[Federal Register Volume 64, Number 65 (Tuesday, April 6, 1999)]
[Notices]
[Pages 16699-16703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8486]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-412-810]


Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from 
the United Kingdom: Preliminary Results of Antidumping Administrative 
Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on certain hot-
rolled lead and bismuth carbon steel products from the United Kingdom 
in response to requests by respondent, British Steel Engineering Steels 
Limited (BSES), and petitioners, Ispat Inland Inc. and USS/KOBE Steel 
Co. This review covers the period March 1, 1997, through February 28, 
1998.
    We have preliminarily determined that sales have been made below 
normal value (NV). Interested parties are invited to comment on these 
preliminary results. If these preliminary results are adopted in our 
final results of administrative review, we will instruct the Customs 
Service to assess antidumping duties on all appropriate entries.

EFFECTIVE DATE: April 6, 1999.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor or Katherine Johnson, 
Office 5, AD/CVD Enforcement Group II, Import Administration, Room 
B099, International Trade Administration, U.S. Department of Commerce, 
14th Street and Constitution Avenue, N.W., Washington D.C. 20230; 
telephone (202) 482-4007, or 482-4929, respectively.

Applicable Statute and Regulations

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

SUPPLEMENTARY INFORMATION:

Background

    On March 22, 1993, the Department published in the Federal Register 
the antidumping duty order on certain hot-rolled lead and bismuth 
carbon steel products from the United Kingdom (58 FR 15324).
    On March 11, 1998, we published in the Federal Register (62 FR 
11868) a notice of opportunity to request an administrative review of 
the antidumping duty order on certain hot-rolled lead and bismuth 
carbon steel products from the United Kingdom covering the period March 
1, 1997, through February 28, 1998.
    In accordance with 19 CFR 351.213(b)(1), both BSES and petitioners 
requested that we conduct this administrative review. We published a 
notice of initiation of this antidumping duty administrative review on 
April 24, 1998 (63 FR 20378).
    On April 28, 1998, petitioners requested that the Department 
determine whether antidumping duties have been absorbed by BSES. On 
January 29, 1999, the Department requested proof that unaffiliated 
purchasers will ultimately pay the antidumping duties to be assessed on 
entries during the review period.
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of the Review

    The products covered by this review are hot-rolled bars and rods of 
nonalloy or other alloy steel, whether or not descaled, containing by 
weight 0.03 percent or more of lead or 0.05 percent or more of bismuth, 
in coils or cut lengths, and in numerous shapes and sizes. Excluded 
from the scope of this

[[Page 16700]]

review are other alloy steels (as defined by the Harmonized Tariff 
Schedule of the United States (HTSUS) Chapter 72, note 1 (f)), except 
steels classified as other alloy steels by reason of containing by 
weight 0.4 percent or more of lead, or 0.1 percent or more of bismuth, 
tellurium, or selenium. Also excluded are semi-finished steels and 
flat-rolled products. Most of the products covered in this review are 
provided for under subheadings 7213.20.00.00 and 7214.30.00.00 of the 
HTSUS. Small quantities of these products may also enter the United 
States under the following HTSUS subheadings: 7213.31.30.00; 
7213.31.60.00; 7213.39.00.30; 7213.39.00.60; 7213.39.00.90; 
7213.91.30.00; 7213.91.45.00; 7213.91.60.00; 7213.99.00; 7214.40.00.10, 
7214.40.00.30, 7214.40.00.50; 7214.50.00.10; 7214.50.00.30, 
7214.50.00.50; 7214.60.00.10; 7214.60.00.30; 7214.60.00.50; 7214.91.00; 
7214.99.00; 7228.30.80.00; and 7228.30.80.50. HTSUS subheadings are 
provided for convenience and Customs purposes. The written description 
of the scope of this proceeding is dispositive.

Duty Absorption

    On April 28, 1998, the petitioners requested that the Department 
determine whether antidumping duties had been absorbed during the POR. 
Section 751(a)(4) of the Act provides for the Department, if requested, 
to determine during an administrative review initiated two or four 
years after the publication of the order, whether antidumping duties 
have been absorbed by a foreign producer or exporter, if the subject 
merchandise is sold in the United States through an affiliated 
importer. In this case, BSES sold to the United States through an 
importer that is affiliated within the meaning of section 751(a)(4) of 
the Act.
    Section 351.213(j)(2) of the Department's regulations provides that 
for transition orders (i.e., orders in effect on January 1, 1995), the 
Department will conduct duty absorption reviews, if requested, for 
administrative reviews initiated in 1996 or 1998. Because the order 
underlying this review was issued prior to January 1, 1995, and this 
review was initiated in 1998, we will make a duty absorption 
determination in this segment of the proceeding.
    On January 29, 1998, the Department requested proof that 
unaffiliated purchasers will ultimately pay the antidumping duties to 
be assessed on entries during the review period. BSES did not respond 
to the Department's request for information. Based on the record, we 
cannot conclude that the unaffiliated purchasers in the United States 
will pay the ultimately assessed duty. Furthermore, we have 
preliminarily determined that there is a dumping margin on 66 percent 
of BSES' U.S. sales during the POR. Therefore, we find that antidumping 
duties have been absorbed by BSES on 66 percent of its U.S. sales.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by BSES to 
the United States were made at less than NV, we compared export price 
(EP) to the NV, as described in the ``Export Price'' and ``Normal 
Value'' sections of this notice.
    Pursuant to section 777(A)(d)(2), we compared the EPs of individual 
U.S. transactions to the monthly weighted-average NV of the foreign 
like product where there were sales made at prices above the cost of 
production (COP), as discussed in the ``Cost of Production Analysis'' 
section, below, and were otherwise in the ordinary course of trade.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by BSES covered by the description in the ``Scope of 
the Review'' section, above, to be foreign like products for purposes 
of determining appropriate product comparisons to U.S. sales. We 
compared U.S. sales to sales made in the home market within the 
contemporaneous window period, which extends from three months prior to 
the U.S. sale until two months after the sale. 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 the 
most similar foreign like product made in the ordinary course of trade. 
In making the product comparisons, we matched foreign like products 
based on the physical characteristics reported by the respondents in 
the following order: chemical composition, shape, cut (i.e., coil or 
cut-to-length), size, and grade.
    Consistent with our practice (see, e.g., Final Results of 
Antidumping Duty Administrative Review: Cold-Rolled Carbon Steel Flat 
Products from the Netherlands, 61 FR 48465, September 13,1996), we 
compared prime quality models sold in the United States to identical 
prime quality models sold in the home market. Where no home market 
sales of identical prime quality models made in the ordinary course of 
trade existed, we compared the U.S. sales of prime quality models to 
the most similar prime quality foreign like product made in the 
ordinary course of trade, based on the characteristics listed above. 
There were no U.S. sales of second quality models during the POR.

Export Price

    We based United States price on EP, as defined in section 772(a) of 
the Act, because the merchandise was sold directly by the exporter to 
unaffiliated U.S. purchasers prior to the date of importation and 
constructed export price was not otherwise indicated by the facts of 
record. When sales are made prior to importation through an affiliated 
or unaffiliated U.S. sales agent to an unaffiliated customer in the 
United States, our practice is to examine several criteria in order to 
determine whether the sales are EP sales. Those criteria are: (1) 
whether the merchandise was shipped directly from the manufacturer to 
the unaffiliated U.S. customer; (2) whether this was the customary 
commercial channel between the parties involved; and (3) whether the 
function of the U.S. selling agent was limited to that of a ``processor 
of sales-related documentation'' and a ``communications link'' with the 
unaffiliated U.S. buyer. Where all three criteria are met, indicating 
that the activities of the U.S. selling agent are ancillary to the 
sale, the Department has determined the sales to be EP sales. See, 
e.g., Notice of Final Results of Sales at Less Than Fair Value: 
Stainless Steel Wire Rod From Italy, 63 FR 40422, 40424-25, July 29, 
1998. In the instant review, the role of BSES' U.S. subsidiary was 
limited to providing marketing support and referring customer inquiries 
to the parent company. Thus, the above-referenced criteria have been 
met, and we have treated all U.S. sales as EP sales.
    We calculated EP based on packed, delivered prices to customers in 
the United States. We made deductions, where applicable, for foreign 
inland freight, FOB charges in the United Kingdom, ocean freight, 
marine insurance, U.S. Customs duties, brokerage and handling charges, 
merchandise processing fees, and U.S. inland freight charges, in 
accordance with 19 CFR 351.402(a). We also made adjustments for invoice 
corrections.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
the Department compared BSES's volume of home market sales of the 
foreign like product to its volume of U.S. sales of the subject 
merchandise, in accordance with

[[Page 16701]]

sections 773(a)(1) (B) and (C) of the Act. Because BSES' aggregate 
volume of home market sales of the foreign like product was greater 
than five percent of its aggregate volume of U.S. sales of the subject 
merchandise, we determined that the home market provides a viable basis 
for calculating NV, in accordance with 19 CFR 351.404(b).
    Many of BSES' home market sales were made to affiliated original 
equipment manufacturers (OEMs). It is the Department's practice, in 
situations where home market sales are made to affiliated parties, to 
determine whether it is appropriate to use such sales as the basis of 
NV by comparing the prices of those sales to the prices of sales to 
unaffiliated parties, on a model-by-model basis. See Final Results of 
Antidumping Duty Administrative Reviews, Partial Termination of 
Administrative Reviews, and Revocation in Part of Antidumping Duty 
Orders; Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof from France, et al., 60 FR 10899, 10900, February 28, 
1995; and 19 CFR 351.403(c). Because BSES made home market sales to 
affiliated OEMs during the period of review (POR), we tested these 
sales to ensure that, on average, the affiliated-party sales were made 
at arm's length. To conduct this test, we compared the weighted-average 
gross unit prices of sales to affiliated and unaffiliated customers net 
of all movement charges, direct selling expenses, invoice corrections, 
rebates, and packing. As a result of our arm's-length test, we 
disregarded sales to the affiliated OEM customers in the home market 
where the prices charged to an affiliated customer were on average less 
than 99.5 percent of the prices charged to unaffiliated customers. See 
Final Results of Antidumping Duty Administrative Review; Certain Welded 
Carbon Steel Pipes and Tubes From Thailand 62 FR 53809, 53817, October 
16, 1997. We did not require BSES to provide downstream sales by the 
affiliated OEM customers because these customers further manufactured 
the subject merchandise into merchandise not covered by the order. BSES 
also sold through affiliated resellers to unaffiliated customers during 
the POR. BSES reported these unaffiliated-customer transactions, and we 
used them in our determination of NV. See 19 CFR 351.403(d).
    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we based NV on sales at the same level of trade 
(LOT) as the EP sale. If NV was calculated at a different LOT, we made 
an adjustment, if appropriate and if possible, in accordance with 
section 773(a)(7) of the Act. (See ``Level of Trade'' section below.)

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same LOT as the EP transaction. The NV LOT is that of the starting-
price sales in the comparison market or, when NV is based on CV, that 
of the sales from which we derive selling, general and administrative 
(SG&A) expenses and profit. For EP, the LOT is also the level of the 
starting-price sale, which is usually from the exporter to an 
unaffiliated U.S. customer. To determine whether NV sales are at a 
different LOT than EP sales, we examined 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 difference affects 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 an LOT 
adjustment under section 773(a)(7)(A) of the Act.
    While BSES did not claim a LOT adjustment, we have, nonetheless, 
undertaken an evaluation to determine whether such an adjustment was 
necessary. In so doing, we examined respondent's distribution systems, 
including selling functions, classes of customers, and selling 
expenses. BSES reported two channels of distribution in the home 
market: (1) sales produced to order and shipped from the mill directly 
to unaffiliated OEMs (Channel 1 sales); and (2) sales by affiliated 
resellers to unaffiliated OEMs (Channel 2 sales). In analyzing the 
information submitted, we found that the two home market channels 
differ with respect to selling activities. Channel 2 sales involved 
additional selling activities including: ordering by the reseller for 
its own account in anticipation of future customer orders; maintenance 
of inventory; small lot sales; cutting into short lengths; and 
rebundling into smaller weight bundles. None of these activities are 
typical of mill direct sales to Channel 1 customers. Further, we found 
that these channels constitute different stages in the marketing 
process. Based on this analysis, we find that the two home market 
channels of distribution comprise two LOTs.
    BSES reported EP sales in the U.S. market, which were made to order 
by BSES, and shipped directly to OEMs in the United States. We found 
that EP sales involved the same selling functions and therefore were 
sold at the same marketing stage as BSES' home market Channel 1 sales, 
described above. Therefore, we have determined that the LOT for all EP 
sales is the same as Channel 1 in the home market. Accordingly, we have 
compared the U.S. sales to sales at the same LOT in the home market 
when possible. If we found no contemporaneous home market Channel 1 
sales of the identical or most similar product, we matched the EP sale 
to home market Channel 2 sales of that product. Because we compared 
sales at different LOTs in some instances, we examined whether a LOT 
adjustment was appropriate. Based on our analysis, we determined that 
there was a pattern of consistent price differences between the Channel 
1 and Channel 2 LOTs in the home market. Therefore, when we compared 
sales at different LOTs, we made an adjustment in accordance with 
section 773(a)(7)(A) of the Act. (See Memorandum to the File from The 
Team dated March 31, 1999, for further explanation.)

Cost of Production Analysis

    Pursuant to section 773(b) of the Act, for this POR, we initiated 
an investigation of sales at less than the COP. We performed this 
analysis because, in the final results of the most recent 
administrative review of BSES, we disregarded BSES' home market sales 
that were below the COP. See Final Results of Antidumping Duty 
Administrative Review; Certain Hot-Rolled Lead and Bismuth Carbon Steel 
Products From the United Kingdom, 62 FR 18744, April 17, 1997. 
Therefore, in accordance with section 773(b)(2)(A)(ii) of the Act, we 
had reasonable grounds to believe or suspect that BSES made sales at 
less than the COP during this review period. Before making any NV 
comparisons, we conducted the COP analysis described below.

A. Calculation of COP

    We calculated the COP based on the sum of BSES' cost of materials 
and fabrication employed in producing the foreign like product, plus 
amounts for home market general and administrative expenses. We relied 
on the home market sales and COP information provided by BSES in its 
questionnaire responses.

B. Test of Home Market Prices

    After calculating COP, we tested whether home market sales of hot-
rolled lead and bismuth carbon steel were made at prices below the COP 
within an extended period of time in substantial quantities, and 
whether such prices permitted recovery of all costs within a

[[Page 16702]]

reasonable period of time. We compared the model-specific COP to the 
reported home market prices less any applicable invoice corrections, 
movement charges, rebates, direct and indirect selling expenses, and 
packing costs.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of the respondent's sales of a specific model were at prices 
less than the COP, we did not disregard any below-cost sales of that 
product because we determined that the below-cost sales were not made 
in ``substantial quantities.'' Where 20 percent or more of the 
respondent's sales of a specific model during the POR were at prices 
less than the COP, we disregarded the below-cost sales because we 
determined that the below-cost sales were made within an extended 
period of time in ``substantial quantities'' in accordance with 
sections 773(b)(2)(B) and (C) of the Act, and because, based on our 
comparisons of prices to weighted-average COPs for the POR, we 
determined that the below-cost sales of the product were at prices 
which would not permit recovery of all costs within a reasonable period 
of time, as defined in section 773(b)(2)(D) of the Act. Based on this 
test, we disregarded certain below-cost home market sales made by BSES.

Price-to-Price Comparisons

    Pursuant to section 777A(d)(2) of the Act, we compared the EPs of 
individual transactions to the monthly weighted-average price of sales 
of the foreign like product where there were sales at prices above COP, 
as discussed above. We based NV on packed, delivered prices to 
unaffiliated purchasers in the home market, and to affiliated 
purchasers in the home market to the extent that prices were at arm's 
length. We made adjustments to home market price, where applicable, in 
accordance with section 773(a)(6) of the Act, for invoice corrections, 
rebates, and inland freight. We also made a circumstance-of-sale 
adjustment for differences in credit, credit insurance and warranty 
expenses pursuant to section 773(a)(6)(C)(iii) of the Act. In order to 
adjust for differences in packing between the two markets, we increased 
home market price by the amount of U.S. packing costs and reduced it by 
the amount of home market packing costs. We made adjustments, where 
appropriate, for physical differences in merchandise, in accordance 
with section 773(a)(6)(C)(ii) of the Act, and for differences in LOT, 
in accordance with section 773(a)(7)(A) of the Act.

Preliminary Results of the Review

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

------------------------------------------------------------------------
                                                              Margin
          Manufacturer/exporter               Period         (percent)
------------------------------------------------------------------------
British Steel Engineering Steels Limited  3/1/97-2/28/98           12.55
 (BSES) (formerly United Engineering
 Steels Limited)........................
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within 30 days of publication. Any hearing, if 
requested, will be held 80 days after the date of publication or the 
first business day thereafter.
    Issues raised in the hearing will be limited to those raised in the 
respective case briefs and rebuttal briefs. Case briefs from interested 
parties and rebuttal briefs, limited to the issues raised in the 
respective case briefs, may be submitted not later than 70 days and 77 
days, respectively, from the date of publication of these preliminary 
results. See 19 CFR 351.309(c) and (d). Parties who submit case briefs 
or rebuttal briefs in this proceeding are requested to submit with each 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. Parties are also encouraged to provide a summary of the 
arguments not to exceed five pages and a table of statutes, regulations 
and cases cited.
    The Department will subsequently issue the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written briefs or at the hearing, if held, not later 
than 120 days after the date of publication of this notice.
    Interested parties who wish to request a hearing or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, within 30 days of the 
date of publication of this notice. Requests should contain: (1) the 
party's name, address and telephone number; (2) the number of 
participants; and (3) a list of issues to be discussed. See 19 CFR 
351.310(c).

Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. The Department 
will issue appropriate appraisement instructions directly to the 
Customs Service upon completion of this review. The final results of 
this review shall be the basis for the assessment of antidumping duties 
on entries of merchandise covered by this review and for future 
deposits of estimated duties. We will instruct the Customs Service to 
assess antidumping duties on all appropriate entries covered by this 
review if any importer-specific assessment rate calculated in the final 
results of this review is above de minimis. For assessment purposes, we 
intend to calculate importer-specific assessment rates for the subject 
merchandise by aggregating the dumping margins calculated for all U.S. 
sales examined and dividing this amount by the total quantity sold.
    This notice 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.

Cash Deposit Requirements

    The following cash deposit requirements will be effective for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
company will be that established in the final results of this review, 
except if the rate is less than 0.50 percent, and therefore, de minimis 
within the meaning of 351.106(d)(1), in which case the cash deposit 
rate will be zero; (2) for previously reviewed or 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, a prior review, or 
the original less than fair value (LTFV) investigation, but the 
manufacturer is, the cash deposit rate

[[Page 16703]]

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 25.82 percent, the 
``All Others'' rate made effective by the LTFV investigation. These 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.
    This administrative review and notice are published in accordance 
with section 751(a)(1) of the Act and 19 CFR 351.221.

    Dated: March 31, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-8486 Filed 4-5-99; 8:45 am]
BILLING CODE 3510-DS-P