[Federal Register Volume 63, Number 116 (Wednesday, June 17, 1998)]
[Notices]
[Pages 33037-33041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16106]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-601]


Brass Sheet and Strip From Canada: Final Results of Antidumping 
Duty Administrative Review and Notice of Intent Not To Revoke Order in 
Part

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

ACTION: Notice of Final Results of Antidumping Duty Administrative 
Review and Notice of Intent Not to Revoke Order in Part.

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SUMMARY: In response to a request by the respondent, the Department of 
Commerce is conducting an administrative review of the antidumping duty 
order on brass sheet and strip from Canada. The review covers one 
manufacturer/exporter of this merchandise to the United States, 
Wolverine Tube (Canada), Inc. The period covered is January 1, 1996 
through December 31, 1996. As a result of the review, the Department 
preliminarily determined that no dumping margins existed for this 
respondent. However, upon consideration of petitioner's and 
respondent's case briefs and rebuttal briefs, we have now determined 
that a dumping margin does exist. Therefore, we are not revoking the 
order with respect to brass sheet and strip from Canada manufactured by 
Wolverine Tube (Canada), Inc.

EFFECTIVE DATE: June 17, 1998.

FOR FURTHER INFORMATION CONTACT: Paul Stolz or Tom Futtner, Office of 
Antidumping/Countervailing Duty Enforcement, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th

[[Page 33038]]

Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-4474 or 482-3814, respectively.

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the Tariff Act of 1930, 
as amended (the Act) are references to the provisions effective January 
1, 1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all references to the Department's regulations are to 19 CFR 
part 353 (April 1, 1997).

SUPPLEMENTARY INFORMATION:

Background

    The Department of Commerce (the Department) published an 
antidumping duty order on brass sheet and strip from Canada on January 
12, 1987 (52 FR 1217). On February 9, 1998, the Department published in 
the Federal Register the preliminary results of its administrative 
review of the antidumping duty order on brass sheet and strip from 
Canada (63 FR 6519) (preliminary results). We gave interested parties 
an opportunity to comment on our preliminary results. We received 
written comments from Hussey Copper, Ltd.; The Miller Company; Olin 
Corporation; Revere Copper Products, Inc.; International Association of 
Machinists and Aerospace Workers; International Union, Allied 
Industrial Workers of America (AFL-CIO); Merchandise Educational 
Society of America, and United Steelworkers of America (AFL-CIO), 
collectively, the petitioner, and Wolverine Tube (Canada), Inc., the 
respondent.

Scope of Review

    Imports covered by this review are shipments of brass sheet and 
strip (BSS), other than leaded and tinned BSS. The chemical composition 
of the covered products is currently defined in the Copper Development 
Association (C.D.A.) 200 Series or the Unified Numbering System 
(U.N.S.) C2000. This review does not cover products the chemical 
compositions of which are defined by other C.D.A. or U.N.S. series. In 
physical dimensions, the products covered by this review have a solid 
rectangular cross section over 0.006 inches (0.15 millimeters) through 
0.188 inches (4.8 millimeters) in finished thickness or gauge, 
regardless of width. Coiled, wound-on-reels (traverse wound), and cut-
to-length products are included. The merchandise is currently 
classified under Harmonized Tariff Schedule (HTS) item numbers 
7409.21.00 and 7409.29.00. Although the HTS item numbers are provided 
for convenience and customs purposes, the written description of the 
scope of this order remains dispositive. Pursuant to the final 
affirmative determination of circumvention of the antidumping duty 
order, covering the period September 1, 1990, through September 30, 
1991, we determined that brass plate used in the production of BSS 
falls within the scope of the antidumping duty order on BSS from 
Canada. See Brass Sheet and Strip from Canada: Final Affirmative 
Determination of Circumvention of Antidumping Duty Order. 58 FR 33610 
(June 18, 1993).
    The review period (POR) is January 1, 1996 through December 31, 
1996. The review involves one manufacturer/exporter, Wolverine Tube 
(Canada), Inc. (Wolverine).

Fair Value Comparisons

    To determine whether sales of subject merchandise from Canada to 
the United States were made at less than fair value, we compared the 
Export Price (EP) to the Normal Value (NV), as described in the 
``Export Price'' and ``Normal Value'' sections of the preliminary 
results of review notice (see Preliminary Results, 63 FR at 6520). On 
January 8, 1998, the Court of Appeals for the Federal Circuit issued a 
decision in CEMEX v. United States, 1998 WL 3626 (Fed Cir.). 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 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 in the 
``Scope of Review'' section of this notice, above, 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 to 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. We have implemented the Court's decision in 
this case, to the extent that the data on the record permitted.

Revocation

    Under the Department's regulations, the Department may revoke and 
order in part if the Secretary concludes that: (1) ``one or more 
producers or resellers covered by the order have sold the merchandise 
at not less than fair value for a period of at least three consecutive 
years''; (2) ``[i]t is not likely that those persons will in the future 
sell the merchandise at less than fair value * * *; and (3) ``the 
producers or resellers agree in writing to the immediate reinstatement 
of the order as long as any producer or reseller is subject to the 
order, if the Secretary concludes that the producer or reseller, 
subsequent to the revocation, sold the merchandise at less than fair 
value.'' See 19 CFR 353.25(a)(2).
    Upon review of the three criteria described above, and of the case 
briefs and rebuttal briefs, and on the basis of all the evidence on the 
record, we determine for the final results of this review that the 
Department's requirements for revocation have not been met.
    The Department found that Wolverine's sales reviewed during the 
eighth (1994) and ninth (1995) reviews under this order were made at 
not less than NV. However, in this tenth review, we have determined 
that Wolverine's sales were made at less than NV. We, therefore, do not 
revoke in part the antidumping duty order with respect Wolverine.

Changes

    In our preliminary results we inadvertently failed to make a 
certain adjustment reported by the respondent. Since the adjustment 
constitutes business proprietary information, it is described in our 
analysis memorandum dated June 9, 1998.

Analysis of Comments Received

    Comment 1: Wolverine claims that the Department erred in not taking 
into

[[Page 33039]]

consideration, in matching home market and U.S. sales, the product code 
information it submitted identifying reroll/nonreroll material. 
Petitioner states that the Department properly disregarded non-physical 
characteristics of Wolverine's product control numbering system, such 
as whether the brass content was reroll material, and that the 
Department should not accept a product matching system that is not 
based on actual physical elements of the merchandise.
    Department Position: We agree with the Petitioner. The Department 
believes that the reroll/nonreroll designation, and its revision, 
``type 1/type 2'' designation, indicates only whether Wolverine 
purchased brass for further rolling or cast the material itself. 
Wolverine maintains that brass it purchased from unrelated suppliers 
and then rerolled itself resulted in an end product more chemically 
pure and of a higher grain density than the end product produced from 
brass it cast itself. The Department believes that, although this 
designation may indicate a probability or tendency with respect to 
purity and grain density of the final end product, this designation 
does not objectively and scientifically describe actual purity and 
grain density as measurable physical characteristics of the end 
product. Wolverine has provided no quantifiable or verifiable data on 
the differences in purity and grain density between BSS made from 
reroll material and that made from non-reroll material. Therefore this 
criterion should not be considered as a product matching 
characteristic. Moreover, in its supplemental questionnaire, the 
Department stated that Wolverine should delete the reroll/nonreroll 
designation from its product matching criteria and report instead the 
actual chemical purity and grain density of sales of subject 
merchandise for the POR. Wolverine deleted the reroll/nonreroll 
designation from its product description but then did not add chemical 
purity and grain density designations to its product numbering system. 
Instead, Wolverine simply designated reroll and nonreroll as ``type 1'' 
and ``type 2'' subject merchandise, respectively. This designation does 
not provide an objective, measurable basis upon which to segregate the 
end-product into separate product groups for purposes of creating 
product matches. In addition, the record does not include details 
supporting separation of the subject merchandise into separate product 
groups on the basis of production process/costs and/or market selling 
prices, additional factors the Department might consider in 
establishing the product concordance.
    Comment 2: Wolverine asserts that sales verification exhibit 19 
should be included in the record of this proceeding. Wolverine 
maintains that topics covered in this exhibit, covering revocation 
issues, were listed in the verification outline, and it, therefore, 
created and presented exhibit 19 to avoid the possibility of the 
application of facts available by the Department in its analysis. In 
addition, Wolverine claims that sales verification exhibit 19, which 
the Department removed from the record as untimely submitted new 
information, should be placed back on the record in accordance with 
established rules of evidence because the petitioner, it claims, relied 
on exhibit 19 in arguments made in its case brief.
    Petitioner states that the Department properly removed sales 
verification exhibit 19 from the administrative record as new 
information. Petitioner asserts that the respondent had ample 
opportunity to present company-specific information regarding 
revocation but waited until verification to do so. Furthermore, 
petitioner claims that the information presented in exhibit 19, 
covering revocation topics, did not correspond to information 
previously placed on the record and was not itself verified. Therefore, 
this exhibit cannot be relied upon as part of the administrative 
record.
    Department Position: the Department believes that exhibit 19 
contained untimely submitted new factual information. The Department 
believes that this information should have been presented, at the 
latest, when the Department opened the record for 30 days beginning on 
October 16, 1998, so that such information could be presented. The 
Department's verification outline stated only that the respondent 
should be prepared to discuss revocation topics. The Department did not 
request or solicit additional factual information pertaining to the 
revocation issue from respondent. In addition, the verifier informed 
respondent's counsel at the time exhibit 19 was presented that it could 
be considered new information and did not verify this information when 
it was presented for the first time at verification. Finally, we note 
that, because it has rejected exhibit 19, the Department has not relied 
on petitioner's reference in its case brief to exhibit 19 in reaching 
its final determination and therefore that reference does not 
incorporate exhibit 19 into the record of this proceeding.
    Comment 3: Petitioner claims that Wolverine's per-unit cost of 
materials was understated because the overall cost of materials was 
divided by a quantity factor that included metals provided to Wolverine 
at no cost by customers to whom Wolverine provided only fabrication 
services. Wolverine did not purchase these metal input materials for 
these customers; therefore, the quantities of these materials should 
not have been added to quantities purchased by Wolverine for processing 
to determine total cost of materials. Respondent states that it 
reported material costs are accurate and require no adjustment. 
Wolverine notes that a standard mill loss allowance was deducted from 
tolled production quantity and was then added to non-tolled production 
quantity to be incorporated into calculations showing mill loss, in 
terms of quantity, including both tolled and non-tolled merchandise. 
Respondent cites verification cost exhibit 9a, which shows that the 
quantity of copper used for non-tolled production divided into the 
total cost of copper equals the reported per pound copper cost.
    Department Position: We agree with the respondent. The Department 
verified that the reported per-unit materials cost was accurate. 
Although a mill loss adjustment was made to the metal pools account 
which reflected decreased quantities, this adjustment does not affect 
the cost of materials account. We also verified that the mill loss 
allowance was consistently applied in terms of quantity according to 
company accounting procedures. Because proprietary information is 
involved, please refer to our analysis memorandum dated June 9, 1998, 
for further information.
    Comment 4: Petitioner assets that net home market prices, as 
calculated by the Department for purposes of the cost analysis, 
included indirect selling expenses. However, by definition, the cost of 
production (COP), to which net home market prices are compared for 
purposes of the below COP test, did not include indirect selling 
expenses. Petitioner claims, therefore, that the comparison of per unit 
COP with home market net prices results in an understatement of number 
of below cost sales. That is, home market prices are artificially high 
with respect to COP since home market prices include indirect selling 
expenses while COP does not. Respondent asserts that the COP already 
includes indirect selling expenses as these expenses are grouped under 
the general and administrative expenses (G&A) of the consolidated 
company, Wolverine USA, which were

[[Page 33040]]

included in the Department's calculation of COP.
    Department Position: We agree with the respondent. Respondent's 
financial statements demonstrate that indirect selling expenses were 
included in general and administrative expenses. Adding an additional 
amount for indirect selling expenses to the COP would result in double-
counting.
    Comment 5: Petitioner states that the Department's calculation 
applied to Wolverine's general and administrative expenses to include 
an allocated portion of the expenses of Wolverine's corporate 
headquarters' included two minor errors with respect to the exchange 
rate and the revised selling, general and administrative (SG&A) ratio: 
(1) The Department used an incorrect exchange rate in calculating the 
preliminary results, and (2) the Department slightly understated the 
revision of the SG&A ratio. Wolverine did not specifically comment on 
this issue.
    Department Position: We agree with petitioner that the exchange 
rate was rounded incorrectly and that the revised SG&A ratio was 
inaccurately recorded. We have corrected these errors which were 
clerical in nature. See our analysis memorandum dated 9, 1998; for the 
proprietary version of this amount.
    Comment 6: Petitioner states that the Department properly adjusted 
Wolverine's general and administrative expenses to include an allocated 
portion of the G&A expenses incurred by Wolverine's corporate 
headquarters. Respondent asserts that no general expenses of the 
corporate headquarters should be allocated to the Fergus plant. 
Wolverine claims that the only U.S. operation of Wolverine that 
provided services to the Fergus facility was Wolverine Finance USA, 
which handles customer credit. Wolverine states that an appropriate 
proportion of Wolverine Finance USA expenses were allocated to the 
Fergus plant.
    Department Position: We agree with petitioner that the adjustment 
to Wolverine's general and administrative expenses to include an 
allocated portion of expenses incurred by Wolverine's corporate 
headquarters is appropriate.
    For purposes of the below COP test conducted for home market 
comparison sales we allocated a portion of SG&A expenses for the 
corporate headquarters in Huntsville/Decatur, Alabama to Wolverine's 
COP. This additional allocation was based on SG&A and cost of sales 
information taken from Wolverine's financial statements. In its 
questionnaire response, Wolverine did not allocate SG&A for its 
Huntsville/Decatur corporate headquarters, although it did allocate 
SG&A for its London, Ontario corporate offices. At verification, 
however, discussions with company officials and a review of company 
correspondence revealed that the Fergus, Ontario facility was subject 
to significant guidance and control by corporate headquarters in 
Huntsville/Decatur during the POR. Therefore, we calculated a ratio 
based on the Fergus Facility's reported cost of sales and the U.S. 
total cost of sales as follows. First we converted the reported Fergus 
cost of sales from Canadian dollars to U.S. dollars. Second, we divided 
the Fergus cost of sales (in U.S. dollars) by the U.S. total cost of 
sales as reported in respondent's 1996 consolidated income statement 
included in its April 28, 1997 questionnaire response as appendix. The 
result represents the appropriate proportion of U.S. SG&A expense to be 
applied to the Fergus operation. We then multiplied the appropriate 
proportion of U.S. SG&A expense to be applied to the Fergus operation 
by total SG&A taken from appendix A-5. We then converted this amount to 
Canadian dollars and added the U.S. portion of SG&A expense to the 
Canadian portion shown in exhibit H. Finally, we divided total G&A 
allocable to Fergus by the total cost of sales of Wolverine Tube 
(Canada), Inc. to yield the revised G&A factor. We adjusted the 
computer program to apply this revised G&A factor. See our analysis 
memorandum dated June 9, 1998, for the proprietary version of this 
comment.
    Comment 7: Petitioner claims that the Department erroneously 
applied its revised SG&A ratio to Wolverine's originally reported SG&A 
amount, whereas it should have applied the revised ratio to Wolverine's 
reported cost of manufacture. Wolverine did not comment specifically on 
this issue.
    Department Position: The Department agrees with petitioner that the 
revised SG&A should have been applied to Wolverine's cost of 
manufacture in accordance with our usual practice. We have adjusted our 
calculations to reflect this revision.
    Comment 8: Petitioner claims that the Department failed to include 
revised warranty expenses outlined in the respondent's pre-verification 
submission of December 1, 1997. Respondent does not dispute 
petitioner's claim regarding the inclusion of warranty expenses.
    Department Position: We agree with petitioner. The Department 
overloaded the submission of the revised warranty expenses in its 
calculations. We have revised our computer program in include the 
revised warranty expenses.
    Comment 9: Petitioner argues that the Department erred by not 
requiring that additional historical data be placed on the record to 
inform the Department's decision with respect to the revocation issue. 
Petitioner asserts that the Department, as the administering authority, 
has not complied with its investigative responsibilities in this 
respect. In addition, petitioner maintains that the burden is on 
Wolverine to demonstrative that it is not likely to resume dumping if 
the order were revoked, and that Wolverine has not been forthcoming 
with company-specific information on this point. Furthermore, 
petitioner claims that respondent should not be able to obtain 
revocation based on a limited number of sales, of a limited product 
range, to a limited number of customers. Respondent states that no 
compelling need exists to place further information with respect to 
revocation on the record. Respondent states that ample opportunity has 
been provided for interested parties to place information on the 
record. In addition, respondent claims that volume and value 
information from previous proceedings would not have probative value in 
this review. Wolverine claims that it is not likely to dump in the 
future and rebuts petitioner's arguments that it is likely to do so. 
Finally, Wolverine states that it takes its legal responsibilities 
seriously and considers potential reinstatement of the order to be a 
viable remedy were it to resume dumping following revocation.
    Department Position: The Department does not need to reach the 
issues raised by the parties in this review with respect to likelihood 
of future following a revocation of an antidumping duty order because 
it has determined on other grounds that the revocation of the order at 
issue is not appropriate.
    Comment 10: Petitioner argues that Wolverine is likely to dump in 
the future because: (1) U.S. prices have been declining, (2) 
Wolverine's preliminary margin was just barely de minimis, (0.042 
percent), (3) Wolverine has economic incentive to dump as it must 
replace certain lost business, and (4) the U.S. market is the most 
likely target for dumping due to the openness of the market, strong 
demand, and price competition. Wolverine denies that is likely to dump 
in the future. It asserts that the U.S. and Canadian brass market 
comprise a unified market, thus brass prices will rise and fall in 
tandem. In addition, Wolverine claims that although it lost certain 
business, that business involved non-subject merchandise which did not 
include the production process of annealing. Therefore, the loss of 
that business does not create additional capacity to

[[Page 33041]]

produce, and presumably dump, additional subject merchandise which 
requires annealing.
    Department Position: These issues were addressed in the preliminary 
results wherein the Department indicated that it did not consider these 
factors conclusive. Final determinations regarding these points need 
not be reached in these final results since we not find that, due to 
the extensive of a non-de-minimis dumping margin in this review, 
Wolverine is not eligible for revocation pursuant to 19 CFR 
353.25(a)(2).

Final Results for the Review

    As a result of our comparison of EP to NV, we determine that a 
dumping margin of 0.67 percent exists for Wolverine for the period 
January 1, 1996 through December 31, 1996, and we determine, not to 
revoke in part the antidumping duty order with respect to imports of 
subject merchandise from Wolverine.
    The Department will determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. For assessment 
purposes, we have calculated importer-specific ad valorem duty 
assessment rates for the merchandise based on the ratio of the total 
amount of antidumping duties calculated for the examined sales during 
the POR to the total quantity of sales examined during the POR. The 
Department will issue appraisement instructions directly to the Customs 
Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of these final results for all shipments of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the publication date provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for Wolverine will be 
the rate stated above; (2) if the exporter is not a firm covered in 
this review, a prior review, or the original less than fair value 
(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 (3) the cash deposit rate for all 
other manufacturers or exporters will continue to be the ``all others'' 
rate established in the LTFV investigation. These deposit requirements, 
when imposed, shall remain in effect until publication of the final 
results of the next administrative review.

Notification of Interested Parties

    This notice also 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 the antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification 
of the return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 9, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-16106 Filed 6-16-98; 8:45 am]
BILLING CODE 3510-DS-M