[Federal Register Volume 63, Number 66 (Tuesday, April 7, 1998)]
[Notices]
[Pages 16979-16982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8973]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-810]


Certain Welded Stainless Steel Pipe From Korea; Final Results of 
Antidumping Duty Changed Circumstances Review

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

ACTION: Notice of final results of antidumping duty changed 
circumstances review.

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SUMMARY: On February 6, 1998, the Department of Commerce (the 
Department) published in the Federal Register the preliminary results 
of its antidumping duty changed circumstances review on certain welded 
stainless steel pipe from Korea (63 FR 6153) to examine whether SeAH 
Steel Corporation (SeAH) is the successor to Pusan Steel Pipe (PSP), 
the successor to Sammi Metal Products Co. (Sammi), or neither. We have 
now completed this review and determine that, for purposes of applying 
the antidumping duty law, SeAH is the successor to PSP, and as such, 
should be assigned the antidumping deposit rate applicable to PSP.

EFFECTIVE DATE: April 7, 1998.

FOR FURTHER INFORMATION CONTACT: Lesley Stagliano 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) 482-0648, (202) 482-3020.

SUPPLEMENTARY INFORMATION:

Background

    On February 6, 1998, the Department of Commerce (the Department) 
published in the Federal Register the preliminary results of its 
antidumping duty changed circumstances review on certain welded 
stainless steel pipe from Korea (63 FR 6153). We have now completed 
this changed circumstances review in accordance with section 751(b) of 
the Tariff Act of 1930, as amended (the Act).

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.

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, petitioners have argued 
that SeAH is, at a minimum, a hybrid of PSP and 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, 20461, 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

[[Page 16980]]

merchandise, and is not a successor to Sammi, nor a new hybrid entity.

Analysis of Comments Received

Comment 1

    Petitioners argue that it is not the change in name from PSP to 
SeAH that supports a finding of changed circumstances but rather the 
acquisition of the production operations for WSSP from Sammi in 
Changwon, and the closure of the PSP Seoul facility. Consequently, 
petitioners state that whether or not PSP ever changed its name, the 
fundamental changes in PSP that resulted from acquiring Sammi's WSSP 
Changwon facility justify a finding of changed circumstances in this 
review. Petitioners point out that the agency must recognize that 
although changes in names provide grounds for a changed-circumstances 
review, the law does not require that a name change occur in order to 
support a finding of changed circumstance. In support of this 
statement, petitioners cite Industrial Phosphoric Acid from Israel, (59 
FR 6944, 6945, (1994)). Petitioners state that in its preliminary 
analysis, the Department erroneously focused on whether there was a 
change in factors such as production facilities, customers, suppliers 
and management following the name change, not following the 
acquisition. Thus, petitioners argue that the Department focused on the 
wrong time period with respect to this analysis. Instead of comparing 
PSP's operations in 1995 to SeAH's operations in 1996, petitioners 
argue that the Department should examine the operations of PSP in 1994 
as contrasted with PSP's operations in 1995 and SeAH's operations in 
1996.
    Respondents maintain that the Department correctly applied the 
successorship test used in Brass Sheet and Strip from Canada, (57 FR 
20460, 20461, May 13, 1992), Sugar and Syrups from Canada, (61 FR 
51275, October 1, 1996), Large Power Transformers from Italy, (52 FR 
46806, December 10, 1987), and Industrial Phosphoric Acid from Israel, 
(59 FR 6944, February 14, 1994), to the facts of this review in order 
to conclude that SeAH's business operation for production of the 
subject merchandise was that of its predecessor PSP. Furthermore, 
respondents argue that petitioners ignore that the administrative 
record includes multiple questionnaire responses which focused on PSP's 
acquisition of the Changwon plant and cover over three years of 
information regarding PSP and SeAH's (1) management, (2) production 
facilities, (3) suppliers, and (4) customer base. In addition, 
respondents assert that the Department's conclusion in the Preliminary 
Results does indeed address the effects of the plant acquisition.
    Department's Position: The Department disagrees with petitioners' 
argument that the Department did not inquire about or consider the 
successorship factors following the acquisition of the Changwon plant. 
While our preliminary results may not have detailed the breadth of our 
inquiry, the Department did, in fact, consider the effects of the 
acquisition of the Changwon plant including: (1) The changes in 
production facilities at the Changwon plant after January 1, 1995. See 
August 27, 1997 Response; (2) all documentation pertaining to the 
acquisition of the Changwon plant (i.e., contracts, sales agreements, 
non-compete agreements, deeds of transfer, meeting notes, articles of 
incorporation, etc.); (3) whether Sammi's employees were transferred to 
PSP as a result of the acquisition of the Changwon plant. See October 
3, 1997 Response; (4) the number of workers that are currently employed 
at the Changwon facility, (5) the percentage that the transferred 
employees make up of the total employees at the Changwon plant, (6) the 
functions that are performed by the ninety employees that were 
transferred from Seoul to work in the Changwon facility. See December 
2, 1997 Response; (7) the process through which PSP acquired the 
Changwon plant, the negotiation process time-line, and all documents 
associated with the negotiation, (8) the factory layouts of the Seoul 
plant before and after the relocation, as well as the factory layouts 
of the Changwon plant before and after PSP acquired it, and (9) 
marketing practices and marketing changes after PSP acquired the 
Changwon plant. In addition, the Department analyzed information from 
1994, 1995 and 1996 with respect to the customers and suppliers of PSP/
SeAH. As a result of the Department's analysis of the effects of the 
acquisition of the Changwon plant, the Department stated in its 
preliminary results:

    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.

(63 FR 6155; February 6, 1998)

Thus, the record establishes that the Department thoroughly considered 
PSP's acquisition of the Sammi facility and the effect of that 
acquisition on PSP's operations.

Comment 2

    Petitioners argue that the Department impermissibly shifted focus 
of the inquiry to a change in the corporation as a whole rather than a 
change solely with respect to production of subject merchandise by 
focusing on the change in the name rather than on the acquisition of 
Sammi's Changwon facility. Petitioners cite Industrial Phosphoric Acid 
from Israel, (59 FR 6945), when arguing that the successor company 
question must be resolved ``in terms of the operations that produce the 
subject merchandise.'' Petitioners also cite Brass Sheet and Strip from 
Canada, (57 FR 20460, 20461, (1992)), which states that ``the point of 
comparison is the type of business, not the legal entity itself.'' 
Moreover, petitioners argue that by focusing on the company name 
change, the Department has departed from its legal precedent requiring 
that successorship inquiries analyze changes at the level of production 
of subject merchandise, not based on an overall corporate entity.
    Department's Position: The Department agrees with petitioners that 
the focus of the changed circumstances should be the production of 
subject merchandise. However, both the name change and the acquisition 
of the Sammi facility relate to the production of the subject 
merchandise. Thus, the Department correctly considered the name change 
as a changed circumstance giving rise to the issue of successorship. As 
stated in response to Comment 1, the Department considered both the 
name change and the effects of the acquisition of Changwon as they 
relate to the successorship factors.

Comment 3

    Petitioners argue that the Department has failed to examine whether 
SeAH is a hybrid of PSP and Sammi. Petitioners contend that at a 
minimum, SeAH must be viewed as a combination of PSP and Sammi with 
respect to the production of WSSP and, thus, should be subject to the 
``all others'' cash deposit rate. Petitioners assert that the 
additional information obtained at verification provides further 
support for the conclusion that SeAH is a hybrid of PSP

[[Page 16981]]

WSSP production and Sammi WSSP production.
    Although petitioners acknowledge that overhauling of the Changwon 
facility may support the Department's conclusion that SeAH is not the 
successor to Sammi, petitioners argue that these facts do not support 
the conclusion that SeAH is the successor to PSP. Petitioners' 
arguments focus on the change in production facilities that since (1) 
PSP's WSSP operations were physically relocated from Seoul and 
integrated with Sammi production lines, in Sammi's pre-existing 
Changwon facility, and (2) SeAH shut down the Seoul facility, SeAH is 
not the successor to PSP with respect to WSSP production facilities. 
Petitioners argue that the acquisition of raw materials, supplies and 
inventory, and retention of certain production lines in addition to 
physical facilities at Changwon prove that the resulting WSSP 
production at the Changwon facility is now a combination of PSP and 
Sammi.
    Petitioners argue that evidence on the record indicates that the 
production facilities of PSP are not the same as those of SeAH. 
Petitioners argue that instead of focusing on the March 26, 1996 shut 
down of the WSSP facility in Seoul, the agency focused on differences 
that exist at the Changwon facility today in comparison to the Changwon 
facility when it was run by Sammi.
    Respondents argue that many companies frequently buy equipment, 
occasionally expand and/or move their facilities, and sometimes they 
increase production and grow. Thus, none of the changes that 
accompanied PSP's acquisition of Sammi's Changwon plant were 
extraordinary. Respondents note that the only difference between this 
case and the normal changes that most companies experience is that PSP 
purchased the physical assets of a company that also produced subject 
merchandise and had its own company-specific rate. Respondents argue 
that there is no difference with respect to equipment purchased from 
Sammi or any other source because no equipment nor a specific facility 
has an antidumping deposit rate inviolably attached to it. While SeAH's 
production facility at Changwon may be a combination of equipment from 
Sammi and PSP's Seoul plant, it does not logically follow that in 
purchasing the plant and equipment from Sammi that PSP became something 
other than itself.
    Department's Position: The Department disagrees with petitioners. 
The Department considers the acquisition of the Changwon facility and 
the above mentioned materials as asset acquisitions and nothing more. 
Although the hybrid issue may not be detailed in the preliminary 
results, the Department addressed it in its analysis of the management, 
production facilities, customers and suppliers. We collected and 
analyzed PSP/SeAH information regarding these factors for 1994, 1995, 
and 1996. After reviewing these four factors, the Department determined 
that with the purchase of the Changwon plant, PSP remained PSP. 
Contrary to petitioners' argument, the Department's findings did 
resolve the hybrid issue. Specifically, we found that (1) PSP did not 
change into a new corporate entity, (2) the management team remained 
the same, and (3) even though PSP's production facility changed with 
the acquisition of the Changwon plant and the relocation of the Seoul 
facility, the new Changwon facility came under the PSP corporate 
structure. With the exception of the acquisition of the new facility, 
PSP (and hence SeAH) continued to operate essentially as it had prior 
to the acquisition. Subsumed in the Department's conclusion that SeAH 
operates essentially the same as PSP is the conclusion that it is not a 
hybrid operation.

Comment 4

    Petitioners claim that although SeAH has attempted to focus on the 
fact that it did not ``transfer'' production workers from Sammi's 
Changwon facility as part of its contractual agreements, the agency 
didn't ask whether there was a contractual agreement to transfer 
workers. In addition, petitioners argue that the agency incorrectly 
focused on whether the number of people employed at the Changwon plant 
changed after PSP changed its name to SeAH and not whether the number 
of people in Changwon's facility changed after PSP acquired Changwon 
and shifted employees from Seoul to Changwon. Moreover, petitioners 
state that the agency fails to contrast the number of newly-hired 
workers with the number of transferred workers.
    Respondents contend that the number of newly-hired employees and 
the proportion of total workers at Changwon that these employees 
represent are stated on the record.
    Department's Position: At verification, the Department analyzed the 
original contract to buy the Changwon plant and found no evidence of an 
agreement to transfer workers from Sammi to PSP. Moreover, as mentioned 
in the preliminary determination, at verification the Department looked 
at personnel files of current SeAH employees at the Changwon plant and 
found only one new hire who had worked for Sammi prior to 1989, and for 
an unaffiliated entity between 1989 and 1996, before coming to 
Changwon. There was no evidence that any other employees had worked for 
Sammi. Thus, the Department finds no reason to suspect that any 
Changwon employees were transferred to PSP. As this issue contains 
proprietary information, refer to the Memorandum to the File from 
Lesley Stagliano, dated March 30, 1998 for further information.

Comment 5

    Petitioners argue that facts on the record contradict the agency's 
conclusion that SeAH is the successor to PSP with respect to the 
domestic customer base. Petitioners cite SeAH as stating ``that the 
majority of its customers are small customers'' and ``that it is likely 
that most of its (SeAH's) new smaller customers were customers of 
Sammi.'' Based on these two statements, petitioners assert that SeAH's 
operations in Changwon served not only the home market customer base of 
PSP but also the home market customer base of Sammi, thus, proving that 
SeAH is not the successor to PSP.
    Respondents maintain that the Department's findings regarding the 
change in customers was correct. Respondents argue that with Sammi's 
disappearance from the market, the new small customers would be just as 
likely to seek material from any of the several other producers of 
subject merchandise in Korea.
    Department's Position: At verification, the Department did not find 
any evidence of customer lists or contracts transferring customers from 
Sammi to PSP. We believe PSP's addition of customers who were former 
customers of Sammi is a normal consequence of Sammi's departure from 
the market. For further discussion of this issue, refer to the 
Memorandum to the File from Lesley Stagliano, dated March 30, 1998.

Comment 6

    Petitioners state that SeAH has never submitted for the record 
either PSP's or SeAH's list of United States customers even though the 
Department asked SeAH to report data on ``all'' customers, see Request 
for Information from SeAH Steel Corp., dated July 24, 1997, question 
12. Petitioners assert that because the focus of a changed-
circumstances review is on whether the company (PSP) that was subject 
to the antidumping finding by the Department in its original order is 
the same as the company (SeAH) now requesting successorship status, it 
is critical that the Department examine the U.S. customer base, for it 
was on the basis of

[[Page 16982]]

U.S. sales to U.S. customers at particular prices that the dumping 
findings were made. Furthermore, petitioners state that the weighted-
average margins resulting from the case reflect that Sammi accounted 
for the majority of U.S. sales of WSSP from Korea; therefore, 
petitioners argue that as the only other exporter of WSSP to the United 
States previously identified, SeAH is now supplying Sammi's former U.S. 
customer base. Thus, petitioners conclude that SeAH is not the 
successor to PSP.
    Respondents state that PSP/SeAH sells the vast majority of its 
subject merchandise in the domestic market, and that petitioners have 
no basis for claiming that ``SeAH is now supplying Sammi's former U.S. 
customer base.'' Moreover, respondents argue that Sammi did not, and 
could not, transfer its U.S. customers to PSP. In addition, respondents 
contend that it is unreasonable to assume that, among all of the 
potential suppliers to the U.S. customer, both domestic and foreign, 
that all of Sammi's former customers would choose PSP/SeAH.
    Department's position: As noted above, PSP purchased only Sammi's 
production assets. PSP did not succeed to any rights or obligations 
Sammi had with its U.S. or domestic customers. With Sammi's absence 
from the market, it is natural that U.S. customers would seek business 
from other suppliers of subject merchandise in order to fill the void 
that was created. Further, as noted by respondents, PSP's/SeAH's U.S. 
sales consist of a small percentage of the total sales of WSSP, a fact 
admitted by petitioners as well.

Comment 7

    Petitioners disagree with the agency's conclusion that the changes 
in suppliers were not ``significant''.
    Department's Position: The Department maintains its position that 
the changes in suppliers were not significant. For further elaboration 
of the Department's position, as it contains proprietary information, 
refer to the Memorandum to the File from Lesley Stagliano, dated March 
30, 1998.

Comment 8

    Petitioners argue that the Department incorrectly focused on the 
change in management following the name change and not on the 
acquisition of Changwon. In addition, petitioners assert that 
respondents' statement that ``management dictates and controls the 
production of subject merchandise, and, most important, sets prices'' 
is an unfounded overemphasis of just one factor and that production 
facilities, suppliers, and customers are relevant factors as well.
    Respondents argue that not only did the Department address the 
issue of management specifically with respect to the Changwon 
acquisition, but that it also analyzed management on a corporate-wide 
level. Consequently, respondents state that the Department verified all 
of the information pertaining to the period before and after the 
acquisition of Sammi's Changwon plant, and that such information is 
reflected in the verification report. Respondents quote the 
Department's verification report which states that there were ``no 
significant organizational changes after the acquisition of the 
Changwon plant.'' See Verification Report at 5.
    Department's Position: The Department agrees with respondents. The 
Department did address the relevant changes in management. In the 
Memorandum to Joseph Spetrini from Edward Yang, dated January 29, 1998, 
the Department states, ``[a]ll of the managers of the Changwon plant 
were transferred from PSP plants after the January 1, 1995 acquisition 
of the Changwon plant.'' In addition, the Department states, ``(t)he 
headquarters for the sales and marketing division remained at the head 
office in Seoul, and very little changed with respect to the 
individuals holding these management positions.'' See Preliminary 
Results, (63 FR 6154). In its analysis, the Department specifically 
looked at the period following the acquisition as well as the name 
change with respect to management. Thus, the Department maintains its 
original position in the preliminary results regarding this issue.

Comment 9

    Petitioners argue that SeAH attempted to circumvent the antidumping 
duty laws by combining operations with another company (Sammi) subject 
to a higher dumping rate, but nonetheless continued to produce and 
export subject merchandise to the United States without divulging this 
information and relying instead on the lower (PSP's) rate.
    Respondents argue that PSP could in no way improve its position 
vis-a-vis the applicable cash deposit rate by purchasing Sammi's 
Changwon plant, a company with a higher deposit rate than PSP. 
Furthermore, respondents argue that for PSP to try to circumvent the 
antidumping order by purchasing the production facilities of the 
company with the highest cash deposit rate, when PSP already had the 
lowest cash deposit rate of any company subject to the antidumping 
order, would defy logic.
    Department's position: The Department disagrees with petitioners. 
Petitioners cite to no evidence on the record to support their 
contention. The Department has thoroughly reviewed the facts on the 
record and did not find that Respondent has intentionally attempted to 
mislead the Department.

Final Results of the Review

    After reviewing the comments received, we determine that SeAH is 
the successor to PSP for antidumping duty cash deposit purposes.
    SeAH will, therefore, be assigned the PSP antidumping deposit rate 
of 2.67 percent.
    The following deposit requirements will be effective upon 
publication of this notice of final results of administrative review 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date as provided 
by section 751(a)(2)(c) of the Act: The case deposit rate for the 
reviewed company will be as outlined above.
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice 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 antidumping duties occurred and subsequent assessment 
of double antidumping duties.
    This determination is issued and published in accordance with 
section 777(i)(1) of the Act and 19 CFR 353.22(f).

    Dated: March 30, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-8973 Filed 4-6-98; 8:45 am]
BILLING CODE 3510-DS-P