked others ... to do,'' rather than 
dissolving Company A's corporate charter roughly two weeks after 
petitioners' first calling attention to Company A's existence;
     Ta Chen would not have precipitously rerouted its business 
away from Company B, with sales to this customer dropping sharply 
between the second and third periods of review. As with Company A's 
dissolution, petitioners maintain, the shifts in Ta Chen's U.S. sales 
pattern were ``undoubtedly reactions by Ta Chen'' to petitioners'' 
allegations concerning Company A, its ``dba''s, and Company B;
     Ta Chen would have volunteered information at the October 
1994 verification in the first review concerning its extensive 
commercial and financial ties to Company B, which were clearly relevant 
to that extraordinary verification. Likewise, Ta Chen would have 
volunteered this information in the body of its second and third review 
questionnaire responses. Petitioners aver that Ta Chen did not do so.

Petitioners' Case Brief at 9 and 10.
    According to petitioners, the record before the Department with 
respect to Ta Chen is so replete with inconsistencies, unsubstantiated 
claims, ``gaps in logic,'' and the withholding of accurate information, 
that the only proper course for the Department is to apply total 
adverse facts available. Petitioners assert that Ta Chen's U.S.

[[Page 37552]]

sales database is ``both incomplete and untrustworthy,'' and that Ta 
Chen's protestations that it has cooperated with the Department are 
``unpersuasive.'' Id. at 11. Petitioners claim that the situation in 
the instant review is akin to that of respondent Nippon Pillow Block 
Sales (NPB) in Antifriction Bearings From France, 62 FR 2081, 2086 
(January 15, 1997). In that review the Department applied facts 
available to NPB for its failure to report accurately all home market 
and U.S. sales of subject merchandise. Because of omissions by NPB in 
its sales listings the Department determined that NPB's questionnaire 
responses were unreliable in toto and disregarded all of NPB's sales 
data. Further, the Department concluded that NPB had not acted to the 
best of its ability in reporting the relevant sales data and, thus, 
applied an adverse inference in choosing the facts otherwise available.
    Petitioners also object to Ta Chen's efforts to ``maintain the 
fiction'' that the extraordinary ties detailed in the Department's 
preliminary results are commonplace between unaffiliated persons. With 
respect to TCI's physical custody of certain customers' signature 
stamps, dedicated modem lines to the customers' computerized accounting 
systems, shared sales department personnel, TCI's direct negotiations 
with these distributors' subsequent customers, and the distributors' 
pledging of their inventory to secure TCI's debts, petitioners insist 
that these practices ``are not common and do not exist,'' nor has Ta 
Chen been able to point to a single instance of such intimate ties 
between unaffiliated entities. Petitioners suggest that Ta Chen's 
arguments are ``laughable'' and ``ludicrous.'' Petitioners' Rebuttal 
Brief at 14. Petitioners suggest that the reason the Department has 
never found parties to be affiliated based on these facts is not 
because these ties are insufficient to establish affiliation but, 
rather, because the Department has never before been confronted with a 
similar fact pattern. Petitioners brand as ``specious'' Ta Chen's 
``discrete parsing'' of the Department's preliminary finding of 
affiliation. Petitioners assert that Ta Chen's interpretation is 
thrice-flawed in its assumptions that (i) Ta Chen's ties with certain 
U.S. customers, including Company B, are common in the industry, (ii) 
Ta Chen has cooperated with the Department in all three administrative 
reviews, and (iii) Ta Chen's unsubstantiated and unsupported claims 
establish that it had no affiliation with Company B. Petitioners claim 
that Ta Chen's statement that physical custody of distributors' 
signature stamps does not indicate control over these distributors' 
disbursements is ``nonsense.'' Similarly, Ta Chen's claim that its 
computer access to these distributors' financial records is common is 
not supported by any other instance of unaffiliated parties being so 
linked. Furthermore, in response to Ta Chen's argument that Ta Chen had 
no control over these distributors' prices, petitioners note that Ta 
Chen has stated that ``Ta Chen officials knew the prices which would be 
accepted by Ta Chen's distributor.'' Petitioners' Rebuttal Brief at 17 
(quoting Ta Chen's Case Brief). ``Arm's-length companies do not and are 
not supposed to operate in this manner.'' Id. at 18. Further, Ta Chen 
has not provided a single instance of these distributors rejecting the 
price Ta Chen established for subsequent re-sales of WSSP.
    Finally, petitioners assail Ta Chen's characterization of its 
credit arrangements as ``absurd.'' Asserting that the pledging of one's 
inventory and accounts receivable ``are not normal between arm's-length 
parties,'' petitioners point to Ta Chen's failure to provide any 
documentation of an agreement establishing these arrangements and 
conclude that the suggestion that an unaffiliated party would 
voluntarily accept such an obligation is ``preposterous in itself.'' 
Id. at 19.
    Department's Position: In this third review Ta Chen concealed 
relevant information pertaining to its sales to Company B, and only 
revealed other relevant information concerning sales to another U.S. 
customer when the Department opted to verify Ta Chen's U.S. 
questionnaire responses. Furthermore, this is a respondent which has on 
three occasions made substantial changes to its U.S. sales operations 
(in 1992, 1993 and 1994); Ta Chen has acknowledged that it made many of 
these changes as a direct result of the order. Given the sophistication 
of its behavior and its legal arguments before the Department, we find 
unpersuasive Ta Chen's assertion that it ``had absolutely no reason to 
think the Department would consider Ta Chen'' and certain of its U.S. 
customers as affiliated persons.
    We also disagree with Ta Chen's suggestion that this review 
addresses ``novel, vague issues.'' The governing statutory provisions 
for this review took effect on January 1, 1995. Our Notice of Proposed 
Rulemaking, with its exhaustive commentary and analysis, appeared in 
February, 1996, or fully two months prior to Ta Chen's initial 
questionnaire response in this review. Thus, the affiliated party 
provisions of section 771(33), as well as the Department's proposed 
interpretation of these provisions, had been comprehensively vetted 
before Ta Chen submitted any factual information in this third review. 
Further, the Department's February 13, 1996 questionnaire specifically 
asked Ta Chen to report its first sales to unaffiliated customers in 
the United States. Appendix I of the questionnaire provided the new 
definition of ``affiliated person'' found at section 771(33) of the 
Tariff Act, including the new emphasis on affiliation through 
``control.'' See the Department's questionnaire at Appendix I-1. The 
request to provide the first U.S. sales to unaffiliated customers 
imposed no new reporting burden upon Ta Chen. Finally, as noted above, 
there was no ambiguity in the questionnaire's language as to which 
sales the Department sought.
    We also find that Ta Chen's citations to past Departmental 
determinations in support of using cooperative, non-adverse facts 
available are not on point. In Fresh Cut Flowers From Colombia, for 
example, the respondent's related entities had either gone out of 
business entirely, or were in the process of liquidation, and thus the 
firms were unable to provide sales data to the Department. Similarly, 
in Certain Small Business Telephones From Taiwan, the affiliated U.S. 
customer of respondent Bitronics was out of business. We concluded that 
``(s)ince Bitronics made substantial attempts to submit information to 
the Department,'' second-tier, or cooperative, BIA would be most 
appropriate. See Certain Small Business Telephones From Taiwan; Final 
Results of Administrative Review, 60 FR 16606 (March 31, 1995). In the 
instant case, despite the 1995 sale of Company B to another party, Ta 
Chen has never indicated any such difficulty in accessing Company B's 
records, and has even submitted Company B's federal income tax returns 
in the record of this review.
    As to Ta Chen's argument that it merely ``mischaracterized'' (as 
distinguished from ``misrepresented'') its sales to Company B, Ta 
Chen's distinction is without a difference. The facts remain that Ta 
Chen misled the Department as to the nature of its transactions with 
Company B and that it failed to report properly Company B's sales to 
the first truly unaffiliated person in the United States.
    With respect to the precedent set in Steel Wire Rod, we disagree 
with Ta Chen's interpretation of this case. In fact, we find a number 
of similarities between Ta Chen's summary of the

[[Page 37553]]

Department's findings in that case and the facts of the instant review. 
Like Mukand in Steel Wire Rod, Ta Chen initially and repeatedly denied 
any relationship with Company B, claimed that Company B was free to 
purchase from others but later acknowledged that it never attempted to 
do so, and submitted certain contradictory information. All of this 
information was certified as accurate by the same official, the 
president of Ta Chen. While we cannot state authoritatively that a Ta 
Chen official ran Company B, as was the case with Mukand in Steel Wire 
Rod, the individual who did run Company B formerly worked for Ta Chen 
and continued to have intimate business ties to Ta Chen before and 
after his employment with Company B. Unlike Mukand in Steel Wire Rod, 
however, Ta Chen has never admitted any control over Company B, nor has 
it attempted to correct its earlier misreporting of its U.S. sales 
data.
    We also disagree with petitioners' argument that the record 
evidence supports use of total adverse facts available for Ta Chen's 
margin. We verified Ta Chen's U.S. sales questionnaire responses after 
issuing the Preliminary Results and examined Ta Chen's customer 
relationships in detail. While we did find misreported sales to one 
previously-unnamed customer, we did not find evidence to suggest that 
Ta Chen is affiliated in a fashion similar to the relationships between 
Ta Chen and Companies A and B with any of its other U.S. customers in 
this review. Therefore, while we have applied adverse facts available 
to those misreported sales, we have not based Ta Chen's margin on total 
adverse facts available. We agree with petitioners, however, that there 
is an issue concerning the reliability and consistency of the 
information supplied by Ta Chen dating back to the first administrative 
review (see Certain Welded Stainless Steel Pipe From Taiwan; 
Preliminary Results of Administrative Reviews, 62 FR 26776 (May 15, 
1997)). Accordingly, we will address the specific circumstances 
surrounding Ta Chen's relationships with Company A and Company B within 
the context of the ongoing reviews which cover periods predating this 
POR. In addition, we intend to closely scrutinize this issue within the 
context of the pending fourth review of this order.
    Comment Four: Ta Chen argues that the margin used as adverse facts 
available in the Preliminary Results ``is not relevant, calculated or 
corroborated, and thus is unlawful.'' According to Ta Chen, the 
Department's proposed regulations and the SAA both call for the 
Department, when using facts available which are based on secondary 
information, to corroborate these facts as such information ``may not 
be entirely reliable because, for example, as in the case of a 
petition, it is based on unverified allegations, or * * * it concerns a 
different timeframe than the one at issue.'' Ta Chen's Case Brief at 
58, quoting the SAA at 870. Ta Chen insists that the Department has 
already ``verified'' that the facts available margin is wrong. In the 
underlying LTFV investigation, Ta Chen argues, the Department 
calculated a margin of 3.27 percent for Ta Chen, based on data which 
were subject to verification. Ta Chen maintains that the 31.90 percent 
margin (the ``all others'' rate from the LTFV investigation) resulted 
from the Department's rejection of one respondent's data in favor of 
best information available.
    In addition, Ta Chen argues that the facts available margin was 
applied to producers other than Ta Chen and is, thus, ``irrelevant and 
unlawful.'' Ta Chen cites to an antidumping case from Canada wherein 
Canada's International Trade Tribunal noted Ta Chen's lower margins 
(and the refusal of other Taiwanese respondents to participate in the 
proceeding) as indicative of a pattern of lawful and cooperative 
behavior by Ta Chen which resulted in lower dumping margins.
    Ta Chen also faults the 31.90 percent facts available margin as 
being unrepresentative of current conditions in the stainless steel 
pipe market. Ta Chen insists that the Department must use the most up-
to-date information as facts available as it carries greater probative 
value. In addition, Ta Chen notes what it sees as significant changes 
in the U.S. market since publication of the antidumping duty order. 
According to Ta Chen, Ta Chen is no longer forced to compete against 
other Taiwanese producers of WSSP, who largely withdrew from the U.S. 
market after the imposition of antidumping duties. In support of this 
contention, Ta Chen quotes from a 1996 determination by the Canadian 
International Trade Tribunal which concludes that ``Taiwanese producers 
other than Ta Chen have been excluded from the U.S. market.'' Ta Chen's 
Case Brief at 63. Ta Chen also insists that the health of the U.S. 
industry has improved markedly since the original investigation in this 
case. Id. at 64, citing Welded Stainless Steel Pipe From Malaysia, ITC 
Pub. No. 2744 (March 1994).
    According to Ta Chen, the Department erred by disregarding 
independent sources for more probative dumping margins for use as facts 
available. Ta Chen suggests that petitioners in the investigation of 
welded stainless steel pipe from Malaysia testified to the 
International Trade Commission that the imposition of antidumping 
duties on WSSP from Taiwan had effectively eliminated dumping by 
Taiwanese producers. See ITC Pub. No. 2744 (Final) (March 1994). In a 
similar vein, Ta Chen cites the testimony of an official of Bristol 
Metals, a U.S. producer of WSSP, insisting that ``Taiwan imports have 
been checked by the antidumping laws.'' Ta Chen's Case Brief at 67, 
quoting from Economic Effects of Antidumping and Countervailing Duty 
Orders and Suspension Agreements, ITC Pub. No. 2900 (June 1995). Ta 
Chen argues that these statements offered by representatives of the 
U.S. pipe industry ``support a [zero] percent dumping finding for Ta 
Chen.'' Id. at 68. Furthermore, Ta Chen suggests that these statements, 
coming after the original petition in this case, are more indicative of 
present market conditions. Ta Chen also cites to statements submitted 
by Ta Chen into the record of this review, one from the same individual 
from Bristol Metals, and another by a U.S. purchaser of WSSP and 
stainless steel butt-weld pipe fittings, both claiming that Ta Chen was 
not dumping at 31.90 percent margins through Company A and Company B.
    Ta Chen also suggests that the failure of petitioners in this case 
to request a review of Ta Chen for the first three PORs is indicative 
of petitioners' belief that Ta Chen is not dumping WSSP into the U.S. 
market. ``By reason of their failure to act, it is a fair inference 
that the [petitioners] do not believe that Ta Chen is dumping in the 
USA beyond the previously found dumping margin(  ) of 3.27%.'' Ta 
Chen's Case Brief at 69.
    Ta Chen next turns to what it views as ``other independent 
sources'' for Ta Chen's dumping margins. Ta Chen notes that for its 
remaining U.S. sales, the Department's preliminary margin calculation 
found dumping margins of zero percent. Ta Chen submits that similar 
analysis in the first two PORs will, likewise, result in margins of 
zero percent. Finally, Ta Chen suggests, the Department could turn to 
antidumping proceedings in other countries as evincing Ta Chen's 
``proclivity not to dump.'' Ta Chen cites to a margin of 3.5 percent 
found in an Australian investigation of WSSP, and zero percent margins 
found in similar investigations conducted by Canada and the European 
Union. Further, in its investigation of Class 150 Pound Fittings From 
Taiwan, Ta Chen notes, the Department found a

[[Page 37554]]

zero-percent margin for Ta Chen. Ta Chen suggests using these margins 
to determine the facts available margin to apply in this third 
administrative review.
    Further, Ta Chen argues, since it is a fungible, commodity product, 
the market for A-312 WSSP is driven primarily by price. Had Ta Chen 
been dumping through Company B at 31.90 percent margins, Ta Chen 
reasons, ``there would have been a ``giant sucking sound,'' as all the 
business went to Company B. There was no such sound.'' Ta Chen's Case 
Brief at 75. Finally, Ta Chen asserts that petitioners have 
consistently overestimated the actual margins in cases involving 
Taiwan. As proof of this, Ta Chen notes that the final margins 
published in the Department's LTFV determination were consistently much 
lower than those originally presented in the petition. Therefore, a 
margin drawn from the petition should not serve as the basis for facts 
available in the instant review.
    Petitioners counter that the URAA ``expressly approves of the use 
of data from the petition and an original investigation's final 
determination for facts available,'' and note that the LTFV 
investigation is the only source of margins for use as facts available. 
Petitioners maintain that ``[t]he Department is not required to conduct 
an economic analysis of the industry whenever it determines that 
dumping margins should be based on facts available,'' and argues that 
Ta Chen's citations to ITC testimony in an unrelated case, and to 
antidumping proceedings in other nations, are ``not relevant.'' Noting 
that the Department has not completed either the first or second 
administrative reviews in this case, petitioners aver that the 
Department has little choice but to turn to the highest margin from the 
original LTFV investigation (i.e., 31.90 percent) as adverse facts 
available. Petitioners also dismiss Ta Chen's argument that petitioners 
themselves have concluded that Ta Chen was not selling merchandise at 
dumped prices during the instant POR. Ta Chen's argument, petitioners 
insist, is based upon statements made before the ITC in an injury 
investigation concerning pipe from Malaysia; that proceeding had 
nothing to do with calculating dumping margins with respect to sales of 
WSSP from Taiwan.
    Petitioners also dismiss Ta Chen's argument that the 31.90 percent 
margin is flawed because this margin is significantly higher than the 
calculated rates for respondents during the LTFV proceeding. 
Petitioners aver that ``cooperative respondents that timely and 
completely submit verifiable data are entitled to whatever rates 
result,'' whereas in the instant case, Ta Chen has ``lie(d) to the 
Department and * * * fraudulently pose[d] as being cooperative.'' 
Where, as here, the Department has determined that the withholding of 
information is deliberate, petitioners stress, the Department has `` 
`heavily favored using alternative ``best information available'' least 
favorable to a respondent.' '' Petitioners' Rebuttal Brief at 48 
(quoting from Chinsung Industries Co., Ltd. v. United States, 705 F. 
Supp. 598, 600 (CIT 1989)). Furthermore, petitioners argue, use of the 
highest margin from the LTFV investigation is fully consistent with the 
Department's longstanding practice of applying a two-tiered BIA 
methodology whereby an uncooperative respondent will receive a higher 
margin than would a respondent who genuinely cooperated with the 
Department but failed to timely submit requested factual information. 
Finally, petitioners argue that in the absence of rates issuing from 
any administrative review the highest margin from the LTFV 
investigation stands as ``most probative of current conditions.'' 
Reliance upon Ta Chen's own rate from the original investigation, 
petitioners maintain, would ``essentially reward Ta Chen for 
withholding information from the Department.'' Id. at 49.
    Department's Position: We agree with petitioners and disagree, in 
part, with Ta Chen. We cannot accede to Ta Chen's suggestion that we 
apply its existing cash deposit rate as adverse facts available, as 
this would amount to rewarding Ta Chen for its failure to disclose 
essential facts to the Department and to report the proper body of its 
U.S. sales. Were we to consider Ta Chen's existing margin, which was 
calculated in a segment of these proceedings wherein Ta Chen was deemed 
cooperative and its responses fully verified, as adverse facts 
available, we would effectively cede control of this review to Ta Chen. 
The respondent would be free to submit selective, misleading, or 
inaccurate information, secure in its knowledge that the worst fate it 
could expect would be to receive its existing cash deposit rate as 
facts available. See Olympic Adhesives, Inc. v. United States, 899 F.2d 
1565, 1571 (Fed. Cir. 1990). As the Court stated in Industria de 
Fundicao Tupy, et al. v. United States 936 F. Supp 1009 (CIT 1996), 
``the Court will not allow respondent to cap its antidumping rate by 
refusing to provide updated information to the (the Department).'' 
Similarly, margins from other Departmental proceedings or from Canadian 
or European antidumping cases, wherein Ta Chen cooperated fully, are 
likewise irrelevant to this third administrative review where Ta Chen 
impeded our investigation. Contrary to Ta Chen's suggested approach, 
our aim in selecting facts available for non-cooperative respondents is 
to choose a margin which is sufficiently adverse ``to induce 
respondents to provide (the Department) with complete and accurate 
information in a timely fashion.'' See National Steel Corp., et al., v. 
United States, 13 F. Supp 593 (CIT 1996).
    We also reject Ta Chen's assertion that the 31.90 percent facts 
available margin is inappropriate because it was drawn from an earlier 
segment of these proceedings. In Mitsuboshi Belting Corp., Ltd. v. 
United States, the Court, relying upon the findings in Rhone Poulenc 
Inc. v. United States (899 F.2d 1185 (Fed Cir. 1990)), found that the 
Department's use of a margin drawn from a LTFV investigation was 
reasonable and, further, that ``best information'' doesn't necessarily 
mean ``most recent information.'' The Court also rejected plaintiff's 
claim that the Department's choice of BIA was unreasonably harsh:

to be properly characterized as ``punitive,'' the agency would have 
had to reject low margin information in favor of high margin 
information that was demonstrably less probative of current 
conditions. Here, the agency only presumed that the highest prior 
margin was the best information of current margins. * * * We believe 
a permissible interpretation of the statute allows the agency to 
make such a presumption and that the presumption is not 
``punitive.'' Rather, it reflects a common sense inference that the 
highest prior margin is the most probative evidence of current 
margins because, if it were not so, the importer, knowing of the 
rule, would have produced current information showing the margin to 
be less.

Mitsuboshi Belting Ltd. and MBL (USA) Corp. v. United States., Court 
No. 93-09-00640 (CIT March 12, 1997).
    Likewise, in Sugiyama Chain Co., Ltd. et al., v. United States, the 
defendant contested our selection of best information available as 
having no probative value concerning Sugiyama's current margins because 
the rate taken from the LTFV investigation had ``only a tenuous link to 
Sugiyama Chain's margins in the instant review.'' The Court approved of 
our use of the highest prior margin as BIA, noting that the Department 
``can make a common sense inference --indeed, there is a rebuttable 
presumption--that the highest prior margin is the most probative 
evidence indicative of the current margin.'' Sugiyama Chain Co., Ltd., 
et al. v.

[[Page 37555]]

United States, 13 CIT 218; see also Rhone Polenc, Inc., et al. v. 
United States, 710 F. Supp. 341 (CIT 1989) (``There is no mention in 
the statute or regulations that the best information available is the 
most recent information available.''). Furthermore, our use of a margin 
drawn from data supplied by the petitioners comports fully with section 
776(b) of the 1995 Tariff Act.
    In addition, we note that in the instant review we have calculated 
individual transaction margins for Ta Chen which are comparable to the 
31.90 percent, which was chosen from the LTFV investigation as facts 
available. See the Department's Final Margin Program, ``Minimum and 
Maximum Margins.'' Thus, we have available contemporaneous and 
calculated margins, based on Ta Chen's own third POR data, which serve 
to corroborate the petition margin, and which reflect Ta Chen's 
practices during this third administrative review. For the purpose of 
these final results, therefore, we have continued to use 31.90 percent 
as adverse facts available.
    As to Ta Chen's comments regarding the present state of the market 
for Taiwanese stainless steel pipe, we find these comments irrelevant 
in this review. Ta Chen stresses its claim that the antidumping duty 
order has driven other Taiwanese pipe producers from the playing field, 
eliminating the need for Ta Chen to sell WSSP at less than normal 
value. However, Ta Chen's continued presence in the United States 
market cannot be seen as indicative that it has not engaged in dumping 
of WSSP in this country.
    We also find inapposite Ta Chen's argument that, since petitioners 
did not request this third review, petitioners are satisfied with Ta 
Chen's existing cash deposit rate. Whether or not petitioners requested 
this review is, at this point, irrelevant, and cannot be construed in 
any way as evidence of Ta Chen's present dumping activities, or lack 
thereof. Furthermore, any number of factors may lead a domestic 
industry to eschew the administrative review process, including, for 
example, insufficient resources to participate in a review, or a belief 
that it cannot ``prevail'' in an administrative review.
    Finally, as to ``Ta Chen's proclivity not to dump,'' Ta Chen could 
best have demonstrated such proclivity by extending its full 
cooperation in the first three reviews of this antidumping duty order. 
We can only conclude in this third review, as we have preliminarily 
determined in the first and second reviews, that Ta Chen's refusal to 
provide the complete body of appropriate U.S. sales, as requested, is 
because these sales represent significant dumping margins. As it is, 
the Department has no choice but to make the negative inference 
specifically called for by the facts available provisions of the Tariff 
Act.
    Comment Five: Petitioners argue that if the Department continues to 
use the bulk of Ta Chen's sales data for its final results of review, 
the Department must adjust its cost-of-production (COP) test to account 
for import duties paid by Ta Chen on its imports of stainless steel 
coil (the raw material used in the production of A-312 welded stainless 
steel pipe). According to petitioners, the Department in its 
preliminary results increased U.S. price by the amount of home market 
import duties rebated or not collected by reason of exportation of the 
finished WSSP to the United States. This was necessary, petitioners 
suggest, because Ta Chen's home market prices were inclusive of import 
duties. However, Ta Chen's COP data were reported exclusive of import 
duties, because Ta Chen's mill is a customs bonded facility. The 
Department, therefore, compared COP amounts which do not include import 
duties to home market prices which do. This had the effect, petitioners 
conclude, of ``understating the extent that Ta Chen's home market sales 
were made at prices that were below the cost of production.'' 
Petitioners' Case Brief at 14. Petitioners suggest that the Department 
either deduct home market import duties from home market sales prices, 
or add these duties to Ta Chen's reported COP prior to conducting our 
cost test.
    In rebuttal, Ta Chen confirmed that it paid import duties on 
imports of stainless steel coil, and that its home market prices 
include these import duties.
    Department's Position: We agree with petitioners. In conducting our 
cost test, we inadvertently compared net home market prices inclusive 
of import duties on stainless steel to COP totals exclusive of these 
duties. We have adjusted our calculation of the net home market price 
used in our COP test to deduct the amount of the import duties.
    Comment Six: Ta Chen urges the Department to correct two ``clerical 
errors'' in the preliminary results margin program. The first involves 
the Department's calculation of Ta Chen's COP. Ta Chen suggests that 
the Department inadvertently double-counted Ta Chen's indirect selling 
expenses in calculating total COP. The preliminary margin program 
includes two variables, ISELCOP and INDSELEX, both of which represent 
indirect selling expenses. At different points in the preliminary 
margin program, Ta Chen notes, the Department added both to Ta Chen's 
COP, thereby overstating these expenses.
    Ta Chen also argues that the Department double-counted Ta Chen's 
U.S. packing expenses by subtracting these expenses from U.S. price 
while adding them to foreign unit price in dollars (FUPDOL). Ta Chen 
suggests altering the calculation of net U.S. price to eliminate the 
deduction for U.S. packing expenses.
    Department's Position: We agree with Ta Chen on both points. With 
respect to indirect selling expenses, we inadvertently double-counted 
these expenses in calculating Ta Chen's COP. As for packing expenses, 
we erroneously subtracted these from U.S. price while simultaneously 
adding them to FUPDOL. We have corrected both errors for these final 
results of review.
    Comment Seven: Ta Chen maintains that it has not been dumping for 
three consecutive periods of review and, therefore, requests that the 
Department revoke Ta Chen from the antidumping duty order covering 
welded stainless steel pipe from Taiwan.
    Petitioners, in a footnote in their rebuttal brief, maintain that, 
``viewed overall,'' Ta Chen's behavior throughout these proceedings 
demonstrates that Ta Chen is not entitled to revocation from the 
antidumping duty order.
    Department's Position: Given the existence of a calculated margin 
for Ta Chen in these third review final results, we determine that Ta 
Chen has not met the requirements of three consecutive years of zero 
(or de minimus) margins as called for in section 19 CFR 353.25 of the 
Department's regulations. Therefore, we cannot consider a partial 
revocation of the antidumping duty order as to Ta Chen at this time.
    Comment Eight: Ta Chen, noting the three ongoing administrative 
reviews of WSSP, asks that the Department use the final results dumping 
margin from the third administrative review to establish Ta Chen's cash 
deposit rate for future entries of subject merchandise. Ta Chen cites 
the Department's approach in Silicon Metal From Brazil, where the 
Department issued final results of several ongoing reviews 
simultaneously, using the margins calculated for the most recent POR as 
the respondents' new cash deposit rates.
    Petitioners argue that the Department should assign Ta Chen a 
margin in all three administrative reviews of 31.90 percent as total 
adverse facts available, thus obviating the need to address the issue 
of which final results margin should establish Ta Chen's new cash 
deposit rate.

[[Page 37556]]

    Department's Position: Consistent with past Departmental practice, 
we will use as Ta Chen's new cash deposit rate the weighted-average 
dumping margin found in these final results of the third POR. Our 
practice is to adopt the dumping margin from the final results for the 
most recent POR to serve as a respondent's new cash deposit rate.

Final Results of Review

    Based on our review of the arguments presented above, for these 
final results we have made changes in our margin calculations for Ta 
Chen. After comparison of Ta Chen's EP to normal value (NV), we have 
determined that Ta Chen's weighted-average margin for the period 
December 1, 1994 through November 30, 1995 is 6.06 percent.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. 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 WSSP from Taiwan 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 Ta Chen will be the rate established 
in the final results of this administrative review;
    (2) For previously reviewed or investigated companies other than Ta 
Chen, 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 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 19.84 percent. See Amended Final Determination and 
Antidumping Duty Order; Certain Welded Stainless Steel Pipe From 
Taiwan, 57 FR 62300 (December 30, 1992).
    All U.S. sales by the respondent Ta Chen 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 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 this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of the antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (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 or destruction of APO materials, or conversion to judicial 
protective order, is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    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: July 8, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18448 Filed 7-11-97; 8:45 am]
BILLING CODE 3510-DS-P