[Federal Register Volume 64, Number 42 (Thursday, March 4, 1999)]
[Notices]
[Pages 10445-10448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5396]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-833]


Stainless Steel Bar From Japan: Preliminary Results of 
Antidumping Administrative Review

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

ACTION: Notice of preliminary results of antidumping administrative 
review.

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SUMMARY: The Department of Commerce is conducting an administrative 
review of the antidumping duty order on stainless steel bar from Japan 
in response to a request from a respondent, Aichi Steel Works, Ltd. 
This review covers the period February 1, 1997, through January 31, 
1998.
    We preliminarily determine that sales have been made below normal 
value (NV). Interested parties are invited to comment on these 
preliminary results. Parties who submit argument are requested to 
submit with the argument (1) a statement of the issue and (2) a brief 
summary of the argument.

EFFECTIVE DATE: March 4, 1999.

FOR FURTHER INFORMATION CONTACT: Minoo Hatten or Robin Gray, Office of 
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-
1690 or (202) 482-4023, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, 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 
indicated, all citations to the Department of Commerce's (the 
Department's) regulations are to 19 CFR Part 351 (1998).

Background

    On February 27, 1998, the Department received a request from Aichi 
Steel Works, Ltd. (Aichi) to conduct an administrative review of the 
antidumping duty order on stainless steel bar (SSB) from Japan. On 
March 23, 1998, the Department published a notice of initiation of an 
administrative review of Aichi, covering the period February 1, 1997, 
through January 31, 1998, in the Federal Register (63 FR 13837).
    On May 29, 1998, Al Tech Specialty Steel Corp., Dunkirk, N.Y., 
Carpenter Technology Corp., Reading, PA, Republic Engineered Steels, 
Inc., Massillon, OH, Slater Steels Corp., Fort Wayne, IN, Talley Metals 
Technology, Inc., Hartsville, SC, and the United Steel Workers of 
America, AFL-CIO/CLC, collectively petitioners in the less-than-fair 
value (LTFV) investigation (hereafter petitioners), requested that the 
Department conduct an investigation to determine if Aichi made sales at 
prices below its cost of production (COP) during the 1997-1998 review 
period.
    On July 10, 1998, based on petitioners' allegation and the evidence 
on the record, the Department determined that there were reasonable 
grounds to believe or suspect that Aichi made sales at prices below its 
COP, in accordance with section 773(b)(2) (A)(i) of the Act, and 
initiated a COP investigation of Aichi pursuant to section 773(b)(1) of 
the Act (see the Memorandum To File (July 10, 1998) located in Room B-
099 of the main Commerce building).
    On September 28, 1998, the Department conducted a sales 
verification using standard verification procedures. Our verification 
results are outlined in the public version of the verification report 
(see verification report from analysts to file, dated December 21, 
1998).

Scope of Review

    The merchandise covered by this review is stainless steel bar 
(SSB). For purposes of this review, the term ``stainless steel bar'' 
means articles of stainless steel in straight lengths that have been 
either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise 
cold-finished, or ground, having a uniform solid cross section along 
their whole length in the shape of circles, segments of circles, ovals, 
rectangles (including squares), triangles, hexagons, octagons or other 
convex polygons. SSB includes cold-finished SSBs that are turned or 
ground in straight lengths, whether cold-finished SSBs that are turned 
or ground in straight lengths, whether produced from hot-rolled bar or 
from straightened and cut rod or wire, and reinforcing bars that have 
indentations, ribs, groves, or other deformations produced during the 
rolling process.
    Except as specified above, the term does not include stainless 
steel semi-finished products, cut-length flat-rolled products (i.e., 
cut-length rolled products which if less than 4.75 mm in thickness have 
a width measuring at least 10 times the thickness or if 4.75 mm or more 
in thickness having a width which exceeds 150 mm and measures at least 
twice the thickness), wire (i.e., cold-formed products in coils, of any 
uniform solid cross section along their whole length, which do not 
conform to the definition of flat-rolled products), and angles, shapes 
and sections.
    The SSB subject to this order is currently classifiable under 
subheadings 7222.10.0005, 7222.10.0050, 7222.20.0005, 7222.20.0045, 
7222.20.0075, and 7222.30.0000 of the Harmonized Tariff Schedule of the 
United States (``HTSUS''). Although the HTSUS subheadings are provided 
for convenience and customs purposes, our written description of the 
scope of this order is dispositive.

United States Price

    In calculating the price to the United States, we used export price 
(EP) as defined in section 772(a) of the Act, because the subject 
merchandise was sold to an unaffiliated U.S. purchaser in the United 
States prior to the date of importation into the United States and the 
use of constructed export price was not indicated by the facts of 
record.
    We calculated EP for U.S. sales based on F.O.B. Japan port prices 
to the United States. We made adjustments, where appropriate, for 
domestic inland freight, warehousing expenses, and brokerage and 
handling, in accordance with section 772(c)(2)(A) of the Act.
    Aichi claimed that an upward adjustment to EP was appropriate to 
account for a ``duty drawback'' program. As stated in Certain Welded 
Carbon Standard Steel Pipes and Tubes from India (62 FR 47632, 47635, 
September 10, 1997), ``we determine whether an adjustment to U.S. price 
for a respondent's claimed duty drawback is appropriate when the 
respondent can demonstrate that it meets both parts of our two-part 
test. There must be: (1) a sufficient link between the import duty

[[Page 10446]]

and the rebate, and (2) a sufficient amount of raw materials imported 
and used in the production of the final exported product.'' As 
discussed below, because the respondent met these criteria, we have 
made an adjustment to EP.
    Aichi participates in Japan's duty-drawback program through its 
operation of a ``hozei area,'' which is similar to a bonded warehouse. 
Aichi posts a bond on all materials that enter the warehouse. If Aichi 
utilizes the imported materials for the production of merchandise that 
is exported, Japanese Customs Authority then releases the bond. If the 
imported materials are not used in the production of exported 
merchandise, Aichi pays import duties on the materials.
    We examined a listing Aichi sent to the hozei area as notification 
of the export of merchandise that was manufactured using materials 
entered under bond. We tied specific transactions from this listing to 
the U.S. sales listing Aichi submitted to the Department. See 
Verification Report dated December 21, 1998. Thus, we granted an upward 
adjustment to EP because Aichi was able to show both (1) a link between 
the import duty and the rebate, and (2) a sufficient amount of raw 
materials imported and used in the production of the final exported 
product.
    No other adjustments to EP were claimed.

Normal Value

    On April 27, 1998, Aichi requested that the Department not require 
it to report home market sales that would not likely be needed for 
matching purposes. Aichi claimed that there are a limited number of 
home market sales of SSB during the period of review (POR) that will 
match to U.S. sales for purposes of calculating dumping margins. In 
addition, Aichi requested that it not be required to report resale 
information for its affiliated customers (downstream sales), with the 
exception of its subsidiary trading company, Aiko Corporation.
    On May 1, 1998, the Department granted Aichi's request in part by 
permitting Aichi to report only home market sales of hot-rolled 
merchandise. In the letter of May 1, 1998, the Department requested 
additional information from Aichi concerning its downstream sales. On 
June 11, 1998, the Department issued additional questions seeking 
further clarification of downstream-sales information.
    After a complete analysis of all the information on the record, on 
July 14, 1998, the Department informed Aichi that it was required to 
report all downstream sales made by its affiliates.
    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a basis for calculating NV, we compare 
the respondent's volume of home market sales of the foreign like 
product to the volume of U.S. sales of the subject merchandise, in 
accordance with section 773(a) of the Act. Because the aggregate volume 
of home market sales of the foreign like product was greater than five 
percent of the aggregate volume of U.S. sales of the subject 
merchandise, we determined that the home market provides a viable basis 
for calculating NV. Therefore, in accordance with section 
773(a)(1)(B)(i) of the Act, we based NV on the price at which the 
foreign like product was first sold to unaffiliated customers for 
consumption in the exporting country, in the usual commercial 
quantities and in the ordinary course of trade. We matched EP sales to 
sales at the same LOT in the home market and made no LOT adjustment. 
(See Level of Trade below.)
    After disregarding appropriate below-cost sales (see Cost-of-
Production Analysis below), pursuant to section 777A(d)(2) of the Act, 
we compared the EP sales of individual transactions to the monthly 
weighted-average price of sales of the most similar foreign like 
product. Where possible, we based NV on delivered prices to 
unaffiliated purchasers in the home market. Where applicable, we made 
adjustments to home market price for billing adjustments, inland 
freight, warehousing expenses, discounts and rebates. Subject 
merchandise sold in the United States was compared to home market 
products by applying the following criteria on a hierarchical basis: 
general type of finish, grade, remelting, type of final finishing 
operation, shape and size.
    Home market prices were based on delivered prices to affiliated or 
unaffiliated purchasers. When applicable, we made adjustments for 
differences in packing and for movement expenses in accordance with 
sections 773(a)(6)(A) and (B) of the Act. We also made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) 
of the Act and for differences in circumstances of sale (COS) in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. To make COS adjustments, we reduced home market price by an 
amount for home market credit and we increased it by an amount for U.S. 
credit expenses.

Level of Trade

    As set forth in section 773(a)(1)(B)(i) of the Act and in the 
Statement of Administrative Action (SAA) accompanying the Uruguay Round 
Agreements Act, at 829-831 (see H.R. Doc. No. 316, 103d Cong., 2d Sess. 
829-831 (1994)), to the extent practicable, the Department calculates 
NV based on sales at the same level of trade (LOT) as the U.S. sales 
(either EP or Constructed Export Price). When the Department is unable 
to find sale(s) in the comparison market at the same LOT as the U.S. 
sale(s), the Department may compare sales in the U.S. and foreign 
markets at different LOTs. The NV LOT is that of the starting-price 
sales in the home market. When NV is based on CV, the LOT is that of 
the sales from which we derive selling, general and administrative 
expenses (SG&A) and profit.
    To determine whether home market sales are at a different LOT than 
U.S. sales, we examine stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT and the differences affect price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Tariff Act. See Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate 
from South Africa, 62 FR 61731 (November 19, 1997).
    In implementing these principles in this review, we examined 
information from the respondent regarding the marketing stages involved 
in the reported home market and EP sales, including a description of 
the selling activities performed by Aichi for each channel of 
distribution. Aichi reported three channels of distribution in the home 
market and claimed five levels of trade for its home market sales--
consignment sales to trading companies, consignment sales to direct 
distributors, non-consignment sales to trading companies, non-
consignment sales to distributors and non-consignment sales to end-
users. During verification, we examined Aichi's reported LOTs further.
    Based on our analysis of information on the record, we determine 
that there are no differences with respect to selling functions between 
consignment and non-consignment sales. Specifically, there are no 
differences between

[[Page 10447]]

consignment and non-consignment sales with respect to strategic and 
economic planning, market research, computer, legal, accounting, audit, 
business systems development assistance, personnel assistance, 
engineering services, research and development technical programs, 
advertising, procurement and sourcing, sales calls/assistance and post-
sale warehousing. The distinction between consignment and non-
consignment sales is that in consignment sales situations, Aichi 
permits the customer to take possession of the product without 
requiring that the customer pay for the product until the customer 
sells to its downstream customer. This distinction, however, does not 
relate to the nature of the selling activities provided. See 
Preliminary results analysis memorandum from case analyst to file, 
dated February 22, 1999, in room B-099.
    Aichi reported sales to three types of customers in the home 
market: trading companies, end-users, and distributors. Selling 
functions performed with respect to sales to trading companies included 
strategic and economic planning, market research, computer, legal and 
business-systems development, engineering services and post-sale 
warehousing. In addition to these functions, other functions performed 
for sales to end-users included R&D technical programs, advertising, 
and sales calls/assistance. Distributors were also offered personnel 
training and manpower assistance in addition to the services offered to 
trading companies and end-users. Based on these differences, we found 
that the three types of home market customers constituted three 
different levels of trade.
    We found that Aichi made EP sales of various models of merchandise 
through unaffiliated trading companies, a channel of distribution 
similar to the home market channel involving sales to trading 
companies. As with sales through the trading-company channel of 
distribution in the home market, Aichi performed only a few selling 
functions when selling merchandise to trading companies that exported 
the merchandise to the United States. Thus, we found that the LOT for 
this U.S. channel of distribution was the same as the LOT for the home 
market trading company channel of distribution. See Id.

Cost-of-Production Analysis

    As stated in the Background section of this notice, the Department 
initiated a COP investigation for Aichi to determine whether Aichi made 
home market sales during the POR at prices below their respective COPs 
(as defined by section 773(b) of the Act). In accordance with section 
773(b)(3) of the Act, we calculated the COP based on the sum of the 
costs of materials and fabrication employed in producing the foreign 
like product, plus SG&A expenses and all costs and expenses incidental 
to packing the merchandise. In our COP analysis, we used the home 
market sales and COP information Aichi provided in its questionnaire 
responses.
    After calculating the COP, in accordance with section 773(b)(1) of 
the Act, we tested whether home market sales of SSB were made at prices 
below the COP within an extended period of time in substantial 
quantities and whether such prices permitted the recovery of all costs 
within a reasonable period of time. We compared model-specific COPs to 
the reported home market prices less any applicable movement charges, 
discounts, and rebates.
    Pursuant to section 773(b)(2)(C) of the Act, when less than 20 
percent of Aichi's sales of a given product were at prices below the 
COP, we did not disregard any below-cost sales of that product because 
the below-cost sales were not made in substantial quantities within an 
extended period of time. When 20 percent or more of Aichi's sales of a 
given product during the POR were at prices less than the COP, we 
disregarded the below-cost sales because they were made in substantial 
quantities within an extended period of time. See sections 773(b)(2)(B) 
and (C) of the Act. Additionally, based on comparisons of prices to 
weighted-average COPs for the POR, we determined that the sales were at 
prices which would not permit recovery of all costs within a reasonable 
period of time, as defined by section 773(b)(2)(D) of the Act.

Constructed Value

    In accordance with section 773(a)(4) of the Act, we used 
constructed value (CV) as the basis for NV when there were no usable 
sales of the foreign like product in the comparison market. We 
calculated CV in accordance with section 773(e) of the Act. We included 
the cost of materials and fabrication, SG&A expenses, and profit in the 
calculation of CV. In accordance with section 773(e)(2)(A) of the Act, 
we based SG&A expenses and profit on the amounts incurred and realized 
by Aichi in connection with the production and sale of the foreign like 
product in the ordinary course of trade for consumption in the home 
market.
    When appropriate, we make adjustments to CV in accordance with 
section 773(a)(8) of the Act and 19 CFR 351.410 for COS differences and 
LOT differences. For comparisons to EP, we make COS adjustments by 
deducting home market direct selling expenses from and adding U.S. 
direct selling expenses to NV.
    We calculated CV at the same LOT as the EP. Therefore we made no 
LOT adjustment.

Preliminary Results of Review

    As a result of our comparison of EP and NV, we preliminarily 
determine a weighted-average dumping margin of 5.91 percent for Aichi 
for the period February 1, 1997, through January 31, 1998.
    Any interested party may request a hearing within 30 days of 
publication of this notice. Any hearing, if requested, will be held 37 
days after the date of publication of this notice, or the first workday 
thereafter. Issues raised in hearings will be limited to those raised 
in the respective case and rebuttal briefs. 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 35 days after the date of 
publication.
    Parties who submit argument are requested to submit with the 
argument (1) a statement of the issue, and (2) a brief summary of the 
argument. 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 or at a hearing.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b)(1), we have calculated an exporter/customer-
specific assessment value for subject merchandise. 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 SSB from Japan 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 Aichi 
will be the rate established in the final results of this review; (2) 
if the exporter is not a firm covered in this review, or the original 
LTFV investigation, but the manufacturer is, the cash deposit rate

[[Page 10448]]

will be the rate established for the most recent period for the 
manufacturer of the merchandise; and (3) for all other producers and/or 
exporters of this merchandise, the cash deposit rate shall be 61.47 
percent, the all-others rate established in the LTFV investigation (59 
FR 66930, December 28, 1994).
    This deposit rate, 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 351.402(f) 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.
    We are issuing and publishing this determination in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: February 26, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-5396 Filed 3-3-99; 8:45 am]
BILLING CODE 3510-DS-P