[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