[Federal Register Volume 64, Number 164 (Wednesday, August 25, 1999)]
[Notices]
[Pages 46344-46349]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22087]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-601]


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

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

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

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SUMMARY: In response to a request by the respondent, the Department of 
Commerce (the Department) has conducted an administrative review of the 
antidumping duty order on brass sheet and strip (BSS) from Canada. The 
review covers one manufacturer/exporter of this merchandise to the 
United States, Wolverine Tube (Canada), Inc. (Wolverine). The period 
covered is January 1, 1997 through December 31, 1997.
    Upon consideration of the data on the record of this review, and of 
the case briefs and rebuttal briefs submitted by Petitioners' (Hussey 
Copper, Ltd.; The Miller Company; Olin Corporation; Revere Copper 
Products, Inc.; International Association of Machinists and Aerospace 
Workers; International Union, Allied Industrial Workers of America 
(AFL-CIO); Mechanics Educational Society of America, and United 
Steelworkers of America (AFL-CIO)) and by Wolverine, we have determined 
that a dumping margin exists. For the reasons discussed below, we are 
not revoking the order with respect to BSS from Canada manufactured by 
Wolverine.

EFFECTIVE DATE: August 25, 1999.

FOR FURTHER INFORMATION CONTACT: Paige Rivas or James Terpstra, Office 
of Antidumping/Countervailing Duty Enforcement, Office Four, Group II, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-0651 or 482-3965, 
respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the Tariff Act of 1930, 
as amended (the Act) are references to the provisions effective January 
1, 1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all references to the Department's regulations are to 19 CFR 
part 351 (1998).

Background

    The Department published an antidumping duty order on BSS from 
Canada on January 12, 1987 (52 FR 1217). On February 8, 1999, the 
Department published in the Federal Register the preliminary results of 
its administrative review of the antidumping duty order on BSS from 
Canada (64 FR 6039) (preliminary results).
    Immediately prior to the preliminary results, Petitioners raised a 
number of issues with respect to Wolverine's questionnaire response 
(Petitioners' letter of January 12, 1999). Some of these issues we were 
able to consider for purposes of the preliminary results (see 64 FR at 
6039-41/Further Developments Section). However, in order to address the 
remaining issues we needed to collect additional information from 
Wolverine in order to clarify the record. Thus, on February 23, 1999, 
we issued a supplemental questionnaire to which Wolverine responded on 
March 25, 1999. On April 12, 1999, Petitioners raised issues with this 
reported information which necessitated an additional supplemental 
questionnaire (April 18, 1999), to which Wolverine responded on April 
30, 1999. On May 7, 1999, Petitioners raised issues with the 
information in the April 30, 1999, response. As a result, we sought 
further clarification in a supplemental questionnaire (May 14, 1999) to 
which Wolverine responded on June 3, 1999. We gave interested parties 
an opportunity to comment on our preliminary results. We received 
written comments from Petitioners and Wolverine. No hearing was 
requested.

Scope of Review

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

Period of Review

    The review period (POR) is January 1, 1997 through December 31, 
1997. The review involves one manufacturer/exporter, Wolverine.

[[Page 46345]]

Normal Value Comparisons

    To determine whether sales of subject merchandise from Canada to 
the United States were made at less than normal value, we compared the 
Export Price (EP) to the Normal Value (NV), as described in the 
``Export Price'' and ``Normal Value'' sections of the preliminary 
results of review notice (see preliminary results, 64 FR at 6039). 
Therefore, in this proceeding, when making comparisons in accordance 
with section 771(16) of the Act, we considered all products sold in the 
home market as described in the ``Scope of Review'' section of this 
notice, above, that were sold in the ordinary course of trade, for 
purposes of determining appropriate product comparisons to U.S. sales. 
Where there were no sales of identical merchandise in the home market 
made in the ordinary course of trade to compare to U.S. sales, we 
compared U.S. sales to sales of the most similar foreign like product 
made in the ordinary course of trade, based on the characteristics 
listed in Sections B and C of our antidumping questionnaire.

Revocation in Part

    Under the Department's regulations, the Department may revoke an 
order in part if the Secretary concludes that: (1) ``one or more 
exporters or producers covered by the order have sold the merchandise 
at not less than normal value for a period of at least three 
consecutive years''; (2) ``[i]t is not likely that those persons will 
in the future sell the subject merchandise at less than normal 
value...''; and (3) ``the exporter or producer agrees in writing to its 
immediate reinstatement in the order, as long as any exporter or 
producer is subject to the order, if the Secretary concludes that the 
exporter or producer, subsequent to the revocation, sold the subject 
merchandise at less than normal value.'' See 19 CFR 351.222(b)(2).
    Upon review of the three criteria described above, and of the case 
briefs and rebuttal briefs, and on the basis of all of the evidence on 
the record, we determine for the final results of this review that the 
Department's requirements for revocation have not been met.
    The Department found that Wolverine's sales reviewed during the 
eighth (1994) and ninth (1995) administrative reviews under this order 
were made at not less than NV. However, in the tenth (1996) and in this 
current eleventh review, we determined that Wolverine's sales were made 
at less than NV. Therefore, we are not revoking the antidumping duty 
order with respect Wolverine. See Comment 1.

Changes Since the Preliminary Results

    Since the preliminary results we have made the following changes in 
our calculations. We recalculated Wolverine's reported warranty costs 
on a customer-specific basis (see Comment 3). We added home market 
indirect selling expenses to the COP calculation (see Comment 7). We 
included in the margin calculation a sale made in 1996 but entered in 
1998 (see Comment 8). We used temper as a matching criterion, as in 
previous reviews of this product (see Comment 9). See also Analysis 
Memo dated August 9, 1999, on file in the Central Records Unit (CRU), 
located in Room B-099 of the main Commerce Department Building.
    In addition, Wolverine, in response to post-preliminary 
supplemental questionnaires, presented several revisions to its 
reported information. We have accepted and used the following 
revisions: 1) recalculated general and administrative (G&A) expenses 
which accounted for certain one-time personnel related expenses (see 
Comment 6); 2) revised allocation of foreign exchange gains and losses 
to attribute the proper amounts to the reported cost information (see 
Analysis Memo); 3) recalculated freight expenses (see Analysis Memo); 
4) recalculated packing expenses (see Analysis Memo); 5) revised 
interest expense which accounts for certain one-time debt-refinancing 
arrangements (see Comment 10); and 6) recalculated credit expenses (see 
Analysis Memo).

Analysis of Comments Received

Comment 1

    Wolverine claims that the Department should revoke Wolverine from 
the antidumping order for the following reasons: 1) the Department 
found zero or de minimis dumping margins in the final results of the 
administrative reviews of subject merchandise entered during calender 
years 1994 and 1995, 2) Wolverine timely requested revocation from the 
order during the administrative review covering entries during calender 
year 1996, complied with all other prerequisites for requesting 
revocation, and submitted evidence demonstrating that it was unlikely 
that the Company would resume dumping if the antidumping order were 
revoked, 3) the Department's position in litigation with respect to the 
1996 review shows that Wolverine has de facto achieved de minimis or 
zero dumping margins in the final results of three successive reviews, 
4) the Department has issued preliminary results in the 1997 review 
indicating de minimis margins for that review period, and 5) the 
information regarding likelihood of resumption of dumping submitted in 
the 1996 review, and used as the basis for its preliminary decision in 
the instant review remains valid.
    Petitioners state that Wolverine's request for revocation should be 
denied for the following reasons: 1) regardless of the Department's 
position before the NAFTA Panel with respect to the 1996 review, the 
margin found in that review remains in effect, 2) correcting the errors 
in Wolverine's sales and cost database will result in dumping margins 
above de minimis in this review, and 3) dumping is likely to recur in 
the future.

Department Position

    We agree with Petitioners that Wolverine has not met the 
requirements for revocation in this review. Because the litigation in 
the 1996 review is not yet complete, the margin found in that review 
remains in effect. In addition, we have determined that Wolverine was 
dumping at an above de minimis rate during the 1997 POR. Because 
Wolverine does not meet the requirements of 19 CFR 351.222(b)(2)(i), 
Wolverine is not entitled to revocation in this review.

Comment 2

    Petitioners claim that Wolverine incorrectly reported the width for 
one of Wolverine's U.S. sales. Petitioners request that the Department 
correct this error in Wolverine's U.S. sales database before making its 
final margin analysis. Additionally, Petitioners contend that Wolverine 
also failed to provide cost data for the product (i.e., control number) 
sold pursuant to this invoice in its constructed value database.

Department Position

    We agree with Petitioners that the width reported for this sale was 
inaccurate, and have adjusted our calculation accordingly. However, we 
disagree that the reported cost information is wrong and must be 
rejected. Wolverine reported the cost for producing the merchandise 
subject to this sale. That fact that the product code reported on the 
sales list for this merchandise was incorrect with respect to the width 
variable does not mean the reported cost for this merchandise is also 
incorrect. Accordingly, we accepted the reported cost. (See also 
Analysis Memo.)

Comment 3

    Petitioners claim that Wolverine's reported U.S. warranty expense 
is understated and must be corrected to include all relevant costs. 
Petitioners state that warranty expenses should be

[[Page 46346]]

recalculated to include complete delivery costs for the returned goods. 
According to Petitioners, the Department's supplemental questionnaire 
directed Wolverine to include in its warranty expense value freight 
costs and the cost of manufacture associated with restoring merchandise 
returned under warranty. Petitioners claim that the reported warranty 
expenses should include the delivery cost of the damaged merchandise, 
as well as the return freight costs for this merchandise. Petitioners 
also argue that the fabrication portion of the reported warranty 
expense is understated because it only includes variable manufacturing 
costs and excludes fixed manufacturing costs. In addition, Petitioners 
argue that the Department erred by treating the reported direct 
warranty expenses as being in Canadian dollars, rather than in U.S. 
dollars. Finally, Petitioners generally contest the accuracy of the 
fabrication portion of the reported warranty expenses.
    Wolverine asserts that the Department should accept its warranty 
cost data as submitted, because these costs are accurate and include 
all appropriate expenses. Specifically, Wolverine states, the freight 
cost for returned goods, plus the cost of fabricating returned 
material, is included in its market-specific warranty expense, and 
fixed manufacturing costs are properly excluded. Moreover, these costs 
were reported in Canadian dollars, the currency in which the expenses 
were incurred. According to Wolverine, Petitioners' criticisms 
regarding the justifications for Wolverine's warranty expense are 
unfounded. Wolverine rebuts Petitioners' assertion that warranty 
expenses should be increased by an amount for fixed overhead, arguing 
that the Department excludes such costs from its ``DIFMER'' analysis 
and should exclude them from warranty costs as well. Wolverine also 
argues that Petitioners' arguments with respect to the factual accuracy 
of the fabrication portion of its warranty expenses were raised too 
late in the proceeding and should not be considered.

Department Position

    We agree with Petitioners that an adjustment to the margin 
calculation is needed to properly deal with the cost of re-working the 
defective merchandise; however, as explained below, this is not an 
adjustment to warranty costs, for which the fabrication element of 
warranty expense is already correctly reported. We also agree with 
Wolverine that the total amount of warranty expense, which includes the 
freight cost associated with returning defective merchandise and the 
manufacturing costs associated with re-working such merchandise to make 
it re-saleable, was accurately reported inclusive of all appropriate 
costs and expenses, and was reported in Canadian dollars.
    We disagree with petitioners' claim that the overall warranty cost 
is understated because it does not include the cost of the outbound 
freight to the customer. This expense was properly excluded from the 
warranty expense. The outbound cost of freight on the transaction 
associated with the warranty claim was incurred by Wolverine as a 
freight cost outside of any warranty context, and therefore should 
continue to be treated as freight cost, not a warranty cost, for that 
sale. The reference to ``freight cost'' in the supplemental 
questionnaire was to the freight costs incurred as a direct result of 
the product defect associated with the warranty. Since in this case the 
re-worked brass was not returned after re-working to the customer 
filing the warranty claim, the only ``warranty'' freight was the cost 
of returning the defective product to Wolverine.
    With respect to the fabrication element of warranty costs, in other 
words the cost of re-working the defective product so that it could be 
re-sold, we do not agree with Wolverine's claim that these expenses 
(which are now included in the reported warranty expense value) should 
be excluded from the reported warranty expenses. These expenses are 
clearly incurred as a direct result of the warranty claim, and thus 
should be treated as warranty expenses. We do, however, agree with 
Wolverine that double counting of these expenses must be avoided. 
Because the manufacturing costs associated with re-working defective 
merchandise reported for warranty expenses is part of the overall 
reported cost of production/constructed value (COP/CV) data for the 
POR, we need to make an adjustment to avoid double counting. 
Accordingly, we reduced the reported COP/CV to account for any portion 
of such costs associated with re-working defective merchandise returned 
under warranty (see Analysis Memo).
    Regarding petitioners' claim that the fabrication element of 
Wolverine's overall warranty costs is understated because it includes 
only labor and variable overhead, with no fixed overhead component, we 
disagree. In calculating warranty expenses, the Department considers 
only variable expenses, because the fixed expenses associated with 
fabrication would, by definition, be incurred irrespective of the 
warranty claims at issue. In this respect, warranty expenses are 
similar to technical service expenses: any fixed portion of the cost at 
issue, e.g., the salary of a technical service representative, would be 
considered an indirect selling expense. Similarly, any fixed overhead 
expenses which could be allocated to the cost of reworking the 
defective merchandise would also be considered indirect expenses. In 
addition, given the relatively minor amount of these costs, as compared 
to the overall production expenses, the portion of fixed overhead 
allocable to warranty expenses would be negligible and would have a de 
minimis effect on the calculations. Accordingly, we made no adjustment 
to direct warranty expenses for fixed overhead. See Analysis Memo.
    With respect to the question of whether the warranty expenses 
reported by Wolverine were stated in U.S. dollar or Canadian dollar 
values, we agree with Wolverine that the reported values are Canadian 
dollar values reported in that currency. Wolverine originally indicated 
that it reported these expenses in U.S. dollars (August 14, 1998 
questionnaire response, computer format sheet exhibit C1). Wolverine 
subsequently realized its oversight, however, and reported that these 
expenses were both incurred and reported in Canadian dollars (June 3, 
1999 questionnaire response, at 2 and Exhibit 8 of Wolverine's December 
28, 1998).
    Finally, Petitioners attempt, in their case brief, to cast doubts 
on the overall accuracy of the fabrication cost element of Wolverine's 
warranty cost data, suggesting that Wolverine has not provided enough 
support for the Department to be sure of the accuracy of these costs as 
reported. We agree with Wolverine that these allegations are late, lack 
substance, and are not supported by the record.

Comment 4

    During this review, Wolverine allocated its POR warranty expenses 
on U.S. and Canadian sales, respectively, over total quantity shipped 
in each market. During this POR, Wolverine's total U.S. warranty 
expense arose from a claim associated with a single defective brass 
coil that was returned. Petitioners argue that, whenever possible, 
warranty expenses must be allocated on a model-specific basis, or at a 
minimum, on a customer-specific basis. Thus, Petitioners argue, because 
it is possible to associate this warranty expense with the single 
transaction at issue, and because the Department's practice is to seek 
to allocate direct expenses such as warranties at a transaction-
specific or model-specific

[[Page 46347]]

level, the Department should allocate this entire warranty expense 
either to the transaction at issue, or at least to the customer at 
issue. Wolverine argues that its U.S. warranty expenses should be 
allocated over total U.S. sales of subject merchandise, as currently 
reported, because Wolverine sets its prices in consideration of its 
average likelihood of defects. This is particularly true, Wolverine 
asserts, because BSS is a mature commodity-like product which is not 
highly customized, such that the defect rate tends to be generally 
consistent, even though Wolverine cannot predict on which units 
individual defects will occur. Wolverine also argues that, if the 
Department were to reject the basis on which Wolverines has allocated 
warranty expenses incurred during the POR, it should use the historical 
3-year average warranty expense it reported.

Department Position

    We disagree with Wolverine that the warranty expense should be 
allocated over all U.S. sales of the subject merchandise. Once we 
ascertained the correct total warranty expense we determined that these 
expenses should be allocated on as a specific a basis as possible, 
which in this case, for the reasons given below, is on a customer-
specific basis.
    Where feasible, the Department normally considers actual or 
historical warranty data on a model-by-model basis. See, e.g., 
questions B34 and C44 of the questionnaire sent to Wolverine on March 
31, 1998. Because certain warranty expenses are direct selling 
expenses, the Department asks respondents to associate these expenses 
with the individual sales which gave rise to them, to the extent that 
the company's record-keeping system permits them to do so. In some 
instances, the company's record-keeping system does not track direct 
expenses such as warranties to individual sales; in such cases, the 
Department normally will accept an allocation of these expenses on as 
specific a basis as possible, including a customer-specific basis. In 
this case, Wolverine's records kept in the normal course of business 
allow it to track warranty expenses on a more specific basis. (See 
Analysis Memo.) In this review, Wolverine changed its practice and 
allocated warranty expenses over all U.S. sales of subject merchandise. 
(We also note that Wolverine made no mention of this change in practice 
in the narrative portion of its questionnaire response, and gave no 
reason for the change until petitioners challenged the allocation.)
    Wolverine argues that, in negotiating sales prices (and including 
in those prices an element for possible warranty expense) a 
manufacturer takes into account the ``average likelihood'' of product 
defects. Thus, Wolverine argues, the ``only logical basis'' for 
allocating warranty expenses is the average warranty expense that it 
has reported. This would be a more convincing argument had Wolverine 
chosen to allocate its warranty expenses in this fashion earlier. 
Furthermore, Wolverine has not argued that it was unforeseen that its 
warranty expenses could be so concentrated. When a company produces 
large products, such as coils of brass, it is clear that a single 
damaged product can result in a significant warranty expense, and this 
fact would be taken into consideration in setting prices. Despite this 
fact, Wolverine's earlier warranty-reporting has been more specific.
    Companies often track warranty expenses on a customer-specific 
basis. This is because such expenses frequently tend to be clearly 
identified with specific customers. It is the individual customer whose 
warranty claims must be addressed. Producers and sellers have a 
fundamental need to be familiar with and satisfy their customers' needs 
in order to obtain repeat business. As a result, companies usually need 
to keep accurate records to assure that customer complaints, including 
but not limited to warranty expense claims, are dealt with. This gives 
rise to the requirement for accurate, customer-specific, record 
keeping. In addition, warranty expenses may, in fact, vary by customer. 
This is based not only on the different mix of models sold to 
individual customers, but also on differences in product applications, 
delivery conditions (time, distance, and method), product tolerance 
requirements individual customers specify as acceptable, and inspection 
practices. Moreover, Wolverine changed its practice with regard to 
warranty allocation and failed to identify or justify this change. In 
light of the above factors we continued to allocate warranty expenses 
on a customer-specific basis as we did in earlier review segments of 
this proceeding. See Analysis Memo.
    Finally, we have not followed Wolverine's suggestion that if we do 
not accept its reported allocation of POR data, we use the historical 
three year average warranty expense, because we have more accurate POR-
based data available. Average historical data are most commonly used in 
situations in which POR-specific data are not available because the 
product is one for which warranty claims may only be filed some years 
after merchandise is sold or in which POR-specific data are for some 
reason aberrational. Wolverine has not alleged that the warranty claim 
at issue was aberrational.

Comment 5

    Petitioners argue that Wolverine improperly allocated its U.S. 
freight costs and thus, that Wolverine's U.S. freight costs for a small 
number of sales for which transaction-specific costs are available 
should be recalculated on a transaction-specific basis. Petitioners 
assert that, rather than allocating its freight costs on the most 
specific basis possible, as required by the Department's regulations, 
Wolverine diluted the BSS freight costs incurred on subject merchandise 
by allocating its freight costs, including those incurred on a 
substantial volume of sales of non-subject merchandise, over all brass 
sales. The result, Petitioners claim, was a significant reduction in 
Wolverine's reported U.S. freight expense for subject merchandise.
    Wolverine argues that the use of a transaction-specific method for 
the sales in question would be distortive and that Wolverine's freight 
costs reported for the POR are based on the same method that the 
company has used in the past, and that the Department has accepted in 
prior segments of this proceeding. Wolverine states that its reported 
cost of freight reflects the average POR freight cost incurred to ship 
all merchandise to the same customer at the same location. According to 
Wolverine, this average reflects the delivery terms it negotiates with 
each customer, which are based on Wolverine's assessment of the 
delivery costs it will incur on sales of all products to an individual 
customer. Moreover, Wolverine argues that its freight records are not 
organized to allow freight costs to be easily attributed to specific 
invoices.

Department Position

    We disagree with Petitioners that the freight costs associated with 
the particular sales in question should be re-calculated on a 
transaction-specific basis. To avoid a ``cherry-picking'' approach to 
price adjustments, the Department generally prefers to use a 
transaction-specific expenses or a single allocation methodology to 
quantify a given expense within a POR. As a consequence, while 
transaction-specific data may be available for certain transactions, 
the Department will not use the transaction-specific expenses when only 
allocated expense data is available for other transactions. Although 
the Department seeks to

[[Page 46348]]

obtain transaction-specific freight costs, the accounting records of 
respondent companies are frequently not organized in a way that lends 
itself to such reporting as a general matter. See, e.g., Brother 
Industries, Ltd. v. United States, 540 F. Supp. 1341, 1363 (1982); see 
also Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof From [various countries]; Final Results of Antidumping 
Duty Administrative Reviews, 63 FR 33320, 33340 (June 18, 1998). As a 
result, allocations of freight costs are common. As noted in this 
review, and as verified in prior reviews, Wolverine's freight expenses 
records are not organized in a manner that allows freight costs to be 
attributed easily to individual transactions. For example, it is common 
for a given Wolverine freight bill to cover multiple invoices and both 
subject and non-subject merchandise. Therefore, the Department has in 
the past determined that it is reasonable for Wolverine to calculate 
the average freight costs to each customer, and then allocate this 
amount over all sales to that customer. That is what Wolverine did in 
this review. Moreover, Commerce also has verified in past reviews that 
no distortion was introduced by allocating costs to ship both subject 
and non-subject merchandise to the same customer, and there is no 
indication on the record of this review of a change in that situation.

Comment 6

    Petitioners argue that the Department should correct Wolverine's 
G&A expense ratio: (1) based on the formula in the Department's 
questionnaire, and (2) to reflect an ``even-handed and consistent 
treatment'' for income and expenses. Petitioners assert that Wolverine 
improperly excluded certain personnel costs in its calculation of G&A 
expenses. According to Petitioners, the Department should calculate a 
revised G&A expense ratio for Wolverine based on the total G&A expenses 
reported by Wolverine at Attachment 12 of Wolverine's March 25, 1999 
questionnaire response, and the total cost of sales shown in Wolverine 
Tube Inc.''s 1997 financial statement.
    Wolverine states that it reported G&A expense net of related income 
items generated at the manufacturing subsidiary, in compliance with the 
Department's questionnaire requirement. Wolverine contends that, in 
calculating the G&A ratios, it also added a proportionate amount of G&A 
expenses incurred at the corporate parent level that were not otherwise 
reflected in the subsidiary's expenses. According to Wolverine, the 
Department should use Wolverine's submitted G&A figures in its Final 
Results.

Department Position

    We agree with Wolverine that its G&A expenses were appropriately 
reported. Contrary to Petitioners' assertion, Wolverine allocated an 
appropriate portion of its corporate parent's G&A to the production of 
subject merchandise. This allocation is typical of the kind we accept 
in antidumping cases where the corporate parent incurs certain G&A 
expenses on behalf of its subsidiary. See, e.g., Final Determination of 
Sales at Less Than Fair Value: Welded Stainless Steel Pipe from 
Malaysia: Final Result of Antidumping Review, 59 FR 4023, 4027 (January 
28, 1994). See also Analysis Memo. We note that, based on issues raised 
by Petitioners, we asked Wolverine to revise its reported G&A expenses 
to include a portion of certain one-time charges which had not 
originally been included in the reported costs. Wolverine complied with 
this request in its March 30, 1999 questionnaire response. We have used 
the G&A expenses revised in this manner for the final results of this 
review.

Comment 7

    Petitioners claim that the Department should include home market 
indirect selling expenses in its cost test due to the fact that 
Wolverine failed to report indirect selling expenses in its sales 
database and the Department incorrectly excluded indirect selling 
expenses from its cost test.
    Wolverine agrees that the Department should add indirect selling 
expenses to COP.

Department Position

    We agree and have adjusted our calculations accordingly.

Comment 8

    Wolverine claims that the Department erroneously excluded from the 
1997 POR margin calculation one U.S. sale. This sale involved 
merchandise that was sold prior to, but entered during, the POR. 
According to Wolverine, the U.S. sale in question was confirmed in 1996 
but the merchandise was shipped in 1997. Wolverine notes that under 
section 751(a)(2)(A) of the Act, the Department is required to 
determine the normal value and U.S. price of each entry of subject 
merchandise made during the POR.
    Petitioners did not comment on this issue.

Department Position

    We have included this sale in our analysis. The Department's 
practice with respect to sales prior to importation has been to examine 
the sales of merchandise which entered the United States during the 
POR.

Comment 9

    Petitioners argue that the Department should continue to reject 
Wolverine's original and revised temper codes. Petitioners state that 
temper has not been viewed as an appropriate model match criterion in 
the BSS proceedings generally, because it is not one of the primary or 
essential characteristics of C.D.A. 200-series BSS, the subject 
merchandise.
    Wolverine claims that the Department must reject Petitioners' newly 
submitted factual information with respect to the use of temper as a 
product matching criterion (i.e., statements regarding whether or not 
temper is ``generally identified in the industry'' as representing 
``commercial reality''). Wolverine states that temper has been used by 
the Department as a matching criterion in the last 3 completed reviews; 
therefore, regardless of whether the Department accepts Petitioners' 
``new factual information,'' temper should continue to be used as a 
matching criterion. Finally, Wolverine notes that Petitioners have 
reviewed this methodology in three prior reviews and have not 
previously objected to the use of temper as a matching criterion in any 
of those segments of the proceedings.

Department Position

    We agree with Wolverine that temper is an appropriate matching 
criterion. We did not use Wolverine's submitted temper codes in the 
preliminary determination because its temper coding categories also 
involved a different criterion ``finish.'' In response to our 
supplemental questionnaire, however, Wolverine, has re-coded its 
products as to temper to resolve this problem. We have used temper as a 
matching criterion in previous reviews of this order. See, e.g., Brass 
Sheet and Strip from Canada: Preliminary Results of Antidumping Duty 
Preliminary Review; Review of Notice of Intent To Revoke Order in Part, 
63 FR 6519, 6521 (February 9, 1998)((1996 review); Brass Sheet and 
Strip from Canada; Results of Antidumping Duty Administrative Review, 
61 FR 1560, 1561 (January 22, 1996)(1993 review). We have found that 
temper is a measurable physical characteristic, which is recognized in 
the marketplace, and which results in cost and price differences. 
Moreover, we

[[Page 46349]]

disagree with Petitioners' claim that because temper was not used as a 
matching criterion in the investigation it cannot be a relevant 
criterion in this review. The Department may alter its approach over 
different segments of a proceeding if the facts so warrant. In fact, it 
is not uncommon for the Department to modify its approach through 
different segments of a proceeding as it learns more about the product, 
the industry, and the selling practices within that industry. Finally, 
we do not agree that Petitioners' assertions and argument with respect 
to the alleged ``commercial reality'' concerns as to temper codes rise 
to the level of ``factual information.'' Thus, they need not be 
excluded as ``new factual information.''

Comment 10

    Petitioners argue that the Department should revise Wolverine's 
interest expense ratio to include the costs that Wolverine incurred 
during the POR to refinance and restructure its debt.
    Wolverine states that the Department does not require that all 
interest expenses incurred by a company in one year be included in COP 
in the same year for antidumping analysis purposes, and that the 
Department has allocated exchange gains and losses associated with 
long-term debt over the remaining term of that debt, and not to the 
year in which the exchange gain/loss occurred.

Department Position

    We agree with Petitioner that Wolverine's interest expense ratio 
should take these costs into account; however, we also agree with 
Wolverine that the debt restructuring costs, which were originally 
excluded from the reported costs, should be amortized over five years, 
the term of the credit arrangement. Wolverine resubmitted its interest 
cost incorporating this change and we have accepted it. See also 
Analysis Memo.

Final Results of the Review

    As a result of our comparison of EP to NV, we determine that a 
dumping margin of 0.71 percent exists for Wolverine for the period 
January 1, 1997 through December 31, 1997. We also determine not to 
revoke in part the antidumping duty order with respect to imports of 
subject merchandise from Wolverine.

Cash Deposit Instructions

    The following deposit requirements will be effective upon 
publication this notice of final results of administrative review for 
all shipments of the subject merchandise from Canada that are entered, 
or withdrawn from warehouse, for consumption on or after the 
publication date as provided by section 751(a)(1) of the Act: (1) The 
cash deposit rate for Wolverine will be the rate stated above; (2) if 
the exporter is not a firm covered in this review, a prior review, or 
the original less than fair value (LTFV) investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; (3) the 
cash deposit rate for all other manufacturers or exporters will 
continue to be rate, the ``all others'' rate established in the LTFV 
investigation, and (4) for any previously reviewed exporter, the cash 
deposit rate will be its company-specific rate established for the most 
recent period. These deposit requirements, when imposed, shall remain 
in effect until publication of the final results of the next 
administrative review.

Assessment Instructions

    The Department will determine, and the U.S. Customs Service shall 
assess, antidumping duties on all entries subject to this review. For 
assessment purposes, we have calculated importer-specific ad valorem 
duty assessment rates for the merchandise based on the ratio of the 
total amount of antidumping duties calculated for the examined entries 
during the POR to the total quantity of sales examined corresponding to 
such sales. The Department will issue appraisement instructions 
directly to the Customs Service.

Notification of Interested Parties

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

    Dated: August 9, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-22087 Filed 8-24-99; 8:45 am]
BILLING CODE 3510-DS-P