[Federal Register Volume 63, Number 170 (Wednesday, September 2, 1998)]
[Notices]
[Pages 46753-46759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23670]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-201-806]
Carbon Steel Wire Rope From Mexico; Final Results of Antidumping
Duty Administrative Review
AGENCY: International Trade Administration/Import Administration,
Department of Commerce.
ACTION: Notice of Final Results of Antidumping Duty Administrative
Review.
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SUMMARY: On April 7, 1998, the Department of Commerce (the Department)
published in the Federal Register the preliminary results of its
antidumping duty administrative review of the antidumping duty order on
carbon steel wire rope from Mexico (63 FR 16967). This review covers
one manufacturer/exporter of the subject merchandise to the United
States, Aceros Camesa S.A. de C.V. (Camesa), and the period of March 1,
1996 through February 28, 1997. We gave interested parties an
opportunity to comment on the preliminary results of review. We
received comments from Camesa and from the Committee of Domestic Steel
Wire Rope and Specialty Cable Manufacturers (the petitioner). We have
changed the results from those presented in the preliminary results of
review.
EFFECTIVE DATE: September 2, 1998.
FOR FURTHER INFORMATION CONTACT: Joanna M. Gabryszewski, Laurel
LaCivita, or Maureen Flannery, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington DC 20230; telephone (202) 482-0780,
(202) 482-4236, or (202) 482-3020, respectively.
SUPPLEMENTARY INFORMATION:
Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provision 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
indicated, all citations to the Department's regulations are to the
provisions codified at 19 CFR part 353 (April 1, 1996).
Background
On April 7, 1998, the Department published in the Federal Register
the preliminary results of the review of the antidumping duty order on
carbon steel wire rope from Mexico (63 FR 16967). On May 7, 1998, we
received comments from the petitioner and Camesa. The petitioner and
Camesa submitted rebuttal comments on May 15, 1998. Both parties
presented their comments in a hearing held on May 28, 1998.
The Department has now completed this antidumping duty
administrative review in accordance with section 751(b) of the Act.
Scope of Review
The product covered by this review is steel wire rope. Steel wire
rope encompasses ropes, cables, and cordage of 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 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 Federal Register 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 for
Customs purposes, our own written description of the scope of this
review remains dispositive.
This review covers one manufacturer/exporter, Camesa, and the
period March 1, 1996 through February 28, 1997.
Model Match Methodology
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.)
(CEMEX). 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
[[Page 46754]]
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 normal value (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.'' Instead, the Department will use sales of similar merchandise,
if such sales exist. 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 segment of the 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. We have implemented the Court's
decision in this case, to the extent that the data on the record
permitted.
Analysis of the Comments Received
We gave interested parties an opportunity to comment on the
preliminary results of review. We received case and rebuttal briefs
from the petitioner and from Camesa.
Comment 1: Whether Camesa's U.S. Sale is a Bona Fide Transaction
The petitioner contends that the timing and nature of Camesa's one
sale to the United States during the period of review (POR) indicates
that it was not a bona fide transaction.
The petitioner asserts that although Camesa's sale of subject
product was not overtly fraudulent, circumstances surrounding the sale
were contrived under controlled conditions. Petitioner contends the
price of the product was arranged to ensure that the sale would yield
little or no dumping margin and serve as the basis for an
administrative review and adjustment of the existing antidumping duty
deposit requirement.
Petitioner argues that, given that Camesa had not sold carbon steel
wire rope to the United States in over three years, and that the U.S.
customer purchased subject product so late in the POR and was willing
to pay a 111.68 percent duty indicates that this sale was orchestrated
by Camesa and does not represent typical commercial trade. Petitioner
further contends that the price of the sale was calculated so as to
closely coordinate with home market sales of identical product during
the same period. Consequently, the petitioner argues, the Department
must disregard this sale and determine that no proper basis existed for
an administrative review of the March 1, 1996 through February 28, 1997
period.
Camesa contends that the petitioner has not provided any evidence
that the sale in question was not genuine, or that the prices were
aberrational or atypical compared to other sales in the U.S. market.
Camesa points out that the petitioner has not demonstrated that
Camesa's U.S. customer had a financial interest in the outcome of this
antidumping duty review. Camesa argues that the petitioner's arguments
are based on the speculation that the U.S. sale must have been
contrived because it occurred so late in the review period and results
in a margin that the petitioner does not like.
Camesa further claims that there is no statutory or regulatory
basis for excluding any U.S. sales from an administrative review.
Camesa notes that the Department set forth its understanding that
section 751(a)(2)(A) of the Act requires the Department to include all
U.S. sales in the calculation of dumping margins in Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished, From Japan and
Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and
Components Thereof, From Japan; Final Results of Antidumping Duty
Administrative Reviews and Revocation in Part of an Antidumping
Finding, 61 FR 57629, 57639 (November 7, 1996) (TRBs). Therefore,
Camesa contends, its one U.S. sale should be included in this review.
DOC Position
We agree with Camesa. Section 751(a)(2)(A) of the Act requires the
Department to determine the NV and export price (or constructed export
price) of each entry of the subject merchandise and to calculate the
dumping margin for each entry during the POR. We stated in TRBs that
section 751(a)(2)(A) of the Act requires us to analyze all U.S. sales
within the review period. As the petitioner notes in its case brief,
the sale in question was made between a foreign company and the first
unaffiliated purchaser in the United States, during the POR. The
petitioner does not claim that this sale was fraudulent and has not
provided any evidence, only speculative allegations, that the sale was
not a bona fide transaction. Therefore, we have continued to include
this sale in our margin calculation in these final results of review.
Comment 2: Whether Camesa's Home Market Sales Constitute a Fictitious
Market
The petitioner contends that the home market sales which served as
the basis for the price comparison constitute a fictitious market. The
petitioner claims that section 773(a)(2) of the Act and section
353.43(b) of the Department's regulations require the Department to
disregard and/or reject any pretended sale or sales intended to
establish a fictitious market in determining NV.
The petitioner alleges that the data provided by Camesa regarding
the home market sales on which NV is based demonstrate a price movement
vis-a-vis different forms of the product subject to the order which is
indicative of a fictitious market. Specifically, the petitioner states
that the timing and isolated nature of one customer-specific discount
was contrived to lower the home market price, thereby reducing or
eliminating the dumping margin. Therefore, the petitioner asserts, the
price manipulation evident in these sales constitutes the very type of
price movement which the Department has determined constitutes the
basis for a fictitious market determination.
Camesa argues that there is no evidence to support the petitioner's
claim of a fictitious market. Camesa notes that under the Department's
established practice, a ``fictitious market'' may be found when the
evidence shows that the trends in prices for comparison products: (1)
are moving in a different way from the trends in prices for non-
comparison products, and (2) would have the effect of reducing the
dumping margins. See the preamble to Antidumping Duties; Countervailing
Duties; Final Rule; Final Rule, 62 FR 27296, 27357 (May 19, 1997).
Camesa claims that the home market prices for the comparison product in
the month of the U.S. sale were at relatively high levels both in
comparison to other sales of the same product and in comparison to the
trends in prices of non-comparison products. Thus, the price trends for
the comparison product had the effect of raising, not lowering, the
dumping margins.
Furthermore, Camesa argues that an analysis of the timing of its
home market sales and discounts reveals that these sales and discounts
were not unusual and were within the range of Camesa's normal sales
practices. Camesa concludes, therefore, there is no evidence to support
the petitioner's claim that these sales constitute a fictitious market.
[[Page 46755]]
DOC Position
The petitioner failed to raise its fictitious market allegation
until the filing of its case brief following the preliminary results of
this review. Therefore, the petitioner's allegation was untimely filed
and, consequently, does not warrant determining that Camesa's home
market sales constitute a fictitious market.
As we explained in our Notice of Final Results of Antidumping Duty
Administrative Review and Determination Not to Revoke Order in Part:
Dynamic Random Access Memory Semiconductors of One Megabyte or Above
from the Republic of Korea, 62 FR 39809, 39822 (July 25, 1997), a
fictitious market analysis is extraordinary. The preamble to
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296,
27357 (May 19, 1997)(the Departments's regulations), implementing the
URAA, states that the Department typically does not engage in a
fictitious market analyses under section 773(a)(2) of the Act, or a
variety of other analyses called for by section 773, ``unless it
receives a timely and adequately substantiated allegation from a
party.'' (See Tubeless Steel Disc Wheels from Brazil; Final Results of
Antidumping duty Administrative Review, 56 FR 14083 (April 15, 1991);
Porcelain-on-Steel Cooking Ware from Mexico; Final Results of
Antidumping Duty Administrative Review, 58 FR 32095, 23096 (June 8,
1993) (Mexican Cooking Ware).) The various provisions of section 773,
particularly section 773(a)(2), ``call for analyses based on
information that is quantitatively and/or qualitatively different from
the information normally gathered by the Department as part of its
standard antidumping analysis.'' See 62 FR 27296, 27357, (May 19,
1997). The Department must determine, as a threshold matter, whether
such an analysis is warranted based upon the adequacy of the
allegation. See Mexican Cooking Ware; Electrolytic Manganese Dioxide
from Japan; Final Results of Antidumping Duty Administrative Review, 56
FR 28551, 28555 (May 14, 1993).
The untimely nature of the petitioner's allegation during this
review prevented the Department from making this threshold
determination at an appropriate point in the proceeding. Therefore, we
reject petitioner's fictitious market allegation.
Comment 3: The Date of Sale for Home Market Observation 527
The petitioner argues that the Department must reject the reported
date of sale for home market observation (OBS) 527 since Camesa used
the invoice date as the date of sale whereas, during verification, the
Department discovered a facsimile transmission from Camesa to its home
market customer indicating that the material terms of sale for OBS 527
had been settled three months before the date of invoice. The
petitioner contends that the Department should establish the date of
the facsimile transmission as the date of sale for OBS 527, since it
corresponds to the date of the last known changes in the material terms
of sale. As a result, the petitioner argues, OBS 527 should not be used
as a basis for calculating NV, since the earlier date of sale is
outside of the contemporaneous window period. The petitioner further
alleges that the remaining sales of the foreign like product sold in
the home market during the month of the U.S. sale, constitute an
unacceptably small quantity of home market sales upon which to base NV.
Therefore, the petitioner argues, the Department should base NV on
contemporaneous home market sales of other carbon steel wire rope
products of the same general class or kind as the subject merchandise
sold by Camesa in the United States, or, alternatively, on sales of the
foreign like product made prior to the month of the U.S. sale.
Camesa asserts that section 351.401 of the Department's regulations
stipulates that the date of sale should be based on the date of invoice
and that the preamble to this new regulation also expresses a
``preference for using a single date of sale for each respondent,
rather than a different date of sale for each sale.'' (See 62 FR 27296,
27348). Furthermore, Camesa notes that the preamble to the Department's
regulations also indicates that the Department will depart from using
the date of invoice as the date of sale when ``the material terms of
sale usually are established on some date other than the date of
invoice.'' (See 62 FR 27296, 27349.) Camesa finally points to the
requirement in the Department's questionnaire that respondents use a
uniform date of sale methodology for all sales.
Camesa notes that, as a general matter, the prices for the home
market sales reported during the POR were fixed based on the price
lists in effect when the invoice was generated. Camesa explains that it
used the date of invoice as the date of sale for all of the home market
transactions reported in this review. Finally, Camesa explains that the
facsimile transmission in question establishes neither the price nor
quantity of the sale and consequently cannot be used as the basis of
the date of sale.
DOC Position
We agree with Camesa. The Department's verification report
established that the purpose of the facsimile transmission petitioner
references was to grant a discount, and not to establish the price,
quantity or other terms of the sale. As Camesa explained above, the new
regulations require the use of single, uniform date of sale throughout
each response, rather than a different date of sale for each sale.
Although this review is not governed by the new regulations, the new
regulations serve as a restatement of the Department's interpretation
of the requirements of the Act as amended by URAA. See section 351.701
of the Department's regulations. Therefore, the Department will use the
date of invoice as the date of sale. Section 351.401(i) of Department's
regulations establishes that normally, the date of sale is the date of
invoice, as recorded in the exporter's or producer's records kept in
the ordinary course of business. Section 351.401(i) also states that
the Department may use a date other than the date of invoice if the
Secretary is satisfied that a different date better reflects the date
on which the exporter or producer establishes the material terms of
sale.
Camesa prepared its response on a consistent basis, using the
invoice date as the date of sale. There is no evidence that any date
other than the invoice date should be considered as the date on which
Camesa established the material terms of sale in the course of its
business. The verification report did not identify any discrepancies
with respect to the date of sale for this transaction. Therefore, for
the purposes of these final results of review, we will accept Camesa's
verified invoice date as the date of sale.
Comment 4: Duty Drawback
The petitioner argues that Camesa is not entitled to a duty
drawback adjustment under section 772(c)(1)(B) of the Act because
Camesa has failed to satisfy the Department's two-pronged test to
receive duty drawback. (See Far East Machinery Co. v. United States, 12
CIT 972, 974 (1988). Petitioner states that the first prong of the test
requires Camesa to demonstrate that the import duty and the rebate
received under the duty drawback program must be directly
[[Page 46756]]
linked to, and dependent upon, one another. The second prong requires
that Camesa demonstrate that there were sufficient imports of raw
materials to account for the duty drawback received on exports of the
manufactured product, Id.
Petitioner argues that Camesa failed to satisfy the first prong
because under PITEX, Mexico's duty drawback program, Camesa did not
actually pay the import duty as petitioner claims is required by the
Act. According to the petitioner, duty drawback adjustments ``may only
be made where imports [sic] duties are actually paid and rebated.''
Petitioner's case brief at 19 (emphasis in original), citing Far East
Machinery, 12 CIT at 976, quoting Huffy Corporation v. United States,
10 CIT 214 (1986).
Moreover, petitioner argues that since Camesa did not pay any
import duties, it has failed to establish that such duties were paid
for those raw materials that were used to produce steel wire rope sold
in the home market but not paid on wire rope products exported.
Petitioner also asserts that Camesa did not pay duties on a quantity of
imported rod substantially greater than the quantity of its documented
exports.
Camesa contends that the petitioner incorrectly characterizes
section 772(c)(1)(B) of the Act and in a way that is directly
inconsistent with the plain language of the Act. Camesa also disputes
petitioner's allegation that they did not meet the second prong, i.e.,
did not export a sufficient quantity of finished products to account
for its amount of imports. Camesa argues that petitioner ignored the
vast majority of the steel products it exports--steel wire, steel wire
strand, and electro-mechanical cable--which, like steel wire rope, are
produced from imported steel wire rod. Camesa notes that the total
exports of these products were substantially more than the quantity of
steel wire rod imported by Camesa.
DOC Position
We disagree with the petitioner. Section 772(c)(1)(B) of the Act
explicitly provides for the Department's grant of a duty drawback
adjustment when import duties ``imposed by the country of exportation
which have been rebated, or which have not been collected, by reason of
the exportation of the subject product to the United States''. Id.
(emphasis added).
Petitioner's argument that Camesa has to actually pay and receive a
rebate in order to qualify for duty drawback adjustment is contrary to
the plain language of the statute and the Department's long-established
practice. ``Section 772(c)(1)(B) of the Act provides for adjustment for
duty drawback on import duties which have been rebated (or which have
not been collected) by reason of exportation * * *.'' Final
Determination of Sales Less Than Fair Value: Stainless Steel Wire Rod
from Korea, 63 FR 40404, 40415 (July 29, 1998). See also Certain Welded
Stainless Steel Pipe from Taiwan; Final Results of Administrative
Review, 63 FR 38382, 38389 (July 16, 1998); Certain Welded Carbon Steel
Pipes and Tubes from India; Final Results of New Shipper Antidumping
Duty Administrative Review (Indian Pipe), 62 FR 47632, 47635 (September
10, 1997).
The Department will grant a duty drawback adjustment if we
determine: 1) that the import duty and rebate are directly linked to,
and dependent upon, one another; and 2) that imported raw materials are
sufficient to account for the duty drawback received on the exports of
the manufactured product. (See Far East Machinery, 12 CIT at 974.)
However, the Department has never established a strict prerequisite
that import duties must actually be paid and subsequently rebated in
order for there to be the necessary link justifying an adjustment to
the U.S. starting price. Nor have the courts established such a
requirement. It is true, as petitioner notes, that the Court of
International Trade stated in Far East Machinery that payment of import
duties is a ``prerequisite to receipt of an export rebate'' to qualify
for an adjustment. Far East Machinery, 12 CIT at 976. However,
petitioner has taken the Court's discussion of this issue out of
context. In Far East Machinery, the respondent had actually paid duties
upon importing the input and had received some amount of rebate on
exporting the subject merchandise. The question in that case only
concerned whether the government drawback program at issue established
the necessary link between actual payment of the duties and receipt of
the rebate. See id.; see also, Du Pont de Nemours & Co. v. United
States, 841 F. Supp. 1237, 1242-43 (CIT, 1993); Huffy Corp., supra.
In this case, under the PITEX program, the Mexican government has
effectively suspended collection of duties from Camesa on imported
steel wire rod contingent upon Camesa's later exporting merchandise
containing an equivalent amount of steel. The Department has reviewed
this type of program before. See Silicon Metal from Brazil; Final
Results of Antidumping Duty Administrative Review, 62 FR 1970, 1976
(January 7, 1997) (Brazilian duty drawback program suspends the payment
of taxes or duties that ordinarily would have been due upon
exportation); Extruded Ruber Thread from Malaysia; Final Results of
Antidumping Administrative Review, 62 FR 33588, 33598-99 (June 20,
1997) (import duties not collected when subject merchandise
incorporating those imported goods were exported).
Therefore, in cases where the import duty is not collected, the
first prong then becomes whether ``import duties were actually not
collected by reason of the exportation of the subject merchandise to
the United States.'' This type of program falls within the express
language of section 772 (c)(1)(B). See Indian Pipe, at 47632, 47635.
The Department determines that Camesa has met the requirements of the
first prong.
The Department examined and reviewed the PITEX program at
verification. The Department also examined the Mexican government's
audits of Camesa's imports of wire rod, consumption of steel wire rod,
and subsequent exports of wire rope. We verified that Camesa conformed
to the requirements of the PITEX program, which requires that exports
be sufficient to account for the drawback claimed.
The Department agrees with Camesa that it has also met the second
prong. After taking into consideration the variety of products Camesa
exported--including exports of steel wire, steel wire strand, and
electro-mechanical cable--Camesa's total exports were sufficient to
account for the quantity of steel wire rod imported. It should also be
noted that the Court of International Trade has consistently held that
there is no requirement that specific inputs be traced from importation
through exportation before allowing drawback on duties paid. See Far
East Machinery, 12 CIT at 975.
Comment 5: The Accuracy of Camesa's Duty Drawback Claims
The petitioner contends that the Department must reject Camesa's
claimed adjustment for duty drawback since the Department was unable to
verify the information provided in the questionnaire response. The
petitioner claims that Camesa, by basing the reported duty drawback
adjustment on only one of many imports of steel wire rod, attempted to
obtain the highest possible adjustment by selectively supplying the
Department with certain information, while withholding other, less
advantageous, information. Therefore, the petitioner argues, as adverse
facts available, the Department must reject Camesa's claim for a duty
drawback adjustment in its entirety.
[[Page 46757]]
Camesa argues that the Department should use verified information,
and not ``adverse inferences'' to correct what it claims was a minor
``error'' in the reported duty drawback found during verification.
Camesa claims that the employee responsible for providing the duty
drawback information did not explain that the information was based on
a single import of wire rod. At verification, the Department reviewed
the documents for all of Camesa's purchases of imported rod during the
review period. Camesa claims the Department did not find discrepancies
with respect to the one invoice that was reported. Camesa further
contends that, at verification, it successfully demonstrated the
accuracy of the information it had submitted. Camesa claims that the
duty drawback rate that it submitted was not unreasonable, since it is
very close to the rates obtained for other imports which occurred at
the beginning and the middle of the POR. Therefore, Camesa argues,
since the verification report did not identify any discrepancies in the
information reported in the questionnaire response, the Department
should base Camesa's duty drawback adjustment for the final results of
review on verified information, rather than on adverse facts available.
DOC Position
We agree with the petitioner that Camesa failed to use all of the
appropriate information available to it in calculating its claimed
adjustment for duty drawback. The Department's verification established
that Camesa used only one of many imports of steel wire rod as the
basis for the claimed adjustment, yet reported it as an average price
for imported rod during the POR. In addition, Camesa was not able to
explain the reason for the reporting error at verification. (See Report
of the Sales and Cost Verification of Aceros Camesa S.A. de C.V.
(Camesa) in the First Administrative Review of the antidumping Duty
Order on Steel Wire Rope from Mexico, March 31, 1998, pages 12 and 13.)
In fact, Camesa's explanation of this ``minor'' error is made for the
first time in its case brief. Consequently, in the preliminary results
of review, we concluded that Camesa overreported the amount of the duty
drawback and we made an adjustment based on adverse inferences. Since
there have been no changes in material fact since the preliminary
results of this review, we have continued to allow an adjustment for
duty drawback in the final results of this review and to make an
adjustment to starting price in the United States using the smallest
per-unit amount of duty drawback calculated for any invoice of steel
wire rod purchased during the POR.
Comment 6: Rescission of the Department's Decision to Initiate the
Sales Below Cost Investigation
Camesa contends that the Department should rescind its decision to
initiate a sales-below-cost investigation in this review. Camesa claims
that the petitioner's sales-below-cost allegation failed to include the
net gain on monetary position recorded on Camesa's financial
statements, thereby overstating net financial expense and the cost of
production (COP). Camesa further contends that if the petitioner had
properly included the net gain on monetary position in its
calculations, all of the home-market sales identified by the petitioner
would have been made above cost, and the allegation would not have been
made. Therefore, Camesa argues, the petitioner's allegation should be
rejected and the sales-below-cost investigation should be rescinded.
The petitioner contends that the Department's decision to initiate
the investigation was proper in all respects and in accord with the
Department's standards. The petitioner further states that it presented
the Department with more than sufficient grounds to proceed with an
investigation. And, since the petitioner's allegation otherwise met the
legal criteria for initiation of a COP investigation, the Department's
decision to initiate a COP investigation was fully in accord with the
controlling statutory standard and legal precedent. Therefore, the
petitioner contends, the Department must reject Camesa's argument for
rescission of the initiation of the COP investigation.
DOC Position
We agree with the petitioner. The Department considered Camesa's
arguments and rejected them on two previous occasions. Camesa
originally presented this argument in its letter to the Department on
October 1, 1997 arguing that the petitioner failed to include net gain
on monetary position in its calculation of net financial expense.
Nevertheless, at the time of the decision to initiate a sales-below-
cost investigation, the Department determined that Camesa did not
sufficiently substantiate its case for this adjustment for the record
for the Department to be able to determine whether Camesa's proposed
adjustment concerning the monetary position was appropriate. In the
Department's October 6, 1997 decision memo, Steel Wire Rope from
Mexico: Whether to Initiate a Sales Below Cost Investigation, the
Department stated on page 3, ``since Camesa's financial statements do
not specify what the interest expenses relate to, we believe that we do
not have enough information on the record to determine whether such an
adjustment is appropriate in this case.'' On October 19, 1997, Camesa
again requested the Department to rescind its decision to initiate a
sales-below-cost investigation, presenting for a second time the
arguments set forth in its October 1, 1997 letter. The request was
considered and denied in a letter from the Department to Camesa on
October 23, 1997. Furthermore, the Department found the petitioner's
allegation to be representative of the broader range of the home market
sales than were actually used to determine NV in the review.
Therefore, the Department initiated a sales-below-cost
investigation, because at the time the decision was made, the
Department had ``reasonable grounds'' to believe that sales of foreign
like product under consideration for the determination of normal value
had been made at prices which represent less than the cost of
production. See Section 773(b)(1) of the Act. The Department will not
revisit the issue of initiation at this time.
Comment 7: Disregarding Sales Below Cost
Camesa claims that the Department erroneously conducted its cost
test on all home market sales of the foreign like product reported to
the Department. Camesa points out that it made only one sale of steel
wire rope to the United States during the POR, and that the Department
based its preliminary results of review on home market sales of the
identical product. Therefore, Camesa points out that section 773(b)(1)
of the Act requires the Department to exclude sales below cost which
have been made within an extended period of time in substantial
quantities, and were not at prices which permit recovery of all costs
within a reasonable period of time. Camesa notes that section
773(b)(2)(C) states that ``sales made below cost of production have
been made in substantial quantities if --(i) the volume of such sales
represents 20 percent or more of the volume of sales under
consideration for the determination of normal value, or (ii) the
weighted average per unit price of the sales under consideration for
the determination of normal value is less than the weighted average per
unit cost of production for such sales.'' Therefore, Camesa concludes,
the Department cannot apply the cost test to sales of similar
merchandise or disregard them
[[Page 46758]]
from its analysis, since only sales of identical merchandise should
have been the relevant universe of sales under consideration for the
determination of NV.
Camesa notes that this issue does not bear any significance for
calculation of NV in the current review, since the Department did not
disregard any of the home-market sales of the product that were used as
the basis for NV. However, Camesa notes that it may have a significance
in future reviews since the Department's questionnaire instructs
respondents to respond to the cost of production and CV sections of the
questionnaire only if any of the respondent's sales were disregarded as
below cost in the prior review. Therefore, Camesa requests the
Department to specifically state that none of Camesa's home market
sales were disregarded as below cost in the current review.
The petitioner contends that Camesa is incorrect in its assertion
that the sales of similar merchandise in the home market are not under
consideration for the determination of NV. It further notes that all
sales of merchandise covered by the scope of the order remain
candidates for the determination of NV, even if the NV for the final
results of this review continues to be based solely on the identical
home market product. The petitioner argues that, since the Department
acted in accordance with law in its preliminary results of review, it
must maintain this analysis for purposes of the final results of this
review.
DOC Position
We disagree with Camesa's interpretation of section 773(b)(1) of
the Act and that we should find that no below-cost-sales were
disregarded. The premise underlying Camesa's argument--that the sales-
below-cost analysis is done after the Department does its matching
analysis--is inconsistent with the current court decision in CEMEX.
The Department's practice following the CEMEX decision is to
conduct a sales-below-cost test prior to conducting the matching
analysis. The Court in CEMEX held that ``A determination of the dumping
margin cannot be made if sales of a product which are to be relied upon
in reaching foreign market value are not in the ordinary course of
trade. [citations omitted]. Therefore, the initial consideration for
Commerce is whether, under section 1677b(a)(1), the sales are `in the
usual commercial quantities and in the ordinary course of trade. 19
U.S.C. 1677b(a)(1).' '' CEMEX, 133 F.3d at 903 (emphasis added).
The Court in CEMEX explicitly held that sales below cost are not in
the ``ordinary course of trade.'' Citing Mantex v. United States, 841
F. Supp. 1290, CIT, 1993, the Court in CEMEX held that `` `[a] profit
level comparison is probative of the economic reality' of the sales
[citation omitted] and therefore the disparity in profit margins is
indicative of sales that were not in the ordinary course of trade.''
CEMEX, 133 F.3d at 900 citing Mantex, 841 F.Supp. at 1308.
Sales that are below cost (not in the ordinary course of trade) are
then disregarded and subsequently the matching analysis is done on
remaining sales. ``Commerce should then examine the next available
class of merchandise * * * to determine if it matches any of the * * *
categories of `such or similar merchandise.' '' CEMEX, 133 F.3d at 903.
Therefore, Camesa's argument that only identical merchandise should
have been subjected to the sales-below-cost analysis is contrary to the
Court's mandate in CEMEX. Camesa incorrectly takes a very narrow
interpretation of the phrase ``under consideration for the
determination of normal value'' to include only those identical sales
that were actually used in calculating normal value. The Department
considers all home market sales reported to be ``under consideration
for the determination of normal value.'' The fact that certain sales
were later disregarded for being below cost or non-identical matches,
when identical matches were available, does not alter the fact that
initially all reported home market sales were ``under consideration for
the determination of normal value.''
Accordingly, based on the cost test, the Department disregarded
certain of Camesa's below-cost home-market sales in the current review.
Comment 8: Home Market Credit
Camesa maintains that the Department should calculate home-market
credit expenses based on the actual short-term interest rate available
to Camesa, rather than the published interbank equilibrium rate
(abbreviated TIIE in Spanish), used in the preliminary results of
review. Camesa notes that the TIIE rate is an interbank rate which is
available for transactions between banks and not intended for corporate
customers. Therefore, Camesa contends, the Department should calculate
the credit expense for Camesa's home-market sales based on the evidence
on the record concerning the actual interest rates Camesa would have
paid if it had short-term borrowings during the review period.
The petitioner contends that the Department properly used the TIIE
interest rate to determine home market credit expense during this
review. The petitioner states that since Camesa did not have actual
borrowings in the home market during the period of the review, an
interest rate must be imputed. The petitioner contends that the
interest rates proposed by Camesa are hypothetical and speculative,
cannot be verified and cannot serve as the basis for a circumstance of
a sale adjustment. Therefore, the petitioner contends, the Department
should continue to use the TIIE rate in its final results of review.
DOC Position
The Department's preference for determining an interest rate for
imputed credit expenses when the respondent does not have any short-
term loans is set forth in Import Administration Policy Bulletin 98.2
(Policy Bulletin 98.2). Policy Bulletin 98.2 states, ``For foreign
currency transactions, we will establish interest rates on a case-by-
case basis using publicly available information, with a preference for
published average short-term lending rates.'' The Bulletin also states
that any short-term interest rates used by the Department should meet
three criteria: `` * * * it should be reasonable, readily obtainable,
and representative of `usual commercial behavior.' '' We were not able
to identify any published sources of short-term lending rates in Mexico
during the period of review. However, we recognize that the information
on the record concerning the minimum interest rate that Camesa could
have obtained from commercial banks, if it had had short-term
borrowings during the period of review, satisfied the above criteria.
Furthermore, we agree with Camesa that the TIIE rate is an interbank
rate that is applied only to transactions between banks and understates
the rates available to corporate customers and is not appropriate for
calculating imputed credit expenses in this review. Therefore, for
these final results we have imputed credit expenses using the
information on the record. (See, Calculations Memo for the Final
Results of Review, dated August 21, 1998.)
Comment 9: The Timeliness of the Filing of the Public Version of
Camesa's Case Brief
The petitioner argues that by submitting the public version of its
case brief to the Department on May 11, 1998, Camesa missed the public
filing deadline date of May 8, 1998. The petitioner contends that due
to the untimely filing, the Department must reject Camesa's filing
according to the
[[Page 46759]]
Department's regulation at section 353.38(a) which states that ``[T]he
Secretary will return to the submitter * * * any written argument
submitted after the time limits specified in this section or by the
Secretary.'' The petitioner further contends that to do otherwise not
only works to the prejudice of the petitioner, which operated under the
established time frames, but provides license for Camesa, and parties
to other proceedings before the Department, to flout the Department's
mandatory requirements. The petitioner further argues that, at the
least, the Department must reject Camesa's claim for confidentiality
regarding its case brief since it failed to perfect this claim by
filing a public version of the case brief by the close of the next
business day. Camesa did not comment on this issue.
DOC Position
Camesa attempted to file its business proprietary version of its
case brief on May 7, 1998. Details of Camesa's attempt to file its case
brief in a timely manner are outlined in Sherman & Sterling's letter to
the Honorable William Daley dated May 8, 1998 and accompanying
affidavit of its courier. The Department accepted Camesa's explanation
and effectively gave Camesa an extension of one day by accepting its
case brief on May 8, 1998. See 353.38(c)(1). Therefore, the public
version of Camesa's case brief was due on the next business day, which
in this case was on May 11, 1998. See 353.32(b). Camesa timely filed
its public version on May 11, 1998.
Final Results of the Review
As a result of our review of the comments, we determine that the
following dumping margins exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Period (percent)
------------------------------------------------------------------------
Aceros Camesa, S.A. de C.V............... 3/1/96-2/28/97 0.00
------------------------------------------------------------------------
The Department shall determine, and the Customs service shall
assess, antidumping duties on all appropriate entries. We will instruct
customs to liquidate the entries made during the POR without regard to
antidumping duties since no margins were determined to exist in this
review. The Department will issue appraisement instructions directly to
the U.S. Customs Service.
Further, the following deposit requirements will be effective upon
publication of this notice of final results of review for all shipments
of steel wire rope from Mexico entered, or withdrawn from warehouse,
for consumption on or after the publication date, as provided for by
section 751(a)(1) of the Act: (1) the cash deposit rate for Camesa will
be the rate stated above; (2) for previously investigated companies not
listed above, the cash deposit rate 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 review, or the original investigation of
sale at less than fair value (LTFV), 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) the cash deposit rate
for all other manufacturers or exporters will continue to be 111.68
percent, 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.
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 the subsequent
assessment of double antidumping duties.
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with section 353.34(d) of the Department's
regulations. Timely notification of 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
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), section 771(i) of
the Act (19 U.S.C. 1677f(i)), and 19 CFR 353.22.
Dated: August 27, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-23670 Filed 9-1-98; 8:45 am]
BILLING CODE 3510-DS-P