[Federal Register Volume 63, Number 66 (Tuesday, April 7, 1998)]
[Notices]
[Pages 16967-16971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9092]


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

DEPARTMENT OF COMMERCE

International Trade Administration
[A-201-806]


Carbon Steel Wire Rope from Mexico; Preliminary Results of 
Antidumping Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review; Carbon Steel Wire Rope from Mexico.

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

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on steel wire rope 
from Mexico in response to a request by respondent, Aceros Camesa S.A. 
de C.V. (Camesa). This review covers exports of subject merchandise to 
the United States during the period March 1, 1996 through February 28, 
1997.
    We have preliminarily determined that sales have not been made 
below normal value (NV). If these preliminary results are adopted in 
our final results, we will instruct U.S. Customs to liquidate entries 
without regard to antidumping duties. Interested parties are invited to 
comment on these preliminary results. Parties who submit comments are 
requested to submit with each comment (1) a statement of the issue and 
(2) a brief summary of the comment.

EFFECTIVE DATE: April 7, 1998.

FOR FURTHER INFORMATION CONTACT: Leah Schwartz or Maureen Flannery, AD/
CVD Enforcement, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-
3782 or (202) 482-3020.

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
stated, all citations to the Department's regulations are references to 
the regulations as codified at 19 CFR Part 353 (April 1996).

SUPPLEMENTARY INFORMATION:

Background

    The Department published in the Federal Register the antidumping 
duty order on steel wire rope from Mexico on March 25, 1993 (58 FR 
16173). On March 7, 1997 we published in the Federal Register (62 FR 
10521) a notice of opportunity to request an administrative review of 
the antidumping duty order on steel wire rope from Mexico covering the 
period March 1, 1996 through February 28, 1997.
    In accordance with 19 CFR 353.22(a)(2), Camesa requested that we

[[Page 16968]]

conduct an administrative review of its sales. We published a notice of 
initiation of this antidumping duty administrative review on May 21, 
1997 (62 FR 27720).
    On September 18, 1997, we solicited comments from Camesa and from 
petitioner, the Committee of Domestic Steel Wire Rope and Specialty 
Cable Manufacturers, regarding the product characteristics used to 
match subject merchandise sold in the United States to foreign like 
products sold in the home market. We received comments from petitioner 
on September 25, 1997 and comments from Camesa on September 26, 1997. 
(See the Model Match section below for further discussion.)
    On September 29, 1997, petitioner requested that the Department 
initiate an investigation of sales below the cost of production (COP) 
for Camesa. Based on our analysis of petitioner's COP allegation, we 
initiated an investigation of sales at less than COP, pursuant to 
section 773(b) of the Act. (See Memorandum For Edward Yang from Leon 
McNeill, Steel Wire Rope from Mexico: Whether to Initiate a Sales Below 
Cost Investigation, October 6, 1997.) We received cost data from Camesa 
on December 1, 1997 and December 29, 1997.
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for completion of administrative reviews if it determines 
that it is not practicable to complete the review within the 
established time limit. The Department published a notice of extension 
of the time limit for the preliminary results in this case, on October 
22, 1997. See Steel Wire Rope from Mexico: Extension of Time Limits for 
Preliminary Results of Antidumping Duty Administrative Review, 62 FR 
54831 (October 22, 1997). On January 5, 1998, the Department published 
a second notice of extension of the time limit for the preliminary 
results. See Steel Wire Rope from Mexico: Extension of Time Limits for 
Preliminary Results of Antidumping Duty Administrative Review, 63 FR 
206 (January 5, 1998). The Department is conducting this administrative 
review in accordance with section 751(a) of the Act.

Scope of the Review

    The product covered by this review is steel wire rope. Steel wire 
rope encompasses ropes, cables, and cordage of iron or carbon steel, 
other than stranded wire, not fitted with fittings or made up into 
articles, and not made up of brass plated wire. Imports of these 
products are currently classifiable under the following Harmonized 
Tariff Schedule (HTS) subheadings: 7312.10.9030, 7312.10.9060 and 
7312.10.9090.
    Excluded from this review is stainless steel wire rope, which is 
classifiable under the HTS subheading 7312.10.6000, and all forms of 
stranded wire, with the following exception.
    Based on the final affirmative determination of circumvention of 
antidumping duty order, 60 FR 10831 (February 28, 1995), the Department 
has determined that steel wire strand, when manufactured in Mexico by 
Camesa and imported into the United States for use in the production of 
steel wire rope, falls within the scope of the antidumping duty order 
on steel wire rope from Mexico. Such merchandise is currently 
classifiable under subheading 7312.10.3020 of the HTS.
    Although HTS subheadings are provided for convenience and Customs 
purposes, the written description of the scope of this order remains 
dispositive.
    This review covers one manufacturer and exporter, Camesa, and the 
period March 1, 1996 through February 28, 1997.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by Camesa using standard verification procedures, including 
on-site inspection of the manufacturer's facilities, examination of 
relevant sales and financial records, and selection of original 
documentation containing relevant information. Our verification results 
are outlined in the public version of the verification report.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by Camesa covered by the description in the ``Scope 
of Review'' section, above, and sold in the home market during the 
period of review (POR) to be foreign like products for the purposes of 
determining appropriate product comparisons with U.S. sales. In the 
Product Concordance section (Appendix V) of the questionnaire, we 
provided the following hierarchy of product characteristics to be used 
for reporting identical and most similar comparisons of merchandise: 1) 
type of steel wire (finishing type), 2) diameter of wire rope, 3) type 
of core, 4) class of wire rope, 5) grade of steel, 6) number of wires 
per strand, 7) design of strands, and 8) lay of rope. In response to 
arguments raised by petitioner regarding the use of certain product 
characteristics as model match criteria, we solicited comments from 
both parties on September 18, 1997. Based on our analysis of the 
comments we received, our findings at verification, and information 
contained in Camesa's submissions, we have preliminarily determined not 
to change the model match criteria set forth in our June 11, 1997 
questionnaire. (See the Memorandum from Leah Schwartz to Edward Yang, 
dated March 31, 1998: Model Matching Criteria in the First 
Administrative Review of Steel Wire Rope from Mexico (Model Match 
Memo).)
    Camesa requested to limit its reporting of home market sales of 
steel wire rope during the POR because it claimed that it sold only a 
limited number of models of steel wire rope to the United States, and 
that many of its home market models of steel wire rope would not match 
the steel wire rope sold to the United States. We told Camesa that it 
might report only the home market sales of identical or most similar 
foreign like products sold during the POR, but that we might, at a 
later date, require the reporting of additional home market sales at 
short notice. In the sales section of its questionnaire response, 
Camesa limited its reporting of home market sales to one general 
category of steel wire rope which encompasses the specific models of 
steel wire rope sold to the United States. In the COP section of the 
questionnaire response, Camesa reported data for a smaller, more 
specific group of steel wire rope products which it considered to be 
identical or most similar to the subject merchandise sold to the United 
States. In its sales response, Camesa provided a comprehensive list of 
all steel wire rope products which Camesa manufactures for sale in the 
home market. Upon examination of this information, and the results of 
our verification of Camesa's home market sales and costs, we 
preliminarily determine that the steel wire rope models which Camesa 
did not report are neither identical nor most similar to steel wire 
rope that Camesa sold to the United States during the POR. Moreover, 
the Department verified that Camesa had home market sales of identical 
or most similar models in the home market during the period of time 
contemporaneous with the U.S. sales. We preliminarily determine that 
the models for which Camesa submitted cost information are identical 
and most similar to the models sold to the United States.

United States Price

    We based United States price on export price (EP), as defined in 
section 772(a) of the Act, because the merchandise was sold directly by 
the exporter to unaffiliated U.S. purchasers

[[Page 16969]]

prior to the date of importation and constructed export price was not 
indicated by other facts of record.
    The Department calculated EP for Camesa based on packed, delivered 
prices to customers in the United States. We made deductions, where 
applicable, for foreign inland freight, U.S. Customs duties, and 
brokerage and handling, in accordance with 19 CFR 353.41(d). We added 
to U.S. price an amount for duty drawback received by Camesa. We found 
at verification that Camesa over-reported the amount of duty drawback 
to be added to the U.S. price. (See the Report on the Sales and Cost 
Verification of Aceros Camesa S.A. de C.V. (Camesa) in the First 
Administrative Review of Steel Wire Rope from Mexico, dated March 31, 
1998 (Verification Report).) Since Camesa stated in its questionnaire 
response that it calculated its reported duty drawback amount using the 
average price for imported rod during the POR, and we found at 
verification that Camesa in fact did not use an average price for wire 
rod purchased during the POR, we determine in accordance with section 
776(a) of the Act, that the use of facts available is appropriate, as 
the basis of our adjustment to U.S. price for duty drawback. Section 
776(b) of the Act further provides that an adverse inference may be 
used with respect to a party that has failed to cooperate to the best 
of its ability. See Statement of Administrative Action accompanying the 
URAA, H.R. Rep. No. 316, 103rd Cong., 2d Sess. 870. As adverse facts 
available, we based the adjustment to U.S. price for duty drawback on 
the smallest per-unit amount of duty drawback calculated using any 
invoice for steel wire rod purchased during the POR.

Normal Value

    Based on a comparison of the aggregate quantity of home-market and 
U.S. sales, we determined that the quantity of foreign like product 
sold in the home market 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 (exclusive 
of value-added tax (VAT)) at which foreign like product was first sold 
for consumption in the home market, in the usual commercial quantities 
and in the ordinary course of trade. All of Camesa's home market sales 
were made to unaffiliated customers.

Cost of Production Analysis

    Section 773(b)(1) of the Act provides that, whenever the Department 
has reasonable grounds to believe or suspect that home market sales 
under consideration for the determination of NV have been made at 
below-cost prices, it shall determine whether, in fact, there were 
below-cost sales. Based on our analysis of petitioner's September 29, 
1997 allegation of sales below COP, and in accordance with section 
773(b)(2)(A)(ii) of the Act, the Department determined that reasonable 
grounds exist to believe or suspect that Camesa made below-cost home 
market sales during the POR. Accordingly, we requested and obtained 
from Camesa the cost data necessary to determine whether below-cost 
sales occurred during the POR. Before making any NV comparisons for 
Camesa, we conducted the COP analysis described below.
    We calculated the COP based on the sum of Camesa's cost of 
materials and fabrication employed in producing the foreign like 
product, plus amounts for home market selling, general, and 
administrative expenses (SG&A), and the cost of all expenses incidental 
to placing the foreign like product in condition packed ready for 
shipment in accordance with section 773(b)(3) of the Act. Mexico 
experienced significant inflation during the POR, as measured by the 
Consumer Price Index issued by the Bank of Mexico. Therefore, in order 
to avoid the distortive effects of inflation on our comparisons of 
costs and prices, we used monthly, model-specific cost data provided by 
respondent. See, e.g., Porcelain-On-Steel Cookware from Mexico: 
Preliminary Results of Administrative Review, 63 FR 1430, 1432 (January 
9, 1998) and Notice of Preliminary Results of Antidumping Duty 
Administrative Review: Certain Welded Carbon Steel Pipe and Tube from 
Turkey, 63 FR 6155, 6156 (February 6, 1998). We calculated a model-
specific total cost of manufacture (COM) for each month of the POR and 
indexed these costs to a common point (i.e. February 1997, the last 
month of the POR) using the consumer price index for Mexico as 
maintained by the Bank of Mexico. We then divided the sum of the 
monthly model-specific costs by the total model-specific production 
quantity to obtain a model-specific POR weighted-average cost 
corresponding to the February 1997 reference point. The weighted 
average COM was then restated based on the currency value of each 
respective month. We multiplied Camesa's SG&A and finance rates by the 
monthly COMs and added these amounts to derive product-specific monthly 
COPs. We relied on the home market sales and COP information provided 
by Camesa in its questionnaire responses and implemented changes based 
on findings at verification (See the Analysis Memo).
    We compared the monthly weight-averaged per unit COP figures, 
indexed to account for the effects of inflation as noted above, to home 
market sales of foreign like product as required under section 773(b) 
of the Act, in order to determine whether these sales were made at 
prices below COP. In determining whether to disregard home market sales 
made at prices below COP, we examined whether: (1) such sales were made 
in substantial quantities within an extended period of time; and (2) 
such sales were made at prices which permitted recovery of all costs 
within a reasonable period of time. We compared the model-specific COP, 
plus packing, and net of direct selling expenses, to the reported home 
market prices less any applicable movement charges, discounts, and 
direct selling expenses.
    In accordance with section 773(b)(2)(C), where less than 20 percent 
of home market sales of a given model were made at prices less than the 
COP, we did not disregard any below-cost sales of that model because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of home market sales during the 
POR were made at prices less than the COP, we disregarded the below-
cost sales because we determined that the below-cost sales were made in 
``substantial quantities'' and at prices which would not permit the 
recovery of all costs within reasonable period of time in accordance 
with section 773(b)(2)(D) of the Act.
    On January 8, 1998, the Court of Appeals for the Federal Circuit 
issued a decision in CEMEX v. United States, 133 F.3d 897 (Fed Cir., 
1998). In that case, based on the pre-URAA version of the Act, the 
Court discussed the appropriateness of using constructed value (CV) as 
the basis for foreign market value when the Department finds home 
market sales to be outside the ``ordinary course of trade.'' This issue 
was not raised by any party in this proceeding. However, the URAA 
amended the definition of sales outside the ``ordinary course of 
trade'' to include sales below cost. See Section 771(15) of the Act. 
Consequently, the Department has reconsidered its practice in 
accordance with this court decision and has determined that it would be 
inappropriate to resort directly to CV, in lieu of foreign market

[[Page 16970]]

sales, as the basis for NV if the Department finds foreign market sales 
of merchandise identical or most similar to that sold in the United 
States to be outside the ``ordinary course of trade.'' We will match a 
given U.S. sale to foreign market sales of the next most similar model 
when all sales of the most comparable model are below cost. The 
Department will use CV as the basis for NV only when there are no 
above-cost sales that are otherwise suitable for comparison. Therefore, 
in this proceeding, when making comparisons in accordance with section 
771(16) of the Act, we considered all products sold in the home market, 
as described above in the ``Scope of Review'' section of this notice, 
that were in the ordinary course of trade for purposes of determining 
appropriate product comparisons to U.S. sales. Where there were no 
sales of identical merchandise in the home market made in the ordinary 
course of trade to compare with U.S. sales, we compared U.S. sales to 
sales of the most similar foreign like product made in the ordinary 
course of trade, based on the characteristics listed in Sections B and 
C of our antidumping questionnaire.

Price-to-Price Comparisons

    Pursuant to section 777A(d)(2), we compared the EPs of individual 
transactions to the monthly weighted-average price of sales of the 
foreign like product where there were sales at prices above COP, as 
discussed above. We based NV on packed, delivered prices to 
unaffiliated purchasers in the home market. We made adjustments, where 
applicable, in accordance with section 773(a)(6) of the Act. Where 
applicable, we made adjustments to home market price for invoice 
corrections, discounts, and inland freight. We also made a 
circumstance-of-sale adjustment for differences in credit, warranty, 
and insurance expenses, pursuant to section 773(a)(6)(C)(iii) of the 
Act. Because credit, warranty, and insurance expenses are incurred on a 
sale-by-sale basis and directly related to sales, we have treated these 
expenses as direct selling expenses in the applicable market(s). 
Accordingly, we made the circumstance-of-sale adjustments by adding the 
amounts of U.S. credit for each U.S. sale to the NV, and subtracting 
the home market credit and warranty expense amounts from NV. At 
verification we found that Camesa did not incur U.S. warranty expenses 
which it reported. Therefore, we did not add the reported per-unit 
warranty expense amount to NV. In order to adjust for differences in 
packing between the two markets, we increased home market price by U.S. 
packing costs and reduced it by home market packing costs. Prices were 
reported net of VAT and, therefore, no deduction for VAT was necessary.

Home Market Credit Expense

    During the POR, Camesa did not have any short-term borrowings in 
pesos. In cases where there are no borrowings in the currency of the 
sales made, it is the Department's practice to use external information 
about the cost of borrowing in a particular currency. (See Final 
Determination of Sales at Less Than Fair Value: Fresh Cut Roses from 
Colombia, 60 FR 6980, 6998 (February 6, 1995); and Import 
Administration Policy Bulletin 98.2 (February 23, 1998).) Therefore, 
for these preliminary results, we are recalculating Camesa's home 
market credit expense using the average interbank equilibrium rate 
(abbreviated TIIE in Spanish) for the POR as published by the Bank of 
Mexico. We find that the rate is both reasonable and representative of 
usual commercial behavior in Mexico based on the sample rates quoted by 
other Mexican banks as submitted in Camesa's questionnaire responses.

Sales of Strand to U.S. Affiliate

    Pursuant to the final affirmative determination of circumvention of 
this antidumping duty order (see Steel Wire Rope from Mexico: 
Affirmative Final Determination Circumvention of Antidumping Duty 
Order, 60 FR 10831, (February 28, 1995)), steel wire strand, when 
manufactured in Mexico by Camesa and imported into the United States 
for use in the production of steel wire rope, falls within the scope of 
the antidumping duty order on steel wire rope from Mexico. Therefore, 
in our June 11, 1997 antidumping questionnaire, we requested that 
Camesa: (1) report separately all sales of steel wire strand imported 
into the United States during the period of review for use in the 
manufacture of steel wire rope; and (2) report the monthly quantity and 
value of sales of steel wire strand which is imported into the United 
States during the period of review and which is not intended for use in 
the manufacture of steel wire rope (see pages C-1 and C-2 of the 
questionnaire). In its August 11, 1997 questionnaire response, Camesa 
reported that during the POR it ``did not export any strand products 
that are subject to the antidumping order to United States, and its 
U.S. affiliates did not sell any steel wire rope manufactured using 
such imported strand products. Accordingly, all of the U.S. sales 
reported in the sales listing provided in Appendix C-1 are sales of 
steel wire rope that was entirely produced in and exported from 
Mexico.'' (See page 40, footnote 17.) At verification, we found that 
Camesa did sell steel wire strand to its U.S. affiliate during the 
period of review which it did not report. However, at verification we 
examined the specifications of the strand that Camesa sold to the 
United States, and found that it falls outside the scope of the order 
as defined in the Department's Final Circumvention Determination (60 FR 
10831, February 28, 1995) and is not used in the manufacture of steel 
wire rope. Therefore, the Department is not applying facts available 
under section 776 of the Act (See the March 31, 1998 verification 
report and the Analysis Memo.)

Duty Reimbursement

    In its September 17, 1997 response, Camesa stated that it was 
identified as the importer of record in the U.S. Customs entry summary 
corresponding to the U.S. sales during the POR, because Camesa is 
responsible for the payment of any import charges to U.S. Customs on 
the entry. At verification, Camesa further stated that it paid the 
antidumping duties for certain U.S. sales. Section 353.26 of the 
Department's regulations state that ``[i]n calculating the United 
States price, the Secretary will deduct the amount of any antidumping 
duty which the producer or reseller: (i) [p]aid directly on behalf of 
the importer; or (ii) [r]eimbursed to the importer.'' 19 CFR 
353.26(a)(1). It has been our practice that separate corporate entities 
must exist as producer/reseller and importer in order to invoke the 
duty reimbursement regulation. (See Circular Welded Non-Alloy Steel-
Pipe and Tube from Mexico: Preliminary Results of Administrative Review 
and Partial Termination of Review, 62 FR 64564, 64566, (December 8, 
1997).) In the present case, however, we have preliminarily determined 
that there are no dumping margins, and hence no antidumping duties will 
be assessed on the subject merchandise exported and imported by Camesa. 
Therefore, there is no issue regarding reimbursement.

Preliminary Results of the Review

    As a result of our comparison of EP and NV, we preliminarily 
determine that the following weighted-average dumping margin exists:

[[Page 16971]]



------------------------------------------------------------------------
                                                                Margin  
          Manufacturer/exporter                 Period        (percent) 
------------------------------------------------------------------------
Aceros Camesa S.A. de C.V. (Camesa).....     3/1/96-2/28/97         0.00
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 5 business 
days of the date of publication of this notice. Any interested party 
may request a hearing within 10 days of publication. Pursuant to 19 CFR 
353.38, any hearing, if requested, will be held 44 days after the 
publication of this notice, or the first workday thereafter. Interested 
parties may submit case briefs within 30 days of the date of 
publication of this notice. Rebuttal briefs, which must be limited to 
issues raised in the case briefs, may be filed not later than 37 days 
after the date of publication. The Department will publish a notice of 
final results of this administrative review, which will include the 
results of its analysis of issues raised in any such comments, not 
later than 120 days after the date of publication of this notice.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. If these 
preliminary results are adopted in our final results, we will instruct 
the U.S. Customs Service not to assess antidumping duties on the 
merchandise subject to review. Upon completion of this review, the 
Department will issue appraisement instructions directly to the Customs 
Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of steel wire rope products from Mexico entered, or withdrawn 
from warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(2)(c) of the Act: (1) the cash deposit 
rate for the reviewed company will be the rate established in the final 
results of this review; (2) for merchandise exported by manufacturers 
or exporters not covered in this review but covered in the original 
investigation of sales at less than fair value (LTFV) or a previous 
review, the cash deposit 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 or 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; and (4) for all other producers and/or exporters of 
this merchandise, the cash deposit rate shall be 111.68 percent, the 
``all others'' rate established in the LTFV investigation (58 FR 7531, 
February 8, 1993).
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also 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 determination is issued and published in accordance with 
sections 751(a)(1) of the Act (19 U.S.C. 1675(a)) and 19 CFR 353.22.

    Dated: March 31, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-9092 Filed 4-6-98; 8:45 am]
BILLING CODE 3510-DS-P