[Federal Register Volume 62, Number 174 (Tuesday, September 9, 1997)]
[Notices]
[Pages 47436-47440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23855]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration A-351-817


Certain Cut-to-Length Carbon Steel Plate From Brazil: Preliminary 
Results of Antidumping Duty Administrative Review

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

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

-----------------------------------------------------------------------

SUMMARY: In response to requests from the respondent, Usinas 
Siderurgicas de Minas Gerais (``USIMINAS''), and from petitioners 
(Bethlehem Steel Corporation; U.S. Steel Company, a Unit of USX 
Corporation; Inland Steel Industries, Inc.; Geneva Steel; Gulf States 
Steel Inc. of Alabama; Sharon Steel Corporation; and Lukens Steel 
Company), the Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on certain cut-to-
length carbon steel plate from Brazil. This review covers the above 
manufacturer/exporter of the subject merchandise to the United States. 
The period of review (POR) is August 1, 1995, through July 31, 1996.
    We preliminarily determine the dumping margin for USIMINAS and its 
affiliate Companhia Siderurgica Paulista (``COSIPA'') to be 10.49 
percent during the POR. Interested parties are invited to comment on 
these preliminary results. Parties who submit argument in this 
proceeding should also submit with the argument (1) a statement of the 
issue, and (2) a brief summary of the argument.

EFFECTIVE DATE: September 9, 1997.

FOR FURTHER INFORMATION CONTACT: Samantha Denenberg or Linda Ludwig, 
Enforcement Group III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0413 or (202) 482-3833, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all references to the Department's regulations are 
to 19 CFR Part 353 (1997).

Background

    On July 9, 1993, the Department published in the Federal Register 
(58 FR 37062) the final affirmative antidumping duty determination on 
certain cut-to-length carbon steel plate from Brazil. We published an 
antidumping duty order on August 19, 1993 (58 Fed. Reg. 44164). On 
August 12, 1996, the Department published the Opportunity to Request an 
Administrative Review of this order for the period August 1, 1995-July 
31, 1996 (61 FR 41768). The Department received requests for an 
administrative review of USIMINAS'' exports from USIMINAS itself, a 
producer/exporter of the subject merchandise, and from the petitioners. 
We published a notice of initiation of the review on September 17, 1996 
(61 FR 48882).
    Significant inflation was an issue in the previous segments of this 
proceeding. The Department required that USIMINAS report monthly 
inflation rates for 1995-1996. The Department's analysis of the 
inflation rates determined that inflation did not exceed 15% during the 
POR. The Department did not require USIMINAS to report monthly costs, 
as it was determined that inflation was not significant during the 
period of review. See the Department's letter from Linda Ludwig to 
Christopher S. Stokes, dated October 22, 1996. We are not using the 
Department's inflationary methodology in these preliminary results of 
the review.
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for issuing a preliminary determination in an 
administrative review if it determines that it is not practicable to 
complete the preliminary review within the statutory time limit of 245 
days. On March 21, 1997, the Department published a notice of extension 
of the time limit for the preliminary results in this case to 365 days 
after the last day of the month in which the anniversary date of the 
order occurred. See Extension of Time Limit for Antidumping Duty 
Administrative Reviews, 62 FR 13596 (March 21, 1997).
    The Department is conducting this review in accordance with section 
751(a) of the Act.

Affiliated Respondents

    Pursuant to section 771 (33) of the Act, the Department considers 
the following persons or parties to be affiliated:
    A. Members of a family, including brothers and sisters (whether by 
the whole or half blood), spouse, ancestors, and lineal descendants.

B. Any officer or director of an organization and such 
organization.

C. Partners.

D. Employer and employee.

    E. Any person directly or indirectly owning, controlling, or 
holding with power to vote, five percent or more of the outstanding 
voting stock or shares of any organization and such organization.
    F. Two or more persons directly or indirectly controlling, 
controlled by, or under common control with, any person.
    G. Any person who controls any other person and such other person.
    For the purposes of this paragraph, a person shall be considered to 
control another person if the person is legally or operationally in a 
position to exercise restraint or direction over the other person.
    USIMINAS acknowledges that COSIPA is affiliated with it under the 
antidumping statute because, during the POR, as indicated by publicly 
available information on the record, USIMINAS owned 49 percent of the 
voting stock of COSIPA. See Section A Response at 3.
    It is the Department's practice to collapse affiliated producers 
for purposes of calculating a margin when the facts demonstrate that 
the relationship is such that there is a strong possibility of 
manipulation of prices

[[Page 47437]]

and production decisions that would result in circumvention of the 
antidumping law. See the Department's internal memorandum from Richard 
Weible to Joseph A. Spetrini, dated March 21, 1997. Although the 
Department's new regulations published May 19, 1997 (62 FR 27410) do 
not govern this review, they do codify the Department's current 
practice. Current practice calls for the Department to treat two or 
more affiliated producers as a single entity (i.e., ``collapse'' the 
firms) for purposes of calculating a dumping margin when the following 
three criteria are met:
    1. The producers must be affiliated;
    2. The producers must have production facilities for similar or 
identical products that would not require substantial retooling of 
either facility in order to restructure manufacturing priorities; and
    3. There must be a significant potential for the manipulation of 
price or production. See 19 CFR Part 351 et. al., Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27410.
    As indicated above, USIMINAS and COSIPA are considered affiliated. 
Further, based on publicly available information, it was determined 
that USIMINAS and COSIPA have production facilities for identical 
products and that no substantial retooling would be required for 
USIMINAS and COSIPA to restructure their production priorities with 
respect to production of subject merchandise. In identifying whether 
there is a significant potential for the manipulation of price or 
production, the factors the Department considers include: the level of 
common ownership; whether managerial employees or board members of one 
of the affiliated producers sit on the board(s) of directors of the 
other affiliated parties; and whether operations are intertwined, such 
as through the sharing of sales information, involvement in production 
and pricing decisions, the sharing of facilities or employees, or 
significant transactions between the affiliated producers. The 
following factors support a conclusion that the relationship between 
USIMINAS and COSIPA has significant potential for manipulation of price 
or production: a large share of COSIPA's stock is held by USIMINAS and 
related parties, there is cross-representation on the governing bodies 
of the two companies and both companies are making at least a portion 
of their home market sales of subject merchandise through the same 
channels of distribution (distributors affiliated with USIMINAS). Thus, 
the Department has determined to collapse USIMINAS and COSIPA and to 
treat them as a single producer of cut-to-length carbon steel plate for 
purpose of this antidumping duty review. See the Department's internal 
memorandum from Richard Weible to Joseph A. Spetrini, dated March 21, 
1997 (``Collapsing Memorandum'').

Scope of the Review

    The products covered by this administrative review constitute one 
``class or kind'' of merchandise: certain cut-to-length carbon steel 
plate. These products include hot-rolled carbon steel universal mill 
plates (i.e., flat-rolled products rolled on four faces or in a closed 
box pass, of a width exceeding 150 millimeters but not exceeding 1,250 
millimeters and of a thickness of not less than 4 millimeters, not in 
coils and without patterns in relief), of rectangular shape, neither 
clad, plated nor coated with metal, whether or not painted, varnished, 
or coated with plastics or other nonmetallic substances; and certain 
hot-rolled carbon steel flat-rolled products in straight lengths, of 
rectangular shape, hot rolled, neither clad, plated, nor coated with 
metal, whether or not painted, varnished, or coated with plastics or 
other nonmetallic substances, 4.75 millimeters or more in thickness and 
of a width which exceeds 150 millimeters and measures at least twice 
the thickness, as currently classifiable in the Harmonized Tariff 
Schedule (HTS) under item numbers 7208.40.3030, 7208.40.3060, 
7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 
7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 
7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, and 
7212.50.0000.
    These HTS item numbers are provided for convenience and Customs 
purposes. The written description remains dispositive. Included are 
flat-rolled products of non-rectangular cross-section where such cross-
section is achieved subsequent to the rolling process (i.e., products 
which have been ``worked after rolling'') for example, products which 
have been beveled or rounded at the edges. Excluded is grade X-70 
plate.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by the respondent by using standard verification procedures, 
including on-site inspection of the manufacturing facilities of 
USIMINAS and COSIPA, the examination of relevant sales and financial 
records, and selection of original documentation containing relevant 
information. Our verification results are outlined in the verification 
reports, the public versions of which are available at the Department 
of Commerce, in the Central Records Unit (CRU), Room B099.

Transactions Reviewed

    In accordance with section 751(a)(2) of the Act, the Department is 
required to determine the normal value (NV) and export price (EP) of 
each entry of subject merchandise.
    The Department granted respondent's request for limited time 
reporting of sales data. USIMINAS/COSIPA was only required to report 
home market sales during a window of February 1995 through September 
1995. See Letter to Respondent's Counsel (Willkie Farr & Gallagher) 
from Linda Ludwig, October 22, 1996.
    Based on a review of USIMINAS/COSIPA's submissions and verification 
findings, the Department determined that USIMINAS/COSIPA need not 
report its home market downstream sales because the total volume and 
value of home market sales to affiliated parties constitutes a 
relatively small percentage of USIMINAS/COSIPA's total home market 
sales. See Decision Memorandum on Reporting Downstream Sales, April 1, 
1997.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondent, covered by the description in the 
Scope of the Review section, above, and sold in the home market during 
the POR, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales.

Fair Value Comparisons

    To determine whether sales of certain cut-to-length carbon steel 
plate by USIMINAS/ COSIPA to the United States were made at less than 
fair value, we compared the EP to the NV, as described in the ``Export 
Price'' and ``Normal Value'' sections of this notice. In accordance 
with section 777A (d)(2) of the Act, we calculated monthly weighted-
average prices for NV and compared these to individual U.S. 
transactions.

Export Price

    We used EP as defined in section 772(a) of the Act. We calculated 
EP based on prices to unaffiliated customers in the United States. 
Where appropriate, we made deductions from the starting price for 
inland freight, brokerage and handling, and

[[Page 47438]]

international freight. See USIMINAS and COSIPA Sales Verification 
Reports, August 12, 1997. Based on verification of the U.S. sales 
response, we made adjustments to the gross unit price from a 
theoretical metric ton basis to an actual metric ton basis in order to 
convert all fields to the same weight basis.

Normal Value

    Based on a comparison of the aggregate quantity of home market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a) of the Act. Therefore, in accordance 
with section 773(a)(1)(B)(i) of the Act, we based NV on the price at 
which the foreign like product was first sold for consumption in the 
home market, in the usual commercial quantities and in the ordinary 
course of trade, at the same level of trade as the export price. See 
``Level of Trade'' section below.
    Where appropriate, we deducted rebates, discounts, packing costs, 
credit expenses, movement expenses, pre-sale warehousing, inland 
insurance. We added interest revenue. We also deducted IPI tax and the 
ICMS tax from the reported gross unit price, since the reported price 
included those taxes. Based on our verification of USIMINAS/ COSIPA's 
home market sales response, we made adjustments on certain sales to 
reported imputed credit expenses.
    Further, we added U.S. Commissions and U.S. credit expenses to NV; 
because there were no home market commissions, we deducted from NV the 
lesser of either (1) the amount of commission paid on a U.S. sale for a 
particular product, or (2) the amount of indirect selling expenses 
incurred on the home market sales for a particular product.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act and the 
Statement of Administrative Action (SAA) accompanying the URAA, to the 
extent practicable, the Department will calculate normal values based 
on sales at the same level of trade as the U.S. sales (either EP or 
CEP). When the Department is unable to find sales in the comparison 
market at the same level of trade as the U.S. sale(s), the Department 
may compare sales in the U.S. and foreign markets at different levels 
of trade, and adjust NV if appropriate. The NV level of trade is that 
of the starting-price sales in the home market. As the Department 
explained in Gray Portland Cement and Clinker From Mexico: Final 
Results of Antidumping Duty Administrative Review (``Cement from 
Mexico''), 62 Fed. Reg. 17148, 17156 (April 9, 1997), for both EP and 
CEP, the relevant transaction for the level of trade analysis is the 
sale from the exporter to the importer.
    To determine whether home market sales are at a different level of 
trade than U.S. sales, we examine whether the home market sales are at 
different stages in the marketing process than the U.S. sales. The 
marketing process in both markets begins with the good being sold by 
the producer and extends to the sale to the final user. The chain of 
distribution between the producer and the final user may have many or 
few links, and each respondent's sales are generally to an importer, 
whether independent or affiliated. We review and compare the 
distribution systems in the home market and the United States, 
including selling functions, class of customer, and the extent and 
level of selling expenses for each claimed level of trade. Customer 
categories such as distributor, retailer or end-user are commonly used 
by respondents to describe level of trade, but without substantiation, 
they are insufficient to establish that a claimed level of trade is 
valid. An analysis of the chain of distribution and of the selling 
functions substantiates or invalidates the claimed customer 
categorization levels. If the claimed levels are different, the selling 
functions performed in selling to each level should also be different. 
Conversely, if customer levels are nominally the same, the selling 
functions performed should also be the same. Different levels of trade 
necessarily involve differences in selling functions, but differences 
in selling functions, even substantial ones, are not alone sufficient 
to establish a difference in the level of trade. Differences in levels 
of trade are characterized by purchasers at different stages in the 
chain of distribution and sellers performing qualitatively or 
quantitatively different functions in selling to them.
    When we compare U.S. sales to home market sales at a different 
level of trade, we make a level-of-trade adjustment if the difference 
in level of trade affects price comparability. We determine any effect 
on price comparability by examining sales at different levels of trade 
in a single market, the home market (or the third-country market used 
to calculate NV when the home market is not viable or otherwise 
inappropriate as a basis for NV). Any price effect must be manifested 
in a pattern of consistent price differences between home market (or 
third-country) sales used for comparison and sales at the equivalent 
level of trade of the export transaction. See Granular 
Polytetrafluorethylene Resin from Italy; Preliminary Results of 
Antidumping Duty Administrative Review, 62 Fed. Reg. 26283, 26285 (May 
13, 1997); Cement from Mexico. To quantify the price differences, we 
calculate the difference in the average of the net prices of the same 
models sold at different levels of trade. We use the average percentage 
difference between these net prices to adjust NV when the level of 
trade of NV is different from that of the export sale. If there is a 
pattern of no price differences, then the difference in level of trade 
does not have a price effect and, therefore, no adjustment is 
necessary.
    USIMINAS/COSIPA sold to a single customer in the U.S. market (a 
trading company). In the home market, USIMINAS/COSIPA sold to two 
categories of customers (wholesalers/ distributors and end-users) and 
performed the same selling functions for all sales to all its U.S. and 
home market customers. Originally, respondents claimed and reported two 
levels of trade: sales directly from the producer to the customer and 
sales from the producer to an affiliated distributor for resale. 
However, since the Department determined that respondents need not 
report downstream sales by affiliated distributors, respondent is no 
longer claiming two levels of trade. See Transactions Reviewed section 
above. Our analysis of the questionnaire response and information 
collected at verification lead us to conclude that sales within each 
market and between markets are not made at different levels of trade. 
Accordingly, we preliminarily find that all sales in the home market 
utilized by the Department and all sales to the U.S. market are made at 
the same level of trade. Therefore, all price comparisons are at the 
same level of trade and no adjustment pursuant to section 773(a)(7)(A) 
is warranted.

Cost of Production Analysis

    Petitioners alleged on January 15, 1997 that USIMINAS sold cut-to-
length carbon steel plate in the home market at prices below the cost 
of production (``COP''). Based on this allegation, and in accordance 
with section 773(b) of the Act, the Department determined, on March 20, 
1997, that it had reasonable grounds to believe or suspect that 
USIMINAS had sold the subject merchandise in the home market below the 
COP. See Decision Memorandum from Linda Ludwig to Richard O. Weible 
(March 20, 1997). As a result,

[[Page 47439]]

the Department initiated an investigation to determine whether USIMINAS 
made home market sales during this POR at prices below their COP within 
the meaning of section 773(b) of the Act. After determining that 
USIMINAS and COSIPA should be collapsed, the Department extended the 
COP investigation to include COSIPA. Before making any fair value 
comparisons, we conducted the COP analysis described below.

A. Calculation of COP

    We calculated the COP based on the sum of USIMINAS/COSIPA's cost of 
materials and fabrication for the foreign like product, plus amounts 
for home market selling, general and administrative expenses and 
packing costs in accordance with section 773(b)(3) of the Act. Based on 
findings made at verification, we have recalculated USIMINAS/COSIPA's 
general and administrative expenses and interest. See Analysis 
Memorandum for The File from Samantha Denenberg, September 2, 1997.

B. Test of Home Market Prices

    We used the respondent's weighted-average COP, as adjusted (see 
above), for the period 1/1/95-12/31/95. We compared the weighted-
average COP figures to home market sales of the foreign like product as 
required under section 773(b) of the Act. In determining whether to 
disregard home-market sales made at prices below the COP, we examined 
whether (1) within an extended period of time, such sales were made in 
substantial quantities, and (2) such sales were made at prices which 
permitted the recovery of all costs within a reasonable period of time. 
On a product-specific basis, we compared the COP to the home market 
prices, less any applicable movement charges, rebates, and discounts.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C), where less than 20 percent of 
respondent's sales of a given product were at prices less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of a respondent's sales of a 
given product during the POR were at prices less than the COP, we 
determined such sales to have been made in ``substantial quantities'' 
within an extended period of time in accordance with section 
773(b)(2)(B) of the Act, and not at prices which would permit recovery 
of all costs within a reasonable period of time, in accordance with 
section 773(b)(2)(D) of the Act. Therefore, we disregarded such below-
cost sales. Where all contemporaneous sales of a comparison product 
were disregarded, we calculated NV based on CV.

D. Calculation of CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of USIMINAS/COSIPA's cost of materials, fabrication, 
SG&A, U.S. packing costs, interest expenses as reported in the U.S. 
sales database and profit. As noted above, we recalculated USIMINAS/
COSIPA'S general and administrative expenses and interest expenses 
based on our verification results. In accordance with section 
773(e)(2)(A) of the Act, we based SG&A and profit on the amounts 
incurred and realized by the respondent in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade, for consumption in the foreign country. For selling expenses, 
we used the weighted-average home market selling expenses. Where we 
compared CV to EP, we added U.S. commissions to CV, and then we 
deducted from CV the lesser of either (1) the amount of commission paid 
on a U.S. sale for a particular product, or (2) the amount of indirect 
selling expenses incurred on the home market sales for a particular 
product.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the official exchange rates in effect on the dates 
of the U.S. sales as certified by the Federal Reserve Bank of New York. 
Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in order to convert foreign currencies into U.S. dollars, 
unless the daily rate involves a ``fluctuation.'' In accordance with 
the Department's practice, we have determined as a general matter that 
a fluctuation exists when the daily exchange rate differs from a 
benchmark by 2.25 percent. The benchmark is defined as the rolling 
average of rates for the past 40 business days. When we determine a 
fluctuation exists, we substitute the benchmark for the daily rate.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margin exists:

------------------------------------------------------------------------
                                                                Margin  
       Manufacturer/Exporter                 Period           (percent) 
------------------------------------------------------------------------
Usinas Siderurgicas de Minas                                            
 Gerais, S.A......................           8/1/95-7/31/96        10.49
Companhia Siderurgica Paulista....           8/1/95-7/31/96        10.49
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the date of publication or the 
first business day thereafter. Case briefs from interested parties may 
be submitted not later than 30 days after the date of publication. 
Rebuttal briefs, limited to issues raised in those briefs, may be filed 
not later than 37 days after the date of publication of this notice. 
The Department will publish the final results of this administrative 
review, including its analysis of issues raised in the case and 
rebuttal briefs, not later than 120 days after the date of publication 
of this notice.
    The following deposit requirements will be effective upon 
publication of the final results of this antidumping duty review for 
all shipments of certain cut-to-length carbon steel plate from Brazil, 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date, as provided by section 751(a) of the Tariff Act: (1) 
the cash deposit rate for the reviewed company will be that established 
in the final results of review; (2) for exporters not covered in this 
review, but covered in the LTFV investigation or previous review, the 
cash deposit rate will continue to be the company-specific rate from 
the LTFV investigation or the most recent previous review; (3) if the 
exporter is not a firm covered in this review, a previous review, or 
the original 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; (4) the cash deposit rate for 
all other manufacturers or exporters will continue to be 75.54 percent, 
the ``All Others'' rate in the

[[Page 47440]]

LTFV investigation. These requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    This notice serves as a preliminary 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 antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are published in accordance 
with section 751(a)(1) of the Act and 19 CFR 353.22.

    Dated: September 2, 1997.
Robert S. LaRussa,
Assistant Secretary, for Import Administration.
[FR Doc. 97-23855 Filed 9-8-97; 8:45 am]
BILLING CODE 3510-DS-P