[Federal Register Volume 63, Number 102 (Thursday, May 28, 1998)]
[Notices]
[Pages 29179-29181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14150]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-122-823]
Cut-to-Length Carbon Steel Plate From Canada; Initiation of
Anticircumvention Inquiry on Antidumping Duty Order
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of initiation of anticircumvention inquiry; cut-to-
length carbon steel plate from Canada.
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SUMMARY: In response to a request from Kentucky Electric Steel Company
(Kentucky Steel), the Department of Commerce (the Department) is
initiating an anticircumvention inquiry to determine whether imports of
boron-added grader blade and draft key steel, falling within the
physical dimensions outlined in the scope of the order, are
circumventing the antidumping duty order on cut-to-length carbon steel
plate from Canada (58 FR 44162, August 19, 1993).
EFFECTIVE DATE: May 28, 1998.
FOR FURTHER INFORMATION CONTACT: Gideon Katz, Eric Scheier, or Maureen
Flannery, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC, 20230; telephone: (202) 482-4733.
SUPPLEMENTARY INFORMATION:
Applicable Statute
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 62 FR 27296 (May 19, 1997).
Background
On March 14, 1997, the Department initiated a scope inquiry to
determine whether certain cut-to-length carbon steel plate used to make
grader blades and draft keys (``grader blade'' and ``draft key'' steel)
that contain small amounts of boron (approximately 0.0016 percent by
weight) fall within the scope of the order on certain cut-to-length
carbon steel plate from Canada. The Department gave interested parties
the opportunity to provide comments pursuant to 19 CFR Sec. 353.29(i)
and 19 CFR 353.29(g).
On January 16, 1998, the Department issued a ruling, based on 19
CFR Sec. 353.29(i), that boron-added grader blade and draft key steel
falls outside the scope of the order. The Department concluded that,
because the petition relied on the HTS definition of carbon steel,
which excluded other-alloy steel (i.e. steel containing more than
0.0008 percent boron), and because the petition equated the term
`carbon steel' with the HTS term `non-alloy steel', variants of grader
blade and draft key steel which contain at least 0.0008 percent boron
by weight fell outside the scope of the order. Specifically, the HTSUS
defines the term ``steel'' as certain ``ferrous materials * * * usually
malleable and which contain by weight two percent or less of carbon. *
* * '' and defines the term ``non-alloy'' steel as steel other than A)
``stainless steel'', i.e. alloy steel containing, by weight, 1.2
percent or less of carbon and 10.5 percent or more of chromium or B)
``other alloy steel, i.e. steel * * * containing by weight 0.3 percent
or more of aluminum or 0.0008 percent or more of boron. See HTSUS,
Chapter 72, Note 1(d) and (f).
The Department also solicited comments from interested parties
concerning the possible applicability of the ``minor alterations''
provision pursuant to 19 CFR 353.29(g) (now codified as
Sec. 351.225(i), see 62 FR 27296, 27404 (May 19, 1997)).
[[Page 29180]]
On January 30, 1998, Kentucky Steel requested that the Department
conduct an anticircumvention inquiry pursuant to section 781(c) of the
Tariff Act to determine whether imports of certain cut-to-length steel
plate used to make grader blades and draft keys (``grader blade'' and
``draft key'' steel) that contain small amounts of boron (approximately
0.0016 percent by weight) and fall within the physical dimensions
outlined in the scope of the order, are circumventing the antidumping
duty order on certain cut-to-length carbon steel plate from Canada.
Scope
The scope language contained in the final determination and
antidumping duty order describes the covered merchandise as follows:
Although the Harmonized Tariff Schedule of the United States
(HTS) subheadings are provided for convenience and customs purposes,
our written descriptions of the scope of these proceedings are
dispositive * * *.
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 HTS under item numbers
7208.31.000, 7208.32.000, 7208.33.1000, 7208.33.5000, 7208.41.000,
7208.42.000, 7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.0000,
7211.11.0000, 7211.12.0000, 7211.21.0000, 7211.22.0045,
7211.90.0000, 7212.40.1000, 7212.40.5000, and 7212.50.0000. Included
in these investigations are flat-rolled products of nonrectangular
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 from these investigations is grade X-70
plate.
Final Determination; Certain Cold-Rolled Carbon Steel Flat Products
From Argentina, 58 FR 37063 (July 9, 1993), Appendix I
See also Antidumping Duty Orders: Certain Corrosion-Resistant
Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate
From Canada, 58 FR 44162 (August 19, 1993).
Kentucky Steel now alleges that since publication of the
antidumping duty order, exporters of certain cut-to-length carbon steel
plate from Canada have been circumventing the order by exporting carbon
steel plate with small amounts of boron added. According to Kentucky
Steel, the ``inclusion of 0.0016 percent boron by weight to high carbon
grader blade and draft key steel constitutes a minor alteration'' and
is thus within the meaning of the provisions detailed in section 781(c)
of the Tariff Act. See Anticircumvention Application, January 30, 1998
at 4.
Kentucky Steel describes the merchandise that is the subject of
this anticircumvention inquiry as cut-to-length plate made of high-
carbon steel to which boron has been added. Kentucky Steel defines
``high carbon'' steel to be steel of AISI or SAE grades 1050, 1152, or
1552, or higher, i.e. carbon steels that may contain 0.55% or more
carbon by weight.
Initiation of Anticircumvention Proceeding
Section 781(c) of the Tariff Act states that the Department may
find circumvention of an order when products which are of the class or
kind of merchandise subject to an antidumping duty order have been
``altered in form or appearance in minor respects * * * whether or not
included in the same tariff classification.'' The applicant asserts
that, while the statute is silent as to what factors to consider in
determining whether alterations are properly considered ``minor,'' the
legislative history of this provision indicates that there are certain
factors which should be considered before reaching an anticircumvention
determination.
The applicant cites to the Senate Finance Committee report on the
Omnibus Trade and Competitiveness Act of 1988 (which amended the Tariff
Act of 1930 to include the anticircumvention provisions contained in
section 781), which states:
[I]n applying this provision, the Commerce Department should
apply practical measurements regarding minor alterations, so that
circumvention can be dealt with effectively, even where such
alterations to an article technically transform it into a
differently designated article. The Commerce Department should
consider such criteria as the overall physical characteristics of
the merchandise, the expectations of the ultimate users, the use of
the merchandise, the channels of marketing and the cost of any
modification relative to the total value of the imported products.
S. Rep. No. 71, 100th Cong., 1st Sess. 100 (1987).
The applicant has presented evidence with respect to each of the
criteria listed in the Senate report. Each of these criteria is
addressed below.
Overall Physical Characteristics
The cut-to-length plate for grader blades and draft keys at issue
in this proceeding have small amounts, usually about 0.0016 percent by
weight, of boron added to high carbon steel (high carbon being defined
by the applicant as steel containing at least 0.55 percent carbon by
weight). The applicant claims that while boron, like carbon, is added
to steel to improve ``hardenability,'' when the level of carbon is
already at 0.60 percent by weight or above, the added boron's effect on
the final product is negligible. The applicant asserts that grader
blade and draft key steel products are composed of upwards of 0.70
percent carbon, sufficiently high levels to render the addition of
boron immaterial to the performance characteristics of the final
product. The applicant also claims that practice in the industry is not
to add boron to higher carbon steels, like AISI grades 1070 and 1084,
which are used to make grader blades and draft keys.
Expectations of the Ultimate Users
The applicant maintains that carbon steel plate users are
purchasing imported plate with the expectation that the product be hard
and durable, and that these characteristics are imparted by the
presence of sufficient levels of carbon. The applicant states that
consumers of this product are fully aware that carbon steel of the sort
at issue here does not rely on or benefit from the presence of boron,
and thus ``do not expect, seek, or desire'' its presence. The applicant
notes that its own marketing officials have been advised that many
consumers of the product do not know that it contains boron, and that
there is no significant price difference between plain carbon and
boron-added versions of the product imported from Canada.
Use of the Merchandise
The applicant maintains that, with or without boron, high carbon
grader blade and draft key steel have the same uses: making blades on
grading equipment and locking devices on railroad couplings. The
applicant states that knowledgeable purchasers would be aware that
there are no uses of higher carbon steel plate containing 0.0016
percent boron that cannot fully be met without boron, and that the
addition of boron neither responds to a new need in
[[Page 29181]]
the market, nor improves the way existing technical needs are met.
Channels of Marketing
The applicant states that steel producers, with few exceptions,
sell directly to manufacturers of grader blades and draft keys through
company sales forces. The applicant claims that, because carbon grader
blade and draft key steels are used for precisely the same products as
are the boron-added versions of the products, boron-added grader blade
and draft key carbon steel from Canada is sold in precisely the same
sales channels as plain grader blade and draft key carbon steel from
Canada.
Cost of Modification
The applicant alleges that, by adding about 0.0016 percent boron to
high carbon steels, Canadian producers have been able to avoid dumping
duties ranging from 1.47 percent to 68.7 percent, and that the cost of
avoiding these duties, relative to the total value of the product
itself, is negligible. The applicant estimates that Canadian producers
can realize a value of 1.25 percent to 68.5 percent by avoiding the
duties under the order in this case by adding 0.0016 percent boron to
their product.
Other interested parties, Co-Steel Lasco, Caterpillar Inc., and
Algoma Steel Inc., submitted comments arguing that the Department
cannot initiate a ``minor alterations'' anticircumvention inquiry on a
type of merchandise which the Department has previously determined to
be outside the scope of the order. These interested parties base their
argument on the decision of the Court of International Trade (CIT) in
Hylsa, S.A. v. United States, Slip Op. 98-10 (February 3, 1998), which
upheld the earlier decision of the CIT in Wheatland Tube Co. v. United
States, 973 F. Supp. 149 (CIT 1997). As the Department disagrees with
the decision in Hylsa, and as it is appealing this decision to the
Federal Circuit, the Department is not bound to apply it to the
determination of whether to initiate the requested inquiry.
Based on our evaluation of the application, we determine that a
formal inquiry is warranted. Accordingly, we are initiating a
circumvention inquiry concerning the antidumping duty order on cut-to-
length carbon steel plate from Canada, pursuant to section 781(c) of
the Tariff Act. In accordance with 19 CFR 351.225(l)(2), we will not
instruct the Customs Service to suspend liquidation and require a cash
deposit of estimated duties on the merchandise which is the subject of
this inquiry unless and until we issue an affirmative preliminary
determination.
The Department will, following consultation with the interested
parties, establish a schedule for questionnaires and comments on the
issues. The Department intends to issue its final determination within
300 days of the date of publication of this initiation.
This notice is published in accordance with section 781(c) of the
Tariff Act (19 U.S.C. 1677j(c)) and 19 CFR 351.225.
Dated: May 20, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-14150 Filed 5-27-98; 8:45 am]
BILLING CODE 3510-DS-P