[Federal Register Volume 63, Number 25 (Friday, February 6, 1998)]
[Notices]
[Pages 6153-6155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3077]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-810]
Certain Stainless Steel Pipe From Korea; Preliminary Results of
Antidumping Duty Changed Circumstances Review
AGENCY: International Trade Administration/Import Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty changed
circumstances review.
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SUMMARY: In response to a request by SeAH Steel Corporation (SeAH), the
Department of Commerce (the Department) is conducting a changed
circumstances review to examine whether SeAH is the successor to Pusan
Steel Pipe (PSP). As a result of this review, the Department
preliminarily finds that SeAH is the successor to PSP, and should be
assigned the antidumping deposit rate applicable to PSP.
EFFECTIVE DATE: February 6, 1998.
[[Page 6154]]
FOR FURTHER INFORMATION CONTACT: Lesley Stagliano, Elisabeth Urfer, or
Maureen Flannery, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-
4733.
SUPPLEMENTARY INFORMATION:
Background
On March 27, 1997, SeAH requested that the Department conduct a
changed circumstances administrative review pursuant to section 751(b)
of the Tariff Act of 1930, as amended (the Act) to determine whether
SeAH should properly be considered the successor firm to PSP and if, as
such, SeAH should be entitled to PSP's cash deposit rate. We published
a notice of initiation of a changed circumstances review on June 11,
1997 (62 FR 31789) to examine whether SeAH is the successor to PSP. The
Department is conducting this changed circumstances review in
accordance with 19 CFR 353.22(f).
Scope of Review
Imports covered by the review are shipments of welded austenitic
stainless steel pipe (WSSP) that meets the standards and specifications
of 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 this order also includes WSSP 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
Schedules of the United States (HTSUS) subheadings: 7306.40.5005,
7306.40.5015, 7306.40.5040, 7306.40.5065, and 7306.40.5085. Although
these subheadings include both pipes and tubes, the scope of this
review is limited to welded austenitic stainless steel pipes. Although
the HTSUS subheadings are provided for convenience and Customs
purposes, the written description of the scope of this order is
dispositive.
This changed circumstances administrative review covers SeAH and
any parties affiliated with SeAH.
Verification
As provided in section 782(i) of the Act, we verified information
provided by SeAH using standard verification procedures, including on-
site inspection of the manufacturer's facilities, the examination of
relevant financial records, and the selection of original documentation
containing relevant information. Our verification results are outlined
in the public version of the verification report.
Successorship
According to SeAH, PSP legally changed its name to SeAH on December
28, 1995, which change became effective on January 1, 1996. SeAH claims
that its name change from PSP was a change in name only, and that the
legal structure of the company, its management, and ownership were not
affected by the name change. SeAH also claims that it is a part of a
larger group of related companies, certain members of which had SeAH in
their names prior to January 1, 1996.
In its request for a changed circumstances review, SeAH indicated
that PSP had acquired certain production assets formerly owned by Sammi
Metal Products Co. (Sammi). SeAH asserts that the acquisition, which
occurred more than a year before the name change and was effective
January 3, 1995, is not related to the name change. SeAH claims that
its acquisition of the products and facilities of Sammi is functionally
no different from PSP expanding its existing facilities or contracting
a new manufacturing facility.
Based on the information submitted by SeAH, petitioner has argued
that SeAH is the successor to Sammi.
In determining whether one company is the successor to another for
purposes of applying the antidumping duty law, the Department examines
a number of factors including, but not limited to, changes in (1)
management, (2) production facilities, (3) suppliers, and (4) customer
base. (See, e.g., Brass Sheet and Strip from Canada; Final Results of
Antidumping Duty Administrative Review, (57 FR 20460; May 13, 1992);
Steel Wire Strand for Prestressed Concrete from Japan; Initiation and
Preliminary Results of Changed Circumstances Antidumping Duty
Administrative Review, (55 FR 7759; March 5, 1990); and Industrial
Phosphoric Acid From Israel; Final Results of Antidumping Duty Changed
Circumstances Review (59 FR 6944, February 14, 1994).) While no one or
several of these factors will necessarily provide a dispositive
indication of succession, the Department will generally consider one
company to be a successor to a second if its resulting operation is
essentially the same as that of its predecessor. (See Brass Sheet and
Strip from Canada; Final Results of Antidumping Duty Administrative
Review, (55 FR 20460; May 13, 1992).) Thus, if the evidence
demonstrates that, with respect to the production and sale of the
subject merchandise, the new company operates as the same business
entity, the Department will assign the new company the cash deposit
rate of its predecessor.
The record in this review, as demonstrated by the following
factors, indicates that SeAH is the successor to PSP for the production
of subject merchandise, and is not a successor to Sammi.
(1) Management
All of the managers of the Changwon plant were transferred from PSP
plants. One manager was transferred from the Pohang plant, one was
transferred from the Seoul Head Office and the others were transferred
from the Seoul plant. The manager and assistant manager of the
Stainless Steel Pipe Production Team at the Changwon plant had worked
for Sammi in the past, but this was prior to 1989, six years before PSP
purchased the Changwon facility. The headquarters for the sales and
marketing division remained at the head office in Seoul, and very
little change occurred with respect to the individuals holding these
management positions. None of Sammi's 1994 board of directors appear on
SeAH's board of directors.
Currently, there are three team managers and one general manager at
the Changwon plant. This management structure closely resembles the
management structure in 1995 (before the name change). With respect to
the executive management of PSP, the majority retained their positions
after the name change to SeAH, although several top executives were
transferred to or from related entities. SeAH's chart of its board of
directors indicates that the Chairman & CEO, President & COO, Vice
President, and four of six directors remain the same.
(2) Production Facilities
The purchase of the Changwon facility only involved physical
assets. This was verified by a review of the contract for sale of the
Changwon plant by Sammi to PSP. After purchasing the Changwon plant,
PSP reconfigured and overhauled the plant. It moved
[[Page 6155]]
machinery and equipment from its Seoul plant, installed new pickling
lines, enlarged the building, and scrapped machinery and equipment
purchased from Sammi. In our examination of information on the record
we find that production quantity also changed. SeAH stated in its
November 20, 1997 letter that ninety of the factory employees were sent
to the Changwon facility from former PSP plants, while other employees
were hired. During verification we found that one of these new hires
had worked for Sammi prior to 1989, and for an unaffiliated entity
between 1989 and 1996. After PSP's name change to SeAH, only minimal
changes occurred with respect to the number of people employed at
Changwon plant. For further details, see the proprietary ``Memorandum
to Robert LaRussa, Successorship: Certain Welded Stainless Steel Pipe
from Korea, Changed Circumstances Review,'' January 23, 1998.
(3) Suppliers
Information on the record indicates that there have been some
changes in suppliers between 1994 and 1996. An examination of PSP's
1994 supplier list and SeAH's 1996 supplier list show some changes in
suppliers. An examination of Sammi's 1994 supplier list (which SeAH
stated was an informal list compiled by them from basic knowledge of
the Korean Stainless Steel Pipe market) and SeAH's 1996 supplier list
also show changes in suppliers. However, we believe these changes are
not significant, see the proprietary ``Memorandum to Robert LaRussa,
Successorship: Certain Welded Stainless Steel Pipe from Korea, Changed
Circumstances Review,'' January 23, 1998.
(4) Customer Base
SeAH states that it does not have Sammi's 1994 customer list;
therefore, we are not able to compare SeAH's customer base to Sammi's.
SeAH states that there are six other producers of WSSP in Korea, two of
which are new companies, and that Sammi's former customers could go to
any one of these companies to purchase WSSP. An analysis of the
information submitted by SeAH indicates that PSP did not have a
significant increase in its large-customer base due to the acquisition
of the Changwon facility. With respect to SeAH's smaller-customer base,
SeAH notes that it is likely that some of its new customers are due to
the closure of Sammi's operations, but that without Sammi's lists, it
cannot prove this. We found at verification that PSP used their own
marketing strategies and knowledge of the market to obtain their own
customers. See ``Report of Verification of SeAH Steel Corporation, Ltd.
(SeAH) in the Changed Circumstances Review for Certain Welded Stainless
Steel Pipe from Korea,'' page 7. A comparison of the customer lists
submitted by SeAH indicates that there have been some small changes in
the customer base between PSP in 1994 and SeAH in 1996.
We preliminarily find that SeAH is not the successor to Sammi as
suggested by the petitioner. While the plant is a former Sammi
facility, the plant was overhauled and redesigned. Further, none of
Sammi's former managers work for SeAH, with the exception of two plant
managers, who ceased working for Sammi long before the plant
acquisition, and, therefore, were not hired as a result of that
acquisition. PSP's suppliers did not change in a way that would be
attributed to PSP's acquisition of the Changwon plant, and PSP did not
acquire a significant number of new customers or substantial new
business from such customers as a result of the Changwon acquisition.
With PSP's name change to SeAH, no major changes occurred with
respect to PSP's management, plant facilities, customer base or
supplier base. Therefore, we find that PSP was not the successor to
Sammi and that SeAH is the successor to PSP.
These issues are more fully discussed in ``Memorandum to Robert
LaRussa: Successorship: Certain Welded Stainless Steel Pipe from Korea,
Changed Circumstances Review,'' January 23, 1998.
Preliminary Results of the Review
We preliminarily conclude that, for antidumping duty cash deposit
purposes, SeAH is the successor to PSP. SeAH will, therefore, be
assigned the PSP antidumping deposit rate of 2.67 percent.
Parties to the proceeding may request disclosure within five days.
Interested parties may submit written arguments in case briefs on these
preliminary results, which will be due on February 12, 1998. Rebuttal
briefs, limited to arguments raised in case briefs, are due on February
17, 1998. Case briefs and rebuttal briefs must be served on interested
parties in accordance with 19 CFR 353.38(e). A hearing, if requested,
will be held on February 19, 1998. The Department will publish the
final results of the changed circumstances review including the results
of any such comment. This changed circumstances review and notice are
in accordance with 19 CFR 353.22(f).
Dated: January 29, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-3077 Filed 2-5-98; 8:45 am]
BILLING CODE 3510-DS-P